United States v. Bernegger
2011 U.S. App. LEXIS 21244
| 5th Cir. | 2011Background
- Bernegger and Finch were charged in a six-count indictment for mail, wire, and bank fraud and conspiracy arising from investor funding for We-Gel and CPI.
- Investors were told of forged or exaggerated production capabilities and contracts, despite Bernegger and Finch not producing a sellable product.
- Bernegger sent letters to investors boasting shipments, orders, and interest from the Navy to obtain additional funds.
- Bernegger obtained state grants and pledged equipment as security, misrepresenting lien status to BancorpSouth to obtain a loan.
- A BancorpSouth loan was secured in part by Bernegger’s home, with undisclosed liens, and the bank later refused funding when a fourth lien appeared.
- The jury convicted Bernegger of mail and bank fraud and imposed a 70-month sentence and approximately $2.1 million in restitution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bank-fraud count should have been severed | Bernegger contends severance appropriate because counts involve different defendants and schemes. | Severance required to avoid prejudice from joinder of offenses in one defendant. | No reversible error; counts preserved by Rule 8(a) common scheme finding; instructions cured prejudice. |
| Confrontation Clause and cross-examination of Kisner | Bernegger argues broader cross-examination reveals bias and trade-secret relevance. | Limitation prevented relevant evidence that Kisner stole Bernegger’s trade secret and thus biased testimony. | No Sixth Amendment violation; restrictions not prejudicial; cross-examination sufficiently broad. |
| Mistrial due to indictment format | The confusing indictment format warrants sua sponte mistrial. | Requested mistrial not necessary; format clarified; prejudice avoided by curative instruction. | No plain error; district court properly clarified Count 1 and did not err in denying mistrial. |
| Sufficiency of evidence for Count 3 (mailing $25,000) | Evidence supports a scheme to defraud and mailing of the check; contamination of multiple facts allowed. | Insufficient direct proof the mailing occurred or that intent to defraud targeted Bieneck specifically. | Sufficient evidence supports a scheme to defraud, mailing, and specific intent to defraud Bieneck. |
| Restitution and loss calculation | Total loss includes government loans to We-Gel and CPI as losses attributable to Bernegger. | Loans obtained from Clay County and Timber Board were not criminally obtained; should not be included. | District court erred in including loans in loss; correct total loss is $1,725,000; restitution modified accordingly. |
Key Cases Cited
- United States v. Mann, 161 F.3d 840 (5th Cir. 1998) (preservation and plain-error review for severance of offenses/defendants)
- United States v. Holloway, 1 F.3d 307 (5th Cir. 1993) (citing rule-based preservation of severance arguments)
- Delaware v. Van Arsdall, 475 U.S. 673 (Supreme Court 1986) (limits on cross-examination based on potential prejudice)
- United States v. McMillan, 600 F.3d 434 (5th Cir. 2010) (mail fraud elements include scheme, use of mails, and specific intent)
- United States v. Sprick, 233 F.3d 845 (5th Cir. 2000) (circumstantial evidence suffices to prove mailing in mail fraud)
- United States v. Glinsey, 209 F.3d 386 (5th Cir. 2000) (restitution must reflect correct loss when loss is miscalculated)