U.S. v. Atwell, 84-1012

• Decision Date: 24 June 1985
• Docket Number: No. 84-1012,84-1012
• Citation: 766 F.2d 416
• Parties: 18 Fed. R. Evid. Serv. 1064 UNITED STATES of America, Plaintiff-Appellee, v. Gordon G. ATWELL, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 416

766 F.2d 416

18 Fed. R. Evid. Serv. 1064

UNITED STATES of America, Plaintiff-Appellee, v. Gordon G. ATWELL, Jr., Defendant-Appellant.

No. 84-1012.

United States Court of Appeals, Tenth Circuit.

June 24, 1985.

Rehearing Denied July 18, 1985.

Stephen Jones and Susan McNaughton of Jones, McNaughton & Blakley, Enid, Okl., for defendant-appellant.

William S. Price, U.S. Atty., Frank Michael Ringer, Asst. U.S. Atty., Oklahoma City, Okl., for plaintiff-appellee.

Before LOGAN and SETH, Circuit Judges, and SAFFELS, District Judge ^*.

PER CURIAM.

Gordon Atwell appeals his conviction under 18 U.S.C. Secs. 1341 and 1342 for mail fraud and aiding and abetting. He was found guilty by a jury on all sixteen counts of the indictment. Appellant bases his appeal on asserted errors in evidentiary rulings and on limitations placed on cross-examination of a government witness.

The facts of the case arise out of the oil fields of Oklahoma. The appellant worked for Major Oil Company, a Texas corporation engaged in promoting oil well drilling ventures. It assembled limited partnerships for wells and acted as the general partner. The company then hired oil field contractors to drill and complete the wells.

Over the past decade John Holden who was president of Major had headed a succession of similar companies. These were operations where a group of salesmen would solicit by telephone the participation of investors in drilling ventures. The appellant had been one of these salesmen and had been associated with John Holden since 1972. The two were friends. Evidently the appellant received as compensation a percentage of the amounts invested by the limited partners. John Holden was to be the principal witness for the government in the prosecution of appellant.

John Holden sent the appellant to Oklahoma to supervise the drilling and completion of the wells for Major. The appellant was in charge of all local activities, hired the subcontractors and supervised the drilling. While succeeding in making Major's Oklahoma venture more profitable the appellant also embarked on a kickback scheme. Because he had the authority to contract with third parties to provide materials and services, he instructed his suppliers and subcontractors to add a certain amount to their invoices in excess of what they normally would have charged. Major Oil Corporation then mailed payment to these suppliers. After receiving payment the suppliers paid the added amount to the appellant. He used a dummy consulting firm to disguise the scheme. The evidence shows the appellant never performed any consulting services.

Admitting that he took the kickbacks, the appellant's theory of defense was based on the assertion that John Holden, Major's president, knew and approved of the scheme. Thus because Major Oil and Holden were essentially interchangeable the company could not have been defrauded if its president had knowledge of the kickbacks. John Holden's knowledge would eliminate an essential element of the crime.

The appellant testified John Holden knew all along about the kickbacks and under his version the primary inducement for his moving to Oklahoma was that he would receive ten percent of the Oklahoma ventures. He also testified that John Holden cautioned the appellant that the ten percent cut could not be disclosed in the company's prospectuses. As a consequence the appellant under his version was supposedly encouraged to surreptitiously concoct his own methods for generating the expected compensation.

John Holden as a witness for the government testified he neither encouraged nor had any knowledge of the kickback scheme. Another corporate officer gave substantially similar testimony and also testified about another side venture of the appellant. The corporation learned that the appellant had begun a drilling mud business called Discount Drilling Fluids. The appellant when acting as an employee of Major would purchase the services of Discount Drilling. When the arrangement came to light, the appellant was instructed to choose between working for one or the other firm. He chose to remain with Major and it was at this point that John Holden ostensibly encouraged him to find a less visible way to make his money. The government argued at trial that it was inconsistent to suppose the corporation would discourage the appellant from engaging in one scheme merely to encourage him in undertaking another. It was critical, therefore, that the appellant attack John Holden's credibility as an honest businessman who had been defrauded by a trusted employee.

The defense indicated that it would introduce a great deal of evidence concerning John Holden's past in the business promotion world. The government made a pretrial motion in limine to prevent the evidence from being admitted. The evidence consisted of evidence of a prior felony conviction for fraud with a revocation of parole; evidence of prior arrests on fraud charges; evidence of federal and state violations of securities laws and the entry of consent judgments and injunctions on those violations; evidence that John Holden had characterized his felony conviction as a misdemeanor in the prospectus of one of the limited partnerships.

The trial court allowed the defense to use the prior felony fraud conviction even though it had occurred more than ten years before. The court also allowed the defense to use the mischaracterization of the fraud conviction in the prospectus. The court granted the government's motion insofar as the evidence of prior arrests and securities violations. Thus the appellant was precluded from examining the witness on those matters. He was thus examined on the felony conviction for fraud and its mischaracterization.

Appellant presents three issues on appeal. First, did the trial court's limitation of the scope of Holden's cross-examination deny the appellant his right of confrontation under the Sixth Amendment? Second, did the government suppress evidence of Holden's past in violation of Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215? Finally, did the court err in allowing the government to put on evidence of similar kickbacks received by appellant that were not charged in the indictment?

Cross-examination is not an absolute or unlimited right in confrontation. See Ohio v. Roberts, 448 U.S. 56, 100 S.Ct. 2531, 65 L.Ed.2d 597. As long as the defendant's basic confrontation right is protected, it is within the trial court's discretion to limit the scope of cross-examination. United States v. Valentine, 706 F.2d 282 (10th Cir.). We indicated in Valentine that issues as to limitations of cross-examination take two basic forms. The first is where the trial court precludes inquiry into an entire area of relevant cross-examination and there the defendant's confrontation rights may be violated. Id. at 287-88. See also United States v. Jorgenson, 451 F.2d 516, 519 (10th Cir.). The second type of limitation is directed only to the general extent of cross-examination. There limiting the scope of cross-examination is within the discretion of the trial court. Such limitations will not compel reversal unless an abuse of discretion clearly prejudicial to the defendant occurs. United States v. Valentine, 706 F.2d at 288. See also United States v. Alderete, 614 F.2d 726, 728-29 (10th Cir.).

The record demonstrates in the present case that the appellant was not barred from pursuing an entire area of relevant inquiry. The trial court allowed defense counsel to examine John Holden on his felony conviction. When the witness attempted to equivocate on the mischaracterization in the prospectus defense counsel required the witness to read aloud the relevant portion of the prospectus containing the misstatement. Record, Vol. VI at 188. Thus it is clear the appellant was able to develop the credibility issue. The court simply limited the scope of the inquiry into the witness' past and, accordingly, the court's actions must be measured against the second element of the Valentine test.

The evidence the appellant sought to introduce, as mentioned, concerned John Holden's problems with the Securities and Exchange Commission and was not directly relevant to the type of fraud with which the appellant was charged. As a consequence, the trial court viewed the evidence as potentially confusing to the jury. None of the evidence dealing with John Holden's violations of securities laws involved a kickback scheme. The court acted within its discretion in limiting the scope of credibility cross-examination.

Federal Rule of Evidence 403 permits the trial court to exclude what might otherwise be admissible evidence when the danger of confusion of the issues or misleading the jury substantially outweighs the probative value of the evidence. We agree with the trial court that the potential for confusion surpassed any utility the evidence might have. In any event, the evidence was cumulative as the honesty of the witness had already been made an issue.

The same is true of the...