United States v. Fisher

REVISED
UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 95-10733

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

VERSUS

JAMES R. FISHER and JOHN R. CARNEY,
Defendants-Appellants.

Appeal from the United States District Court
for the Northern District of Texas

February 13, 1997

Before POLITZ, Chief Judge, SMITH and DUHÉ, Circuit Judges.

DUHÉ, Circuit Judge:

Defendants-Appellants James Fisher and John Carney appeal

their convictions on several counts including bank fraud, mail

fraud, wire fraud, conspiracy, and making false statements to the
Federal Home Loan Bank Board and the Office of Thrift Supervision.

For the reasons assigned, we reverse and vacate the convictions and

remand for a new trial.1

1
We note at the outset there is no double jeopardy issue in
remanding for a new trial: “[T]he Double Jeopardy Clause’s general
prohibition against successive prosecutions does not prevent the
government from retrying a defendant who succeeds in getting his
first conviction set aside, through direct appeal or collateral
attack, because of some error in the proceedings leading to
conviction.” Lockhart v. Nelson, 488 U.S. 33, 38, 109 S.Ct. 285,
 BACKGROUND

In 1984, James Fisher, John Carney and Jeff Noebel2 formed

Equisource Realty Corporation as a real estate investment company

in Dallas, Texas. By 1987, Texas real estate was no longer a

profitable investment, and the Equisource Realty partners began to

investigate other business opportunities.

At that time, the savings and loan industry was in disastrous

condition. Many S&Ls had declared bankruptcy, and the federal

government was faced with the unappealing reality of bailing out

numerous failed institutions. In an effort to curtail the

disaster, the Federal Home Loan Bank Board (“FHLBB”) sought private

investors to aid in the bailout.

To induce investment, bankrupt S&Ls were allowed to recognize

“regulatory goodwill” as an asset. This goodwill was not

recognized under Generally Accepted Accounting Principles, but was

instead a creation of federal regulators. The goodwill asset

created artificial capital for S&Ls without requiring investors to

contribute hard dollars.

Equisource Realty became interested in acquiring an S&L in the

summer of 1987. It targeted Bayside Savings and Loan Association

in Port Charlotte, Florida, and applied for regulatory approval to

purchase the institution. In the fall of 1987, Bayside had zero

value, was $1,000,000 in debt and was losing $50,000 a month.

289 (1988).
2
Jeff Noebel was indicted with Fisher and Carney but entered
into a plea agreement and was not a defendant.

2
 To acquire Bayside, the defendants and Noebel formed

Equisource Capital Corporation to act as the general partner of a

newly formed bank holding company, U.S. Savings Associates

(“USSA”). Davis Hughes served as president of a sister

organization, Equisource Financial Corporation.

Originally, USSA proposed to regulators it raise $3,000,000

for the acquisition: $2,000,000 in equity and $1,000,000 in debt.

This proposal received approval. However, before closing, USSA

opted to instead raise $4,000,000 in equity, with $875,000 of that

sum subject to repurchase agreements. To accomplish this goal,

USSA sold 80 units in USSA for $50,000 a unit to approximately 37

investors.

Some of the investors in USSA were represented by Joe

Courrege, an agent for the financial interests of several NFL

football players (“Players”). Courrege had purchased several homes

in Dallas in the early eighties and then sold the homes to the

Players as investments. By 1988, however, changes in the tax laws

and the general decline of the real estate market had contributed

to extremely high interest rates on the loans made to acquire the

homes. Courrege was interested in refinancing these homes to

decrease the monthly loan payments.

Early in 1988, Courrege learned of the USSA investment. As

incentive to have his Players invest, USSA promised Courrege it

would obtain refinancing on the Players’ homes if the Players

bought units in USSA.

Jeff Walker was represented by Courrege and sought to purchase

3
a USSA share. Jeff Walker’s father Trent Walker deposited $10,000

with USSA for the purchase of one share, with the remaining $40,000

owed to be financed. Trent Walker was offered a repurchase

agreement if the homes owned by his son were not refinanced by

December 31, 1988. Both Walkers had trouble obtaining financing

for the remaining $40,000 owed, so Trent Walker sent USSA a check

for $40,000 in October 1988 to be placed in escrow until financing

of the balance came through. That check was instead cashed by

USSA.

Other investors were also promised repurchase agreements.

Another Courrege client, Gary Hogeboom, invested $100,000 in USSA

with the understanding his homes would be refinanced, and that his

shares would be repurchased if such refinancing did not come

through. Michael Barlerin purchased one unit in USSA in October

1988. Barlerin testified he was promised a repurchase agreement.

Ramesh Mahtani, an investor who joined the Bayside Board of

Directors, paid $250,000 for five units in USSA in October 1988.

He also testified USSA promised him he could “put” the investment

back to USSA within 18 months of the investment. Theodore Taub,

another investor who joined the Bayside Board of Directors,

purchased one unit for $50,000, and testified USSA promised him a

repurchase agreement. Dennis Noebel, USSA partner Jeff Noebel’s

brother, bought a half unit with the understanding he could “put”

the investment back.

Bradley Branson, a professional basketball player living

abroad, purchased two units of USSA through his accountant Michael

4
Tannery. In September 1988, Tannery sent USSA a check for $20,000

on Branson’s behalf, with the remainder of the purchase price to be

financed. Tannery then sent another Branson account check to USSA

in October for $20,000. Tannery claimed the check was sent by

mistake. That check was cashed by USSA.

The USSA investment was beset with problems from the start.

After promising refinancing to the players as an incentive to

investment, USSA discovered that their homes had dropped

significantly in value since their original financing, and that

refinancing could only be obtained based upon the new worth of the

homes. The Players believed that the homes could be refinanced

without any out of pocket expense. In reality, large loan

shortfalls would result, necessitating a hefty payment from the

Players. Refinancing on the terms the Players had expected was not

forthcoming.

The Bayside investment itself also received a severe blow. In

1989, Congress passed the Financial Institution Reform, Recovery,

and Enforcement Act of 1989 (“FIRREA”), Pub.L. 101-73, 103 Stat.

183. FIRREA eliminated the regulatory goodwill offered by

regulators as an incentive to purchase S&Ls. This severely

restricted the amount of capital available in S&Ls using regulatory

goodwill, and also limited the size of the S&Ls since their ability

to lend was contingent on their capital reserves.3 Bayside had

3
In United States v. Winstar Corp., 116 S.Ct. 2432 (1996), the
Supreme Court held that the United States breached its contracts
to allow purchased savings and loans to use regulatory goodwill
when it passed FIRREA. The Court also held the government could be
liable for this breach. Bayside currently has a $5,000,000 action

5
used much of its original cash investment to pay off Bayside’s

debts to federal regulators, and had relied on the goodwill to

support its capital base until the institution had recouped some of

its losses. Bayside’s capital base was reduced by FIRREA from

close to $4,000,000 to around $800,000.

As well as vastly reducing operating capital, FIRREA greatly

diminished the attractiveness of S&L investment. Many USSA

investors were understandably nervous, and some of those with

repurchase agreements with USSA sought to exercise them. However,

after FIRREA, USSA no longer had surplus capital, and could not

make good on all the repurchase agreements. Some of the parties

involved sued USSA to enforce the buy back provision.

Michael Tannery, Bradley Branson’s accountant, had difficulty

obtaining a refund of his $20,000 overpayment for Branson’s

account. He testified that Fisher told him to apply for a loan

from Bayside in Branson’s name, and that Fisher and Carney would

then repay the loan.

In its indictment against Carney, Fisher, Noebel and Hughes,

the Government charged they conspired to commit mail fraud, wire

fraud, and bank fraud, and also conspired to make false statements

to and obstruct the operation of the FHLBB and Office of Thrift

Supervision. The indictment then charged separate counts of mail

fraud, wire fraud, making false statements, and bank fraud.

At trial, Fisher and Carney were found guilty of all charges

against them. Hughes was acquitted. Fisher and Carney were

pending to recover losses it attributes to FIRREA.

6
sentenced to 87 months in prison, followed by five years’

supervised release, and ordered to pay $895,000 in restitution.

They now appeal.

Discussion

The defendants assign numerous points of error to their trial

proceedings. We discuss certain of those points below.

I.

Carney alleges the district court erred when it denied his

motion for new trial because the Government impermissibly impeached

him on cross examination with a constitutionally infirm conviction.

Several months before his trial in this case, a Texas court

found Carney guilty of criminal contempt for failure to comply with

a state court’s turnover order.4 The judge in the contempt hearing

also made many factual findings implying Carney had acted in a

deceitful and unscrupulous manner. Carney sought a writ of habeas

corpus from the Texas Supreme Court.

While Carney’s habeas application was pending, the present

action went to trial. Before Carney testified, the Government

obtained a ruling allowing it to impeach Carney with the conviction

and factual findings from the turnover action. The district court

held that Carney could have both the conviction and factual

findings used against him if he chose to testify in his defense.

Notwithstanding this ruling, Carney chose to testify to

4
According to Carney’s testimony, Dennis Noebel filed a
lawsuit to enforce his repurchase agreement. USSA apparently
settled with him. Noebel obtained a final judgment against Carney
in December 1993, and a hearing related to the satisfaction of that
judgment resulted in the criminal contempt conviction.

7
explain his version of the events the Government was prosecuting.

Because the Government had already obtained a ruling from the trial

court allowing it to introduce the contempt conviction if Carney

testified, Carney’s attorney asked him about the contempt hearing

and conviction on direct in an effort to ameliorate any forthcoming

negative cross examination. Carney tried to explain his version of

the events leading to the conviction: namely, that he had believed

the hearing would be a restricted inquiry into the turnover of

certain assets.5 Contrary to Carney’s expectations, the hearing

quickly escalated into a very serious inquiry on the turnover order

that resulted in the contempt conviction.

The Government made the contempt conviction and the

accompanying factual findings a central element of its cross

examination of Carney, subjecting Carney to rigorous interrogation

on both topics.6 The cross examination succeeded in making Carney

5
Carney initially represented himself before realizing the
seriousness of the hearing and retaining an attorney.
6
The Government referred to the conviction in its cross
examination repeatedly. The examination specifically addressed
numerous factual findings made by the state court. Typical of the
exchange between the Government and Carney are the following
excerpts:

BY THE GOVERNMENT:
Q: You’re no stranger to misrepresentations in court or out
of court, are you, sir?
MR. CARNEY:
A: I don’t know what that question asks me.
Q: Well, we know, do we not--you don’t deny, or do you, that
when Judge Hoffman convicted you of contempt he found
that you had specifically made misrepresentations which
justified the most severe impositions of sanctions? He
found that, didn’t he?
A: He did.
Q: And he sentenced you to jail for six months based on your

8
appear corrupt, untruthful, and dishonest. In short, Carney’s

credibility was severely undermined by this questioning.

Soon after trial concluded and Carney was convicted, the

contempt conviction was overturned by the Texas Supreme Court on

the grounds Carney did not receive full and proper notice of the

subject matter of the contempt motion, or when, how and by what

means he was guilty of contempt. Carney moved for a new trial in

the present case on the ground that the use of the invalid

conviction and factual findings was highly prejudicial to him. He

argued that his guilt or innocence rested on his credibility, and

that “manifest and undue harm” was done to him by cross examination

with an invalid conviction. The district court denied that motion.

While Federal Rule of Evidence 609 specifically details the

rules of impeachment at trial by evidence of prior conviction, past

cases have carved out exceptions beyond the scope of that rule when

an exception is necessary to protect the constitutional rights of

conduct, didn’t he?
A: That is on appeal and I disagree with his order and the
notice upon which it was founded.
* * *
Q: [Judge Hoffman] specifically found, for example, that you
had engaged in dilatory and harassing tactics for the
purpose of delaying, didn’t he?
A: I believe that’s in the order, yes.
* * *
Q: When you described the outcome of this matter on Friday,
you said you were branded, right?
A: Yes.
A: And that’s because you were branded for what you really
are: someone who’s modus operandi is to engage in
repeated intentional misrepresentations, deceptions and
delaying tactics. Isn’t that the truth, sir?
A: No, sir.
Record Vol. 14 at 82-110.

9
the accused. For example, the Supreme Court has held that the

admission of a prior criminal conviction at trial to support guilt

or enhance punishment is impermissible if that conviction was

invalid because it was obtained in violation of the defendant’s

right to counsel. Burgett v. Texas, 389 U.S. 109, 115, 88 S.Ct.

258, 262 (1967). Later Supreme Court cases reaffirmed this rule.

United States v. Tucker, 404 U.S. 443, 92 S.Ct. 589 (1972); Loper

v. Beto, 405 U.S. 473, 92 S.Ct. 1014 (1972).

This Court addressed the Burgett rule in Spiegel v. Sandstrom,

637 F.2d 405 (1981). Defendant Spiegel’s petition for habeas

relief from a state conviction was granted by a federal district

court. The state appealed. Spiegel argued his sentence in a trial

for aggravated battery was enhanced because of a prior

constitutionally invalid conviction for bribery, and that the

prosecutor at trial prejudiced Spiegel by asking him if he had ever

been convicted of a felony. At the time of trial, the earlier

conviction was pending on appeal.

After Spiegel was convicted of battery, his bribery conviction

was overturned on two grounds. First, the Florida Court of Appeals

found Spiegel was denied effective assistance of counsel in

violation of the Sixth Amendment. Second, the appeals court stated

illegally seized evidence was impermissibly introduced against

Spiegel in violation of his Fourth Amendment rights. Spiegel was

retried for battery and acquitted. This Court held the district

court had properly granted habeas relief because the

constitutionally infirm conviction should not have been used

10
against Spiegel.

The Spiegel Court stated:

We perceive a major distinction between a prior
conviction appealed on non-constitutional grounds and
one, as here, appealed on the ground of violation of a
Sixth Amendment right to counsel. . . .Here, Spiegel’s
guilt or innocence rested on his credibility. . . .[H]e
was the sole witness to testify in his behalf. The
Federal district court determined that manifest and
undue harm was done to Spiegel through the introduction
of his prior unconstitutional conviction. . . .

Spiegel, 637 F.2d at 407.

Carney argues that since the Texas Supreme Court found he was

not given notice of the contempt motion or exactly how he was

guilty of contempt, a violation of his due process rights, this

Court should find that use of an invalid conviction obtained in

violation of constitutional rights other than the Sixth Amendment

was error for which Carney deserves a new trial. The conviction

was not overturned for a technical error, but because of a

substantive violation of his constitutional rights. He argues his

credibility was of central importance at his trial, since the jury

was forced to decide in several instances whether to believe Carney

or the Government’s witnesses. When he was made to appear a liar

on cross examination, his character for veracity was impugned

beyond repair.

The Government claims that Carney is not entitled to a new

trial despite the introduction of an invalid conviction for

numerous reasons. It first argues Carney waived his right to

appeal the use of the conviction since he introduced it in direct

examination, relying on United States v. Williams, 939 F.2d 721

11
(9th Cir. 1991), Shorter v. United States, 412 F.2d 428 (9th Cir.

1969), cert. denied, 396 U.S. 970 (1969), and United States v.

Cobb, 588 F.2d 607, 613 (8th Cir. 1978), cert denied, 440 U.S. 947

(1979).

However, the Fifth Circuit has held a party is not prohibited

from introducing evidence in direct examination when the trial

court has already ruled the evidence may be introduced on cross

examination. Reyes v. Missouri Pac. R.R. Co., 589 F.2d 791 (5th

Cir. 1979). Plaintiff Reyes unsuccessfully attempted, through a

motion in limine, to keep certain evidence excluded from trial.

Anticipating introduction of the evidence by the defense, and “[i]n

an attempt to minimize the damaging effects of his prior

convictions, Reyes brought them out on direct examination.” Id. at

793. On appeal, the defense argued Reves waived error by himself

introducing evidence of the prior convictions. This Court refused

to accept that argument, stating, “After the trial court refused to

grant Reyes’ motion in limine to exclude the evidence, he had no

choice but to elicit this information on direct examination in an

effort to ameliorate its prejudicial effect.” Id. at 793 n.2.

Following our Reyes holding, we decline to agree that when

opposing counsel obtains a ruling allowing it to introduce damaging

evidence on cross, the affected party who attempts to anticipate

that negative evidence waives his right to object to the

introduction of that testimony by himself raising it. Clearly, no

defendant would introduce damaging testimony unless he feared he

would be more injured by the jury first hearing of that evidence

12
from the prosecution. When the Government obtains a ruling in

advance allowing it to introduce prior conviction evidence, the

defendant is faced with a difficult dilemma: to refrain from

testifying in his own defense, or risk impeachment by the opposite

side. A holding that, under these facts, a defendant who testifies

in anticipation automatically waives his right to object to a trial

court’s ruling admitting the damaging evidence goes against basic

notions of fairness. Therefore, when the prosecution obtains, over

objection, a ruling in limine that it may use evidence of an

earlier conviction if the defendant testifies, the defendant who

introduces evidence of the conviction, later found to be

constitutionally infirm, in direct examination in an effort to

ameliorate the highly prejudicial effect of that evidence, should

not be deemed to have waived objection to the erroneous

introduction of such evidence.

The Government next relies on United States v. Galvan-Garcia,

872 F.2d 638 (5th Cir. 1989), cert denied, 493 U.S. 857 (1989), for

the proposition that when a defendant attempts on direct

examination to explain an earlier conviction, he may be cross

examined on those facts. Id. at 640-41. However, that case shared

none of the circumstances of Carney’s case. First, Defendant

Galvan-Garcia failed to object to the admission of evidence of a

prior conviction at trial. The asserted evidentiary error was only

reviewed for plain error. Second, the Government did not

affirmatively seek a ruling allowing it to use the conviction,

necessitating introduction by the defense of the damaging testimony

13
on direct. Third, and most important, the defendant was not

impeached by the use of a constitutionally invalid conviction. The

defendant suffered no manifestly unjust treatment from admission of

a conviction that was properly admissible under Fed.R.Evid. 609,

that he failed to object to at trial, and that he introduced on

direct.7

The Government contends even if we find admission of Carney’s

contempt conviction erroneous, no new trial is required since the

rule of Loper, that constitutionally invalid convictions may not be

used to impeach a testifying defendant, has been subjected to a

harmless error analysis. The Government argues it had such a

plethora of evidence against Carney, the use of the invalid

conviction against him at trial was not meaningful. We disagree.

The Government used the contempt judgment and the findings made in

connection with it as an integral part of its cross. As such, we

cannot find the admission of the conviction to impeach Carney did

not affect his substantive rights.

The Government avers that the rule of Burgett and Spiegel only

applies to prior convictions obtained in violation of a defendant’s

7
Insofar as Galvan-Garcia suggests that a defendant waives any
objection to the introduction of impeachment evidence when he
offers evidence of prior convictions on direct examination,
following an adverse ruling on a motion in limine concerning the
admissibility of such prior convictions, we decline to follow that
suggestion. See Galvan-Garcia, 872 F.2d at 640. As we have
already explained, our decision in Reyes holds that a motion in
limine is sufficient to preserve error for appeal under such
circumstances, and we reaffirm that holding today. See Reyes, 589
F.2d at 793 n.2; accord Coursey v. Broadhurst, 888 F.2d 338, 341
n.3 (5th Cir. 1989); Petty v. IDECO, 761 F.2d 1146, 1152 n.3 (5th
Cir. 1985), superseded on other grounds, Green v. Bock Laundry
Mach. Co., 490 U.S. 504 (1989).

14
Sixth Amendment rights, and that a conviction invalidated for any

other reason may be used against a defendant. We disagree. The

rational of Burnett and Spiegel is equally applicable to this

constitutional infirmity arising from lack of notice.

At oral argument, the Government cited the recent Supreme

Court decision in Custis v. United States, 511 U.S. 485, 114 S.Ct.

1732 (1994) as further support for its position the invalid

conviction was properly introduced against Carney. The Court held

only defendants whose conviction was obtained in violation of their

right to counsel could attack the validity of the earlier

conviction at a later proceeding. However, Custis only addresses

the right of a defendant in a federal sentencing proceeding to

collaterally attack the validity of prior state proceedings. That

case did not stand for the proposition that no inherent prejudice

results when a constitutionally infirm conviction is used to

impeach a defendant, so that the use of any constitutionally infirm

conviction other than one obtained in violation of the right to

counsel is per se acceptable.

The Government also refers us to Smith v. Collins, 964 F.2d

483 (5th Cir. 1992). Defendant Smith was impeached with several

convictions found to be void because the indictments contained

technical defects. This Court stated that since the factual

reliability of the convictions was not in question, and since Smith

never claimed he was innocent of the charges, there was no

reversible error. We then distinguished the facts in Smith from

those in Loper: “the use of the void convictions in Loper ‘might

15
well have influenced the outcome of [that] case’ because the issue

of innocence and guilt ‘turned entirely on whether the jury would

believe the testimony. . .of Loper.’” Smith, 964 F.2d at 486

(quoting Loper v. Beto, 405 U.S. 473, 480 (1972)). Carney’s case

is far closer to that in Loper than in Smith. Carney protested his

innocence against the charges of contempt. The Government relied

heavily on the contempt conviction to cast doubt on Carney’s

character and truthfulness. As in Loper, the evidence against

Carney was hardly overwhelming. Carney’s word was an important

part of his defense, and when the Government attacked him with the

invalid conviction, Carney lost much of his credibility with the

jury.

Finally, the Government states the conviction should have come

in as probative of Carney’s modus operandi of stalling and

confusing investors. This argument is without merit. If the

Government’s position were allowed in this particular case, it

would in effect be permitted to use circumstantial evidence of

guilt to prove Carney’s alleged ultimate crime. The limited

allowances of Fed.R.Evid. 404(b) do not extend as far as the

Government asks us to go.

Evidence of the contempt conviction was wrongly admitted

against Carney, and merits reversal and remand for a new trial.

II.

Defendant Fisher appeals the trial court’s refusal to grant

him severance once evidence of Carney’s contempt conviction was

16
introduced to the jury.

Fisher and Carney were indicted together, and tried together,

for the same offenses. The two defendants attempted to present a

uniform defense. During his opening statement, Fisher’s attorney

told the jury that Fisher and Carney’s conduct was so connected the

acts of both defendants should be considered collectively.8

Fisher’s attorney made these statements before he was aware the

contempt conviction would be used against Carney.

After Carney testified on direct examination to his contempt

conviction, Fisher unsuccessfully moved for a severance because of

the introduction of such evidence before the jury. The devastating

cross of Carney followed. At the close of evidence, co-defendant

Hughes also moved for a severance. Because Fisher’s attorney filed

a motion before trial to adopt the motions and memoranda of co-

defendants, both motions inured to his benefit to preserve the

alleged error for appeal. United States v. Bernal, 814 F.2d 175,

182 (5th Cir. 1987).

Fisher argues that the introduction of the void contempt

conviction against Carney caused a prejudicial spillover effect to

Fisher’s right to a fair trial and to his right to be judged

independently by the jury. He cites Zafiro v. United States, 113

S.Ct. 933 (1993) for the proposition that severance was proper in

8
In opening statements, Fisher’s attorney told the jury:

Carney and Fisher’s conduct, or lack of conduct, are
intertwined about a hundred percent. It has to do with
Fisher, it has to do with Carney. If it has to do with
Carney, it has to do with Fisher. That’s all there is to it.

17
his case. The Court there stated:

[A] district court should grant a severance under Rule 14
only if there is a serious risk that a joint trial would
compromise a specific trial right of one of the
defendants, or prevent the jury from making a reliable
judgment about guilt or innocence. Such a risk might
occur when evidence that the jury should not consider
against a defendant and that would not be admissible if
a defendant were tried alone is admitted against a
codefendant. For example, evidence of a codefendant’s
wrongdoing in some circumstances erroneously could lead
a jury to conclude that a defendant was guilty.

Id. at 938. Fisher contends that the contempt conviction and the

acts constituting the alleged contempt would not have been

admissible in evidence if Fisher had been tried separately from

Carney, and that the jury could have attributed Carney’s apparent

wrongdoing to Fisher. Fisher argues the apparent prejudice at the

introduction of the contempt conviction was such he is entitled to

a new trial.

The Government responds that whether to sever defendants is a

matter within the trial court’s discretion, and a denial of

severance is only reviewable for abuse of that discretion. United

States v. Faulkner, 17 F.3d 745, 758 (5th Cir. 1994), cert denied,

115 S.Ct. 193 (1994). Reversal is only warranted when the

appellant can show compelling prejudice the trial court could not

protect against--the rule, not the exception, is that persons

indicted together should be tried together. United States v.

Pofahl, 990 F.2d 1456, 1483 (5th Cir. 1993). “[T]he mere presence

of a spillover effect does not ordinarily warrant severance.” Id.

As well, a limiting jury instruction, such as one instructing the

jury to consider each defendant separately, is often sufficient to

18
cure any risk of prejudice. Zafiro, 113 S.Ct. at 938-39.

Since we hold the invalid conviction should never have been

introduced in this trial, we hold that even though midtrial

severance is an extraordinary measure, warranted in very few cases,

the damaging impeachment of Carney with an invalid conviction so

poisoned the entire trial against both defendants as to render the

verdict against Fisher suspect. Since Fisher’s counsel announced

to the jury Fisher and Carney had considered their actions to be

intertwined, the destruction of Carney’s credibility irreparably

harmed Fisher. The instructions the jury received to consider each

defendant and offense separately before returning a verdict were

insufficient to protect Fisher.9 Midtrial severance is an

extraordinary measure, but as we believe the introduction of the

invalid conviction against Carney was egregiously wrong, and since

it could not have been admitted against Fisher if they had been

separately tried, we find that Fisher was entitled to a severance

when that evidence came in against his partner and co defendant.10

9
The jury instruction stated in part:

[T]he case of each defendant should be considered separately
and individually. The fact that you may find one or more of
the defendants guilty or not guilty of any of the crimes
charged should not control your verdict as to any other crime
or any other defendant. You must give separate consideration
to the evidence as to each defendant.
10
Our conclusion that Fisher was entitled to a separate trial,
under the unique circumstances of this case, does not signal a
retreat from the general principle that the mere “spillover” effect
of damaging evidence introduced against one defendant is
insufficient to warrant the severance of other defendants. See
e.g. United States v. Broussard, 80 F.3d 1025, 1037 (5th Cir.),
cert. denied, 117 S.Ct. 264 (1996); United States v. Mitchell, 31
F.3d 271, 276 (5th Cir.), cert. denied, 115 S.Ct. 455 (1994);

19
 III.

Fisher alleges that Count One of the indictment alleged four

separate and distinct conspiracies, and was therefore duplicitous

under Fed.R.Crim.P. 8(a) and should have been dismissed. He moved

before trial to dismiss Count One for this reason, but the district

court informed him it would cure the error in the jury

instructions. Fisher apparently felt the instruction was

insufficient to cure any error, and argues that a duplicitous

indictment subjected him to prejudice in obtaining appellate review

and the prevention of double jeopardy, and risked a non-unanimous

jury verdict.

A conspiracy may have more than one object without making the

indictment alleging that conspiracy duplicitous. United States v.

Duvall, 846 F.2d 966, 975 (5th Cir. 1988).

[A] single count may be used where those actions
“represent a single, continuing scheme,” provided the
indictment (1) notifies the defendant adequately against
the charges against him; (2) does not subject the
defendant to double jeopardy; (3) does not permit
prejudicial evidentiary rulings at trial; and (4) does
not allow the defendants to be convicted by a
nonunanimous jury verdict.

United States v. Baytank (Houston), Inc., 934 F.2d 599, 609 (5th

Cir. 1991). However, “[i]f an indictment is duplicitous and

prejudice results, the conviction may be subject to reversal.” Id.

Pofahl, 990 F.2d at 1483. To the contrary, the Supreme Court has
instructed us to consider the risk of prejudice on a case-by-case
basis. Zafiro, 506 U.S. at 539. Therefore, although we conclude
that Fisher has demonstrated “compelling prejudice” warranting
reversal of his conviction, see Pofahl, 990 F.2d at 1483, we limit
our holding to the extraordinary circumstances of this case.

20
at 608.

Fisher only alleges he was prejudiced by subjection to double

jeopardy and conviction by a nonunanimous jury verdict. The

indictment against Fisher did not subject him to double jeopardy.

The classic test for resolving issues of double jeopardy was set

out by the Supreme Court in Blockburger v. United States, 284 U.S.

299 (1932). Blockburger directs that double jeopardy concerns are

not raised if each crime charged requires an element of proof the

other crimes charged do not. Id. at 304. The Supreme Court

recently reaffirmed this “same elements” test, stating that “where

the two offenses for which the defendant is punished or tried

cannot survive the ‘same elements’ test, the double jeopardy bar

applies.” United States v. Dixon, 113 S.Ct. 2849, 2856 (1993).

This Court has also relied frequently on the Blockburger test.

United States v. Gonzales, 40 F.3d 735, 738 n.5 (5th Cir., 1994);

Bias v. Ieyoub, 36 F.3d 479, 480.11

11
Several years ago, in United States v. Marable, 578 F.2d 151
(5th Cir. 1978), this Court first set out a test to resolve when an
indictment risks exposing a defendant to double jeopardy. That
test asked “whether the proof for charges in a second indictment
would have been admissible in the first trial and would have
supported a conviction.” United States v. Robin, 693 F.2d 376, 378
(5th Cir. 1982) (citing Marable, 578 F.2d at 153.) In 1980,
however, this Court, in an en banc decision, discredited the
analysis in Marable, holding the better interpretation of
Blockburger is one that focuses “on the elements of the offense
charged, not on the evidence adduced at trial.” United States v.
Rodriguez, 612 F.2d 906, 919 (5th Cir. 1980) (en banc), aff’d, 450
U.S. 333 (1981), overruled on other grounds, United States v.
Michelena-Orovio, 719 F.2d 738, 757 (5th Cir. 1983) (en banc),
cert. denied, 465 U.S. 1104 (1984).
For that reason, we feel the Blockbuster “same elements” test is
the test we should use to resolve Fisher’s claim. We recognize
that this Court has cited the Marable test even after Rodriguez was
decided. Robin, 693 F.2d at 378. However, the abundance of

21
 Under the “same elements” test, the indictment did not subject

Fisher to double jeopardy. Each part of the conspiracy charged in

Count One required proof of its own element. No double jeopardy

concerns were raised.

The danger of a nonunanimous jury verdict may be avoided by

proper jury instructions. Baytank, 934 F.2d at 609. The judge

instructed the jury on the burden of proof the Government was

required to meet before they could find the defendants guilty. The

judge also gave the jury a specific instruction that while they

need not find the defendants committed each of the five offenses

alleged in the indictment, they must unanimously agree the

defendants committed at least one of the five offenses alleged to

have made up the conspiracy. The jury instructions in this case

were sufficient to cure any alleged defect in the indictment.

Fisher has not made the necessary showing of prejudice to

merit reversal on this ground. In Robin, we noted that a

duplicitous indictment is not reversible error if defense

preparation was not affected and the jury’s verdict is unambiguous.

Robin, 693 at 379. We do not find either condition occurred in

this case. Any alleged duplicity in the indictment did not cause

any prejudice and was harmless.

authority endorsing the “same elements” test leads us to believe
that is the better standard.
We also note that regardless of which test we use, Fisher’s claim
fails. Under the Marable test, each element of Count One was
supported by adequate, separate evidence, so that none of the
evidence could be used as the basis for a future indictment.

22
 IV.

Both defendants allege the district court erred when it

refused to admit evidence that the defendants had prevailed in an

arbitration proceeding between themselves and four of the NFL

players seeking to have their USSA shares repurchased. The

defendants argue their success in arbitration showed the legitimacy

of their position the athletes had breached their contracts with

USSA and were not entitled to repurchase contracts. The district

court excluded the evidence under Fed.R.Evid. 402 and 403,

concluding the risk of confusing and misleading the jury with the

evidence outweighed its probativity.

This evidence was highly relevant. Evidence that an

arbitration proceeding occurred and that the defendants were not

found obliged to repurchase the Players’ shares goes to the heart

of the case. The objections the Government had to this evidence--

namely, that the arbitrator did not detail his reasons for the

finding, and that the jury might not understand they were not bound

by the arbitrator’s decision--may be pointed out in cross

examination on these subjects and argued to the jury. The

defendants have been found guilty of a crime and sentenced to

substantial jail terms. Evidence that is so relevant must be

extremely prejudicial to warrant its exclusion in these

circumstances. The arbitration results are not so inherently

confusing that the defense should have been prevented from

introducing them.

The Government also argues a civil judgment is not admissible

23
in a criminal case, particularly when the Government is not a party

to both matters. Wharton’s Criminal Evidence, § 669 (14th ed.

1985). However, the arbitration results were not offered to prove

innocence, but to show that contrary to the Government’s

assertions, the defendants’ legal position against the Players was

not a “ruse” or a position taken in bad faith. Also, as the

defense notes, several of the Government’s own witnesses mentioned

the results of other civil litigation against USSA. If civil

actions against the defense where the defense was unsuccessful were

mentioned in testimony, Fisher and Carney should have been allowed

to discuss the results of arbitration they won. It was error to

exclude this evidence.

V.

Michael Tannery, the accountant for Bradley Branson who

mistakenly overpaid USSA by $20,000, testified at trial. He stated

when he tried to obtain a refund of the $20,000 overpayment, Fisher

advised him to take out a loan at Bayside in Branson’s name, and

Fisher and Carney would later repay that loan.

Tannery was the central witness against Fisher on the bank

fraud charge, Count Ten of the indictment. Tannery testified to

the grand jury and again at trial that Brad Branson was aware of

the loan from Bayside when it was requested.

Before trial, Fisher’s counsel had successfully filed a

“Motion for Production of Favorable Evidence,” which included

information affecting the credibility of any person called as a

24
witness by the Government. The Government answered it was unaware

of any Brady12 material at that time. After Tannery testified, the

defendants filed a specific motion seeking Brady material relating

to Tannery. At that point, the Government submitted to the defense

an FBI 302 report from November 1992 of an interview with Bradley

Branson. In that interview, the FBI learned Branson did not

request the loan from Bayside, he did not request Tannery to obtain

a loan, and he was unaware a loan was requested in his name. He

did not know why the loan was requested or how the proceeds were

used. This evidence was directly contradictory to what Tannery

testified to both in the grand jury hearing and at trial. The

Government did not at any point attempt to correct the inconsistent

testimony.

When the defense received the 302 report, on the last day of

trial, Carney’s counsel moved for a mistrial due to the

Government’s failure to provide the information in a timely manner.

The court overruled the motion because it stated it did not think

the report was inconsistent with other testimony, and that no one

had attempted to have Branson appear as a witness, or if Branson

were unavailable,13 to take a deposition for use at trial.

In Brady v. Maryland, 373 U.S. 83 (1963), the Supreme Court

held the suppression by the prosecution of material evidence

favorable to the accused violates due process.

To prevail on a Brady claim, petitioner must prove that

12
Brady v. Maryland, 373 U.S. 83 (1963).
13
Bradley Branson lives in Spain.

25
 (1) the prosecution suppressed or withheld evidence (2)
which was favorable to the defense and (3) material to
either guilt or punishment. Materiality requires the
petitioner to demonstrate that “there is a reasonable
probability that, had the evidence been disclosed to the
defense, the result of the proceeding would have been
different.”. . .[A] reasonable probability is shown when
the non-disclosure “could reasonably be taken to put the
whole case in such a different light as to undermine
confidence in the jury verdict.”

Westley v. Johnson, 83 F.3d 714, 725 (5th Cir. 1996), petition for

cert filed, No. 96-6205 (Sept. 30, 1996)(citations omitted).

Fisher argues that Tannery was the critical witness against

him on Count Ten, a count on which he was found guilty and

sentenced to 87 months in prison. Even though the Government had

been ordered to turn over all evidence that might affect the

credibility of its witnesses before trial began, the Government did

not disclose the report to the defense in time for it to make a

meaningful difference in their trial strategy. Fisher contends no

effort was made to depose Branson or have him appear at trial

because the defense was unaware Branson did not know of the loan

when it was requested, or that Branson had disclaimed Fisher was

responsible for the loan. He argues the information in the 302

report would have severely impeached the credibility of Tannery.

Since Tannery was the key witness against him on Count Ten, and

since Tannery’s believability was critical to a jury finding of

guilt on that count, disclosure of the 302 would have made a

different result reasonably probable, as required to prevail under

Brady and its progeny.

The Government claims that while the 302 did contradict

Tannery’s testimony, Branson’s statements were not material. It

26
argues that the withheld 302 could not have exculpated Fisher or

impeached Tannery on essential issues, and that much other evidence

was presented that proved Fisher’s guilt. For those reasons, the

failure to disclose the 302 did not undermine confidence in the

verdict.

While the 302 would not have directly exculpated Fisher, it

would have severely impeached the testimony of a key government

witness. As Tannery was the essential witness against Fisher on

Count Ten, any evidence tending to discredit his testimony would

have been valuable to the defense. The Government knew of the 302

and that Branson directly contradicted Tannery’s evidence. Had the

defense known of the 302, it could have deposed Branson and had his

testimony contradicting Tannery ready for trial. The Government’s

failure to release this material information to the defense was

error, and should have resulted in a new trial for Fisher.

VI.

Both Fisher and Carney allege insufficient evidence was

produced to support Count Seven of the indictment, making false

statements under 18 U.S.C. § 1014. The indictment alleged Fisher

and Carney submitted an affidavit to the FHLBB which “falsely

stated that no material adverse events or material adverse changes”

occurred with respect to the financial condition of USSA since the

defendants submitted their application to buy Bayside. This

application represented that USSA would be capitalized with

$2,250,000 in equity and $1,000,000 in debt. After submitting the

27
affidavit, however, USSA restructured its capital and increased

equity to $4,000,000, but with $875,000 of that sum subject to

repurchase agreements and no debt. Defendants did not report this

change and contend it was not an adverse event. They certified

that no material adverse change had occurred.

The Government disagrees. It claims that the FHLBB should

have been told this information since demand repurchase agreements

affected the timing of when funds would come due. It points out a

defense witness testified he would want to know about repurchase

agreements in deciding whether to approve an application for change

in control. It then notes the defendants made no provision for

repayment of the sums included in the buy back agreements, creating

a risk of bankruptcy. The fact that equity was increased and debt

decreased does not end the inquiry.

“To overturn the convictions on a sufficiency of the evidence

challenge, we must find that a rational trier of fact could not

have found that the government proved the essential elements of the

crime charged beyond a reasonable doubt.” United States v.

Jimenez, 77 F.3d 95, 97 (5th Cir. 1996). When we view the evidence

in this light, we cannot find the verdict so unsupported as to

merit reversal. The change in capitalization created, in effect,

a sizable debt payable on demand. No provision was made for

repayment of this debt. This created a danger that several

investors would seek repayment at the same time and drain Bayside

of operating capital. While we are sympathetic to the impact of

FIRREA on Bayside, the fact that Bayside was unable to repay its

28
liabilities when investors sought to exercise repurchase options

illustrates the dangers inherent in these liabilities. There was

sufficient evidence to support the verdict on these counts. The

information withheld was adverse.

CONCLUSION

As we find the district court erred and reverse its decision,

we do not reach the remaining contentions on appeal. We REVERSE

Appellant’s convictions, VACATE their sentences and REMAND.

29