United States v. McLaren

• Court: Court of Appeals for the Fifth Circuit
• Decided: August 21, 2000
• Docket: 98-10762
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS For the Fifth Circuit

No. 98-10762

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

RICHARD LANCE MCLAREN; LINH NGOC VU; EVELYN ANN MCLAREN; JASPER EDWARD BACCUS; RICHARD GEORGE KIENINGER; ERWIN LEO BROWN; JOE LOUIS REECE; STEVEN CRAIG CREAR,

Defendants-Appellants.

Appeals from the United States District Court For the Northern District of Texas (3:97-CR-128-1-G) August 17, 2000

Before JOLLY and DeMOSS, Circuit Judges, and DOWD,* District Judge.

DeMOSS, Circuit Judge:**

Defendants Steven Craig Crear, Linh Ngoc Vu, Richard George

Kieninger, Erwin Leo Brown, Jasper Edward Baccus, Joe Louis Reece,

Evelyn Ann McLaren, and Richard Lance McLaren appeal their criminal

* District Judge of the Northern District of Ohio, sitting by designation. ** 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 R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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. convictions on multiple counts of mail fraud and bank fraud.

Defendant Vu also appeals the sentence imposed upon him by the

district court. We affirm.

Each of the eight defendants were either members or affiliates

of the Republic of Texas, a Texas-based secessionist group and

self-proclaimed sovereign nation located within the United States.

Defendants Richard and Evelyn McLaren were at all material times

husband and wife, who lived for many years in a secluded semi-rural

subdivision in the Davis Mountains near Fort Davis, Texas. While

in the process of conducting title research on their property, the

McLarens became convinced that Texas was not legally annexed by the

United States. In the early 1990s, the McLarens were part of a

group of people who founded the Republic of Texas based upon the

belief that Texas remained a sovereign nation. The organization

was based near Fort Davis, Texas, at a site declared to be the

Republic of Texas embassy.

After formation, the Republic of Texas set up a provisional

government and tried to get the State of Texas and the United

States to recognize that Texas was never lawfully annexed by the

United States. Richard McLaren was named chief foreign ambassador

and legal officer for the organization. At some point, the

independent Republic of Texas court system entered a default

judgment in favor of the Republic of Texas and against the State of

Texas, granting the Republic of Texas all of the assets held by the

State of Texas. Richard McLaren subsequently filed UCC notice of

2 lien forms evidencing the default judgment in various locations.

The defendants claim that they believed, on the basis of this

documentation, that the Republic of Texas enjoyed full ownership of

the assets of the State of Texas. The Republic of Texas then began

recruiting new members across the state, some of whom were to be

involved in the establishment of Republic of Texas banks. During

the recruitment campaign, the Republic of Texas, devised a cash-

generating scheme in which persons would be granted a Republic of

Texas bank charter in exchange for a cash payment to the Republic

of Texas. Some of the defendants were promised jobs and

substantial salaries as banking officers. For example, defendant

Crear, who was then a security guard incapacitated by a work-

related injury, was offered $250,000 per year.

The Republic of Texas, aided and instructed by an individual

named Arthur Griesacker, also devised a scheme for using financial

instruments referred to as “warrants” to secure the desired assets

from the treasury of the State of Texas. Griesacker, who

previously worked with secessionist groups in several other states,

purported to be an expert in such matters. The scheme involved the

use of form drafts or “warrants” similar to checks. The warrants,

which were issued with identifying serial numbers, were ordered

from a commercial printer. The documents were then made out to a

particular payee. In some cases, the warrants were used to make

payment for various credit card purchases or to obtain a cash

advance or other advantage from the credit card issuer. In others,

3 the warrants were presented directly to various individuals or

banks as payment for goods or services, or in exchange for cash or

its equivalent. In all cases, the intent was to use the warrants,

which were both non-negotiable and worthless, to obtain goods or

funds for Republic of Texas use. Typically, the recipient of the

fraudulent document would present the draft for payment to the

payor or warrantor on the draft, which was a trust established by

the Republic of Texas. The scheme called for the eventual

presentation of the warrants to the State of Texas for payment on

the authority of the default judgment and liens. The defendants’

criminal conduct in this case, as alleged in the various counts of

a twenty-six count superseding indictment, relates to the unlawful

scheme to secure money using the warrants, and more specifically,

to the individual defendants’ conduct in purchasing, executing,

mailing, receiving, or presenting the warrants. According to the

indictment, this unlawful conduct occurred between December 1995

and November 1997, when an indictment was returned charging each of

the defendants.

II.

A superseding indictment entered November 6, 1997 charged each

defendant with conspiracy to commit mail fraud and bank fraud, and

with substantive counts of mail fraud or bank fraud or both. The

case was tried to a jury over a six week period beginning in early

4 March 1998 and ending in mid-April 1998. At trial, the government

produced a virtual mountain of relevant and probative documentary,

videotape, and testimonial evidence. The jury returned guilty

verdicts as set forth below.

Defendant Crear was charged with conspiracy to commit mail

fraud and bank fraud (count 1), and five counts of mail fraud

(counts 8, 9, 10, 11, and 20). Crear was convicted on all charged

counts. In October 1998, Crear was sentenced to 27 months on each

count, to run concurrently.

Defendant Vu was charged with conspiracy to commit mail fraud

and bank fraud (count 1), and two counts of mail fraud (counts 25

and 26). Vu was convicted on one count of mail fraud (count 25),

but acquitted on the conspiracy count (count 1) and the other mail

fraud count (count 26). In August 1998, Vu was sentenced to 21

months imprisonment.

Defendant Kieninger was charged with conspiracy to commit mail

fraud and bank fraud (count 1), fourteen counts of mail fraud

(counts 6, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, and 25),

and four counts of bank fraud (counts 21, 22, 23, and 24).

Kieninger was convicted on all charged counts. In August 1998,

Kieninger was sentenced to 21 months on each count, to run

concurrently.

Defendant Brown was charged with conspiracy to commit mail

fraud and bank fraud (count 1), and six counts of mail fraud

(counts 12, 13, 14, 15, 16, and 17). Brown was convicted on all

5 six counts of mail fraud, but acquitted of the conspiracy charge.

In September 1998, Brown was sentenced to 21 months on each count,

to run concurrently.

Defendant Baccus was charged with conspiracy to commit mail

fraud and bank fraud (count 1), two counts of mail fraud (counts 3

and 4), and two counts of bank fraud (counts 22 and 23). Baccus

was convicted on one count of bank fraud (count 22), but acquitted

of the conspiracy charge, the two mail fraud counts, and the

remaining bank fraud count. In July 1998, Baccus was sentenced to

21 months imprisonment.

Defendant Reece was charged with conspiracy to commit mail

fraud and bank fraud (count 1), one count of mail fraud (count 5),

and one count of bank fraud (count 24). Reece was convicted on one

count of bank fraud (count 24), but acquitted on the conspiracy

charge and the mail fraud count. In October 1998, Reece was

sentenced to 21 months imprisonment.

Defendant Evelyn McLaren was charged with conspiracy to commit

mail fraud and bank fraud (count 1), four counts of mail fraud

(counts 2, 6, 7, and 19), and one count of bank fraud (count 21).

Evelyn McLaren was convicted on the conspiracy charge, on two of

the four counts of mail fraud (counts 6 and 19), and on the bank

fraud count (count 21). Evelyn McLaren was sentenced to 27 months

on each count, to run concurrently.

Defendant Richard McLaren was charged and convicted on all

twenty-six counts of the indictment, which included the conspiracy

6 count (count 1), twenty-one counts of mail fraud (counts 2-20, 25,

and 26), and four counts of bank fraud (counts 21, 22, 23, and 24).

McLaren was sentenced to a term of 151 months on each of counts 2

through 7 and counts 21 through 26, and a term of 60 months on each

of count 1 and counts 8 through 20, all to be served concurrently.

The defendants filed timely notices of appeal, and have raised

numerous issues which, taken cumulatively, allege reversible error

at virtually every stage of this lengthy trial. We have carefully

reviewed each of those issues in light of the defendants’ arguments

on appeal and the relevant portions of the record, and have

concluded that the district court should in all respects be

affirmed. Only one of the defendants’ issues merits further

discussion for purposes of this opinion.

III.

Each of the defendants maintains that the government failed to

disclose exculpatory evidence in violation of its duty under Brady

v. Maryland, 83 S. Ct. 1194 (1963). Specifically, the defendants

maintain that the government was obligated to disclose an F.B.I.

file and other materials in the government’s possession relating to

Republic of Texas affiliate Arthur Griesacker. The defendants

claim that Griesacker was a government informant and that the

government’s failure to disclose Griesacker’s F.B.I. file precluded

them from presenting a viable entrapment defense that could have

7 changed the result at their trial.

The defendants preserved error on this point by moving for

disclosure of Griesacker’s F.B.I. file and other materials relating

to Griesacker prior to trial. The government responded that, based

upon the personal investigation of the prosecutor in this case,

Griesacker was not a government agent or informant for any federal

law enforcement agency. The government further produced certain

responsive materials, including Griesacker’s F.B.I. file. The

district court conducted an in camera review of the materials and

concluded that neither the F.B.I. file nor the remaining materials

contained any Brady material. The defendants made a second motion

for disclosure at trial, which was likewise denied on the basis of

the district court’s earlier in camera review.

The defendants bolster their supposition that Griesacker was

a government informant with reference to several other facts.

First, the defendants note that Griesacker’s claimed financial and

legal expertise was all the more credible to Republic of Texas

members because Griesacker had apparently eluded prosecution for

similar conduct in the other states. In this vein, the defendants

claim that they held a good faith belief in the legality of the

scheme to use warrants as a result of Griesacker’s representations.

In hindsight, the defendants maintain that the only explanation for

Griesacker’s ability to avoid prosecution is that he must have been

a government informant. The defendants support this premise with

8 a NCIC report demonstrating that there was a federal warrant for

Griesacker’s arrest during the time that Griesacker was working

with Republic of Texas officials. Notwithstanding the fact that

there was an outstanding arrest warrant, Griesacker was not

arrested until after these defendants were indicted. The

defendants also rely upon a document prepared by the New York State

Banking Department, which states the Texas Attorney General’s

recommendation that negotiable instruments presented by the

Republic of Texas or Griesacker personally not be honored. The

defendants argue that this shows government knowledge of

Griesacker’s whereabouts and his affiliation with the Republic of

Texas during this time period. Finally, the defendants note that

the government failed to indict Griesacker for his own role in the

warrant scheme in this case.1

To establish a Brady violation, the defendants must show: (1)

that the prosecution suppressed evidence, (2) that the evidence was

favorable to their case, and (3) that the favorable evidence was

material to their case. See United States v. Green, 46 F.3d 461,

464 (5th Cir. 1995). When the district court has reviewed

materials alleged to contain Brady material in camera, and has

1 We note that Griesacker did not testify at trial. Although the defense tried to call him as a witness after he was arrested on the outstanding warrant, Griesacker refused to testify unless he received “sovereign judicial diplomatic immunity.” The district court held Griesacker in civil contempt and ordered a psychiatric evaluation to determine his competency. He was later found to be competent, but still did not testify.

9 determined that the materials do not in fact contain Brady

material, this Court’s standard of review is very deferential. See

id. Ordinarily, we will not go beyond a district court’s

determination that there is no Brady material to determine whether

exculpatory materials were withheld. Jones v. Butler, 864 F.2d

348, 356 (5th Cir. 1988). In this case, however, and based upon

our review of the record evidence, we were struck by the pivotal

role that Griesacker played in the scheme to defraud. Griesacker

claimed to be able to secure assets from the State of Texas based

upon his extensive experience with several other state militia or

secessionist groups. Griesacker instructed members of the Republic

of Texas in the use and feasibility of the warrants as a means to

accomplish this objective. Videotape evidence shows Griesacker to

be a zealous teacher, who often insisted on a particular course of

action, notwithstanding the initial resistance by some Republic of

Texas members. Given Griesacker’s pivotal role in the scheme to

defraud, we have, in an abundance of caution, expanded our review

beyond what is absolutely required to include a de novo review of

both the materials reviewed by the district court in camera as well

as the additional documentation relied upon by the defendants in

this appeal. Having concluded that review, we affirm the district

court.

Griesacker’s F.B.I. file contains absolutely no indication

that Griesacker is or ever was a government informant. Indeed,

10 without revealing the specific contents of the file itself, which

remains under seal, we can state with confidence that there are

concrete indications to the contrary. Likewise, the remaining

facts relied upon by the defendants do not tend to establish that

Griesacker was a government informant. It is true that there was

an outstanding warrant for Griesacker’s arrest during the time that

he was working with Republic of Texas members. The warrant was

issued on the basis of Griesacker’s involvement with a Kansas-based

group perpetuating a scheme to defraud similar to the unlawful

scheme at issue in this case. Likewise, we can probably assume

that, as a result of ongoing surveillance of Republic of Texas

activities, federal law enforcement officers were aware of

Griesacker’s developing relationship with the Republic of Texas

group. Neither of those facts, however, tends to establish that

there was any considered decision not to enforce the arrest warrant

for Griesacker, let alone that such a decision was made on the

basis that Griesacker was cooperating with the government. To the

contrary, the record reflects that Griesacker was eventually

arrested pursuant to the federal warrant and prosecuted in federal

district court. While it is true that the government elected not

to indict Griesacker on the basis of his conduct in this case, a

decision that the government attributes to problems with the proof

against Griesacker, Griesacker’s sentence in the Kansas case is

more than twice as long as that of any of the eight defendants in

this case, with the exception of defendant Richard McLaren. In a

11 post-argument filing made available to this Court, the prosecutor

in Griesacker’s case has likewise confirmed that, based upon

personal investigation, Griesacker was never an F.B.I. informant.

Similarly, the document prepared by the New York State Banking

Department is of no probative value with respect to whether

Griesacker was a government informant. At the very most, that

document merely reflects that Texas state law enforcement had

reason to question the legitimacy of negotiable instruments

presented by the Republic of Texas or Griesacker.

We conclude that the defendants’ Brady claim is premised upon

mere speculation that is not supported by the record. Stated

simply, there is no evidentiary support in this record for the

defendants’ speculation that Griesbacker could have been a

government informant. Indeed, this record, including the materials

reviewed in camera by the district court and this Court, strongly

supports the contrary conclusion; that is, that Griesbacker was not

a government informant. See Hughes v. Johnson, 191 F.3d 607, 629-

30 (5th Cir. 1999) (mere speculation does not adequately support a

claim for relief under Brady), cert. denied, 120 S. Ct. 1003

(2000). We therefore affirm the district court’s decision denying

the defendants’ motion for disclosure pursuant to Brady.

CONCLUSION

For the foregoing reasons, the district court is in all

12 respects AFFIRMED.