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United States v. Davis

decided: May 31, 1985.

UNITED STATES OF AMERICA, APPELLEE,
v.
GEORGE G. DAVIS, DEFENDANT-APPELLANT



Appeal from a judgment of conviction entered on November 1, 1984 in the United States District Court for the Southern District of New York, Conner, J., convicting George G. Davis of 11 counts charging the filing of false, fictitious and fraudulent claims against the United States in violation of 18 U.S.C. § 287, of one count charging a criminal conspiracy in violation of 18 U.S.C. § 371, of one count charging a conspiracy to conduct the affairs of an enterprise affecting interstate and foreign commerce through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(d), and one count charging bankruptcy fraud in violation of 18 U.S.C. § 152. Davis was sentenced to a total term of seven years imprisonment to run consecutively to a three year sentence imposed after trial on a separate fraud indictment.*fn1 Judge Conner also ordered forfeiture of the proceeds of Davis' racketeering activity.

Meskill and Pratt, Circuit Judges and Palmieri, Senior District Judge.*fn*

Author: Palmieri

PALMIERI, Senior District Judge:

The indictment containing seventeen counts (Davis having been named in fourteen) charged Davis and three co-defendants with various charges arising out of a scheme contrived and executed during the years 1973-1978 which involved the payment of multi-million dollar kickbacks to executives of General Dynamics Corporation in return for the approval of subcontracts awarded by General Dynamics to Frigitemp Corporation of New York City ("Frigitemp"), of which Davis was a Senior Vice President.

The Government's evidence can be deemed to support jury findings to the following effect: During the 1970's Davis was a Senior Vice President of Frigitemp, which acted as a subcontractor on major commercial and naval shipbuilding projects. From 1973 to 1977, Frigitemp was awarded over $44 million in subcontracts from two shipbuilding divisions of General Dynamics Corporation, the Quincy Shipbuilding Division ("QSD") in Quincy, Massachusetts, and the Electric Boat Division ("EB") at Groton, Connecticut. In return for the award of these subcontracts, Frigitemp paid $2.7 million in kickbacks to two key executives of General Dynamics responsible for approving the award of the subcontracts: P. Takis Veliotis, President and General Manager of QSD until 1977 and General Manager of EB after 1977, and James H. Gilliland, Veliotis' principal assistant at QSD.

The principal actor in the scheme was Davis, who first proposed the payment of kickbacks to Veliotis and Gilliland. A fund of over $5 million to pay the kickbacks was devised by Davis by creating and submitting to Frigitemp for payment a series of fictitious "consulting contracts" and materials invoices in the names of sham Cayman Island corporations, for non-existent consulting services and raw materials.

Davis also organized and supervised the laundering of the kickback fund through an elaborate network of bank accounts in the United States, Canada, the Cayman Islands and Switzerland, and carried out the actual payment of the kickbacks through a series of wire transfers to secret numbered Swiss bank accounts of Veliotis and Gilliland. In the course of carrying out the kickback scheme, Davis secretly diverted nearly half of the $5 million fund to himself.

Davis' co-defendant Gerald E. Lee, chief executive officer of Frigitemp, pleaded guilty to the racketeering conspiracy charge and a conspiracy charge contained in a second indictment, testified at trial, and was sentenced by Judge Conner to concurrent sentences of 18 months imprisonment. The other two co-defendants, James H. Gilliland and P. Takis Veliotis, became fugitives so that Davis stood trial alone.*fn2

Davis seeks reversal on three grounds. First, he claims that records of his Swiss bank accounts were procured by the Government in contravention of applicable treaty provisions and were therefore inadmissible; and further, that their admission in evidence violated his rights of confrontation. Second, he claims that the District Court improperly procured the production of certain bank records of the Cayman Islands Branch of the Bank of Nova Scotia. Third, he contends that the evidence at trial was insufficient to support his conviction for bankruptcy fraud charged in Count 14. We deal with these objections seriatim.

I. The Swiss Bank Records

In October 1981, almost two years before the return of the indictment, the Government availed itself of the Treaty between the United States and Switzerland on Mutual Assistance in Criminal Matters, May 25, 1973, 27 U.S.T. 2019, T.I.A.S. No. 8302 (the "Treaty"),*fn3 to seek out records of Swiss bank accounts used in the scheme, including those maintained by Davis.*fn4

Following the procedure set forth in the Treaty,*fn5 the Central Authority approved the request and transmitted it to the Examining Magistrate for the canton in which Davis' accounts were located for issuance of orders to the banks to produce the required records. On February 8, 1982, the Swiss Magistrate directed the Swiss Bank Corporation and the Credit Suisse (the two Zurich banks where Davis maintained accounts) to produce the records and to swear to their authenticity as genuine business records maintained in the regular course of business. On February 19, 1982, Davis' Swiss attorney became aware of the October 1981 document request*fn6 and filed a notice of protest in the Swiss courts.*fn7 As provided for in the Treaty, a hearing (referred to here for convenience as an authentication hearing) was held in June 1982. At that time, the bank employees produced written affidavits certifying that the documents produced were authentic business records maintained in the regular course of business. In addition, as provided in paragraphs 1 through 3 of Article 18 of the Treaty, the Magistrate before whom the documents were produced examined the bank employees under oath, satisfied himself as to the authenticity of the records, and attested to their authenticity under his official seal. Specifically, the examining Magistrate made the following findings in the certificate of authenticity:

I have examined the documents, and have interrogated under oath the person who produced them. As a result of this examination and interrogation, I am satisfied that these documents are genuine; that they were made as memoranda or records of acts, transactions, occurrences or events; that they were made in the regular course of business; and that it was a regular practice of that business to make such a document at the time of the act, transaction, occurrence or event recorded therein or within a reasonable time thereafter.

Finally, pursuant to paragraph 4(a) of Article 18 of the Treaty, the bank records and certificate of authenticity were certified as genuine by the Central Authority of Switzerland. The bank records and certificates were then transmitted to the United States Government.

Davis was not notified of the authentication hearing and was not present at the hearing. Davis made no application to attend the hearing.

On appeal, Davis presents two arguments in support of his claim that the Swiss bank records were improperly admitted. First, he contends that the Government violated the Treaty by failing to notify him of the authentication hearing. Second, Davis argues that in light of the failure to notify him of the authentication hearing the admission of the Swiss bank records deprived him of his confrontation rights under the Sixth Amendment. Neither claim is valid.

A. Treaty Violation

Davis contends that the Zurich Bank records were procured in violation of Article 18, paragraph 5 of the Treaty and that the records should therefore have been excluded. That paragraph provides as follows:

"Where a request under this Article pertains to pending court proceedings, the defendant,*fn8 upon his application, may be present or represented by counsel or both, and may examine the person producing the document as to its genuineness and admissibility. In the event the defendant elects to be present or represented, a representative of the requesting State or a state or canton thereof may also be present and put such questions to the witness." (Emphasis added.)

At the outset, it must be noted that Davis has no standing to raise this purported Treaty violation before this Court. See United States v. Johnpoll, 739 F.2d 702, 714 (2d Cir.), cert. denied, 469 U.S. 1075, 105 S. Ct. 571, 83 L. Ed. 2d 511 (1984). Article 37 of the Treaty provides that:

"the existence of restrictions in this Treaty shall not give rise to a right on the part of any person to take any action in the United States to suppress or exclude any evidence or to obtain other judicial relief in connection with requests under this Treaty, except with respect to [certain enumerated paragraphs.]"

One of the enumerated paragraphs, paragraph 7 of Article 18, provides that "in the event that the genuineness of any document authenticated in accordance with Article is denied by any party" that party shall have the burden of establishing that the document is not genuine. Since Davis has never contested the genuineness of the documents, paragraph 7 is not implicated.

That Davis has no standing to raise a purported violation of Article 18, Paragraph 5 of the Treaty in this context is made absolutely clear by both the interpretative letters signed by the United States and Switzerland and by the Technical Analysis of the Treaty. The interpretative letters signed on May 25, 1973 provide that it is the understanding of the United States and Swiss governments that a person alleging a violation of Article 5 of the Treaty (which deals with limitations on the use of information obtained pursuant to the Treaty) "has no standing to have such allegations considered in any proceeding in the United States . . . His recourse would be for him to inform the Central Authority of Switzerland for consideration only as a matter between governments." 27 U.S.T. at 2128-38. The Technical Analysis provides that "restrictions in the Treaty shall not give rise to a right of any person to take action to suppress or exclude evidence or to obtain judicial relief." Technical Analysis of the Treaty between the United States and Switzerland on Mutual Assistance in Criminal Matters (reprinted in Message from the President Transmitting the Treaty with the Swiss Confederation on Mutual Assistance in Criminal Matters, 94th Cong., 2d Sess. at 63-64 (1976)). See Cardenas v. Smith, 236 U.S. App. D.C. 78, 733 F.2d 909, 918 (D.C. Cir. 1984). More generally, this Court has written that "even where a treaty provides certain benefits for nationals of a particular state -- such as fishing rights -- it is traditionally held that 'any rights arising from such provisions are, under international law, those of states and . . . individual rights are only derivative through the states.'" United States Ex Rel. Lujan v. Gengler, 510 F.2d 62, 67 (2d Cir.), cert. denied, 421 U.S. 1001, 44 L. Ed. 2d 668, 95 S. Ct. 2400 (1975), quoting Restatement (Second) of the Foreign Relations Law of the United States § 115, comment e (1965) (criminal defendant abducted in Bolivia and brought to the United States for trial had no standing to raise violation of the charters of the United Nations and the Organization of American States in the absence of protest by a signatory state). See also United States v. Reed, 639 F.2d 896, 902 (2d Cir. 1981) (criminal defendant abducted in Bahamas in violation of extradition treaty had no standing to raise its violation in absence of protest by the Bahamas).

Given the clear and unambiguous language in Article 37 of the Treaty reflecting the intention of the signatory states that the Treaty would not -- except in certain specifically designated circumstances -- confer judicially enforceable rights on individuals*fn9 and the absence of any protest from either Switzerland or the United States, Davis has no standing to move to exclude or ...


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