United States v. Fisher ( 1997 )


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  •                                REVISED
    UNITED STATES COURT OF APPEALS
    For the Fifth Circuit
    No. 95-10733
    UNITED STATES OF AMERICA,
    Plaintiff-Appellee,
    VERSUS
    JAMES R. FISHER and JOHN R. CARNEY,
    Defendants-Appellants.
    Appeal from the United States District Court
    for the Northern District of Texas
    February 13, 1997
    Before POLITZ, Chief Judge, SMITH and DUHÉ, Circuit Judges.
    DUHÉ, Circuit Judge:
    Defendants-Appellants James Fisher and John Carney appeal
    their convictions on several counts including bank fraud, mail
    fraud, wire fraud, conspiracy, and making false statements to the
    Federal Home Loan Bank Board and the Office of Thrift Supervision.
    For the reasons assigned, we reverse and vacate the convictions and
    remand for a new trial.1
    1
    We note at the outset there is no double jeopardy issue in
    remanding for a new trial: “[T]he Double Jeopardy Clause’s general
    prohibition against successive prosecutions does not prevent the
    government from retrying a defendant who succeeds in getting his
    first conviction set aside, through direct appeal or collateral
    attack, because of some error in the proceedings leading to
    conviction.” Lockhart v. Nelson, 
    488 U.S. 33
    , 38, 
    109 S. Ct. 285
    ,
    BACKGROUND
    In 1984, James Fisher, John Carney and Jeff Noebel2 formed
    Equisource Realty Corporation as a real estate investment company
    in Dallas, Texas.      By 1987, Texas real estate was no longer a
    profitable investment, and the Equisource Realty partners began to
    investigate other business opportunities.
    At that time, the savings and loan industry was in disastrous
    condition.    Many S&Ls had declared bankruptcy, and the federal
    government was faced with the unappealing reality of bailing out
    numerous   failed   institutions.       In   an   effort    to   curtail   the
    disaster, the Federal Home Loan Bank Board (“FHLBB”) sought private
    investors to aid in the bailout.
    To induce investment, bankrupt S&Ls were allowed to recognize
    “regulatory   goodwill”   as   an   asset.        This    goodwill   was   not
    recognized under Generally Accepted Accounting Principles, but was
    instead a creation of federal regulators.                The goodwill asset
    created artificial capital for S&Ls without requiring investors to
    contribute hard dollars.
    Equisource Realty became interested in acquiring an S&L in the
    summer of 1987.     It targeted Bayside Savings and Loan Association
    in Port Charlotte, Florida, and applied for regulatory approval to
    purchase the institution.      In the fall of 1987, Bayside had zero
    value, was $1,000,000 in debt and was losing $50,000 a month.
    289 (1988).
    2
    Jeff Noebel was indicted with Fisher and Carney but entered
    into a plea agreement and was not a defendant.
    2
    To     acquire       Bayside,     the       defendants    and   Noebel   formed
    Equisource Capital Corporation to act as the general partner of a
    newly    formed    bank     holding     company,        U.S.   Savings    Associates
    (“USSA”).         Davis     Hughes     served      as    president   of   a   sister
    organization, Equisource Financial Corporation.
    Originally, USSA proposed to regulators it raise $3,000,000
    for the acquisition: $2,000,000 in equity and $1,000,000 in debt.
    This proposal received approval.                  However, before closing, USSA
    opted to instead raise $4,000,000 in equity, with $875,000 of that
    sum subject to repurchase agreements.                   To accomplish this goal,
    USSA sold 80 units in USSA for $50,000 a unit to approximately 37
    investors.
    Some    of    the     investors    in       USSA   were   represented    by   Joe
    Courrege, an agent for the financial interests of several NFL
    football players (“Players”). Courrege had purchased several homes
    in Dallas in the early eighties and then sold the homes to the
    Players as investments.         By 1988, however, changes in the tax laws
    and the general decline of the real estate market had contributed
    to extremely high interest rates on the loans made to acquire the
    homes.    Courrege was interested in refinancing these homes to
    decrease the monthly loan payments.
    Early in 1988, Courrege learned of the USSA investment.                        As
    incentive to have his Players invest, USSA promised Courrege it
    would obtain refinancing on the Players’ homes if the Players
    bought units in USSA.
    Jeff Walker was represented by Courrege and sought to purchase
    3
    a USSA share.   Jeff Walker’s father Trent Walker deposited $10,000
    with USSA for the purchase of one share, with the remaining $40,000
    owed to be financed.             Trent Walker was offered a repurchase
    agreement if the homes owned by his son were not refinanced by
    December 31, 1988.         Both Walkers had trouble obtaining financing
    for the remaining $40,000 owed, so Trent Walker sent USSA a check
    for $40,000 in October 1988 to be placed in escrow until financing
    of the balance came through.           That check was instead cashed by
    USSA.
    Other investors were also promised repurchase agreements.
    Another Courrege client, Gary Hogeboom, invested $100,000 in USSA
    with the understanding his homes would be refinanced, and that his
    shares would be repurchased if such refinancing did not come
    through.    Michael Barlerin purchased one unit in USSA in October
    1988.   Barlerin testified he was promised a repurchase agreement.
    Ramesh Mahtani,       an   investor   who   joined    the   Bayside    Board   of
    Directors, paid $250,000 for five units in USSA in October 1988.
    He also testified USSA promised him he could “put” the investment
    back to USSA within 18 months of the investment.               Theodore Taub,
    another    investor    who   joined   the   Bayside    Board   of     Directors,
    purchased one unit for $50,000, and testified USSA promised him a
    repurchase agreement.        Dennis Noebel, USSA partner Jeff Noebel’s
    brother, bought a half unit with the understanding he could “put”
    the investment back.
    Bradley    Branson,     a   professional   basketball     player     living
    abroad, purchased two units of USSA through his accountant Michael
    4
    Tannery.     In September 1988, Tannery sent USSA a check for $20,000
    on Branson’s behalf, with the remainder of the purchase price to be
    financed.     Tannery then sent another Branson account check to USSA
    in October for $20,000.           Tannery claimed the check was sent by
    mistake.     That check was cashed by USSA.
    The USSA investment was beset with problems from the start.
    After promising refinancing to the players as an incentive to
    investment,      USSA     discovered        that    their     homes     had   dropped
    significantly in value since their original financing, and that
    refinancing could only be obtained based upon the new worth of the
    homes.     The Players believed that the homes could be refinanced
    without    any   out     of   pocket   expense.        In    reality,    large   loan
    shortfalls would result, necessitating a hefty payment from the
    Players. Refinancing on the terms the Players had expected was not
    forthcoming.
    The Bayside investment itself also received a severe blow. In
    1989, Congress passed the Financial Institution Reform, Recovery,
    and Enforcement Act of 1989 (“FIRREA”), Pub.L. 101-73, 103 Stat.
    183.       FIRREA   eliminated     the      regulatory       goodwill    offered   by
    regulators    as    an   incentive     to       purchase    S&Ls.     This    severely
    restricted the amount of capital available in S&Ls using regulatory
    goodwill, and also limited the size of the S&Ls since their ability
    to lend was contingent on their capital reserves.3                       Bayside had
    3
    In United States v. Winstar Corp., 
    116 S. Ct. 2432
    (1996), the
    Supreme Court held that the United States breached its contracts
    to allow purchased savings and loans to use regulatory goodwill
    when it passed FIRREA. The Court also held the government could be
    liable for this breach. Bayside currently has a $5,000,000 action
    5
    used much of its original cash investment to pay off Bayside’s
    debts to federal regulators, and had relied on the goodwill to
    support its capital base until the institution had recouped some of
    its losses.        Bayside’s capital base was reduced by FIRREA from
    close to $4,000,000 to around $800,000.
    As well as vastly reducing operating capital, FIRREA greatly
    diminished       the   attractiveness   of   S&L   investment.      Many   USSA
    investors were understandably nervous, and some of those with
    repurchase agreements with USSA sought to exercise them.             However,
    after FIRREA, USSA no longer had surplus capital, and could not
    make good on all the repurchase agreements.            Some of the parties
    involved sued USSA to enforce the buy back provision.
    Michael Tannery, Bradley Branson’s accountant, had difficulty
    obtaining    a    refund   of   his   $20,000   overpayment   for   Branson’s
    account.     He testified that Fisher told him to apply for a loan
    from Bayside in Branson’s name, and that Fisher and Carney would
    then repay the loan.
    In its indictment against Carney, Fisher, Noebel and Hughes,
    the Government charged they conspired to commit mail fraud, wire
    fraud, and bank fraud, and also conspired to make false statements
    to and obstruct the operation of the FHLBB and Office of Thrift
    Supervision.       The indictment then charged separate counts of mail
    fraud, wire fraud, making false statements, and bank fraud.
    At trial, Fisher and Carney were found guilty of all charges
    against them.          Hughes was acquitted.       Fisher and Carney were
    pending to recover losses it attributes to FIRREA.
    6
    sentenced   to   87   months    in    prison,    followed      by    five   years’
    supervised release, and ordered to pay $895,000 in restitution.
    They now appeal.
    Discussion
    The defendants assign numerous points of error to their trial
    proceedings.     We discuss certain of those points below.
    I.
    Carney alleges the district court erred when it denied his
    motion for new trial because the Government impermissibly impeached
    him on cross examination with a constitutionally infirm conviction.
    Several months before his trial in this case, a Texas court
    found Carney guilty of criminal contempt for failure to comply with
    a state court’s turnover order.4           The judge in the contempt hearing
    also made many factual findings implying Carney had acted in a
    deceitful and unscrupulous manner.           Carney sought a writ of habeas
    corpus from the Texas Supreme Court.
    While Carney’s habeas application was pending, the present
    action went to trial.          Before Carney testified, the Government
    obtained a ruling allowing it to impeach Carney with the conviction
    and factual findings from the turnover action.            The district court
    held that   Carney    could    have   both     the   conviction      and    factual
    findings used against him if he chose to testify in his defense.
    Notwithstanding     this    ruling,      Carney   chose    to    testify   to
    4
    According to Carney’s testimony, Dennis Noebel filed a
    lawsuit to enforce his repurchase agreement.       USSA apparently
    settled with him. Noebel obtained a final judgment against Carney
    in December 1993, and a hearing related to the satisfaction of that
    judgment resulted in the criminal contempt conviction.
    7
    explain his version of the events the Government was prosecuting.
    Because the Government had already obtained a ruling from the trial
    court allowing it to introduce the contempt conviction if Carney
    testified, Carney’s attorney asked him about the contempt hearing
    and conviction on direct in an effort to ameliorate any forthcoming
    negative cross examination. Carney tried to explain his version of
    the events leading to the conviction: namely, that he had believed
    the hearing would be a restricted inquiry into the turnover of
    certain assets.5     Contrary to Carney’s expectations, the hearing
    quickly escalated into a very serious inquiry on the turnover order
    that resulted in the contempt conviction.
    The      Government   made   the       contempt   conviction   and   the
    accompanying factual findings a central element of its cross
    examination of Carney, subjecting Carney to rigorous interrogation
    on both topics.6     The cross examination succeeded in making Carney
    5
    Carney initially represented himself before realizing the
    seriousness of the hearing and retaining an attorney.
    6
    The Government referred to the conviction in its cross
    examination repeatedly.   The examination specifically addressed
    numerous factual findings made by the state court. Typical of the
    exchange between the Government and Carney are the following
    excerpts:
    BY THE GOVERNMENT:
    Q:  You’re no stranger to misrepresentations in court or out
    of court, are you, sir?
    MR. CARNEY:
    A:  I don’t know what that question asks me.
    Q:  Well, we know, do we not--you don’t deny, or do you, that
    when Judge Hoffman convicted you of contempt he found
    that you had specifically made misrepresentations which
    justified the most severe impositions of sanctions? He
    found that, didn’t he?
    A:  He did.
    Q:  And he sentenced you to jail for six months based on your
    8
    appear corrupt, untruthful, and dishonest.         In short, Carney’s
    credibility was severely undermined by this questioning.
    Soon after trial concluded and Carney was convicted, the
    contempt conviction was overturned by the Texas Supreme Court on
    the grounds Carney did not receive full and proper notice of the
    subject matter of the contempt motion, or when, how and by what
    means he was guilty of contempt.       Carney moved for a new trial in
    the present case on the ground that the use of the invalid
    conviction and factual findings was highly prejudicial to him.      He
    argued that his guilt or innocence rested on his credibility, and
    that “manifest and undue harm” was done to him by cross examination
    with an invalid conviction. The district court denied that motion.
    While Federal Rule of Evidence 609 specifically details the
    rules of impeachment at trial by evidence of prior conviction, past
    cases have carved out exceptions beyond the scope of that rule when
    an exception is necessary to protect the constitutional rights of
    conduct, didn’t he?
    A:   That is on appeal and I disagree with his order and the
    notice  upon which it was founded.
    * * *
    Q:   [Judge Hoffman] specifically found, for example, that you
    had engaged in dilatory and harassing tactics for the
    purpose of delaying, didn’t he?
    A:   I believe that’s in the order, yes.
    * * *
    Q:   When you described the outcome of this matter on Friday,
    you said you were branded, right?
    A:   Yes.
    A:   And that’s because you were branded for what you really
    are: someone who’s modus operandi is to engage in
    repeated intentional misrepresentations, deceptions and
    delaying tactics. Isn’t that the truth, sir?
    A:   No, sir.
    Record Vol. 14 at 82-110.
    9
    the accused.       For example, the Supreme Court has held that the
    admission of a prior criminal conviction at trial to support guilt
    or enhance punishment is impermissible if that conviction was
    invalid because it was obtained in violation of the defendant’s
    right to counsel.          Burgett v. Texas, 
    389 U.S. 109
    , 115, 
    88 S. Ct. 258
    , 262 (1967).       Later Supreme Court cases reaffirmed this rule.
    United States v. Tucker, 
    404 U.S. 443
    , 
    92 S. Ct. 589
    (1972); Loper
    v. Beto, 
    405 U.S. 473
    , 
    92 S. Ct. 1014
    (1972).
    This Court addressed the Burgett rule in Spiegel v. Sandstrom,
    
    637 F.2d 405
    (1981).            Defendant Spiegel’s petition for habeas
    relief from a state conviction was granted by a federal district
    court. The state appealed.          Spiegel argued his sentence in a trial
    for     aggravated     battery      was    enhanced      because      of     a     prior
    constitutionally invalid conviction for bribery, and that the
    prosecutor at trial prejudiced Spiegel by asking him if he had ever
    been convicted of a felony.               At the time of trial, the earlier
    conviction was pending on appeal.
    After Spiegel was convicted of battery, his bribery conviction
    was overturned on two grounds. First, the Florida Court of Appeals
    found    Spiegel     was   denied   effective       assistance      of     counsel   in
    violation of the Sixth Amendment. Second, the appeals court stated
    illegally seized evidence was impermissibly introduced against
    Spiegel in violation of his Fourth Amendment rights.                       Spiegel was
    retried for battery and acquitted.                This Court held the district
    court     had   properly        granted         habeas     relief     because        the
    constitutionally       infirm    conviction       should    not     have    been    used
    10
    against Spiegel.
    The Spiegel Court stated:
    We perceive a major distinction between a prior
    conviction appealed on non-constitutional grounds and
    one, as here, appealed on the ground of violation of a
    Sixth Amendment right to counsel. . . .Here, Spiegel’s
    guilt or innocence rested on his credibility. . . .[H]e
    was the sole witness to testify in his behalf.      The
    Federal district court    determined that manifest and
    undue harm was done to Spiegel through the introduction
    of his prior unconstitutional conviction. . . .
    
    Spiegel, 637 F.2d at 407
    .
    Carney argues that since the Texas Supreme Court found he was
    not given notice of the contempt motion or exactly how he was
    guilty of contempt, a violation of his due process rights, this
    Court should find that use of an invalid conviction obtained in
    violation of constitutional rights other than the Sixth Amendment
    was error for which Carney deserves a new trial.                The conviction
    was   not   overturned   for   a   technical     error,   but    because     of   a
    substantive violation of his constitutional rights.              He argues his
    credibility was of central importance at his trial, since the jury
    was forced to decide in several instances whether to believe Carney
    or the Government’s witnesses.        When he was made to appear a liar
    on cross examination, his character for veracity was impugned
    beyond repair.
    The Government claims that Carney is not entitled to a new
    trial   despite   the    introduction      of   an   invalid    conviction    for
    numerous reasons.        It first argues Carney waived his right to
    appeal the use of the conviction since he introduced it in direct
    examination, relying on United States v. Williams, 
    939 F.2d 721
    11
    (9th Cir. 1991), Shorter v. United States, 
    412 F.2d 428
    (9th Cir.
    1969), cert. denied, 
    396 U.S. 970
    (1969), and United States v.
    Cobb, 
    588 F.2d 607
    , 613 (8th Cir. 1978), cert denied, 
    440 U.S. 947
    (1979).
    However, the Fifth Circuit has held a party is not prohibited
    from introducing evidence in direct examination when the trial
    court has already ruled the evidence may be introduced on cross
    examination.       Reyes v. Missouri Pac. R.R. Co., 
    589 F.2d 791
    (5th
    Cir. 1979).    Plaintiff Reyes unsuccessfully attempted, through a
    motion in limine, to keep certain evidence excluded from trial.
    Anticipating introduction of the evidence by the defense, and “[i]n
    an   attempt   to    minimize    the     damaging    effects    of   his     prior
    convictions, Reyes brought them out on direct examination.” 
    Id. at 793.
       On appeal, the defense argued Reves waived error by himself
    introducing evidence of the prior convictions.             This Court refused
    to accept that argument, stating, “After the trial court refused to
    grant Reyes’ motion in limine to exclude the evidence, he had no
    choice but to elicit this information on direct examination in an
    effort to ameliorate its prejudicial effect.”              
    Id. at 793
    n.2.
    Following our Reyes holding, we decline to agree that when
    opposing counsel obtains a ruling allowing it to introduce damaging
    evidence on cross, the affected party who attempts to anticipate
    that    negative    evidence    waives      his   right   to   object      to   the
    introduction of that testimony by himself raising it.                Clearly, no
    defendant would introduce damaging testimony unless he feared he
    would be more injured by the jury first hearing of that evidence
    12
    from the prosecution.       When the Government obtains a ruling in
    advance allowing it to introduce prior conviction evidence, the
    defendant is faced with a difficult dilemma: to refrain from
    testifying in his own defense, or risk impeachment by the opposite
    side. A holding that, under these facts, a defendant who testifies
    in anticipation automatically waives his right to object to a trial
    court’s ruling admitting the damaging evidence goes against basic
    notions of fairness. Therefore, when the prosecution obtains, over
    objection, a ruling in limine that it may use evidence of an
    earlier conviction if the defendant testifies, the defendant who
    introduces   evidence      of     the       conviction,    later   found       to   be
    constitutionally infirm, in direct examination in an effort to
    ameliorate the highly prejudicial effect of that evidence, should
    not   be   deemed   to   have      waived        objection    to   the    erroneous
    introduction of such evidence.
    The Government next relies on United States v. Galvan-Garcia,
    
    872 F.2d 638
    (5th Cir. 1989), cert denied, 
    493 U.S. 857
    (1989), for
    the   proposition   that        when    a     defendant    attempts      on    direct
    examination to explain an earlier conviction, he may be cross
    examined on those facts.        
    Id. at 640-41.
          However, that case shared
    none of the circumstances of Carney’s case.                     First, Defendant
    Galvan-Garcia failed to object to the admission of evidence of a
    prior conviction at trial. The asserted evidentiary error was only
    reviewed   for   plain   error.         Second,      the     Government       did   not
    affirmatively seek a ruling allowing it to use the conviction,
    necessitating introduction by the defense of the damaging testimony
    13
    on direct.      Third, and most important, the defendant was not
    impeached by the use of a constitutionally invalid conviction. The
    defendant suffered no manifestly unjust treatment from admission of
    a conviction that was properly admissible under Fed.R.Evid. 609,
    that he failed to object to at trial, and that he introduced on
    direct.7
    The Government contends even if we find admission of Carney’s
    contempt conviction erroneous, no new trial is required since the
    rule of Loper, that constitutionally invalid convictions may not be
    used to impeach a testifying defendant, has been subjected to a
    harmless error analysis.       The Government argues it had such a
    plethora of     evidence   against   Carney,   the   use   of   the   invalid
    conviction against him at trial was not meaningful.             We disagree.
    The Government used the contempt judgment and the findings made in
    connection with it as an integral part of its cross.            As such, we
    cannot find the admission of the conviction to impeach Carney did
    not affect his substantive rights.
    The Government avers that the rule of Burgett and Spiegel only
    applies to prior convictions obtained in violation of a defendant’s
    7
    Insofar as Galvan-Garcia suggests that a defendant waives any
    objection to the introduction of impeachment evidence when he
    offers evidence of prior convictions on direct examination,
    following an adverse ruling on a motion in limine concerning the
    admissibility of such prior convictions, we decline to follow that
    suggestion.   See 
    Galvan-Garcia, 872 F.2d at 640
    .      As we have
    already explained, our decision in Reyes holds that a motion in
    limine is sufficient to preserve error for appeal under such
    circumstances, and we reaffirm that holding today. See 
    Reyes, 589 F.2d at 793
    n.2; accord Coursey v. Broadhurst, 
    888 F.2d 338
    , 341
    n.3 (5th Cir. 1989); Petty v. IDECO, 
    761 F.2d 1146
    , 1152 n.3 (5th
    Cir. 1985), superseded on other grounds, Green v. Bock Laundry
    Mach. Co., 
    490 U.S. 504
    (1989).
    14
    Sixth Amendment rights, and that a conviction invalidated for any
    other reason may be used against a defendant.                 We disagree.        The
    rational of Burnett and Spiegel is equally applicable to this
    constitutional infirmity arising from lack of notice.
    At oral argument, the Government cited the recent Supreme
    Court decision in Custis v. United States, 
    511 U.S. 485
    , 
    114 S. Ct. 1732
    (1994)    as    further      support   for   its   position      the   invalid
    conviction was properly introduced against Carney.                  The Court held
    only defendants whose conviction was obtained in violation of their
    right   to   counsel     could    attack    the    validity    of    the    earlier
    conviction at a later proceeding.            However, Custis only addresses
    the right of a defendant in a federal sentencing proceeding to
    collaterally attack the validity of prior state proceedings.                   That
    case did not stand for the proposition that no inherent prejudice
    results when a constitutionally infirm conviction is used to
    impeach a defendant, so that the use of any constitutionally infirm
    conviction other than one obtained in violation of the right to
    counsel is per se acceptable.
    The Government also refers us to Smith v. Collins, 
    964 F.2d 483
    (5th Cir. 1992).           Defendant Smith was impeached with several
    convictions found to be void because the indictments contained
    technical defects.         This Court stated that since the factual
    reliability of the convictions was not in question, and since Smith
    never   claimed     he   was    innocent    of   the   charges,     there   was    no
    reversible error.        We then distinguished the facts in Smith from
    those in Loper: “the use of the void convictions in Loper ‘might
    15
    well have influenced the outcome of [that] case’ because the issue
    of innocence and guilt ‘turned entirely on whether the jury would
    believe the testimony. . .of Loper.’”              
    Smith, 964 F.2d at 486
    (quoting Loper v. Beto, 
    405 U.S. 473
    , 480 (1972)).              Carney’s case
    is far closer to that in Loper than in Smith.         Carney protested his
    innocence against the charges of contempt.           The Government relied
    heavily on the contempt conviction to cast doubt on Carney’s
    character and truthfulness.           As in Loper, the evidence against
    Carney was hardly overwhelming.             Carney’s word was an important
    part of his defense, and when the Government attacked him with the
    invalid conviction, Carney lost much of his credibility with the
    jury.
    Finally, the Government states the conviction should have come
    in   as   probative   of   Carney’s    modus    operandi   of   stalling   and
    confusing investors.        This argument is without merit.           If the
    Government’s position were allowed in this particular case, it
    would in effect be permitted to use circumstantial evidence of
    guilt to prove Carney’s alleged ultimate crime.                  The limited
    allowances of Fed.R.Evid. 404(b) do not extend as far as the
    Government asks us to go.
    Evidence of the contempt conviction was wrongly admitted
    against Carney, and merits reversal and remand for a new trial.
    II.
    Defendant Fisher appeals the trial court’s refusal to grant
    him severance once evidence of Carney’s contempt conviction was
    16
    introduced to the jury.
    Fisher and Carney were indicted together, and tried together,
    for the same offenses.         The two defendants attempted to present a
    uniform defense.         During his opening statement, Fisher’s attorney
    told the jury that Fisher and Carney’s conduct was so connected the
    acts       of   both   defendants   should   be   considered   collectively.8
    Fisher’s attorney made these statements before he was aware the
    contempt conviction would be used against Carney.
    After Carney testified on direct examination to his contempt
    conviction, Fisher unsuccessfully moved for a severance because of
    the introduction of such evidence before the jury. The devastating
    cross of Carney followed.           At the close of evidence, co-defendant
    Hughes also moved for a severance. Because Fisher’s attorney filed
    a motion before trial to adopt the motions and memoranda of co-
    defendants, both motions inured to his benefit to preserve the
    alleged error for appeal.           United States v. Bernal, 
    814 F.2d 175
    ,
    182 (5th Cir. 1987).
    Fisher argues that the introduction of the void contempt
    conviction against Carney caused a prejudicial spillover effect to
    Fisher’s right to a fair trial and to his right to be judged
    independently by the jury.          He cites Zafiro v. United States, 
    113 S. Ct. 933
    (1993) for the proposition that severance was proper in
    8
    In opening statements, Fisher’s attorney told the jury:
    Carney and Fisher’s conduct, or lack of conduct, are
    intertwined about a hundred percent.     It has to do with
    Fisher, it has to do with Carney.     If it has to do with
    Carney, it has to do with Fisher. That’s all there is to it.
    17
    his case.      The Court there stated:
    [A] district court should grant a severance under Rule 14
    only if there is a serious risk that a joint trial would
    compromise a specific trial right of one of the
    defendants, or prevent the jury from making a reliable
    judgment about guilt or innocence. Such a risk might
    occur when evidence that the jury should not consider
    against a defendant and that would not be admissible if
    a defendant were tried alone is admitted against a
    codefendant. For example, evidence of a codefendant’s
    wrongdoing in some circumstances erroneously could lead
    a jury to conclude that a defendant was guilty.
    
    Id. at 938.
         Fisher contends that the contempt conviction and the
    acts    constituting       the   alleged   contempt   would    not    have    been
    admissible in evidence if Fisher had been tried separately from
    Carney, and that the jury could have attributed Carney’s apparent
    wrongdoing to Fisher.        Fisher argues the apparent prejudice at the
    introduction of the contempt conviction was such he is entitled to
    a new trial.
    The Government responds that whether to sever defendants is a
    matter within        the   trial   court’s    discretion,   and   a   denial    of
    severance is only reviewable for abuse of that discretion.               United
    States v. Faulkner, 
    17 F.3d 745
    , 758 (5th Cir. 1994), cert denied,
    
    115 S. Ct. 193
      (1994).       Reversal   is   only   warranted    when    the
    appellant can show compelling prejudice the trial court could not
    protect against--the rule, not the exception, is that persons
    indicted together should be tried together.                 United States v.
    Pofahl, 
    990 F.2d 1456
    , 1483 (5th Cir. 1993).              “[T]he mere presence
    of a spillover effect does not ordinarily warrant severance.”                  
    Id. As well,
    a limiting jury instruction, such as one instructing the
    jury to consider each defendant separately, is often sufficient to
    18
    cure any risk of prejudice.         
    Zafiro, 113 S. Ct. at 938-39
    .
    Since we hold the invalid conviction should never have been
    introduced    in    this   trial,   we   hold   that   even    though   midtrial
    severance is an extraordinary measure, warranted in very few cases,
    the damaging impeachment of Carney with an invalid conviction so
    poisoned the entire trial against both defendants as to render the
    verdict against Fisher suspect.           Since Fisher’s counsel announced
    to the jury    Fisher and Carney had considered their actions to be
    intertwined, the destruction of Carney’s credibility irreparably
    harmed Fisher. The instructions the jury received to consider each
    defendant and offense separately before returning a verdict were
    insufficient       to   protect   Fisher.9      Midtrial      severance   is   an
    extraordinary measure, but as we believe the introduction of the
    invalid conviction against Carney was egregiously wrong, and since
    it could not have been admitted against Fisher if they had been
    separately tried, we find that Fisher was entitled to a severance
    when that evidence came in against his partner and co defendant.10
    9
    The jury instruction stated in part:
    [T]he case of each defendant should be considered separately
    and individually. The fact that you may find one or more of
    the defendants guilty or not guilty of any of the crimes
    charged should not control your verdict as to any other crime
    or any other defendant. You must give separate consideration
    to the evidence as to each defendant.
    10
    Our conclusion that Fisher was entitled to a separate trial,
    under the unique circumstances of this case, does not signal a
    retreat from the general principle that the mere “spillover” effect
    of damaging evidence introduced against one defendant is
    insufficient to warrant the severance of other defendants. See
    e.g. United States v. Broussard, 
    80 F.3d 1025
    , 1037 (5th Cir.),
    cert. denied, 
    117 S. Ct. 264
    (1996); United States v. Mitchell, 
    31 F.3d 271
    , 276 (5th Cir.), cert. denied, 
    115 S. Ct. 455
    (1994);
    19
    III.
    Fisher alleges that Count One of the indictment alleged four
    separate and distinct conspiracies, and was therefore duplicitous
    under Fed.R.Crim.P. 8(a) and should have been dismissed.              He moved
    before trial to dismiss Count One for this reason, but the district
    court   informed   him   it   would     cure     the    error   in   the   jury
    instructions.      Fisher     apparently       felt    the   instruction   was
    insufficient to cure any error, and argues that a duplicitous
    indictment subjected him to prejudice in obtaining appellate review
    and the prevention of double jeopardy, and risked a non-unanimous
    jury verdict.
    A conspiracy may have more than one object without making the
    indictment alleging that conspiracy duplicitous.             United States v.
    Duvall, 
    846 F.2d 966
    , 975 (5th Cir. 1988).
    [A] single count may be used where those actions
    “represent a single, continuing scheme,” provided the
    indictment (1) notifies the defendant adequately against
    the charges against him; (2) does not subject the
    defendant to double jeopardy; (3) does not permit
    prejudicial evidentiary rulings at trial; and (4) does
    not allow the defendants to be convicted by a
    nonunanimous jury verdict.
    United States v. Baytank (Houston), Inc., 
    934 F.2d 599
    , 609 (5th
    Cir. 1991).     However, “[i]f an indictment is duplicitous and
    prejudice results, the conviction may be subject to reversal.” 
    Id. Pofahl, 990
    F.2d at 1483. To the contrary, the Supreme Court has
    instructed us to consider the risk of prejudice on a case-by-case
    basis. 
    Zafiro, 506 U.S. at 539
    . Therefore, although we conclude
    that Fisher has demonstrated “compelling prejudice” warranting
    reversal of his conviction, see 
    Pofahl, 990 F.2d at 1483
    , we limit
    our holding to the extraordinary circumstances of this case.
    20
    at 608.
    Fisher only alleges he was prejudiced by subjection to double
    jeopardy and conviction by a nonunanimous jury verdict.         The
    indictment against Fisher did not subject him to double jeopardy.
    The classic test for resolving issues of double jeopardy was set
    out by the Supreme Court in Blockburger v. United States, 
    284 U.S. 299
    (1932).    Blockburger directs that double jeopardy concerns are
    not raised if each crime charged requires an element of proof the
    other crimes charged do not.       
    Id. at 304.
      The Supreme Court
    recently reaffirmed this “same elements” test, stating that “where
    the two offenses for which the defendant is punished or tried
    cannot survive the ‘same elements’ test, the double jeopardy bar
    applies.”     United States v. Dixon, 
    113 S. Ct. 2849
    , 2856 (1993).
    This Court has also relied frequently on the Blockburger test.
    United States v. Gonzales, 
    40 F.3d 735
    , 738 n.5 (5th Cir., 1994);
    Bias v. Ieyoub, 
    36 F.3d 479
    , 480.11
    11
    Several years ago, in United States v. Marable, 
    578 F.2d 151
    (5th Cir. 1978), this Court first set out a test to resolve when an
    indictment risks exposing a defendant to double jeopardy. That
    test asked “whether the proof for charges in a second indictment
    would have been admissible in the first trial and would have
    supported a conviction.” United States v. Robin, 
    693 F.2d 376
    , 378
    (5th Cir. 1982) (citing 
    Marable, 578 F.2d at 153
    .)        In 1980,
    however, this Court, in an en banc decision, discredited the
    analysis in Marable, holding the better interpretation of
    Blockburger is one that focuses “on the elements of the offense
    charged, not on the evidence adduced at trial.” United States v.
    Rodriguez, 
    612 F.2d 906
    , 919 (5th Cir. 1980) (en banc), aff’d, 
    450 U.S. 333
    (1981), overruled on other grounds, United States v.
    Michelena-Orovio, 
    719 F.2d 738
    , 757 (5th Cir. 1983) (en banc),
    cert. denied, 
    465 U.S. 1104
    (1984).
    For that reason, we feel the Blockbuster “same elements” test is
    the test we should use to resolve Fisher’s claim. We recognize
    that this Court has cited the Marable test even after Rodriguez was
    decided. 
    Robin, 693 F.2d at 378
    . However, the abundance of
    21
    Under the “same elements” test, the indictment did not subject
    Fisher to double jeopardy.            Each part of the conspiracy charged in
    Count One required proof of its own element.                   No double jeopardy
    concerns were raised.
    The danger of a nonunanimous jury verdict may be avoided by
    proper jury instructions.             
    Baytank, 934 F.2d at 609
    . The judge
    instructed the jury on the burden of proof the Government was
    required to meet before they could find the defendants guilty.                   The
    judge also gave the jury a specific instruction that while they
    need not find the defendants committed each of the five offenses
    alleged   in   the    indictment,        they    must   unanimously     agree   the
    defendants committed at least one of the five offenses alleged to
    have made up the conspiracy.            The jury instructions in this case
    were sufficient to cure any alleged defect in the indictment.
    Fisher has not made the necessary showing of prejudice to
    merit   reversal     on   this   ground.         In   Robin,    we   noted   that   a
    duplicitous     indictment       is    not      reversible     error   if    defense
    preparation was not affected and the jury’s verdict is unambiguous.
    Robin, 693 at 379.        We do not find either condition occurred in
    this case.     Any alleged duplicity in the indictment did not cause
    any prejudice and was harmless.
    authority endorsing the “same elements” test leads us to believe
    that is the better standard.
    We also note that regardless of which test we use, Fisher’s claim
    fails.   Under the Marable test, each element of Count One was
    supported by adequate, separate evidence, so that none of the
    evidence could be used as the basis for a future indictment.
    22
    IV.
    Both defendants allege the district court erred when it
    refused to admit evidence that the defendants had prevailed in an
    arbitration proceeding between themselves and four of the NFL
    players seeking      to     have   their    USSA     shares    repurchased.         The
    defendants argue their success in arbitration showed the legitimacy
    of their position the athletes had breached their contracts with
    USSA and were not entitled to repurchase contracts.                      The district
    court   excluded     the     evidence     under     Fed.R.Evid.      402    and    403,
    concluding the risk of confusing and misleading the jury with the
    evidence outweighed its probativity.
    This     evidence     was    highly       relevant.      Evidence      that    an
    arbitration proceeding occurred and that the defendants were not
    found obliged to repurchase the Players’ shares goes to the heart
    of the case.     The objections the Government had to this evidence--
    namely, that the arbitrator did not detail his reasons for the
    finding, and that the jury might not understand they were not bound
    by   the     arbitrator’s     decision--may         be    pointed    out    in    cross
    examination     on   these    subjects      and    argued     to   the   jury.      The
    defendants have been found guilty of a crime and sentenced to
    substantial jail       terms.          Evidence that is so relevant must be
    extremely      prejudicial        to    warrant     its     exclusion      in     these
    circumstances.       The arbitration results are not so inherently
    confusing     that   the     defense     should     have    been    prevented      from
    introducing them.
    The Government also argues a civil judgment is not admissible
    23
    in a criminal case, particularly when the Government is not a party
    to both matters.       Wharton’s Criminal Evidence, § 669 (14th ed.
    1985).    However, the arbitration results were not offered to prove
    innocence,    but   to   show   that     contrary   to   the   Government’s
    assertions, the defendants’ legal position against the Players was
    not a “ruse” or a position taken in bad faith.                 Also, as the
    defense notes, several of the Government’s own witnesses mentioned
    the results of other civil litigation against USSA.                If civil
    actions against the defense where the defense was unsuccessful were
    mentioned in testimony, Fisher and Carney should have been allowed
    to discuss the results of arbitration they won.           It was error to
    exclude this evidence.
    V.
    Michael Tannery, the accountant for Bradley Branson who
    mistakenly overpaid USSA by $20,000, testified at trial. He stated
    when he tried to obtain a refund of the $20,000 overpayment, Fisher
    advised him to take out a loan at Bayside in Branson’s name, and
    Fisher and Carney would later repay that loan.
    Tannery was the central witness against Fisher on the bank
    fraud charge, Count Ten of the indictment.           Tannery testified to
    the grand jury and again at trial that Brad Branson was aware of
    the loan from Bayside when it was requested.
    Before   trial,     Fisher’s   counsel   had   successfully   filed   a
    “Motion for Production of Favorable Evidence,” which included
    information affecting the credibility of any person called as a
    24
    witness by the Government.      The Government answered it was unaware
    of any Brady12 material at that time.       After Tannery testified, the
    defendants filed a specific motion seeking Brady material relating
    to Tannery. At that point, the Government submitted to the defense
    an FBI 302 report from November 1992 of an interview with Bradley
    Branson.      In that interview, the FBI learned Branson did not
    request the loan from Bayside, he did not request Tannery to obtain
    a loan, and he was unaware a loan was requested in his name.              He
    did not know why the loan was requested or how the proceeds were
    used.      This evidence was directly contradictory to what Tannery
    testified to both in the grand jury hearing and at trial.                The
    Government did not at any point attempt to correct the inconsistent
    testimony.
    When the defense received the 302 report, on the last day of
    trial,     Carney’s   counsel   moved    for   a   mistrial   due   to   the
    Government’s failure to provide the information in a timely manner.
    The court overruled the motion because it stated it did not think
    the report was inconsistent with other testimony, and that no one
    had attempted to have Branson appear as a witness, or if Branson
    were unavailable,13 to take a deposition for use at trial.
    In Brady v. Maryland, 
    373 U.S. 83
    (1963), the Supreme Court
    held the suppression by the prosecution of material evidence
    favorable to the accused violates due process.
    To prevail on a Brady claim, petitioner must prove that
    12
    Brady v. Maryland, 
    373 U.S. 83
    (1963).
    13
    Bradley Branson lives in Spain.
    25
    (1) the prosecution suppressed or withheld evidence (2)
    which was favorable to the defense and (3) material to
    either guilt or punishment.    Materiality requires the
    petitioner to demonstrate that “there is a reasonable
    probability that, had the evidence been disclosed to the
    defense, the result of the proceeding would have been
    different.”. . .[A] reasonable probability is shown when
    the non-disclosure “could reasonably be taken to put the
    whole case in such a different light as to undermine
    confidence in the jury verdict.”
    Westley v. Johnson, 
    83 F.3d 714
    , 725 (5th Cir. 1996), petition for
    cert filed, No. 96-6205 (Sept. 30, 1996)(citations omitted).
    Fisher argues that Tannery was the critical witness against
    him on Count Ten, a count on which he was found guilty and
    sentenced to 87 months in prison.    Even though the Government had
    been ordered to turn over all evidence that might affect the
    credibility of its witnesses before trial began, the Government did
    not disclose the report to the defense in time for it to make a
    meaningful difference in their trial strategy.   Fisher contends no
    effort was made to depose Branson or have him appear at trial
    because the defense was unaware Branson did not know of the loan
    when it was requested, or that Branson had disclaimed Fisher was
    responsible for the loan.   He argues the information in the 302
    report would have severely impeached the credibility of Tannery.
    Since Tannery was the key witness against him on Count Ten, and
    since Tannery’s believability was critical to a jury finding of
    guilt on that count, disclosure of the 302 would have made a
    different result reasonably probable, as required to prevail under
    Brady and its progeny.
    The Government claims that while the 302 did contradict
    Tannery’s testimony, Branson’s statements were not material.    It
    26
    argues that the withheld 302 could not have exculpated Fisher or
    impeached Tannery on essential issues, and that much other evidence
    was presented that proved Fisher’s guilt.          For those reasons, the
    failure to disclose the 302 did not undermine confidence in the
    verdict.
    While the 302 would not have directly exculpated Fisher, it
    would have severely impeached the testimony of a key government
    witness.   As Tannery was the essential witness against Fisher on
    Count Ten, any evidence tending to discredit his testimony would
    have been valuable to the defense.       The Government knew of the 302
    and that Branson directly contradicted Tannery’s evidence. Had the
    defense known of the 302, it could have deposed Branson and had his
    testimony contradicting Tannery ready for trial.          The Government’s
    failure to release this material information to the defense was
    error, and should have resulted in a new trial for Fisher.
    VI.
    Both Fisher and Carney allege insufficient evidence was
    produced to support Count Seven of the indictment, making false
    statements under 18 U.S.C. § 1014.        The indictment alleged Fisher
    and Carney submitted an affidavit to the FHLBB which “falsely
    stated that no material adverse events or material adverse changes”
    occurred with respect to the financial condition of USSA since the
    defendants submitted their application to buy Bayside.                 This
    application   represented   that   USSA    would    be   capitalized   with
    $2,250,000 in equity and $1,000,000 in debt.         After submitting the
    27
    affidavit, however, USSA restructured its capital and increased
    equity to $4,000,000, but with $875,000 of that sum subject to
    repurchase agreements and no debt.       Defendants did not report this
    change and contend it was not an adverse event.          They certified
    that no material adverse change had occurred.
    The Government disagrees.        It claims that the FHLBB should
    have been told this information since demand repurchase agreements
    affected the timing of when funds would come due.       It points out a
    defense witness testified he would want to know about repurchase
    agreements in deciding whether to approve an application for change
    in control.   It then notes the defendants made no provision for
    repayment of the sums included in the buy back agreements, creating
    a risk of bankruptcy.      The fact that equity was increased and debt
    decreased does not end the inquiry.
    “To overturn the convictions on a sufficiency of the evidence
    challenge, we must find that a rational trier of fact could not
    have found that the government proved the essential elements of the
    crime charged     beyond   a   reasonable   doubt.”   United   States   v.
    Jimenez, 
    77 F.3d 95
    , 97 (5th Cir. 1996).       When we view the evidence
    in this light, we cannot find the verdict so unsupported as to
    merit reversal.    The change in capitalization created, in effect,
    a sizable debt payable on demand.           No provision was made for
    repayment of this debt.          This created a danger that several
    investors would seek repayment at the same time and drain Bayside
    of operating capital.      While we are sympathetic to the impact of
    FIRREA on Bayside, the fact that Bayside was unable to repay its
    28
    liabilities when investors sought to exercise repurchase options
    illustrates the dangers inherent in these liabilities.    There was
    sufficient evidence to support the verdict on these counts.     The
    information withheld was adverse.
    CONCLUSION
    As we find the district court erred and reverse its decision,
    we do not reach the remaining contentions on appeal.     We REVERSE
    Appellant’s convictions, VACATE their sentences and REMAND.
    29