Argued: December 6, 2017
Appeals from the United States District Court for the Eastern
District of Virginia, at Alexandria. Leonie M. Brinkema,
District Judge. (1:13-cr-00419-LMB-1; 1:13-cr-00419-LMB-2)
A. Sears, SCHERTLER & ONORATOR, LLP, Washington, D.C.,
for Appellant Lee Hall.
Citronberg, ZWERLING/CITRONBERG, PLLC, Alexandria, Virginia,
for Appellant Mark Stuart Landersman.
Rudolph Parker, Jr., Patricia Marie Haynes, OFFICE OF THE
UNITED STATES ATTORNEY, Alexandria, Virginia, for Appellee.
Zwerling, ZWERLING/CITRONBERG, PLLC, Alexandria, Virginia,
for Appellant Mark Landersman.
J. Boente, United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Alexandria Virginia, for Appellee.
KING and THACKER, Circuit Judges, and SHEDD, Senior Circuit
THACKER, Circuit Judge
consolidated appeal, Lee Hall, former Director of
Intelligence for the Deputy Undersecretary of the Navy, and
Mark Landersman, a machinist from California (collectively,
"Appellants"), appeal guilty verdicts for criminal
conspiracy and, as to Hall, unlawful conversion of government
funds. Specifically, following a bench trial, the district
court found that Hall facilitated the purchase of hundreds of
firearm suppressors from Mark Landersman, Hall's
boss's brother, for over $1.6 million in government
funds. The district court concluded that this transaction was
illegal because, inter alia, Hall did not use the proper
channels for government funding approval; Mark Landersman was
an untested and unlicensed firearm manufacturer; and upon
arrival, the suppressors did not meet government performance
raise a host of challenges to the manner in which their bench
trials were conducted and the sufficiency of the evidence
against them. Because some of these challenges relied on
classified government records, the district court and this
court conducted proceedings pursuant to the Classified
Information Procedures Act ("CIPA"), see
18 U.S.C. app. 3, §§ 1-16. For the reasons that
follow, we find no reversible error in the classified and
unclassified proceedings below and therefore affirm
recount the facts in the light most favorable to the
Government, the prevailing party at trial. See United
States v. Garcia-Ochoa, 607 F.3d 371, 376 (4th Cir.
2010). In late 2012 and early 2013, Hall facilitated the
Navy's purchase of 349 unattributable (i.e., unserialized
and untraceable) firearm suppressors for approximately $1,
657, 750. At that time, Hall worked directly for David
Landersman, Senior Director of Intelligence for the
Navy's Office of Plans, Policy, Oversight and Integration
background, sometime during the summer of 2012, David
Landersman and Hall approached Robert Martinage, Deputy
Undersecretary for PPOI and David's superior, to seek
funds for "intelligence studies." J.A.
Martinage approved their request to approach Carla Lucchino,
Department of the Navy Assistant for Administration
("DON/AA"), and ask for authorization to seek
funding for this purpose.
6, 2012, David sent an email to Lucchino, asking for a total
of $3 million from the PPOI Senior Director's operational
budget for the following: intelligence studies, a program
integration assessment, an anti-submarine warfare research
project, an assessment of the Navy's participation in the
Defense Clandestine Service program,  and "an overall
assessment of how well D[epartment] O[f] N[avy] intelligence
requirements are being satisfied." J.A. 1185. Lucchino
forwarded the request to David Nugent, the Director of the
Financial Management Division of DON/AA.
then began working with Hall on David Landersman's budget
request. During the time that Hall and Nugent discussed the
funding request, Hall emphasized to Nugent that this was
"an Under Secretary priority, " which "would
move [it] up on the [priority] list." J.A. 439-40. On
August 13, 2012, Nugent indicated to Lucchino that he had
been working with Hall and explained that the budget for the
studies was reduced from $3 million to $2.2 million. Lucchino
authorized Nugent to disburse $2.2 million to David
Landersman. Notably, Lucchino testified that she could not
authorize the purchase of "weapons or small arms."
Id. at 349.
August 13, 2012, David Landersman sent an email to his
brother Mark, the erstwhile owner of an automobile machinery
company in California called "Advanced Machining and
Engineering, " or "AME." J.A. 1191-92. Mark
had been in dire straits, as he "couldn't keep up
the overhead" at AME, id. at 723; he was forced
to file for Chapter 7 bankruptcy on July 9, 2012; and a 2011
tax return showed that another of his businesses owed his
brother David $50, 000 in unpaid loans.
August 13 email, David asked Mark for the proper name of his
company. The next day, Mark responded to David with the name
and phone number of his company: "Advanced Machining and
Engineering (951) 852 1653." J.A. 1192. About an hour
later, David forwarded this information to Hall, noting,
"Lee, Info a[s] follows . . . ." Id. at
1193. Later that same day, David sent his brother Mark an
email with the subject line "300BLK Suppressor, "
which included a link to a website entitled "How I Built
a 300 AAC Blackout Suppressor." Id. at 1195,
1447. Under the link, David wrote, "Look this over . . .
Looks very much like what we're going to send you."
Id. at 1195. Mark responded, "Wow! [V]ery
simple." Id. at 1194.
weeks after Lucchino authorized Hall to spend $2.2 million
for studies and assessments, on September 17, 2012, Hall met
with Tedd Shellenbarger, a counterdrug director within PPOI;
Sherri Donahue, the Navy Contracting Officer Representative;
and Gail Williams, a senior program manager at CACI
International, Inc. ("CACI"), a government
contractor. The purpose of the meeting was to discuss what
Hall wanted to be done with the money.
that meeting, Hall asked about procuring materials, as
opposed to studies as he previously represented to DON/AA.
Donahue recalled that "the conversation ha[d] to do with
. . . alterations on guns." J.A. 480. Williams also
recalled that Hall was seeking to procure equipment or
materials. She did not recall Hall mentioning "anything
about using [the money] to support intelligence
studies." Id. at 499. During the meeting, Hall
and Williams "discuss[ed] . . . what was required for
CACI to do a sole source justification, " meaning that
the contract would not have to be put out for bid, but
rather, CACI would award the contract to a preselected
follow up to that meeting, on October 19, 2012, Hall emailed
Williams, providing her with the name of the vendor he
proposed to use for the contract. He stated:
We are finally ready to move. Here is the information you
need to get started:
Poc: Mark Stuart of Applied Engineering and Materials Phone:
What else do you need? Also, if at all possible, we'd
like this rolling by the end of November. I understand you
have internal hurdles, but we have accelerated interest in
delivering the products.
J.A. 1208. Notably, Mark's middle name is Stuart, but his
full name is Mark Stuart Landersman; the company
name is actually Advanced Machining and Engineering; and this
phone number is one off from the actual number David
Landersman forwarded to Hall, which was
responded by email the same day, stating, "[I] will need
some information in order to justify a 'sole source'
purchase." Id. For example, "Why is
Applied Engineering and Materials the vender [sic] of
choice?" Id. (parentheses omitted). Thereafter,
Hall sent Williams an email stating in relevant part:
Other subcontractors were not considered due to the fact that
they do not possess the expertise required to do the job nor
posses [sic] the unique proprietary tooling systems created
by AME to produce the required enhancements needed. Their
proprietary system is wholly, and solely exclusive to AME and
therefore unavailable by any other subcontractor.
. . .
 AME currently has sole proprietary expertise that is not
commercially offered by other companies or individuals. It is
the only responsible source for the engineering expertise
sought and no other services will satisfy requirements [sic].
Their product is the first that incorporate [sic] a unique
design that significantly reduces the decibel ratings to near
background noise levels. All technologies are developed and
owned exclusively by AME and no licensing agreements
currently exist, providing a unique opportunity for CACI and
the end customer to utilize proprietary engineering and
services not readily available elsewhere.
J.A. 1207. At CACI's request, Hall then sent an Statement
of Work, proposing that CACI would pay AME 50% up front and
50% "upon delivery, inspection and acceptance
trials" of the product. Id. at 1206. In
addition, each suppressor was to be billed at a cost of
around $5, 000.
finalizing the contract and performing the required due
diligence, a CACI officer asked Mark to "provide a
detailed breakout of [his] costs, i.e., labor and materials,
" and also to "provide . . . a copy of an invoice
and/or PO" demonstrating that he "suppl[ied] this
product . . . to [a] client of [his] within one year."
J.A. 1215. Mark replied, "I am not be able [sic] to
provide this information, " and told the CACI officer to
contact Hall. Id.; see also id. at 1247
(November 8, 2012 email from Mark Landersman to CACI
procurement director explaining, "[Hall] has instructed
me to direct any and all requests for information" to
Hall). In turn, Hall claimed the information CACI requested
was confidential, citing "increased questioning on the
vendor issues, " and explaining, "[T]he sensitive
nature of the product(s), past performance and service, and
the proprietary information involved . . . makes for
potential problems later regarding security and
classification." Id. at 1415 (Nov. 9, 2012
email). On November 12, 2012, Mark finally quoted CACI a
labor rate of $85 per hour for 29 hours per part, coming to
$2, 465 per suppressor, which Hall said he and David
"determined . . . to be fair, reasonable, and
accurate." See id. at 1416. Hall also emailed
CACI on December 3, 2012, and notified the project analyst
that the items were to be shipped to Al Zalewski, a Navy
intelligence official, at a Chesapeake, Maryland address. He
also advised the analyst to use the notation "Hold for
Al Zalewski, " rather than using Hall's name.
Id. at 1014 n.17.
December 7, 2012, CACI approved a purchase order in the
amount of $1, 657, 750 for 349 "Signature
Suppressor[s]." J.A. 1303-04. However, in November 2012,
before the purchase order was approved, Mark gave $2, 000 to
Juan Carlos Robles, a machinist and successor-owner of AME,
to "cover the entire costs of the materials" for
the suppressor project. Id. at 726. Nonetheless, on
December 12, Mark emailed CACI, stating, "I can't
get started without the deposit check and wondered if you
have an idea when it might be sent." Id. at
1306-07. Two days later, CACI cut a check for 50% of the
contract price, or $828, 875, and sent it to Mark.
blueprints provided by Mark, Robles alone manufactured the
suppressor tubes and accompanying assembly parts for the
suppressors. It took him four to five weeks, working around
five hours per day. Mark paid Robles under $10, 000,
contrast to the labor charge of $2, 465 per suppressor quoted
by Mark (which comes to $860, 285 in labor for 349
in January 2013, Hall met with Zalewski and asked if he could
have a shipment sent to a Naval Intelligence warehouse in
Chesapeake, Maryland, even though he had already scheduled to
have the shipment delivered there. Zalewski agreed, but
testified Hall "made it clear to me that I was not to
know . . . what was in the boxes . . . I was not cleared for
that." J.A. 746. Hall also asked Zalewski to remove the
boxes' labels, which contained Mark Landersman's
name, but Zalewski refused to do so.
February 19, 2013, boxes containing the 349 Landersman
suppressors arrived at the warehouse. Despite the fact that
the suppressors were delivered on February 19, Hall certified
on a Form DD-250 (Material Inspection and Receiving Report)
that he accepted and inspected the suppressors on February
14. Notably, on February 14, 2013, Hall was on administrative
leave for an unrelated matter and thus, could not have
accepted and inspected the suppressors as indicated. Because
Hall signed the DD-250, CACI mailed Mark Landersman a check
for the $828, 875 balance on the contract.
weeks later, Nugent saw the DD-250 and realized the money
intended for intelligence studies was actually used for
suppressors. As a result, the matter was referred to the
Naval Criminal Investigative Services ("NCIS"). The
boxes containing the Landersman suppressors were finally
opened when they were seized by NCIS agents in April 2013,
two months after they were delivered. The boxes were located
"next to a photocopier and in an otherwise inappropriate
area for classified materials as they were . . . accessible
to anyone in that space." J.A. 1014. Thereafter, Jason
Davis, a mechanical engineer for the Naval Surface Warfare
Center at Crane, Indiana, tested the suppressors to see if
they would meet Navy performance standards for sound and
flash.Davis's report reveals that the
suppressors failed to meet those performance standards.
Indeed, the report states that the suppressors were deemed
"[u]nacceptable" in multiple ways, which
"would have made this suppressor ineligible for [a Navy]
contract award." Id. at 1783. After an
investigation, Mark Landersman was identified as the
manufacturer of the suppressors, and he was indicted singly
for conspiracy on November 14, 2013.
March 13, 2014, a grand jury sitting in the Eastern District
of Virginia returned a two-count superseding indictment,
charging Hall and Mark Landersman together with a conspiracy
containing three objects: (a) the unlicensed manufacture of
firearms; (b) shipping of unregistered firearms; and (c) mail
fraud ("Count One"); and charging Hall alone with
converting Navy funds without authority ("Count
Two"). Hall and Mark consented to a bench trial, and on
June 20, 2014, they jointly filed a notice pursuant to CIPA
to use classified information.
September 25, 2014, the district court granted Mark
Landersman's motion to sever, scheduling Hall's bench
trial for October 20, and Mark's for October 27. At the
hearing on the motion to sever, Hall represented that he
would testify at Mark's trial. However, on October 9,
Hall rescinded that representation. The district court
nonetheless allowed the cases to proceed separately.
20, 2014, Appellants moved to dismiss the indictment based on
the allegation that some of Hall's personal notes were
destroyed by Pentagon officials while he was on
administrative leave. At a hearing on July 14, 2014, Hall
posited that the missing notes would have demonstrated that:
(1) he communicated with a man named Robert Gudz, president
of the International Police Supply and a firearms dealer, who
represented to him that suppressors meeting Hall's
requirements would cost between $10, 000 and $12, 000 a
piece; (2) Hall informed Lucchino they could no longer carry
out the studies for which they initially requested funds, but
Lucchino had no objection to using the money for another
purpose; (3) Shellenbarger, the other PPOI director who
attended the CACI meeting, had a contract vehicle for
purchase of the suppressors, and they talked about the
contract at the meeting; (4) Hall spoke with Zalewski about
holding the boxes in a secure facility; and (5) Hall had a
meeting with Martinage about the suppressor purchase.
the bench, the district court denied the motion to dismiss
the indictment but explained:
[T]here'll be an inference drawn against the government
on th[e] issue [of the handwritten notes], and it will come
out to play as it comes out to play.
Again, it may be moot. These witnesses . . . may say exactly
what Mr. Hall recalls them saying. If they don't then
he'll be permitted to testify, and as I said, if he says
under oath that he had a note that ...