Argued: December 6, 2017
from the United States District Court for the Eastern
District of Kentucky at Frankfort. No. 3:14-cr-00010-Gregory
F. Van Tatenhove, District Judge.
J. Guarnieri, MCBRAYER MCGINNIS, LESLIE & KIRKLAND, PLLC,
Lexington, Kentucky, for Appellant.
M. Schad, FEDERAL PUBLIC DEFENDER, Cincinnati, Ohio, for
B. Goodhand, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellee.
J. Guarnieri, MCBRAYER MCGINNIS, LESLIE & KIRKLAND, PLLC,
Lexington, Kentucky, for Appellant.
M. Schad, FEDERAL PUBLIC DEFENDER, Cincinnati, Ohio, for
B. Goodhand, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., Charles P. Wisdom, Jr., Kenneth Taylor, Neeraj K.
Gupta, UNITED STATES ATTORNEY'S OFFICE, Lexington,
Kentucky, for Appellee.
Before: CLAY, GIBBONS, and BUSH, Circuit Judges.
John Westine and Henry Ramer ("Defendants") appeal
their convictions and sentences in their criminal cases
involving charges of mail fraud, in violation of 18 U.S.C.
§ 1341; money laundering, in violation of 18 U.S.C.
§ 1956; and securities fraud, in violation of 15 U.S.C.
§ 78j(b). Defendants were convicted in separate jury
trials. For the reasons set forth below, we
AFFIRM both convictions and both sentences.
case involves a group of individuals who schemed to defraud
investors through the marketing of a series of spurious oil
and gas drilling projects. Prosecutors indicted several
individuals in connection with the scheme, including
Defendants. The evidence presented at Defendants' trials
supports the following timeline of events.
October 2011, Defendant Westine completed a 235-month
sentence following his conviction for securities fraud,
whereupon he returned to his home in California. The crime
that led to this prior term of imprisonment involved the sale
of fraudulent Kentucky oil and gas interests as well as
non-existent shares of crude oil from Saudi Arabia. Investors
knew Westine by his aliases, John Scott and Michael
Fairchild. Westine operated through a company he called
TriState Development, and he hired a sales team that worked
out of a Los Angeles call center.
than a year after Westine was released from prison, he began
offering investments in Kentucky oil wells through three
companies: Liberty Oil Leasing, Three Star Leasing, and
Clementsville Oil & Gas Leasing. The companies published
promotional materials claiming that their wells were
currently producing oil and would generate a steady stream of
royalty payments. These promotional materials highlighted the
leadership of "John Scott, " a "long-time oil
and gas operator" (R. 357 at PageID #3415), and the
companies rented virtual office space in Kentucky under the
names Michael Fairchild and Michael Ross. Prospective
investors were promised that they would receive their
"[f]irst monthly check within 90 days." (R. 357 at
PageID #3414.) The government refers to the operations of
these three companies as "Phase I" of the fraud.
investors never received royalty checks from the Phase I
companies, they began filing complaints with the Kentucky
Department of Financial Institutions ("DFI"). DFI
investigators concluded that the companies were selling
unlawful securities. DFI's investigation culminated in
the issuance of a restraining order that, among other things,
prohibited the individuals affiliated with the companies from
"making offers to sell and selling interests in oil and
gas programs." (GEX 57 at 2.)
point, Defendant Westine had recruited Defendant Ramer as a
partner in his scheme. Together, Defendants began winding
down the Phase I companies' operations and transitioning
them to three new companies-the start of what the government
calls "Phase II." Over the course of the following
year, Royal Leasing of Tennessee, Royal Energy of Tennessee,
and Royal Energy LLC collected over $2 million from 138
investors. When these investors complained about not
receiving royalty payments, "Michael Ross"
reassured them, blaming "freakish weather" for
delays, telling them he had multiple wells generating 15-20
barrels of oil per day, and promising that checks were
forthcoming. (R. 358 at PageID #3934-35, 3948, 3990.) But
none of this was true, and investors never received the
Defendant Ramer recruited new investors and persuaded
existing investors to double down, sometimes even after they
complained. To find new recruits, he oversaw two call centers
in California and developed a promotional video that boasted
a fictional production capacity of 75 barrels per day. Ramer
helped Westine keep track of his many aliases, tutoring him
on which identity to use during at least one meeting with
Ramer's call center sales staff. For existing investors,
Ramer organized a trip so that they could "see the oil
wells" and "smell the oil." (R. 358 at
PageID #3945-46; R. 473 at PageID #6005; R. 474 at PageID
#6203.) On this trip, Ramer introduced investors to a third
co-conspirator, Mark Cornell, who provided a tour of his
JMack Energy oil facility. In reality, this facility was
capable of producing only a small amount of oil-nowhere near
75 barrels per day-but it served to create an appearance of
legitimacy. During the tour, Cornell even gave the investors
jars of oil, purportedly produced by JMack Energy.
the investors were placated. In mid-2014, investor complaints
again started to weigh on Defendants. Defendants began to
wind down the Phase II companies and to shift operations to a
new company called Marathon Leasing. Defendant Ramer also
proposed that they form a company called Midwest Leasing
"so . . . there will not be a link to Marathon or
Royal." (GEX 501; see R.476 at PageID
#6753-54.) During a period of less than two months, which
prosecutors referred to as "Phase III, " Defendants
collected $242, 233 from twelve investors. But before
Defendants could fully transition from Phase II to Phase III,
prosecutors had Defendant Westine arrested. Upon learning of
the arrest, Defendant Ramer directed his associates to
"take [out] as much money" as possible from the
corporate accounts and send it to him. (R. 356 at PageID
#3277; R. 237 at Page ID #1301-02; GEX 371 (audio recording);
R.450 at PageID #5507.) Ramer's arrest followed shortly
October 9, 2014, the government indicted two individuals in
connection with the scheme, including Defendant Westine. A
superseding indictment named additional individuals,
including Defendant Ramer. The superseding indictment charged
Defendants with 29 counts of mail fraud, in violation of 18
U.S.C. § 1341; conspiracy to commit money laundering, in
violation of 18 U.S.C. § 1956(h); securities fraud, in
violation of 15 U.S.C. § 78j(b) and 17 C.F.R. §
240.10b-5; and three forfeiture allegations.
were tried separately. The government presented overwhelming
evidence implicating both Defendants in the scheme, including
extensive testimony from oil and gas experts, victims,
co-conspirators, and federal investigators. At the conclusion
of each trial, a jury found each Defendant guilty of multiple
counts of mail fraud, conspiracy to commit money laundering,
and securities fraud. The district court sentenced Defendant
Westine to 480 months' imprisonment and Defendant Ramer
to 156 months' imprisonment.
government also obtained a conviction for co-conspirator Mark
Cornell. In connection with Cornell's sentencing, which
took place after Defendants' sentencing, the government
submitted evidence that Cornell had conducted a separate
criminal securities fraud scheme. The government described a
"side deal" that resembled the one for which
Cornell, Westine, and Ramer were indicted, but which Cornell
conducted on his own. (R. 496 at PageID #7352-57.) An
independent team of state investigators discovered
Cornell's scheme based on a web page he created to
September 3, 2015, Ramer filed a Motion for New Trial
"pursuant to Brady v. Maryland evidence or, in
the alternative, newly discovered evidence pursuant to
F.R.C.P. 33." (R. 388 at l.) Westine, who represented
himself through the trial, filed several motions that the
district court construed as also requesting a new trial. The
district court concluded that neither Defendant was entitled
to a new trial and denied their motions.
then filed timely appeals, raising numerous challenges to the
trial proceedings. We address each of their challenges in
PRIOR ACTS EVIDENCE
government's theory of mail fraud involved allegations
that both Defendants failed to disclose material facts to
prospective investors, including that Defendant Westine had
been convicted in 1992 for "conducting essentially the
same oil production scam" and that Defendant Ramer was
"the subject of state regulatory cease and desist
orders for selling unregistered securities." (R. 51 at
PageID #217-18.) The district court permitted the
introduction of prior acts evidence showing that Defendant
Westine had indeed been convicted for the fraudulent sale of
oil and gas interests. The court also permitted the jury to
learn of regulatory actions in California and Arizona that
directed Defendant Ramer to cease and desist the sale of
government also alleged that Defendants made affirmative
misrepresentations to investors regarding the production
capacity of their oil wells and the corresponding returns on
investment. In their defense, Defendants largely focused on
the knowledge and intent elements of mail fraud; they
asserted that they were not sophisticated enough to recognize
or understand that the representations they made to investors
were false or misleading. Westine also disputed that he used
aliases such as Michael Fairchild and John Scott. In response
to these defenses, and over Defendants' objections, the
district court permitted the government to introduce
additional details regarding Defendant Westine's previous
fraud conviction (such as his use of the aliases Michael
Fairchild and John Scott) as well as the California cease and
desist letter directed to Defendant Ramer. Defendants now
argue that all prior acts evidence should have been excluded.
court reviews evidentiary rulings for abuse of discretion.
United States v. White, 492 F.3d 380, 398 (6th Cir.
2007); see United States v. Churn, 800 F.3d 768,
774-80 (6th Cir. 2015). Pursuant to Rule 404(b), "a
court may admit evidence of a defendant's 'other'
or 'similar' bad acts or crimes only if the evidence
is probative of a relevant fact, and not to show the
defendant's 'character' or 'propensity'
to commit bad acts." United States v. Mack, 258
F.3d 548, 552-53 (6th Cir. 2001) (quoting United States
v. Clemis, 11 F.3d 597, 600 (6th Cir. 1993)). Relevant
facts include "motive, opportunity, intent, preparation,
plan, knowledge, identity, absence of mistake, or lack of
accident." Fed.R.Evid. 404(b)(2). "To admit
evidence under Rule 404(b), the trial court must follow three
steps: (1) make a preliminary determination that enough
evidence exists that the prior act actually occurred; (2)
determine whether the other acts evidence is being offered
for a proper purpose under Rule 404(b); and (3) determine
whether the other acts evidence is more prejudicial than
probative under Federal Rule of Evidence 403."
United States v. Thompson, 690 Fed.Appx. 302, 307
(6th Cir. 2017). Rule 403 states, "[t]he court may
exclude relevant evidence if its probative value is
substantially outweighed by a danger of one or more of the
following: unfair prejudice, confusing the issues, misleading
the jury, undue delay, wasting time, or needlessly presenting
cumulative evidence." Fed.R.Evid. 403.
argue that the prior acts evidence was improperly offered to
suggest a propensity for wrongdoing. But the record shows
that the evidence was offered for a number of proper
purposes. One such purpose was to prove Defendants'
knowledge. To prove mail fraud, the government needed to show
that "the scheme included a material misrepresentation
or concealment of a material fact." Sixth Circuit
Pattern Jury Instructions, 10.01 Mail Fraud (18 U.S.C. §
1341). The government alleged that Defendants concealed their
prior conduct from investors and that the investors would
have chosen not to invest if they had known the full truth.
Because the facts of Defendants' prior conduct were the
same facts that Defendants were alleged to have concealed
from investors, the facts were relevant for purposes of Rule
404(b). "A contrary ruling would place the government in
the thoroughly untenable position of attempting to prove that
[the defendants] failed to disclose material facts without
allowing the government to demonstrate the existence of those
facts." United States v. Monea, 129 F.3d 1266,
1997 WL 704935, at *2 (6th Cir. 1997) (per curiam)
proper purpose was to prove Defendants' intent.
Defendants argued that they were merely "acting as part
of the company" and that other individuals "made
false promises that duped everyone." (Def. W. Br. 16;
see Def. R. Br. 38.) The details of Defendants'
prior acts evidence tended to prove that they were not so
naive. Defendant Westine previously orchestrated a scheme
selling fake oil and gas securities under a fake identity,
and Defendant Ramer had previously been sanctioned in
California for, as he describes it, "contact[ing]
investors by telephone about purchasing fractional interests
in oil and gas leases, which the California Department of
Corporations (DCOC) deemed unregistered securities."
(Def. R. Br. 37.) Defendants both knew about this
information, and their deliberate effort to conceal it from
investors severely undermines their credibility in telling
the jury that they were just as surprised as their investors
were to learn that the securities they sold were fraudulent.
the evidence was admissible for the proper purpose of proving
Defendant Westine's identity. Evidence of prior acts is
admissible for the purpose of proving identity when the act
is so "unusual or distinctive as to be like a
signature." United States v. Woods, 613 F.2d
629, 634-35 (6th Cir. 1980). The details of Westine's
prior conviction show that he used the same aliases (John
Scott and Michael Fairchild) and nearly the same techniques
(fake companies, virtual offices, and California-based call
centers) when perpetrating his previous fraud. These aliases
and techniques are sufficiently distinctive to qualify as
Westine's "signature" for purposes of Rule
Defendants also argue that the evidence should have been
excluded as unfairly prejudicial. Given the many proper
purposes for which the prior acts evidence was admissible and
highly probative, Defendants face a heavy burden to show, as
they must, that the probative value of the evidence was
substantially outweighed by the risk of unfair prejudice.
See Fed. R. Evid. 403. Defendants' argument
falls short. Defendants assert that the government repeatedly
showcased the prior acts evidence and encouraged the jury to
consider it as propensity evidence when it asked witnesses
questions along the following lines: "If you had known
Henry Ramer had been sanctioned in California and Arizona for
selling unregistered securities, would you have
invested?" (Def. R. Br. at 30; see Def. W. Br.
at 17-18.) But these questions merely demonstrate the
significance of Defendants' omissions to their investors
and, by extension, the relevance of Defendants' prior
acts. Although admission of the prior acts evidence carried
some risk of unfair prejudice, this risk was not amplified by
the cited government conduct.
district court also recognized a risk that jurors might
consider the evidence for an improper purpose, and it abated
this risk by instructing both juries to consider
Defendants' prior acts only if the jurors "find the
defendant did commit those [prior acts]" and only
"as it relates to the government's claim on the
defendant's intent, knowledge, identity, absence of
mistake, or lack of accident." (R. 195 at PageID #956;
R. 306 at PageID #2854.) The district court concluded that
the probative value of this evidence, combined with its jury
instruction, was sufficient to satisfy Rule 404(b),
we are not persuaded that the district court abused its
discretion in reaching this conclusion.
NEW TRIAL MOTIONS
Defendants appeal based on information that came to light
during the sentencing of their co-conspirator Mark Cornell.
Cornell was charged in connection with the same oil
securities scheme for which Defendants were also charged.
Cornell pleaded guilty, cooperated with the government's
investigation, and agreed to testify against Defendants at
trial. Cornell's initial testimony downplayed his role in
the scheme, potentially to the point of perjury. Cornell
initially testified that he was unaware of the fraud and that
he merely served as Defendants' unwitting agent. After
his examination, the government obtained evidence that
Cornell had knowingly embraced an active role in the scheme.
The government put Cornell back on the stand, treated him as
a hostile witness, and obtained an admission that he had lied
about his true level of involvement.
the jury did not know-and what the government later disclosed
during Cornell's sentencing-is that DFI was building a
separate file on Cornell as the government's case
unfolded. Cornell was operating a "little side
deal"-essentially a smaller scale carbon copy of the oil
securities scam that he operated with Defendants. (R. 497.)
Indeed, Cornell had been using many of the same techniques
and the same false documentation he used with Defendants, but
he did so through his own company, JMack Energy. DFI's
investigation of Cornell was conducted by an independent team
of civil investigators. By the time of Defendant
Westine's trial, these investigators had issued a
cease-and-desist letter to Cornell regarding a web page that
marketed unregistered securities. Whether the investigators
at this point understood the interplay between this web page,
the criminal investigation of Defendants, and Cornell's
side deal is unclear, but the investigators knew enough to
make the cease-and-desist letter available to the criminal
division; the government turned the letter over to Defendant
Westine as Brady material. See Brady v.
Maryland, 373 U.S. 83, 87 (1963). By the time of
Defendant Ramer's trial, which was four months later,
civil investigators had received a complaint from an
additional Cornell investor and pieced together that Cornell
was running "some side deals." (R. 497 at PageID
Defendants request a new trial under Rule 33, arguing that
the Cornell file constitutes newly discovered evidence.
Defendant Westine argues in the alternative that the Cornell
file is Brady material that the government
suppressed. This Court "review[s] the denial of a motion
for new trial based on Brady violations or newly
discovered evidence under an abuse of discretion
standard." United States v. Jones, 399 F.3d
640, 647 (6th Cir. 2005); United States v. Barlow,
693 F.2d 954, 966 (6th Cir. 1982). "However, the
district court's determination as to the existence of a
Brady violation is reviewed de novo."
United States v. Graham, 484 F.3d 413, 416-17 (6th
successfully obtain a new trial under either Rule 33 of the
Federal Rules of Criminal Procedure or Brady, a
criminal defendant must show that the undisclosed evidence
would have affected the outcome of the original trial or
affected his sentence. Under Rule 33 specifically, the
defendant must show, among other things, that "the
evidence . . . would likely produce an acquittal if the case
were retried." Barlow, 693 F.2d at 966.
Meanwhile, under the Brady standard, a defendant
must show, among other things, that the evidence was
"material" to his conviction or sentence. See
Strickler v. Greene, 527 U.S. 263, 281-82 (1999);
Jones v. Bagley, 696 F.3d 475, 486 (6th Cir. 2012).
Undisclosed evidence is material "if there is a
reasonable probability that, had the evidence been disclosed
to the defense, the result of the proceeding would have been
different." United States v. Bagley, 473 U.S.
667, 682 (1985). A "reasonable probability" is a
probability sufficient to undermine confidence in the
outcome. United States v. Hawkins, 969 F.2d 169, 175
(6th Cir. 1992). "The question is not whether the
defendant would more likely than not have received a
different verdict with the evidence, but whether in its
absence he received a fair trial, understood as a trial
resulting in a verdict worthy of confidence." Kyles
v. Whitley, 514 U.S. 419, 434 (1995). The materiality
inquiry involves weighing "the value of the undisclosed
evidence relative to the other evidence produced by the
state." Eakes v. Sexton, 592 Fed.Appx. 422, 427
(6th Cir. 2014). "[W]here the undisclosed evidence
merely furnishes an additional basis on which to challenge a
witness whose credibility has already been shown to be
questionable or who is subject to extensive attack by reason
of other evidence, the undisclosed evidence may be
cumulative, and hence not material." Bales v.
Bell, 788 F.3d 568, 574 (6th Cir. 2015) (alteration in
original) (internal quotation marks omitted); see Byrd v.
Collins, 209 F.3d 486, 518 (6th Cir. 2000).
Defendant has made the showing required for remand. With
regard to Defendant Westine, the district court found that
the information from the civil division's file on Cornell
was immaterial in light of overwhelming evidence of
Westine's guilt and because the information is
"plainly cumulative of the substantial evidence already
establishing Cornell's history of fraud and
deception." (R. 472 at PageID #5725.) We agree.
district court articulated its rationale and provided a
concise summary of the extensive inculpatory evidence
presented to the jury regarding both Westine and Cornell:
Although Westine argues the "newly discovered evidence
shows that Mark Cornell had the intent to commit fraud,
" he overlooks the fact that Cornell's intent to
commit fraud was never in dispute. In his testimony at
Westine's trial, Cornell expressly admitted that he had
been indicted as a co-conspirator in the scheme, that he
intended to enter a guilty plea in the case, and that he had
previously lied to investigators about his involvement in the
fraud. [R. 360 at 101-105.] Moreover, the jury in
Westine's trial was aware of Cornell's dishonesty not
only as a result of his guilty plea, but also as a result of
his false testimony at trial. The United States severely
impeached his testimony after discovering an email exchange
that flatly contradicted his previous statements on direct
examination. [R. 361 at 74-92.] As Westine himself emphasized
in his closing argument, "Mark Cornell pled guilty ...
and he lied, and he lied, and he lied." [R. 354 at 94.]
Placed alongside this existing evidence, any additional
information undermining Cornell's credibility is
immaterial. See Robinson v. Mills, 592 F.3d 730, 736
(6th Cir. 2010) ("Where the undisclosed evidence merely
furnishes an additional basis on which to challenge a witness
whose credibility has already been shown to be questionable
or who is subject to extensive attack by reason of other
evidence, the undisclosed evidence may be cumulative, and
hence not material."). . . .
Additionally, when measuring the impact this evidence might
have had on the outcome of each Defendant's trial, this
Court must situate that information beneath the weight of the
evidence establishing the Defendants' guilt. In the case
of both Westine and Ramer, the United States provided a
sweeping and exhaustive body of evidence demonstrating that
both Defendants were guilty of the crimes charged. Moreover,
the majority of this evidence was wholly independent of
Cornell's participation in the scheme. Although the
evidence adduced at trial is far too voluminous to recount in
full, the following summary provides a snapshot of the
evidence available to the jury prior to the Defendants'
At Westine's trial, the United States introduced abundant
evidence showing that his fraudulent scheme commenced long
before he ever met Cornell. Throughout the time period
identified by the United States as "Phase I, "
Westine had no association with Cornell. During this period,
Westine assured prospective investors that he had
"dozens of wells" and announced a plan "to put
50 on line, " yet made no attempt to describe the
location of the wells or the ownership of the purported
leases. [R. 362 at 13.] Marni Gibson, an enforcement branch
manager at DFI, testified that, "[f]rom all appearances,
" these 50 wells were "just made up." [R. 297
at 21.] In July 2013, Westine distributed a sales script to
employees in which he encouraged them to suggest the company
had "been in business for over 25 years" and that
investors should expect to "receive [their] first
royalty check with[in) 60 days after filing."
[Id. at 22.] Also in July 2013, Westine sent an
email to a victim promising a "300 barrel a day target
before November, " despite the absence of any evidence
indicating that such a target was remotely reasonable.
[Id. at 97.] By October 2013-the month in which
Cornell provided the production guarantee to investors-there
were about "five pages of investments that had nothing
to do with the 75 barrel a day promise of Mr. Cornell."
[R. 359 at 160.]
The jury also heard evidence that Westine failed to inform
investors he had recently served a 22-year prison sentence
for devising a similar oil and gas investment scheme. [R. 362
at 199.] In an effort to prevent victims from uncovering his
criminal history, Westine used at least five aliases.
[Id. at 204.] He sent "email after email"
to victims in which he variously identified himself as John
Scott, Michael Fairchild, Michael Ross, John Gorman, and
Michael Hicks. [Id. at 207-08.] When an employee in
his virtual office discovered that his name was John Westine,
he fired her and replaced her with someone who was not yet
aware of his identity. [R. 354 at 96.] Some of the fake names
used in this scheme were the same names used in the previous
oil and gas fraud for which Westine served the 22-year prison
term. [R. 362 at 207.] Relatedly, the prosecution also