U.S. v. Manges

• Decision Date: 15 April 1997
• Docket Number: No. 95-50645,95-50645
• Citation: 110 F.3d 1162
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Clinton MANGES; David Wayne Myers; and Carl Hubert Shanklin, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1162

110 F.3d 1162

UNITED STATES of America, Plaintiff-Appellee, v. Clinton MANGES; David Wayne Myers; and Carl Hubert Shanklin, Defendants-Appellants.

No. 95-50645.

United States Court of Appeals,Fifth Circuit.

April 15, 1997.

Rehearing and Suggestion for Rehearing En Banc Denied May 21, 1997.

Mervyn J. Hamburg, U.S. Dept. of Justice, Criminal Div., Washington, DC, for Plaintiff-Appellee.

David L. Botsford, Austin, TX, for Defendants-Appellants.

Appeals from the United States District Court for the Western District of Texas.

Before REAVLEY, GARWOOD and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:

This appeal involves a plot to retain the oil and gas rights to a parcel of submerged property in Corpus Christi Bay, Nueces County, Texas, known as tract 350. The Appellants appeal their convictions and sentences on charges of conspiracy and mail fraud; their briefs teem with an overabundance of evidentiary, statutory, and constitutional challenges. Many of these claims do not merit full discussion. We are persuaded by only one of appellants' arguments: Shanklin's contention that the conspiracy charge against him was time-barred.

indictment alleged that appellants prevented the leased mineral rights from reverting to the state by submitting false documents to state regulatory agencies and making corrupt payments to a state official.

FACTUAL BACKGROUND

Clinton Manges has been described as a legendary figure in South Texas: an oilman and rancher, wheeler-dealer and political kingmaker. Born in poverty in Cement, Oklahoma, Manges amassed a billion-dollar fortune, only to face bankruptcy in 1989 and criminal charges in the instant case. ¹ David Wayne Myers, the ringleader of the scheme alleged in the indictment, was an oil industry entrepreneur based in San Antonio, Texas. Carl Hubert Shanklin was an independent contractor who performed "workover" operations on oil and gas wells. Also named in the indictment was Benny Joe McLester, who as the "gauger" for tract 350 was responsible for accurately measuring and reporting its output.

It is unnecessary to detail the various corporate entities through which Myers wielded control over the operations on tract 350. We note simply that Myers, through companies he controlled, at relevant times subleased the oil and gas rights to tract 350 and three adjacent tracts; that his close business associate Morris D. Jaffe, Jr., acquired interests in the tracts through an assignment from Myers; and that Myers was instrumental in efforts to convince state regulators that the lease terms were being met.

The mineral rights to tract 350 were controlled by the Texas General Land Office (GLO), which grants subsurface oil and gas rights throughout Texas in a competitive bid process. Successful bidders are required to pay the state yearly rental fees, plus royalties representing a portion of their revenues. Under applicable state regulations, the holder of an oil and gas lease must act affirmatively to maintain the rights granted by the state. The lessee must (1) continuously produce oil and gas; (2) undertake timely and diligent workover efforts to restore or increase productive capacity; or (3) pay a "shut-in royalty" to the state, supported by an affidavit stating that there is no economic market for the tract's resources. To put it another way, if a market exists for a tract's oil and gas, and if the tract fails to produce for 60 days and is not worked over during that time, the lease reverts to the state. Once that happens, the GLO may re-lease the tract to the highest bidder.

It is undisputed that tract 350 should have reverted to the state for lack of production at the time of the events described in the indictment, if not earlier. Myers, Jaffe, and their colleagues, believing that the lease was worth millions, sought to prevent its reversion. Rather than meet the requirements imposed by state law, however, appellants submitted false documents to the GLO and tried to buy the favor of its chief clerk, Jack Giberson.

Appellants and others tried to prevent the reversion of the lease by a variety of methods. Specifically, viewing the evidence in the light most favorable to the verdict, Myers had McLester prepare a series of false production reports claiming that tract 350 had produced various quantities of oil. The false production figures provided by McLester were duly reported to state regulators by the company nominally operating the tract. ²

Moreover, Myers orchestrated the filing of false shut-in affidavits with the GLO. Three such affidavits were filed, claiming variously that the shut-in was based on the well's lack Myers swore out an affidavit on July 31, 1989, stating that tract 350 had been worked over at intervals of less than 60 days between June 28, 1988, and July 27, 1989. This affidavit was supported by daily time records and documents called morning field reports, prepared and signed by Shanklin. These documents purported to be contemporaneous records of the work described by Myers; according to the prosecution's evidence at trial, however, they were post hoc fabrications designed to convince the GLO that the lease to tract 350 had been maintained.

of production, a lack of market for its oil, and a severed gas line.

If Shanklin covered Myers' back in the oil fields of Corpus Christi Bay, Manges fronted for him in the government halls of Austin. Starting in the summer of 1988, Manges tried to convince his contacts in the GLO that the lease to tract 350 had been maintained. Some time that summer, Manges accompanied Jaffe to the GLO to discuss tract 350 with Giberson. Starting soon thereafter, in August 1988, Manges made a series of five payments to Giberson totaling $30,100. The indictment listed the final two payments--$6,400 on July 11, 1989, and $3,700 on July 31, 1989--as overt acts in furtherance of the alleged conspiracy.

GLO staff members testified that Giberson did not actually influence their decisions regarding tract 350. Moreover, it is undisputed that Giberson did not keep the money; all five payments were deposited in the bank account of his son, Richard Giberson. Richard Giberson had been employed by the San Antonio Gunslingers professional football team; Manges, through a corporation, was the team's principal owner. The defense contends that the payments were partial satisfaction of a $70,000 debt that the Gunslingers corporation owed Richard.

Appellants' efforts to retain the lease to tract 350 seemed to bear fruit. On September 19, 1989, GLO staff geologist Tim Pittman mailed a letter to Jaffe's Redfish Bay Operating Co.--the tract's operator of record at the time--stating that the lease had been maintained.

As an epilogue to the conspiracy, Manges discussed tract 350 in two conversations the following spring with a longtime friend, Crandell Addington. The two friends discussed how Manges had done his "little magic" to save the lease. They specifically mentioned that documents were "fixed" and that Jack Giberson would not approve the lease unless Manges paid his son, Richard, $10,000. Addington secretly recorded these conversations, which were introduced at trial by the prosecution.

PROCEDURAL BACKGROUND

Appellants and co-defendant McLester were charged in a three-count indictment filed on September 14, 1994, in United States District Court.

The first count charged all four defendants with conspiracy to commit mail fraud and conspiracy to commit bribery. The mail fraud conspiracy had two alleged goals. Its first object was to deprive Texas citizens of money or property, i.e., the lease to tract 350 and the additional royalties that the state would earn if the lease reverted and were rebid. The second object of the mail fraud conspiracy was to deprive Texas citizens of their intangible right to the honest services of a government official, later identified as Jack Giberson. 18 U.S.C. §§ 371 (conspiracy), 1341 (mail fraud), 1346 (mail fraud involving honest services), & 666 (bribery).

Count two charged McLester, Myers, and Shanklin with mail fraud. This substantive count incorporated the two theories underlying the mail fraud conspiracy charged in count one--deprivation of money or property and deprivation of the intangible right to honest government services. The mailing alleged in count two was the September 19, 1989 letter from the GLO to Redfish Bay Operating Co. stating that the lease to tract 350 had been maintained. 18 U.S.C. §§ 1341, 1346, & 2 (aiding and abetting).

Count three charged Manges alone with bribery. 18 U.S.C. § 666(a)(2).

Pursuant to a plea agreement, McLester pleaded guilty to count one and testified against appellants at trial. At the close of the evidence, the district court entered a On March 10, 1995, after a joint trial, Manges was convicted of conspiracy, and Myers and Shanklin were convicted of both conspiracy and mail fraud. As discussed below, appellants were sentenced at a hearing in district court on August 25, 1995.

judgment of acquittal for Manges on count three. The court held the proof insufficient to establish that the GLO received more than $10,000 annually in federal aid, as required to support a federal bribery prosecution. See 18 U.S.C. § 666(b). In its jury charge, the district court also deleted the conspiracy to commit bribery from count one.

DISCUSSION

I. Appellant Shanklin's Statute of Limitations Defense

Shanklin claims that he was prosecuted in violation of the applicable five-year statute of limitations. See 18 U.S.C. § 3282. With respect to the conspiracy count only, we agree. Our review is plenary. United States v. Workinger, 90 F.3d 1409, 1412 (9th Cir.1996) (citation omitted).

To satisfy the statute of limitations for mail fraud, the government must prove that the predicate mailing occurred in the five years before the indictment. United States v. Ashdown, 509 F.2d 793, 798 (5th Cir.), cert. denied, 423 U.S. 829, 96 S.Ct. 48, 46 L.Ed.2d 47 (1975). To satisfy ...