U.S. v. Patrick Petroleum Corp. of Michigan, 81-2312

• Decision Date: 24 September 1982
• Docket Number: No. 81-2312,81-2312
• Citation: 703 F.2d 94
• Parties: 12 Fed. R. Evid. Serv. 1448 UNITED STATES of America, Plaintiff-Appellee, v. PATRICK PETROLEUM CORPORATION OF MICHIGAN, Charles Douglas Robinson, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 94

703 F.2d 94

12 Fed. R. Evid. Serv. 1448

UNITED STATES of America, Plaintiff-Appellee, v. PATRICK PETROLEUM CORPORATION OF MICHIGAN, Charles Douglas Robinson, Defendants-Appellants.

No. 81-2312.

United States Court of Appeals, Fifth Circuit.

Sept. 24, 1982.

John J. Privitera, Washington, D.C., for Patrick Petroleum.

Michael E. Tigar, Washington, D.C., for Robinson.

Carl Walker, Jr., U.S. Atty., James R. Gough, Asst. U.S. Atty., Houston, Tex., for United States.

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

Before THORNBERRY, REAVLEY and GARWOOD, Circuit Judges.

REAVLEY, Circuit Judge:

Appellants were convicted of mail fraud and conspiracy to commit mail fraud. 18 U.S.C. Secs. 371, 1341. Their appeal argues that their knowledge of and participation in the fraudulent scheme was not proved, that co-conspirator statements were admitted against them without the James ¹ predicate, and that the mailings were only collateral or incidental to the scheme. We affirm.

The fraudulent scheme was: to obtain from a corrupt employee valuable confidential geophysical information of Union Oil Company of California--to obtain mineral leases in areas of Mississippi thereby disclosed to be valuable to Union, which Union wanted to lease for itself and which it planned to develop, and which lands were disclosed to have high potential for gas or oil production--to profit from production and from resale of part interest in the acquired leases to Union. The scheme involved the use of the mails to facilitate the acquisitions and to transmit statements and payment to lease brokers and a co-conspirator, to obtain charges from lease brokers who were acquiring the leases in Mississippi, to propose the resale to Union and to obtain follow up consideration within Union's ranks, all for the purpose of executing the scheme.

Appellants are Patrick Petroleum Corporation of Michigan (Patrick), an independent oil company with a branch office in Houston, and Charles D. Robinson, Patrick's vice-president in charge of its lands division. Coindictee Ronald Meeks, the Patrick landsman in Houston, was granted a severance. Coindictee William Kent, a Houston oil broker, was a fugitive. Coindictee Lauren Smith, the former Union employee, pleaded guilty to one count and testified for the government.

The case has been here before. The district court originally dismissed all counts of the indictment on the ground that the mailings alleged were remote from the misappropriation of the Union data and the defalcation of the Union employee. We reversed and sent the case back for trial. U.S. v. Kent, 608 F.2d 542 (5th Cir.1979).

A. Sufficiency of the Evidence

Smith, senior draftsman for Union, testified that he violated his obligation to his employer by taking confidential maps and documents from Union's Houston offices and selling them to Kent. The information transmitted had been developed by Union at substantial expense and disclosed particular prospects or areas in Mississippi where mineral deposits were thought by Union experts to exist. The information was passed on to Patrick. The evidence tending to prove that Patrick, through its vice-president Robinson and its area landsman Meeks, knew that the information was confidential property of another, acquired by fraud, is as follows:

1. Robinson placed a high value upon the information that came from Kent, who was just a trader, not a geologist or engineer. Robinson authorized a large lease acquisition activity in the precise areas of Union interest. More than a quarter of a million dollars was spent there, and Kent was paid $10 an acre ($23,580 in all) and given an overriding interest in all mineral acreage leased by Patrick.

2. The decision by Robinson to move on the Mississippi program came shortly after a meeting in Kent's apartment, which he and Meeks attended, on June 30, 1975.

3. The relationship with Kent was concealed. The Patrick geologist in its Houston office was never informed or consulted about the Mississippi program. The checks and mineral interest assignments to Kent were in the names of "Harold Gray" and "J.J. Paul" and were hand delivered by Meeks to Kent. The name of the true beneficiary of these payments and assignments, though known to Robinson, was never reflected on Patrick records. The only place Kent's name shows up is on a few expense account notations by Meeks.

4. Robinson had in his files a clearly marked Union map, showing the accurate site discussed within Union offices for a well location, attached to a "confidential" memorandum dated February 18, 1977 from Kent giving information on Union's plans and admonishing him to "be careful." Kent says: "The location on Sellers [Union prospect name] was decided on last Monday" and "when you make a deal with Union on Sellers" send a copy through Meeks. The memo concluded: "Best, Bill."

5. Smith testified that Kent told him of a meeting in Kent's apartment when he showed the maps to some big oil company men, including a large red headed man. Robinson is a large red headed man.

6. Watzlavick, a geologist who reproduced for Kent Union maps without the Union name, testified that Kent told him that Patrick was considering the Mississippi acreage and, on July 7, 1975 was told that Patrick would lease to the extent of $250,000 in the Mississippi area, paying Kent $10 an acre up to $240,000 and thereafter $5 per leased acre, with a 5 1/2 percent override.

7. One of the Union maps, with the Union name on it, which was taken from Kent's office in the execution of a search warrant, had a fingerprint on it proved to be that of Meeks.

Robinson testified that the Mississippi prospects were not mentioned in the meeting at Kent's apartment, that later he approved a leasing program to spend from $25,000 to $75,000 there, that additional expenditures were to depend upon what was learned on the ground after activity there began. This is inconsistent with the size of Patrick's program that began by July 4 or 5 when an Oklahoma broker was called by Meeks to go to Mississippi, along with two other brokers in his employ, to begin work. On July 9 the Oklahoma broker obtained a current ownership map of the general area and was shown by Meeks exactly what locations were desired, locations that were based on the information obtained by Meeks from Kent. On July 15 the same broker offered in writing to lease from a Mississippi landowner 4320 acres at $25 an acre, which would have required the payment of $108,000. Robinson sent his brother to Mississippi on July 9 and testified that he did so because "there was no way three or four brokers could handle" the job.

Appellants purport to explain their reliance upon Kent's information by saying they confirmed the geology of the Mississippi acreage with an expert named Richard Winborn. But Winborn stated that the contact with him...