United States v. Lucas

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
February 1, 2008

No. 06-60289 Charles R. Fulbruge III
Clerk

UNITED STATES OF AMERICA

Plaintiff-Appellee
v.

ROBERT J LUCAS, JR; BIG HILL ACRES INC; CONSOLIDATED
INVESTMENTS INC; ROBBIE LUCAS WRIGLEY; M E THOMPSON JR

Defendants-Appellants

Appeal from the United States District Court
for the Southern District of Mississippi

Before HIGGINBOTHAM, SMITH, and OWEN, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge.

I
Defendants sold house lots and designed and certified septic systems on
wetlands but represented the lots as dry. Septic systems on the lots failed,
causing waste discharges. The Government charged the corporate developer and
various individuals with Clean Water Act (CWA) violations, mail fraud, and
 No. 06-60289

conspiracy to commit mail fraud and to violate the CWA. A jury found
Defendants guilty on all counts.1 Defendants appealed.
II
Robert J. Lucas owned Big Hill Acres, Inc. (BHA, Inc.) and Consolidated
Investments, Inc. Through these companies, he acquired Big Hill Acres (BHA),
a large parcel of land in Jackson County, Mississippi approximately eight miles
from the Gulf of Mexico. He subdivided the property and sold mobile home lots
under long-term installment plans. The property was not connected to a central
municipal waste system, and County law required Lucas to certify and install
individual septic systems on each lot before they could establish electric hook-
ups or sell the lots. In Jackson County, septic systems must be approved by an
engineer with the Mississippi Department of Health (MDH) or by an
independent licensed engineer. Lucas initially hired an MDH engineer to
approve septic systems, but MDH withdrew many of its initial approvals when
it found that the lots were on saturated soils. Lucas then hired a private
licensed engineer, M.E. Thompson, Jr., to approve and certify the septic systems.
Robbie Lucas Wrigley, Lucas’s daughter, advertised the lots, showed them to
prospective buyers, and leased them.
The Army Corps of Engineers, the EPA, the MDH, and the Mississippi
Department of Environmental Quality (DEQ) became concerned that Defendants
were selling house lots and installing septic systems on wetlands. These
agencies issued several cease and desist orders against Lucas and Thompson,2

1
Not every count included all Defendants. See infra note 3.
2
A July 15, 1997, letter from MDH to Thomspon indicated that he must “either fully
comply with the statutes when designing systems, or cease and desist immediately.” A June
3, 1999, cease and desist order from the Army Corps of Engineers told Lucas that unpermitted
placement of dredged or fill material into wetlands violated the CWA and ordered him to cease
and desist constructing homes in a subdivision near Vancleave, Mississippi. An August 4,
1999, administrative order from the EPA notified Lucas that placement of fill into wetlands
without a permit violated the CWA and ordered him to cease and desist from unpermitted

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and the EPA sent letters to residents and organized a meeting of the residents
to warn them of lot conditions and to tell them where wetlands were located on
the property. It also met with BHA’s counsel to attempt to designate the areas
where they would allow development. These efforts were not fully successful.
The Government filed a 41-count indictment against Defendants in June
of 2004 and then a superseding indictment, charging filling of wetlands without
a Section 404 permit from the Corps, failing to obtain Section 402 National
Pollutant Discharge Elimination System (NPDES) Permits for the septic tanks,
mail fraud, and conspiracy to commit mail fraud and to violate Sections 402 and
404 of the CWA.3 The district court denied pre-trial motions to dismiss the CWA
charges. After the Government concluded its case, the court denied a joint
motion for judgment of acquittal for all counts, except for counts 30-35 charging
violations of the CWA. After a weekend recess and an argument from the
Government that granting the motion would preclude appeal, the court reversed
the acquittal. A jury convicted Defendants on all counts, and the court denied
Defendants’ joint motion to vacate the verdict, enter a judgment of acquittal on
all counts, or to order a new trial. The court sentenced Lucas, Wrigley, and
Thomas to prison terms; placed BHA, Inc. and Consolidated Investments on
probation; and ordered all Defendants to pay restitution, special assessments,
and fines.

filling.
3
Count 1 charged all Defendants with Conspiracy to defraud buyers using the U.S.
mails and conspiracy to violate the CWA; Counts 2-18 charged Lucas, Wrigley, Thompson, and
BHA, Inc. with mail fraud; Count 19 charged Lucas, Wrigley, and BHA, Inc. with mail fraud;
Counts 20-22 charged Lucas with violating Section 404 of the CWA; Counts 23-26 charged
Lucas, Wrigley, and Thompson with violating Section 404 of the CWA; Counts 27-29 charged
Lucas with violating Section 404 of the CWA; Counts 30-32 charged Lucas, Wrigley, and
Thompson with violating Section 402 of the CWA; Counts 33-39 charged Lucas and Wrigley
with violating Section 402 of the CWA; and Counts 40-41 charged Lucas with violating Section
402 of the CWA.

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III
A
The first and overarching question is jurisdiction – whether the jury was
properly required to find that the property at issue was subject to the CWA.
Lucas, BHA, Inc., and Consolidated Investments, Inc., as well as Wrigley in
adopting all arguments in Lucas’s brief and Thompson in adopting the CWA
jurisdiction issues raised in Lucas’s brief, urge that the jury instructions failed
to require the jury to find that the wetlands were “waters of the United States”
and in refusing its requested charge. The instructions stated in relevant part,

The term navigable waters means waters of the United States.
Whether a body of water is navigable-in-fact is determined by
whether it is used or susceptible of being used in its natural and
ordinary condition as a highway for commerce over which trade and
travel are, or may be, conducted in the customary modes of trade
and travel on water.

The term wetlands means those areas that are inundated or
saturated by surface or groundwater at a frequency and duration
sufficient to support, and that under normal circumstances do
support, a prevalence of vegetation typically adapted for life in
saturated soil conditions. . . . Not all wetlands fall under the
protection of the Clean Water Act. However, wetlands that are
waters of the United States are protected by the Clean Water Act.
Wetlands are considered waters of the United States if they are
adjacent to a navigable body of open water. Wetlands are adjacent
to a navigable body of water if there is a significant nexus between
the wetlands in question and a navigable-in-fact waterway. Some
of the factors which you may wish to consider in determining
whether there is a significant nexus include, but are not limited to:
. . . flow rate of surface waters from the wetlands into a navigable
body of water . . . evidence of any past or present contamination of
a navigable body of water attributable to the discharge of
pollutants on the wetlands . . . when, or to what extent,
contaminants from the wetlands have or will affect a navigable
body of water . . . .

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Defendants argue that the court erred in not including their requested language
that
The Clean Water Act does not permit the federal government to
impose regulations over tributaries that are neither themselves
navigable nor truly adjacent to navigable waters . . . adjacency
implicates a ‘significant nexus’ between the water in question and
the navigable in fact waterway. If the government fails to prove
beyond a reasonable doubt that the wetlands at issue in this case
are in fact navigable or truly adjacent to i.e. lying near, close,
contiguous, or adjoining a navigable waterway, you must find the
defendants not guilty on counts Twenty through Forty-One.

They allege that the instructions, which did not include their proposed language,
were in error because they “could have lead the jury to believe that they could
find Defendants guilty under the CWA even if they found no significant nexus.”4
We review alleged error in jury instructions for an abuse of discretion,
reversing “only when ‘the charge as a whole leaves us with substantial and
ineradicable doubt whether the jury has been properly guided in its
deliberations.’”5 A district court abuses its discretion in omitting a requested
jury instruction only if the requested language “(1) is substantively correct; (2)
is not substantially covered in the charge given to the jury; and (3) concerns an
important point in the trial so that the failure to give it seriously impairs the
defendant’s ability to present effectively a particular defense.”6
The court’s instructions were not in error, nor was the court’s omission of
Defendants’ requested instructions. The court’s instructions required that the
jury find that the wetlands were waters of the United States adjacent to
navigable waters with a significant nexus between the wetland and the

4
Defendant Lucas’s Brief at 55.
5
Treadaway v. Societe Anonyme Louis-Dreyfus, 894 F.2d 161, 168 (5th Cir. 2000)
(quoting McCullough v. Beech Aircraft Corp., 587 F.2d 754, 759 (5th Cir. 1979)).
6
United States v. Simkanin, 420 F.3d 397, 410 (5th Cir. 2005).

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navigable-in-fact waterway to establish CWA jurisdiction. The instructions
substantially covered Defendants’ requested instructions by requiring adjacency7
as defined by a significant nexus. The closing arguments also included the
“significant nexus” language. The Government argued
[T]he government has shown that there is a significant nexus
between the wetlands on Big Hill Acres and navigable-in-fact
waters. Showed that the surface from the Big Hill Acres site drains
in three directions. The western portions of the site drain into
Bayou Costapia. Bayou Costapia empties into the Tchoutacabouffa
River, which then empties into the Gulf of Mexico. The central
portions of the Big Hill Acres development drained through
tributaries into Old Fort Bayou Creek. And Old Fort Bayou Creek
connects to Old Fort Bayou, which is a protected coastal preserve
empyting into the Gulf of Mexico. And the eastern portions drain
into the headwaters of Little Bluff Creek, which then connects to
Bluff Creek, which flows into the Pascagoula River and on to the
Gulf of Mexico. And what we also demonstrated was that you could
walk on wetlands from any one of these three areas on Big Hill
Acres all the way to the navigable-in-fact waters.

Defendants also emphasized the need for a significant nexus finding in their
closing arguments. Lucas’s attorney argued, “And if you find that the land at
Big Hill Acres is not adjacent to a navigable-in-fact body of water, does not have
a significant nexus to a navigable water, you should return a verdict of not guilty
on all the Clean Water Act counts.” The court did not abuse its discretion in
giving the CWA instructions.8

7
The term “adjacent” is substantially similar to Defendants’ requested term of “truly
adjacent.”
8
Defendants do not challenge the instructions on the grounds that they failed to
include the Rapanos v. United States standard for navigable waters. This is understandable.
The Rapanos plurality requires a channel adjacent to a wetland to be adjacent to “a relatively
permanent body of water connected to traditional interstate navigable waters” to constitute
“waters of the United States,” 126 S.Ct. 2208, 2227 (2006), and the Rapanos concurrence
requires a “significant nexus” between the wetlands and the navigable waters, meaning that
“wetlands, either alone or in combination with similarly situated lands in the region,
significantly affect the chemical, physical, and biological integrity of other covered waters more

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B
The second jurisdictional question is the sufficiency of the evidence
supporting the jury finding that the CWA reaches this property. All Defendants
argue that there is insufficient evidence to establish jurisdiction under the CWA.
“Our review of the sufficiency of the evidence supporting a conviction is narrow:
we will affirm if a rational trier of fact could have found that the evidence
established the essential elements of the crime beyond a reasonable doubt.”9
Under the CWA, the United States has jurisdiction over the “waters of the
United States,”10 i.e., navigable waters. Wetlands adjacent to certain navigable
waters are waters of the United States.11 Rapanos addressed wetlands adjacent
to navigable waters and the tributaries of navigable waters, determining the
types of adjacent tributaries and waters that count as waters of the United
States and the connection that wetlands must have to these waters to fall under
federal jurisdiction. The four-justice plurality defined waters of the United

readily understood as navigable.” 126 S.Ct. at 2248 (Kennedy, J., concurring). The
instructions contained elements of both the plurality and concurring opinions by requiring the
jury to find that the wetlands were “adjacent to a navigable body of open water,” meaning
“there is a significant nexus between the wetlands in question and a navigable-in-fact
waterway.” The judge instructed the jury to consider “flow rates of surface waters from the
wetlands into a navigable water,” an element similar to the connection required by the
Rapanos plurality, and to consider “whether there is evidence of when, or to what extent,
contaminants from the wetlands have or will affect a navigable water,” an element similar to
the concurrence’s significant nexus standard.

9
United States v. Davis, 226 F.3d 346, 354 (5th Cir. 2000).
10
33 U.S.C. § 1362(7).
11
See. e.g., United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 133 (1985)
(“We cannot say that the Corps’ conclusion that adjacent wetlands are inseparably bound up
with the ‘waters’ of the United States -- based as it is on the Corps’ and EPA’s technical
expertise -- is unreasonable.”); Rapanos, 126 S.Ct. at 2217 (recognizing that subsequent cases
limiting federal jurisdiction over certain waters have not overrruled Riverside Bayview).

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States, as “relatively permanent, standing or flowing bodies of water,”12
concluding that
establishing that wetlands . . . are covered by the Act requires two
findings: First, that the adjacent channel contains a “wate[r] of the
United States,” (i.e., a relatively permanent body of water connected
to traditional interstate navigable waters); and second, that the
wetland has a continuous surface connection with that water,
making it difficult to determine where the “water” ends and the
“wetland” begins. 13

The plurality did not define “relatively permanent,” finding that “we have no
occasion in this litigation to decide exactly when the drying-up of a stream bed
is continuous and frequent enough to disqualify the channel . . . .”14
Its adjacency standard finds its roots in Solid Waste Agency of Northern
Cook Cty. v. Army Corps of Engineers (“SWANCC”).15 SWANCC did not involve
wetlands but held that “nonnavigable, isolated, intrastate waters” such as “an
abandoned sand and gravel pit” were not waters of the United States.16 The
Rapanos plurality recognized that the Act allows states under delegated federal
authority to regulate“wetlands adjacent” to “navigable waters . . . other than
those [navigable waters] which are presently used, or are susceptible to use . .
. as a means to transport interstate or foreign commerce,” and that SWANCC

12
126 S.Ct. at 2221.
13
Id. at 2227.
14
Id. at 2221 n.5.
15
531 U.S. 159 (2001).
16
Id. at 162.

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was not to the contrary.17 In other words, the Government has jurisdiction over
waters that neighbor tributaries of navigable waters.18
The evidence presented at trial is sufficient by the plurality’s measure of
federal waters. One of the Government’s expert witnesses at trial, Mike Wylie,
described how he began at the westernmost drainage of the property and moved
across, finding “flowing open water” north of the site and boat points on the
western portion of the property “at the confluence of two tributaries.” These
tributaries had “strong flow” and “high velocity.” Wylie showed photographs of
his staff kayaking in tributaries connected to BHA wetlands as well as in several
wetlands on the property. A jury could have reasonably concluded that these
pictures show areas on the edge of the BHA property where “it is difficult to
determine where the ‘water’ ends and the ‘wetland’ begins.”19 The Government
maps of Big Hill Acres presented at trial also show Fort Bayou Creek, Bayou
Costophia, tributaries to Bayou Catophia, and tributaries to Little Bluff Creek
all connected to the development property, and all eventually flowing into the
navigable Tchoutachabouffa River, the Pascagoula River, and the Mississippi
Sound. Expert Peter Stokely testified that “there is a continuous band of
wetlands and streams and creeks that lead from the site to the waters,” and
showed aerial photographs of “drainage and wetlands patterns on the site” as
well as drainage and wetlands patterns that “branch up towards the site” and
that lead “up on to the property itself.”
The evidence presented at trial is also sufficient by the measure of federal
waters offered by the concurring justices. They concluded that the applicable

17
126 S. Ct. at 2220.
18
The definition includes wetlands that neighbor tributaries of navigable waters
because the plurality definition includes wetlands adjacent to “a relatively permanent body of
water connected to traditional interstate navigable waters.” Id. at 2227 (emphasis added).
19
Id. at 2227.

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standard should be the “significant nexus,” evoking whether “wetlands, either
alone or in combination with similarly situated lands in the region, significantly
affect the chemical, physical, and biological integrity of other covered waters
more readily understood as navigable.”20 The Government presented evidence
that the BHA wetlands control flooding in the area and prevent pollution in
downstream navigable waters, evidence supporting the significant nexus
standard of the Rapanos concurrence.
A four-justice dissent found that United States v. Riverside Bayview
Homes, Inc.21 controls the definition of waters of the United States and the
Supreme Court should defer to “the Corps’ judgment that treating adjacent
wetlands as ‘waters’ would advance the ‘congressional concern for protection of
water quality and aquatic ecosystems.”22 The evidence of flood and pollution
control provided by the BHA wetlands is sufficient by this measure, as well.
In sum, the evidence presented at trial supports all three of the
Rapanos standards and the jury’s finding that Lucas, Thompson, and Wrigley
were “guilty beyond a reasonable doubt” “of knowingly causing the discharge of
pollutants from a point source into waters of the United States without a permit
as required by Section 404” of the CWA; that Lucas, Thompson, and Wrigley
were guilty of “knowingly causing the discharge of pollutants from a point
source; to wit, a septic system on [various lots], into waters of the United States
without a permit as required by . . . Section 402” of the CWA; and that all
Defendants were guilty “of conspiracy to commit an offense against the laws of
the United States in violation of Title 18, United States Code, Section 371 . . . as
alleged in Count 1 of the indictment,” alleging, inter alia, that all Defendants

20
Id. at 2248 (Kennedy, J., concurring).
21
474 U.S. 121 (1985).
22
126 S. Ct. at 2244 (Stevens, J., dissenting).

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“caused the discharge of sewage into wetlands that are waters of the United
States” and “caused the discharge of pollutants into wetlands that are waters of
the United States.”
C
Finally, Defendants challenge the jurisdictional elements of the CWA
charges on the basis that the “CWA as applied to the regulation of wetlands is
unconstitutionally vague” and that “jurisdiction [under the Act] continues to be
determined on an ad hoc basis.”23 The district court denied their pretrial motion
on vagueness. We review this denial de novo.24 Multiple agencies had warned
Defendants that they were violating the CWA and state law by installing septic
systems and dredging in federal waters.25 This does not end our inquiry, as
Defendants allege that they disputed the agencies’ interpretation of the Clean
Water Act.
Even in the absence of disputed agency warnings, the prevalence of wet
property at BHA and an area network of creeks and their tributaries leading to
the Gulf, some of which connected to wetlands on the property, should have
alerted “men of common intelligence”26 to the possibility that the wetlands were

23
Defendant Lucas’s Brief at 38.
24
United States v. Nevers, 7 F.3d 59, 61 (5th Cir. 2003) (reviewing de novo the question
of unconstitutional vagueness); Haspel & Davis Milling & Planting Co. v. Bd. of Levee
Comm’rs, 493 F.3d 570, 575 (5th Cir. 2007) (reviewing de novo denial of a motion to dismiss).
25
The District Health Officer for the Jackson County office of MDH informed Thompson
in 1997 that the septic systems that he approved in wetland soils violated state law. On June
3, 1999, the Corps of Engineers issued a cease and desist letter ordering Lucas to stop putting
filled or dredged material into wetlands. On August 4, 1999, an EPA Administrative Order
ordered Lucas to stop fill activity at BHA. On October 27, 1999 the Mississippi DEQ sent a
letter to Lucas indicating that he was violating the CWA. On July 26, 2000 the EPA issued
another cease and desist letter.
26
Ford Motor Co. v. Tex. Dept. of Transp., 264 F.3d 493, 507 (5th Cir. 2001).

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waters of the United States under the CWA. As we found in Avoyelles
Sportsmen’s League, Inc. v. Marsh,
the landowners were well aware that at least a significant portion
of their land was a wetland; if they wished to protect themselves
from liability they could have applied for a permit and thus obtained
a precise delineation of the extent of the wetland, as well as the
activities permissible on the land.27

At trial, the Government presented evidence that one of Lucas’s employees told
Lucas that the property might contain wetlands, and that the property might be
regulated.28 Another employee also testified that he had warned Lucas that the
property was wet.29 Furthermore, the Government produced evidence that the
language in the deeds conveying property from a timber company to Big Hill
Acres indicated that the land was subject to “[w]etlands, environmental,
hazardous or solid waste and flood plain laws, rules, and regulations affecting
said property,” while another deed from Robert Lucas to Big Hill Acres was a
special warranty deed “with language saying any property which may constitute

27
715 F.2d 897, 917 (5th Cir. 1983).
28
Direct Examination of John Mizelle. Q: “But when you were working for Mr. Lucas
in doing the work you described, you told him that there might be a problem here and you
knew about it; right?” A: “Possibly yes, sir.” Q: “And that problem was that you were working
in wetlands and thought you were; is that correct?” A: “I thought I was, yes, sir.” Q: “And you
raised that issue with Mr. Lucas?” A: “At one point, yes, sir.” * * * Q: “So you explained to Mr.
Lucas that the county [at another job that Mr. Mizelle worked on, unrelated to BHA] had
gotten in trouble and had been fined for digging, trenching, side casting in wetlands, is that
correct?” A: “Well, yes and no. I mean, [at the county job] I was working strictly in the water
– in the running creek or running bayou. It’s totally different.” Q: “But you explained – you
explained that there were” A: “We [the county] did get fined, yes, sir.” Q: “And you explained
that to Mr. Lucas??” A: “Yes, sir.” Q: “And you explained that in the context because you were
working in an area that you thought might be regulated in the same way; is that correct?” A:
“It might be, yes.” Q: “And that’s why you raised it with Mr. Lucas – “ A: “Yes, sir.” Q: “–is
that correct? So you had a concern about it, and you raised that concern that maybe you were
working in wetlands with Mr. Lucas; correct?” A: “Right.”
29
Direct Examination of Phillip Johnson.

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coastal wetlands as defined in the coastal wetland protection law is conveyed by
quitclaim only.” The district court did not err in denying the vagueness motion.
IV
A
We now turn from the jurisdictional question of whether the wetlands
were waters of the United States, to challenges to the sufficiency of the
indictment and the instruction to the jury regarding the CWA’s NPDES
permitting requirements. We first address the challenges to the sufficiency of
the indictment with respect to the charges for discharging pollutants from septic
systems into waters of the United States without an NPDES permit.
Counts 30-41 of the superseding indictment charged some of the
Defendants with “knowingly caus[ing] pollutants, including sewage and domestic
wastewater, to be discharged from a septic system, a point source, into wetlands
that are waters of the United States without a permit issued under the authority
of Section 402 of the Clean Water Act.”30
Defendants challenge the sufficiency of the indictment with respect to the
Section 402 charges, arguing that “[b]ecause the regulation [enacting Section
402] unambiguously excludes septic tanks from the definition of ‘treatment
works treating domestic sewage,’ Defendants were not legally required to obtain
an NPDES permit, and therefore did not violate CWA Section 402.”31
Defendants moved to dismiss these counts before trial, arguing that “[t]he CWA
regulations require a Section 402 permit for point source discharges and for
‘treatment works treating domestic sewage.’ An individual on-site septic system

30
Counts 30-32 charged Lucas, Wrigley, and Thompson; Counts 33-39 charged Lucas
and Wrigley, and Counts 40-41 charged Lucas.
31
Defendant Lucas’s Brief at 33.

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is neither a ‘point source’ nor a ‘treatment works treating domestic sewage.’”32
The Government counters that “Defendants [on appeal] do not dispute that the
release of sewage from septic tanks constitutes the discharge of a pollutant from
a point source.”33
Even if Defendants abandoned their argument that septic systems are not
a point source, and it appears they have not, there remains the broader
argument that the indictment is insufficient because Section 402 NPDES
permitting requirements do not apply to individual septic systems. Because the
NPDES program requires permits for point source discharges and for certain
treatment works, the definition of a point source is inherent to the applicability
of NPDES permitting to septic systems.
40 C.F.R. § 122 and Sections 123 and 124, “implement the National
Pollutant Discharge Elimination System (NPDES) Program under sections 318,
402, and 405 of the Clean Water Act (CWA).” Section 122.1(b) addresses the
“Scope of the NPDES permit requirement” and defines the NPDES permitting
requirement for point sources, stating,
The NPDES program requires permits for the discharge of “pollutants”
from any “point source” into “waters of the United States.” The terms
“pollutant”, “point source” and “waters of the United States” are defined
at § 122.2.

Section 122.2 defines these terms, in relevant part, as follows:

Point source means any discernible, confined, and discrete
conveyance, including but not limited to, any pipe, ditch, channel,
tunnel, conduit, well, discrete fissure, container, rolling stock,
concentrated animal feeding operation, landfill leachate collection
system, vessel or other floating craft from which pollutants are or
may be discharged.

32
Memorandum in Support of Motion to Dismiss Clean Water Act Courts (30-41) For
Failing to Charge an Offense, at 3-4.
33
Government’s Brief at 51.

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Pollutant means dredged spoil, solid waste, incinerator residue,
filter backwash, sewage, garbage, sewage sludge, munitions,
chemical wastes, biological materials, radioactive materials (except
those regulated under the Atomic Energy Act of 1954, as amended
(42 U.S.C. 2011 et seq.)), heat, wrecked or discarded equipment,
rock, sand, cellar dirt and industrial, municipal, and agricultural
waste discharged into water. It does not mean:

(a) Sewage from vessels; or

(b) Water, gas, or other material which is injected into
a well to facilitate production of oil or gas, or water
derived in association with oil and gas production and
disposed of in a well, if the well used either to facilitate
production or for disposal purposes is approved by
authority of the State in which the well is located, and
if the State determines that the injection or disposal
will not result in the degradation of ground or surface
water resources.

After defining the scope of NPDES permitting to apply to any point source
discharging a pollutant into waters of the United States, Section 122.1(b)(2)
describes other sources (treatment works) that must meet additional sewage
sludge requirements as part of the NPDES permitting process. Section
122.1(b)(2) provides,

The [NPDES] permit program established under this part also
applies to owners or operators of any treatment works treating
domestic sewage, whether or not the treatment works is otherwise
required to obtain an NPDES permit, unless all requirements
implementing section 405(d) of the CWA applicable to the treatment
works treating domestic sewage are included in a permit issued
under the appropriate provisions of subtitle C of the Solid Waste
Disposal Act, Part C of the Safe Drinking Water Act, the Marine
Protection, Research, and Sanctuaries Act of 1972, or the Clean Air
Act, or under State permit programs approved by the Administrator
as adequate to assure compliance with section 405 of the CWA.34

34
Emphasis added.

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Treatment works under § 122.1 (b)(2) do not include septic systems.35 Thus, the
NPDES permitting requirement applies to two types of sources – point sources
and treatment works. The Government urges that septic systems that discharge
waste directly into federal waters of the United States are point sources and
thus subject to the first permitting requirement under § 122.1(b)(1). Defendants,
on the other hand, argue that privately-owned septic systems are not subject to
NPDES permitting requirements, impliedly arguing that they are neither point
sources nor treatment works.
The crux of Defendants’ argument is that because septic systems are not
treatment works under § 122.1(b)(2), they cannot be subject to NPDES
permitting. But as the Government argues, treatment works are defined
separately from point sources in the regulation: point sources are subject to the
permitting requirement, and certain treatment works are additionally subject
to these requirements. In other words, because § 122.1(b)(2) provides that
NPDES permitting “also applies to owners or operators of any treatment works
treating domestic sewage, whether or not the treatment works is otherwise
required to obtain an NPDES permit,”36 the provision “is not exclusionary, but
includes additional sources that are not otherwise covered.”37 Section 122.1(b)(1)
provides that point sources are subject to NPDES permitting, the argument
concludes, and that is the definition that applies here. Section 122.1(b)(2),
defining treatment works that are also subject to NPDES permitting, is not the
basis for NPDES permitting in this case. Section 122.1(b)(2)’s exclusion of septic

35
See infra note 38 and accompanying text.
36
Emphasis added.
37
Government’s Brief at 52.

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systems does not diminish § 122.1(b)(1)’s applicability to septic systems. We
agree with this reading.
Section 122.1(b)(1) defines the sources requiring NPDES permits, namely
point sources that discharge pollutants into U.S. waters. Section 122.1(b)(2)
defines additional sources that must either obtain NPDES permits or fully meet
the sewage disposal requirements of § 405 of the CWA. Section 122.1(b)(2)
specifically exempts septic systems from its requirements; it incorporates the
definition of treatment works from § 122.2, and this definition “does not include
septic tanks or similar devices.”38 But § 122.1(b)(2) does not address the sources
under § 122.1(b)(1) to which NPDES permitting applies. Rather, it implements
NPDES permitting for certain sources of sewage sludge subject to special sludge
disposal requirements under the CWA.
The background material to the amendments incorporating sewage sludge
disposal into the NPDES permitting program confirms this reading of the
statute. It states that
the amendments direct that any permit under section 402 of the Act
(NPDES permits) issued to a POTW or any other treatment works
treating domestic sewage shall include the sludge technical
standards, unless such requirements have been included in a permit
issued under subtitle C of the Solid Waste Disposal Act, Part C of
the Safe Drinking Water Act, MPRSA, or the Clean Air Act, or
under State permit programs approved by the Administrator.39

By exempting individual septic systems from these technical sludge disposal and
treatment standards, EPA prevented homeowners and other operators of
individual septic systems from facing these requirements. The sewage sludge
regulations aim primarily at “safe use and disposal of sewage sludge,” allowing
permitting that is “compatible with beneficial reuse projects [for sludge] such as

38
40 C.F.R. § 122.2.
39
54 F.R. 18716 (EPA 40 C.F.R. § 122, 123, 124, and 501, May 2, 1989).

17
 No. 06-60289

agricultural land application.”40 Once an entity physically removes sewage from
an individual septic tank, the owner of that tank no longer has control over the
disposal of the waste41 and should not have to comply with sewage sludge
standards. Section 122.1(b)(2) therefore aims at the disposers, not the initial
producers and dischargers, of sludge.42
In sum, 40 C.F.R. § 122.1 (b)(1) defines the point sources that are subject
to NPDES permitting. 40 C.F.R. § 122.1(b)(2) is a separate portion of the
regulation, applying sewage sludge disposal requirements to entities that might
not otherwise be regulated by NPDES permits under the point source
requirement. Although septic systems are explicitly excluded from these sludge
disposal requirements, Defendants have not persuaded us that septic systems
are not “point sources” that discharge “pollutants” into U.S. waters under 40

40
Id.
41
See id. (“To regulate individual septic tanks (whether serving one or several
households) [under the sewage sludge disposal regulations] obviously would be extremely
difficult and inefficient. It would also be impractical in terms of achieving environmental
results since the owners and operators of septic tanks have no effective control over the actual
disposition of septage pumped from their tanks (i.e., they cannot control the entities who pump
and dispose of the septage” (emphasis added)).
42
See id. (“Part 122 contains a second part to the definition of ‘treatment works treating
domestic sewage.’ It provides that the Regional Administrator may designate a particular
facility as a ‘treatment works treating domestic sewage’ for the purpose of CWA section 405(f)
where necessary to protect public health and the environment from poor sludge quality, use,
handling or disposal practices, or to ensure compliance with 40 CFR Part 503. This enables the
Regional Administrator to carry out the intent of Congress to ensure that all persons subject
to the standards for sludge use and disposal (e.g., persons who handle sewage sludge but who
do not generate or treat sewage sludge) operate in compliance with such standards, and that
adverse effects on the environment resulting from poor sludge quality, use, handling or
disposal can be minimized. The authority to designate facilities as ‘treatment works treating
domestic sewage’ on a case-by-case basis is not required for either NPDES (Part 123) or
non-NPDES (Part 501) State programs. Under today’s final rule, States are required to have
a program that requires permits for POTWs and other treatment works as defined in § 501.2,
but are free to develop any appropriate program to regulate other users and disposers of
sewage sludge to ensure compliance with the technical standards.” (emphasis added)).

18
 No. 06-60289

C.F.R. C.F.R. § 122.1 (b)(1) and that the indictment fails to state an offense.43
The septic systems on BHA are “containers,” thus suggesting that they fall
under the definition of “point source” incorporated into Section 122.1(b)(1), and
septic systems hold “solid waste” and “sewage” that fit within the definition of
“pollution” as defined by Section 122.2. The exemptions to § 122.1(b)(1)’s
NPDES permit requirement list sewage from vessels but do not exempt
individual septic systems from the permitting requirement.44
We have never addressed whether the Clean Water Act can require
NPDES permits for septic systems, but by the language of the Act the septic
systems at issue in this case are point sources that discharged pollutants into
waters of the United States and required NPDES permits. Other case law
provides support for this reading. The Supreme Court’s plurality decision in
Rapanos, in the context of § 404 of the CWA, found that,
many courts have held that . . . upstream, intermittently flowing
channels themselves constitute “point sources” under the Act. The
definition of “point source” includes “any pipe, ditch, channel,
tunnel, conduit, well, discrete fissure, container, rolling stock,
concentrated animal feeding operation, or vessel or other floating
craft, from which pollutants are or may be discharged.” 33 U.S.C. §
1362(14). We have held that the Act “makes plain that a point
source need not be the original source of the pollutant; it need only
convey the pollutant to ‘navigable waters.’”45

43
We recognize that we have not formerly encountered a case charging an operator of
a septic system with failure to obtain an NPDES permit. This is likely because few cases have
presented us with these unique circumstances, where a developer hired an engineer to approve
and install septic systems directly in wetlands that are waters of the United States, thus
making a system that is typically a diffuse, non-point source into a point source.
44
See 40 C.F.R. § 122.3.
45
126 S.Ct. at 2227 (emphasis added) (quoting S. Fla. Water Mgmt. Dist. v. Miccosukee
Tribe, 541 U.S. 95, 105 (2004)).

19
 No. 06-60289

The Court, in determining that intervening conduits can be point sources,
cited to United States v. Ortiz46 and Dague v. Burlington.47 In Ortiz, the Tenth
Circuit reversed an acquittal after a jury trial on a charge of “discharging
pollutants from a point source (a storm drain) into waters of the United States
. . . without [an NPDES] permit.”48 Defendant dumped pollutants into a toilet,
and the pollutants eventually emptied through a storm drain into the Colorado
River.49 Similar to Rapanos, Dague did not involve a violation of NPDES permit
requirements but addressed the definition of “point source” that is used in
NPDES permitting.50 The Second Circuit held that where pollutants ran off
from a landfill into a pond and then through a railroad culvert that conveyed the
pollutants into a surrounding marsh, the railroad culvert was a point source.51
The Second Circuit followed a definition similar to the Supreme Court’s in
distinguishing point sources from nonpoint sources, identifying point sources as
“pollutants . . . discharged from ‘discernible, confined, and discrete
conveyance(s)’ either by gravitational or nongravitational means.”52

46
427 F.3d 1278 (10th Cir. 2005).
47
935 F.2d 1343 (2d Cir. 1991).
48
427 F.3d at 1281.
49
Id. at 1279-81.
50
33 U.S.C. § 1311, the statute addressed in Dague, uses the definition of point source
from 33 U.S.C. § 1362 (see Dague, 935 F.2d at 1354) and is identical to the definition of point
source for NPDES permitting contained in 40 C.F.R. § 122.2. Section 1362, like § 122.2,
defines point source as “any discernible, confined and discrete conveyance, including but not
limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling
stock, concentrated animal feeding operation, or vessel or other floating craft, from which
pollutants are or may be discharged. This term does not include agricultural stormwater
discharges and return flows from irrigated agriculture.”
51
935 F.2d at 1355.
52
Sierra Club v. Abston Constr. Co., 620 F.2d 41, 45 (1980) (quoting 33 U.S.C. §
1362(14)).

20
 No. 06-60289

Several district courts have found that pollutants discharged from failed
septic systems into navigable waters are point sources for the purposes of the
Clean Water Act. In United States v. Evans, where the “discharge alleged [was]
overflow from a septic tank,”53 the Middle District of Florida held that “the
affidavits established that pollutant was being discharged from a point source
into the creek.”54 In that case, some of the sewage was bypassing the septic
system and flowing directly into the creek.55 In Minnesota Center for
Environmental Advocacy v. United States EPA, the court found that a “straight
pipe septic system,”56 one that disposes “untreated sewage directly via a pipe to
rivers, lakes, drain tiles, or ditches,” is a point source under 33 U.S.C. §
1362(14).57 In Friends of Sakonnet v. Dutra58 the court held, “The owners of [a]
[v]illage [development] septic system are required to obtain an NPDES (national
pollutant discharge elimination system) permit under 33 U.S.C. § 1342 as they
are discharging pollutants into navigable waters.”59 The 33 homes had sewage
lines connecting to a “large communal septic tank,”60 and the sewage then
“deposited in a leach field”61 and was chlorinated, then sent through a pipe into
the Sakkonet River. When the septic system failed, raw sewage flowed into the

53
No. 3:05-cr-159(S3)-J-32MMH, 2006 U.S. Dist. LEXIS 94369 at *90, n.32 (M.D. Fla.
July 14, 2006).
54
Id. at 132.
55
Id. at 108.
56
No. 03-5450, 2005 U.S. Dist. LEXIS 12652 at *17 (D. Minn. June 23, 2005).
57
Id. at 17-18.
58
738 F. Supp. 623 (D. R.I. 1990).
59
Id. at 630 n.13.
60
Id. at 627.
61
Id.

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river. The court held that the system was a “privately owned treatment works”
and that “[t]here is no question . . . that the owners of the failed septic system
are liable under 33 U.S.C. § 1311 [including ‘effluent limitations for point
sources, other than publicly owned treatment works’].”62
The septic systems on BHA are not a communally-used septic system or
a straight-pipe system and are not privately owned treatment works. However,
the evidence produced at trial was sufficient to support a finding that they were
a point source and could be subject to NPDES permitting requirements under
the CWA. The indictment was sufficient in charging a violation of the CWA for
failure to obtain NPDES permits for the septic systems.
B
The jury instructions on point source pollution from BHA under Section
402 of the CWA were also sufficient. All Defendants object to the instructions
as “misleading because the language in the instruction stated multiple times
‘from a point source, to wit, a septic system,”63 arguing that this language could
have suggested that a septic system is a point source and established an
essential element of the crime. The “to-wit” language arises frequently within
the jury instructions because that language was part of the counts in the
indictment, which the court read to the jury. The court’s instructions after
reading the counts did not include the phrase “to wit, a septic system” but
instead required the jury to find,
First, that the defendants knew that they were discharging or
causing to be discharged pollutants; Second, from a point source;
Third, that the defendants knew the physical characteristics of the
property into which the pollutant was discharged that identify it as
a wetland; Fourth, that the defendants knew of the facts establishing
the required link between the wetland and waters of the United

62
Id.
63
Defendant Lucas’s Brief at 55.

22
 No. 06-60289

States; And fifth, that the defendants knew that they did not have a
permit as required by the National Pollutant Discharge Elimination
System Program, Section 402 of the Clean Water Act.64

These instructions did not establish that a septic system was a point source; they
required the jury to find beyond a reasonable doubt that element of the crime.
As the court found in overruling Thompson’s attorney’s objections to the
instruction, “the essential element[] – Element No. 2 requires the jury to find
beyond a reasonable doubt that there is a point source without telling them what
it is. It’s up to them to decide based on the evidence that they’ve heard whether
these septic tanks even qualify as a point source.”
Defendants also argue that “the law imposes the requirement to obtain a
Section 402 NPDES permit solely upon the actual discharger or operator of a
facility” and that the court’s instructions misstated the law by allowing the jury
to convict defendants for “causing” a discharge. The court, in overruling
Defendants’ objections to the instruction, found,
I think the government’s theory of the case is that they – although
they may not have discharged the pollutant, they created the
instrumentality through which a pollutant could have been
discharged. And I’ll let the jury – I’ll let the jury make a
determination as to whether or not that theory is sufficient to
satisfy the causing of a pollutant or a causing of a discharge of a
pollutant.

The court instructed the jury,
For you to find the defendants guilty of these crimes, you must be
convinced that the government has proved each of the following
beyond a reasonable doubt: First, that the defendants knew that
they were discharging or causing the discharge of pollutants;
Second, from a point source; Third that the defendants knew the
physical characteristics of the property into which a pollutant was
discharged that identify it as a wetland; Fourth, that the defendants

64
Emphasis added.

23
 No. 06-60289

knew of the facts establishing the required link between the wetland
and waters of the United States; And fifth, that the defendants
knew that they did not have a permit as required by Section 404 of
the Clean Water Act.

Although the court instructed the jury that it could find defendants guilty
for “causing” a discharge, Lucas’s attorney argued in closing,
The EPA wants to hold Mr. Lucas responsible for septic tank
problems even though he had no control over what the owners of
those systems were doing to them or how they were using them.
Mr. Lucas and Big Hill Acres do not operate septic systems on
mobile homes in Big Hill Acres. And the evidence showed that the
EPA doesn’t require any kind of permit to operate a septic system.
But the government is here telling you that it’s a crime for Mr.
Lucas not to have had a permit or, even worse, do what the
Department of Health and Environmental Protection Agency
encouraged him to do [i.e., take action to counter the failing septic
systems].

Defendants’ argument against the court’s instructions turns partly on the
construction of 40 C.F.R. § 122.21(b), providing, “When a facility or activity is
owned by one person but is operated by another person, it is the operator’s duty
to obtain a permit” and on whether an individual who causes a discharge can be
considered an operator. Defendants point to Newton County Wildlife Ass’n v.
Rogers,65 where the court held that the Forest Service, in approving timber sales,
did not need to obtain NPDES or dredge and fill permits. If any permits were
required, the contractors doing the harvesting and building roads would have
the responsibility of obtaining them.66
The Government argues that Congress amended the CWA in 1987 to
broaden criminal liability under the Act and in doing so, provided that its intent

65
141 F.3d 803 (8th Cir. 1998).
66
Id. at 810.

24
 No. 06-60289

was to “provide penalties for dischargers or individuals who knowingly or
negligently violate or cause the violation of certain of the Act’s requirements.”67
The Government further argues that “defendants may . . . be held indirectly
liable for the discharges as aiders and abettors under 18 U.S.C. § 2. In each of
the CWA counts, defendants were charged as principals pursuant to this
provision. A principal is criminally culpable for causing an intermediary to
commit a criminal act even where the intermediary has no criminal intent and
is innocent of the substantive crime.”68 We are persuaded by the latter
argument.
In Abston Construction Co., we addressed the question of causation in the
context of defining a point source of pollution. The Sierra Club brought a citizen
suit against a mining company that constructed sediment basins to catch the
run-off from spoil piles.69 The basins occasionally overflowed during rainy
weather, thus discharging pollutants into a creek.70 The company argued that
it was not legally responsible for the discharge because “natural” discharge in
the form of rain caused the discharge from the spoil piles;71 it argued that the
discharge from the spoil piles was not a point source of pollution. We held that
although the mining company had not created the gullies and ditches formed by
the rainwater, which channeled the mining pollutants into the creek, the
company was responsible for a point source discharge because it collected the

67
Government’s Brief at 79 (quoting H.R. Rep. No. 99-1004 at 136 (1986) (Conf. Rep.);
H.R. Rep. No. 99-189, at 29-30 (1985) (emphasis added)).
68
Government’s Brief at 80-81.
69
620 F.2d at 43.
70
Id.
71
Id. at 44.

25
 No. 06-60289

“rock and other materials” that eventually caused creek pollution.72 Specifically,
we held that
[n]othing in the [Clean Water73] Act relieves miners from liability
simply because the operators did not actually construct those
conveyances, so long as they are reasonably likely to be the means
by which pollutants are ultimately deposited into a navigable body
of water.74

This case did not apply specifically to NPDES permits, however.
Defendants’ activities in constructing the septic systems fall somewhere between
the standards in Newtown County Wildlife Ass’n and Abston Construction Co.
Under the Newtown County Wildlife Ass’n standard, Defendants here could have
been considered the “operators,” as they were directly responsible for designing
and certifying the septic systems that collected and discharged the waste,
although a contractor handled the actual installation. The Government also
provided evidence that Lucas voluntarily worked on the septic systems when
owners complained that they were failing, filling them with dirt and extending
the drain fields.75 In Abston Construction Co., the mine created the waste (rocks
and other mining materials) that was collected in a point source, the sediment
basins; at BHA, Defendants did not create the waste collected in the septic
systems.

72
Id. at 45.
73
The opinion referred to the Clean Water Act by its full name, the Federal Water
Pollution Control Act.
74
Id. at 45.
75
Defendants provided evidence that the state and the EPA had determined that they
would not prosecute installers at BHA for temporary repairs of septic problems that
Defendants claimed at trial were the lot owners’ responsibility. The Government presented
evidence that Lucas did not follow required procedures for the repairs and attempted to repair
at least one septic system on an uninhabited lot that he wished to re-sell.

26
 No. 06-60289

We have not addressed whether individuals and corporations “causing”
discharge are required to obtain NPDES permits. Several district courts have.
In Evans, the Middle District of Florida upheld the constitutionality of searches
challenged by the owner and operator of a labor camp. The Government had
obtained search warrants to investigate, among other things, potential violations
of the Clean Water Act for discharging human waste into a creek without an
NPDES permit. Although the waste came from the workers in the labor camp,
the Defendants may have constructed the “illegal bypass” around the septic
system76 that allowed raw human waste to flow through a PVC pipe into a creek
or ditch.77 Evans asked, of course, whether there was probable cause to believe
that there was CWA jurisdiction. Friends of Sakkonet addressed a treatment
works rather than a point source but also speaks to the issue of causation.
There, the defendants were the corporate owners and former landowners of the
land holding a large septic tank serving 33 homes. The district court granted
summary judgment under the federal CWA against the “corporate owner of the
land on which the failed sewage system is located” and “the sole trustee of the
Trust” that owned the corporation.78
Defendant Lucas hired M.E. Thompson to design and certify the septic
systems that discharged pollutants into navigable waters. Although Defendants’
personal septic waste was not the waste that entered federal wetlands, the
attempted technical distinction between the “discharge of any pollutant” and
“causing” this discharge is unavailing here. The lot owners eventually used the
systems, but Defendants were the cause of their operation and their unlawful
discharge from the systems. At minimum, they aided and abetted the operation

76
2006 U.S. Dist. LEXIS 94369 at *108.
77
Id. at 108-09.
78
738 F.Supp. at 626, 635.

27
 No. 06-60289

of the septic systems and the resulting discharges. A jury instruction allowing
conviction for “causing” the discharge of pollutants was not an abuse of
discretion.
V
In addition to challenging the sufficiency of the indictment and jury
instructions pertaining to NPDES permitting, all Defendants challenge the
court’s denial of their motion for acquittal on constitutional grounds. Counts 30-
35 of the superseding indictment charged Lucas, Wrigley, and Thompson with
causing the discharge of pollutants into waters of the United States without a
Section 402 permit. Following the close of the Government’s case, Defendants
moved for acquittal on all counts. The district court initially granted acquittal
for counts 30-35 but after a weekend recess reversed its ruling. The court, in
reversing the acquittal, stated,
I could be in error. And if I am in error, I should be corrected. And
the only way to preserve that would be to take the matter – reserve
ruling on the Rule 29 motion and allow the case to go forward to the
jury with proper instructions.

The court, in other words, questioned its initial determination that there was “no
evidence” on the counts. This decision did not subject Defendants to double
jeopardy, and the court did not abuse its discretion in denying their acquittal
motion.
Reversal of a final judgment of acquittal would place a defendant in double
jeopardy. “A judgment of acquittal, whether based on a jury verdict of not guilty
or on a ruling by the court that the evidence is insufficient to convict, may not
be appealed . . . ”79 But an initial ruling of acquittal followed by a change of
mind before any further proceedings occur is not a final judgment. Smith v.
Massachusetts confirmed that “a prosecutor can seek to persuade the court to

79
United States v. Scott, 437 U.S. 82, 91 (1978).

28
 No. 06-60289

correct its legal error [i.e., an “ill-considered acquittal ruling[ ]”] before it rules,
or at least before the proceedings move forward.”80
The district court made its initial ruling outside of the jury’s presence at
the end of the week and announced that the Government could appeal the
ruling. The court considered the Government’s arguments against the ruling
during the weekend recess81 and, before the trial progressed any further,
reversed its initial ruling on the acquittal. The court’s final ruling was a denial
of the motion for acquittal on the CWA counts, and no double jeopardy attached
after the initial ruling.
Defendants also contest counts 30-35 on the grounds that the
Government’s evidence for those counts did not prove CWA jurisdiction, and that
the court should have granted the motion for acquittal on these counts. “So long
as a reasonable trier of fact could find that the evidence established guilt beyond
a reasonable doubt, the evidence need not exclude every reasonable hypothesis
of innocence or be wholly inconsistent with every conclusion except that of
guilt.”82 Where a reasonable trier of fact could find guilt beyond a reasonable
doubt, “the jury [is] free to choose among the reasonable constructions of the
evidence: one of which [is] consistent with [Defendant’s] guilt,”83 and the judge
need not grant a motion for acquittal. We are persuaded that there was
sufficient evidence to support conviction on the counts, including evidence that
the wetlands on BHA were waters of the United States under the Rapanos
standards, as we have discussed.

80
543 U.S. 462, 474 (2005) (citing Price v. Vincent, 538 U.S. 634, 637-38, 643-43, and
n. 1 (2003)).
81
The prosecution argued that despite the court’s intent to allow an appeal of the
judgment, the Government would not be able to appeal a ruling of acquittal on the counts.
82
United States v. Loe, 262 F.3d 427, 434 (5th Cir. 2001).
83
Id.

29
 No. 06-60289

VI
All Defendants argue that the indictment was insufficient on the mail
fraud charges and that the evidence does not support their mail fraud conviction,
alleging that a breach of the warranty of habitability is necessary to show fraud
for lot sales in Mississippi and that all lot buyers signed contracts making a
breach of the warranty impossible.84 Defendants also allege that no one testified
that the lots were “uninhabitable” and that the Government failed to prove that
septic systems backed up and caused problems because of their placement in
wetlands. They conclude that a “breach of a warranty of habitability” cannot
support the mail fraud conviction.
The mail fraud charges were not limited to allegations of a breach of
warranty. Rather, they charged a broader scheme of fraudulent
misrepresentation that induced buyers to purchase lots and use of the mails to
further this scheme. The indictment charged, in relevant part,
in advertisements to the public and in statements to individuals,
represented to potential purchasers of Big Hill Acres lots that the
lots were habitable and suitable for home sites when in fact they
were not . . . . submitted . . . a letter certifying that the below-ground
septic system . . . had been installed in compliance with Mississippi
state law when in fact it was not [charge against M.E. Thompson]
. . . . represented to customers that the lots they were marketing at
Big Hill Acres development had or would have properly designed
and correctly installed septic systems that made the lots suitable for
purchase as home sites . . . entered into contracts with purchasers
of Big Hill Acres to buy home sites that were not suitable for
habitation requiring the purchasers to make monthly payments to
the Big Hill Acres office in Lucedale, Mississippi . . . knowingly

84
The contract contained a waiver provision stating, “It is understood and agreed that
Buyer . . . has inspected the above described property and that the same is, and has been
purchased by Buyer as a result of said inspection and not upon any representation made by
Seller or its agents . . . that Buyer waives any and all claims for damages because of any
representation made by any person whomsoever; and that Seller or its agent or agents shall
not and are not responsible for any inducement, promise, representation, agreement, condition,
or stipulation not specifically set forth herein.”

30
 No. 06-60289

caused a payment for the sale of the lot [identified in counts 2
through 18] to be delivered by the United States Postal Service to
BIG HILL ACRES, INC., . . . each such mailing being a separate
count . . . .

The mail fraud statute attaches criminal liability to

Whoever, having devised or intending to devise any scheme or
artifice to defraud, or for obtaining money or property by means
of false or fraudulent pretenses, representations, or promises .
. . for the purpose of executing such scheme or artifice or
attempting so to do, places in any post office or authorized
depository for mail matter, any matter or thing whatever to be
sent or delivered by the Postal Service . . . or takes or receives
therefrom, any such matter or thing . . . .85

Specifically, a jury must find three elements to support a mail fraud conviction:
“‘(1) a scheme to defraud; (2) use of the mails to execute that scheme; and (3) the
specific intent to defraud.’”86 A misrepresentation must be material to constitute
fraud under the statute,87 meaning it “has a natural tendency to influence, or is
capable of influencing, the decision of the decision-making body to which it was
addressed.”88
We are not persuaded that the disclaimer provision of these individual
sales contracts insulates Defendants from the federal charges89 or that the fraud

85
18 U.S.C. § 1341 (emphasis added).
86
United States v. Dotson, 407 F.3d 387, 391-92 (5th Cir. 2005) (quoting United States
v. Strong, 371 F.3d 225, 227 (5th Cir. 2004)).
87
See Neder v. United States, 527 U.S. 1, 22 (1999).
88
United States v. Harms, 442 F.3d 367, 372 (5th Cir. 2006), cert. denied, 127 S.Ct.
2875 (2007).
89
Defendants do not cite to any case law for this proposition.

31
 No. 06-60289

alleged and shown in this case was limited to a violation of that narrow
warranty.
We have not addressed the question of whether a working septic system
is required for the implied warranty of habitability that arises from a contract
of the sale of a house and land under Mississippi law. Mississippi courts have
held that the warranty covers mobile homes and septic systems.90 We have
determined in an Alabama case that a realtor’s misrepresentation that a vacant
lot’s soil was suitable for a septic tank91 may have constituted intentional and
negligent misrepresentation and a breach of implied warranty, remanding to
the district court to consider the issue.92
The contracts for the lots purportedly waived the liability of Defendants
and their agents for any representations made outside of the written contract,
including “inducements.” A broad contract waiver cannot exempt Defendants
from federal mail fraud conviction in this case. “The Supreme Court has
repeatedly noted that misrepresentation cannot be justified by incorrectness of
the position of the party to whom the misrepresentation is made.”93 Although
residents inspected the lots and verified this inspection in the contract,

90
See, e.g., Moorman v. Tower Management Co., 451 F.Supp.2d 846, 851 (S.D. Miss.
2006) (quoting Staley v. Bouril, 718 A.2d 283, 284-85 (1998)) (finding that the warranty of
habitability applies to mobile home lots and citing the Staley case, which “recognized that ‘in
leasing improved lots in a mobile home park,’ tenants ‘bargain for a similar bundle of goods
and services,’ including, for example, ‘potable water, adequate septic service, and proper
electrical connections,’ all of which are ‘essential components of a habitable residence’”).
91
See Mann v. Adams Realty Co., Inc., 556 F.2d 288, 291 (5th Cir. 1977) (The realtor
had stated that “[e]verything [was] fine” concerning the septic system).
92
Id. at 297.
93
Dotson, 407 F.3d at 393-94 (citing United States v. Mandujano, 425 U.S. 564 (1976)
(“sanctions for false statements or perjury allowed even when inquiry was unconstitutional”)
and Dennis v. United States, 384 U.S. 855 (1966) (“‘It is no defense to a charge based upon
[conspiracy to circumvent a law through deceit] that the statutory scheme sought to be evaded
is somehow defective.’”)).

32
 No. 06-60289

Defendants made misrepresentations that directly contradicted inspecting
buyers’ observations. Wrigley misrepresented the dryness of the site, for
example, when buyers noticed wetlands and wetlands vegetation and questioned
her about the wetlands.
The Government presented evidence that Defendants, despite warnings
from agencies that they were installing septic systems in saturated soils,
advertised the lots as “high and dry” and, when asked by owners if there were
wetlands on the property, responded that there were none. “[T]he mail fraud
statute does not require a completed fraud, just that the defendant has ‘devised
or intend[ed] to devise’ a scheme to defraud,”94 but the Government presented
evidence of a completed fraud, indicating that the lots were not in fact dry, as
Defendants had advertised, and that residents encountered sewage problems on
their wet lots.95 At least one witness also testified that Wrigley or Lucas added
language to her contract after she signed it; the language stated that she had
been notified about potential wetlands on her property, while the owner testified
that Defendants had not informed her of wetlands or shown her any wetlands
maps when she was purchasing the property. Other witnesses testified that
their land was wet and that their septic systems backed up. A witness who had
asked Wrigley whether there were any wetlands on the property testified that
it “would have made a huge difference” in her decision to buy the property if
Wrigley had informed her that it contained wetlands. Although Defendants
presented some evidence that the septic systems failed because lot owners had

94
United States v. Ratcliff, 488 F.3d 639, 645 n.7 (5th Cir. 2007).
95
Patrick Brossett, Sr. testified that he “had a problem with it [the septic] flooding up
on the ground all the time. Every time it rains, it comes up.” Winford Patterson testified that
“within the first month” his septic system “filled up. Commodes wouldn’t flush.” Sewer
“[w]ater was coming up into the bathtubs and the sinks and the showers.” He testified that
he had to drain waste from the system out of his yard and “into the property ditch.” Patricia
Griswold testified that sewage “was still backing up inside the trailer even after the septic tank
was pumped.”

33
 No. 06-60289

misused their septic systems, other lot owners testified that they only disposed
of proper waste in their systems, yet the systems still failed.96 Based on this
evidence, “a reasonable trier of fact could conclude that the Government proved
beyond a reasonable doubt”97 that Defendants made material misrepresentations
in selling the lots and that the septic systems failed because they were placed in
wetlands.
The Government also presented evidence that Defendants used the mail
to accomplish fraudulent sales: they caused lot owners to send payments through
the mail to the BHA, Inc. office and sent receipts through the mail for these
payments.98 We are persuaded that the mailings were sufficiently connected to
the fraudulent misrepresentations. “One ‘causes’ an article to be delivered by
mail if he acts with the knowledge that use of the mail will follow in the ordinary
course or if use of the mail is reasonably foreseeable . . . .”99
After purchasing a lot based on fraudulent misrepresentations, prospective
lot owners committed themselves to years of installment payments to be made
through the mail. Although many owners made payments after the EPA had
informed them that their lots were on wetlands, these payments connected
directly back to contracts that they signed prior to agency warnings.

96
Pansy Maddox, district environmental supervisor for MDH, also testified that “[m]ost
of the systems were failing because fled drains had been placed in soils that were too wet and
do not drain adequately to absorb the wastewater.”
97
Harms, 442 F.3d at 374.
98
Defendants allege that “proof of mailing was lacking for Counts 10 and 16.” Count
10 involved lot GG-4. Patricia Griswold, the former owner of lot GG-4, testified that she made
a payment in the mail for that lot and verified that a receipt for that payment (Government’s
Exhibit 50(ii)) came through the mail. Count 16 involved lot YY-1. The owner “involved in
purchasing YY-1 and YY-2” testified that “[w]e paid cash and sometimes by check” for the lot
payments. “We mailed them.” He also verified that Government’s Exhibit 79(a) contained
“envelopes that Mr. Lucas had given us to send our money in to them.”
99
United States v. Blankenship, 746 F.2d 233, 240 (5th Cir. 1984).

34
 No. 06-60289

Defendants challenge the court’s instructions on mail fraud, arguing that
the court abused its discretion by failing to instruct on materiality. For jury
instructions, “the omission of an element is subject to harmless-error
analysis.”100 Although the district court erred in stating that the Fifth Circuit
Pattern Jury Instructions for mail fraud do not mention materiality,101 the
district court’s instructions defined false representations as constituting “a half
truth, or effectively conceal[ing] a material fact, provided it is made with the
intent to defraud.”102 But this does not end our inquiry. The inclusion of the
word “or” between “half truth” and “conceals a material fact” could have
suggested to the jury that a false representation could be defined as a half truth
that concealed a non-material fact. The court’s instruction, under either
definition of false representation – one that is a “half truth” or “conceals a
material fact” – correctly required the jury to find, for a mail fraud conviction,
that defendants “knowingly created a scheme to defraud. That is, obtain money
by inducing individuals to lease, rent or purchase lots or subdivided real
property in [BHA] under representations that were false.”103
The court’s instructions included a requirement of materiality. As
indicated above, “a false statement is material if it has a natural tendency to
influence, or [is] capable of influencing, the decision of the decisionmaking body
to which it was addressed.”104 By instructing the jury that the

100
Neder, 527 U.S. at 10.
101
The pattern jury instructions require, inter alia, “That the scheme to defraud
employed false material representations.” 2001 Fifth Circuit Criminal Jury Instructions.
102
Emphasis added.
103
Emphasis added.
104
Neder, 527 U.S. at 16 (internal quotations and citations omitted, emphasis added).

35
 No. 06-60289

misrepresentations must have induced individuals to lease the property to
constitute fraud, the court required that the jury establish materiality.
VII
Moving from mail fraud to conspiracy, M.E. Thompson – the engineer who
designed and certified the septic systems – and Wrigley and Lucas,105 contest the
sufficiency of the conspiracy charge in the indictment and the sufficiency of the
evidence proving conspiracy. They also argue that because the conspiracy
convictions “are contingent upon the underlying charges” of violation of the CWA
and mail fraud, there is insufficient evidence to support the conspiracy charges.
Because we have found sufficient evidence to support the underlying charges, we
need not address their final argument.
We review “the sufficiency of an indictment de novo, taking the
indictment’s allegations as true.”106 To prove a conspiracy under § 371, the
evidence must prove and the indictment must allege “(1) an agreement between
the defendant and a co-conspirator to violate a law of the United States; (2) an
overt act by one conspirator in furtherance of the conspiracy; and (3) the specific
intent to further an unlawful objective of the conspiracy.”107 The agreement
“must be arrived at knowingly,” and “‘[m]ere association with those involved in
a criminal venture is insufficient to prove participation in a conspiracy.’”108 The
Government may prove an agreement using “circumstantial evidence,” and “in
a conspiracy case: an agreement may be inferred from concert of action,

105
Lucas, BHA, Inc., and Consolidated Investments, Inc. briefed the conspiracy issues.
Wrigley and Thompson adopted the arguments from that brief. Thompson additionally argued
that the evidence did not support his conviction for conspiracy.
106
United States v. Ratcliff, 488 F.3d 639, 643 (5th Cir. 2007).
107
United States v. Bieganowski, 313 F.3d 264 , 276 (5th Cir. 2002).
108
Id. at 277 (quoting United States v. Ballard, 663 F.2d 534, 543 (5th Cir. 1981)).

36
 No. 06-60289

voluntary participation may be inferred from a collocation of circumstances, and
knowledge may be inferred from surrounding circumstances.”109
With respect to the sufficiency of the indictment, Defendants only
challenge the unlawful objective prong, arguing that the object of the conspiracy
– the sale of wetlands – was not illegal. The indictment sufficiently alleged
unlawful objectives and placed Defendants on notice of the offenses charged.
The unlawful objectives charged included, inter alia,
Use of the United States Mail in furtherance of a scheme to defraud
by inducing individuals to lease, rent, and purchase residential lots
in the Big Hill Acres development . . . by making material
representations they [Defendants] knew to be false that the lots
were suitable for habitation when they were not, in violation of Title
18, United States Code, Section 1341 * * * By installing septic
systems in water-saturated soils and wetlands, knowingly causing
pollutants, including human waste, to be discharged from point
sources, into waters of the United States, specifically, wetlands
located in Vancleave, Mississippi, without a permit . . . in violation
of Title 33, United States Code, Section 1319(c)(2)(A).

Defendants also challenge the sufficiency of the evidence for the conspiracy
conviction, arguing that there was insufficient evidence to show an agreement
between Thompson and any one of the other Defendants, or that any of the
Defendants intended to violate the mail fraud statute or the CWA. When
proving conspiracy,
“[a]n express agreement is not required; a tacit, mutual agreement
with common purpose, design, and understanding will suffice.”
Because secrecy is the norm, each element may be established by
circumstantial evidence.110

109
Id. (internal quotations omitted).
110
United States v. Farias, 469 F.3d 393, 398 (5th Cir.) (quoting United States v.
Infante, 404 F.3d 376, 385 (5th Cir. 2005)), cert. denied, 127 S.Ct. 1502 (2007).

37
 No. 06-60289

The circumstantial evidence showed that Thompson agreed to the conspiracy,
participated in overt acts in furtherance of the conspiracy, and that he had
knowledge of the unlawful objectives of the conspiracy. The evidence also was
sufficient to support a finding that Defendants intended to commit mail fraud
or to violate the CWA. The Government presented evidence that Thompson
attended meetings about the septic system designs with MDH and a
“representative” of Lucas.111 The MDH informed Thompson in letters that many
of the septic systems he had certified were illegal and that he had certified septic
systems on sites where the MDH had rejected the installation of septic systems.
The MDH sent a letter to Lucas informing him that the MDH had rescinded
many of its former recommendations of septic systems, and an MDH employee
met with Wrigley to explain why the MDH could not recommend underground
septic systems for the property. After MDH brought legal action against
Thompson for illegally approving wastewater disposal systems at a non-BHA
site, Wrigley told the MDH to stop interfering with Thompson’s certifications.112
The MDH also sent letters to Thompson warning him that he was illegally
installing systems. The Government presented evidence that Thompson ignored
the MDH’s warnings and certified systems to allow lot sales to move forward.113
The Government also presented evidence that Thompson did not inspect many

111
Maddox testified that Mr. Thompson requested a meeting with her “to discuss the
regulations” regarding septic systems in saturated soils and that Tommy Brodnax attended
the meeting and “said he was there on behalf of Mr. Lucas and his development in Vancleave.”
She testified that “a couple weeks later, Tommy Brodnax and M.E. Thompson requested
another meeting” with her.
112
Jim Weston, branch director of the division of on site wastewater at MDH, testified
that Wrigley “picked [him] up, and she [rode] him around Ocean Springs” and told him that
“she felt that Mr. Thompson was doing a very good job for them out there. As far as she knew,
that he knew more about it than we did. And that we should be ashamed of ourselves for
having him arrested.”
113
Defendants presented evidence that Thomspon disagreed with the MDH’s standards
for interpreting soil charts and identifying saturated soils, arguing that his alleged non-
compliance was a result of this disagreement.

38
 No. 06-60289

of the systems that he certified and infrequently supervised installation. A
reasonable jury could have determined beyond a reasonable doubt that
Thompson, Lucas, and Wrigley conspired to profit from the sale of lots that were
not habitable and to violate the CWA.
Thompson, Lucas, and Wrigley also challenge the court’s jury instructions
on conspiracy, alleging that the court erred in refusing to instruct the jury on
unanimity and that the Government also requested a unanimity instruction,
which the court failed to give. The district court viewed the conspiracy claim as
a single conspiracy to commit several offenses, instructing the jury to find

that the defendant and at least one other person made an
agreement to commit at least one of the offenses charged in the
indictment. That is, the crime of mail fraud or to knowingly violate
Section 404 of the Clean Water Act or to knowingly violate Section
402 of the Clean Water Act as charged in the indictment.

Defendants allege that these instructions created a “genuine risk that the jury
[would be confused] or that a conviction [might] occur as the result of different
jurors concluding that a defendant committed different acts” and that the court
should have instructed on unanimity for this charge. The district court did not
abuse its discretion in refusing to do so. The instructions did not risk confusing
the jury, and they reasonably instructed the jury that it must find that
Defendants agreed114 to commit “at least one of the offenses” to convict for

114
See United States v. Dillman, 15 F.3d 384, 391-92 (5th Cir. 1994) (citations omitted)
(“The appellants’ argument fails because it is based on a fundamental misunderstanding of the
crux of a conspiracy charge under 18 U.S.C. § 371: The defendant’s voluntary agreement with
another or others to commit an offense against or to defraud the United States. It does not
matter that a single conspiracy was comprised of several objects to which the defendant did
not specifically agree to accomplish, if those acts were reasonably foreseeable. Once the
defendant had joined the agreement, the acts of the other conspirators became his acts
irrespective of whether he physically participated in those particular acts or expressly agreed
to the various specific objectives that constituted the respective stages of the overarching
conspiracy. When twelve jurors believe beyond a reasonable doubt that the defendant under

39
 No. 06-60289

conspiracy, suggesting that the jurors had to concur on the specific offense – or
the several offenses – that Defendants agreed to commit.
Finally, Defendants argue that the “District Court erred in failing to
instruct the jury that if the objective of the conspiracy was legal, Defendants
could not be convicted of conspiracy.” Although Defendants’ proffered
instruction was an accurate statement of the law, the court’s instructions
substantially covered the alternative language. They required that, in order to
find conspiracy, the jury must find that Defendants agreed to commit the “crime
of mail fraud or to knowingly violate Section 404 of the Clean Water Act or to
knowingly violate Section 402 of the Clean Water Act as charged in the
indictment,” thus indicating that the jury must find that Defendants agreed to
do something illegal.
VIII
All of the Defendants contest several evidentiary rulings of the court.115
At trial, the Government presented Phillip Johnson, a lot owner and worker at
BHA, as a witness. The Government provided Defendants with “The Statements
of Phillip Johnson” prior to trial but substantially redacted the statements by
cutting out large paragraphs and repasting the material. The redacted portions
included allegations that Robert Lucas had bribed local officials to further his
business on BHA. Defendants were unaware of the redacted bribery allegations
until Johnson mentioned them in direct examination. For the first time at oral
argument, the Government claimed that it had not planned to elicit the bribery
testimony and that Johnson’s statements came as a surprise.

consideration agreed to achieve an ultimate criminal purpose against the United States, all
jurors need not agree on which particular offenses that defendant intended personally to
commit as long as there is but one conspiracy that encompasses the particular offenses
charged.”).
115
Lucas, BHA, Inc., Consolidated Investments, Inc., and Thompson adopted Wrigley’s
evidentiary arguments.

40
 No. 06-60289

Regardless of whether or not the Government anticipated that Johnson
would testify about bribery, its behavior was wrong. By redacting the
statements in a non-obvious manner and failing to reveal material that would
arise at trial, the Government shortened Defendants’ time to prepare an
adequate defense.
When improper evidence is introduced to the jury but a defendant’s
subsequent motion for mistrial is denied, we review the denial for abuse of
discretion116 and, if we find error, we apply harmless error review.117 Further,
New trial is required only when, after a review of the entire record,
it appears that there is a significant possibility that the prejudicial
evidence had a substantial impact on the jury verdict. We give
great weight to the trial court’s assessment of the prejudicial effect
of the evidence, and prejudice may be rendered harmless by a
curative instruction.118

The FBI had interviewed Johnson and had prepared a summary of the
interviews. The Government provided a redacted version of this summary to
defendants before trial, as required by Rule 16 for organizational defendants.119
The redacted version of the FBI summary omitted the following language:
While employed at BHA he [Johnson] knew several other men who
worked for LUCAS [followed by the names of employees]. He
believes that most of these employees are still around. DANNY
ANDERSON moved to Newberry, South Carolina.

116
United States v. Valles, 484 F.3d 745, 756 (5th Cir. 2007) (citing United States v.
Dupre, 117 F.3d 810, 823 (5th Cir. 1997), cert. denied, 127 S. Ct. 3025 (2007), and petition for
cert. filed (Jul. 6, 2007) (No. 07-8373), and cert. denied, 128 S. Ct. 238 (2007).
117
See, e.g., Dorsey v. Quarterman, 494 F.3d 527, 531 (5th Cir. 2007) (jurors saw non-
redacted version of a redacted transcript that had been introduced at trial; defendant moved
for mistrial; court denied motion; we reviewed for harmless error and found that any error was
harmless), petition for cert. filed (Oct. 27, 2007) (No. 07-7371).
118
Valles, 484 F.3d at 756.
119
FED. R. CRIM. P. 16(a)(1)(C).

41
 No. 06-60289

JOHNSON heard rumors from other employees that LUCAS paid
off county officials in order to develop land he was not supposed to,
build roads in an inferior manner, and get approval for septic tanks
in areas where they would clearly not function correctly.
JOHNSON always assumed that these were just rumors and that
LUCAS was doing things correctly.

However, one day he saw something that troubled him. Around
that spring of 1998 he was repairing a piece of equipment on the job
site. LUCAS pulled up in his car, then two males pulled up in a
Ford Crown Victoria with county tags displayed on it. LUCAS
handed each of the men a brown envelope. They stood at the back
of the car and spoke. Then TOMMY BROADNAX [sic], a county
supervisor pulled up. BROADNAX [sic] also received a brown
envelope from Lucas . . . All four men then got in the county car and
drove off. They were only gone for a few minutes. When they
returned BROADNAX [sic] and LUCAS got out and got in LUCAS’
car and drove towards the BHA office. The two men got in the
county car and drove away.

BROADNAX [sic] would frequently come out to the area and ride
around with LUCAS. Other employees told him that BROADNAX
leased a dump truck to BHA. The dump truck was very seldom
used but, LUCAS paid for it on a monthly bases [sic] whether or not
it was utilized.

Johnson, in response to a Government question about a meeting that
Johnson had with Brodnax, testified that Lucas “pulled out a couple of envelopes
and gave one to Tommy,” and that there was “some greenback” in the envelope.
This testimony was a surprise to both the court and Defendants. This surprise
introduction of the bribery evidence was unfair but did not rise to a deprivation
of Defendants’ due process rights.
After Johnson testified about bribery, the court changed its prior ruling
that Defendants could not introduce Johnson’s criminal background, allowing
them to extensively cross-examine him about his prior convictions and arrests.

42
 No. 06-60289

The court also gave curative instructions and reminded the jury about the
testimony on Johnson’s prior convictions, stating,
You have been told that the witness Phillip Johnson was previously
convicted of several felony offenses. A conviction is a factor you may
consider in deciding whether to believe that witness, but it does not
necessarily destroy the witness’ credibility. It has been brought to
your attention only because you may wish to consider it when you
decide whether your believe the witness’ testimony. * * * You are
here to decide whether the government has proved beyond a
reasonable doubt that the defendants are guilty of the crimes
charged. The defendants are not on trial for any other act, conduct
or offense not alleged in the indictment.

Although Defendants argue that despite these measures, the bribery evidence
tainted the entire case and “moved the direction of the trial from a mail fraud,
wetlands, habitability, Clean Water Act case into a public bribery case,” the
evidence from the record does not suggest that the case was tainted to this
degree or that it led the jury to settle upon a verdict that it would not have
otherwise reached. The Government presented evidence of Defendants’
continued and knowing violations of the law, despite several agencies’ orders to
stop. The evidence in the case did not focus unduly on bribery but rather on the
hydrology of the area, the problems that residents faced as a result of septic
systems installed in wet areas, and Defendants’ methods for advertising, selling,
and receiving payments for the lots. The Government did not mention bribery
in its closing argument; its only discussion of Phillip Johnson referred to his
warnings to Lucas that the land was wet, his complaints about the failed septic
system on his lot, and his road construction work as an employee for Lucas.
Defendants also argue that the Government, in providing Johnson’s
redacted statements to Defendants prior to trial, failed to properly disclose Rule
16(A)(1)(c) evidence of statements by an organization’s representative; failed to
comply with the court’s discovery order in violation of Rule 26; violated the

43
 No. 06-60289

Jencks Act; and introduced improper 404(b) character evidence of “bad acts.”
The Government did not violate the Jencks Act because it provided an
unredacted version of the statements after Johnson testified. Even assuming
that the Government violated the court’s discovery order and Rule 16(A)(1)(c) by
failing to provide a full, unredacted version of Johnson’s statements prior to
trial, we are not persuaded that the introduction of the testimony and the
Government’s failure to disclose the nature of that testimony in advance rose to
the level of reversible error.120
The day after Johnson had mentioned the bribery incident, the court
advised Johnson to “make a conscious effort to try to limit [his] responses to the
questions so that [he would be] responsive to the question and [not] give us more
. . . more of a colorful comments [sic] and colorful testimony than is really
necessary for this jury to resolve the issues.” The court also allowed the
Defendants to extensively cross examine Johnson and gave the jury cautionary
instructions, as discussed above.
Finally, the district court did not abuse its discretion in refusing to strike
Johnson’s testimony and ruling that Johnson’s testimony was evidence of overt
acts and not Rule 404(b) character evidence, finding,
The government’s theory of the conspiracy from the beginning has
included the allegation that Mr. Brodnax was at a minimum helpful
in obtaining favorable zoning decisions and resolutions from the
board of supervisors, exerting influence upon the health department
in an overall effort to assist Mr. Lucas.

We have held that “all the government need do [to show that Rule 404(b) does
not apply] is suggest a logical hypothesis of the relevance of the evidence for a

120
See United States v. Ramirez, 174 F.3d 584, 587 (5th Cir. 1999) (“Even when a
[Jencks Act] violation is found, the failure to produce prior statements is subject to a harmless
error analysis.”); United States v. Gonzalez, 661 F.2d 488, 494 (5th Cir. 1981) (“Assuming that
th[e] failure to disclose [under 16(a)(1)(C)] was the government’s error, it is not cause to reverse
unless prejudicial to the substantial rights of the accused.”).

44
 No. 06-60289

purpose other than to demonstrate [the defendant’s] propensity to act in a
particular manner.”121 In its opening arguments, the Government stated:
[T]he Jackson County board of supervisors granted Mr. Lucas
variance after variance, freeing him from any platting requirement.
. . . These variances from the Jackson County board of supervisors
were an additional benefit to Mr. Lucas and Ms. Wrigley. . . . The
variances freed them from the scrutiny of the planning department.

The Government then introduced evidence of the unusual number of
variances granted to Lucas, including the testimony of Johnson, who worked for
Lucas and witnessed his interactions with the board.
Defendant Thompson argues that the court abused its discretion in
denying his motion to sever following the introduction of Johnson’s surprise
testimony. We review a district court’s denial of a motion for severance for an
abuse of discretion122 and reverse only if “there is clear prejudice to the
defendant”123 as a result of the denial. Defendants argue that “Thompson
suffered extreme prejudice from the joint trial with Robert Lucas . . . [because]
a new but uncharged crime c[a]me before the jury (bribery) which he had no
opportunity to defend since he was not aware of any such purported act and the
Government concealed the prejudicial testimony in discovery.” They further
argue, “The prejudice suffered by Defendant Thompson is patently compelling
and the court could do nothing to mitigate same, as it was impossible to mitigate
the effect on the jury or give the defendant sufficient time to prepare a defense
. . .”

121
United States v. Kraut, 66 F.3d 1420, 1431 (5th Cir. 1995).
122
United States v. Hickerson, 489 F.3d 742, 746 (5th Cir. 2007) (citing United States
v. McCarter, 316 F.3d 536, 538 (5th Cir. 2002), cert. denied, 128 S. Ct. 521 (2007).
123
Id. (quoting United States v. Holloway, 1 F.3d 307, 310 (5th Cir. 1993)).

45
 No. 06-60289

Thompson cites the court’s remarks regarding its surprise over the
introduction of Johnson’s bribery evidence. A court’s surprise over the
introduction of evidence does not demonstrate clear prejudice, and Thompson
fails to indicate how he was otherwise prejudiced.
Defendants also sought leave to depose a witness, Bobby Strickland, and
present his deposition at trial to counter the evidence introduced by Johnson.
The district court denied the motion. Mr. Strickland was unable to testify at
trial due to “distance, surgery, and death in his family.” Defendants allege that
Strickland would have countered Johnson’s claims about his relationship with
Strickland.
District courts have “broad discretion” to grant or refuse a Rule 15(a)
motion, and they “should review these motions on a case-by-case basis,
examining whether the particular characteristics of each case constitute
‘exceptional circumstances.’”124 “The words ‘exceptional circumstances’ bespeak
that only in extraordinary cases will depositions be compelled.”125 Such
extraordinary circumstances include, for example, situations where a potential
deponent would not likely be able to return to the United States.126 Even if
extraordinary circumstances are present, the proposed deposition must be
“material,”127 and we subject any error caused by denial of a motion for
deposition to harmless error review.128 Where “even assuming the greatest
benefit to the defendants from [the proposed deponent’s testimony, that

124
Dillman, 15 F.3d at 389 (quoting United States v. Bello, 532 F.2d 422, 423 (5th Cir.
1976)).
125
Id.
126
Id.
127
Id.
128
Id.

46
 No. 06-60289

testimony still could not have exculpated [the defendant],”129 we find harmless
error.
Although Strickland’s testimony would have been “material” in the sense
that it may have discredited some of Johnson’s claims, the circumstances of
“distance, surgery, and death in his family” are not extraordinary. Even if they
were, Strickland’s testimony would not have necessarily helped to exculpate
Defendants from their direct charges, as bribery was not included in the charges
but was evidence relevant to the conspiracy, of which there was substantial
evidence unrelated to bribery, as we have described.
Finally, Defendants argue that the Government committed many
unforgivable errors throughout the trial by making multiple speaking objections,
mentioning in front of the jury that Defendants had filed a motion to dismiss,
suggesting that Defendants had the burden of proof,130 alluding to the fact that
Thompson had not testified,131 and asking “prejudicial questions” with “no good
faith basis.”132 The court instructed the jury that Defendants had no burden of
proof and that statements by lawyers are not evidence, stating,
[t]he law does not require a defendant to prove his innocence or to
produce any evidence at all and no inference whatever may be
drawn from the election of a defendant not to testify. The
government has the burden of proving each of the defendants guilty
beyond a reasonable doubt; and, if it fails to do so, you must acquit

129
Id.
130
The prosecution asked one of Defendants’ witnesses on cross, “And you’re asking the
jury to rely on this beyond a reasonable doubt, and there are no data points here at all on it,
right?”
131
The prosecution stated, in referring to defense counsel’s cross examination, “Your
honor, he’s just simply testifying. If they want to put Mr. Thompson on to say what happened.
But he’s testifying. I object to it.”
132
Claiming, for example, that “the Government elicited testimony about the drinking
water that the Government knew to be baseless, but which was highly prejudicial to
Appellants.”

47
 No. 06-60289

that defendant. * * * Remember that any statements, objections or
arguments made by the lawyers are not evidence in the case.

After the Government alluded to Mr. Thompson’s decision not to testify and Mr.
Thompson’s attorney made a motion for mistrial, the court also gave a
cautionary instruction, stating,
the government’s attorney made a comment during an objection
which may have been taken by you as an indication that Mr. M.E.
Thompson would or should testify in this case. First, I want to
remind you the defendants are presumed innocent until proven
guilty. The burden of proof is on the government until the very end
of the case. The defendants have no burden to prove their innocence
or to present any evidence or to testify. Since the defendants have
the right to remain silent, the law prohibits you in arriving at your
verdict from considering that the defendants may not have testified.
I specifically instruct you that Mr. Thompson has absolutely no duty
to testify. And you are not to hold it against him or to consider that
in any way as to whether or not he is guilty or not guilty of the
crimes that are charged against him in the indictment. He has an
absolute right under the Constitution of the United States not to
testify. And that is not to be held against him by the jury. And I
want you to keep that in mind at all times. I don’t know whether
Mr. Thompson will testify or not. However, any remarks counsel for
the government may have made that might lead you to expect Mr.
Thompson to testify should be put out of your minds entirely.

Defendants understandably take issue with the tactics of the Government, but
none of their examples suggest that the tactics were so out of line that we must
find that the district court abused its discretion in refusing to grant a mistrial.
That does not mean that we approve of this want of professionalism.
IX
The court, following the guidelines, sentenced Lucas to 108 months’
imprisonment and three years’ supervised release and fined him $15,000. It
sentenced both Wrigley and Thompson to 87-month sentences with three years’
supervised release and assessed $15,000 in fines against each of them. It fined

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BHA, Inc. $4.8 million and Consolidated Investments $500,000, and assessed
$1,407,400 in restitution against each Defendant.133 Defendants argue that the
restitution is based on an erroneous calculation of loss and the number of
victims. Defendants also contest the court’s refusal to grant downward
departures for acceptance of responsibility.
“‘Although the determination of loss is a factual finding reviewed for clear
error, the court’s choice of the method by which losses are determined involves
an application of the sentencing guidelines, which is reviewed de novo.’”134
Defendants argue that the district court erred in calculating a loss range
between $1 and 2.5 million based on the eighteen lots in the mail fraud counts
and in calculating the number of victims. They assert that even if the loss figure
were correct, the court should have authorized a lower loss figure because “the
offense level determined under this guideline substantially overstated the
seriousness of the offense.” Defendants also argue that the court erred in
identifying 67 victims when calculating loss, as only 21 residents and former
residents testified, and MDH evaluations indicated that 25 septic systems
malfunctioned.
The court properly used the sales price of the lots to calculate the amount
of money that Defendants intended to receive from the fraud – i.e., the loss to the
victims of the fraud. This is an acceptable measure under United States v.
Pennell.135 The court also correctly determined the number of victims by

133
The court also sentenced BHA, Inc. and Consolidated Investments to 5 years’
probation and made special assessments of $7,600 and $400 against BHA and Consolidated
Investments, respectively.
134
Harms, 442 F.3d at 379 (quoting United States v. Deavours, 219 F.3d 400, 402 (5th
Cir. 2000)).
135
409 F.3d 240, 244 (5th Cir. 2005).

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identifying the individuals included in the indictment.136 The number of victims
should not be limited to those who testified at trial or to the MDH evaluations
that showed that 25 septic systems malfunctioned, as Defendants argue.
Defendants were convicted for a fraudulent scheme that affected many lot
buyers, not just those that Mississippi determined to have been affected by
septic system problems.
Finally, Defendants argue that the court should have granted a downward
departure from the sentencing guidelines because they accepted responsibility
for their acts, arguing that Lucas did not challenge the underlying facts
presented by the Government but rather disputed the constitutionality of the
CWA. We review a court’s interpretation of the guidelines de novo and its
findings of fact in the sentencing hearing for clear error.137 We “lack[]
jurisdiction to review a downward-departure denial unless . . . the district court
held a mistaken belief that the Guidelines do not give it the authority to
depart.”138 Appellants produce no evidence that the court was unaware of its
authority.
AFFIRMED.

136
United States v. Cothran, 302 F.3d 279, 290 (5th Cir. 2002) (“under our precedent,
the district court could award restitution to all of the victims of the broader scheme”).
137
United States v. Austin, 479 F.3d 363, 367 (5th Cir. 2007).
138
United States v. Sam, 467 F.3d 857, 861 (5th Cir. 2006).

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