1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-23-1995

USA v Zehrbach

Precedential or Non-Precedential:

Docket 93-7477

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Recommended Citation

"USA v Zehrbach" (1995). 1995 Decisions. Paper 20.

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 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 Nos. 93-7477 and 93-7493 

 

 UNITED STATES OF AMERICA 

 

v. 

 DARUS H. ZEHRBACH, 

 Appellant in No. 93-7477. 

 ALEX A. MERVIS, 

 Appellant in No. 93-7493. 

 Appeal from the United States District Court 

 for the Middle District of Pennsylvania 

 (D.C. Criminal Action No. 92-00218-01 and 02) 

 

 Argued October 28, 1993 

 Before: ROTH, LEWIS and GARTH 

 Circuit Judges

 Reargued in banc October 17, 1994 

 Before: Sloviter, Chief Judge, Becker, Stapleton, 

 Mansmann, Greenberg, Hutchinson, Scirica, Cowen, 

 Nygaard, Alito, Lewis, Roth, McKee and Garth 

 Circuit Judges

 (Opinion Filed January 23, 1995) 

 

David M. Barasch 

United States Attorney 

Theodore B. Smith, III (Argued) 

Assistant United States Attorney 

Federal Building, 228 Walnut Street 
P.O. Box 11754 

Harrisburg, PA 17108 

 Attorneys for Appellee 

James V. Wade, Esquire 

Federal Public Defender 

Daniel I. Siegel, Esquire (Argued) 

Assistant Public Defender 

100 Chestnut Street, Suite 306 

Harrisburg, PA 17101 

 Attorneys for Appellant Zehrbach 

Donald J. Goldberg, Esquire (Argued) 

Creed C. Black, Jr., Esquire 

Ballard, Spahr, Andrews & Ingersoll 

1735 Market Street, 51st Floor 

Philadelphia, PA 19103 

 Attorneys for Appellant Mervis 

 

 OPINION OF THE COURT 

 

ROTH, Circuit Judge: 

 Defendants Darus Zehrbach and Alex Mervis appeal from 

jury verdicts convicting them each of two counts of bankruptcy 

fraud and one count of conspiracy to commit bankruptcy fraud, in 

violation of 18 U.S.C. § 152 (1988) and 18 U.S.C. § 371 (1988). 

In their appeals, Zehrbach and Mervis asserted two grounds for 

reversal. First, they argued that the district court erred in 

instructing the jury that the government need not prove, as an 

essential element of the crime, that they knew their actions to 

be illegal. Second, they asserted that comments made by the 
prosecutor in his closing argument, regarding two of the defense 

witnesses, triggered a rule of per se reversal under United 

States v. DiLoreto, 888 F.2d 996 (3d Cir. 1990). Their appeals 

were first heard by a panel of this court. On the basis of the 

panel decision, Zehrbach and Mervis petitioned for rehearing in 

banc, which was granted as to both issues. For the reasons that 

follow, we will overrule our ruling in DiLoreto, insofar as it 

established a per se rule,1 and we will affirm the convictions. 

I. 

 In the late summer or fall of 1989, appellant, Darus 

Zehrbach, a West Virginia businessman doing business under the 

name of Consolidated Assets Management Corporation ("CAMCORP"), 

formulated a plan to purchase the assets of bankrupt aircraft 

manufacturing companies. Zehrbach became particularly interested 

in Taylorcraft Aviation Corporation ("Taylorcraft"), a company 

located in Lock Haven, Pennsylvania, that was in the process of a 

Chapter 7 liquidation proceeding.2 Zehrbach retained the 

Pittsburgh investment banking firm, Drizos Investments, Inc., to 

facilitate the acquisition by locating other investors and 

securing financing. 

 

 1 In overruling the per se rule announced in DiLoreto, we do 

not, based upon the facts presented in that case, in any way 

overrule the result reached by the DiLoreto court in reversing 

the convictions. 

 

2 Largely because of a failed $458,000 bid to purchase 

Taylorcraft at a prior bankruptcy auction, the Taylorcraft 

bankruptcy proceeding had been converted from a Chapter 11 

debtor-in-possession proceeding into a Chapter 7 liquidation. 
 Appellant, Alex A. Mervis, a stock broker and a 

licensed pilot, had recently become an employee at Drizos 

Investments. Because of his aviation background, he was assigned 

to Zehrbach's project. Steven Drizos supervised Mervis's work on 

this assignment. Robert Smith of Capital Resources Group, a firm 

affiliated with Drizos Investments, was brought in to help with 

financing. Eventually, Mervis located John Polychron, a North 

Carolina investor, who agreed to become a limited partner in an 

association in which Zehrbach was to be the general partner. 

 The bankruptcy trustee for Taylorcraft was Charles 

Szybist, an attorney in Williamsport, Pennsylvania. Szybist 

contacted a number of potential bidders in an attempt to generate 

an offer that would be substantial enough to create a base for 

aggressive bidding. In September 1989, Szybist received a bid of 

$155,000 from Leander Research, Manufacturing and Distributing, 

Inc. ("Leander"). Using this as his base, Szybist notified 

creditors and other parties in interest of the offer, inviting 

higher bids to be submitted by October 23, 1989. The notice 

provided that Leander and all other higher, qualifying bidders 

would be permitted to participate at a final private auction to 

be held on October 30, 1989. 

 Three new parties, including Zehrbach through CAMCORP, 

entered bids. T. Chester Baker made a bid of $156,000; Starman 

Brothers Auctions bid $160,000; and CAMCORP bid $165,000. 

CAMCORP's bid had been agreed upon at a joint meeting between 
Zehrbach, Polychron, Drizos, Smith, and Mervis. Because the 

names of the bidders were released, the Zehrbach group was in a 

position to contact the other bidders. Zehrbach instructed 

Mervis to negotiate a "buy-out" of their bidding positions. 

Baker, for reasons unrelated to the case, lost interest in the 

acquisition. The other parties remained serious. According to 

Mervis, he did not hesitate to follow Zehrbach's instructions 

because Zehrbach was a bankruptcy expert who "did this all of the 

time." 

 Steven Starman, of Starman Brothers Auctions, testified 

at trial that he would have bid up to "$200,000 plus" for 

Taylorcraft. Appendix ("App.") at 189. On October 25, Starman 

received a call from Mervis who asked what it would take to keep 

Starman out of the bidding process. Starman agreed to withdraw 

from the bidding for a payment of $40,000, with $10,000 to be 

paid up-front and the remainder by January 1990. A draft 

agreement was sent from Mervis's office at Drizos Investments to 

Starman for his signature and return. The document 

mischaracterized the nature of the payment as made "[i]n return 

for services renderd [sic]." Starman also received a form of 

notice that he was to sign, have notarized, and send to the 

bankruptcy judge, informing the bankruptcy court of his 

withdrawal from the bidding process. Upon receiving these 

documents, Starman consulted his attorney, David Buelt, a 

specialist in trusts and estates, who redrafted the agreement to 
state that Starman Brothers Auctions was being paid to forgo its 

right to bid at the October 30 sale of Taylorcraft's assets. 

Steven Starman did not question Buelt about the legality of the 

agreement but merely expressed concerns about its enforceability. 

The parties executed the amended agreement, and, once Starman had 

received the initial $10,000 by wire transfer, he telephoned 

Szybist to inform him that he would no longer be participating in 

the bidding for Taylorcraft. 

 Leander Eckard, the president of Leander and the only 

other potential bidder, testified at trial that he would have 

been willing to bid up to approximately $250,000 for the purchase 

of Taylorcraft. App. at 179. Sometime shortly after the October 

23 close of bidding, Mervis had contacted Eckard to discuss how 

much it would cost to purchase his bidding position. Although at 

first Eckard was not interested, he began to reconsider his 

position after he encountered difficulty in obtaining financing 

for the potential acquisition. Eckard's initial request was for 

a payment of $100,000, but Zehrbach instructed Mervis to 

negotiate a lower figure. On October 26, Eckard and Mervis 

agreed on a $50,000 fee with $30,000 payable immediately and the 

remainder covered by a promissory note and security in one of the 

Taylorcraft airplanes. Eckard had planned to fly from Seattle, 

Washington, to visit the Taylorcraft plant the next day, October 

27, the last business day before the auction on October 30. He 
agreed to meet Mervis at the Pittsburgh airport to finalize the 

bid buy-out. 

 To document the agreement with Eckard, Mervis contacted 

Charles Vollmer, a Pittsburgh attorney. Vollmer had worked with 

Drizos Investments in the past. Mervis and Vollmer met at 7:30 

a.m. on October 27. Vollmer prepared three documents before 

departing for a 10:00 a.m. appointment. These documents were (1) 

a Letter of Intent for the limited partnership between Zehrbach 

and Polychron, which had not yet been formally created; (2) a 

letter to Polychron on Vollmer's firm letterhead with 

instructions on making the $30,000 wire transfer to Eckard; and 

(3) a bid buy-out agreement reflecting the terms of the 

negotiations between Mervis and Eckard. Like the revised 

agreement with Starman, the bid buy-out agreement stated that, in 

exchange for the payment, Leander "agree[d] to sell to TAC 

[Taylorcraft Acquisition Corporation, Zehrbach's group] all of 

its rights . . . [with regard to its bid for Taylorcraft] and, 

further, agree[d] not to participate either in its own right or 

through third parties in the bidding process." 

 At the time he drafted the documents, Vollmer knew very 

little about the transaction and had not conducted any legal 

research on the issues. After drafting the bid buy-out 

agreement, Vollmer expressed his uneasiness about the transaction 

to Mervis, stating that he "hoped this thing [was] legal." 
 During the afternoon of October 27, after Vollmer was 

able to consult two other attorneys and to do some legal 

research, he faxed a letter to Mervis and Smith explaining: 

 Under the terms of the Agreement, Taylorcraft 

Acquisition Corporation would buy out 

Leander's "position" in the Bankruptcy Court. 

Prior to this morning, I had thought that the 

"position" that was being bought out, if 

indeed there was one being bought out, was 

that of a secured creditor. I simply 

remarked to Alex that, "I hope this [is] 

legal." 

Mr. Vollmer then quoted, verbatim, the language of 18 U.S.C. 

§ 152, the statute under which Zehrbach and Mervis were later 

charged. Vollmer's letter concluded: 

 At this point, I must advise you that in 

my opinion, there is a possibility that this 

action violates these criminal provisions. 

Unless this matter is somehow reworked so 

that it is not a possible violation, such as 

a possible joint venture with Leander, I 

cannot recommend that you participate any 

further. Please advise. 

App. at 61-62. 

 In the interim, after meeting with Vollmer, Mervis had 

gone to the airport to meet Eckard. Mervis gave Eckard the buyout agreement, which Zehrbach had signed, and a $30,000 certified 

check. Mervis assured Eckard of the legality of the transaction, 

stating that his attorney had approved it. Eckard had already 
called Szybist to inform him that he would not be coming to view 

the Taylorcraft plant or to place a bid. 

 Upon Mervis's return to his office that afternoon, he 

was informed of the Vollmer letter which questioned the legality 

of the bid buy-out scheme. Vollmer, Mervis, and Smith then held 

a conference call with Zehrbach to inform him of Vollmer's 

concerns. Zehrbach dismissed Vollmer's opinion, suggesting that 

Vollmer did not know what he was talking about. After Drizos and 

Smith requested a second legal opinion, Zehrbach contacted his 

West Virginia attorney, James D. Crane, who had bankruptcy 

experience. Crane affirmed the legality of the transaction, but 

he characterized it as a joint venture that had merged bidding 

interests. Crane was never informed that two bidders had been 

paid to withdraw their bids. 

 After both Starman and Leander withdrew from the 

bidding process just days before the auction was to occur, 

Szybist called Mervis and spoke of his concern that the other 

bidders "were having some difficulties." In response, Mervis 

suggested not that there had been payments to withdraw, but 

rather that "we had formed a joint venture and we had merged our 

bidding interest." Szybist decided to postpone the auction from 

October 30 to November 15 and to make it public rather than 

private. At the auction, the Zehrbach-Polychron group was the 

only bidder. Szybist accepted its bid of $165,000. 
 Shortly after the final sale, Szybist contacted the FBI 

about the circumstances surrounding the withdrawal of the Starman 

and Leander bids. After an FBI investigation, Mervis and 

Zehrbach were indicted, tried, and convicted of one count of 

conspiracy to commit bankruptcy fraud, in violation of 18 U.S.C. 

§ 371,3 and of two counts of bankruptcy fraud, pertaining to 

actions with regard to Starman and Eckard, in violation of 18 

U.S.C. § 152.4 Specifically, Zehrbach and Mervis were charged 

with conspiring to pay two bidders for the assets of Taylorcraft 

to refrain from bidding in a bankruptcy auction, with actually 

paying the bidders to refrain from bidding, and with purchasing 

the assets as the sole bidders. 

 

 

3 Section 371, conspiracy to commit offense or to defraud 

United States, provides in part: 

 If two or more persons conspire either to commit 

any offense against the United States, or to 

defraud the United States, or any agency 

thereof in any manner or for any purpose, and 

one or more of such persons do any act to 

effect the object of the conspiracy, each 

shall be fined not more than $10,000 or 

imprisoned not more than five years, or both. 

 

4 Section 152, concealment of assets; false oaths and 

claims; bribery, provides in part: 

 Whoever knowingly and fraudulently gives, offers, 

receives or attempts to obtain any money or 

property, remuneration, compensation, reward, 

advantage or promise thereof, for acting or 

forbearing to act in any case under title 11; 

 . . . 

 Shall be fined not more than $5,000 or imprisoned 

not more than five years, or both. 
 Because the defendants did not substantively contest 

the actions attributed to them, the sole issue at trial was that 

of intent. Mervis and Zehrbach defended themselves on the basis 

of their good faith belief that they had done nothing illegal. 

Zehrbach's position, as stated by his counsel, was that Zehrbach 

had made a mistake, just as the three attorneys involved in the 

transaction, Buelt, Vollmer, and Szybist, had made a similar 

mistake, and that Zehrbach could not have had fraudulent intent. 

Mervis testified that he was working on a joint venture to merge 

the bidding interests. Mervis also emphasized that Drizos and 

Smith had supervised his involvement in the project. Mervis's 

counsel argued that because Mervis was acting in good faith to 

form a joint venture, he had no intention to deceive. The 

government contended, on the other hand, that Zehrbach and Mervis 

knowingly paid the other bidders to withdraw from the auction, 

thereby keeping down the price paid for the Taylorcraft assets 

and, as a consequence, cheating the creditors of Taylorcraft and 

the bankruptcy trustee. 

 This question of good faith and knowledge of the law 

became an issue in the formulation of the jury charge. The 

district judge proposed first to list the essential elements of 

the substantive offense and to follow that with a detailed 

discussion of the requirements that the acts be performed 

"knowingly" and "fraudulently." He would then, as Zehrbach and 

Mervis requested, give an instruction on "good faith." 
 Although Zehrbach and Mervis fully concurred in the 

scope and content of the good faith instruction,5 they challenged 

a portion of the "knowingly" instruction, in which the court 

stated that "[t]he government is not required to prove that a 

defendant knew that his acts were unlawful." When the district 

judge stated that he was going to leave this sentence in the 

instructions, counsel for Mervis requested, "May I have argument 

on that just to preserve my objection on the record?" App. at 

608 (emphasis added). The district judge replied: "Sure. I 

know you objected to that." Id. Counsel for Zehrbach then 

argued that the instruction had "the potential of confusing the 

jury." Counsel suggested: 

 By telling the jurors that the government is 

not required to prove that the defendant knew 

his acts were unlawful, the jurors may 

misconstrue that to mean that it is not 

relevant that the defendant did not know that 

his acts were unlawful. 

Id. at 609. Counsel asked that the sentence be deleted "in the 

interest of clarity" because of the potential for confusion and 

"because the instructions clearly state[d] the burden of the 

government and [did] not state that [proof of knowledge of 

illegality] [was] one of the burdens of the government, because 

it [hadn't] been suggested that this is one of the burdens of the 

 

 

5 At a pre-charge conference, the district court asked each 

party for their response to the court's rewrite of the good faith 

instruction. Mervis' counsel said that it was "satisfactory," 

and Zehrbach's counsel found it to be "really much better than 

[the] original good faith defense instruction." App. at 601-02. 
government and because it [would] not be suggested that is one of 

the burdens of the government . . .." Id.

 The following excerpt from the jury charge, which fills 

twenty-six pages of trial transcript in its entirety, places the 

remark in context. Topic headings have been inserted for the 

ease of the reader. The instructions were as follows: 

 [1. The Elements] 

 In order to meet its burden of proof [on 

the bankruptcy counts] as to either defendant 

the government must establish beyond a 

reasonable doubt each one of the following 

elements: First, that the defendant gave or 

offered any money, property, remuneration, 

compensation, reward, advantage or promise of 

any of those things to another in exchange 

for that other person's acting or forbearing 

to act; second, that the action or 

forbearance, in exchange for which the money, 

property, advantage or promise thereof was 

given or offered, was in a case under Title 

11 of the United States Code, the bankruptcy 

law; third, that the defendant gave or 

offered the money, property, advantage or 

promise thereof knowingly; and fourth, that 

the defendant did so fraudulently. 

 [2. "Knowingly"] 

 Now, in order to find a defendant guilty 

of bankruptcy fraud, therefore you must find 

beyond a reasonable doubt that the giving or 

offering of money, property, remuneration, 

compensation, reward, advantage or promise 

thereof was done knowingly. An act is done 

knowingly if it is done voluntarily and 

intentionally and not because of mistake or 

accident or other innocent reason. In other 

words, an act is done knowingly if the 

defendant is aware of the act and is not 

committing the act through ignorance, 

mistake, or accident. The government is not 
required to prove that a defendant knew that 

his acts were unlawful. 

 It is also necessary . . . that you find 

beyond a reasonable doubt that the defendant 

knew that his acts were in connection with a 

bankruptcy proceeding. You may consider 

evidence of a defendant's words, acts or 

omissions along with all other evidence in 

deciding whether a defendant acted knowingly. 

 [3. "Fraudulently"] 

 Also, . . . you must . . . find beyond a 

reasonable doubt that the giving or offering 

of money, property, remuneration, 

compensation, reward, advantage or promise 

thereof was done fraudulently. In a 

bankruptcy case, an act is done fraudulently 

if it is done with the intent to defraud the 

creditors of the bankrupt entity or with the 

intent to defraud the United States or the 

trustee in bankruptcy concerning their right 

and governmental function of regulating 

bankruptcies and fairly distributing the 

assets of the bankrupt entity. 

 Now, to act with fraudulent intent . . . 

means to act knowingly and with the specific 

intent to deceive, ordinarily for the purpose 

[of] either causing some financial loss to 

another or bringing about some financial gain 

to one's self [sic]. 

 Now, intent ordinarily may not be proved 

directly because there is no way of fathoming 

or scrutinizing the operations of the human 

mind, but you may infer a defendant's intent 

from the surrounding circumstances. You may 

consider any statements made and done or 

omitted by a defendant and all other facts 

and circumstances in evidence which indicate 

his state of mind. 

 To act with a fraudulent intent a person 

must act knowingly and with the intention or 

the purpose to deceive or to cheat, in this 

case either to deceive or to cheat the 

creditors of Taylorcraft Aviation Corporation 

or the bankruptcy trustee. 
 [Passage distinguishing intent and motive 

omitted.] 

 [4. "Good faith"] 

 Now, a defendant may contend that he did 

not act with the specific intent to commit 

the crimes with which he is charged since he 

acted in good faith. A good faith is a 

complete defense to charges of acting with 

fraudulent intent because good faith is 

simply inconsistent with the intent to 

defraud. A person acts with fraudulent 

intent and without good faith when he acts 

with a purpose to deceive or to cheat, and so 

as to deprive another person of a right or 

property. While the term good faith has no 

precise definition, it means, among other 

things, an absence of an intention of taking 

advantage of another. 

 The burden of proving that a defendant 

did not act in good faith is on the 

government. In determining whether a 

defendant acted in good faith you should 

consider all of the evidence in the case 

bearing on that defendant's state of mind. 

 If the evidence leaves you with a 

reasonable doubt as to whether a defendant 

acted with the intent to defraud, or in good 

faith, you must acquit him. On the other 

hand, if you find that the government has 

proven beyond a reasonable doubt all of the 

other elements of the charged crimes and that 

a defendant did not act in good faith, then 

you should find that defendant guilty. 

(Emphasis added). 

 At the conclusion of the reading of the jury charge, 

defense counsel renewed their objections to the instruction that 

the government was not required to prove that a defendant knew 

his acts were illegal. App. at 726. 
 Zehrbach and Mervis also objected during closing 

argument to comments that the prosecutor made in regard to Drizos 

and Smith, whom the defense had called as witnesses to support 

Mervis's testimony that he believed he was creating a legal joint 

venture to acquire Taylorcraft. In his closing argument, the 

prosecutor suggested that neither Drizos nor Smith was "worthy of 

belief," citing testimony which cast doubt on their credibility. 

Specifically, the prosecutor pointed to Drizos's failure to 

inform Polychron that an attorney had advised Drizos to refrain 

from further action in connection with the buy-outs. He 

similarly noted Drizos's failure to ensure that his employee 

(Mervis) stop his involvement in potentially illegal activity. 

The prosecutor also cited the inconsistencies between what Smith 

had told the FBI and Smith's testimony in court. The prosecutor 

then commented: 

 I suggest you shouldn't believe Drizos and 

Smith because they're guilty of exactly the 

same bankruptcy fraud that these two 

defendants are guilty of. And don't you 

assume that they are not going to get what's 

coming to them either. 

 Both defense counsel immediately objected to this 

statement. The district judge granted their motion to strike. 

He cautioned the jury to "disregard the last statement of the 

prosecutor with respect to what may or may not happen with 

respect to these two gentlemen." Moreover, the judge 

subsequently instructed the members of the jury to disregard 
counsel's personal opinions and to make decisions based solely on 

the evidence. He then reminded the jury not to consider any 

evidence that he had instructed them to disregard in the course 

of the proceedings. 

 Defense counsel later moved for a mistrial on the 

ground that the second comment was irrelevant and was based upon 

information outside the record. The district court denied the 

motion, citing its curative instructions and questioning whether 

the statement "could have resulted . . . in any serious prejudice 

to either defendant." Similarly, in denying Zehrbach's motion 

for a new trial, the district court held that the first sentence 

of the statement was properly based on evidence of the witnesses' 

own guilt that had been adduced at trial and that any improper 

inference that might have been induced by the second sentence had 

been cured by the court's instructions. United States v. 

Zehrbach, No. 92-0218, mem. op. at 8-9 (M.D. Pa. Jul. 7, 1993). 

 Following the jury verdict, the district judge 

sentenced Zehrbach to a term of imprisonment of 21 months, 

followed by three years of supervised release, and sentenced 

Mervis to 10 months of imprisonment, followed by two years of 

supervised release. Zehrbach and Mervis base their appeal on the 

two issues of the jury instructions and of the prosecutor's 

remarks in closing argument. 
 The district court had subject matter jurisdiction 

pursuant to 18 U.S.C. § 3231 (1988), and this court is vested 

with appellate jurisdiction pursuant to 28 U.S.C. § 1291 (1988). 

 II. THE JURY CHARGE. 

A. 

 Zehrbach and Mervis objected to the trial judge's 

instruction that "the government is not required to prove that a 

defendant knew that his acts were unlawful" on the grounds, 

expressed by counsel, that it had "the potential of confusing the 

jury." Defense counsel suggested that "[b]y telling the jurors 

that the government is not required to prove that the defendant 

knew his acts were unlawful, the jurors may misconstrue that to 

mean that it is not relevant that the defendant did not know his 

acts were unlawful." Although neither Zehrbach or Mervis's 

attorney proposed any clarifying language, they asked that the 

sentence be dropped "in the interest of clarity." 

 The extent of the grounds for defense counsels' 

objection to the challenged instruction are not entirely clear 

from the record. The objection could be construed as a challenge 

to the trial court's inclusion of the instruction as a matter of 

law. Alternatively, the objection could be read as a challenge 

merely to the confusing nature of the instruction. The basis of 

the objection determines the appropriate standard of review. We 

will consider the issue first as a review of the legal propriety 
of the instructions. In this light, if the objection is 

construed as a challenge to the court's statement of the legal 

standard, we exercise plenary review. United States v. McGill, 

964 F.2d 222, 235 (3d Cir. 1992); Savarese v. Agriss, 883 F.2d 

1194, 1202 (3d Cir. 1989). In connection with a review of the 

legal sufficiency of the instructions, however, if we were to 

determine that counsel had not objected at trial to the court's 

statement of the legal standard, we would review the legal 

propriety of the instructions on a "plain error" standard.6 

Whether we exercise plenary review or apply the plain error 

standard, however, we conclude that the court did not err in 

stating the relevant legal principles. 

 Zehrbach and Mervis concede that the jury charge 

correctly stated the government's burden of proof. The jury 

instruction did not omit any of the four essential elements of 

bankruptcy fraud. The trial judge properly instructed the jury 

that the government was required to establish beyond a reasonable 

doubt: 

 

 

6 Where a party has not made a clear, specific objection to 

the charge that he alleges is erroneous at trial, he waives the 

issue on appeal "unless the error was so fundamental and highly 

prejudicial as to constitute plain error." Bennis v. Gable, 823 

F.2d 723, 727 (3d Cir. 1987) (internal quotation omitted); see 

also United States v. Santos, 932 F.2d 244, 250-53 (3d Cir.) 

(examining the court's failure to define the burden of proof 

applicable to a duress defense for plain error where the party 

objected to the court's failure to give the defendant's proposed 

duress instruction), cert. denied 112 S. Ct. 592 (1991); United 

States v. Castro, 776 F.2d 1118, 1128-30 (3d Cir. 1985), cert. 

denied, 475 U.S. 1029 (1986). 
 First, that the defendant gave or offered any 

money, property, remuneration, compensation, 

reward, advantage or promise of any of those 

things to another in exchange for that other 

person's acting or forbearing to act; second, 

that the action or forbearance, in exchange 

for which the money, property, advantage or 

promise thereof was given or offered, was in 

a case under Title 11 of the United States 

Code, the bankruptcy law; third, that the 

defendant gave or offered the money, 

property, advantage or promise thereof 

knowingly; and fourth, that the defendant did 

so fraudulently. 

App. at 716. 

 Zehrbach and Mervis do not argue that the elements of 

bankruptcy fraud were improperly set out. They contend, however, 

that the challenged instruction, contained in the court's further 

explanation of the element "knowingly," contradicted the court's 

good faith instruction. As set out infra, the trial judge had 

instructed the jury that good faith is a complete defense to 

bankruptcy fraud and that the government must prove that a 

defendant did not act in good faith. Zehrbach and Mervis made 

the good faith charge relevant by their claim that they were 

involved, not in an attempt to silence competing bidders, but 

merely in a joint venture with Starman and Leander to acquire 

Taylorcraft. 

 Our first consideration in reviewing defendants' 

argument is whether a good faith defense was necessary in view of 

the description of the elements of bankruptcy fraud which the 

district court gave to the jury. If the jury found beyond a 
reasonable doubt that, by paying competitors not to bid in the 

auction, Zehrbach and Mervis acted with fraudulent intent to 

deceive or to cheat the creditors of Taylorcraft Aviation 

Corporation or the bankruptcy trustee, it would be inconsistent 

with this conclusion for the jury also to find that Zehrbach and 

Mervis had acted with good faith. When a jury has determined 

that an accused has intended to cheat his victim, the possibility 

that the accused also acted in good faith has been eliminated. 

 Because the trial judge had delivered detailed 

instructions regarding the elements of bankruptcy fraud, and in 

particular regarding the element of acting with fraudulent 

intent, the good faith instruction became in fact superfluous. 

The good faith instruction merely reiterated that the government 

carried the burden of demonstrating that the defendants did act 

with the requisite fraudulent intent. 

 Moreover, as Zehrbach and Mervis acknowledge, proof of 

knowledge of illegality is not a burden of the government in a 

bankruptcy fraud case. The statutory requirement that the 

underlying acts be performed "knowingly" requires only that the 

act be voluntary and intentional and not that a person knows that 

he is breaking the law. See Cheek v. United States, 498 U.S. 

192, 199 (1991) (stating that as a general rule, the government 

is not required to prove the criminal defendant's knowledge of 

the illegality of his actions); United States v. Brown, 862 F.2d 

1033, 1038 n.5 (3d Cir. 1988). 
 The instant case differs from those cases involving 

criminal offenses for which proof of knowledge of illegality is 

an element of the government's prima facie case. In such cases, 

mistake of law is a complete defense. For instance, the Supreme 

Court recently held that the "willfulness" element of the antistructuring provision of the financial transaction reporting 

requirements, contained at 31 U.S.C. §§ 5322(a) & 5324, requires 

proof of knowledge of illegality. See Ratzlaf v. United States, 

114 S.Ct. 655, 658 (1994). The Court based its holding upon a 

strict reading of the statutory language of the two sections. 

Section 5324 provides that it is illegal to "structure" financial 

transactions "for the purpose of evading" a financial 

institution's reporting requirements. Section 5322(a) 

establishes that "a person willfully violating" the antistructuring provision (§ 5324) is subject to criminal penalties. 

The Court found that failure to read knowledge of illegality into 

a violation prosecuted under § 5322 would -- in light of § 5324's 

purposefulness requirement -- treat "§ 5322(a)'s `willfulness' 

requirement essentially as surplusage." Id. at 659-60. In 

concluding, the Court stated that it did not "dishonor the 

venerable principle that ignorance of the law generally is no 

defense to a criminal charge" and emphasized that its decision 

was particular to the plain meaning of the statute then before 

it.7 Id. at 663. See also Staples v. United States, 114 S.Ct. 

 

 

7 Since Ratzlaf was decided, Congress has amended § 5324 so 

that it contains its own criminal penalty provision, making 
1793, 1804 (1994) (government required to prove defendant knew of 

the features of his semiautomatic firearm which brought it within 

the scope of the National Firearms Act, requiring registration of 

fully automtic weapons); United States v. Curran, 20 F.3d 560, 

568-69 (3d Cir. 1994) (applying the Ratzlaf willfulness standard 

by analogy where the prosecution alleged a violation of the 

disclosure obligations imposed under the Election Campaign Act); 

United States v. Gross, 961 F.2d at 1102 (noting that belief in 

legality is a complete defense to the crime of making false 

statements to the Securities and Exchange Commission where the 

parties stipulated that the Government had the burden of showing 

that the defendant acted with knowledge of the wrongfulness of 

his actions). 

 We conclude, in light of the elements making up the 

offense of bankruptcy fraud, particularly the element of intent 

to defraud the creditors or the trustee of the bankruptcy estate, 

that a defendant's good faith belief in the lawfulness of his 

conduct is not a defense to bankruptcy fraud. In a case like the 

present one, where the defendants have claimed they were 

(..continued) 

resort to § 5322(a) unnecessary. The amended provision does not 

refer to a mental state but declares that "[w]hoever violates 

this section shall be fined in accordance with title 18, United 

States Code, imprisoned for not more than 5 years, or both." 

1994 Riegle Community Development and Regulation Improvement Act, 

Pub. L. No. 103-325, § 411, 108 Stat. 2253 (1994). Because the 

provision no longer incorporates the willfulness requirement of 

§ 5322(a), the only mental state that the Government must prove 

in prosecutions for structuring is the purpose of having a 

financial institution not file a required report. 
attempting to set up a joint venture, a belief that acquisition 

of Taylorcraft through a joint venture was proper would be 

relevant for the jury to consider in determining if there was 

intent to defraud. However, the element of "knowledge of 

illegality" which is required in federal criminal tax offenses, 

see Cheek, 498 U.S. at 192, or in the violation of election 

disclosure obligations, see Curran, 20 F.3d at 569, is not a 

required element of bankruptcy fraud. Therefore, proof by a 

defendant of lack of knowledge of illegality cannot in and of 

itself defeat a conviction for bankruptcy fraud.8

 In challenging the legal sufficiency of the charge on 

knowledge of illegality, Zehrbach and Mervis also argue that the 

inclusion of the statement unconstitutionally shifted the burden 

of proof or precluded the jury from considering proper 

exculpatory information. They rely primarily on two cases, 

United States v. Rhone, 864 F.2d 832 (D.C. Cir. 1989) and United 

States v. Schilleci, 545 F.2d 519 (5th Cir. 1977), both of which 

we find to be distinguishable. 

 

 

8 For this reason, we do not find error in the district 

court's ruling, if the court in fact did so rule, that defense 

counsel could not argue that good faith is a defense if there is 

a mistake as to the law, see App. at 607-08, so long as the 

element of intent to defraud had to be proved by the government 

beyond a reasonable doubt and so long as the jury could consider 

the defendant's state of mind in making its determination on 

intent to defraud. It is because we find that these latter two 

requirements were met in this case that we do not find such a 

ruling would have been erroneous. 
 In Rhone, the defendant appealed her conviction for 

mail fraud and theft arising out of her continued receipt of 

unemployment benefits after she had become employed full time. 

As in the instant case, the government had the burden of 

establishing specific intent to defraud, and the defendant's sole 

defense was that she lacked the requisite intent, i.e., that she 

didn't believe that her employment qualified as "full time" 

employment. At the close of the case, the trial court gave a 

standard jury instruction on specific intent to defraud but ended 

the instruction with the following statement: "And I should 

point out at this time that ignorance of the law is no excuse." 

United States v. Rhone, 864 F.2d at 834. 

 Suggesting that the quoted instruction eased the 

government's burden of proving specific intent beyond a 

reasonable doubt or at least "confused the jury on the very 

central issue of intent," the D.C. Circuit found that the 

statement created constitutional error requiring a new trial. 

Id. at 836-37. The court concluded that 

 [t]he jury . . . could well have inferred 

that the prosecution had met its burden of 

proving specific intent beyond a reasonable 

doubt simply on the basis that appellant was 

presumed to know the law and that she 

therefore knowingly committed fraud and 

theft. 

Id. at 837. 

 We believe that the instruction in Rhone went far 

beyond the instruction given in this case. That instruction 
effectively told the jury that ignorance of the law is 

irrelevant, suggesting -- incorrectly -- that the jury should not 

even consider the defendant's lack of knowledge of the law 

regarding her legal entitlement to unemployment benefits. In the 

instant case, the court merely instructed the jury that the 

government was not required to prove that the defendants knew 

their actions to be illegal. This instruction correctly stated 

the government's burden of proof in this case and in addition was 

made pursuant to a charge in which the district court instructed 

the jury no less that three times, once each in connection with 

the defense of "good faith" and the elements of "knowingly" and 

"fraudulently," that they "should consider all of the evidence in 

the case bearing on that defendant's state of mind." 

 Schilleci involved the appeal of a conviction for 

conspiring to intercept wire and oral communications, in 

violation of 18 U.S.C. § 2511. This offense is a crime of 

specific intent and has been held to require an intentional or 

reckless disregard of legal obligations. See Malouche v. JH 

Management Co., Inc., 839 F.2d 1024, 1025 (4th Cir. 1988) (§2511 

was intended "to denote at least a voluntary, intentional 

violation of, and perhaps also a reckless disregard of, a known 

legal duty", citing Citron v. Citron, 722 F.2d 14, 16 (2d Cir. 

1983) cert. denied, 466 U.S. 973 (1984)). For this reason we do 

not find that the Fifth Circuit's reasoning in Schilleci is 

helpful to our consideration of an offense, like bankruptcy 
fraud, where the government must prove intent to cheat or defraud 

but where there is not a duty for the government to prove that 

the defendant knew his acts were illegal. 

 Contrary to the arguments of Zehrbach and Mervis, we 

find that the charge in the instant case fairly and adequately 

submitted the issues to the jury for determination. The charge 

accurately stated the government's burden of proof. It did not 

preclude consideration of defendants' claim that they thought 

they were putting together a joint venture and that they did not 

know that what they were doing was illegal. Importantly, the 

challenged instruction did not shift the government's burden of 

proving fraudulent intent. At the same time, however, it did not 

preclude the jury from considering exculpatory information which 

Zehrbach and Mervis introduced in an effort to establish their 

defense. Rather, the instruction merely explained that proof of 

knowledge of illegality was not a burden of the government's case 

in chief. We conclude that the court did not err as a matter of 

law in setting forth the legal standards governing the jury's 

consideration. 

 Moreover, since we have found that the legal standard 

of the charge survived plenary review on the supposition that a 

proper objection was made to the jury instructions, if we should 

instead determine that defense counsel failed to object to the 

legal propriety of the inclusion of the "the government is not 

required to prove that a defendant knew that his acts were 
unlawful" language in the jury instructions, clearly the giving 

of this charge does not constitute plain error.9

B. 

 Whether or not defense counsel preserved an objection 

to the legal sufficiency of the charge, counsel clearly objected 

to the charge on the ground that it was potentially confusing to 

the jury. In reviewing jury instructions, we review the trial 

court's expression for abuse of discretion. Savarese v. Agriss, 

883 F.2d at 1194; United States v. Messerlian, 832 F.2d 778, 789 

(3d Cir. 1987), cert. denied, 485 U.S. 988 (1988). We must 

consider "whether, viewed in light of the evidence, the charge as 

a whole fairly and adequately submits the issues in the case to 

the jury." Bennis v. Gable, 823 F.2d at 727. We must reverse if 

"the instruction was capable of confusing and thereby misleading 

the jury." Bennis v. Gable, 823 F.2d at 727 (citing United 

States v. Fischbach and Moore, Inc., 750 F.2d 1183 (1984)); 

United States v. Goldblatt, 813 F.2d 619, 623 (3d Cir. 1987). 

 Examining the jury charge as a whole, we cannot agree 

with Zehrbach and Mervis that the challenged instruction was 

capable of confusing the jury, even in relation to the good faith 

instruction. Notably, the good faith instruction came after the 

 

 

9 This court has defined "plain error" as "those errors that 

seriously affect the fairness, integrity or public reputation of 

judicial proceedings." United States v. Santos, 932 F.2d at 250 

(internal quotation omitted). The doctrine is applied 

"`sparingly' . . . and only where the error was sure to have had 

an `unfair prejudicial impact on the jury's deliberations.'" Id.

(citation omitted). 
instructions on "knowingly" and "fraudulently," serving as a 

general statement on the absence or existence of the required 

intent. The court explained that good faith is an absolute 

defense, that "all evidence bearing on [the] defendant's state of 

mind" should be considered, and that the jury must acquit if they 

had a reasonable doubt about the existence of intent or good 

faith. Given this language, it is unlikely that the jury 

mistakenly did not consider Mervis and Zehrbach's alleged belief 

in the legality of their actions when the jury was deliberating 

on the question of whether the government had proved fraudulent 

intent beyond a reasonable doubt. 

 As a more general matter, the court continuously 

reinforced the notions that the burden of proof in a criminal 

case is always upon the government; that the defendants are 

protected by a presumption of innocence; and that, unless they 

are proven guilty beyond a reasonable doubt, the defendants must 

be acquitted. The court repeated these principles at least six 

times during the course of its final instructions to the jury. 

In addition, the court instructed the jury to "consider the 

charge as a whole," rather than "singl[ing] out any one 

instruction." This reinforces our belief that the jury would not 

have been misled by the single instruction that the government 

need not prove knowledge of illegality. 

 Moreover, when defense counsel first challenged the 

instruction, the court explained that it felt that the 
instruction was necessary in order to clarify precisely what 

"knowledge" is required of a defendant who acts "knowingly" in 

the commission of bankruptcy fraud. That decision was clearly 

committed to the discretion of the district court. Here, 

Zehrbach and Mervis did not challenge the content of the good 

faith instruction, nor did they propose the inclusion of a 

sentence clarifying the relationship between their claimed 

ignorance of the law and their good faith defense. They simply 

challenged the inclusion of language which in fact correctly 

commented on an element that the government did not need to 

prove. Therefore, because we believe that the jury charge, taken 

as a whole, was not misleading or confusing to the jury, we find 

no abuse of discretion. 

 III. THE PROSECUTOR'S REMARKS. 

A. 

 We turn next to Zehrbach and Mervis' argument that the 

prosecutor prejudiced their right to a fair trial when he stated 

in his closing argument: 

 I suggest you shouldn't believe Drizos and 

Smith because they're guilty of exactly the 

same bankruptcy fraud that these two 

defendants are guilty of. And don't you 

assume that they are not going to get what's 

coming to them either. 

Zehrbach and Mervis urge that these remarks comment on the 

credibility of Drizos and Smith, based on facts not in the 

record, and are therefore per se grounds for a new trial under 
DiLoreto, 888 F.2d at 996. For the reasons stated below, we will 

overrule the per se rule of DiLoreto. Rather than using the 

DiLoreto per se rule, we will analyze this case on its own facts. 

In making this analysis, because we must conclude that the 

prosecutor's remarks were improper, we will go on to weigh the 

remarks under a harmless error standard. See United States v. 

Young, 470 U.S. 1, 11-12 (1985). 

B. 

 Prosecutorial misconduct does not always warrant the 

granting of a mistrial. The Supreme Court has acknowledged that 

given "the reality of the human fallibility of the participants, 

there can be no such thing as an error-free, perfect trial, and 

that the Constitution does not guarantee such a trial." United 

States v. Hasting, 461 U.S. 499, 508-09 (1983). Thus, the 

Supreme Court has held that an appellate court should not 

exercise its "[s]upervisory power to reverse a conviction . . . 

when the error to which it is addressed is harmless since, by 

definition, the conviction would have been obtained 

notwithstanding the asserted error." Id. at 506. 

 The harmless error doctrine requires that the court 

consider an error in light of the record as a whole, but the 

standard of review in determining whether an error is harmless 

depends on whether the error was constitutional or nonconstitutional. In this instance, the alleged error, attacking 

the credibility of a witness with evidence not in the record, is 
non-constitutional. We have held that non-constitutional error 

is harmless when "it is highly probable that the error did not 

contribute to the judgment." Government of Virgin Islands v. 

Toto, 529 F.2d 278, 284 (3d Cir. 1976). "High probability" 

requires that the court possess a "sure conviction that the error 

did not prejudice" the defendant. United States v. Jannotti, 729 

F.2d 213, 219-20 (3d Cir.), cert. denied, 469 U.S. 880 (1984). 

Therefore, we will reverse if we conclude that the prosecutor's 

remarks, taken in the context of the trial as a whole, prejudiced 

the defendants. 

 In determining prejudice, we consider the scope of the 

objectionable comments and their relationship to the entire 

proceeding, the ameliorative effect of any curative instructions 

given, and the strength of the evidence supporting the 

defendant's conviction.10 As the Supreme Court has emphasized "a 

criminal conviction is not to be lightly overturned on the basis 

of a prosecutor's comments standing alone, for the statements or 

conduct must be viewed in context." United States v. Young, 470 

U.S. at 11 (finding harmless error where the prosecutor had 

stated his opinion that the defendant was guilty and urged the 

jury to "do its job"). 

 

 

10 See United States v. Gambino, 926 F.2d at 1355, 1365 

(3d Cir.), cert. denied sub nom. Mannino v. United States, 501 

U.S. 1206 (1991); United States v. DiPasquale, 740 F.2d 1282 (3d 

Cir. 1984), cert. denied, 469 U.S. 1228 (1985); United States v. 

Homer, 545 F.2d 864, 867-68 (3d Cir. 1976), cert. denied, 431 

U.S. 954 (1977). 
C. 

 The first sentence of the prosecutor's objectionable 

remarks suggested that the jury should not believe Drizos and 

Smith because they were also guilty of the crimes of which the 

defendants were guilty. This statement was clearly improper to 

the extent that it reflected the prosecutor's opinion concerning 

the guilt of Mervis and Zehrbach. As the Supreme Court has held, 

when a prosecutor expresses his personal opinion concerning the 

guilt of the accused, he creates two risks: 

 such comments can convey the impression that 

evidence not presented to the jury, but known 

to the prosecutor, supports the charges 

against the defendant and can thus jeopardize 

the defendant's right to be tried solely on 

the basis of the evidence presented to the 

jury; and the prosecutor's opinion carries 

with it the imprimatur of the Government and 

may induce the jury to trust the Government's 

judgment rather than its own view of the 

evidence. 

United States v. Young, 470 U.S. at 18-19. 

 In addition, the statement was improper as an 

expression of the prosecutor's personal belief regarding the 

guilt of the two witnesses themselves.11 As the district court 

 

 

11 Although counsel may state his views of what the evidence 

shows and the inferences and conclusions that the evidence 

supports, it is clearly improper to introduce information based 

on personal belief or knowledge. Standard 3-5.8(b) of the 

American Bar Association Standards for Criminal Justice provides: 

 It is unprofessional conduct for the prosecutor to 

express his or her personal belief or opinion 

as to the truth or falsity of any testimony 

or evidence or the guilt of the defendant. 

See also ABA Model Rules of Professional Conduct, Rule 

3.4(e)(stating that a lawyer shall not "in trial . . . assert 
held, however, "[i]t is not impermissible to argue the conclusion 

that witnesses other than the accused are guilty of a crime when 

evidence of such has been produced." United States v. Zehrbach, 

No. 92-0218, mem. op. at 8. Evidence regarding Drizos and 

Smith's decision making and supervision of the bid buy-out 

scheme, including testimony by both witnesses as to their active 

participation, supported the prosecutor's challenged remark, 

prompting the district court to conclude that the remark was 

"based on evidence adduced at trial." Id. Nonetheless, to the 

extent that the sentence was an expression of the prosecutor's 

personal belief, it was inappropriate and is subject to review 

for prejudicial effect, as is the second sentence of the 

prosecutor's remarks. 

 The second sentence, which entreated the jury not to 

assume that Drizos and Smith were "not going to get what's coming 

to them," was improper and irrelevant, because it referred to 

information outside of the record and sought to influence the 

decision of the jury on an illegitimate basis. This Court has 

long acknowledged a defendant's "right to have his guilt or 

innocence determined by the evidence presented against him, not 

by what has happened" -- or by what may happen -- "with regard to 

a criminal prosecution against someone else." United States v. 

(..continued) 

personal knowledge of facts in issue except when testifying as a 

witness, or state a personal opinion as to the justness of a 

cause, the credibility of a witness, . . . or the guilt or 

innocence of an accused"). 

 
Thomas, 998 F.2d 1202, 1207 (3d Cir. 1993) (quoting United States 

v. Toner, 173 F.2d 140, 142 (3d Cir. 1949)).12

 As the district court concluded in denying Zehrbach's 

motion for a new trial, the prosecutor may have made the remark 

"to keep the jury from reaching a verdict on an improper basis, 

i.e. that all of the guilty parties had not been brought to 

justice, and only the defendants then on trial had been singled 

out for prosecution." United States v. Zehrbach, No. 92-0218, 

mem. op. at 8-9. The court's conclusion was consistent with the 

grounds that counsel for Zehrbach originally stated to support 

his motion for a mistrial. Nonetheless, the remark effectively 

encouraged the jury to reach a guilty verdict on irrelevant and 

illegitimate grounds. 

 Furthermore, given that the prosecutor made the 

statement in question immediately after telling the jury that the 

witnesses should not be believed because they were themselves 

guilty, the comment could also be construed as a comment on the 

witnesses' credibility. Thus, Zehrbach and Mervis argued that 

 

 

12 Likewise, standard 3-5.8(d) of the American Bar 

Association Standards for Criminal Justice explains: 

 The prosecutor should refrain from argument which 

would divert the jury from its duty to decide 

the case on the evidence, by injecting issues 

broader than the guilt or innocence of the 

accused under the controlling law . . . . 

Standard 3-5.9 further advises: 

 It is unprofessional conduct for the prosecutor 

intentionally to refer to or argue on the 

basis of facts outside the record. 
this court's holding in United States v. DiLoreto, 888 F.2d at 

996, required reversal per se. 

 In DiLoreto, the defendants objected to the 

prosecutor's comments in closing argument regarding the 

credibility of the defendants' accomplices, who testified for the 

Government after entering into plea agreements themselves. The 

prosecutor stated: "We don't take liars. We don't put liars on 

the stand. We don't do that." DiLoreto, 888 F.2d at 998. 

Although the defendants characterized the comments as "improper 

prosecutorial vouching depriving them of a fair trial," the 

district court denied both their motions for mistrial and their 

subsequent request for curative instruction. On appeal, this 

court vacated and remanded, holding that "a prosecutor's remarks 

regarding the defendant's guilt or a witness' credibility, if 

based on information not adduced at trial, require reversal per

se." Id. at 999. 

 The per se reversal standard announced in DiLoreto, 

however, conflicts with Supreme Court case law requiring the 

court to analyze prosecutorial comments case by case, in the 

context of the entire trial, and to reverse only where the 

defendant has suffered prejudice. United States v. Young, 470 

U.S. at 111-12. Therefore, we expressly overrule DiLoreto

insofar as it established a per se, rather than a case by case, 

rule. We will, therefore, analyze the prosecutor's remark 

pursuant to the harmless error doctrine. In light of that 
analysis, we conclude that both comments, though truly improper 

and unfortunate, do not constitute reversible error. 

D. 

 Although it is true that irreparable harm may be 

inflicted in a moment, the comments at issue were but two 

sentences in a closing argument that filled forty pages of 

transcript. Immediately after the objection, the court gave a 

specific instruction to disregard the prosecutor's comment, an 

instruction that the court repeated just a short time later at 

the close of the prosecutor's argument. As a general matter, the 

court told the jurors to disregard any personal opinion of 

counsel and to base their decision solely on the evidence. And, 

in its final instructions, the court cautioned the jury members 

that the arguments of counsel are not evidence; that they must 

not be persuaded by bias, prejudice, or sympathy; and that they 

must not consider any evidence that they were earlier instructed 

to disregard. We believe that this extensive cautioning by the 

court was sufficient to cure the prosecutor's error. 

 Furthermore, the extensive evidence of Zehrbach and 

Mervis's intent to defraud supports our conclusion that the 

prosecutor's remarks would not have prejudiced the jury's 

deliberations. The evidence clearly supports the government's 

burden of proving that Zehrbach and Mervis knowingly and 

fraudulently paid other bidders to refrain from bidding for 

assets in a bankruptcy auction. 
 Zehrbach and Mervis acted in blatant disregard of 

questions about the legality of their actions, and they 

repeatedly mischaracterized the transaction. In response to 

Polychron's inquiry as to whether the buy-outs were "kosher," 

Mervis promised to obtain an opinion letter from an attorney 

approving the transaction. Mervis failed to produce such a 

letter. Moreover, when Attorney Vollmer sent an unsolicited 

letter quoting the relevant criminal statute and strongly 

advising against further participation in the bid buy-out scheme, 

Mervis and Zehrbach chose to disregard it. Zehrbach made some 

effort to obtain another opinion, from Attorney Crane, to assuage 

concerns. But Crane's positive opinion affirming the legality of 

"the transaction" rested on a misrepresentation of the 

transaction as a joint-venture rather than a bid buy-out. In 

fact, in seeking Crane's legal opinion, no one had mentioned to 

him the payments made to Starman and Eckard to refrain from 

bidding. Mervis was similarly selective in his discussions with 

the bankruptcy trustee and the FBI, referring to the transaction 

as a "merger of interests" or a "joint-venture" and remaining 

silent about the payments. 

 We find the evidence of knowledge and of deception to 

be substantial. Under these circumstances and given the court's 

curative instructions, we find that the remarks of the prosecutor 

constitute harmless error. 
IV. 

 For the foregoing reasons, we will affirm the judgments 

of conviction of the district court. 

United States v. Darus H. Zehrbach 

United States v. Alex A. Mervis 

Nos. 93-7477 and 93-7493 

LEWIS, Circuit Judge, dissenting. 

 I join in Parts I and II of the majority opinion, and 

in Part III insofar as it overrules the per se rule of DiLoreto. 

However, I cannot join in Part III of the opinion to the extent 

it concludes that the error here was harmless. 

 It is difficult for me to imagine a statement which 

would carry a more powerful impact upon a jury, or which would be 

more likely to deter it from acquitting, than to imply in no 

uncertain terms that the defendants' two chief witnesses were 

going to be indicted for their participation with the defendants 

in the underlying criminal activity. That is exactly what 

happened here. The prosecutor's statement was tantamount to 

telling the jury that the defendants' two main witnesses were in 

fact as guilty as the defendants were and would themselves be 

brought to answer criminal charges, despite the fact that there 
was no evidence to suggest that these individuals were going to 

be indicted and despite the more compelling fact that they never 

were indicted. 

 The majority acknowledges that "the remark effectively 

encouraged the jury to reach a guilty verdict on irrelevant and 

illegitimate grounds." Maj. Op. Typescript at 34. How, then, 

can we be confident that "it is highly probable that the error 

did not contribute to the judgment"? See Maj. Op. Typescript 

at 31, citing Govt. of Virgin Islands v. Toto, 529 F.2d 278, 274 

(3d Cir. 1976). "Highly probable" requires us to be virtually 

certain, as that standard is only satisfied when we hold a "sure 

conviction that the error did not prejudice" the defendant. See

Maj. Op. Typescript at 31, citing United States v. Jannotti, 729 

F.2d 213, 219-20 (3d Cir.), cert. denied 469 U.S. 880 (1984). 

The majority acknowledges this also, but then shifts its focus 

from the impact of the remarks to the prosecutor's motive in 

uttering them. I believe this diversion to be the fundamental 

flaw in the majority's analysis. Since we must be convinced that 

a criminal defendant was not prejudiced for harmless error to 

apply, what difference does it make to that inquiry that the 

prosecutor might have meant something else in uttering the 

offending remarks? It is not what the prosecutor meant that 

should control, but rather the effect of what he said upon the 

defendants' right to be judged by an untainted jury. Our focus 

should be to determine that it is almost certain that the error 
did not contribute to the conviction. In my view, the majority 

does not place sufficient emphasis upon this critical inquiry. 

 And it is precisely for this reason that I believe the 

majority fails to perceive the violence which remarks such as 

those at issue are capable of inflicting upon the unfettered 

fact-finding and truth-seeking mission of the jury, preferring 

instead to rely upon the court's cautionary instructions and the 

quantum of evidence properly before the jury which pointed toward 

guilt. As I stated in my original dissent, "I cannot imagine any 

curative instruction that would be sufficient to purge the jury 

of the powerful impact of such an improper, unfounded assertion 

by the prosecutor." United States v. Zehrbach, Nos. 93-7477 and 

93-7493 at 8 (Lewis, J. dissenting). I believe this is 

particularly true in view of the fact that to a considerable 

degree, the defendants' convictions rested upon the jury's 

assessment of the credibility of Drizos and Smith. Moreover, I 

am not persuaded that the jury could not have been influenced by 

these improper remarks, to the prejudice of the defendants, 

regardless of the weight of additional evidence demonstrating 

their guilt. 

 For these reasons, I respectfully dissent.