United States v. Maloof

UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 98-21114

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

MARK ALBERT MALOOF,

Defendant-Appellant.

Appeal from the United States District Court
for the Southern District of Texas
March 2, 2000

Before JONES, DeMOSS and DENNIS, Circuit Judges.
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 resentencing.

I. FACTUAL AND PROCEDURAL BACKGROUND

Maloof served as the southern regional sales manager for Bay

1
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, Maloof faxed Bay’s price sheet to

him. The prosecution introduced telephone records documenting

phone calls and faxes between Maloof’s phone line and Mizell on a

daily basis the following week. Rhodes and Maloof stated that

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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 Killingsworth’s

agreement upon Brite’s participation and faxed the uniformly

adjusted Mizell and Bay price sheets to Killingsworth, who prepared

a Brite price sheet that was almost identical. Several weeks later

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Killingsworth stated that he sent the Bay, Brite and Mizell price

sheets to the PBI Supply Company (PBI). Killingsworth 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 stated that they complied

with Maloof’s 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 Maloof, he instructed them to stop

selling to those customers.

Janne Smith, who worked for Bay as a division manager under

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Maloof’s 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 Maloof’s 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

5
both counts and sentenced to 30 months imprisonment on each count,

to run concurrently, and fined $30,847. Maloof appealed.

II. DISCUSSION

Maloof assigns several errors on appeal, including the trial

court’s limitations of his direct testimony and cross-examination

of government witnesses, the court’s application of a four level

sentence enhancement, prosecutorial violations, judicial

restriction of his “consciousness of innocence” defense, and the

admission of the guilty pleas of witnesses-accomplices as

substantive evidence of his guilt. After considering the oral

arguments of counsel, the parties’ briefs and the record designated

for appeal, we conclude that Maloof’s argument concerning his

sentences has merit but that his assertions of errors affecting his

convictions lack reversible merit.

Maloof’s argument that he was deterred from adequately

presenting a “consciousness of innocence” defense is unmeritorious.

He relies on United States v. Biaggi, 909 F.2d 662, 689-91 (2d Cir.

1990), cert. denied, 499 U.S. 904 (1991), in which the court of

appeals held that evidence that defendant had rejected an offer of

immunity from the government in exchange for testifying as to the

wrongdoing of others is relevant and admissible to show defendant’s

“consciousness of innocence.” In Biaggi, the court reasoned that,

although plea negotiations are inadmissible against the defendant,

see FED. R. CRIM. P. 11(e)(6)and FED. R. EVID. 410, it does not

6
necessarily follow that the government is entitled to a similar

shield, and, more fundamentally, that the two types of negotiations

differ markedly in their probative effect when they are sought to

be offered against the government. “When a defendant rejects an

offer of immunity on the ground that he is unaware of any

wrongdoing about which he could testify, his action is probative of

a state of mind devoid of guilty knowledge.” Biaggi, 909 F.2d at

690. In Biaggi the court of appeals reversed bribery convictions

because the trial court, unlike the district court in the present

case, had completely excluded evidence of the defendant’s rejection

of immunity under circumstances in which that evidence might well

have affected the jury verdict. Id. at 692.

Maloof was permitted to testify that he had rejected two

government offers of immunity, one by two FBI agents and another by

two Department of Justice attorneys, in exchange for taping

conversations with his employer and other individuals, explaining

to the agents and attorneys that his company could sell all of the

insulation it had without price fixing and that he had no knowledge

of any price fixing by his company or others. He complains,

however, that the trial court erred in (1) instructing the jury to

disregard his testimony that the FBI agents had knocked on his door

and called out, “Mr. Maloof, this is the FBI, you’re going to jail

for three years;” and (2) limiting his testimony to the substance

of the conversations relating to the offers of immunity, his

rejection of the offers and his explanation of lack of knowledge of

7
wrongdoing, and disallowing his testimony to what he considered to

be threats and attempted intimidation of him by the government

agents.

We conclude that the trial court correctly applied FED. R.

EVID. 401, 410 and 403 as interpreted in Biaggi by allowing Maloof

to testify to the sum and substance of the offers and rejections of

immunity; and did not abuse its discretion under FED. R. EVID. 403

to bar embellishing details on the grounds that their probative

value was outweighed by the danger of unfair prejudice, confusion,

or delay.

Maloof argues that the prosecution violated Giglio v. United

States, 405 U.S. 150 (1972), Brady v. Maryland, 373 U.S. 83 (1963)

and the Jencks Act, 18 U.S.C. § 3500, by withholding a December 3,

1993 letter written by prosecution witness Killingsworth that

directly contradicted his testimony regarding the distribution of

Brite’s January 1, 1994 price sheets. Under Brady, exculpatory

evidence is discoverable by the defendant where it is “material to

guilt or punishment.” Brady, 373 U.S. at 87. Information is

material “if there is a reasonable probability that, had the

evidence been disclosed to the defense, the result of the

proceeding would have been different.” United States v. Rosario-

Peralta, 175 F.3d 48, 53 (1st Cir. 1999) (citation omitted). The

Jencks Act requires the government to provide, upon request, any

prior statements of government witnesses that relate to the subject

matter of their testimony. See 18 U.S.C. § 3500(b). A statement

8
includes a written statement made by the witness and signed or

adopted by him. See 18 U.S.C. § 3500(e)(1). To succeed under the

Jencks Act, the defendant must demonstrate that he was prejudiced

by the failure to disclose. See Rosario-Peralta, 175 F.3d at 53.

Killingsworth testified that at a trade association meeting in

Kansas City in January 1994 he agreed to a proposal by Rhodes and

Maloof that Killingsworth’s company, Brite, join their companies,

Mizell and Bay, in an agreement to fix prices and to publish a

common or substantially identical price list. Killingsworth said

that prior to this agreement there had been no such direct

collaboration by the companies in price fixing, although Brite and

its competitors had distributed price lists to customers and had

been indirectly influenced in pricing by competitors’ price lists

or quotes passed on to them by their customers. On cross-

examination, Killingsworth identified several Brite price lists

dated February 1992, November 1992 and March 1993 that he said had

been sent to specific customers. He agreed that the March 1, 1993

price sheet was a “sample of what should be a larger stack” and

that he had prepared documents similar to it for manufacturers he

either was getting business from or was trying to get business

from. In response to further questions on cross-examination,

Killingsworth testified:

Q. . . . [I]n fact in 1992 and in ‘93 Brite
insulation had put out, in the Houston market
area, written, printed price information to
various customers?
A. That is true.

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 * * *
Q. You would not want us to think that your
testimony was that for five years prior to
1994 there was no written price information
put out in this market by Brite Insulation;
that’s not correct, is it?
A. Not correct, no, sir.

On cross-examination, Killingsworth identified a Brite price sheet

dated January 1, 1994 marked Defendant’s exhibit 28 and agreed that

it seemed to be a price sheet that he had prepared. On redirect

examination, Killingsworth testified that the price sheet marked

Defendant’s exhibit 28 was not distributed to customers because it

was not intended for that use. In the context of his entire

testimony it is apparent that he meant that the list was intended

for internal company use.

Maloof moved for a new trial on the ground that Killingsworth

had presented false testimony in saying the price sheet marked

exhibit 28 was not distributed to customers, that the government

did not correct this evidence it knew or should have known was

false, and that the government had violated Brady by withholding a

letter that would have shown that Killingsworth testified falsely.

Maloof attached to his motion, as appendix no. 10, a copy of a

letter from Killingsworth dated December 3, 1993 to Supreme

Insulation in Kansas City regarding “1994 Insulation Prices”

stating, inter alia, “Brite Insulation is enclosing our price

sheets for North & South Louisiana and Texas attached.” Maloof

also contends, without dispute by the government, that a copy of

the Brite price sheet marked as Defendant’s exhibit 28 was attached

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to the letter when it was mailed to Supreme Insulation.

Maloof argued in his motion for new trial that Killingsworth’s

letter, which the government had obtained prior to trial in

response to a grand jury subpoena, was not only Brady material but

also shows that Killingsworth’s testimony was false and that the

government let it go uncorrected at trial although it knew or

should have known it was false. The government responded that

Killingsworth’s letter to Supreme Insulation does not effectively

impeach his testimony, prove that it was false or that false

testimony was knowingly presented by the government. The

prosecution points out that when Killingsworth testified about

distributing price sheets he made a clear distinction between

distributions to competitors and those to customers. Further, the

government contends that Supreme Insulation was primarily a

competitor of Brite, a co-target in Brite’s grand jury

investigation, and that Supreme Insulation was not a direct user or

consumer of the product, i.e., it was not a metal building

manufacturer. Killingsworth’s letter to Supreme Insulaltion tends

to support the conclusion that he was trying to sell to it as a

competitor for resale. In the letter he distinguished between one

column of prices as “what Brite will charge you for the

materials[]” and “[t]he other prices . . . we suggest be quoted to

your customer based on market pricing for this area, but you are

free to sell it for what you wish to over the minimum.”

The trial court rejected Maloof’s arguments in denying his

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motion for a new trial, concluding, in essence, (1) that he had

failed to prove that Killingsworth’s testimony was false because

the Killingsworth-Supreme Insulation letter did not necessarily

contradict his testimony in that he had testified at trial that he

had distributed price sheets to special customers prior to January

1, 1994 and that Maloof had not demonstrated that Supreme was a

customer rather than a competitor or that it was a buyer in the

Texas market; and (2) the court was not persuaded that the letter

was truly exculpatory or impeachment evidence or that it was of

such a serious nature as to be material under the Brady standard.

Maloof presents similar arguments for reversal of his

conviction on appeal. We agree with the trial court and the

government that Maloof failed to show that Killingsworth’s letter

to Supreme Insulation contradicted his testimony or that

Killingsworth’s testimony was false. Consequently, we do not reach

the question of whether there was false testimony that could in any

reasonable likelihood have affected the judgment of the jury. See

United States v. Bagley, 473 U.S. 667, 678-79 (1985); Giglio, 405

U.S. at 154 (quoting Napue v. People of State of Illinois, 360 U.S.

264, 271 (1959)); Kirkpatrick v. Whitley, 992 F.2d 491, 497 (5th

Cir. 1993). Further, assuming without deciding that the

Killingsworth-Supreme letter was evidence that the government was

obliged to disclose under Brady, we agree that the evidence was not

material under the Brady standard because Maloof has not

demonstrated that there is a reasonable probability that, had the

12
evidence been disclosed to the defense, the result would have been

different. See Bagley, 473 U.S. at 682-83.

In addition, we agree that there was no Jencks Act violation.

The harmless error doctrine is strictly applied in Jencks Act

cases. See United States v. Ramirez, 145 F.3d 345, 357 (5th Cir.),

cert. denied, 119 S. Ct. 602 (1998). A failure to produce Jencks

Act material at trial is harmless error where there is no

“substantial inconsistency, contradiction or variation” between the

prior statements and the witness’ trial testimony. See United

States v. Keller, 14 F.3d 1051, 1055 (5th Cir. 1994) (citation

omitted). As previously noted, there was no contradiction between

Killingsworth’s testimony and his letter to Supreme Insulation.

Thus, the fact that the government did not produce the

Killingsworth letter does not mandate a new trial. See Ramirez,

145 F.3d at 357 (“the government’s failure to comply with the

Jencks Act does not per se require a new trial . . . if the error

was harmless, a new trial would not be required.”).

Maloof also argued for a new trial and now contends on appeal

that the government’s failure to disclose a statement made by Danny

Fong to the FBI violated Brady. We conclude, however, that the

statement made by Fong to FBI agents on June 21, 1995 was not Brady

material because Maloof’s defense counsel had obtained Fong’s

version of the facts from his attorney. See United States v.

Meros, 866 F.2d 1304, 1309 (11th Cir. 1989) (“[T]he government is

not obliged under Brady to furnish a defendant with information

13
which he already has or, with any reasonable diligence, he can

obtain for himself.” (citation and internal quotations omitted)).

Maloof’s witness-accomplice conviction argument is without

reversible merit because the district court instructed the jury to

consider the guilty pleas of Maloof’s accomplices only when

weighing the credibility of their testimony. See United States v.

Mitchell, 31 F.3d 271, 276-77 (5th Cir.) (“a witness-accomplice’s

guilty plea may be admitted into evidence if it serves a legitimate

purpose and a proper limiting instruction is given.”), cert.

denied, 513 U.S. 977 (1994). The prosecution had a legitimate

purpose for introducing the plea agreements because defense counsel

advised the court that he intended to rely on the plea agreements

to demonstrate bias and motive. See United States v. Valley, 928

F.2d 130, 133 (5th Cir. 1991).

Maloof contends that the district court improperly limited his

direct testimony concerning the content of his telephone

conversation with Rhodes on January 3, 1994. Rhodes’ testimony

that he and Maloof agreed to maintain price levels during that

conversation was very important to the government’s case. Equally

vital to the defense was the persuasiveness of Maloof’s testimony

that their conversation had nothing to do with prices but focused

exclusively on Rhodes’ divorce and his desire to be employed by

Bay. Maloof testified they talked about Rhodes’ divorce problems,

but the trial court prevented Maloof from relating specific details

that Rhodes had disclosed about the nature and source of his

14
marital strife. Maloof argues that his testimony was unfairly

deprived of its full force and credibility when the court prevented

his complete and detailed recounting of the conversation with

Rhodes.

The district court’s restrictions on direct examination are

reviewed for abuse of discretion. See United States v. Martinez,

151 F.3d 384, 390 (5th Cir. 1998), cert. denied, 119 S. Ct. 572

(1999). The district court has broad discretion in managing its

docket including maintaining the pace of the trial by interrupting

counsel or setting time limits. See Sims v. ANR Freight System,

Inc., 77 F.3d 846, 849 (5th Cir. 1996). Reasonable limits on

questioning “based on concerns about . . . harassment, prejudice,

confusion of the issues, the witness’ safety, or interrogation that

is repetitive or only marginally relevant” are permissible. United

States v. Gray, 105 F.3d 956, 964-65 (5th Cir.), cert. denied, 520

U.S. 1246 (1997) (quoting Delaware v. Van Arsdall, 475 U.S. 673,

679 (1986)). We conclude that the limitation of Maloof’s testimony

was reasonably based on the trial court’s perceived danger of

unfairly prejudicial effects upon the jury by the introduction of

irrelevant and scandalous information.

During direct examination, Maloof stated the following:

Q: Did you, during January of 1994, have
telephone conversations to and from Mr.
Maloof?
A: Mr. Maloof?
Q: I’m sorry, Mr. Rhodes. Thank you, Mr. Maloof.
A: Yes.
Q: What was the nature of those calls?

15
 A: Well, there was several calls. Wally had
expressed a dissatisfaction with working at
Mizell Brothers and wanted me to ask Dan to
get him a job. He had called me to complain
about there was some Bay employees who had
told some other Bay employees about his –
Opposing Counsel: Your honor, I’m going to object to
this.
Court: I’m going to allow it.
Q: Go ahead, Mr. Maloof.
A: Wally was either getting a divorce or had
gotten a divorce and he called me.
Court: You can be very general. You’ve discussed his
divorce or marital issues, is that what you are going to
talk about?
A: He asked me –
Court: Wait, wait, stop. I do not want any detail.
A: He wanted the employees to stop talking about –
Q: His domestic situation?
A: His domestic situation.
Q: Pardon me for leading, your honor.
Court: That’s fine.
Q: When he said he wanted the employees, did he
mean the employees of Mizell or Bay?
A: Of Bay.
***
Q: There are calls in January of 1994 to Mr.
Rhodes’ home, are there not?
A: Yes.
Q: Why did you call Mr. Rhodes at his home?
A: The personal things that he wanted to talk
about and the questions about gaining
employment with Bay he did not want to talk
about at Mizell Brothers, so he had called an
employee at Bay and asked the employee to have
me give him a call at the house.
Q: Of the calls that you had with him in January,
how many, how much of the, if you have a
judgment, how much of the time that you spoke
with him had to do with either the employment
or the personal matters?
A: 90 percent.

Maloof conveyed the fact that he discussed several topics with

Rhodes and that their conversation was primarily personal in

nature. He stated that Rhodes had gone through a divorce and had

16
called him to complain about the fact that Bay employees were

discussing his personal affairs. The district court limited

Maloof’s direct testimony on the issue of Rhodes’ divorce by

interrupting him several times. In the district court’s judgment,

Maloof’s testimony of additional details that Rhodes had revealed

about his marital controversy would have been unfairly prejudicial

and of little probative value to the jury in its assessment of the

witnesses’ credibility with regard to whether they conspired to fix

prices. We conclude that the district court stringently exercised

but did not abuse its discretion in limiting Maloof’s testimony

regarding Rhodes’ marital vicissitudes.

Contrary to Maloof’s argument, the district court did not

abuse its discretion by unduly restricting Maloof’s counsel in

cross-examining Rhodes. The district court has “wide latitude to

impose reasonable limits on cross-examination subject to the Sixth

Amendment requirement that sufficient cross-examination be

permitted to expose to jurors facts from which they can draw

inferences relating to the reliability of witnesses.” Martinez,

151 F.3d at 390. The Sixth Amendment is not violated by

limitations on cross-examination if the jury is presented with

sufficient information to “appropriately draw inferences relating

to the reliability of the witnesses.” United States v. Landerman,

109 F.3d 1053, 1061 (5th Cir.), cert. denied, 522 U.S. 1033 (1997).

The trial court’s limitation on cross-examination into the details

of Rhodes’ divorce did not implicate the Confrontation Clause, as

17
additional information about Rhodes’ personal problems would not

have informed the jury of Rhodes’ “considerable incentive to . . .

‘slant, unconsciously or otherwise, his testimony in favor of or

against a party.’” Id. (internal quotation omitted). On the other

hand, Rhodes was questioned extensively on cross-examination about

the details of his plea agreement. The jury was informed that

Rhodes was facing a sentence of up to three years and the

government would recommend a sentence of four months in the event

that he cooperated fully. Thus, the Sixth Amendment was not

violated because Maloof’s cross-examination of Rhodes elicited

sufficient evidence with which the jury could appropriately assess

Rhodes’ credibility.

In the absence of any constitutional violation, district court

rulings on the length and scope of cross-examination are reviewed

for abuse of discretion. Gray, 105 F.3d at 964. In order to

obtain relief, the defendant must show that the trial court’s

restrictions on questioning witnesses were “clearly prejudicial”

based on the overall strength of the government’s case, the

circumstances surrounding the challenged testimony and the

importance of that testimony and its corroboration or contradiction

at trial. Id. at 965.

Considering all of these relevant factors, the trial court’s

limitations upon the cross-examination of Rhodes were not

prejudicial. Maloof’s argument is factually incorrect in asserting

that Rhodes testified on direct that their conversation dealt

18
exclusively with establishing a conspiracy to maintain prices.

Rhodes in fact testified on both direct and cross-examination that

they had discussed both. The trial court excluded cross-

examination only as to the elaborate details of Rhodes’ personal

problems.

Thus, after Rhodes answered on cross-examination that he was

divorced prior to his January 1994 conversation with Maloof, the

court sustained Rhodes’ objection as to a further question seeking

the exact date of the divorce because that detail was lacking in

probative value. The ruling was not clearly prejudicial because

the date of Rhodes’ divorce had only a marginal relation to whether

he discussed price fixing with Maloof in addition to personal

problems. Moreover, there was an abundance of other evidence to

support the verdict, including the testimony of Killingsworth and

Smith; Maloof’s tape recorded conversations with Smith; the records

of phone calls among the co-conspirators at crucial times; and the

competitors’ price sheets reflecting orchestrated price increases.

Maloof challenges the district court’s four level sentence

enhancement under U.S.S.G. §3B1.1(a), which provides that the court

shall increase a defendant’s offense level by four levels if he was

“an organizer or leader of a criminal activity that involved five

or more participants or was otherwise extensive.” Section 3B1.1(a)

is satisfied if there is proof that the defendant led at least one

of the participants in the criminal activity. See United States v.

Okoli, 20 F.3d 615, 616 (5th Cir. 1994).

19
 Maloof argues that the conspiracy did not involve “five or

more participants” and that he was not an organizer or leader. The

commentary to §3B1.1 defines a participant as a person who is

criminally responsible for the commission of the offense but who

need not have been convicted. U.S.S.G. §3B1.1, comment. (n.1).

The district court concluded that the involvement of Maloof,

Rhodes, Killingsworth and three Bay employees (Janne Smith, Nancy

Jensen and Delores Hill) satisfied the five participant

requirement. Maloof argues that the district court failed to

apply the correct legal standards and clearly erred in its factual

findings in determining that each of these individuals was a

participant. During the sentencing proceeding the district court

stated: “Jane Smith was a participant in the conspiracy for a

period of time, at least, insofar as she carried out instructions

of the Defendant. Whether she had criminal intent or not is

irrelevant.” Further, the district court did not otherwise

indicate that it had determined that Smith, Jensen or Hill had

intentionally or willfully participated in the criminal conspiracy

or point to the evidence in the record that would support such a

finding.

We agree with Maloof that the district court erred in

concluding that Smith, Jensen and Hill were participants without

first determining that each of them was criminally responsible for

commission of an offense. “A finding that other persons ‘knew what

was going on’ is not a finding that these persons were criminally

20
responsible for commission of an offense. Willful participation is

an essential element of the crime of conspiracy; mere knowledge of

a conspiracy does not itself make a person a conspirator.” United

States v. Mann, 161 F.3d 840, 867 (5th Cir. 1998)(citing United

States v. D’Angelo, 598 F.2d 1002, 1003 (5th Cir. 1979)), cert.

denied, 119 S. Ct. 1766 (1999). Consequently, we vacate Maloof’s

sentences and remand the case to the district court with

instructions to clearly articulate the legal and evidentiary bases

for the punishment to be imposed and to resentence him accordingly.

We find no merit to Maloof’s other challenges to the district

court’s determination that he was an organizer or leader of the

conspiracy, including his contention that he did not exercise

control of persons other than Bay employees under his supervision.

In determining whether a defendant was an organizer or leader, the

court considers such factors as “the defendant’s exercise of

decision making authority, the nature of the defendant’s

participation in the commission of the offense, and the degree of

control and authority the defendant exercised over others.” United

States v. Ayala, 47 F.3d 688, 689-90 (5th Cir. 1995). The evidence

is sufficient to support findings that Maloof initiated the

proposal to maintain uniform prices and contacted Rhodes in January

1994 to solicit his agreement; that based upon this conversation,

Rhodes agreed to adopt identical prices for Mizell’s sales

representatives; that Maloof encouraged and directed Rhodes’

enlistment of additional conspirators and was actively involved in

21
the operations of the conspiracy, as he regularly exchanged price

sheets with his competitors, recommended higher freight charges for

customers, monitored Bay sales representatives’ adherence to the

agreement and informed Rhodes when sales representatives from other

companies deviated from the agreed upon pricing; that Smith, Jensen

and Hill worked for Bay under Maloof’s supervision; and that Maloof

directed Smith to adhere to the price sheet and played a role in

Hill’s firing when she would not comply with his requests.

III. CONCLUSION

For the reasons assigned, the convictions of the defendant -

appellant Maloof are AFFIRMED, but the sentences are VACATED, and

the case is REMANDED FOR RESENTENCING in accordance with law and

this opinion.

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