United States v. Maloof

205 F.3d 819, 54 Fed. R. Serv. 133, 2000 U.S. App. LEXIS 3180, 2000 WL 244165
CourtCourt of Appeals for the Fifth Circuit
DecidedMarch 2, 2000
Docket98-21114
StatusPublished
Cited by13 cases

This text of 205 F.3d 819 (United States v. Maloof) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Maloof, 205 F.3d 819, 54 Fed. R. Serv. 133, 2000 U.S. App. LEXIS 3180, 2000 WL 244165 (5th Cir. 2000).

Opinion

DENNIS, Circuit Judge:

This direct criminal appeal arises from the conviction following jury trial of Mark Albert Maloof (Maloof) for conspiracy to restrain trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and conspiracy to commit wire fraud in violation of 18 U.S.C. § 371. For the reasons assigned, we affirm the convictions, but vacate the sentences, and remand for resen-tencing.

*823 I. FACTUAL AND PROCEDURAL BACKGROUND

Maloof served as the southern regional sales manager for Bay Industries, Inc. (Bay), a company which produces and sells metal building insulation. Bay opened a Houston office in 1993 and recruited most of Brite Insulation Company’s (Brite) sales force as its employees. Bay sharply reduced prices to attract customers, including many of Brite’s major customers. Sales representatives from Bay’s competitors responded by reducing their prices to generate additional sales.

One of the major components of metal building insulation is fiberglass. In 1993, fiberglass manufacturers doing business in Texas announced a price increase and reduction in the supply of fiberglass insulation. As a result of these changes Daniel Schmidt (Schmidt), Bay’s general manager, prepared a price sheet in November 1993 outlining the new pricing scheme for Bay’s sales representatives.

On January 3, 1994, Maloof, Bay’s regional sales manager, called Wally Rhodes (Rhodes), vice president of sales for Mizell Brothers Company (Mizell), one of Bay’s competitors. Rhodes, testifying on behalf of the government, stated that they discussed the effect of the insulation supply reduction and Rhodes’ marital problems. Rhodes said Maloof suggested adopting uniform pricing to ensure that neither company would quote or sell under the other’s prices. According to Rhodes, Ma-loof faxed Bay’s price sheet to him. The prosecution introduced telephone records documenting phone calls and faxes between Maloofs phone line and Mizell on a daily basis the following week. Rhodes and Maloof stated that Maloof used the name Tom Coop when he called Rhodes during business hours. Rhodes testified that the purpose of the calls was to revise Mizell’s price sheet to conform with Bay’s pricing. Maloof stated that each of his conversations with Rhodes concerned only Rhodes’ marital problems and that he never faxed or received price sheets from Rhodes.

Other witnesses for the prosecution testified that Maloof was involved in the solicitation of additional competitors to participate in the conspiracy to adopt uniform prices. Rhodes testified that prior to a laminators’ trade association meeting in Kansas City on January 11, 1994, he and Maloof agreed to ask representatives of other insulation suppliers to join in the price fixing agreement. At the meeting, Rhodes said, he discussed the plan to adopt uniform prices with Brite employees, Peter Yueh and Jerry Killingsworth. Rhodes testified that he and Maloof decided that Rhodes should approach the Brite representatives first because of hard feelings and possible litigation resulting from Bay’s hiring raid upon Brite’s sales force. Killingsworth testified that his agreement for Brite to participate in the price fixing plan was obtained by Rhodes in the presence of Maloof during a smoke break. Rhodes corroborated Killingsworth’s testimony. Following this meeting, Rhodes testified, he informed Maloof of Killings-worth’s agreement upon Brite’s participation and faxed the uniformly adjusted Mizell and Bay price sheets to Killings-worth, who prepared a Brite price sheet that was almost identical. Several weeks later Killingsworth stated that he sent the Bay, Brite and Mizell price sheets to the PBI Supply Company (PBI). Killings-worth testified that PBI faxed him a price sheet that was very similar to those of the other companies. Maloof denied having had any knowledge of the discussion between Rhodes and either Killingsworth or Yueh during the Kansas City meeting.

Fiberglass manufacturers imposed three price increases in 1994 and one in 1995. According to government witnesses, following each increase Maloof shared Bay’s price sheet with representatives of Mizell, Bright and PBI. While Maloof denied participating in a conspiracy to adopt uniform prices with any competitor, Rhodes and Killingsworth testified that they agreed upon a pricing scheme with Maloof before distributing new price sheets to their sales representatives. Several Bay employees *824 stated that they complied with Maloofs directive to adhere to Bay’s price list because he had little tolerance for deviations. Maloof admitted that he informed Bay sales representatives that they had to adhere to that price list.

In 1994, Bay sales representatives began to receive complaints from some Bay customers that competing sales representatives consistently gave quotes identical to Bay’s for 3 inch white vinyl insulation. Bay sales representatives testified that when they relayed the complaints to Ma-loof, he instructed them to stop selling to those customers.

Janne Smith, who worked for Bay as a division manager under Maloofs supervision, testified that she overheard Maloof discussing Bay’s prices with Rhodes. She said that Maloof faxed Bay’s price sheet to Rhodes and informed her that he had to consult Rhodes before approving a customer’s request for a discounted price. According to Smith, Maloof gave her a copy of Mizell’s price sheet in May 1994 and said that these were the prices Bay would adopt following the next price increase by the manufacturers. Smith also testified that Maloof fired Deloris Hill, a Bay sales representative, for charging prices below the stipulated rates.

Smith stated that because of her observations she suspected Maloof was violating antitrust laws. She testified that in July 1994 she faxed Maloof a document entitled the “Eight Major Fundamentals of Antitrust Law” and discussed her concerns with him. According to Smith, Maloof stated that he could not undo what had already been done. Maloof denied receiving a document on antitrust principles from Smith or discussing it with her.

Several weeks later, Smith reported Ma-loofs activities to the FBI and agreed to record some of her conversations with him in exchange for immunity. In June 1995, FBI agents and government prosecutors offered Maloof immunity in exchange for cooperating in the government’s antitrust case. Maloof refused the offers. On May 15, 1997, Maloof was indicted on one count of conspiracy to restrain trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and one count of conspiracy to commit wire fraud in violation of 18 U.S.C. § 371. Maloof was convicted by a jury of both counts and sentenced to 30 months imprisonment on each count, to run concurrently, and fined $30,847. Maloof appealed.

II. DISCUSSION

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Bluebook (online)
205 F.3d 819, 54 Fed. R. Serv. 133, 2000 U.S. App. LEXIS 3180, 2000 WL 244165, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-maloof-ca5-2000.