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United States of America v. Curtis G. Whiteford

April 13, 2012

UNITED STATES OF AMERICA
v.
CURTIS G. WHITEFORD, APPELLANT AT NO. 10-1023 MICHAEL B. WHEELER, APPELLANT AT NO. 10-1373



On Appeal from the United States District Court for the District of New Jersey D.C. Criminal Nos. 07-cr-00076-001 & 07-cr-00076-003 (Honorable Mary L. Cooper)

The opinion of the court was delivered by: Scirica, Circuit Judge.

PRECEDENTIAL

Argued January 10, 2012

Before: SCIRICA, RENDELL and SMITH, Circuit Judges.

OPINION OF THE COURT

Curtis Whiteford and Michael Wheeler were officers in the United States Army Reserve who were deployed to Iraq in 2003 to work for the Coalition Provisional Authority. Both defendants were convicted of conspiracy under 18 U.S.C. § 371, for participating in a bid-rigging scheme that involved directing millions of dollars in contracts to companies owned by Philip Bloom, an American businessman. Whiteford and Wheeler raise the following claims on appeal: (1) insufficiency of the evidence to establish each defendant‟s participation in the conspiracy; (2) failure to grant a new trial in the interests of justice; and (3) erroneous refusal to grant "use immunity" to a co-conspirator. Wheeler also argues his motion to suppress was erroneously denied. In addition, both defendants challenge their sentences. We will affirm.*fn1

I.

The Coalition Provisional Authority

The Coalition Provisional Authority ("CPA") was created in May 2003 by the United States, the United Kingdom, and other members of the Coalition Forces to function as a temporary governing body in Iraq. U.S. Secretary of Defense Donald Rumsfeld appointed Ambassador Paul Bremer to serve as Administrator of the CPA, and shortly after it was established, the U.N. Security Council passed a resolution recognizing the CPA‟s legitimacy. The U.N.‟s resolution called upon the CPA to "promote the welfare of the Iraqi people through the effective administration of the territory . . . ." See S.C. Res. 1483, ¶ 4, U.N. Doc. S/RES/1483 (May 22, 2003). For the next fourteen months, the CPA carried out this mandate by administering humanitarian programs and reconstruction projects. To finance its operations, it drew on two sources of funding: U.S. congressional appropriations,*fn2 and the Development Fund for Iraq ("DFI").*fn3 On June 28, 2004, the CPA was replaced by the Interim Government of Iraq, a sovereign Iraqi entity.

The CPA‟s staff, about 3,000 persons, consisted of employees sent by the Governments of Australia, Denmark, Italy, Japan, the United States, the United Kingdom, and other members of the Coalition Forces. For its part, the United States contributed both active-duty service members, including reserves, as well as civilian employees. While assigned to the CPA, members of the U.S. armed forces continued to be bound by the Uniform Code of Military Justice, see 10 U.S.C. § 802(a)(1), whose provisions apply "in all places," id. § 805. Military officers also continued to be bound by Part 2635 of Title 5 of the Federal Code of Regulations, which sets forth "standards for ethical conduct" for employees of the Executive Branch. 5 C.F.R. § 2635.101(c). Part 2635 extends to persons "on detail" to an international organization, unless they are specifically exempted. Id. § 2635.104(c). Given that officers are considered "employees" of the Department of Defense ("DoD"), id. § 2635.102(h) ("Employee . . . includes officers but not enlisted members of the uniformed services."), they are bound by Part 2635, and face potential penalties if they deviate from its instructions, id. §§ 2635.106(a), 3601.101. As Colonel and Lieutenant Colonel in the U.S. Army Reserve, Whiteford and Wheeler, respectively, were "officers."

The CPA promulgated rules, memoranda, and orders which carried the force of law in Iraq. See CPA Official Documents, The Coalition Provisional Authority, http://www.iraqcoalition.org/regulations/ (last visited Feb. 12, 2012). Memorandum Number 4, issued on August 19, 2003, governed contracting procedures. It provided that: "competition is mandatory for all Contracts"; "[r]easonable efforts will be made to obtain competitive offers by publicizing a solicitation"; "[g]rants administered under this Memorandum will not directly or indirectly benefit any Ministry, CPA or Coalition Forces official or employee involved in the contracting or grant-making process"; "[p]ersons involved in the contracting process . . . shall not . . [u]se public office for private gain"; requirements on a project "may not be split to avoid the application of these rules"; and contracts in excess of $500,000 shall be approved by a special "Award Committee." See CPA, Coalition Provisional Authority Memorandum Number 4: Contract and Grant Procedures Applicable to Vesterd [sic] and Seized Iraqi Property and the Development Fund for Iraq, §§ 6(2), 6(5), 6(6), & 7 (Aug. 19, 2003), available at http://www.iraqcoalition.org/regulations.

The Defendants

Curtis Whiteford was a Colonel in the U.S. Army Reserve who lived in Utah. In September 2003, he was deployed to Iraq on active duty. He was assigned to the CPA‟s headquarters in the South Central Region ("CPA- SC"), located in al-Hillah.*fn4 Whiteford was appointed Chief of Staff for CPA-SC, which made him the second most senior person in the office after Regional Coordinator Michael Gfoeller. Whiteford‟s responsibilities included supervising CPA-SC‟s staff, overseeing CPA-SC‟s budget of $100 million, managing CPA-SC‟s reconstruction projects, and serving as a liaison between the CPA and Iraqi nationals.

Michael Wheeler was a Lieutenant Colonel in the U.S. Army Reserve who lived in Wisconsin. In October 2003, he was deployed to Iraq on active duty. He was sent to al-Hillah, to work for the CPA. Wheeler was appointed Deputy Chief of Staff and Deputy Civil Administrator for CPA-SC. This made him responsible for recommending reconstruction projects, facilitating payments from the CPA to contractors, and ensuring that CPA-sponsored projects were completed in a satisfactory manner.

The Conspiracy

Besides Whiteford and Wheeler, there were six other persons either charged with or who pled guilty to participating in the conspiracy to defraud the CPA. These individuals were: (1) Philip Bloom, a U.S. citizen residing in Romania, who owned and managed construction companies throughout the world. One of Bloom‟s companies, Global Business Group Logistics ("GBG Logistics"), entered into numerous contracts with the CPA and the DoD to carry out construction projects in Iraq. (2) Bruce Hopfengardner, a Lieutenant Colonel in the U.S. Army Reserve, who served in al-Hillah from September 2003 through June 2004.

Hopfengardner was an Operations Officer for CPA-SC, reporting to Whiteford. His core duties were to oversee police-related construction projects and to help train the Iraqi police. (3) Robert Stein, a contract employee of the DoD, who served as Comptroller for CPA-SC between November 2003 and June 2004, and reported to Whiteford. Stein‟s position gave him unmonitored access to the CPA‟s vault. (4) Debra Harrison, a Lieutenant Colonel in the U.S. Army Reserve residing in New Jersey, who was deployed to Iraq from October 2003 to July 2004. Harrison served as a financial specialist and Deputy Comptroller for CPA-SC. In both positions, she fell under Whiteford‟s chain of command. (5) Seymour Morris, a U.S. citizen residing in Romania, who operated a Cyprus-based financial services business and worked closely with Bloom. (6) William Driver, Harrison‟s husband.

The conspiracy was hatched in December 2003. While visiting the CPA‟s headquarters in Baghdad, Philip Bloom met with Stein and Hopfengardner, with whom he was familiar. The three men formed an arrangement: Bloom would pay Stein and Hopfengardner $100,000 up front and $10,000 per month, each, if they would help Bloom secure contracts from CPA-SC. Stein, who was Comptroller of CPA- SC, could withdraw money from the vault at any point. Hopfengardner, who oversaw the office‟s security projects, could provide Bloom with inside information on bidding to enable Bloom to secure contracts.

Shortly after the Baghdad meeting, several top officials at CPA-SC convened to discuss the police academy construction project. Whiteford, Wheeler, Hopfengardner, and Stein were present, as were others who were not alleged co-conspirators, such as Regional Coordinator Mike Gfoeller. The officials at the CPA-SC meeting collectively decided to break the police academy construction project into pieces, each under $500,000. This would enable CPA-SC to evade CPA regulations, which mandated that contracts over $500,000 be sent to the Head of Contracting Activity for the CPA, in Baghdad, for review and approval. See CPA, Memorandum Number 4, § 7, supra. Gfoeller supported the idea because he wanted to avoid delays in building the police academy. The co-conspirators had personal motives in supporting the policy change, because it meant Bloom‟s companies could receive the police academy contracts without interference from the CPA office in Baghdad.

In January 2004, Stein brought Michael Wheeler into the fold. Wheeler‟s position was key: he was more intimately involved in the details of the contracting process at CPA-SC than Stein or Hopfengardner. Over the next several months, Wheeler helped GBG Logistics secure roughly $5.5 million in contracts. He would develop "scopes of work" that lined up with the firm‟s capabilities, recommend modifications to their bids to help them win approval, and direct Bloom to disguise the bids so it was not obvious that GBG Logistics was securing so many contracts. In return, Wheeler received airplane tickets, liquor, and other gifts from Bloom. In July, Wheeler helped smuggle money out of Iraq, when he flew to the United States with Debra ...


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