In The Courts

The defendants agreed to conditional plea agreements in which they would plead guilty, but preserve the argument that they are immune from criminal liability under the Shipping Act. On appeal, the defendants argued three different grounds for immunity under the Shipping Act, all of which the court denied. First, the court rejected the defendants' argument that ' 1706(a)(4) exempts the defendants from liability for “any agreement of activity concerning the foreign land segment of through transportation that is part of transportation provided in a United States import or export trade.” The defendants contended this section permitted immunity for their bid-rigging, but the court found as a matter of statutory construction that the provision did not apply to the defendants' conduct. Second, the court rejected the defendants' argument that ' 1706(a)(2) of the Shipping Act, which relates to tariff filing exemptions, provides them with immunity for their criminal conduct. Again, the court found that statute clearly referred to tariffs and not the defendants' bid-rigging schemes.

Finally, the defendants argued they were immune under ' 1706(c)(1), which provides that any action that results in antitrust immunity being denied or removed does not remove or alter antitrust immunity for the period before the determination. The court held that the defendants did not “identify a discrete event that triggers the provision's grace period,” and rejected the argument. The court noted that the legislative history supported the conclusion that antitrust immunity should be construed narrowly in federal legislation and that there was no indication the Shipping Act was any different.

Fifth Circuit Holds that Restitution Must Be Alleged in Indictment

In United States v. Inman, No. 04-10136, 2005 WL 1332282 (5th Cir. June 7, 2005), the court held that transactions in a restitution order that were not alleged in the indictment and that occurred years before the criminal conduct were improperly included and should not be part of the restitution order. The court further held that the defendant's personal use of a corporate credit card constituted access device fraud.

The defendant, a computer systems administrator at Corning Systems, repeatedly made charges on his corporate credit card to a shell company that he had created. The defendant was convicted of ten counts of wire fraud, 18 U.S.C. ' 1343, and one count of access device fraud, 18 U.S.C. ' 1029. He appealed his conviction.

First, the court addressed the access-device-fraud issue and cited section 1029(a)(2), which states that a person “who knowingly and with intent to defraud traffics in or uses one or more unauthorized access devices during any one year period” may be subject to criminal liability. Section 1029(e)(3) defines an “unauthorized access device” as “any device that is lost, stolen, revoked, cancelled, or obtained with intent to defraud.” The defendant argued that his company gave him the corporate card and, thus, he was not liable under the statute. The court disagreed and cited to substantial evidence that the defendant had prepared for the fraud in advance, including establishing the shell company before receiving the credit card. The court held that the card was “obtained with intent to defraud.”

The court, however, agreed with the defendant's second argument and held that the District Court erred in ordering the defendant to pay restitution because the restitution order was based on transactions not alleged in the indictment and that occurred over two years before the temporal scope of the indictment.

Fourth Circuit Denies Shipping Act Immunity for Antitrust Violations

In United States v. Gosselin World Wide Moving, N.V., No. 04-4752 (4th Cir. June 14, 2005), the defendants challenged their convictions for their participation in a scheme that they admitted was illegal under the Sherman Act, 15 U.S.C. ' 1, and the federal anti-fraud statute, 18 U.S.C. ' 371. The defendants sought immunity from their criminal liability under a federal maritime statute, the Shipping Act, 46 U.S.C. '' 1701-1719.

The defendant companies placed bids with the Department of Defense, which is tasked with transporting the belongings of military personnel overseas. The defendants conspired with competitors in the contract-bidding process and agreed to charge the Department for set amounts. The defendants also pressured competitors to withdraw or refrain from filing bids in order to secure contracts. The defendants were subsequently indicted.

The defendants agreed to conditional plea agreements in which they would plead guilty, but preserve the argument that they are immune from criminal liability under the Shipping Act. On appeal, the defendants argued three different grounds for immunity under the Shipping Act, all of which the court denied. First, the court rejected the defendants' argument that ' 1706(a)(4) exempts the defendants from liability for “any agreement of activity concerning the foreign land segment of through transportation that is part of transportation provided in a United States import or export trade.” The defendants contended this section permitted immunity for their bid-rigging, but the court found as a matter of statutory construction that the provision did not apply to the defendants' conduct. Second, the court rejected the defendants' argument that ' 1706(a)(2) of the Shipping Act, which relates to tariff filing exemptions, provides them with immunity for their criminal conduct. Again, the court found that statute clearly referred to tariffs and not the defendants' bid-rigging schemes.

Finally, the defendants argued they were immune under ' 1706(c)(1), which provides that any action that results in antitrust immunity being denied or removed does not remove or alter antitrust immunity for the period before the determination. The court held that the defendants did not “identify a discrete event that triggers the provision's grace period,” and rejected the argument. The court noted that the legislative history supported the conclusion that antitrust immunity should be construed narrowly in federal legislation and that there was no indication the Shipping Act was any different.

Fifth Circuit Holds that Restitution Must Be Alleged in Indictment

In United States v. Inman, No. 04-10136, 2005 WL 1332282 (5th Cir. June 7, 2005), the court held that transactions in a restitution order that were not alleged in the indictment and that occurred years before the criminal conduct were improperly included and should not be part of the restitution order. The court further held that the defendant's personal use of a corporate credit card constituted access device fraud.

The defendant, a computer systems administrator at Corning Systems, repeatedly made charges on his corporate credit card to a shell company that he had created. The defendant was convicted of ten counts of wire fraud, 18 U.S.C. ' 1343, and one count of access device fraud, 18 U.S.C. ' 1029. He appealed his conviction.

First, the court addressed the access-device-fraud issue and cited section 1029(a)(2), which states that a person “who knowingly and with intent to defraud traffics in or uses one or more unauthorized access devices during any one year period” may be subject to criminal liability. Section 1029(e)(3) defines an “unauthorized access device” as “any device that is lost, stolen, revoked, cancelled, or obtained with intent to defraud.” The defendant argued that his company gave him the corporate card and, thus, he was not liable under the statute. The court disagreed and cited to substantial evidence that the defendant had prepared for the fraud in advance, including establishing the shell company before receiving the credit card. The court held that the card was “obtained with intent to defraud.”

The court, however, agreed with the defendant's second argument and held that the District Court erred in ordering the defendant to pay restitution because the restitution order was based on transactions not alleged in the indictment and that occurred over two years before the temporal scope of the indictment.