Court Opinion

ID: 29351
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:37:48+00
Date Added: 2024-06-11T14:55:44.967446
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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this opinion should not be published and is not precedent except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).

                                26