Motion Usgj Transcripts Final 011012

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Robert E. Sanders109 Candlewyck DriveWinston-Salem, NC 27104phone: 336.659.2999fax: 336.765.9950email: [email protected] for Randolph B. RodmanPro hac viceC:\Users\RES\Documents\1 CLIENTS\RODMAN\US v RODMAN\ECF DOCUMENTS\MOTION USGJ TRANSCRIPTS FINAL 011012.wpd

UNITED STATES DISTRICT COURT

for the

DISTRICT OF ARIZONA

UNITED STATES OF AMERICAPlaintiff,

v.

RANDOLPH B. RODMAN,HAL PAUL GOLDSTEIN,

Defendants.

CR-10-1047-ROS

MOTION OF DEFENDANTS RODMAN, GOLDSTEIN, KALISH AND GREENBERGFOR TRANSCRIPTS OF GRAND JURYPROCEEDINGS WITH POINTS ANDAUTHORITIES IN SUPPORT THEREOF

MOTION OF DEFENDANTS RODMAN, GOLDSTEIN, KALISHAND GREENBERG FOR TRANSCRIPTS OF GRAND JURY PROCEEDINGS

WITH POINTS AND AUTHORITIES IN SUPPORT THEREOF

Defendants Randolph B. Rodman, Hal Paul Goldstein, Lorren Marc Kalish and Idan C.

Greenberg, by and through Counsel, respectfully move the Court for its Order authorizing

disclosure of the minutes of the proceedings of the grand jury or juries returning the indictment in

this case. As grounds for this motion, Counsel have a good faith belief that grand jurors were

provided with erroneous and ambiguous guidance regarding the law of the case. Failure to

provide accurate interpretations of the law eliminated the grand jury’s ability to return a true and

fair indictment. Errors are found in the text of Count One and are set forth in more detail below.

The transcripts will enable a review for context and the ability to assess the cumulative effect of

the error.

Page 1 of 18MOTION USGJ TRANSCRIPTS FINAL 011012.wpd

mailto:[email protected]

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Prior to indictment, this case was investigated as a conspiracy to violate Section 922(o) of

Title 18. As part of the investigation and before an indictment, every machinegun identified in

the indictment was submitted to the Firearms Technology Branch (FTB), the official Bureau of

Alcohol, Tobacco, Firearms and Explosives (ATF) laboratory in West Virginia. There, the

machineguns were examined and tested for the sole purpose of determining whether

modifications made to 34 machineguns by Defendant Clark constituted new manufactures. No

opinion as to the date of manufacture of any of the machineguns was rendered by any of the FTB

experts who examined and tested the machineguns. The presence of substantive § 922(o) counts

in the indictment means that the grand jury found probable cause without a single expert opinion.

Currently, a year and a half after indictment, there is good reason to believe that Count One will

be prosecuted as a conspiracy to violate § 922(o) of Title 18. Count One is the keystone of this

106 count prosecution. Without conviction on Count One, very few of the remaining

substantive counts survive. Access to the transcripts will permit timely and thoroughly briefed

objections to the Conspiracy and substantive § 922(o) counts. Dismissal of an indictment is

appropriate where violations of grand jury procedures “substantially influenced the grand jury’s

decision to indict,” or raised a “grave doubt as to whether it had such an effect.”

The Supreme Court’s position is well settled that disclosure of grand jury minutes is a

technical breach of grand jury secrecy infra., and that a showing of “compelling necessity” is

required for lifting the “indispensable secrecy of grand jury proceedings.” United States v.

Proctor & Gamble, 356 U.S. 677, 682 (1958). “Compelling necessity” must be demonstrated by

a showing of “particularized need” rather than a general one, to wit, 1) the desired material will

avoid a possible injustice; 2) the need for disclosure is greater than the need for continued

secrecy; and 3) that only the relevant parts of transcripts should be disclosed. Douglas Oil Co. v.

Petrol Stops Northwest, 441 U.S. 211, 223 (1979). However, failure to timely challenge a

charging document is fatal and is tantamount to a waiver of the Grand right of all people not to

be charged with serious crime by the Crown or by political hacks in the Executive Branch.


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“Particularized need” may be met by a showing of a failure to instruct a grand jury of the correct

law to apply. The prosecution has enough advantages in grand jury settings without the inherent

injustice of permitting the use of bad law to obtain an indictment. The statements of law

expressed in paragraphs 10 and 11 (Indictment, p. 4) are intended to introduce the conspiracy

count of the indictment. They are two examples of probable government instructions to the

grand jury as to the law to be applied to “making” machineguns by “private individuals.” The1

facts in this case dictate that the law that should have been provided to the Grand Jury was the

polar opposite to the instructions given. The applicable law is that a licensed manufacturer and

Special Occupational Taxpayer, such as Defendant Clark, acts under the authority of the United

States and is therefore authorized to “manufacture ” machineguns in any amount and in any2

model, design, and configuration. Inapposite legal guidance is plain error in and of itself. The

purpose of this motion is to permit defendants to amplify the consequences flowing from

erroneous legal guidance by the government and to detect other material errors in law which had

the effect of substantially influencing the grand jury’s decision to indict. In the alternative,

Defendants submit that errors about the law of the case would have raised a grave doubt

impacting the decision to indict. See, United States v. DeRosa, 783 F.2nd 1401, 1404 (9 Cir.),th

“Although grand jury may be guided by a prosecutor, the prosecutor may not usurp the

independence of a grand jury.” See also, United States v. Samango, 607 F.2nd 877, 881 (9 Cir.th

1979), United States v. Benjamin, 852 F.2nd 413 (9 Cir. 1988) (Court reviewed errors inth

testimony of government witnesses by themselves and cumulatively. Testimony from live

witness “laden with conclusions concerning the guilt of several defendants and summarizing

The term “make” simply can not be applied to “manufacture” by a licensed and1

qualified NFA Manufacturer. See, 26 U.S.C. 5845(I); 27 C.F.R. 479.11, “The term “make” andthe various derivatives of such word, shall include manufacturing (other than by one qualifiedto engage in such business under this chapter), putting together, altering, any combination ofthese, or otherwise producing a firearm.” Emphasis added.

The term “manufacturer” is not defined other than, “Any person who is engaged in the2

business of manufacturing firearms. See, 26 U.S.C. 5845(m); 27 C.F.R. 479.11.


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ATF investigations, and concluded that the cumulative effect of that error and indiscretions, none

of which alone might have been enough to tip scales, operated to Defendant’s prejudice by

producing a biased grand jury.)

INTRODUCTION - COUNT ONE

A quote from Judge Kozinski’s opinion in United States v. Caldwell, 989 F.2nd 1056,

1061 (9 Cir. 1993) aptly describes the prosecution of this case. “There are places where, ...th

everything not permitted was forbidden and whatever was permitted was mandatory. Citizens

were shackled in their actions by the universal passion for banning things (cite to speech by

Russian President Yeltsin in BBC omitted). Fortunately, the United States is not such a place

and we plan to keep it that way. If the government wants to forbid certain conduct, it may forbid

it. If it wants to mandate it, it may mandate it. But we won’t lightly infer that in enacting 18

U.S.C. 371 Congress meant to forbid all things that obstruct the government or require citizens to

do all those things that could make the government’s job easier. So long as they don’t act

dishonestly or deceitfully and so long as they don’t violate some specific law, people living in

our society are still free to conduct affairs any which way they please.”

This case involves a prosecution under the National Firearms Act (NFA), 26 U.S.C. §

5801 et seq., To be sure, the NFA is codified under the tax code but this is not a tax prosecution;

as such the prosecution of Count One under the “defraud clause” of 18 U.S.C. 371 is a matter of

first impression for any U.S. Court. Count One alleges the existence of the most vague and

ambiguous conspiracy imaginable – based not on proof of the commission of any crime or

violation of a United States statute. Although the indictment charges 105 substantive violations

of United States statutes , the conspiracy defraud clause charge does not require allegation and3

Including Counts 2 to 6; “Mail Fraud, 18 U.S.C. 1341; Counts 7 to 58; “Wire Fraud,”3

18 U.S.C. 1343; Counts 59 to 60; “Money Laundering,” 18 U.S.C. 1956; Counts 61 to 63; “Possession of a Firearm with an Obliterated Serial Number,” 18 U.S.C. 922(k), 924(a) and“Aiding and Abetting,” Counts 64 to 66; “Obliteration, Alteration, Removal of a SerialNumber,” 26 U.S.C. 5842, 5861, 5871, and “Aiding and Abetting,” 18 U.S.C. 2; Counts 67 to74; “Illegal Possession of a Machinegun,” 18 U.S.C. 922(o) and “Aiding and Abetting,” 18


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proof of any violation of law. Under the theory charged, the government is not required to

produce what it did not have when the indictment was issued; i.e., an expert opinion that

modifications to a registered machinegun constitutes a new manufacture. All that is necessary

for conviction on a conspiracy to defraud is proof that the defendants agreed to commit an act of

fraud in its broadest sense and that the fraud interfered with the “ability of the United States to4

carry out its function and rights (sic. ) to regulate machineguns.” This type of charge is premised

on a common law amalgam of cases labeled collectively as a “Klein Conspiracy.” See United

States v. Klein, 247 F 2d 908, 915 (2 Cir. 1957) describing a default clause charge as and

conspiracy to defraud the United States by impeding, impairing, obstructing, and defeating the

lawful functions of the Internal Revenue Service of the Department of the Treasury in the

ascertainment, computation, assessment, and collection of the revenue, to wit, income taxes. In

this case, the defraud charge alleges the defendants agreed together “... to defraud the United

States of and concerning its government functions and rights (sic.), that is: the regulation of

machineguns ...” The potential for abuse under the defraud clause is greater than under the

offense clause because, 1) under the defraud clause, the charge is broader and less precise; 2) the

defraud clause expands the scope of conspiracy and, thus, liability for crimes, co-conspirators

and admissibility of co-conspirators’ declarations; 3) the defraud clause includes more overt acts

and, thus, both lengthens the period of the statute of limitations and increases the number of

U.S.C. 2; Counts 75 to 81; 26 U.S.C. 5812, 5861, and 5871, and “Aiding and Abetting,”U.S.C. 2; Counts 82 to 89; “Receipt or Possession of an Unregistered Firearm,” 26 U.S.S. 5841,5861, 5871, and “Aiding and Abetting,” 18 U.S.C. 2; Count 90; “Receipt of Possession of anUnregistered Firearm,” 26 U.S.C. 5841, 5861, 5871; Counts 91 to 95; “Transfer of Firearms inViolation of NFA,” 26 U.S.C. 5812, 5861, 5871, and “Aiding and Abetting,” 18 U.S.C. 2;Counts 96 to 98, “Making a Firearm in Violation of the NFA,” 26 U.S.C. 5822, 5861, 5871, and“Aiding and Abetting,” 18 U.S.C. 2; Counts 99 to 104; 26 U.S.C. 5848, 5861, 5871, and“Aiding and Abetting,” 18 U.S.C. 2; Count 105 and 107, “Tampering,” 18 U.S.C. 1512; Count106, “Falsify Material Fact,” 18 U.S.C. 1001; Forfeiture Count, 18 U.S.C. 924(D), 28 U.S.C.2461©, 26 U.S.C. 5872.

In Klein conspiracies, fraud is construed in the broadest sense.4


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jurisdictions where venue can be laid; and, 4) charges under the defraud clause may avoid the

limit placed on the penalty for conspiracy to commit a misdemeanor. United States v .

Rosenblatt, 554 F.2d 36, 41 n.6 (2 Cir. 1977). See also, Hammerschmidt v. United States, 265nd

U.S. 182, 188 (1924). (the defraud clause of Section 371 is very broad and encompasses a vast

array of conduct, including acts that do not constitute a crime under a separate federal statute.

See also, United States v. Tuohey, 867 F. 2d 534, 536-537 (9 Cir. 1989) (This is because theth

term “defraud” when used in Section 371 is broader than its common law definition). But see, ,

Caldwell supra. at 1059 & n. 3 (9 Cir 1993). (Court unwilling to conclude Congress meant toth

make it a federal crime to do anything, even that which is otherwise permitted, with the goal of

making the government’s job more difficult. ... “a conspiracy to make the IRS’s job harder – just

isn’t illegal.”

In United States v. Minarik, 875 F 2 1186, 1187 (6 Cir. 1989), the Court opined that innd th

order to properly inform defendants of the charges against them, prosecutors must use the offense

clause rather than the defraud clause when the conduct is overlapping, such as here, where it

constitutes both an alleged conspiracy to violate a specific statute and an alleged conspiracy to

defraud the United States. Other circuits have rejected the Minarik holding in allowing the

government to charge the defraud clause regardless of whether the fraud constitutes a conspiracy

to violate a specific statute. The Ninth Circuit has not rejected Minarik. In Caldwell, ibid. at

1060, the Ninth Circuit found jury instructions on a default clause charge were deficient because

jurors were not told that they had to find that defendants agreed to defraud the United States by

“deceitful or dishonest means and that defendant could not be required to provide the source of

cash on a currency transaction report when the regulations did not require such information.

Under the defraud clause, the government does not have to establish a pecuniary loss to the

United States. So said the Supreme Court in Hammerschmidt, ibid. at 188. but research has not

seen any Ninth Circuit opinion to support that principle.

The crime of conspiracy contains an intent element requiring the government to establish

that each member of the conspiracy had knowledge of the object of the conspiracy and joined the


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conspiracy intending to achieve that objective. Ingram v. United States, 360 U.S. 672, 678

(1959); See, United States v. Hayes, 190 F. 3 939, 946 (9 Cir. 1999), aff’d. en banc 231 F. 3rd th rd

663, 667 n.1 (9 Cir. 2000) (government may rely on circumstantial evidence to establish thisth

element).

THE ATF ORGANIZATIONAL COMPONENTS INVOLVED NATIONAL FIREARMS BRANCH (NFA BRANCH)

The NFA Branch is located in Martinsburg, West Virginia and maintains the National

Firearms Registration an Transfer Record (NFRTR), a central registry including the make and

model, serial number, caliber, barrel length and overall length of every machinegun in the US

that is not in possession of the U.S. Government itself. The registry also includes the

identification and address of the person entitled to possess the machinegun.

FIREARMS TECHNOLOGY BRANCH (FTB)

The Firearms Technology Branch is located in West Virginia and its function is to

provide expert technical support to ATF, other Federal agencies, State and local law enforcement

departments, the firearms industry, Congress and the general public. FTB renders opinions and

determinations regarding the classification of suspected illegal firearms and newly designed

firearms. FTB maintains an extensive firearms reference collection as well as technical firearms

reference files and libray and firearms databases. FTB is also responsible for determinations on

the importation of all firearms. FTB also provides the U.S. Department of Justice, State

prosecutors’ offices, district attorneys’ offices, and military courts with expert firearms

testimony. Testimony includes the identification of the date, place of manufacture and other

matters relating to firearms industry.

THE LAW

This motion for transcripts of the grand jury proceedings in CR-10-1047-ROS is filed to

make it possible to assess the impact of erroneous legal guidance upon a grand jury See, United

States v. Samango, 607 F.2d 877, 881 (9 Cir. 1979) (regarding testimony from live witnessesth

“laden with conclusions concerning the guilt of several defendants and summarizing ATF


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investigations, the Court concluded the cumulative effect of errors and indiscretions, none of

which might have been enough to tip the scales, operated to defendants’ prejudice by producing a

biased grand jury id. at 844.); See also, United States v. DeRosa, 783 F.2d 1401, 1404 (9 Cir.th

1988) (Although grand jury may be guided by a prosecutor, the prosecutor may not usurp the

independence of the grand jury, See also, United States v. Benjamin, 852 F.2d 413 (9 Cir.th

1988); See also, United States v. Roberts,, 481 F.Supp. 1385, 1390 (CDCal. 1988) (Grand Jury is

a “Shield for every person against overzealous, albeit honest and perhaps well intentioned

prosecutors and must be vigorously protected by the courts. It is not, and can never be, permitted

to be a sword.” The Supreme Court appears to be trending in the direction of the Ninth Circuit.

In a concurring opinion on the issue of dismissal of the indictment for improprieties before a

grand jury, See, United States v. Mechanik, 475 U.S. 66, 73 (1986) (issuing a narrow decision

against dismissal analyzing the question under the harmless error standard of FRCrP 52); See

also, Bank of Nova Scotia v. United States, 487 U.S. 250 (1988) (dismissal of indictment

appropriate if timely objection raised establishing that violations “substantially influenced the

grand jury’s decision to indict,” or raised a “grave doubt as to whether it had such an effect.”);

See also, Midland Asphalt v. United States, 489 U.S. 794 (1989).

A careful analysis of discovery material establishes that the government’s theory of

prosecution has been evolving over the past five plus years since the investigation was

commenced. There are numerous examples of erroneous statements of law on points that are

material to the facts in this case spread among the massive discovery material. The standard for

dismissal of an indictment for prosecutorial misconduct is difficult to meet, and there is no legal

right to access information about the conduct of grand jury proceedings. Of course, it approaches

the impossible for any defendant to meet the stiff standards without the help of the grand jury

transcripts he seeks. Further, disclosure pursuant to Jencks Act occurs after trial has begun and is

piecemeal and incomplete and risks needless waste of judicial time.

At all times between on or about September 22, 1993, through April 8, 2009, Defendant

George Clark was licensed by ATF to engage in the business of manufacturing firearms. At all


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times during the same period, Defendant Clark paid an annual Special Occupational Tax to

manufacture NFA “firearms,” including machineguns of all makes, models, configurations and

designs, 26 U.S.C. 5845(b). Thus, his status as licensee and Special Occupational Taxpayer

authorized him to manufacture and register machineguns after May 19, 1986. Paragraph 10,

introduces the conspiracy count with an instruction for the grand jury to apply an erroneous and

highly prejudicial statement of law which does not fit the facts:

“10. Machineguns manufactured after May 19, 1986 can only be transferred or possessedby or under the authority of the United States or any department or agency thereof or aState, or a department, agency, or political subdivision thereof.”

The simple fact is that the person alleged (see paragraphs 18 through 51 – OVERT

ACTS) to be the manufacturer of all thirty-four (34) new machineguns after May 19, 1986 is

Defendant George Clark. He is now and was at all times a manufacturer, licensed by ATF and

qualified by payment of a Special Occupational Tax to the Internal Revenue Service to

manufacture machineguns.

The following is a correct instruction of law to be applied in this case:

“10. At all times during the alleged conspiracy, an individual who is licensed andqualified as an NFA manufacturer, is authorized to manufacture, register, and possessmachineguns in any quantity of any make, model, design, or configuration without priorATF approval.”

There can be no greater difference between the “what is” version and the “what should

be” version of law. In the former, the act of manufacturing a new machinegun is prohibited as is

the act of transferring a new machinegun to a private individual. In the latter, the act of

manfacturing a new machinegun is authorized and he act of transferring a firearm to certain

transferees is authorized. The difference has to do with the licensed and NFA qualified status of

the actor. The first instruction is to be applied when the actor is not licensed and is therefore a

“private individual.” That is inconsistent with our facts.

The intent of § 922(o) is not to impede the manufacture of machineguns but to prohibit

the transfer of newly manufacturers to private individuals. Thus, the transfer of machineguns

manufactured after May 19, 1986 by qualified licensees may only be perfected if an application is


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approved by ATF and will only be approved if the transfer were to the United States or under the

authority of the United States, to State agencies, for export to certain foreign governments or

foreign end users, and to other NFA qualified licensed manufacturers to be used as sales samples

and for demonstration purposes. Manufacture of new machineguns is therefore not only not

prohibited, it does not even require prior approval by ATF. Transfers of new machineguns is

accomplished by notice to ATF after the fact of manufacture.

Paragraph 11, also introducing the conspiracy charge, is another example of bad law:

“11. A private individual may only transfer and possess machineguns manufactured on orbefore May 19, 1986 and that are registered in the NFRTR.”

The use of the term “private individual” to classify the actor (the transferor or possessor)

is totally misleading in that it introduces an element not present in this case. Of the six persons

accused of charges involving transfer and/or possession, five are licensed and NFA qualified.

The alleged manufacturer and transferor of the machineguns identified in the indictment is

Defendant Clark. At all times during the existence of the conspiracy, Defendant Clark was not a

“private individual.” He was licensed and was a Special Occupational Taxpayer. The intent of

this erroneous legal guidance has no other purpose but to mislead grand jurors in the law to be

applied. This is more egregious in the “Overt Acts in Furtherance of the Conspiracy” Section of

the Indictment, paragraphs 18 through 51.

Each of the thirty-four (34) Paragraphs numbered 18 through 51 identifies a specific

machinegun and contains a separate sentence explaining that during the period of time that each

machinegun was registered to Defendant George Clark, he “manufactured” a different style

machinegun using a serial number removed from a MAC style machinegun that was registered to

him. Defendant Clark did not manufacture a different style machinegun, he modified a

machinegun that was registered to him. Paragraph 11, as written in the indictment is a baseless

legal conclusion, not supported by statute, regulation, case law, or any expert opinion in any

official ATF reports of tests and examinations. Thus, each of the thirty-four (34) paragraphs

expressly declares a violation of § 922(o), thirty-four in all without any legal basis. When


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introduced by the erroneous legal instruction in paragraph 11, the determination of a prohibited

manufacture of a machinegun in each paragraph is inescapable. On the other hand if a correct

instruction of law were applied, the same paragraphs would merely describe routine and lawful

business activity.

It does not matter that the erroneous interpretations of law provided to the Grand Jury

may have been due to miscomprehension of the privileges and obligations accruing to the status

of licensee and Special Occupational Tax payments. The prosecutor had an obligation to know

that prior to seeking an indictment.

Facially, 18 U.S.C. § 922(o) provides:

“(o)(1) it shall be unlawful to transfer or possess a machinegun.”

“(0)(2) This subsection does not apply with respect to —

(A) a transfer to or by, or possession by or under the authority of theUnited States ... (Emphasis added)

(B) any lawful transfer or lawful possession of a machinegun that waslawfully possessed before the date this subsection takes effect.” (May 19,1986)

In a nutshell, the simple fact is that 18 U.S.C. § 922(o) does not prohibit the manufacture of

machineguns by licensed and NFA qualified business entities, such as Clark and four of the

others charged as co-conspirators. Licensed and qualified manufacturers can manufacture

machineguns in any quantity of any make, model, design, or configuration without prior ATF

approval. Similarly, § 922(o) does not effect the registration of machineguns manufactured after

May 19, 1986 by licensed and NFA qualified manufacturers and the number of machineguns to

be registered has no limits. Registration is accomplished by notice to ATF after the fact of

manufacture on. Regulations compel a manufacturer to identify the machinegun (27 C.F.R. §

479.102 and give notice by way of an ATF Form 2 (Notice of Firearms Manufactured) which

must be mailed by close of business the day following manufacture. Thus, § 922(o) merely

restricts the transfer of post May 19, 1986 machineguns to U.S. and State agencies, certain

exports to foreign governments and to other NFA qualified licensed manufacturers for use as


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sales samples and for demonstration purposes. All transfers require prior ATF approval and

exports also require an approved license from the U.S. Department of State, Directorate of

Defense Trade Controls (DDTC).

THE ATF CRIMINAL INVESTIGATION

The origin of the criminal investigation was unusual. In contrast to the opening of most

investigations, it was ATF employees of the NFA Branch and the FTB lab (government

employees not authorized to conduct criminal investigations) who first became suspicious of the

existence of a possible violations of law. After the performance of several investigatory tasks ,5

the matter was referred first to the Washington DC (Falls Church) Criminal Division and later to

the Phoenix ATF Criminal Division for criminal investigation.

The matter was referred to the Phoenix Special Agent in Charge by way of a

memorandum dated November 16, 2006 from an ATF Deputy Assistant Director at ATF

Headquarters (The Office of Enforcement Programs and Services) . Prior thereto, faceless and6

nameless ATF employees of the NFA Branch and the Firearms Technology Branch had already

interviewed ATF employees about the matter, had numerous contacts with the person in

possession of SN A6042075, a suspected contraband machinegun; they had conducted an alleged

laboratory test of the suspect gun; and had also returned the gun to the registrant after

determining it was contraband and was illegal to possess. All this took place before the formal

referral for criminal investigation on November 16, 2006.

The referral memo of the Deputy Assistant Director included the following points

The significance of this is that such conduct violates ATF internal procedures. When5

persons unfamiliar with criminal procedures conduct interviews or handle property in a criminalmatter there is risk that evidence will contaminated. ATF employees other than Special Agents,are not authorized, trained or otherwise qualified to conduct criminal interviews of suspects,seize property, receive abandoned property, collect and preserve evidence, or submit property fora determination of its potential evidentiary value, etc.

This position, despite its title, is a regulatory function that oversees the programs and6

Services that support the main functions of ATF, including such service providers as the NFABranch and the FTB Branch supra., and others.


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supporting the need for a criminal investigation in Phoenix:

1. George Clark, a Special Occupational Taxpayer in Arizona since 1993, convertedMAC Models 10 and 11 machineguns into Browning Model 1919 machineguns;

2. Applications to transfer the converted guns from Clark to various parties were7

found to have constant make and model designations but the caliber, barrel andoverall lengths were at variance with descriptions in the National FirearmsRegistration and Transfer Record (NFRTR);

3. One of the suspected machineguns, SN A6042075, caliber 9mm/45 cal., barrellengths 5.57 inches and overall length 11 inches was then registered to a VirginiaFFL, John Brown, DBA Battlefield Sports and that Mr. Brown transported thismachinegun to the FTB lab in West Virginia for examination;

4. Significantly, the memo failed to disclose that prior to being in possession of SNA6042075, Brown had bought and sold at least two other M1919 machinegunsand was a party in eight (8) applications to transfer models 1919 that had beenconverted from MAC models by Clark. It was also learned in review of discoverymaterial that Brown was an ATF Confidential Informant;

5. The examination and testing of SN A6042075 was alleged to have beenperformed on October 31, 2006 by Richard Vasquez, the Deputy Chief of FTB;and

6. Vasquez concluded that the MAC Model 10 machinegun had been destroyed inthe conversion process and that the Model 1919 was a new manufacture whichtriggered a requirement for Clark to file a Form 2 (notice of manufacture of a newmachinegun). Since the Model 1919 was not registered, it was a contrabandunregistered machinegun.

There are major problems with statements in the referral memo:

1. The memo cites neither to a statute, a regulation, a ruling nor any case law for theprinciple that the conversion of an NFA registered machinegun to another modelconstitutes the manufacture of a new machinegun and therefore requires a newregistration. The conversion process described in the memo is a zero sum game. The MAC Model 10 machinegun that was converted was one machinegunlawfully registered and possessed before the conversion. Following theconversion, it was the same one machinegun albeit in a different configuration butnevertheless still one machinegun. The NFA is a tax statute and assesses tax on“machineguns,” per se, not models. The tax assessed and collected on every make, model, design, configuration of machinegun is set at the same uniform rate– $200.00 to register and $200.00 to transfer;

2. The Report of an Official Examination and Testing of SN A6042075 on October31, 2006 is a canard, a complete, from whole cloth fabrication. Like a unicorn,

At the time, 11/16/06, Ms. Stucko reported that 22 such suspect applications to transfer7

had been identified from a search of the NFRTR. The actual number charged in the indictment is34 as others were discovered through investigation.


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because it is impossible to find, it does not exist. The ATF FTB Laboratory hasno record of receiving SN A6042075 for testing and examination on or aboutOctober 31, 2006. There is no report of such an examination in the FTB officialsystem of records. The non-existence of A6042075's receipt in the FTB evidencelog on October 31 and the non-existence of an FTB lab report was concealed fromdefendants throughout the discovery period. It was discovered only afterCounsel’s specific requests for disclosure of the report were ignored for over ayear. Finally, in October, 2011, Defendants received definitive proof that FTBhas no record of receipt of that machinegun on or about that date. That fact wasmade known in response to a request for collateral items, i.e., for the pages ofFTB’s evidence logs for October 31, 2006 and for any other entries in the FTB’ssystem of records. An agency capable of persisting in such deceit, patently falsestatements in a criminal investigation by top level ATF Headquarters Executives,is capable of much worse.8

THE ATF TECHNICAL EXAMINATIONS AND LAB REPORTS

Every machinegun in the indictment (approximately 80) was sent to the FTB lab for

testing. Each was found to be a machinegun. However, they had been submitted to the lab for a

determination whether they were manufactured after May 19, 1986. Such a finding is the ultimate

proof at issue for a violation of § 922(o). The state of the government’s scientific evidence at the

time of indictment was that it did not possess a single expert opinion about any machinegun

submitted to FTB for testing (approximately 400) as to the date of manufacture, the place of

manufacture and the identity of the manufacturer.

After the Court ordered deadline for completion of discovery had passed, on October 13,

2011, the government disclosed an undated report labeled “Supplemental Report of FTB 2008-

514-KEM/FTB 2009-114-KEM.” (Supplemental Report). This report was prepared by Richard

Vasquez, the government’s designated Firearms Expert Witness and purports to supplement the9

For more than a year, Defendants have requested confirmation of the existence of an8

internal investigation of ATF employees and regulated persons involved in this case and/ordisclosure of the report of that investigation.(the ATF Office of Internal Affairs or Office ofProfessional Responsibility) Unlike a unicorn, the report of such an investigation does exist andit can be found.

The timing, authenticity and certification of this Report has not yet been challenged nor9

has the government provided any reasoning or authority for shifting lab reports. This is a Mr.Vasquez’s third modification of the official reports of another firearms expert. (One of thesupplemented reports had been amended in February of 2011). Further, the report is not dated


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2008 and 2009 official lab reports of Firearms Technician Kenneth E. Mason.

It is also worthy of note that the timing of the receipt of the Supplemental Report was

shortly after an August 8, 2011 hearing on Defendants’ Motion to Enlarge Time for Discovery.

Although the Supplemental Report is undated, it can be assumed that it was prepared on or about

the time it was disclosed, more than a year after indictment; five years from the start of the ATF

criminal investigation and shortly after the August 8 hearing. The basic objective of the

Supplemental Report is to provide the expert opinion lacking in all other lab reports – that all

machineguns in the indictment (paragraphs 18 through 51, Overt Acts paragraphs, and the

Forfeiture Count) were manufactured after 1986.

The Supplemental Report arrives at that opinion by use of a error-laced simplistic 4 step

syllogism:

1. § 922(o) prohibits the manufacture of a machinegun after 1986. ;10

2. “Caliber conversions ” are lawful;11

3. The machineguns in the indictment are not “caliber conversions”;

4. Thus, since they are not “caliber conversions,” they are therefore a modificationwhich constitutes a new manufacturer.

Prime examples of erroneous interpretations of law can be found in the government’s

representations to the Court during the hearing of August 8. Such examples are after the case

had been investigated since 2006 and a year and a half after the indictment. Coming at such a

and bears no indicia that it is an official record of the ATF Firearms Technology Branch. Theearlier official versions of the two reports contain no opinion that the conversions constituted anew manufacture.

Actually, § 922(o) authorizes the manufacture of machineguns after 1986. At the same10

time, it prohibits their transfer to any person except to the United States or under the authority ofthe United States, to State agencies and to licensed and qualified NFA businesses with certainrestrictions. There is a difference between that which is authorized and that which is prohibited.

The term “caliber conversion” is a word of art. It has no meaning whatsoever other11

than the meaning of the author. The term does not appear in the statute, regulation, in anyreported opinion.


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time, these statements support an inference that government attorneys and witnesses polluted the

grand jury process by the entry of erroneous statements of law. Taken at best, these remarks

represent a profound misunderstanding of the rights and privileges, duties and obligations of a

person in the status of a licensed manufacturer of firearms and a Special Occupational Taxpayer.

At the hearing, the Court questioned the government on comparisons or contrasts between

modifications, alterations, re-configurations, and/or changes to registered machineguns and

“manufacturing” of new machineguns.

AUSA Lemke: ... “these are not conversions. These are manufacturings (sic.) Thatare occurring, new manufacturing that is occurring.” (Transcript, p.18, lines 19-24)

The Court: “There’s a difference between manufacturing and conversion. Is

that right?”

AUSA Lemke: “Not to put too fine a spin on it, but that would be correct.”

The Court: “... you’re saying that everything that is manufactured is illegal?

AUSA Lemke: “Everything that is manufactured is illegal ....” (TR; p.19; lines 5-8)

It is unreasonable to assume that the grand jury was not provided with similar opinions

about the meaning of conversions and manufacturing. The processes followed by Defendant

Clark are described in 34 separate paragraphs as overt acts. (Overt Acts Section of the

indictment, paragraphs 18 through 51). Each such Overt Act declares that the process constituted

a new manufacture of a machinegun. The grand jury made such statements in the absence of any

testimony supported by any firearms expert. Absent opinion testimony by a firearms expert, the

government could not have cited to the statute or implementing regulations. The statute and the

regulations are barren of any language that can be interpreted to mean that conversions of a

registered machinegun constitutes new manufacture.

CONCLUSION

For the reasons above and for others which may be known to the Court, Defendants move

the Court for its Order granting release of the minutes of the grand jury proceedings. This

request is limited to those portions of the transcripts containing legal opinions and interpretations


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of law by government attorneys and witnesses.

Should this motion not be granted, Defendants request the Court to review the minutes in

camera and further request the Court to take whatever action is deemed appropriate.

Defendants request a hearing.

DATED: January 10, 2012 Respectfully submitted,

/s/ Robert E. Sanders Counsel pro hac vice for Randolph B. Rodman

/s/ Joseph R. Conte Counsel pro hac vice for Hal Paul Goldstein

/s/ William P. Foreman Counsel for Lorren Marc Kalish

/s/ Loyd C. Tate Counsel for Idan C. Greenberg


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CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on the 10 day of January 2012, I electronically transmittedth

the attached document to the Clerk’s Office using the ECF system for filing and transmittal of aNotice of Electronic Filing to the following ECF registrants:

Kathy Jo Lemke [email protected]

Gregory A. Bartolomei [email protected]

Joseph R. Conte [email protected]

William Foreman [email protected]

Michael J. Smith [email protected]

Frederick R. Petti [email protected]

Loyd C. Tate [email protected]

/s/ Robert E. SandersRobert E. SandersCounsel pro hac vice for Randolph Rodman109 Candlewyck DriveWinston-Salem, NC 27104Phone: 336.659.2999Fax: 336.765.9950E-mail: [email protected]

MOTION USGJ TRANSCRIPTS FINAL 011012.wpd






