As Revised, December 22, 2014.
Appeal from the United States District Court for the Northern District of Texas.
For UNITED STATES OF AMERICA, Plaintiff - Appellee: Joseph Michael Revesz, Assistant U.S. Attorney, James Nicholas Bunch, Esq., Assistant U.S. Attorney, James Wesley Hendrix, Assistant U.S. Attorney, U.S. Attorney's Office, Dallas, TX.
For DAVID KEVIN LEWIS, also known as David Shane Lewis, also known as " DW", Defendant - Appellant: Edgar A. Mason, Esq., Robert T. Baskett, Dallas, TX.
Before KING, DENNIS, and CLEMENT, Circuit Judges.
David Kevin Lewis challenges his convictions for one count of conspiracy to commit securities fraud and twenty-three counts of securities fraud. For the following reasons, we AFFIRM the convictions.
David Kevin Lewis was indicted alongside co-defendant Bruce Kyle Griffith on one count of conspiracy in violation of 18 U.S.C. § 371 and twenty-three counts of securities fraud and aiding and abetting in violation of 15 U.S.C. § § 77q(a), 77x, and 18 U.S.C. § 2. Thomas Markham, another co-defendant, was indicted on one count of conspiracy.
Lewis and Griffith co-founded Always Consulting, Inc. (" ACI" ), after meeting at a halfway house in 2003. Lewis had previously been convicted of securities and mail fraud in connection with oil and gas offerings. Griffith had several prior convictions, including convictions for bank robbery. Lewis served as chairman and director of field operations of ACI, and testimony at trial established that he was generally in charge of running the company. Although Griffith served as President
and CEO, Lewis hired and fired all personnel at ACI. While Griffith was the signatory on all of ACI's accounts, Lewis had to approve all checks. Further, Lewis was responsible for training all of ACI's sales force. Markham was the chief--and only--geologist at ACI.
ACI sold interests in the Rattlesnake Springs Drilling Program--an oil and gas drilling project on the Osage Indian Reservation in Oklahoma--to members of the public. ACI offered thirty-five units of interest in the program at a cost of $100,285.71 per unit, for a total of $3,509,999.80. These interests were sold to the public by two groups of salespeople: fronters and closers. Fronters made the initial contact with investors through cold calls; closers handled the later contacts to convince potential investors to buy an interest in the project. Lewis wrote the scripts used by the fronters and closers. These scripts contained several misrepresentations. For example, they stated that there was already pipeline infrastructure for the Rattlesnake Springs Program in place, when in reality such pipeline infrastructure was not in place. Lewis also provided the ACI salespeople with " Do Not Call" lists containing the names of suspected undercover regulators. Furthermore, ACI falsely told investors that investments would be used only for the Rattlesnake Springs wells, and that ACI had special connections within the Osage Nation in Oklahoma, where the mineral leases were supposed to be located.
The case against Lewis was brought to trial in August 2013. Griffith, who had previously agreed with the Government to testify against Lewis in exchange for the possibility of a reduced sentence, testified that Lewis prepared the offering memorandum that became the center of the Government's case at trial. Markham provided additional support for this assertion, testifying that Griffith lacked the knowledge of the oil and gas industry to have prepared it. The offering memorandum was sent out to investors, via interstate carriers. Griffith testified that it contained many assertions that were false. For example, Griffith testified that the offering memorandum falsely stated that he had been in the oil and gas industry since 1985, when he really had at most eight months of experience. The offering memorandum also stated that ACI was profitable, when in reality, it was not. Furthermore, ...