Opinion ID: 2774634
Heading Depth: 3
Heading Rank: 2

Heading: Evidence of Scheme

Text: The first element includes, inter alia, a scheme designed “for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.” 14 Plato generally argues that the jury heard evidence that his business was legitimate, that projections to investors were based on sound drilling-production estimates and profit projections, and that investors were advised in the Notes that the investment bore risks. Plato claimed to have a good-faith basis for the misrepresentations by citing his reliance on the projections of Michael McCoy, an engineer whose estimates indicated a higher profitability than what actually occurred. However, the jury was also presented with evidence of Plato’s involvement in a scheme to defraud the noteholders. Though the Government produced evidence that the marketing materials for the Notes misrepresented the degree of MPC’s ownership in the oil and gas wells, and the investors relied on those misrepresentations, we need not consider these marketing-material arguments since the jury was presented with misrepresentations in the Notes themselves, which were drafted by Plato. Specifically, the evidence showed that the Notes, drafted by Plato, misrepresented various aspects of the 14 United States v. Umawa Oke Imo, 739 F.3d 226, 236 (5th Cir. 2014) (quoting United States v. Ratcliff, 488 F.3d 639, 644 (5th Cir. 2007)). 8 Case: 13-20222 Document: 00512919459 Page: 9 Date Filed: 01/29/2015 No. 13-20222 collateral, including investors’ interest therein, as well as MPC’s ownership and use thereof. Evidence supported oversubscription of the Notes. Though the Robinette Fund 1 subscription agreement limited issuance to 10 Notes, MPC issued 13; and while the Robinette Fund 1A subscription agreement limited issuance to 5 Notes, MPC issued 11. Additionally, these funds were cross-securitized in violation of the terms of the Notes when MPC used the same collateral to secure both Funds, contrary to the representations in the Funds’ respective subscription agreements. Furthermore, as components of the Notes, the security agreements stated that the “debtor is owner of the C[o]llateral, free and clear of any lien, security interest or claim of any kind other than the security interest herein granted.” The Government argues that this language is a representation of MPC’s 100 percent ownership in the leases. Plato counters that the “collateral” described in the Notes is merely MPC’s interest in the lease, and not the lease as a whole. Even had the jury accepted Plato’s characterization of the collateral description, that characterization would not prevent the jury from finding misrepresentations in the Febronio Flores Fund 3 Notes, which listed Hawkins Ranch collateral in which MPC had no interest at all. Additionally, in light of the oversubscription and cross-securitization, the accuracy of the ownership representations does not alter the jury’s ability to find other material misrepresentations by Plato. We also note that the jury was presented with the above-described evidence supporting Plato’s misrepresentation on the use of investors’ funds, which were spent on Plato’s personal expenditures and repayment of other investors, rather than primarily on the business of refurbishing and operating wells. In light of this cumulative evidence, the jury 9 Case: 13-20222 Document: 00512919459 Page: 10 Date Filed: 01/29/2015 No. 13-20222 had sufficient evidentiary grounds to reasonably disbelieve Plato and find the first element satisfied.