Appeal from a judgment of the District Court for the Western District of New York (John T. Elfvin, Judge) convicting defendant, after a jury trial, of conspiracy to violate 22 U.S.C. § 2778(b)(2), (c) and 18 U.S.C. § 1001 and to defraud the United States, in violation of 18 U.S.C. § 371, and wire communications fraud, in violation of 18 U.S.C. § 1343. Conviction reversed.
Before: FEINBERG, Chief Judge, NEWMAN and MINER, Circuit Judges.
JON O. NEWMAN, Circuit Judge:
This appeal from a conviction for offenses relating to a planned shipment of helicopters from the United States to Iran raises a host of perplexing issues. The issues arise in an unusual context: The defendant is an Austrian citizen who never set foot in this country during the entire episode alleged to constitute his offense, and the offense concerns a fictitious sale that was proposed to the defendant by agents of the United States and never consummated. The appeal is brought by Heinz Golitschek from a judgment of the District Court for the Western District of New York (John T. Elfvin, Judge) convicting him, after a jury trial, of conspiracy to violate 22 U.S.C. § 2778(b)(2), (c) and 18 U.S.C. § 1001 and to defraud the United States, in violation of 18 U.S.C. § 371, and wire communications fraud, in violation of 18 U.S.C. § 1343. Golitschek was sentenced to concurrent prison terms of three and one-half years, which he is now serving.
For reasons that follow, we have concluded that the conviction must be reversed because of erroneous instructions concerning the defendant's knowledge. Whether the Government is entitled to retry the defendant depends on resolution of various issues, as to some of which we would find it helpful to have an expression of views from the United States Department of State. Because the defendant has been in custody since his arrest in Canada on October 30, 1985, we have concluded that at this point we will promptly enter a partial judgment reversing the conviction and remanding to the District Court for the limited purpose of setting reasonable conditions of bail. We will retain jurisdiction of the appeal so that, in the event that the Government advises us of its intention to retry the defendant, we can subsequently resolve those issues that bear on the lawfulness of a retrial.
Before setting forth the pertinent fact, it will be helpful to summarize the statute, regulations, and forms pertinent to the exports of arms. Section 38(a)(1) of the Arms Export Control Act (AECA) authorizes the President to control the export of "defense articles" and to issue the United States Munitions List, designating terms considered to be "defense articles." 22 U.S.C. § 2778(a)(1) (1982). The List includes helicopters. 22 C.F.R. § 121.1, Category VIII(a) (1986). Section 38(b)(2) of AECA prohibits the export of defense articles without a license issued in accordance with the Act and regulations promulgated thereunder. 22 U.S.C. § 2778(b)(2) (1982). Section 38(c) of AECA authorizes punishment of up to ten years in prison and a fine of $1,000,000 for any person who "willfully" violates any provision of section 38. 22 U.S.C.A. § 2778(c) (West Supp. 1986).
Regulations of the Department of State require any person exporting defense articles to obtain a license from the Department's Office of Munitions Control. 22 C.F.R. § 123.1(a) (1986). Applications for licenses must be made on Form DSP-5. Id. § 123.22(a). This form calls for identification of the "Country of Ultimate Destination" and the "Name and Address of Foreign end-user." An application for a license to export "significant military equipment" (defined to include helicopters, id. § 120.19(b) must include a "nontransfer and use certificate (Form DSP-83)." Id. § 123.10(a). This certificate must be signed by the foreign consignee and the foreign "end user," and both must stipulate that, unless authorizes by prior written approval of the State Department, they "will not reexport, resell or otherwise dispose of the significant military equipment enumerated in the application outside the country named as the location of the foreign end-use." Id. This certificate is frequently referred to as an "end-user certificate," an "EUC," an "EU," or an "end-user."
The State Department's regulations also provide that it is the policy of the United States to deny licenses to export defense articles to specified Communist countries and to "countries or areas with respect to which the United States maintains an arms embargo or whenever an export would not otherwise to in furtherance of world peace and the security and foreign policy of the United States." Id. § 126.1(a). On April 7, 1980, President Carter embargoed the export of all items to Iran, except food, medicine, and clothing, Exec. Order No. 12,205, reprinted in 50 U.S.C.A. § 1701 note, at 244-45 (West Supp. 1986), but this embargo was revoked on January 19, 1981, just prior to the release of the American hostages held by Iran, Exec. Order No. 12,282 § 1-101, reprinted in 50 U.S.C.A. § 1701 note, at 252. At Golitschek's trial, an official of the State Department's Office of Munitions Control testified that, as a matter of policy, the Department has determined that Iran has not been an acceptable end-user for items on the Munitions List since November 28, 1979.
The arrest of Heinz Golitschek resulted from an undercover "sting" operation conducted by the United States Customs Service in Buffalo, New York. Special Agent Walter Kiniry posed as Walt King, a partner in a supplier of military arms and equipment known as ESAK Enterprises. Kiniry came into contact with Stephen Reiter, a West German interested in buying weapons. Ultimately, in September 1985, Reiter was arrested and agreed to cooperate with the Government. Reiter telephoned his contact in West Germany, a man named Roesch. Subsequently Roesch referred Reiter to Golitschek as a person who was interested in buying military helicopters. Reiter telephoned Golitschek in Vienna, Austria. After ascertaining that Golitschek spoke English, Reiter handed the phone to Agent Kiniry, who conducted all subsequent discussions with Golitschek.
From October 17 to 29, 1985, Kiniry called Golitschek in Austria on twelve occasions, and Golitschek called Kiniry three times. These three calls from Austria to the United States would form the basis for the Government's assertion of federal jurisdiction over Golitschek's offenses.
In the very first call on October 17, Golitschek acknowledged that he had been in touch with Roesch almost daily during the preceding two to four weeks and was completely familiar with Kiniry's proposal to sell ten helicopters for "a special country," subsequently identified as Iran, at a price of $61 million. Kiniry claimed that his firm was reluctant to do business with Roesch and pursued the possibility that Golitschek would replace Roesch as the broker for the helicopter transaction.
Of special significance to the issue that is dispositive at this stage of this appeal is the discussion in this first and subsequent conversations concerning the documents necessary to accomplish the transaction, especially the end-user certificate. Kiniry made the first reference to documents when he referred to a proposed deal with Roesch for sale of TOW missiles "we were going to use a Brazilian EUC." This led to the following exchange with respect to the proposed helicopter sale:
Golitschek: . . . I have even the end user, everything
Kiniry: my understanding is its Spanish
Golitschek: ya that's right and everything is clear with the bankers in Switzerland everything they accept the end user they accept everything is clear you know*fn1
It would be Golitschek's contention at trial that he thought that the end-user document was an import license obtained by the importing company, and that this document would have to be presented to whatever bank would issue a letter of credit for the financing of the transaction.
Kiniry endeavored to alert Golitschek to the fact that an end-user certificate would have to be presented to the State Department:
Kiniry: ok the other problem that we're going to face is presenting the EUC to the state department a ...