U.S. v. Brimberry
| Decision Date | 13 December 1985 |
| Docket Number | No. 84-1716,84-1716 |
| Parties | Fed. Sec. L. Rep. P 92,460, 19 Fed. R. Evid. Serv. 1204 UNITED STATES of America, Appellee, v. Thomas R. BRIMBERRY, Appellant. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Lawrence J. Fleming, St. Louis, Mo., for appellant.
Terry L. Adelman, Asst. U.S. Atty., St. Louis, Mo., for appellee.
Before ROSS, Circuit Judge, BRIGHT, Senior Circuit Judge and NICHOL, * Senior District Judge.
Thomas R. Brimberry was convicted on two counts of bankruptcy fraud and on five counts of perjury before a grand jury. On appeal, Brimberry raises three arguments to each of the offenses. With respect to the bankruptcy fraud offense, he challenges the venue of his trial, raises an immunity defense, and argues that the court erred in instructing the jury on the elements of the offense. With respect to the perjury counts, Brimberry argues that his false statements to the grand jury were not material, that he was improperly indicted by the same grand jury before which he had made his perjurious statements, and that the court improperly admitted evidence of a prior conviction. We reverse Brimberry's conviction on one of the bankruptcy fraud counts on the basis that the court improperly instructed the jury, affirm his conviction on the other bankruptcy fraud count, and affirm his conviction on all of the perjury counts.
Brimberry played a central role in a scheme to embezzle money from Stix & Company (Stix), a St. Louis brokerage firm. We have previously considered the convictions of two of Brimberry's partners in the scheme, James Massa and Duane Skinner, as well as the conviction of a coworker, Leonard Bednar. See United States v. Massa, 740 F.2d 629 (8th Cir.1984); United States v. Bednar, 728 F.2d 1043 (8th Cir.), cert. denied, --- U.S. ----, 105 S.Ct. 110, 83 L.Ed.2d 54 (1984). Although this appeal does not involve a conviction for embezzlement, some background to the embezzlement is necessary to an understanding of this case. The following statement of facts from our decision in Massa serves this purpose:
The scheme to loot Stix and spend the money without being detected by the IRS and other governmental agencies was complex, involving some acts in and of themselves not illegal except that they were financed with misappropriated funds. At the center of the scheme was Brimberry and his manipulation of the margin accounts at Stix. As a margin clerk at Stix, Brimberry was responsible for properly maintaining the margin accounts and making sure that they were backed by adequate collateral. In about 1976, he began to make false entries into ten margin accounts, showing the receipt of nonexistent fully paid securities into the accounts. The ten accounts included five controlled by Brimberry, in various straw names; two accounts in the name of Jerry Maeras, an associate of Brimberry's; two accounts in Massa's name; and one account in the name of Arthur Miller, Jr., Brimberry's brother-in-law. The false entries allowed the purported owners of the accounts to withdraw huge sums of money from Stix. Over the life of the scheme, over $16 million was embezzled from Stix in this manner.
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* * * In order for the scheme to grow to the dimensions that it eventually did, it was necessary for members of the scheme to gain control of the Stix firm. During 1979, Massa purchased controlling interest in Stix using approximately $1 million Brimberry embezzled from the ten padded margin accounts.
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After buying controlling interest in the firm, Massa removed the chief financial officer and another person from the board of directors and added Brimberry. He further promoted Brimberry to senior vice president in complete charge of the operations section of the firm--the section that oversaw the major accounts and the flow of cash from the firm.
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From about 1978 to 1981, participants in the scheme began to exhibit a more lavish lifestyle. Brimberry, Massa, Skinner and others took frequent trips to Las Vegas together, sometimes as often as twice a month. They also traveled on more than one occasion to Hawaii, Disney World, the Bahamas, and Monte Carlo. Brimberry was building a very expensive home in Granite City, Illinois.
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Another facet of the overall scheme to loot Stix and spend the money undetected was the creation of corporations fronted by Skinner for Brimberry. The largest of these was Miller Excavating, Inc. Massa incorporated this company and was an officer, director and shareholder. Arthur Miller, Jr., and Maeras were also officers and Skinner acted as president from 1978 until approximately 1981. More than $1.3 million of Stix money went to fund the operations and purchase of heavy equipment for the company. In 1980 and 1981, the name of the corporation was changed first to Bernate, Inc., and then to MZA, Inc. Brimberry continued to fund the corporation with Stix money and Skinner continued to act as president.
Brimberry's extravagent lifestyle raised suspicions with the IRS and spawned an IRS investigation into Brimberry's financial dealings. Realizing that his scheme would soon be discovered, Brimberry entered into a plea agreement with the government on November 2, 1981. Immediately thereafter, Brimberry began to disclose the details of the Stix fraud. It was only then that the investigators discovered the enormity of the Stix fraud and Brimberry's central role in the fraud.
Upon disclosure of the Stix fraud, the Securities and Exchange Commission and the Securities Investor Protection Corporation filed a joint application in the United States District Court for the Eastern District of Missouri. The application sought a protective decree with respect to Stix pursuant to the Securities Investor Protection Act (SIPA), 15 U.S.C. Secs. 78aaa-lll (1982). See 15 U.S.C. Sec. 78eee (1982).
The district court determined that Stix's customers were in need of protection under the SIPA and appointed Harry O. Moline as trustee for the liquidation of Stix. Orders were entered on November 5 and November 9, 1981, enjoining officers, directors and employees of Stix from removing, selling or otherwise disposing of assets of Stix. The case was then assigned to the United States Bankruptcy Court for the Eastern District of Missouri. See 15 U.S.C. Sec. 78eee(b)(4) (1982).
In February of 1982, Brimberry had approximately $600,000 worth of construction equipment owned by Miller Excavating Company moved to Laredo, Texas for sale in Mexico. Approximately $284,000 of the equipment had been purchased directly with funds stolen from Stix; the remainder of the equipment had been purchased with Miller Excavating Company funds, a corporation which was funded with money stolen from Stix. This equipment was sold for $304,000.
Later, in October of 1982, Brimberry had stained glass windows, light fixtures, and a These facts formed the basis for counts 9 and 10 of the indictment, which alleged that Brimberry fraudulently concealed and transferred property belonging to Stix in violation of 15 U.S.C. Sec. 78jjj(c)(1) and (2). This statute provides, in relevant part, as follows:
generator removed from his mansion in Granite City, Illinois. The items were taken to Salem, Illinois and stored by Joe Hotze, an automobile dealer.
(c) Concealment of assets; false statements or claims.--
(1) Specific prohibited acts.--Any person who, directly or indirectly, in connection with or in contemplation of any liquidation proceeding or direct payment procedure--
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(C) fraudulently or with intent to defeat this chapter--
(i) conceals or transfers any property belonging to the estate of a debtor;
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shall be fined not more than $50,000 or imprisoned for not more than five years, or both.
(2) Fraudulent conversion.--Any person who, directly or indirectly steals, embezzles, or fraudulently, or with intent to defeat this chapter, abstracts or converts to his own use or to the use of another any of the moneys, securities, or other assets of SIPC, or otherwise defrauds or attempts to defraud SIPC or a trustee by any means, shall be fined not more than $50,000 or imprisoned not more than five years, or both.
Specifically, count 9 charged Brimberry with selling the construction equipment after the liquidation proceedings had commenced and using the proceeds for his personal use. Count 10 charged Brimberry with removing stained glass windows, light fixtures, and a generator from his mansion in Granite City, Illinois after the liquidation proceedings had commenced and concealing the items in another location.
The remaining counts involved in this appeal (counts 3, 5, 6, 7 and 8) relate to Brimberry's testimony before a grand jury which had convened in February of 1982 in the Eastern District of Missouri to investigate the Stix fraud. The indictment charged Brimberry with knowingly making false material statements before this grand jury on April 7th and 8th of 1982 in violation of 18 U.S.C. Sec. 1623.
Prior to trial, Brimberry filed a motion to dismiss counts 9 and 10 on the basis that the Eastern District of Missouri was not a proper venue for his trial. Brimberry now contends that the court erred in not granting the motion. He argues that he did not commit the crime of bankruptcy fraud in the Eastern District of Missouri because he did not sell the construction equipment in Missouri, hide the windows, light fixtures, or generator in Missouri, or remove such property from Missouri. See U.S. CONST. ART. III, Sec. 2, cl. 3; U.S. CONST. AMEND. VI; FED.R.CRIM.P. 18 (). The government, on the other hand, argues that the crime was committed in the Eastern District of Missouri because the Stix liquidation proceeding was located in that district.
The bankruptcy fraud statute at issue here, 15 U.S.C. Sec....
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