UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _____________________
No. 00-11292 _____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
ALFRED E. BREMERS,
Defendant-Appellant.
Appeal from the United States District Court for the Northern District of Texas (4:97-CR-111-1-R)
November 21, 2002
Before HIGGINBOTHAM, JONES, and BARKSDALE, Circuit Judges.
PER CURIAM:*
For Alfred E. Bremers’ appeal from his convictions for mail
fraud and interstate transportation of stolen securities, primarily
at issue is whether reversible plain error occurred because of the
Government’s repeated misrepresentation of a consent injunction
against Bremers. AFFIRMED.
I.
In 1990, Bremers, along with Snearly, Fields, Cox, and others,
formed Tekna Synergy Corporation to conduct oil and gas
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. exploration. Fields served as Tekna’s president; Bremers, as vice
president in charge of field operations; and Cox, as both vice
president of Tekna and president of InvestAmerica Financial
Services, a broker-dealer Tekna acquired to solicit investments in
Tekna’s exploration programs.
InvestAmerica brokers contacted, by telephone, high income or
net worth individuals, as well as previous investors in oil and gas
ventures. Although Bremers was primarily responsible for Tekna’s
field operations, he helped train InvestAmerica’s telephone brokers
and made telephone calls to potential investors.
If a contacted-person expressed interest in investing,
InvestAmerica would provide a private placement memorandum (PPM),
which pertained to particular drilling programs offered by Tekna;
each was tied to a particular well or wells. PPMs contained, inter
alia, corporate information, disclosures, geological information,
and investment documents.
InvestAmerica brokers misrepresented to potential investors
that Tekna had leases on certain drilling locations; PPMs and
attachments had misrepresentations concerning, inter alia, the
composition of Tekna’s “Advisory Board”, certain wells’ production
history, and existing wells’ production status; pamphlets regarding
the Securities Investors Protection Corporation were provided
investors, even though Tekna’s programs and investments in them
2 were not covered by SIPC insurance; and Bremers, by telephone, gave
false information to potential investors regarding well production.
Prior to Tekna’s formation, a consent injunction had been
obtained by the Securities and Exchange Commission against Bremers
(1986). It followed the SEC’s investigation of Bremers’ former
company, InterAmerica Minerals, Inc., and essentially prohibits
Bremers (as well as his officers, agents, employees, etc.) from
violating: Sections 5(a) and 5(c) of the Securities Act of 1933,
15 U.S.C. §§ 77e(a), (c) (prohibiting use of interstate commerce
and the mails in the sale, delivery, or offer to sell or buy non-
exempted securities, without first meeting certain
registration/filing requirements); Section 17(a) of the Securities
Act of 1933, 15 U.S.C. § 77(q)(a) (prohibiting use of interstate
commerce and the mails for purposes of fraud or deceit in the offer
or sale of securities); and Section 10(b) of the Securities
Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5
thereunder, 17 C.F.R. 240.10b-5 (prohibiting use of interstate
commerce or the mails for purposes of fraud or deceit in connection
with the purchase or sale of securities).
The disclosures in the PPMs about the injunction were
generally consistent with the following:
[P]rimarily as the result of the downturn in the oil industry and the corresponding rapid decline in oil prices, and regulatory proceedings and civil litigation instituted against Mr. Bremers, InterAmerica Minerals and several significant customers, Mr. Bremers
3 consented to the SEC entering a final Judgment and Order of Permanent Injunction on January 13, 1986, prohibiting violations of federal securities laws....
The Government charged: misrepresentations through, inter
alia, fallacious status reports, continued after Tekna had
attracted investment; Bremers approved a “Ponzi” scheme whereby
investors were sent “revenue checks” drawn on an account containing
funds raised from other investors; and Snearly formed TM
Corporation, which received part of the investments raised by
Tekna, to be shared by Bremers, Snearly, and Cox.
Tekna filed for bankruptcy. Bremers, along with Cox, Snearly,
and Stewart, another Tekna officer, were indicted in September 1997
for mail fraud, interstate transportation of stolen securities
pursuant to a scheme to defraud, and money laundering.
Cox pleaded guilty to a single count of interstate
transportation of stolen securities and cooperated with the
Government. The remaining defendants were found guilty in a jury
trial in 1998. Bremers, charged in 21 counts, was convicted on all
but three, which the Government had waived during trial.
The convictions were vacated because the district judge erred
in not recusing himself. United States v. Bremers, 195 F.3d 221,
229 (5th Cir. 1999).
On remand, Snearly and Stewart pleaded guilty to reduced
charges. In 2000, Bremers was convicted on two counts of mail
fraud, in violation of 18 U.S.C. §§ 1341 & 2, and five counts of
4 interstate transportation of stolen securities pursuant to a scheme
to defraud, in violation of 18 U.S.C. §§ 2314 & 2. He was
sentenced to, inter alia, 70 months imprisonment.
II.
At issue are: whether the Government’s misrepresentations
about the consent injunction constitute reversible plain error;
whether a fatal variance existed between the indictment and proof
for the interstate-transportation-of-stolen-securities counts; and
whether the admission of an unavailable witness’ prior testimony
violated the Confrontation Clause.
A.
Bremers contends the Government violated his Fifth and Sixth
Amendment rights to due process and a fair trial by misrepresenting
the terms of the consent injunction, to wit: that it prohibited
him from engaging in any sale of unregistered securities and he
consequently committed fraud by not disclosing this to investors;
and that it constituted evidence of past fraud and suggested
Bremers, for purposes of this case, acted in conformity with that
behavior.
At trial, however, Bremers did not object to these claimed
misrepresentations. When a party forfeits legal error by failing
to object, our review is sharply limited by the plain error
standard. E.g., United States v. Calverley, 37 F.3d 160, 162-64
(5th Cir. 1994) (en banc), cert. denied, 513 U.S. 1196 (1995). We
5 may only correct “clear” or “obvious” error that affects
substantial rights. See United States v. Olano, 507 U.S. 725, 734
(1993); Calverley, 37 F.3d at 162-64. Even then, we retain
discretion whether to correct it. Olano, 507 U.S. at 732.
Generally, we will do so only if the error “seriously affect[s] the
fairness, integrity, or public reputation of judicial proceedings”.
Id. (quoting United States v. Young, 470 U.S. 1, 15 (1985)).
Throughout trial, the Government misrepresented the
injunction’s terms. For example, in its opening statement, it said
Bremers “was permanently enjoined not to market oil and gas
securities if th[ey] were not registered with the SEC”. (Emphasis
added.) The portion of the injunction prohibiting use of
interstate commerce and the mails in the offering and sale of
unregistered securities, however, is expressly inapplicable to
transactions exempt from the provisions of Section 5 of the
Securities Act of 1933, e.g., “transactions by an issuer not
involving any public offering”. 15 U.S.C. § 77d(2). Restated, the
injunction prohibits the public sale of unregistered securities.
Tekna’s were privately offered.
The Government repeated this error in questioning several
witnesses, asking: Cox, “[The PPM disclosure statement] does not
tell investors that a court has ordered [Bremers] to refrain from
involving in any marketing of oil and gas interests unless they
register with the SEC, does it?” (negative response); an
6 InvestAmerica broker, “As a part of the [marketing] presentation,
did you ever disclose to investors that there had been a court
order issued against ... Bremers prohibiting him marketing
unregistered oil and gas securities?” (negative response); an
investor, “Did they tell you that the people involved in this were
under permanent[] injunction in the sale of securities?” (negative
response); Bremers’ wife, “Were you there when ... the order [was
signed] permanently barring your husband from selling oil and gas
unregistered securities because of fraud?” (negative response);
Fields, “You would agree this injunction ... prohibits Mr. Bremers
from ... making use of any means or instruments [of] transportation
or communication in interstate commerce or the mails to sell any
security in the form of fractional undivided oil and gas leases.
Is that true?” (affirmative response); and Tekna employee Norton,
“Were you aware[,] when you worked for Mr. Bremers at Tekna, ...
that he was under an injunction not to sell oil and gas wells? ...
I should say interest in oil and gas wells.” (affirmative
response).
Bremers also complains about the Government’s questioning
Tekna attorney Ramsey Slugg: “Let me make sure I’m clear. The
securities that Tekna was issuing are subject to this injunction.”
(affirmative response). Tekna’s securities were not subject to the
injunction’s prohibition on the public offering of unregistered
securities. They were, however, subject to its prohibition on use
7 of interstate commerce for purposes of fraud or deceit in the offer
or sale of securities.
During closing argument, discussing the PPM disclosures, the
Government asserted:
[The injunction] prohibits [Bremers] from selling or — himself or in concert with others, selling interests in oil and gas wells. And by his own witness’[s] testimony, Ramsey Slugg, that’s exactly — that’s exactly what they were selling through these brochures.... And I ask you — here’s the simple question. Does the language in these brochures ever disclose, ever disclose anything remotely similar to the fact that he’s been prohibited from doing exactly what he was doing[?]
In its closing argument rebuttal, and despite the injunction’s
providing that Bremers neither admitted nor denied the allegations
in the SEC’s 1986 complaint, the Government arguably implied the
injunction was proof of earlier misconduct and character evidence
to show conformity therewith:
Now, from the very first program[,] ... we also know that Mr. Bremers was resorting to old forms and old styles.... And the SEC couldn’t get his attention back in 1986 because you know he drifted right back to Tekna and the same old form.
Similarly, in the final part of its rebuttal, the Government
argued:
We also know that he’s run afoul of the SEC before. He’s smart enough to know exactly [how] to avoid this. And not one iota of admission for responsibility, everything was just fine. It was somebody else’s fault. That type of individual constitutes a very
8 real danger, an economic danger to people out there.
The SEC didn’t get his attention. It’s time somebody does.
For the most part, the Government appears to concede the
above-noted references constitute error. It maintains, however,
that the closing argument remarks were permissible because either
they were too ambiguous to constitute a Rule 404(b) violation or
were permissible to prove “preparation, plan, [or] knowledge”.
(Rule 404(b) prohibits admission of “[e]vidence of other crimes,
wrongs, or acts ... to prove the character of a person in order to
show action in conformity therewith”, but permits such evidence for
other purposes — e.g., proof of preparation, plan, or knowledge.
FED. R. EVID. 404(b).)
Assuming these references amounted to clear or obvious error,
the error must also affect substantial rights. “To satisfy [that]
requirement ..., the appellant must generally ‘make a specific
showing of prejudice’ — that is, the error ‘must have affected the
outcome of the district court proceedings.’” United States v.
Avants, 278 F.3d 510, 521 (5th Cir.) (quoting Olano, 507 U.S. at
734-35), cert. denied, 122 S. Ct. 2683 (2002). “The burden of
persuasion lies with the defendant. Absent a showing that a
substantial right has been compromised, no remedy is available.”
Calverley, 37 F.3d at 164 (emphasis added).
9 Bremers adequately discusses the nature of the Government’s
errors; but, he fails to show how they affected his substantial
rights. He states, conclusionally: “The strong prejudice to Mr.
Bremers is easily shown by the [G]overnment’s reliance on the
error, from the opening statement to the very last words in
closing”.
Bremers cannot demonstrate prejudice simply by illustrating
the error’s frequency; again, he must demonstrate it affected the
outcome. In that vein, he generally asserts that the remaining
“evidence of a scheme to defraud was by no means overwhelming” and
that “guilt or innocence in this case was closely contested”. This
does not satisfy his burden.
The indictment charged Bremers with a scheme to defraud.
In mail fraud cases the government need not prove every allegation of fraudulent activities appearing in the indictment. It need only prove a sufficient number of fraudulent activities to support a jury inference that there was a fraudulent scheme. Failure of the government to prove one or more of its allegations is not necessarily fatal to the government’s case....
United States v. Toney, 598 F.2d 1349, 1355-56 (5th Cir. 1979),
cert. denied, 444 U.S. 1033 (1980); see also United States v.
Davis, 752 F.2d 963, 970 (5th Cir. 1985) (same).
As the Government points out, the claimed misleading
disclosure about Bremers’ injunction was only one of many
fraudulent, material representations claimed to have been made in
10 the course of the scheme to defraud. Also alleged were fraudulent
representations regarding, inter alia: identities of Tekna
advisors, ownership of well leases, well production history, and
well viability.
Substantial evidence supported these allegations, including,
inter alia: testimony from Tekna-affiliated personnel who observed
Bremers, by telephone, misrepresent well productivity to investors;
letters from Bremers to investors exaggerating the productivity of
certain wells; testimony from a petroleum geologist falsely listed
in PPM attachments as a member of Tekna’s “Advisory Board”;
testimony from Cox that investors were falsely informed of, and
charged for, new wells being drilled, when instead existing wells
were being reentered; testimony from an InvestAmerica broker that
Bremers provided him misinformation to relay to an investor — that
what was actually a dry hole was “not a dry hole [and] that it was
going to be a very good well”; and testimony from an InvestAmerica
broker that Bremers would suggest ways to present and market Tekna
programs, but would preface such suggestions with, “you did not
hear the information from me”.
Bremers notes some of this evidence was contested or disputed;
but, he has not met his burden of establishing that, but for the
Government’s misrepresentations regarding the injunction, he would
not have been convicted.
11 B.
Bremers labels his next claim a challenge to the evidence
sufficiency for counts eight through 12 (interstate transportation
of stolen securities). More accurately, it is a claim of variance
between the indictment and the evidence: Bremers does not contend
the evidence was insufficient to prove the statutory elements;
rather, and as discussed infra, he maintains the evidence does not
support the wording of the indictment. “A variance between the
wording of an indictment and the evidence presented at trial is
fatal only if ‘it is material and prejudices ... [the defendant’s]
substantial rights.’” United States v. Sprick, 233 F.3d 845, 853
(5th Cir. 2000) (alteration in original; quoting United States v.
Mikolajczyk, 137 F.3d 237, 243 (5th Cir. 1998)).
Bremers maintains he preserved this issue for review with
acquittal motions at the close of both the Government’s case and
all the evidence. There is, however, no record of the substance of
those motions. We question whether a general motion for acquittal
can preserve a variance, as opposed to an evidence insufficiency,
claim. We need not decide this issue; even if preserved, the claim
fails.
Section 2314 prohibits, inter alia, the transportation “in
interstate ... commerce [of] any ... securities or money, of the
value of $5,000 or more, knowing the same to have been stolen,
converted or taken by fraud”. 18 U.S.C. § 2314. The elements of
12 such violation are: “(1) the interstate transportation of; (2)
goods, merchandise, wares, money, or securities valued at $5,000 or
more; (3) with knowledge that such items ‘have been stolen,
converted, or taken by fraud’”. United States v. McIntosh, 280
F.3d 479, 483 (5th Cir. 2002) (quoting 18 U.S.C. § 2314).
“[I]t is not necessary to show that [a defendant] actually ...
transported anything [himself]”, Pereira v. United States, 347 U.S.
1, 8 (1954), because “causing interstate transportation is made a
crime under ... § 2314”. Hubsch v. United States, 256 F.2d 820,
822 (5th Cir. 1958) (emphasis added). Nor is actual knowledge of
interstate transportation necessary. See United States v.
Mitchell, 588 F.2d 481, 483 (5th Cir.) (“Because the interstate
element is only included to provide a constitutional basis for the
exercise of federal jurisdiction, it is not necessary to show
actual knowledge by [the defendant] of the interstate
transportation of the security.”), cert. denied, 442 U.S. 940
(1979).
Counts eight through 12 allege Bremers
knowingly transported and caused to be transported in interstate commerce from [another State] to ... Texas, [a] security having a value of more than $5,000 ..., and at the time, ... knew the said security was stolen, converted and taken pursuant to the scheme to defraud alleged in the indictment.
(Emphasis added.) In this light, Bremers contends the Government
was required to prove: at the time each security (investor’s
13 check) crossed the Texas state line, he knew of its existence and
that it was stolen.
To the extent any variance exists between the indictment and
the proof, Bremers has made no attempt to demonstrate how it was
material or prejudicial to his substantial rights.
C.
Finally, Bremers bases error on the district court’s
admitting, in lieu of Gerstner’s live testimony, a transcript of
his testimony at Bremers’ first trial. The district court
concluded Gerstner was unavailable to testify in the light of: a
physician’s letter that Gerstner had a herniated disk, which the
district court characterized as a “medical problem”; and the
considerable distance Gerstner would have to travel to testify (San
Antonio to Dallas). “We review the district court’s decision to
allow admission of evidence for abuse of discretion.” United
States v. Wells, 262 F.3d 455, 459 (5th Cir. 2001).
The Government offered the transcript pursuant to Rule 804(b),
which provides, in part:
The following are not excluded by the hearsay rule if the declarant is unavailable as a witness:
(1) Former testimony. Testimony given as a witness at another hearing of the same or a different proceeding ... if the party against whom the testimony is now offered ... had an opportunity and similar motive to develop the testimony by direct, cross, or redirect examination.
14 (Emphasis added.) “‘Unavailability as a witness’ includes
situations in which the declarant ... is unable to be present or to
testify at the hearing because of ... then existing physical ...
infirmity”. FED. R. EVID. 804(a)(4).
Along those lines, “the traditional common law hearsay
exception allowing use of prior testimony of a witness once subject
to cross-examination, if the witness is unavailable, also applies
in the Confrontation Clause context”. Ecker v. Scott, 69 F.3d 69,
71 (5th Cir. 1995) (citing Ohio v. Roberts, 448 U.S. 56 (1980)).
Bremers maintains: Gerstner was not unavailable; and
admission of his prior testimony violated Bremers’ Confrontation
Clause rights. At trial, Bremers objected on Rule 804 grounds
(“Your Honor, just for the record[,] I would object and say this
doesn’t constitute being [un]available under the record and the
rule”. (Emphasis added.)). He did not object on Confrontation
Clause grounds. In the light of the similarity of purpose between
the Clause and the Rule, as well as the similarity in our case
law’s treatment of each, see Ecker, 69 F.3d at 72 n.3, we assume
Bremers preserved the Confrontation Clause issue.
“[T]he district court should engage in a multifactored
analysis when deciding whether a witness’s illness is sufficiently
grave to allow use of prior testimony”. Id. at 72. Those factors
include: “[t]he importance of the absent witness for the case; the
nature and extent of the cross-examination in the earlier
15 testimony; the nature of the illness; the expected time of
recovery; the reliability of the evidence of the probable duration
of the illness; and any special circumstances counseling against
delay”. Id. (quoting United States v. Faison, 679 F.2d 292 (3d
Cir. 1982)).
A herniated disk (aggravated by the hardship of traveling
almost 300 miles) may not seem overly incapacitating; but, that is
not the end of our inquiry. “The most important of the [above-
mentioned] factors are the first two”, id.: the importance of the
absent witness and the nature/extent of the earlier
cross-examination.
Regarding the former, “[a] trial court deciding whether to
allow use of prior testimony should carefully consider the role a
particular witness plays in the prosecution’s case, especially in
light of the defense’s trial strategy”. Id. Gerstner was by no
means crucial to the Government’s case. He testified: he heard
Bremers misrepresent well productivity to investors; and, when
questioned about it, Bremers acknowledged “embellish[ing] the
truth”. But, as Bremers concedes, that testimony was largely
similar to testimony of another Government witness — Wynne, a
drilling contractor. Needless to say, “[t]estimony providing
cumulative evidence ... might be admitted more readily than
testimony not sharing th[is] characteristic[]”. Id. (emphasis
added).
16 Bremers maintains that admission of Gerstner’s testimony
eviscerated his trial strategy — “to prove he was an honest,
trustworthy, straight shooter, who was not even involved in the
sales part of the business”. Gerstner’s testimony, however, was
merely but one piece in the Government’s otherwise substantial case
against Bremers.
Regarding the second factor, Bremers’ first trial involved the
same charges as the second trial. Accordingly, Bremers had the
same opportunity and motive to cross-examine Gerstner at the first
trial and did so. Bremers complains that portions of Gerstner’s
testimony helpful to his case were not read to the jury in the
second trial. But, as the Government notes, he did not object to
that omission.
The remaining factors are either neutral or militate against
admission of Gerstner’s testimony. Nevertheless,
[i]n the final analysis, the decision of whether a witness is unavailable for Confrontation Clause purposes requires an exercise of a trial court’s sound discretion, considering the possibility of a continuance in light of the Confrontation Clause’s interest in live testimony together with the state and the defendant’s joint interest in a prompt resolution of the criminal charges.
Id. The district court did not abuse that discretion.
III.
For the foregoing reasons, the judgment is
AFFIRMED.
17 18 Patrick E. Higginbotham, Circuit Judge, dissenting:
Alfred Bremers was charged with securities fraud. The
government offered evidence sufficient to support a guilty verdict.
That is the beginning, not the end of the story in this criminal
case – because Alfred Bremers had an arguable defense that the
government effectively took from him.
It was the burden of the prosecution to persuade the jury that
Bremers acted with criminal intent in the sale of securities – here
fractional interests in oil and gas drilling ventures. The
government, however, was not content to rest on the conduct
charged. Rather, it set out to put before the jury that Bremers
had done this before. And even more, that he had been enjoined
from doing it again by Judge Eldon Mahon, a revered figure in Fort
Worth and longtime federal trial judge.2
The government charged a failure to fully disclose this
fifteen-year-old consent decree as part of the overarching
fraudulent scheme from which the individual counts trailed. In
doing so, the government seriously misstated the consent decree,
turning a decree in which Bremers explicitly admitted no wrongdoing
2 The government’s cross of Bremers’ wife is an example: “Were you there when Judge Eldon B. Mahon signed the order permanently barring your husband from selling oil and gas unregulated securities because of fraud?” And again, the prosecutor accented that it was Judge Mahon who entered the injunction. “Before we move on, if you would, Rob, scroll down to the very end of this order, page 10. And it is entered on 4th day of March, 1986 by United States District Judge, Eldon B. Mahon.” and only agreed to obey the law, into a direct order of Judge Mahon
that Bremers was not to engage in sales activity. The government
pointed to the decree’s language enjoining Bremers from
participating in the sale of fractional interests, without a
registration statement on file, omitting the later qualifying
language that its prohibition did not apply to private placements.
Ironically, the government here charges a failure to disclose a
reach of the decree that it now concedes it did not have.
Whether this was simply a large mistake as the government now
urges or a deliberate tactic, we do not know. The explanation that
it misunderstood the decree would be rejected out of hand except
for the extraordinary circumstance that the public defender was
also oblivious to the true character of the decree – “just missed
it” is the present explanation.
So everyone, I can accept, tried this securities case ignorant
of the basics of the most common of SEC consent decrees. That it
was a mistake does not speak to its impact at trial; it does not
mean that this criminal defendant received a fair trial. To the
contrary, the use of the decree rendered Alfred Bremers’ trial
fundamentally unfair.
Make no mistake about this, the government at trial had a very
different view of the importance of the consent decree to its case
than does its appellate counsel. The prosecution challenged in the
20 indictment the adequacy of Bremers’ disclosure of the consent
decree to potential investors. The prosecution rolled out the
consent decree in its opening statement, and repeatedly trotted it
out in examining witnesses. Finally, it was the first document
the government turned to in its closing statement.3 With deference
3 The public defender’s brief makes the following unchallenged statements:
In opening statement, the prosecutor stated the jury would hear that Mr. Bremers ‘called the shots’ with regard to both the production and the sales division, and that investors did not know that Mr. Bremers ‘was permanently enjoined not to market oil and gas securities if that [sic] were not registered with the SEC.’ [It is, of course, the government’s statement that is not true.]
The government got the first witness to testify that the injunction precluded Mr. Bremers from participating in sales of oil and gas securities. The next witness testified that the securities were not registered, which was relevant only to the government’s mistaken point that the sale of the securities was in violation of the injunction.
Paige Hendricks was called to prove Mr. Bremers was involved in sales by proving his involvement in the production of the documents used to market the well. Robert Style, a broker, testified that Mr. Bremers was involved in the sales operations.
Roger Owen, another broker, testified that he never told the investors that there was an injunction prohibiting Mr. Bremers from participating in the sales of oil and gas interests, though he used the offering documents prepared by Mr. Bremers. Norman Greenfield, an investor, testified that Mr. Bremers was involved in marketing. H.T. Christman, an investor, testified that he was never told that Mr. Bremers was under a permanent injunction not to sell oil and gas securities. Steve Fedorko, an investor, testified that Mr. Bremers was involved in sales.
21 to my colleagues, I cannot agree that the doctrine of plain error
saves this conviction.
To my eyes, the “errors” were plain and rendered this trial
fundamentally unfair. The erroneous presentation of the consent
decree was both a mistaken statement of what had occurred, a
historical fact, and a misstatement of the law to the jury – by the
prosecution, by the judge, and even by the “defense.” All this in
a government case in which the jury returned a guilty verdict in
only seven of twenty-one counts and the defendant believed enough
in the oil prospects to personally put his daughter’s college fund
at risk – it was lost along with the investors’ money with the
failure to obtain production – and where much of the government’s
direct evidence came from a lawyer, its lead witness, who had pled
out in the case.
Bernice Norton testified that Mr. Bremers was enjoined from selling oil and gas interests. The coup-de-grace was inflicted when the government had Mr. Bremers’s own securities attorney to testify that Mr. Bremers was enjoined from being involved in the sales of these securities, and that Mr. Bremers knew this.
The government does not dispute that in final argument the prosecution argued to the jury that the injunction had prohibited Mr. Bremers from selling interests in oil gas wells, that his failure to disclose this was one of the lies that was easy to prove, that the very fact that Mr. Bremer’s was involved in TEKNA was proof of his guilt, and that if Mr. Bremers was in any involved in sales, he was guilty of the charges.
22 To be sure, there was plenty of evidence that investors were
not told all they should have been told. More precisely, there was
sufficient evidence to support a verdict that Bremers played a role
in a fraudulent scheme. His ever optimistic reports from the
drilling sites may well alone provide sufficient evidence to
sustain the verdict. But that he had not been a player in these
failed ventures was not his defense. His defense rested on
persuading the jury that there was a reasonable doubt that he had
acted with criminal intent; that he was the field man not the
office man, and the filings were prepared by a lawyer who worked
directly for the enterprise as well as outside counsel engaged as
specialists in securities law; that his enthusiasm, while in
retrospect unwarranted, was not infected by criminal purpose
because he also was its victim.
In short, that there is otherwise sufficient evidence and the
use of the decree was harmless isn’t an adequate response to this
set of errors that ran the full course of trial, with their
palpable impact upon honest triers of fact. I cannot escape the
reality that telling the jury that the defendant is an adjudicated
cheat – he had done it all before – sweeps away the defense of no
criminal intent. The determined use of the evidence compels both
the conclusion that the prosecutors believed it would have
precisely that effect and their judgment that the evidence was
23 necessary to its case. This alone is a large step toward a
conclusion that there is a reasonable likelihood that the outcome
would have been different without the use made of the decree.
Early in the trial defense counsel asked Ramsey Slugg, the
outside securities lawyer, what the failure of the SEC to seek
enforcement of the injunction meant:
Question: And that leads you to believe that what?
Answer: That they didn’t feel there was a problem with – Mr. Bremers’ activities were in violation of that injunction or they would have gone that route which would have been much easier.
The prosecutor was not content to leave this indisputably correct
statement by its own witness alone. To the contrary, the questions
on redirect of Mr. Slugg were:
Question: Mr. Slugg, the SEC did initiate an action, didn’t they?
Answer: Yes, they did.
Question: All right. Ultimately. Maybe not as soon as they ought to but they did, didn’t they?
Answer: Against Tekna and the individuals but not under the injunction, I don’t believe.
Question: Well, they did initiate an action and took evidence and proceeded?
Answer: Correct. They did.
(Vol. VII-64)
24 Their mistake was not in that judgment. It was rather their
erroneous view of what had in fact occurred fifteen years before in
that same federal court.
There are few perfect trials, and in the heat of trial honest
mistakes will occur, mistakes that after the fact are difficult to
fathom, even those as here. But good faith cannot answer our
question. In blunt terms, an apology framed for hanging on a cell
door is no substitute for fundamental fairness. Certainly the
doctrine of plain error is no hand maiden for such an outcome – at
least it should not be. And I see little point in leaving the
cleanup for the federal habeas claim of ineffective assistance of
counsel that will follow. I do not suggest that my colleagues
disagree with this in principle, that they are more tolerant of
unfairness, or lack concern over this error. To the contrary, the
majority opinion fairly sets out the facts. It is that we part
company in our judgments about the effect of the error upon the
trial. In making a judgment about the likelihood of a different
outcome absent the error, there will be honest differences of
opinions, as here. I am persuaded that Bremers has met his burden
of showing that a substantial right has been compromised4 and
4 See United States v. Calverley, 37 F.3d 160, 162-64 (5th Cir. 1994) (en banc), abrogated in part by Johnson v. United States, 520 U.S. 461 (1997).
25 severely affected the fairness and integrity of the proceedings.5
I would reverse and remand for a new trial.
5 United States v. Olano, 507 U.S. 725, 732, 736-37 (1993).