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United States v. Whyte

United States District Court, W.D. Virginia, Danville Division

January 23, 2018

UNITED STATES OF AMERICA,
v.
WILLIAM R. WHYTE, Defendant.

          MEMORANDUM OPINION

          Hon. Jackson L. Kiser Senior United States District Judge

         On October 9, 2017, the jury returned its verdict convicting Defendant William R. Whyte of nine counts of fraud and false claims against the United States. He now seeks to set aside that verdict on various grounds. Defendant filed his Motion to Set Aside the Verdict on October 23, 2017 [ECF No. 189], and the United States filed its opposition on December 4 [ECF No. 196]. Defendant sought to strike the government's response in its reply, which he filed on December 9 [ECF No. 201]. I heard oral arguments on Defendant's Motion on December 12. Following a review of the arguments of counsel, the applicable law, and the Record, the matter is now ripe for disposition.

         I. STATEMENT OF FACTS AND PROCEDURAL BACKGROUND

         In December 2005, Lt. Col. Jeffery Voss was tasked with preparing a Statement of Work for the procurement of armored vehicles for the transportation of dignitaries in Iraq.[1] As part of his research, he contacted Defendant William Whyte (“Whyte” or “Defendant”), who was the owner and CEO of Armet Armored Vehicles, Inc. (“Armet”). At the time, Armet was a GSA-approved vendor for military contracts. Whyte, on behalf of Armet, provided Lt. Col. Voss with the specifications of the Kestrel, an armored vehicle manufactured by Armet. (See Gov'm Exs. 2 & 4.) Whyte included in the information provided to Lt. Col. Voss information about the Kestrel's armoring and ballistic protection. Whyte also informed Voss that Armet would be able to deliver four vehicles a month, depending on the availability of chassis. (See Gov'm Ex. 1.)

         Using the information provided by Whyte, Lt. Col. Voss prepared a Statement of Work that more or less conformed to the represented specifications of the Kestrel. That Statement of Work was incorporated into a Solicitation for twenty vehicles, which M. Sgt. Michael Hollon distributed to military contractors on March 6, 2006. (Gov'm Exs. 4B, 5 & 6.) In addition to armoring and ballistic protection requirements, the Solicitation included payment terms and a delivery schedule. Armet responded with a quote, and Whyte was copied on the email to M. Sgt. Hollon. (Gov'm Ex. 10.) Only Whyte had the authority to prepare quotes at Armet. On March 14, 2006, Whyte signed and submitted an Addendum to Armet's quote to account for the change in vehicles soliticited from twenty to twenty-four. (Gov'm Ex. 11.)

         In April 2006, M. Sgt. Hollon prepared a second Solicitation that was nearly identical to the first. In it, the JCCI[2] requested eight additional armored vehicles. Armet prepared a second Quote and submitted it to the JCCI. Again, Whyte was included on the email that contained Armet's Quote.

         On April 25, 2006, the JCCI awarded the first contract, for twenty-four armored vehicles, to Armet. (Gov'm Ex. 36.) Whyte represented that delivery of the first four vehicles would be on time. (See Gov'm Ex. 37.) A few weeks later, the second contract, for eight additional vehicles, was awarded to Armet. At no point during the contracting process did Whyte or anyone else at Armet indicate that it would be unable to meet the contractual delivery deadline.

         Once production commenced, all armoring and ballistics protection decisions were made by Whyte. Evidence adduced at trial showed that, in order to meet the contract's ballistics protection requirement, a minimum of two sheets of steel would be required throughout the vehicle. Parts and materials were ordered, and Whyte ordered that all the vehicles be manufactured at Armet's Canadian facility so that he could oversee virtually every aspect of the production. Although not required by the contracts, the military officers who oversaw procurement and enforcement of the contracts testified that they believed production would occur at Armet's U.S. facilities.[3]

         The first two vehicles were completed and delivered in August of 2006. Two more vehicles were shipped to Iraq in October of the same year. When the United States was billed for the vehicles, the invoices reflected Armet's Florida address, not its Canadian production facility. (See, e.g., Gov'm Exs. 63 & 64.)

         Additionally, once production began, Armet almost immediately requested a progress payment to reimburse it for its expenses in purchasing the materials to complete the contracts.[4]Although Whyte did not personally send the initial request, he was copied on the relevant email. (Gov'm Ex. 45.) The initial request was denied. Two months later, Armet again requested a progress payment. (Gov'm Ex. 65.) That request was also denied. Two months after that, in September 2006, Armet requested a progress payment again. Again, Frank Skinner, Armet's President, copied Whyte on the email and requested that Capt. Tommy Neville, the head contracting officer, meet with Whyte in Iraq to discuss the request. (Gov'm Ex. 76.)

         On October 28, 2006, Whyte wrote to Capt. Neville in Iraq and requested the progress payment again. (Gov'm Ex. 77.) In his request, Whyte outlined Armet's production efforts, erroneously stating[5] that various vehicles were in stages of production at Armet's U.S.-based facilities, when in fact all vehicles were being manufactured in Canada. Whyte further stated that, without a progress payment, Armet had no hope of completing the contract. (Id. (stating that the contract was a “lost cause” without a progress payment).)

         The next month, in November of 2006, Whyte met with Capt. Neville in person in Iraq. In exchange for a $1 million, Whyte offered to deliver the remaining 20 vehicles (on the first contract) within 90 days of receipt of the payment and the eight vehicles (from the second contract) within 120 days of receipt of the funds. (Gov'm Ex. 83.) Whyte followed up again on November 28, 2006, drafting an email for Frank Skinner to send. (Gov'm Exs. 89 & 90.) Lt. Col. Philip Murphy-Sweet, the contracting officer who took over for Capt. Neville, approved the request in December, and Armet was sent nearly $900, 000. (Gov'm Ex. 93.)

         Despite Whyte's representations, Armet failed to deliver the vehicles within the allotted time. Over the next year, Armet delivered only two additional vehicles. Evidence adduced at trial showed that Armet, at Whyte's direction, prioritized other, higher-paying contracts over the contracts with the JCCI. (See, e.g., Gov'm Ex. 127.) During this time period, Whyte and his employees continued to provide delivery schedules to the JCCI that were not feasible. (See, e.g., Gov'm Exs. 103, 105, 107 & 131.) Whyte signed revised contracts in September 2007, but the JCCI terminated the two contracts with Armet on March 24, 2008. (Gov'm Exs. 132-133, 139, 142-144 & 146.)

         At some point during the period when Armet was still under contract with the JCCI, Frank Skinner, Armet's President, became a confidential informant for the FBI. Through Skinner and others, the FBI learned that there were armoring and ballistic deficiencies with the vehicles Armet delivered to Iraq. The FBI pulled the vehicles from the field and tested one at its ballistics facility.

         According to J. Buford Boone, a supervisory special agent with the FBI and ballistics expert, testing done on the test vehicles showed that areas of the vehicle-specifically the gunner turret, floor, door hatch, and ceiling-were not armored to the specifications of the contract with the JCCI. (See generally Gov'm Exs. 310, 315, 350-352 & 359.) In fact, the gunner turret, which was supposed to provide protection to the back of the gunner, was fabricated with only one sheet of steel.[6] Every test shot pierced the gunner turret hatch. (Gov'm Exs. 323, 324 & 359.) Thomas Mohnal, a retired FBI agent and explosions expert, testified about the vehicles abilities to withstand explosions from underneath. (See Gov'm Ex. 338.) In his opinion, the vehicles did not meet the contract specifications, owing specifically to the lack of protection around the gear shift[7] and the inoperability of the vehicle following an explosion underneath it. (See generally 332-338 & 342-343.)

         Whyte was indicted by a grand jury on July 19, 2012. [ECF No. 1.] Following several pretrial motions, trial commenced on September 25, 2017. At the close of the government case, on October 3, Whyte moved for a judgment of acquittal [ECF No. 153]; I denied the motion at the time [ECF No. 154]. Following the close of all the evidence, Whyte renewed his Rule 29 motion for judgment of acquittal on October 6 [ECF No. 163]; I denied the motion [ECF No. 164]. On October 9, the jury unanimously convicted Whyte on all remaining counts of the Indictment: major fraud (counts 1-3), wire fraud (counts 6-8), and presenting false or fictitious claims to the United States (counts 10-12). (See Jury Verdict, Oct. 9, 2017 [ECF No. 176.]

         Following the verdict, on October 24, Defendant filed his motion to set aside the verdict pursuant to Rule 29, or to grant a new trial pursuant to Rule 33. [ECF No. 189.] The government filed a response on December 4 [ECF No. 196], and Whyte replied on December 9 [ECF No. 201].[8] I heard oral arguments on the motion on December 12. [ECF No. 204.] Following a review of the arguments of counsel, the Record, and the applicable law, the matter is ripe for disposition.

         II. STANDARD OF REVIEW

         In deciding a motion under Federal Rule of Criminal Procedure 29, the court must consider “whether there is substantial evidence (direct or circumstantial) which, taken in the light most favorable to the prosecution, would warrant a jury finding that the defendant was guilty beyond a reasonable doubt.” United States v. MacCloskey, 682 F.2d 468, 473 (4th Cir. 1982). A guilty verdict should be upheld if it is supported by substantial and competent evidence. Glasser v. United States, 315 U.S. 60, 80 (1942). Substantial evidence is defined as “evidence that a reasonable finder of fact could accept as adequate and sufficient to support a conclusion of a defendant's guilt beyond a reasonable doubt.” United States v. Alerre, 430 F.3d 681, 693 (4th Cir. 2005). In determining the issue of substantial evidence, it is not necessary for this court “to be convinced beyond a reasonable doubt of the guilt of the defendant.” White v. United States, 279 F.2d 740, 748 (4th Cir. 1960), cert. denied, 364 U.S. 850 (1960). As such, the court may not usurp the jury's exclusive function by weighing evidence, drawing inferences of fact, resolving evidentiary conflicts, or assessing credibility of witnesses. See United States v. Arrington, 719 F.2d 701, 704 (4th Cir. 1983), cert. denied, 465 U.S. 1028 (1984); see also United States v. Dreitzler, 577 F.2d 539, 545 (9th Cir. 1978). “A defendant bringing a sufficiency challenge ‘must overcome a heavy burden.'” United States v. Palomino-Coronado, 805 F.3d 127, 130 (4th Cir. 2015) (quoting United States v. Hoyte, 51 F.3d 1239, 1245 (4th Cir. 1995)).

         Federal Rule of Criminal Procedure 33 provides, in relevant part, that “the court may vacate any judgment and grant a new trial if the interest of justice so requires.” Fed. R. Crim. P. 33(a). The decision of whether to grant or deny a motion for a new trial rests within the broad discretion of the court, that “discretion should be exercised sparingly, and a new trial should be granted only when the evidence weighs heavily against the verdict.” United States v. Arrington, 757 F.2d 1484, 1486 (4th Cir. 1985). Unlike a motion under Rule 29, a court considering a Rule 33 motion “may consider the credibility of witnesses and need not view the evidence in the light most favorable to the government in determining whether to grant a new trial.” United States v. Souder, 436 F. App'x 280, 289 (4th Cir. 2011) (unpublished).

         III. DISCUSSION

         Defendant seeks a judgment or acquittal or new trial based on five different arguments. First, he claims the evidence was insufficient to support the jury's conclusion that he acted with a specific intent to defraud. Second, he argues that the government failed to disclose potentially exculpatory information pursuant to its obligations under Brady v. Maryland, 373 U.S. 83 (1963). Third, he asserts the indictment was insufficient because the United States was not the victim of any alleged fraud. Fourth, he recycles the previously rejected argument that collateral estoppel and double ...


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