1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA NEWPORT NEWS DIVISION - - - - - - - - - - - - - - - UNITED STATES OF AMERICA : Criminal No. 4:95cr54 VS. : Newport News, Virginia JOHN DANIEL LEASURE, : May 21, 1996 - - - - - - - - - - - - - - TRANSCRIPT OF PROCEEDINGS BEFORE THE HONORABLE JOHN A. MACKENZIE UNITED STATES DISTRICT JUDGE APPEARANCES: For the United States: United States Attorney's Office World Trade Center 101 W. Main Street, Suite 8000 Norfolk, Virginia 23510 By: ARENDA WRIGHT ALLEN, ASSISTANT U.S. ATTORNEY For the Defendant: DAVID N. MONTAGUE, ESQUIRE One East Queen's Way, 2nd Fl. Hampton, Virginia 23669 Court Reporter: Diane Poulin 550 East Main St., Suite 100 Norfolk, Virginia 23510 Proceedings recorded by mechanical stenography, transcript produced by computer. Biggs & Fleet Court Reporters Norfolk - (804) 625-6695 2 I N D E X GOVERNMENT'S EVIDENCE GARY SCHAIBLE Direct Examination by Ms. Allen...... 23 Cross-Examination by Mr. Montague.... 32 DEFENDANT'S EVIDENCE LEWIS JONES, III Direct Examination by Mr. Montague... 48 JOHN D. LEASURE Direct Examination by Mr. Montague... 53 CHERYL LEASURE Direct Examination by Mr. Montague... 59 3 THE COURT: All right. MADAM CLERK: Criminal Number 95-54-NN United States of America-versus John Daniel Leasure. Is the government ready to proceed, Ms. Allen? MS. ALLEN: Yes, Your Honor. MADAM CLERK: Defense ready, Mr, Montague? MR. MONTAGUE: Yes, ma'am. THE COURT: Let me make some notes and I'll be right with you. Let the record reflect that the defendant, John Daniel Leasure, is present in person and with his attorney, Mr. David Montague. And the file would reflect that pursuant to an indictment returned in the fall of 1995, this matter came on early in January, as I recall, for trial on the defendant's pleas of not guilty. He was arraigned on January the 18th and, let me get the date straight, he was indicted on November the 14th. It came on for trial on the 18th and 19th of January, and on January the 19th, the Court found -- continued the matter to look over the record, and on February the 6th, the Court announced it's verdict that he was guilty of Count 1, Count 2, Count 3, Count 6 and not guilty of Counts 4 and 5. Thereafter, Mr. Leasure through his attorney filed several motions. The matter was then continued for 4 sentencing and for the receipt of a presentence report. In the meantime the defendant has filed a motion for a new trial and the matter is here on that motion as supplemented and also for a review of the presentence report at the sentencing. I haven't really set motions as to the proceeding but, Mr. Montague, I assume that your motion for a new trial would be foremost, and I'll be glad to hear you with regard to that. Of course I have your brief and matters filed in connection with that and have reviewed them in detail. MR. MONTAGUE: I'm not going to read them to you, Your Honor. I'm sure that you're well familiar with them. One of the fundamental requirements on the Government in any criminal prosecution is to make known any exculpatory evidence of which the Government reasonably knows. In this case -- let me go back to the beginning. The thing that has troubled me about this case,all along is that this is in that set of Federal statutes - and I say Federal because I don't know of any state statutes like this - where there is no requirement of scienter or mens rea or moral turpitude in order to hold a person guilty of a felony even though he be an honorable and law abiding citizen like this defendant simply making good faith mistakes that the law requires or having rule 5 changes that he doesn't know about convert him -- criminalize what is otherwise innocuous and nondangerous conduct, serious criminal acts. These felonies all carry ten-year sentences potentially and $250,000 fines. The Court relied in its conviction on the case of U.S. v. Freed, which is at 401 U.S. 601, a 1971 case but the holding of that case that no specific intent need be proved has been called into very serious question and I think overruled by the case of Staples against U.S. and that was decided by the Supreme Court in 1994 in a decision by Justice Thomas. We've recited that decision to Your Honor in our materials that we filed. Freed involved a gentleman who was in possession of hand grenades, and his defense essentially was that he didn't know that there was anything wrong with that. And the Court believed that inherently there was something wrong with that and that there was no way he would have been surprised if he had learned that, in fact, a private citizen is not supposed to possess hand grenades. The Staples case involved a man who owned an AK-15 [sic] which is a gun that can be converted. It is normally a semi- automatic weapon that requires the pull of a trigger to fire each round but can be converted into an 6 automatic firearm and, hence, be a machine-gun within the meaning of the NFA. And he contended that he did not know that was a capability of the weapon. The Court refused to so instruct the jury that he didn't -- that they could consider that and so the Supreme Court reversed and did so specifically saying that the reasoning U.S. v. Freed provided little support for dispensing with mens rea in this case, that case involving the gentleman with the AK-15. This case is not like that. In this case we have a highly sophisticated gun person, a federal licensee licensed as a manufacturer who, as the Court knows from material previously submitted, is highly regarded in his field, holds one of the top patents in the development of silencer or suppressor technology. Early on at the arraignment, which I think the Court didn't mention the date, I believe it was January the 5th -- I think it was in December actually. Yes, it was December 5th. THE COURT: My records indicate it was -- MS. ALLEN: It was December 1st. THE COURT: December 1st, okay. MR. MONTAGUE: This defendant was arraigned before Judge Bradberry, and at that time Miss Allen was not available but there was somebody there from the BATF and there was somebody there from the U.S. Attorney's 7 Office. I turned over to them copies of all of the documents that became the evidence in this case of Mr. Leasure's attempts to reverse certain transfers of the weapons for which he was indicted. And I, frankly, thought that that was going to be the end of the case. And I think Miss Allen thought it might be as well but she said that -- she said when I talked to her on the phone she said she sent everything up to Washington to be analyzed and she'd let me know. So not too long before Christmas she called me and said that, in fact, the ATF decided they still had a case. I asked her what it could possibly be but she said, well, she wasn't going to tell me or she said she wasn't going to discuss her case over the phone. There was no invitation to come and discuss it in person either. What she knew and what the ATF knew was that -- as we did not learn until we heard it on the stand -- was that Mr. Schaible of the ATF would inform us that they had changed their rules on how one went about reversing a transfer or voiding under the commission of the NFA and that the procedure followed by Mr. Leasure was the procedure that had existed as far as he knew forever. And Mr. Schaible said that had they gotten the transfer request or the voiding request from him. The new procedure involved sending back a form which he had to 8 fill out and it had to go back to Washington to be approved. And Mr. Schaible also said there's no way that Mr. Leasure could have known that because they didn't notify anybody in the field, it was just something to be learned on a case by case basis as you tried the old technique, I suppose, they would tell you what the new procedure was. Well, not knowing that, we were not prepared to prove to the Court that, in fact, all of these transfer voidings had been faxed to the Government in the usual manner. We would have and have subsequently found all of the forgotten phone records that show without a doubt that for 24 minutes on the 16th day of March, Mr. Leasure faxed from his fax machine in Saluda to the fax machine of the ATF at their weapons registry 24 minutes worth of documents that were these very transfers submitted in court. It wouldn't show up on the phone bill if they had not actually been received just like an incomplete phone call doesn't show up on a phone bill, so there's no question that he sent them. There's no question that they got them. We don't know what they did with them after they got them if they put them in the shredder or in the trash can or if the building burned down. 9 We don't know what happened but all we do know is that when Mr. Schaible showed up here to testify, he said we have no record of having received them, which is not the equivalent of not having received them just that he was unable to tell us what had happened. We certainly did our part or at least what Mr. Leasure thought was his part in following what he then knew to be the procedure. The Court's decision turned not only on the Freed case but also on the exhibits put in evidence by the Government, these things in blue bags with the little ribbons on them that said that the weapons in the various counts of the indictment were not properly registered with the NFA. The Court treated that as true, as anybody would a government agent's testimony and exhibits, obviously, is going to be taken as true without some kind-of very powerful evidence to the contrary. But what the ATF also then knew and didn't tell anybody was that at the time in question of this case, which is February of '94, the Court will recall that this -- the actual bust of Mr. Leasure's place of business and trial were about two years apart and in that two-year period, the firearms registry was taken over by a gentleman by the name of Thomas Busey or Busey 10 I'm not sure how you pronounce his name - and Mr. Busey held a briefing in October of '95 saying that when he took over a year before, which would have been October of '94 and times prior to that, the agency was suffering from a 50 percent error rate in its determination of what firearms were registered properly. He said on Page 19 of the transcript that we gave the Court, "When I first came in a year ago, our error rate was between 49 and 50 percent." This particular briefing was conducted on a tape and the gentleman who I've become acquainted with since the trial through the Freedom of Information Act has also tried to get the tape, so far has not been able to do that. But in any event, at the very time when these undoubtable documents were being produced in February '94, they were subject to a 50 percent error rate. Now, I don't know when knowledge like that becomes reasonable doubt as a matter of law, but it seems to me that with 50 percent, you've got an equal chance of the Government being wrong. I would think you're there at an error rate of 50 percent. Again, we were not told that. As a matter of fact, I'm informed that the ATF tried to suppress that particular briefing, tried to have the transcript and the tape destroyed. It was not until March that they 11 were produced under the Freedom of Information Act. Of course, our trial was long over by the time that information would have done us any good. It certainly seems to me something for the Court to consider. in deciding whether or not this case needs to be retried, that kind of what I would consider dynamite evidence should have been made available to US. Certainly, the ATF knew about it and whether Miss Allen did or not I don't know. But when I filed my letter -- when I supplemented my pleadings in the new trial part of this case on March the 25th, we sent that to Miss Allen by certified mail. She received it on the 26th, and on the 26th she filed part of the same transcript by Mr. Busey but her filing left off the important pages for some reason. Whether she knew that or whether that's what the ATF gave her, I don't know but I believe her transmission quit on Page 15 and all of the important stuff is after that. And her pleadings says that we're not conceding that we had to give that to us but they did anyway. So I'm not going to say there's anything monstrous or wicked going on here but it certainly appears to me that this defendant was entitled to better treatment by his Government than he has gotten in the prosecution of this case. Essentially, I believe that covers it, Your 12 Honor. THE COURT: All right, sir. MS. ALLEN: Your Honor, if I can I'd like to go in the order that the motions are filed just for the record since I suspect this will go for appeal. The first motion that the defendant filed was a motion for a new trial, and he filed that motion right after the Court found his client guilty. I would just like to argue in the first motion, Your Honor, that counsel is correct that on the day of the arraignment, the Jencks material and the discovery materials were provided to the defendant on December 1st of 1995. The discovery materials included Government Exhibits 7-1 through 7-5. Now, those are all the certified copies of nonregistration. And the Court will recall 7-1 went to Count 2 of the indictment; 7-2 went to Count 3 of the indictment; 7-3 went to Count 4 of the indictment; 7-4 went to Count 5 of the indictment; 7-5 went to Count 6 of the indictment. I was not present at that arraignment. Bob Bradenham was present with ATF Agent Joe Perkins. The evidence was turned over by the Government. It is true that I did subsequently receive a packet from Mr. Leasure's attorney regarding documentation. I had previously spoken to Mr. Montague prior to 13 the December 1st arraignment. Once the indictment had been filed by the Grand Jury, Mr. Montague did tell me that he had paperwork that would cause the Government to dismiss its case. I told Mr. Montague that I would not be present at the December 1st arraignment but that I would have all of the evidence there for him. I asked him to bring the documentation to the arraignment, that I was unfamiliar with the documents that he was describing to me over the telephone but that I would take it and send it to my expert in D.C. and get back to him on that. The documentation that I did receive after the December 1st, 1995, arraignment was, in fact, what is now Defense Exhibit 1-8 through Defense Exhibit -- I mean, Defense Exhibit 1-8 through Defense Exhibit, 10-18. I received those materials probably in mid December right before Christmas. I forwarded those materials to Mr. Schaible. I asked him to review those materials in their entirety and compare it with all of the certificates that he had previously provided as listed in 7-1 through 7-5 and to let me know if that changed his opinion. It was in early January right after New Years that I spoke with Mr. Schaible and my question to him was solely, does this change your opinion. His response to 14 me was no. I said thank you very much, called Mr. Montague and told Mr. Montague that it did not change the opinion of our expert and we were not dismissing the indictment, but I did say I was not, trying the case on file. I had no further discussions with Mr. Schaible regarding why it did not change his opinion. If we look at -- if the Court looks at the defendant's first motion for a new trial, I think the case law that they've cited and the case law that the Government's filed shows that on the first motion alone, which the defendant has titled motion for a new trial, should be denied. The Court is well aware that the defendant has to show that the evidence that he is seeking is favorable to him, that it's material, and that the prosecution failed to disclose that. Based on the evidence presented before the Court right now, all that the Court has is the fact that documents were exchanged by the parties and the Government decided based upon Mr. Schaible's opinion that the indictment would not be dismissed. The case law that the Government is relying upon, number one, is that the Government feels that the defendant can't meet its burden and is relying on the 15 first motion to show that the evidence was favorable. There's been no evidence presented by the defendant that shows there was any discussion by Mr. Schaible or myself regarding any favorable evidence that the defendant had requested. As I'm proffering to the Court as an officer of this Court, my contact with Mr. Schaible was very short. I wanted to know if it changed his opinion. He's the expert. He said no. I didn't need to know at that time why it didn't change his opinion. Additionally, the defendant must show that its material, that being the evidence that he's requested. And the Fourth Circuit has defined material as being a reasonable probability that had the evidence been disclosed to the defense, the result of the proceeding would be different. That's a Kelly decision, Fourth Circuit 1994 decision, which is at 35 F.3d 929. Additionally, Your Honor, the defendant not only has to show that its material but that it's related to guilt or innocence, and I don't think that the defendant has done that. There's three cases that the Government cited in its brief all of which deal with exculpatory matters versus inculpatory matters. To be quite candid with you, I thought that the documents were a forgery or false. Mr. Schaible did not 16 tell me that. I asked someone who's been with the ATF for 25 years who's in a high leadership position within the ATF and very well respected within the bureau, he told me it didn't change his opinion. That's all I needed to know. I cited the Adverse case -- THE COURT: Well, tell me -- I don't have the exhibits right here before me. What was it that Mr. Montague produced that you sent to Mr. Schaible, just so I won't be off on the wrong fork in the road? MS. ALLEN: It was Defense Exhibit 1 -- Defense Exhibit 1-8 - - THE COURT: Young lady, do you have the exhibits? MADAM CLERK: No, sir. Did they not go with you to the file? I'll get them. THE COURT: We didn't have any exhibits, did we? LAW CLERK: We did at one point. I don't know. THE COURT: Well, tell me was it Exhibit 18, is that -- MS. ALLEN: There's a whole bunch of exhibits and they're listed Defense Exhibit 1, Defense Exhibit 2, Defense Exhibit 3, Defense Exhibit 4, Defense Exhibit 5, Defense Exhibit 6, Defense Exhibit 7, Defense Exhibit 8, and then the additional documents were Defense Exhibits 10 through 18. MADAM CLERK: I have the clerk checking on it, 17 Judge. MS. ALLEN: Some of those documents have void written on them. Some of them are -- THE COURT: I remember now what you're talking about. MS. ALLEN: Not all of them had void written on them. Some of them had void written on them, some of them Agent -- I mean, Mr. Schaible testified that -- THE COURT: These were all of the transfers to Mr. O'Quinn then it became unnecessary for Mr. Leasure's purposes and were marked void across the front and the question is whether these were ever sent, one, whether they were marked void, two, and, three, did they ever arrive at the -- were they ever received by ATF. MS. ALLEN: That's correct, Your Honor. THE COURT: What else? MS. ALLEN: That's all that I forwarded to Mr. Schaible. THE COURT: All right. Go ahead. MS. ALLEN: And what the Court also needs to know is that all of those documents dealt with all of the counts other than Count 1 of the indictment. Your Honor, the Government's position is still that all of those exhibits, Defense Exhibits 1 through 8 and Defense Exhibits 10 through 18 are not exculpatory matters. I 18 think it was an attempt to perpetrate a fraud on the Court, to be quite candid with you. And in the three cases that I cited in my brief, the Adverse case, the Jones v. Washington case and the Barker case tells the Court that the Government is under no duty to either disclose all they know about their case or disclose the police investigation that's been done on the case or to disclose anything that's not exculpatory and that's what we did. There was one case of Jones v. Washington case a Seventh Circuit case that dealt with firearms and the cite for that is 15 F.3d, 671. It was denied at 114 Supreme Court 2753 and the Court said that there was no great violation in failing to disclose the firearms work sheet because the evidence wasn't exculpatory. That's one of the only three cases that deal with firearms but, again, we didn't think the evidence that the defense was providing to us was truthful evidence; we thought it was an attempt to perpetrate a fraud on the Court. For that reason on the first defendant's motion for a new trial, we'd ask the Court to deny that motion. The defendant then filed a second motion to dismiss only Count 6 of the indictment, and in that case, Your Honor, the defendant's alleging basically that since the 19 word "firearm" was not used in the count as opposed to "weapon" that that count should be dismissed. The Government's relying on Federal Rule of Criminal Procedure 7-C-1 that tells us what the indictment shall state. The Fourth Circuit law tells us that you're to look at the elements of the offense as it's listed in the statute. The Court is to look to see whether or defendant can prepare a defense to the charge and whether or not that defendant is protected against double jeopardy if, in fact, that same defendant is subsequently charged and that's the Daniels case, Fourth Circuit 1992 case. If you look at Count 6 of the indictment, it charges that the defendant knowingly and unlawfully possessed a weapon, number one, and, number two, that it was not registered. Title 26 United States Code Section 5845-B defines weapon and Title 18 USC Code Section 921 83 [sic] defines firearms. And if you look at both of those definitions, definition number one is listed in Count 6 and number two very similar. In Title 26 United States Code 5861-D makes it unlawful to possess a firearm which is not registered. If you pulled the elements out of Count 6 and if you look at the statute, the penal statute not the 20 definitional statute but the penal statute for which he's charged, you will see that Count 6 is in compliance with the penal statute in the Freed case, which lists the three elements that the Government has to prove beyond a reasonable doubt and, that is, possession, that they are firearms, and that they were not registered. The defendant also says that Count 6 does not use the word "firearm" but instead uses the word "weapon." The Government's position would be weapon and firearm are words of similar import. Weapon is specific enough in the count to allow the defendant to know what specific firearm he was charged with possessing and not having properly registered to him, that Count 6 allows him to contest that charge properly, and that Count 6 will prevent him from being charged with possessing and not having registered that same weapon that's charged in Count 6 thereby protecting him from double jeopardy. In Count 6 the Government refers to the definition of both "weapon" and "firearm." Again, I said the definitions are basically the same and then the Government found some case law -- Supreme Court case law and Fourth Circuit case law that says, plus, if the defendant raises the issue to dismiss the count at the return of the verdict that this Court as well as the Fourth Circuit will look at the challenge to the count 21 under a more liberal standard, and that's the Fogle decision which is at 901, F.2d 23, 1990 decision where a cert was denied and the Court found the objection was made at the return of the verdict. Any review for alleged defect was to be reviewed if at all under a liberal standard and there's the Sutton case and the Hooker case here. In conclusion, Your Honor, it's very clear that Count 6 described a very specific weapon whether it's a weapon or a firearm, I think that's immaterial. They're words that are very similar as to import as the Court said. The weapon in Count 6 was seized pursuant to a lawful search warrant and that was Government Exhibit 6-1 during the trial, the actual weapon. Government Exhibit 9-1 was the actual search warrant. And Mr. Schaible testified that the weapon was not properly registered to the defendant on February 8th, 1995, which was done by the certificate 7-4 and then in Government Exhibit 8-1 which was the ATF report that we introduced saying that the weapon functioned as designed, and it's a firearm and a weapon, so we would ask the Court to deny the defendant's motion to dismiss Count 6 of the indictment for the reasons I've just stated and the law. THE COURT: Thank you, Miss Allen. 22 Mr. Montague, do you want to -- MS. ALLEN: And then, Your Honor, I'd like to address the Brady issue based on -- THE COURT: What? MS. ALLEN: I have one more issue I'd like to address. THE COURT: Now? MS. ALLEN: Yes, sir. The last motion that Mr. Montague filed was his supplemental motion for a new trial. What I'd like to do for that, Your Honor, is to put on evidence regarding that for the record to protect the record and for that I'll be relying on Special Agent Schaible. And the issue will be whether or not the packet of material which I sent to the Court and sent to Mr. Montague as soon as our office received it is, in fact, Brady material and whether or not -- THE COURT: Well, that's a choice for me to make. MS. ALLEN: That's a choice for you to make, Your Honor, but I would like -- I know the Court's gone through it but I don't think the record is clear as to what the documents are and what impact, if any, it would have had on Mr. Schaible's testimony regarding the weapons that were before the Court. THE COURT: Well, bring him on. MS. ALLEN: Okay. Thank you, Your Honor. 23 GARY SCHAIBLE, a Witness, called on behalf of the Government, having been first duly sworn, was examined and testified as follows: DIRECT EXAMINATION BY MS. ALLEN: Q. Please state your-full name for the record. A. Gary Schaible. Q. And are you the same Gary Schaible that testified before Judge MacKenzie during Mr. Leasure's trial? A. Yes, I am. THE COURT: How do you spell Schaible, I don't have it right here in front of me? THE WITNESS: S-c-h-a-i-b-l-e. THE COURT: Go ahead. BY MS. ALLEN: Q. And, Mr. Schaible, I'm going to ask the court security officer to give you what I've marked as Government Exhibit 10-1 through 10-8 and also a copy for the Court and a copy of these documents have already been provided to Mr. Montague for Mr. Leasure's benefit. Mr. Schaible, if you would, I'd ask you to first look at Government Exhibit 10-1-and I believe that's entitled The Role Call Training [sic]. Do you have that document there? 24 A. Yes, I do. Q. Okay. And are you familiar with that document? A. Yes, I am. Q. And have you seen it before? A. Yes, I have. Q. And have you read it from top to bottom? A. Yes, I have. Q. And if you could now look at Government Exhibit 10-2 and I believe that's entitled -- THE COURT: Well, let's label that. Is 10-1 the Busey -- MS. ALLEN: That's correct, the Role Call Training of Mr. Busey. THE COURT: Busey's statement; All right. Go ahead. 10 dash what? MS. ALLEN: That was 10-1, Your Honor, the next one is Government Exhibit -- THE COURT: All right. We've got that. Next. BY MS. ALLEN: Q. 10-2. And, Mr. Schaible, I believe that is entitled Memorandum, dated December 1st, 1995. A. 10-2 is the statement. Q. Oh, I'm sorry. 10-2 -- you're right. 10-2 is the handwritten sworn statement of Tom Busey dated November 30th, 1995; is that correct? 25 A. Yes, it is. Q. Okay. And if you could look at Government Exhibit 10-3. A. I have it. Q. And I believe that you have there a memorandum dated December 1st, 1995, and a memorandum dated December 11th, 1995, and an incident report concerning the ATF internal investigation of Mr. Busey's statement; is that correct? A. Yes, it is. Q. And if you can look at Government Exhibit 10-4, I believe that those are minutes of a meeting held on November 9 through 10, 1994, to address firearms and explosives date of integration; is that correct? A. Yes. Q. And if you could look at Government Exhibit 10-5, I believe that's a memo dated February 9th, 1996, and supporting material constituting the report of the recent audit of the NFA data base; is that correct? A. Yes, it is. Q. And if you can look at Government Exhibit 10-6, I believe that's a memo dated April 30th, 1991, concerning the accuracy of the NFRTR; is that correct? A. Yes, it is. Q. And Government Exhibit 10-7 is a memo -- a 26 correspondence, excuse me, between Senators McClure, M-c-C-l-u-r- e, and Senator Bayh, B-a-y-h dated from December 1979 through January 1980 relative to the accuracy of the NFRTR, correct? A. Okay. The first letter is October 15th, 1979, actually. Q. Okay. A. And there's -- I can't read the date on the last one, it says January 1980 but I can't read the actual date. Q. Okay. And then Government Exhibit 10-8, the last exhibit that's there, it's a two-page affidavit of Gary Schaible dated February 13th, 1996. A. Correct, yes. Q. And, Mr. Schaible, is it fair that you have familiarized yourself with the total contents of Government Exhibits 10-1 through 10-8? A. Yes. Q. The first question I have for you, sir, is this the first time in preparation for this hearing today that you have reviewed those materials that are before you? A. No. Q. When did you first review that packet that's in total there before you, what month and year? 27 A. It was in late February 1996 for the total packet. Q. And do you know the facts and circumstances as to how you got possession of that packet generally? A. Yes, I received a copy of what the U.S. Attorneys's Office sent out, I mean, Justice sent out to the U.S. Attorney's Office. Q. Okay. And is it fair to say that that packet of information specifically Government Exhibit 10-2 through 10-8, was the result of an internal audit that was done after Mr. Busey made his statements which are in Government Exhibit 10-1? A. Yes. Q. Is it also fair to say, sir, based upon your knowledge of the exhibits here that Government Exhibit 10-1 through 10-8 once they were compiled by the internal audit were subsequently sent by DOJ to the respective U.S. Attorney"s Offices across the country? A. Yes. Q. And is it also fair to say, sir, that in late February or early March once I received this packet, I called you and asked you if you knew about the packet? A. Yes, you did. THE COURT: Well, whether you knew about it or not, obviously, the Department of Justice knew about all of 28 this material, Mr. Schaible. THE WITNESS: At what time, sir? THE COURT: Well, from -- the letter of the Role Call Training Statement was 10-2 was a statement gotten from Mr..Busey on December the 1st, 1995, so they knew about it at that time, the problem had arisen by virtue of his statement. THE WITNESS: Yes. THE COURT: All right. BY MS. ALLEN: Q. Agent Schaible, you are a part of this packet that's been sent out across the country in Government Exhibit 10-8. Why were you asked to submit that affidavit and what, in essence, was the gist of your affidavit? A. I was asked to submit it because I was basically the senior person in the NFA Branch, had been around the longest, and was more familiar with the procedures and operations of the branch. The gist of it was that what Mr. Busey had said was, you know, exaggerating the situation, you know, that the problems that he said were there weren't there. Q. And who was it that asked you to review these materials and submit your affidavit? A. Our office of chief counsel. 29 Q. So would it be your testimony that that packet as has been provided to the Court and to Mr. Montague was not in existence when you testified during. Mr. Leasure's trial? A. No, it wasn't. THE COURT: Say that again. Did you say that this material wasn't available before Mr. Leasure's trial which was in -- MS. ALLEN: January. THE COURT: January 18th and 19th but the Department of Justice had it, Mr. Schaible? THE WITNESS: Well, yeah. The packet -- the total packet wasn't in existence. There were bits and pieces, yes, but it hadn't been put together. They were still looking at seeing what exactly the import of this was. BY MS. ALLEN: Q. Now, when you testified during the trial, your testimony dealt with Counts 2 through 6 of the indictment, is that true? A. Yes. Q. And when you testified regarding Count 2 of the indictment, you also testified regarding Government Exhibit 7-1 which is the certificate of nonregistration regarding the weapons, is that true? 30 A. Yes. Q. Is there anything based on your review of the evidence that's in Government Exhibit 10-1 through 10-8 that would cause you to change your testimony regarding the fact that the silencers listed in Count 2 were not properly registered to Mr. Leasure? A. No, it wouldn't change my opinion. Q. Is there any -- I believe during the trial you also testified regarding Count 3 of the indictment in Government Exhibit 7-2 the certificate that goes with that; is that correct? A. Yes. Q. Is there anything in your review of Government Exhibit 10-1 through 10-8 that would cause you to change anything that you testified to during Mr. Leasure's trial regarding Count 3 in Government Exhibit 7-2? A. No. Q. And, lastly, Count 6 of the indictment and the corresponding Government Exhibit 7-5, is there anything in your review of the exhibits in the 10 series that would change your testimony regarding Count 6 of Government Exhibit 7-5? A. No. Q. Is there anything that you have seen either in Mr. Busey's statements or in Government Exhibit 10-1 -- 31 MR. MONTAGUE: That's leading, Your Honor, I object. THE COURT: Go on and ask the questions proper. BY MS. ALLEN: Q. Mr. Schaible, is there anything in the Government's 10-1 through 1C-8 series that you would consider material, important information that you-needed in order to do your certificates that were in the Government 7 series? A. No. Q. All right. Mr. Schaible, I'm now going to ask you to look at Government Exhibit 11-1 which I'm handing to the court security officer. THE COURT: What is 11-1 in view of the fact that I must have left that packet on my desk? BY MS. ALLEN: Q. is that entitled telephone records of Mr. Leasure, Sprint Services Account regarding activity taking place on March 16, 1993? A. Yes, well, it says DIW Advantage Quality Account, which I guess is what I think you're saying there. Q. Okay. And have you seen that document before? A. Yes, I have. Q. And I believe that counsel referred to the fact 32 that that document shows that on March 16, 1993, there are two faxed times totaling 24 minutes where documents were sent to the BATF; is that correct? A. Yes, it is. Q. Okay. And based on that document there, is there anything that that document tells you that would cause you to change any of your testimony regarding Counts 2, 3, or 6 of the indictment? A. No. Q. Does that document there tell you what documents were faxed if at all to the BATF? A. No, it doesn't. MS. ALLEN: Your Honor, I'd move for the admission of Government Exhibits 10-1 through 10-8 and Government Exhibit 11- 1. THE COURT: To be received. MS. ALLEN: Your Honor, that's all the questions I have regarding this issue. THE COURT: Cross-examine. CROSS-EXAMINATION BY MR. MONTAGUE: Q. I said Busey, how does the man pronounce his name? I hate people who mispronounce names. I've had mine mispronounced all my life, you probably have too. A. Yes. It's Busey. 33 Q. Busey with a long U, all right, thank you. Now, at the time of this extraordinary Role Call Statement by Mr. Busey, he was then the chief of the NFA Branch? A. Yes, he was. Q. He was the top man in that part of your organization? A. Yes. THE COURT: Chief of what, you say? THE WITNESS: The NFA Branch, National Firearms Branch. THE COURT: The National -- NAF -- THE WITNESS: NFA. THE COURT: Excuse me, National Firearms Branch, what is that? THE WITNESS: We're the ones who maintain the registration records and transfers. THE COURT: He was the chief of the National Firearms -- THE WITNESS: Branch, yes, sir. THE COURT: Registration branch. THE WITNESS: Yes. THE COURT: Go-ahead. BY MR. MONTAGUE: Q. And after he made that statement, what happened 34 to Mr. Busey? Did he get fired or transferred? A. He requested reassignment to another position in January. Q. Was that a coerced request as far as you know, Mr. Schaible? A. No, he went down and asked for it or I should say up. Q. Well, there was considerable hullabaloo-around the agency, was there not A. Yes. Q. having the chief in charge of the registration of firearms saying there was a 50 percent error? A. Yes. Q. You say that that testimony is not correct? A. Well, the 50 percent error rate I said that we have no idea how it was determined. Q. Weren't you working on it? A. No. Q. You were the senior man in the branch and you weren't working on it? A. No, I didn't. Q. Did you check on how it was arrived at? Did you talk to the people who were involved? A. It was done at the request of our former 35 division chief. He said that he did not know exactly what was done to come up with this although he had the figures himself. Q. But whether it was right or wrong, you instituted a number of changes in the way you did that part of your business, didn't you? A. Yes. Q. That also appears in your affidavit. A. Yes. Q. Now, when Ms. Allen sent me her copy of Mr. Busey's statement, the Role Call transcript, do you have any idea why she only sent the first 15 pages instead of the whole 22 pages? A. No, I don't. Q. Did you have anything to do with furnishing her with that transcript? A. No, sir, I didn't. Q. Do you know who did? A. Came out of main Justice, that's my understanding. Q. Came out of the justice department? A. Yes. Q. I'm not sure about the organic structure; do you have people in the Justice Department assigned to the ATF as your lawyers or do you have your own lawyers? 36 A. We have our own lawyers. Q. But they interact with the Justice Department? A. Yes, sir. Q. Now, all of these -- when was Mr. Busey's transfer? A. January of '96. Q. And he had made this statement somewhere around the end of October of '95, something like that, middle of October? A. I believe it was -- I think, October 18th, I'm not quite sure of the exact date, certainly would have been October. Q. Where did he go? A. He is a specialist in the Wine and Beer Branch of ATF. THE COURT: It says that the Role Call Training Sessions were conducted by Busey, Chief of the National Firearms Act Branch in the period between October 3, '95 to October 10, '95 at BATF headquarters and recorded and transmitted through headquarters on closed circuit television. That letter is correct, isn't it, Mr. Schaible? THE WITNESS: That's correct. There was only one session. THE COURT: Well, sometime between October 3 and 37 October 10 there was one session. It doesn't -- well, go ahead. BY MR. MONTAGUE: Q. Was any intermediate administrative action taken with regard to was Mr. Busey put on administrative leave or anything like that? A. No, sir, not that I know of. Q. And the closed circuit television the judge referred to, did that result in a VCR tape of the affair, Mr. Busey's statement? A. The tape was being done irregardless of its transmission throughout the building. Q. That there was a tape? A. Yes. Q. But also a closed circuit transmission within your offices? A. Yes. Q. Okay. And then were you aware of -- well, excuse me. Let me ask a different question. After Mr. Busey left, was he replaced? Is there now a new chief of the NFA Division? A. Yes, there is. Q. NFA Branch. THE COURT: That's you, isn't it? THE WITNESS: No. 38 BY MR. MONTAGUE: Q. Who is it? A. A lady named Nerida Levine. Q. Is she someone who has been with the ATF for a long time? A. I believe she started in '85 -- '86 somewhere around there. Q. Okay. Now, your testimony in response to Miss Allen just now was that these exhibits 10-1 through 10-8 didn't exist at the time of this trial? A. No, it was that the packet -- the entire packet -- Q. What entire packet? MS. ALLEN: Your Honor, I think counsel is misstating the evidence. I asked him whether or not the packet of material existed at the time of trial since there's been an allegation that the Government and Mr. Schaible knew about all of this during the trial. THE COURT: The statement Mr. Busey made on December 1st, 1995, that was certainly in existence. MS. ALLEN: In existence, Your Honor, but I think the allegation was that we knew that it was there during the trial and we withheld favorable evidence and that was not done. MR. MONTAGUE: I didn't make that allegation 39 because I have no way of knowing. THE COURT: You would want me to assume that, wouldn't you, Mr. Montague? MR. MONTAGUE: Well, I certainly believe it's within the breast of the Government and I realize that's a very large breast but it's the Justice Department and the -- THE COURT: Well, let's move on. BY MR. MONTAGUE: Q. Now in fact, Mr. Schaible, there was a strong effort within the ATF to cover up this whole affair, was there not? A. No. Q. There was no effort to cover up this affair? A. No. Q. When was the statement by Mr. Busey made public? A. I believe in February. Q. End of February or early March, right? A. Not quite sure on that. Q. But five months after the event? A. Uh-huh. Q. If that was not the result of a cover up, what was it a result of? A. Freedom of Information Act request. 40 Q. Okay. So the agency did nothing to put this thing out voluntarily; it had to be taken away from you by an FOI request? A. Yes. Q. And then all of this other stuff, your affidavit, and all of these things about the changes that have been made since then were done after that, were they not? A. Yes. Q. So in answer to the Judge's question, did this stuff exist at the time of trial, obviously it potentially all existed? A. Some of it. Q. But simply was not being put together because you, for whatever reason, had not put Mr. Busey's words out publicly. A. Certainly, some of it existed. Q. What is the policy of the ATF regarding statements by the top officials? MS. ALLEN: Your Honor, I'm going to object based on relevance. I think the focus of this hearing should be whether or not there's any Brady material that if released during the trial would tend to establish that Mr. Leasure is guilty or innocent and now we're putting BATF on trial. 41 THE COURT: I think it goes further than that, not whether he would be found guilty or innocent but whether there's an obligation for that material to have been available to defense counsel to try to convince me that BATF were rotten recordkeepers; I think that's the issue not his guilt. Anyway, your objection is overruled. Your exception is in the record. Let's move on. BY MR. MONTAGUE: Q. Let's drop down to the Exhibit that I submitted. I think it's Government 11-1 which is the telephone record of Mr. Leasure's Saluda office. The record itself shows that the phone number used for his fax machine obviously is the phone number of his tax machine. Is the phone number for your fax machine correct? A. Yes. Q. 202 number? A. (Witness nods head.) Q. Okay. So would you agree with me that when a phone bill is produced that shows a completed fax transmission, that faxes actually have arrived at their destination? A. I would certainly agree, yes. Q. So the faxes got to your office and no one knows what happened after that? 42 A. I wouldn't say that. Certainly faxes were sent, what they were I can't know. Q. Well, we can't prove what they were either but it stands to reason they're what we said they were. But whether they were or not, they disappeared into the 50 percent error plague of BATF's recordkeeping at that time. And the 50 percent Mr. Busey was talking about would have been in existence in February of 1994, would it not? A. I don't know what he based the 50 percent on. Q. Mr. Schaible, there was a serious problem, wasn't there, whether it was 50 percent or 35 percent or 80 percent, you-all took substantial action to correct the serious defect in your recordkeeping system, didn't you? A. I believe that any problem is serious, yes. Q. Yes, sir, particularly in a field like this. A. Yes. Q. Do you have -- have you had occasions that you're aware of in the NFA branch of clerks throwing away transmissions because they don't want to fool with them? A. Yes. Q. And so that's one of the things that could happen to you? 43 A. Certainly. Q. A bunch of transmissions come through from Saluda, Virginia, and the clerk says, this is going in File 13? A. Yes. Q. And that has happened? A. Yes. Q. And people have been transferred and fired as a result of that, haven't they? A. No. Q. No, which? I asked two questions. Have they been transferred out of that work? A. The only situation I can remember is, no, that they weren't transferred. No, they weren't fired. They eventually quit, yes, but, no, nothing like transferred or fired. Q. Did you ever continue anybody in that particular job after you knew they threw something away, threw an important transmission away or destroyed it or put it in the shredder or whatever they did? A. And when you say "you," you mean, the branch? Q. I mean you the agency, I'm sorry. A. Yes. Q. You continued them doing that kind of work? A. With monitoring, yes. 44 Q. Okay. MR. MONTAGUE: I believe that's all I have, Your Honor. THE COURT: Anything further, Ms. Allen? MS. ALLEN: No thank you, Your Honor. THE COURT: All right. Step down, Mr. Schaible. MS. ALLEN: Your Honor, that's all the evidence I have to that last motion. THE COURT: All right. All right. The evidence that record has been made. Anything you want to -- MR. MONTAGUE: I just have a couple of comments with regard to the first part of Ms. Allen's comments. In the first place, I don't know what the implication was about fraud on the Court and fraudulent material but I don't practice that kind of law and the documents were genuine as far as I know and I have every reason to think they were. I also think we have every reason to think they were received by the ATF based on the testimony we've just had. THE COURT: I don't think there's any evidence of that, Mr. Montague, that these particular things marked void or received are because you point out Carl O' Quinn or Mr. Leasure called this telephone number on a certain date. But I don't think it's going to make any difference in this case. 45 I'm going to throw out the convictions that have to do with registrations. I'm going to throw out Count 2, 3, and 6 so that the only count left is Count 1. that's the one I want to hear addressed at this time. That's got nothing to do with registrations, we're talking about silencers. MR. MONTAGUE: Yes, sir. All right, thank you for that. THE COURT: The motion for a new trial is denied because it was addressed only to Counts 2, 3, and 6. I have-thrown out Count 2, 3, and 6, so the motion for a new trial is denied. We're here for sentencing as to Count 1. And now, if you want to sit down and talk to your client about how you want to proceed on Count 1 and I'll take a five-minute recess. MR. MONTAGUE: Thank you, Your Honor. THE COURT: Ms. Allen, this isn't to impune [sic] anything dishonest from you. I think you sent to them whatever you've received, but Mr. Schaible has testified that they knew all about Mr. Busey's statement in the National Firearms people. It's on television all over the building, it was in the files of the Department of Justice, and it throws a disagreeable proposition on my finding somebody guilty on records when their chief man says they were 49-percent wrong. That's not your fault. 46 Five minutes and we'll take up sentencing on Count 1. And I'll have something more to say for the record so you-all can have it for appellate purposes but right now that's where we are. (Recess.) THE COURT: Hold up a minute. Let me make some notes. It seems to me that the Court having thrown out Counts 2, 3, 4, 5 and 6 the only thing left is Count 1 of which I found that's the silencers count which has nothing to do with registration. In fact, it's nonregistration that's the essence of the case. There was no motion, I don't believe, made with reference to Count 1, Mr. Montague, but in the wealth of paper you-all have provided me with I may have overlooked something. We're here only on sentencing of Count 1 at this point; is that correct? MR. MONTAGUE: Well, I intended to include -- it's certainly an entirely different animal. THE COURT: All right. We're here for sentencing now. Bring Mr. Leasure up to the lectern with you. MR. MONTAGUE: All right, sir. THE COURT: Mr. Leasure, the matter ended in a conviction of you on Count 1 on, I think it was January the 19th, but so that the record won't have any errors in it, let me be sure. On January the 19th the matter 47 was taken under advisement. On February 6th an order was entered in which I brought all parties back to court and filed a written order of the Court finding you guilty as to Count 1 and as to some other counts which are now made moot by virtue of the rulings of the Court. I at that time ordered a presentence report and ordered you to return here for sentencing for 9:30 on May 21, which is today. I have a presentence report prepared by my probation officer Miss Thayer over here and I ask you first, Mr. Montague, have you been over this report in detail with your client, Mr. John Leasure? MR. MONTAGUE: Yes, sir, I have. THE COURT: And, Mr. Leasure, have you been over this report in detail with your attorney, Mr. Montague? THE DEFENDANT: Yes, sir, I have. THE COURT: And we're here only on Count 1. Mr. Montague, is there any evidence you want to present with reference to this count? MR. MONTAGUE: Not with reference to the count as such but I'd like to put on some character evidence, if I may. THE COURT: All right, sir. Have a seat. I'll be glad to hear the first witness, if you'll call your first witness. 48 MR. MONTAGUE: I'm going to call Sheriff Lewis Jones. THE COURT: Have a seat. All right, sir, go-right ahead. LEWIS JONES, III, a Witness, called on behalf of the Defendant, having been first duly sworn, was examined and testified as follows: DIRECT EXAMINATION BY MR. MONTAGUE: Q. Would you state your -- let me let you get seated. Will you state your full name, please. A. Lewis Jones, III. THE COURT: Lewis spelled L-e- or L-o-? THE WITNESS: L-e-. THE COURT: L-e-w-i-s Jones, III. Go ahead, Mr. Montague. BY MR. MONTAGUE: Q. How are you currently employed, Mr. Jones? A. I'm the sheriff of Middlesex County, Virginia. Q. How long have you held that office? A. I'm in my ninth year. Q. And prior to being -- that's an elective office, is it not? A. Yes, sir, it is. Q. Prior to being elected sheriff of Middlesex, 49 did you have any other background in law enforcement? A. Yes, sir. I was a Virginia state trooper for six and a half years and also with the City of Charlottesville, Virginia Police Department three-and-a-half years. Q. During your time as a state trooper, were you stationed in the Middlesex County area? A. Yes, sir, I was stationed there in December of 1980. Q. All right, sir. Now, would it be fair to describe your position of sheriff of Middlesex as the chief local law enforcement officer in that area? A. Yes, sir, that's correct, I am. Q. Would it be fair to say that as sheriff as the chief local law enforcement officer, it's important for you to know - to be blunt - who the good guys and the bad guys are that frequent your county? THE COURT: Mr. Montague, you've practiced law as long as I have and we're talking about character evidence; we're not talking about anything else. So let's get into it; let's don't get into anything else. MR. MONTAGUE: All right, sir. BY MR. MONTAGUE: Q. But it is necessary for you to evaluate people that may run afoul of the law? 50 A. Yes, sir. Q. And in your office as sheriff, did you become acquainted with a gentleman named, John Leasure? A. Yes, sir, I did. Q. And is he in the courtroom today? A. Yes, sir, he is. Q. Would you point him out? A. (Indicating.) Q. You're indicating Mr. Leasure at the Defense table. And what was Mr. Leasure's business in Middlesex County? A. My first encounter with him in a business was with a parts store with his brother and then later as a retail gun dealer and then with his current business status. Q. Did he operate a business called John's Gun Shop in Saluda? A. Yes, sir, he did. Q. All right. Did you come to develop a relationship or friendship with Mr. Leasure? A. Yes, sir, I did. THE COURT: What we're interested in, Mr. Jones, is do you know his reputation for truth and voracity in the community? THE WITNESS: Yes, sir, I do. 51 THE COURT: And what is it? THE WITNESS: John enjoys a very good character and standing in the community. THE COURT: All right. That's about as far as you can go, Mr. Montague. MR. MONTAGUE: Well, let me try one other step, Your Honor. THE COURT: I'll be glad to stop you if you're wrong. Let's go. MR. MONTAGUE: I know that. BY MR. MONTAGUE: Q. In connection with that reputation, did you have occasion to appoint him as anything in your department? A. Yes, sir. February of 1988 I appointed Mr. Leasure a deputy sheriff of Middlesex County Sheriff's Office. Q. And what were his duties, if any, with your department? THE COURT: That's of no importance to me. He said he has a good reputation for truth and voracity and I let you show that he appointed him as deputy sheriff in 1988. How long did he act? THE WITNESS: Through March of 1990. THE COURT: For a couple of years? 52 THE WITNESS: Yes, sir. THE COURT: A year and a half? THE WITNESS: Yes, sir. THE COURT: All right now. BY MR. MONTAGUE: Q. Sheriff Jones, you're here by your own volition, you're not here by reason of a subpoena, is that correct? A. That is correct. MR. MONTAGUE: Answer Miss Allen. THE COURT: Any questions, Ms. Allen? MS. ALLEN: No questions, Your Honor. THE COURT: Thank you, Sheriff, step down. Any reason why Sheriff Jones can't be excused? MR. MONTAGUE: He can return to his duties as far as we're concerned with our thanks. THE COURT: Call your next witness. MR. MONTAGUE: I'm going to call Mr. Leasure. THE COURT: Mr. Leasure. MR. MONTAGUE: He's not been sworn yet. THE COURT: Go ahead, sir JOHN D. LEASURE. the Defendant, called on behalf of the Defense, having been first duly sworn, was examined and testified as follows: DIRECT EXAMINATION 53 BY MR. MONTAGUE: Q. State your name please, sir. A. John Daniel Leasure. Q. And you are the defendant in this case? A. Yes. Q. Mr. Leasure, during your trial in this case, I showed one of the Government witnesses, I think it was Mr. Schaible, a copy of this book. It's a red cover entitled Federal Firearms Regulation 1988-89. My question, sir, is, was this book provided to you by the ATF as your guide to the law affecting your work as a firearms manufacturer? A. Yes, it was. Q. And the answer given to me by whoever it was that testified from the ATF was that you were told that by following this book you would stay out of trouble, this was your bible, what you had to do as a firearms in relation to federal firearms purchases? A. (Witness nods head.) Q. Now, in connection with that, did you have an understanding as to what your obligation based on the material appearing in this manual -- what your obligation was with regard to placing serial numbers and manufacturer's names on silencers? A. Yes, I did. 54 MS. ALLEN: Your Honor, I'm going to object. We went through -- THE COURT: It's already in the record one time and that's all. MR. MONTAGUE: Count 1 involves 19 unserialized silencers. THE COURT: Was one withdrawn? Are there 18 or 19? MS. ALLEN: There are 19, Your Honor, one was withdrawn from Count 2. THE COURT: 19, all right. MR. MONTAGUE: I think 19 is correct. BY MR. MONTAGUE: Q. Of the 19 none had a serial number on it nor the identification of your manufacturing name which was Precision Arms International or PAI? A. That's correct. Q. And each of those being unmarked, did that result from the same misconception of the law by you? MS. ALLEN: Your Honor, I have a continuing objection to this whole THE COURT: All right. I'll let him testify one time. He's already testified to this. THE WITNESS: Yes, it did. BY MR. MONTAGUE: Q. Not only based upon the regulations but was 55 that misconception also based upon industry practices as you understood them? A. Yes, it is. Q. And is it fair to say, sir, that your intention at all times with regard to these silencers as well as all other armaments and weapons within your shop and within your control was to attempt to obey the law? A. Yes, it is. Q. Mr. Leasure, as based upon the Court's action this morning, you stand convicted of one felony count. And what do you understand will be the impact, leaving aside the question of whether you go to jail or not what do you understand the impact of that conviction to be upon your life as it's been lived up to now? A. Well, it -- from then on I'll be treated as a second class citizen I feel like. It is what I feel like about the worst thing that could happen to me. But I will state and I don't know whether I can do this now or not but I will say sitting here today right here and right now, if I still had -- if I was still asked whether or not I would plead guilty or not to Count 1, I would still plead not guilty. I read and understood the law. I tried to interpret from the law what I understood to be the law, and I've given you the code section and I still feel it's very vague. I still 56 feel it's very vague. In one sentence it says by the ATF's own admission that any firearm silencer part is a silencer, even a rubber disk that goes in the end of it. Q. Even a Coke bottle? A. Yeah, absolutely. So I don't understand how I can manufacture, own, and I'm the one who assigns the serial number but under the Code Section 179.102 that I provided you out of that book that you have, not out of the new book that was published in October of 1995 it's much more explicit, it's very clear, out of the old book it's not. Q. Let me ask you one question about that if we may, Your Honor. The new book, which I think has a yellow cover, came out in, what, November of '95? A. Yes. Q. And what is different bearing on this particular point between that book and the one that you had to go by? A. It says in the yellow book under that code section that the form has to be done by closing the next business day, the Form 2. Q. That does not appear in the red book? A. Not under that code section marked 179.102 Identification of Firearms. Q. So it is your testimony that nowhere in the red 57 book are you told when you're supposed to mark these silencers? A. Not that I could find, no. Under 179.102 it states that it is to be marked when it is sold, transferred, or otherwise disposed of and that's what I got from it. Q. These particular silencers were never going to be sold or transferred, were they? A. They were totally separate, separate from everything else in a locked cabinet, and at various times I would cannibalize them and get parts off of them. I had enough parts in my shop to assemble five hundred silencers. Q. And, as a matter of fact, you had hundreds of parts, tubes, and the like that were intended to be used as parts of silencers? A. Hundred and hundreds and hundreds. Q. And the way the law is written you could have been charged on all of them, you could have a thousand counts or a thousand items under the count? A. I guess so. Q. And I guess they'd want to electrocute you at that point, I don't know. THE COURT: I'm the only one entitled to humor in this courtroom. 58 MR. MONTAGUE: I withdraw the attempt at humor, Your Honor. There isn't anything funny about this situation. BY MR. MONTAGUE: Q. Is there anything else you'd like to tell us, Mr. Leasure? A. Just that I feel like I have tried to -- it has been my intention to abide by the law. I had no intention of breaking the law. I -- certainly from the time the ATF came into the raid, I had three days. They left their own printout there. They'd never even been in the back and seen my inventory. I could have taken that inventory and made sure everything matched and then I probably wouldn't be sitting here, but I wanted -- I wanted to get it straight. If there was a problem, I wanted it to be straight. And, I'm sorry, I still wouldn't do it any differently. Q. And you didn't attempt to hide anything, you cooperated fully in that investigation? A. Absolutely. Q. Because you didn't think you'd done anything wrong; is that correct? A. No, I did not. MR. MONTAGUE: Answer Miss Allen. THE COURT: Cross, Ms. Allen? 59 MS. ALLEN: No questions, Your Honor. THE COURT: Step down. Thank you, Mr. Leasure. Any other witness, Mr. Montague? MR. MONTAGUE. Yes, sir. I'd like to call Mrs. Leasure. THE COURT: All right. CHERYL LEASURE,- a Witness, called on behalf of the Defendant, having been first duly sworn, was examined and testified as follows: DIRECT EXAMINATION BY MR. MONTAGUE: Q. Would state your name, please, ma'am. A. Cheryl Leasure. Q. Would you spell Cheryl for the Court. A. C-h-e-r-y-l. THE COURT: C-h-e-r-y-l, go ahead. BY MR. MONTAGUE: Q. And you're married to Mr. Leasure? A. That's correct. Q. How long have you-all been married? A. We have been married almost a year. Q. And you're -- actually, your first anniversary is going to be next week; isn't it? A. That's right, Monday. Q. Okay. And do you have any children by a prior 60 marriage? A. Yes, I do. Q. And describe the child. A. He's six years old. His name is Drew. Q. And has Drew in your observation as his mother formed a relationship with Mr. Leasure? A. Yes, sir, a very close one. Q. Would it be fair to say that you think Mr. Leasure has become a father figure to your son? A. Very much so, more than his own father; I should say biological father. Q. And how do you regard your husband in terms of hard workingness, good citizenship, and that sort of thing? A. He's very hardworking, he's very honest. I've never seen anything where he's tried to hide or do anything wrong. Q. And you're involved -- have been involved in the business at the gun shop, have you not? A. Right, I've come up there and helped out a little bit there. Q. Have you helped improve the recordkeeping? A. Yes. MR. MONTAGUE: I think that's all. THE COURT: Any questions? 61 MS. ALLEN: No, thank you, Your Honor. THE COURT: Thank you, Ms. Leasure. Step down. Call your next witness. MR. MONTAGUE: That's all, Your Honor. THE COURT: All right. I'll be glad to hear from you, Mr. Montague, and at the proper time I'll ask Mr. Leasure if there's anything further he wants to say. MR. MONTAGUE: All right. Excuse me one second, Your Honor. THE COURT: Surely. (Pause.) THE COURT: Hold up for just a minute. MR. MONTAGUE: Yes, sir. THE COURT: Mr. Montague, there were objections and I overlooked these beginning on Page 16, 17, and 18 and they looked like you objected to paragraph 16. You object to the finding made by Miss Thayer that Mr. Leasure was not entitled to any acceptance of responsibility under the law. Because of his pleas of not guilty in the defense of the case, he isn't entitled to any so if you have any objection to his not getting the three points, that objection is overruled. MR. MONTAGUE: Well -- THE COURT: Now, to Paragraph 19 an objection is raised. The probation officer's report that defendant 62 failed to pay fines and court costs for a reckless driving conviction and that would have no effect on any penalty that I would be involved with to start with, so that objection is irrelevant so far as I'm concerned. MS. ALLEN: And, Your Honor, just for the record, the probation officer informed me this morning that upon further investigation she found out on February 10th, 1987, that Mr. Leasure had, in fact, paid those court costs, and we would withdraw that and note that for the record. THE COURT: The fine has been paid? MS. ALLEN: February 10th, 1987, that's correct, Your Honor. MR. MONTAGUE: The only reason I made that objection, Your Honor, is because it created a sort of scuff or a different type of appearance and I didn't think that was deserving. THE COURT: Paragraph 20 reflects the date of the arrest. The probation officer relies on a copy of the warrant executed June 1, 1993. I find that to be of no consequence to this. MS. ALLEN: Just for the record, Your Honor, we have a certified copy of the paperwork the probation officer was relying upon which is marked as Government's Exhibit 12-1 which we'd offer to the Court. 63 THE COURT: All right. Show it to Mr. Montague. Put it with the papers in the suit. Paragraph 47 an objection is raised that the probation officer reported the defendant didn't file Federal-taxes for the years '90, '91, '92, and '93 according to the Internal Revenue Service's Taxpayer Services Division; they have no record of a return being filed for those four years and, therefore, no change was made to that. Do-you have any response to that? MS. ALLEN: Your Honor, we have a certified copy of the probation officer's request for the information as well as the IRS's response that reflects that Government Exhibit 12-2 has also been shown to Mr. Montague. THE COURT: Mr. Montague, apparently he hadn't filed a return at least according to the evidence available to me. I don't know that it's going to make a lot of difference but do you have anything to the contrary? MR. MONTAGUE: The only thing I have is that Mr. Leasure has assured me that he has filed all the returns and has paid all of the taxes. He is constantly in this case a victim of Government records that don't exist. THE COURT: Well, wait a minute. We're not going to start with that. Are you going to indict the 64 Internal Revenue Service for reporting that he didn't file any taxes for those years? MR. MONTAGUE: No, sir. I'm sure they -- THE COURT: Turn to your client, I'm not going to take that as a charge against the Government. Talk to your client. Ask him has he got any evidence that he paid taxes, filed returns for those years when they say he did not. MR. MONTAGUE: I don't need to ask him that, your Honor, he would have given it to me if he had. No, he does not, and I'm sure the IRS is acting in good faith. I don't question that. The only thing I do know and will add this to the Court if I may is that after the demise of his company, Precision Arms International, there were some unpaid payroll taxes and the IRS procedure in that case is to impose a hundred percent penalty on the person in charge of the company that's gone belly up. In the case of Mr. Leasure, they imposed that penalty and then after meeting with him, they waived it because of his financial condition and the only thing that happened was they did take an assignment on all of the guns that the government now holds. They're supposed to get those when they're turned loose. THE COURT: The last objection is the computations 65 based on the number of weapons and that's an amount that we'll have to discuss after your argument, so now go on with the argument. MR. MONTAGUE: All right, sir. I'm getting a little discombobulated here, Your Honor. I think that -- let me see if I can find the language. This language came up, the language of the regulations under 179 of the regs. affecting firearm manufacturers, registration, identification of firearms. Mr. Leasure has testified that the regulation has been amended at a time after this case was already in process to require anyone manufacturing silencers as he did to mark them with a serial number which he makes up and puts on himself and the name showing the manufacturer's identification. It says that that must be done in accordance with these regulations and the only positive time that it gives him to do it is where the silencer is not an integral part of a complete firearm. It must be done at the time of sale or of transfer. THE COURT: I've ruled on that and ruled against you. You take that up with the Fourth Circuit. MR. MONTAGUE: Well, the issue today I think is of the element of time. I think that is important and should be important to the Court. I understand what the 66 Court's ruling was and I think the interpretation probably is wrong but on the other hand nowhere in the regulation does it tell him when he is to do it other than when he sells it. THE COURT: I've already ruled on that, Mr. Montague. I've found him guilty. I don't have any problem with that. If you've got anything to add to that, you'll get your opportunity in Richmond. MR. MONTAGUE: I have already flagged for the Court the case of Staples against the United States. It's important in this case because it does involve a mental element in what appeared in the way Congress drew these laws to be an absolute offense, a strict liability type of offense. These are what have been called public welfare crimes. They're instrumentalities that are so inherently dangerous such as drugs, high explosives, things of that nature that a person would be deemed to know that there must be some regulation whether he says with all the innocence of a lamb that he did not know, there's many reasons he should know whatever it may be, a nuclear device or hand grenade or something of that kind. The Staples opinion was passed after -- long after the Freed opinion on which this court relied and decided in 1994. Justice Thomas wrote the opinion for the 67 majority and he discussed it at great length. The tradition of Anglo-Saxon courtroom jurisprudence requires that there be some knowledge of evil in conduct that a person elects to pursue. He says it is as universal and persistent in mature systems of law as belief in the freedom of the human will and, consequently, the ability and duty of a normal individual to choose between good and evil. This case at least the last time I looked had not come out of the U.S. Reports but it's in the 128 Lawyers Edition, 2nd, beginning at Page 608. In that edition he says on Page 618 that the Government seeks support for its position which was basically a no-intent position from our decision in U.S. v. Freed, 401, U.S. and so forth, 1971, A case involving unregistered hand grenades. That's the case the Court relied on in making it's ruling in this case. That reasoning provides little support for dispensing with mens rea in this case. In this case what I think has happened is the defendant has made a conclusive showing of a lack of anything other than a law abiding spirit. He's an honorable man; his record supports that. He didn't mean to break the law, and I do not think that the instrumentalities, these locked up silencers that didn't work properly -- 68 THE COURT: There was no showing that these silencers didn't work properly. He fired every one, kept a minute record of the decibels. They were completely done, Mr. Montague, so don't put anything false in the record. MR. MONTAGUE: I'm not putting anything false in the record, Your Honor. That was a mistake in recollection that the Court drew from the testimony of one of the BATF agents. THE COURT: I'll live with it. MR. MONTAGUE: Well, it was the BATF agent that fired the silencers. I'm sure Mr. Leasure had fired them at some time too but he didn't -- the record of decibel reduction was done by THE COURT: He testified, Mr. Montague, that many of these silencers the reason they were in the cabinet was because they didn't meet -- when he tested them, they didn't meet the reduction in decibels that he would require of an instrument. You can argue with me but that as a fine workman he found something wrong with them, but he tested them and found that they didn't suit what he wanted. He knew that they would work. Don't tell me otherwise. MR. MONTAGUE: I'm not telling you otherwise. I'm saying your finding in your order in this case that 69 somebody fired them and kept a record was the Government agent not Mr. Leasure. THE COURT: We can check the record but I'm going on what he testified. MR. MONTAGUE: Yes, there's no question that he knew that they did not meet his standards, and he was not going to sell them for that reason, and he kept them for parts. THE COURT: That's your argument and that's the one you ought to make but don't tell me that they were not fireable or couldn't be used, that's not in the record. MR. MONTAGUE: I didn't tell you that, and I'm not trying to mislead the Court in any way. I think I've been very open in all aspects of this thing. Certainly, he isn't going to throw away the silencer but he wasn't going to market it because it didn't work right, didn't meet his higher standards and he saw nothing wrong in the way he understood the regulation and the industry practices to keep them simply as a source of spare parts. The metals involved in those devices are very expensive and why throw them away. Based upon everything that's before the Court, I would ask the Court to take into account this man's lifelong good record and the fact that this particular 70 case, the incidents that arose to bring this case into this court were the product of a completely innocent mind, a man who is a lifelong law abiding citizen. THE COURT: Thank you. Miss Allen. MS. ALLEN: Your Honor, I believe that the presentence report shows the base offense level to be 18 plus a 6 for 60 weapons, which the probation officer relies upon Paragraph 11 of the presentence report. The probation officer's calculations are in accordance with the Fourth Circuit law, particularly, the Bowman case which was 926 F.2d, 380, 1991 Fourth Circuit decision approving the Court's sentence based upon the convicted counts and uncharged counts. I think the probation officer has figured 60 firearms based on the guns that were in the indictment as well as other guns that were seized with the search warrant. If her calculations are right, the guidelines would be 51 to 63-months. If the Court decides not to consider 60 -- THE COURT: I'm not going to count any of the guns that have been thrown out because of the registration period, so it will reach nowhere near 20. It will be 19 at the most. MS. ALLEN: Based on the Court's statement there, the Government sees the base level of 18 plus 4 since 71 the guns in Count 1 are 19 and the 4 point enhancement is for 13 to 24 firearms and if that's true, the total for that level will be 22 giving the Court a guideline range of 41 to 51 months. If that's what the Court finds, the Government has no further argument other than that. THE COURT: All right. Mr. Montague, you have a right to answer that. She says that the unlawful possession of firearms in Level 18 -- this doesn't state what I'm going to do but that number of firearms are more than 12 and less than 25, add 4 and you come up with 22 and the incarceration period is 31 to some other months so you better answer that, and I'll make my findings in the matter. MR. MONTAGUE: My answer to it would be this, Your Honor, would be the retention of the unmarked silencers - the 19 unmarked silencers - resulted from a single misinterpretation of law and should be treated as one. Mr. Leasure testified it could have been 500 or 1,000 devices under the same category entirely innocently retained as were the hundreds that he was not charged under. Why he wasn't I don't know but the retention of the firearms, of these silencers, these non-proper working silencers should be treated as one weapon and there be no enhancement. 72 And, of course, I think beyond that, the Court should exercise its discretion. I suggested in one of my pleadings that the Court consider a lesser included offense which is failure to properly record firearms, which is under 18 USC 912M, [sic] which is a misdemeanor at offense Level 6 which is much more appropriate to this case. I'm not going to say there was nothing wrong here. I do think the Government has a right to regulate these things; they are dangerous. Certainly, we associate silencers with many criminal activities, assassinations and things of that kind that this Government certainly has a right to control but here the appearance of heavy evil is just not there. THE COURT: I'm not going to file a written order in the matter, so I will record for the record my findings as they apply to this case. Upon the conclusion of the evidence and the information set forth in the trial order the Court dated something like February 6th, the Court found the defendant guilty then as to Count 1 which was the silencer count, 19 silencers that were not registered at all and not in compliance with the statute which requires them to be registered with the firearms people by the close of business of the second day after their manufacture. That's perfectly 73 clear to me. And while I understand Mr. Leasure may have some trouble with that, I don't. He's found guilty of a violation of Count 1. I also had some -- as to Counts 2 and 3, the deal with registration and the debate that surfaced between Mr. Leasure and the firearms people as to whether or not he was using a method of cancelling certain transfers that he made to his accountant apparently over some bankruptcy difficulty that he -- but that's -- they were transferred to somebody named O'Quinn and when the - - whatever the problem -- the matter that had prompted that transfer seemed not to have transpired, then the effort was made to cancel those transfers by writing void across the front of the transfer agreement that had been acceded to by the firearms people. And then the same thing would apply to Count 3 and to the registration of a 22 pen pistol gun which is set forth in Count 6. The argument made in Count 6 that the pistol was not called a firearm it was called a weapon is of no importance to me and I think that's a facetious argument and I would overrule it on that basis. But having heard the indictment of the recordkeeping of the National Firearm Services that was expressed in February of 1993 and having heard something that was not brought up at trial that the head of the 74 registration division made a speech to all of his people and said that the recordkeeping was 49 to 50 percent in error and feeling as I do that from the testimony of Mr. Schaible today that that information was fully knowledgeable within the National Firearms Bureau at the time it was made - it seems it was on closed circuit television and then a transcription was made - and hearing from him that at the time, whether it was in October or November 1994, that this raised such a furor within the bureau that Mr. Busey if was not fired but that he "voluntarily" retired from his position so that statement -- which nobody seems to know where he got his figures from -- but that was not furnished to the defendants in this case. And they would have had a right to have brought that up to me as showing the correctness of the firearms registration for their being questioned by the top man in the registration bureau. I don't say this to Miss Allen. I've known her for a long time and she's said in court and it's in the record that she knew nothing about this until she received a packet from some place from the Department of Justice, I believe, which indicated Busey's statement, then an investigation was immediately ordered, and the consequences of it. That statement and the question of whether or not Mr. Busey's information was correct or 75 not should have been furnished to the defendant's counsel, and its not being furnished seems to me to have violated a precept under which we proceed. For that reason I've thrown out all of those counts of the indictment which deal in any manner upon the active and registered numbers assigned to weapons and that leaves us with the silencers. I have absolutely no problem with the law in the case that when you make a silencer, you've got to register it by five o'clock on the end of the day following its manufacture. And so the matter is before me for sentencing now on only Count 1 of the indictment that affects Mr. Leasure. Mr. Montague, have Mr. Leasure step with you to the lectern. Mr. Leasure, the law requires that a judge of this court give you an opportunity to make any statements you'd like to make before I proceed to sentencing. It does not require that you say anything. You have, in fact, already testified both at the trial in chief and at this sentencing hearing, but if there's anything further you want to say, I'll be glad to hear from you. Anything further? THE DEFENDANT: I would like to say something, Your Honor, and not take up too much of the Court's time. I have it over here. 76 THE COURT: Go ahead. I'm not tired, Mr. Leasure. To give you full benefit of the law, you have a right to make any statement you'd like to make. THE DEFENDANT: Thank you, sir. MR. LEASURE: Your Honor, I had no criminal intent. If I had, when the ATF came to my shop three days prior to the raid and left the National Firearms printout of the weapons that were supposed to be in my inventory, I would have made up paperwork or whatever to get my inventory to match theirs. But I knew that I had completed my paperwork properly, and I knew in my heart I had committed no crime. I felt any discrepancies with BATF could be worked out. I cooperated fully. I left everything just the way it was even though they had never stepped foot in the manufacturing portion of my shop at that point in time. I contacted them on two separate occasions to find out what the status was on the case and on the things that they seized from me. I was told they were waiting on word from Washington, and during that time frame, I basically went out of business. As to Count 1, I truly interpreted the ATF regulations book - the only book that I had in my possession of 1980 and 1989 - to mean a serial number was not required until it was sold, shipped, or 77 otherwise disposed of. This was the only regulation book in print and the only one that I had in my possession. I, of course, now know it crystal clear that that's not the way that it is and that I'm supposed to do it by closing of the next business day. The next update that was printed by ATF was in October of 1995. I was never furnished with one of these updates. I had to receive one from someone else; a friend of mine gave me one. The Code Section 179.102 is what is practiced in the industry, although no one was willing to testify to that fact for fear of retaliation and prosecution. In regard to the - - briefly, just the transfers to Carl O'Quinn. There were transfers that were done to Carl O'Quinn, who was my accountant at that time and the person that I transferred these things to that were voided and approved, that I was not indicted on that were done in exactly the same way the others that I furnished to the Court were done. In closing, Your Honor, whenever I thought of someone who was a convicted felon, I thought of a person who committed a terrible crime, certainly not one that I considered to be paperwork and a misinterpretation of the law. I did not and have not knowingly committed a crime and I did not have any criminal intent, and that's 78 all I have to say. THE COURT: All right. Thank you, Mr. Leasure. Normally, going strictly by the guidelines in the case we would come up with the possession of silencers and it being a violation of the statute would come into the guidelines with a basic 18 points under 2K2.1(a)(5). The unlawful possession of a firearm has a entry level of 18. And if I took into account the whole 19 of the silencers, there would be added at least -- we would be between 13 and 24 and you would add 4 points and that would come up with a total of 22 for which the guideline sentencing table would reach 41 to 51 months. But I'm satisfied in the case not that there hasn't been a violation, there has been so far as I'm concerned clearly shown, but that the impact of the bundle of silencers which were introduced as evidence in this court range from little small implements to something of considerable size and the finding of those in a cabinet, as Mr. Leasure suggests, in a locked cabinet, and, of course, at that point the violation had already occurred. But it seems to me that this matter falls under 5K2 of the guidelines and I quote it. It says that the judge may depart from the guidelines and impose a 79 sentence outside of the guidelines, "if there exists an aggravating or mitigating circumstance of a kind or to a degree not adequately taken into consideration by the sentencing commission in formulating the guidelines, that should result in a sentence different from that described." I think that's the case here. I'd add one thing further in Mr. Leasure's favor, the record wasn't written up totally in the case but as I recall it, the sales that had been made by him had been made to other Governments under prohibitions granted by the United States or to the agencies of the United States so that generally speaking there was a great deal of scrutiny being applied to silencers and their manufacture as indeed there should be because it's certainly an implement that is used in covertness of the most advanced sort. I, therefore, will depart down by 5 points and come to -- well, depart by 9 points, that comes to 13 which carries under the Sentencing Tables of Criminal History Category 1, 12 to 18 months and sentence him at the bottom of that to 12 months, $50 for the conviction of a felony, waive fine, three years supervised release. So to review that that would be that pursuant to this order of the Court, John Daniel Leasure is hereby committed to the custody of the United States Bureau of 80 Prison to be by them incarcerated for a period of 12 months. That he shall serve a term of supervised release of three years upon his release from incarceration. That if requested by the probation people upon his release on supervised release, he would take such tests for the use of any controlled substance within a reasonable time period thereafter that should be required of him. You have a right of appeal, Mr. Leasure. If you wish to appeal, you must notify the clerk of this court in writing within ten days. If you do not have the money to hire an attorney to prosecute an appeal and if you fall within the statutes being provided, an attorney would be appointed by the United States and paid by the United States. If you don't have the money to pay the cost of such an appeal and if you fall within the statute they've provided, that cost will be paid by the United States. Where you would be incarcerated for this period of 12 months would be a matter that would have to be determined by the Marshall's office, and I'll leave you free on bond under the present orders of the Court to report before 2 p.m. on June the 21st. I don't have a calendar. Is that not on a Friday, Saturday, or Sunday? MS. ALLEN: That's on a Friday, Your Honor. 81 MADAM CLERK: It is a Friday, Judge. THE COURT: All right. The 20th, Thursday, to the U.S. Marshall at Norfolk by two o'clock, June 20, 1996. If a point of designation has been indicated by the Department of Prisons and Bureau of Prisons at that time, you would report to the warden of the prison so designated before two o'clock of June 20th, 1996. Now, I assume if he appeals -- I assume he's going to appeal. What sort of bond is he presently on, Mr. Montague? MR. MONTAGUE: It is a monetary amount, Your Honor. I don't recall. THE COURT: Well, let me look. I'll find it. MR. MONTAGUE: It's not a surety bond. THE COURT: He's on an unsecured appearance bond in the amount of $10,000. If he appeals, I would require that he have a secured bond for the $10,000, but I would leave him on bond pending that appeal, but I won't leave him on a $10,000 personal recognizance bond. He'll have to come up with security if he wants to take advantage of that. MR. MONTAGUE: Understood. THE COURT: All right. Have a seat. Hand this to the probation officer. Miss Clerk, let me give you these papers. 82 MS. ALLEN: Your Honor, just for the record, the Government needs to object to the Court's ruling regarding the downward departure. THE COURT: I couldn't hear you. MS. ALLEN: Just for the record, we're going to object to your downward departure with respect to the -- THE COURT: Be my guest. MS. ALLEN: Thank you. THE COURT: This goes back. All right. Miss Clerk, recess the court. CERTIFICATION I certify that the foregoing is a correct transcript from the record of proceedings in the above-entitled matter. [signed] 6-29-96 Diane Poulin, Court Reporter Date