                                                                                                                           Opinions of the United
1995 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


1-23-1995

USA v Zehrbach
Precedential or Non-Precedential:

Docket 93-7477




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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT



                    Nos. 93-7477 and 93-7493


                    UNITED STATES OF AMERICA

                               v.

                       DARUS H. ZEHRBACH,

                                Appellant in No. 93-7477.

                         ALEX A. MERVIS,

                                Appellant in No. 93-7493.


           Appeal from the United States District Court
              for the Middle District of Pennsylvania
          (D.C. Criminal Action No. 92-00218-01 and 02)



                    Argued October 28, 1993
                 Before: ROTH, LEWIS and GARTH
                         Circuit Judges

                Reargued in banc October 17, 1994
       Before: Sloviter, Chief Judge, Becker, Stapleton,
        Mansmann, Greenberg, Hutchinson, Scirica, Cowen,
          Nygaard, Alito, Lewis, Roth, McKee and Garth
                          Circuit Judges


                (Opinion Filed January 23, 1995)




David M. Barasch
United States Attorney
Theodore B. Smith, III (Argued)
Assistant United States Attorney
Federal Building, 228 Walnut Street
P.O. Box 11754
Harrisburg, PA 17108
          Attorneys for Appellee



James V. Wade, Esquire
Federal Public Defender
Daniel I. Siegel, Esquire (Argued)
Assistant Public Defender
100 Chestnut Street, Suite 306
Harrisburg, PA 17101
          Attorneys for Appellant Zehrbach



Donald J. Goldberg, Esquire (Argued)
Creed C. Black, Jr., Esquire
Ballard, Spahr, Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, PA 19103
          Attorneys for Appellant Mervis




                        OPINION OF THE COURT



ROTH, Circuit Judge:



            Defendants Darus Zehrbach and Alex Mervis appeal from

jury verdicts convicting them each of two counts of bankruptcy

fraud and one count of conspiracy to commit bankruptcy fraud, in

violation of 18 U.S.C. § 152 (1988) and 18 U.S.C. § 371 (1988).

In their appeals, Zehrbach and Mervis asserted two grounds for

reversal.   First, they argued that the district court erred in

instructing the jury that the government need not prove, as an

essential element of the crime, that they knew their actions to

be illegal.   Second, they asserted that comments made by the
prosecutor in his closing argument, regarding two of the defense

witnesses, triggered a rule of per se reversal under United

States v. DiLoreto, 888 F.2d 996 (3d Cir. 1990).   Their appeals

were first heard by a panel of this court.   On the basis of the

panel decision, Zehrbach and Mervis petitioned for rehearing in

banc, which was granted as to both issues.   For the reasons that

follow, we will overrule our ruling in DiLoreto, insofar as it

established a per se rule,1 and we will affirm the convictions.

                                I.

          In the late summer or fall of 1989, appellant, Darus

Zehrbach, a West Virginia businessman doing business under the

name of Consolidated Assets Management Corporation ("CAMCORP"),

formulated a plan to purchase the assets of bankrupt aircraft

manufacturing companies.   Zehrbach became particularly interested

in Taylorcraft Aviation Corporation ("Taylorcraft"), a company

located in Lock Haven, Pennsylvania, that was in the process of a

Chapter 7 liquidation proceeding.2   Zehrbach retained the

Pittsburgh investment banking firm, Drizos Investments, Inc., to

facilitate the acquisition by locating other investors and

securing financing.

    1 In overruling the per se rule announced in DiLoreto, we do
not, based upon the facts presented in that case, in any way
overrule the result reached by the DiLoreto court in reversing
the convictions.
    2
     Largely because of a failed $458,000 bid to purchase
Taylorcraft at a prior bankruptcy auction, the Taylorcraft
bankruptcy proceeding had been converted from a Chapter 11
debtor-in-possession proceeding into a Chapter 7 liquidation.
          Appellant, Alex A. Mervis, a stock broker and a

licensed pilot, had recently become an employee at Drizos

Investments.    Because of his aviation background, he was assigned

to Zehrbach's project.   Steven Drizos supervised Mervis's work on

this assignment.    Robert Smith of Capital Resources Group, a firm

affiliated with Drizos Investments, was brought in to help with

financing.   Eventually, Mervis located John Polychron, a North

Carolina investor, who agreed to become a limited partner in an

association in which Zehrbach was to be the general partner.

          The bankruptcy trustee for Taylorcraft was Charles

Szybist, an attorney in Williamsport, Pennsylvania.    Szybist

contacted a number of potential bidders in an attempt to generate

an offer that would be substantial enough to create a base for

aggressive bidding.   In September 1989, Szybist received a bid of

$155,000 from Leander Research, Manufacturing and Distributing,

Inc. ("Leander").   Using this as his base, Szybist notified

creditors and other parties in interest of the offer, inviting

higher bids to be submitted by October 23, 1989.   The notice

provided that Leander and all other higher, qualifying bidders

would be permitted to participate at a final private auction to

be held on October 30, 1989.

          Three new parties, including Zehrbach through CAMCORP,

entered bids.   T. Chester Baker made a bid of $156,000; Starman

Brothers Auctions bid $160,000; and CAMCORP bid $165,000.

CAMCORP's bid had been agreed upon at a joint meeting between
Zehrbach, Polychron, Drizos, Smith, and Mervis.      Because the

names of the bidders were released, the Zehrbach group was in a

position to contact the other bidders.      Zehrbach instructed

Mervis to negotiate a "buy-out" of their bidding positions.

Baker, for reasons unrelated to the case, lost interest in the

acquisition.   The other parties remained serious.     According to

Mervis, he did not hesitate to follow Zehrbach's instructions

because Zehrbach was a bankruptcy expert who "did this all of the

time."

          Steven Starman, of Starman Brothers Auctions, testified

at trial that he would have bid up to "$200,000 plus" for

Taylorcraft.   Appendix ("App.") at 189.     On October 25, Starman

received a call from Mervis who asked what it would take to keep

Starman out of the bidding process.    Starman agreed to withdraw

from the bidding for a payment of $40,000, with $10,000 to be

paid up-front and the remainder by January 1990.     A draft

agreement was sent from Mervis's office at Drizos Investments to

Starman for his signature and return.      The document

mischaracterized the nature of the payment as made "[i]n return

for services renderd [sic]."   Starman also received a form of

notice that he was to sign, have notarized, and send to the

bankruptcy judge, informing the bankruptcy court of his

withdrawal from the bidding process.    Upon receiving these

documents, Starman consulted his attorney, David Buelt, a

specialist in trusts and estates, who redrafted the agreement to
state that Starman Brothers Auctions was being paid to forgo its

right to bid at the October 30 sale of Taylorcraft's assets.

Steven Starman did not question Buelt about the legality of the

agreement but merely expressed concerns about its enforceability.

The parties executed the amended agreement, and, once Starman had

received the initial $10,000 by wire transfer, he telephoned

Szybist to inform him that he would no longer be participating in

the bidding for Taylorcraft.

          Leander Eckard, the president of Leander and the only

other potential bidder, testified at trial that he would have

been willing to bid up to approximately $250,000 for the purchase

of Taylorcraft.   App. at 179.   Sometime shortly after the October

23 close of bidding, Mervis had contacted Eckard to discuss how

much it would cost to purchase his bidding position.   Although at

first Eckard was not interested, he began to reconsider his

position after he encountered difficulty in obtaining financing

for the potential acquisition.   Eckard's initial request was for

a payment of $100,000, but Zehrbach instructed Mervis to

negotiate a lower figure.   On October 26, Eckard and Mervis

agreed on a $50,000 fee with $30,000 payable immediately and the

remainder covered by a promissory note and security in one of the

Taylorcraft airplanes.   Eckard had planned to fly from Seattle,

Washington, to visit the Taylorcraft plant the next day, October

27, the last business day before the auction on October 30.    He
agreed to meet Mervis at the Pittsburgh airport to finalize the

bid buy-out.

          To document the agreement with Eckard, Mervis contacted

Charles Vollmer, a Pittsburgh attorney.   Vollmer had worked with

Drizos Investments in the past.   Mervis and Vollmer met at 7:30

a.m. on October 27.   Vollmer prepared three documents before

departing for a 10:00 a.m. appointment.   These documents were (1)

a Letter of Intent for the limited partnership between Zehrbach

and Polychron, which had not yet been formally created; (2) a

letter to Polychron on Vollmer's firm letterhead with

instructions on making the $30,000 wire transfer to Eckard; and

(3) a bid buy-out agreement reflecting the terms of the

negotiations between Mervis and Eckard.   Like the revised

agreement with Starman, the bid buy-out agreement stated that, in

exchange for the payment, Leander "agree[d] to sell to TAC

[Taylorcraft Acquisition Corporation, Zehrbach's group] all of

its rights . . . [with regard to its bid for Taylorcraft] and,

further, agree[d] not to participate either in its own right or

through third parties in the bidding process."

          At the time he drafted the documents, Vollmer knew very

little about the transaction and had not conducted any legal

research on the issues.   After drafting the bid buy-out

agreement, Vollmer expressed his uneasiness about the transaction

to Mervis, stating that he "hoped this thing [was] legal."
           During the afternoon of October 27, after Vollmer was

able to consult two other attorneys and to do some legal

research, he faxed a letter to Mervis and Smith explaining:
          Under the terms of the Agreement, Taylorcraft
          Acquisition Corporation would buy out
          Leander's "position" in the Bankruptcy Court.
          Prior to this morning, I had thought that the
          "position" that was being bought out, if
          indeed there was one being bought out, was
          that of a secured creditor. I simply
          remarked to Alex that, "I hope this [is]
          legal."


Mr. Vollmer then quoted, verbatim, the language of 18 U.S.C.

§ 152, the statute under which Zehrbach and Mervis were later

charged.   Vollmer's letter concluded:

                 At this point, I must advise you that in

           my opinion, there is a possibility that this

           action violates these criminal provisions.

           Unless this matter is somehow reworked so

           that it is not a possible violation, such as

           a possible joint venture with Leander, I

           cannot recommend that you participate any

           further.   Please advise.

App. at 61-62.

           In the interim, after meeting with Vollmer, Mervis had

gone to the airport to meet Eckard.    Mervis gave Eckard the buy-

out agreement, which Zehrbach had signed, and a $30,000 certified

check.   Mervis assured Eckard of the legality of the transaction,

stating that his attorney had approved it.   Eckard had already
called Szybist to inform him that he would not be coming to view

the Taylorcraft plant or to place a bid.

            Upon Mervis's return to his office that afternoon, he

was informed of the Vollmer letter which questioned the legality

of the bid buy-out scheme.     Vollmer, Mervis, and Smith then held

a conference call with Zehrbach to inform him of Vollmer's

concerns.    Zehrbach dismissed Vollmer's opinion, suggesting that

Vollmer did not know what he was talking about.    After Drizos and

Smith requested a second legal opinion, Zehrbach contacted his

West Virginia attorney, James D. Crane, who had bankruptcy

experience.    Crane affirmed the legality of the transaction, but

he characterized it as a joint venture that had merged bidding

interests.    Crane was never informed that two bidders had been

paid to withdraw their bids.

            After both Starman and Leander withdrew from the

bidding process just days before the auction was to occur,

Szybist called    Mervis and spoke of his concern that the other

bidders "were having some difficulties."    In response, Mervis

suggested not that there had been payments to withdraw, but

rather that "we had formed a joint venture and we had merged our

bidding interest."    Szybist decided to postpone the auction from

October 30 to November 15 and to make it public rather than

private.     At the auction, the Zehrbach-Polychron group was the

only bidder.     Szybist accepted its bid of $165,000.
             Shortly after the final sale, Szybist contacted the FBI

about the circumstances surrounding the withdrawal of the Starman

and Leander bids.     After an FBI investigation, Mervis and

Zehrbach were indicted, tried, and convicted of one count of

conspiracy to commit bankruptcy fraud, in violation of 18 U.S.C.

§ 371,3 and of two counts of bankruptcy fraud, pertaining to

actions with regard to Starman and Eckard, in violation of 18

U.S.C. § 152.4    Specifically, Zehrbach and Mervis were charged

with conspiring to pay two bidders for the assets of Taylorcraft

to refrain from bidding in a bankruptcy auction, with actually

paying the bidders to refrain from bidding, and with purchasing

the assets as the sole bidders.

    3
       Section 371, conspiracy to commit offense or to defraud
United States, provides in part:

        If two or more persons conspire either to commit
             any offense against the United States, or to
             defraud the United States, or any agency
             thereof in any manner or for any purpose, and
             one or more of such persons do any act to
             effect the object of the conspiracy, each
             shall be fined not more than $10,000 or
             imprisoned not more than five years, or both.

    4
        Section 152, concealment       of   assets;   false   oaths   and
claims; bribery, provides in part:

        Whoever knowingly and fraudulently gives, offers,
              receives or attempts to obtain any money or
              property, remuneration, compensation, reward,
              advantage or promise thereof, for acting or
              forbearing to act in any case under title 11;
        . . .
        Shall be fined not more than $5,000 or imprisoned
              not more than five years, or both.
             Because the defendants did not substantively contest

the actions attributed to them, the sole issue at trial was that

of intent.    Mervis and Zehrbach defended themselves on the basis

of their good faith belief that they had done nothing illegal.

Zehrbach's position, as stated by his counsel, was that Zehrbach

had made a mistake, just as the three attorneys involved in the

transaction, Buelt, Vollmer, and Szybist, had made a similar

mistake, and that Zehrbach could not have had fraudulent intent.

Mervis testified that he was working on a joint venture to merge

the bidding interests.    Mervis also emphasized that Drizos and

Smith had supervised his involvement in the project.    Mervis's

counsel argued that because Mervis was acting in good faith to

form a joint venture, he had no intention to deceive.    The

government contended, on the other hand, that Zehrbach and Mervis

knowingly paid the other bidders to withdraw from the auction,

thereby keeping down the price paid for the Taylorcraft assets

and, as a consequence, cheating the creditors of Taylorcraft and

the bankruptcy trustee.

          This question of good faith and knowledge of the law

became an issue in the formulation of the jury charge.    The

district judge proposed first to list the essential elements of

the substantive offense and to follow that with a detailed

discussion of the requirements that the acts be performed

"knowingly" and "fraudulently."    He would then, as Zehrbach and

Mervis requested, give an instruction on "good faith."
           Although Zehrbach and Mervis fully concurred in the

scope and content of the good faith instruction,5 they challenged

a portion of the "knowingly" instruction, in which the court

stated that "[t]he government is not required to prove that a

defendant knew that his acts were unlawful."    When the district

judge stated that he was going to leave this sentence in the

instructions, counsel for Mervis requested, "May I have argument

on that just to preserve my objection on the record?"      App. at

608 (emphasis added).   The district judge replied:   "Sure.    I

know you objected to that."   Id.   Counsel for Zehrbach then

argued that the instruction had "the potential of confusing the

jury."   Counsel suggested:
           By telling the jurors that the government is
           not required to prove that the defendant knew
           his acts were unlawful, the jurors may
           misconstrue that to mean that it is not
           relevant that the defendant did not know that
           his acts were unlawful.


Id. at 609.   Counsel asked that the sentence be deleted "in the

interest of clarity" because of the potential for confusion and

"because the instructions clearly state[d] the burden of the

government and [did] not state that [proof of knowledge of

illegality] [was] one of the burdens of the government, because

it [hadn't] been suggested that this is one of the burdens of the

    5
       At a pre-charge conference, the district court asked each
party for their response to the court's rewrite of the good faith
instruction.   Mervis' counsel said that it was "satisfactory,"
and Zehrbach's counsel found it to be "really much better than
[the] original good faith defense instruction." App. at 601-02.
government and because it [would] not be suggested that is one of

the burdens of the government . . .."    Id.

          The following excerpt from the jury charge, which fills

twenty-six pages of trial transcript in its entirety, places the

remark in context.    Topic headings have been inserted for the

ease of the reader.    The instructions were as follows:
                         [1. The Elements]

               In order to meet its burden of proof [on
          the bankruptcy counts] as to either defendant
          the government must establish beyond a
          reasonable doubt each one of the following
          elements: First, that the defendant gave or
          offered any money, property, remuneration,
          compensation, reward, advantage or promise of
          any of those things to another in exchange
          for that other person's acting or forbearing
          to act; second, that the action or
          forbearance, in exchange for which the money,
          property, advantage or promise thereof was
          given or offered, was in a case under Title
          11 of the United States Code, the bankruptcy
          law; third, that the defendant gave or
          offered the money, property, advantage or
          promise thereof knowingly; and fourth, that
          the defendant did so fraudulently.

                          [2.   "Knowingly"]

               Now, in order to find a defendant guilty
          of bankruptcy fraud, therefore you must find
          beyond a reasonable doubt that the giving or
          offering of money, property, remuneration,
          compensation, reward, advantage or promise
          thereof was done knowingly. An act is done
          knowingly if it is done voluntarily and
          intentionally and not because of mistake or
          accident or other innocent reason. In other
          words, an act is done knowingly if the
          defendant is aware of the act and is not
          committing the act through ignorance,
          mistake, or accident. The government is not
required to prove that a defendant knew that
his acts were unlawful.
     It is also necessary . . . that you find
beyond a reasonable doubt that the defendant
knew that his acts were in connection with a
bankruptcy proceeding. You may consider
evidence of a defendant's words, acts or
omissions along with all other evidence in
deciding whether a defendant acted knowingly.

            [3.   "Fraudulently"]

     Also, . . . you must . . . find beyond a
reasonable doubt that the giving or offering
of money, property, remuneration,
compensation, reward, advantage or promise
thereof was done fraudulently. In a
bankruptcy case, an act is done fraudulently
if it is done with the intent to defraud the
creditors of the bankrupt entity or with the
intent to defraud the United States or the
trustee in bankruptcy concerning their right
and governmental function of regulating
bankruptcies and fairly distributing the
assets of the bankrupt entity.
     Now, to act with fraudulent intent . . .
means to act knowingly and with the specific
intent to deceive, ordinarily for the purpose
[of] either causing some financial loss to
another or bringing about some financial gain
to one's self [sic].
     Now, intent ordinarily may not be proved
directly because there is no way of fathoming
or scrutinizing the operations of the human
mind, but you may infer a defendant's intent
from the surrounding circumstances. You may
consider any statements made and done or
omitted by a defendant and all other facts
and circumstances in evidence which indicate
his state of mind.
     To act with a fraudulent intent a person
must act knowingly and with the intention or
the purpose to deceive or to cheat, in this
case either to deceive or to cheat the
creditors of Taylorcraft Aviation Corporation
or the bankruptcy trustee.
          [Passage distinguishing intent and motive
          omitted.]

                         [4.   "Good faith"]

               Now, a defendant may contend that he did
          not act with the specific intent to commit
          the crimes with which he is charged since he
          acted in good faith. A good faith is a
          complete defense to charges of acting with
          fraudulent intent because good faith is
          simply inconsistent with the intent to
          defraud. A person acts with fraudulent
          intent and without good faith when he acts
          with a purpose to deceive or to cheat, and so
          as to deprive another person of a right or
          property. While the term good faith has no
          precise definition, it means, among other
          things, an absence of an intention of taking
          advantage of another.
               The burden of proving that a defendant
          did not act in good faith is on the
          government. In determining whether a
          defendant acted in good faith you should
          consider all of the evidence in the case
          bearing on that defendant's state of mind.
               If the evidence leaves you with a
          reasonable doubt as to whether a defendant
          acted with the intent to defraud, or in good
          faith, you must acquit him. On the other
          hand, if you find that the government has
          proven beyond a reasonable doubt all of the
          other elements of the charged crimes and that
          a defendant did not act in good faith, then
          you should find that defendant guilty.


(Emphasis added).

          At the conclusion of the reading of the jury charge,

defense counsel renewed their objections to the instruction that

the government was not required to prove that a defendant knew

his acts were illegal.   App. at 726.
          Zehrbach and Mervis also objected during closing

argument to comments that the prosecutor made in regard to Drizos

and Smith, whom the defense had called as witnesses to support

Mervis's testimony that he believed he was creating a legal joint

venture to acquire Taylorcraft.    In his closing argument, the

prosecutor suggested that neither Drizos nor Smith was "worthy of

belief," citing testimony which cast doubt on their credibility.

Specifically, the prosecutor pointed to Drizos's failure to

inform Polychron that an attorney had advised Drizos to refrain

from further action in connection with the buy-outs.      He

similarly noted Drizos's failure to ensure that his employee

(Mervis) stop his involvement in potentially illegal activity.

The prosecutor also cited the inconsistencies between what Smith

had told the FBI and Smith's testimony in court.    The prosecutor

then commented:

          I suggest you shouldn't believe Drizos and
          Smith because they're guilty of exactly the
          same bankruptcy fraud that these two
          defendants are guilty of. And don't you
          assume that they are not going to get what's
          coming to them either.


          Both defense counsel immediately objected to this

statement.   The district judge granted their motion to strike.

He cautioned the jury to "disregard the last statement of the

prosecutor with respect to what may or may not happen with

respect to these two gentlemen."    Moreover, the judge

subsequently instructed the members of the jury to disregard
counsel's personal opinions and to make decisions based solely on

the evidence.   He then reminded the jury not to consider any

evidence that he had instructed them to disregard in the course

of the proceedings.

          Defense counsel later moved for a mistrial on the

ground that the second comment was irrelevant and was based upon

information outside the record.    The district court denied the

motion, citing its curative instructions and questioning whether

the statement "could have resulted . . . in any serious prejudice

to either defendant."     Similarly, in denying Zehrbach's motion

for a new trial, the district court held that the first sentence

of the statement was properly based on evidence of the witnesses'

own guilt that had been adduced at trial and that any improper

inference that might have been induced by the second sentence had

been cured by the court's instructions.    United States v.

Zehrbach, No. 92-0218, mem. op. at 8-9 (M.D. Pa. Jul. 7, 1993).

          Following the jury verdict, the district judge

sentenced Zehrbach to a term of imprisonment of 21 months,

followed by three years of supervised release, and sentenced

Mervis to 10 months of imprisonment, followed by two years of

supervised release.     Zehrbach and Mervis base their appeal on the

two issues of the jury instructions and of the prosecutor's

remarks in closing argument.
         The district court had subject matter jurisdiction

pursuant to 18 U.S.C. § 3231 (1988), and this court is vested

with appellate jurisdiction pursuant to 28 U.S.C. § 1291 (1988).



                       II.   THE JURY CHARGE.

                                 A.

            Zehrbach and Mervis objected to the trial judge's

instruction that "the government is not required to prove that a

defendant knew that his acts were unlawful" on the grounds,

expressed by counsel, that it had "the potential of confusing the

jury."    Defense counsel suggested that "[b]y telling the jurors

that the government is not required to prove that the defendant

knew his acts were unlawful, the jurors may misconstrue that to

mean that it is not relevant that the defendant did not know his

acts were unlawful."    Although neither Zehrbach or Mervis's

attorney proposed any clarifying language, they asked that the

sentence be dropped "in the interest of clarity."

            The extent of the grounds for defense counsels'

objection to the challenged instruction are not entirely clear

from the record.    The objection could be construed as a challenge

to the trial court's inclusion of the instruction as a matter of

law.   Alternatively, the objection could be read as a challenge

merely to the confusing nature of the instruction.    The basis of

the objection determines the appropriate standard of review.     We

will consider the issue first as a review of the legal propriety
of the instructions.   In this light, if the objection is

construed as a challenge to the court's statement of the legal

standard, we exercise plenary review.    United States v. McGill,

964 F.2d 222, 235 (3d Cir. 1992); Savarese v. Agriss, 883 F.2d

1194, 1202 (3d Cir. 1989).   In connection with a review of the

legal sufficiency of the instructions, however, if we were to

determine that counsel had not objected at trial to the court's

statement of the legal standard, we would review the legal

propriety of the instructions on a "plain error" standard.6

Whether we exercise plenary review or apply the plain error

standard, however, we conclude that the court did not err in

stating the relevant legal principles.

          Zehrbach and Mervis concede that the jury charge

correctly stated the government's burden of proof.    The jury

instruction did not omit any of the four essential elements of

bankruptcy fraud.   The trial judge properly instructed the jury

that the government was required to establish beyond a reasonable

doubt:

    6
     Where a party has not made a clear, specific objection to
the charge that he alleges is erroneous at trial, he waives the
issue on appeal "unless the error was so fundamental and highly
prejudicial as to constitute plain error." Bennis v. Gable, 823
F.2d 723, 727 (3d Cir. 1987) (internal quotation omitted); see
also United States v. Santos, 932 F.2d 244, 250-53 (3d Cir.)
(examining the court's failure to define the burden of proof
applicable to a duress defense for plain error where the party
objected to the court's failure to give the defendant's proposed
duress instruction), cert. denied 112 S. Ct. 592 (1991); United
States v. Castro, 776 F.2d 1118, 1128-30 (3d Cir. 1985), cert.
denied, 475 U.S. 1029 (1986).
          First, that the defendant gave or offered any
          money, property, remuneration, compensation,
          reward, advantage or promise of any of those
          things to another in exchange for that other
          person's acting or forbearing to act; second,
          that the action or forbearance, in exchange
          for which the money, property, advantage or
          promise thereof was given or offered, was in
          a case under Title 11 of the United States
          Code, the bankruptcy law; third, that the
          defendant gave or offered the money,
          property, advantage or promise thereof
          knowingly; and fourth, that the defendant did
          so fraudulently.

App. at 716.


          Zehrbach and Mervis do not argue that the elements of

bankruptcy fraud were improperly set out.   They contend, however,

that the challenged instruction, contained in the court's further

explanation of the element "knowingly," contradicted the court's

good faith instruction.   As set out infra, the trial judge had

instructed the jury that good faith is a complete defense to

bankruptcy fraud and that the government must prove that a

defendant did not act in good faith.   Zehrbach and Mervis made

the good faith charge relevant by their claim that they were
involved, not in an attempt to silence competing bidders, but

merely in a joint venture with Starman and Leander to acquire

Taylorcraft.

          Our first consideration in reviewing defendants'

argument is whether a good faith defense was necessary in view of

the description of the elements of bankruptcy fraud which the

district court gave to the jury.   If the jury found beyond a
reasonable doubt that, by paying competitors not to bid in the

auction, Zehrbach and Mervis acted with fraudulent intent to

deceive or to cheat the creditors of Taylorcraft Aviation

Corporation or the bankruptcy trustee, it would be inconsistent

with this conclusion for the jury also to find that Zehrbach and

Mervis had acted with good faith.    When a jury has determined

that an accused has intended to cheat his victim, the possibility

that the accused also acted in good faith has been eliminated.

          Because the trial judge had delivered detailed

instructions regarding the elements of bankruptcy fraud, and in

particular regarding the element of acting with fraudulent

intent, the good faith instruction became in fact superfluous.

The good faith instruction merely reiterated that the government

carried the burden of demonstrating that the defendants did act

with the requisite fraudulent intent.

          Moreover, as Zehrbach and Mervis acknowledge, proof of

knowledge of illegality is not a burden of the government in a

bankruptcy fraud case.    The statutory requirement that the

underlying acts be performed "knowingly" requires only that the

act be voluntary and intentional and not that a person knows that

he is breaking the law.    See Cheek v. United States, 498 U.S.

192, 199 (1991) (stating that as a general rule, the government

is not required to prove the criminal defendant's knowledge of

the illegality of his actions); United States v. Brown, 862 F.2d

1033, 1038 n.5 (3d Cir. 1988).
               The instant case differs from those cases involving

criminal offenses for which proof of knowledge of illegality is

an element of the government's prima facie case.        In such cases,

mistake of law is a complete defense.        For instance, the Supreme

Court recently held that the "willfulness" element of the anti-

structuring provision of the financial transaction reporting

requirements, contained at 31 U.S.C. §§ 5322(a) & 5324, requires

proof of knowledge of illegality.        See Ratzlaf v. United States,

114 S.Ct. 655, 658 (1994).        The Court based its holding upon a

strict reading of the statutory language of the two sections.

Section 5324 provides that it is illegal to "structure" financial

transactions "for the purpose of evading" a financial

institution's reporting requirements.        Section 5322(a)

establishes that "a person willfully violating" the anti-

structuring provision (§ 5324) is subject to criminal penalties.

The Court found that failure to read knowledge of illegality into

a violation prosecuted under § 5322 would -- in light of § 5324's

purposefulness requirement -- treat "§ 5322(a)'s `willfulness'

requirement essentially as surplusage."        Id. at 659-60.   In

concluding, the Court stated that it did not "dishonor the

venerable principle that ignorance of the law generally is no

defense to a criminal charge" and emphasized that its decision

was particular to the plain meaning of the statute then before

it.7       Id. at 663.   See also Staples v. United States, 114 S.Ct.

       7
           Since Ratzlaf was decided, Congress has amended § 5324 so
that        it contains its own criminal penalty provision, making
1793, 1804 (1994) (government required to prove defendant knew of

the features of his semiautomatic firearm which brought it within

the scope of the National Firearms Act, requiring registration of

fully automtic weapons); United States v. Curran, 20 F.3d 560,

568-69 (3d Cir. 1994) (applying the Ratzlaf willfulness standard

by analogy where the prosecution alleged a violation of the

disclosure obligations imposed under the Election Campaign Act);

United States v. Gross, 961 F.2d at 1102 (noting that belief in

legality is a complete defense to the crime of making false

statements to the Securities and Exchange Commission where the

parties stipulated that the Government had the burden of showing

that the defendant acted with knowledge of the wrongfulness of

his actions).

          We conclude, in light of the elements making up the

offense of bankruptcy fraud, particularly the element of intent

to defraud the creditors or the trustee of the bankruptcy estate,

that a defendant's good faith belief in the lawfulness of his

conduct is not a defense to bankruptcy fraud.   In a case like the

present one, where the defendants have claimed they were

(..continued)
resort to § 5322(a) unnecessary. The amended provision does not
refer to a mental state but declares that "[w]hoever violates
this section shall be fined in accordance with title 18, United
States Code, imprisoned for not more than 5 years, or both."
1994 Riegle Community Development and Regulation Improvement Act,
Pub. L. No. 103-325, § 411, 108 Stat. 2253 (1994). Because the
provision no longer incorporates the willfulness requirement of
§ 5322(a), the only mental state that the Government must prove
in prosecutions for structuring is the purpose of having a
financial institution not file a required report.
attempting to set up a joint venture, a belief that acquisition

of Taylorcraft through a joint venture was proper would be

relevant for the jury to consider in determining if there was

intent to defraud.   However, the element of "knowledge of

illegality" which is required in federal criminal tax offenses,

see Cheek, 498 U.S. at 192, or in the violation of election

disclosure obligations, see Curran, 20 F.3d at 569, is not a

required element of bankruptcy fraud.   Therefore, proof by a

defendant of lack of knowledge of illegality cannot in and of

itself defeat a conviction for bankruptcy fraud.8



          In challenging the legal sufficiency of the charge on

knowledge of illegality, Zehrbach and Mervis also argue that the

inclusion of the statement unconstitutionally shifted the burden

of proof or precluded the jury from considering proper

exculpatory information.   They rely primarily on two cases,

United States v. Rhone, 864 F.2d 832 (D.C. Cir. 1989) and United

States v. Schilleci, 545 F.2d 519 (5th Cir. 1977), both of which

we find to be distinguishable.

    8
     For this reason, we do not find error in the district
court's ruling, if the court in fact did so rule, that defense
counsel could not argue that good faith is a defense if there is
a mistake as to the law, see App. at 607-08, so long as the
element of intent to defraud had to be proved by the government
beyond a reasonable doubt and so long as the jury could consider
the defendant's state of mind in making its determination on
intent to defraud. It is because we find that these latter two
requirements were met in this case that we do not find such a
ruling would have been erroneous.
          In Rhone, the defendant appealed her conviction for

mail fraud and theft arising out of her continued receipt of

unemployment benefits after she had become employed full time.

As in the instant case, the government had the burden of

establishing specific intent to defraud, and the defendant's sole

defense was that she lacked the requisite intent, i.e., that she

didn't believe that her employment qualified as "full time"

employment.   At the close of the case, the trial court gave a

standard jury instruction on specific intent to defraud but ended

the instruction with the following statement:   "And I should

point out at this time that ignorance of the law is no excuse."

United States v. Rhone, 864 F.2d at 834.

          Suggesting that the quoted instruction eased the

government's burden of proving specific intent beyond a

reasonable doubt or at least "confused the jury on the very

central issue of intent," the D.C. Circuit found that the

statement created constitutional error requiring a new trial.

Id. at 836-37. The court concluded that
          [t]he jury . . . could well have inferred
          that the prosecution had met its burden of
          proving specific intent beyond a reasonable
          doubt simply on the basis that appellant was
          presumed to know the law and that she
          therefore knowingly committed fraud and
          theft.

Id. at 837.


          We believe that the instruction in Rhone went far

beyond the instruction given in this case.   That instruction
effectively told the jury that ignorance of the law is

irrelevant, suggesting -- incorrectly -- that the jury should not

even consider the defendant's lack of knowledge of the law

regarding her legal entitlement to unemployment benefits.     In the

instant case, the court merely instructed the jury that the

government was not required to prove that the defendants knew

their actions to be illegal.   This instruction correctly stated

the government's burden of proof in this case and in addition was

made pursuant to a charge in which the district court instructed

the jury no less that three times, once each in connection with

the defense of "good faith" and the elements of "knowingly" and

"fraudulently," that they "should consider all of the evidence in

the case bearing on that defendant's state of mind."

          Schilleci involved the appeal of a conviction for

conspiring to intercept wire and oral communications, in

violation of 18 U.S.C. § 2511.   This offense is a crime of

specific intent and has been held to require an intentional or

reckless disregard of legal obligations.    See Malouche v. JH

Management Co., Inc., 839 F.2d 1024, 1025 (4th Cir. 1988) (§2511

was intended "to denote at least a voluntary, intentional

violation of, and perhaps also a reckless disregard of, a known

legal duty", citing Citron v. Citron, 722 F.2d 14, 16 (2d Cir.
1983) cert. denied, 466 U.S. 973 (1984)).    For this reason we do

not find that the Fifth Circuit's reasoning in Schilleci is

helpful to our consideration of an offense, like bankruptcy
fraud, where the government must prove intent to cheat or defraud

but where there is not a duty for the government to prove that

the defendant knew his acts were illegal.

            Contrary to the arguments of Zehrbach and Mervis, we

find that the charge in the instant case fairly and adequately

submitted the issues to the jury for determination.    The charge

accurately stated the government's burden of proof.    It did not

preclude consideration of defendants' claim that they thought

they were putting together a joint venture and that they did not

know that what they were doing was illegal.    Importantly, the

challenged instruction did not shift the government's burden of

proving fraudulent intent.    At the same time, however, it did not

preclude the jury from considering exculpatory information which

Zehrbach and Mervis introduced in an effort to establish their

defense.    Rather, the instruction merely explained that proof of

knowledge of illegality was not a burden of the government's case

in chief.    We conclude that the court did not err as a matter of

law in setting forth the legal standards governing the jury's

consideration.

            Moreover, since we have found that the legal standard

of the charge survived plenary review on the supposition that a

proper objection was made to the jury instructions, if we should

instead determine that defense counsel failed to object to the

legal propriety of the inclusion of the "the government is not

required to prove that a defendant knew that his acts were
unlawful" language in the jury instructions, clearly the giving

of this charge does not constitute plain error.9

                                  B.

            Whether or not defense counsel preserved an objection

to the legal sufficiency of the charge, counsel clearly objected

to the charge on the ground that it was potentially confusing to

the jury.    In reviewing jury instructions, we review the trial

court's expression for abuse of discretion.       Savarese v. Agriss,

883 F.2d at 1194; United States v. Messerlian, 832 F.2d 778, 789

(3d Cir. 1987), cert. denied, 485 U.S. 988 (1988).       We must

consider "whether, viewed in light of the evidence, the charge as

a whole fairly and adequately submits the issues in the case to

the jury."    Bennis v. Gable, 823 F.2d at 727.    We must reverse if

"the instruction was capable of confusing and thereby misleading

the jury."    Bennis v. Gable, 823 F.2d at 727 (citing United

States v. Fischbach and Moore, Inc., 750 F.2d 1183 (1984));

United States v. Goldblatt, 813 F.2d 619, 623 (3d Cir. 1987).

             Examining the jury charge as a whole, we cannot agree

with Zehrbach and Mervis that the challenged instruction was

capable of confusing the jury, even in relation to the good faith

instruction.    Notably, the good faith instruction came after the

    9
     This court has defined "plain error" as "those errors that
seriously affect the fairness, integrity or public reputation of
judicial proceedings." United States v. Santos, 932 F.2d at 250
(internal   quotation  omitted).     The   doctrine  is   applied
"`sparingly' . . . and only where the error was sure to have had
an `unfair prejudicial impact on the jury's deliberations.'" Id.
(citation omitted).
instructions on "knowingly" and "fraudulently," serving as a

general statement on the absence or existence of the required

intent.   The court explained that good faith is an absolute

defense, that "all evidence bearing on [the] defendant's state of

mind" should be considered, and that the jury must acquit if they

had a reasonable doubt about the existence of intent or good

faith.    Given this language, it is unlikely that the jury

mistakenly did not consider Mervis and Zehrbach's alleged belief

in the legality of their actions when the jury was deliberating

on the question of whether the government had proved fraudulent

intent beyond a reasonable doubt.

           As a more general matter, the court continuously

reinforced the notions that the burden of proof in a criminal

case is always upon the government; that the defendants are

protected by a presumption of innocence; and that, unless they

are proven guilty beyond a reasonable doubt, the defendants must

be acquitted.    The court repeated these principles at least six

times during the course of its final instructions to the jury.

In addition, the court instructed the jury to "consider the

charge as a whole," rather than "singl[ing] out any one

instruction."    This reinforces our belief that the jury would not

have been misled by the single instruction that the government

need not prove knowledge of illegality.

           Moreover, when defense counsel first challenged the

instruction, the court explained that it felt that the
instruction was necessary in order to clarify precisely what

"knowledge" is required of a defendant who acts "knowingly" in

the commission of bankruptcy fraud.   That decision was clearly

committed to the discretion of the district court.   Here,

Zehrbach and Mervis did not challenge the content of the good

faith instruction, nor did they propose the inclusion of a

sentence clarifying the relationship between their claimed

ignorance of the law and their good faith defense.   They simply

challenged the inclusion of language which in fact correctly

commented on an element that the government did not need to

prove.   Therefore, because we believe that the jury charge, taken

as a whole, was not misleading or confusing to the jury, we find

no abuse of discretion.



                 III.   THE PROSECUTOR'S REMARKS.

                                A.

            We turn next to Zehrbach and Mervis' argument that the

prosecutor prejudiced their right to a fair trial when he stated

in his closing argument:
          I suggest you shouldn't believe Drizos and
          Smith because they're guilty of exactly the
          same bankruptcy fraud that these two
          defendants are guilty of. And don't you
          assume that they are not going to get what's
          coming to them either.


Zehrbach and Mervis urge that these remarks comment on the

credibility of Drizos and Smith, based on facts not in the

record, and are therefore per se grounds for a new trial under
DiLoreto, 888 F.2d at 996.   For the reasons stated below, we will

overrule the per se rule of DiLoreto.   Rather than using the

DiLoreto per se rule, we will analyze this case on its own facts.

In making this analysis, because we must conclude that the

prosecutor's remarks were improper, we will go on to weigh the

remarks under a harmless error standard.   See United States v.

Young, 470 U.S. 1, 11-12 (1985).

                                B.

          Prosecutorial misconduct does not always warrant the

granting of a mistrial.   The Supreme Court has acknowledged that

given "the reality of the human fallibility of the participants,

there can be no such thing as an error-free, perfect trial, and

that the Constitution does not guarantee such a trial."   United

States v. Hasting, 461 U.S. 499, 508-09 (1983).   Thus, the

Supreme Court has held that an appellate court should not

exercise its "[s]upervisory power to reverse a conviction . . .

when the error to which it is addressed is harmless since, by

definition, the conviction would have been obtained

notwithstanding the asserted error."    Id. at 506.

          The harmless error doctrine requires that the court

consider an error in light of the record as a whole, but the

standard of review in determining whether an error is harmless

depends on whether the error was constitutional or non-

constitutional.   In this instance, the alleged error, attacking

the credibility of a witness with evidence not in the record, is
non-constitutional.   We have held that non-constitutional error

is harmless when "it is highly probable that the error did not

contribute to the judgment."   Government of Virgin Islands v.

Toto, 529 F.2d 278, 284 (3d Cir. 1976).   "High probability"

requires that the court possess a "sure conviction that the error

did not prejudice" the defendant.   United States v. Jannotti, 729

F.2d 213, 219-20 (3d Cir.), cert. denied, 469 U.S. 880 (1984).

Therefore, we will reverse if we conclude that the prosecutor's

remarks, taken in the context of the trial as a whole, prejudiced

the defendants.

          In determining prejudice, we consider the scope of the

objectionable comments and their relationship to the entire

proceeding, the ameliorative effect of any curative instructions

given, and the strength of the evidence supporting the

defendant's conviction.10   As the Supreme Court has emphasized "a

criminal conviction is not to be lightly overturned on the basis

of a prosecutor's comments standing alone, for the statements or

conduct must be viewed in context."   United States v. Young, 470

U.S. at 11 (finding harmless error where the prosecutor had

stated his opinion that the defendant was guilty and urged the

jury to "do its job").


    10
          See United States v. Gambino, 926 F.2d at 1355, 1365
(3d Cir.), cert. denied sub nom. Mannino v. United States, 501
U.S. 1206 (1991); United States v. DiPasquale, 740 F.2d 1282 (3d
Cir. 1984), cert. denied, 469 U.S. 1228 (1985); United States v.
Homer, 545 F.2d 864, 867-68 (3d Cir. 1976), cert. denied, 431
U.S. 954 (1977).
                                C.

          The first sentence of the prosecutor's objectionable

remarks suggested that the jury should not believe Drizos and

Smith because they were also guilty of the crimes of which the

defendants were guilty.   This statement was clearly improper to

the extent that it reflected the prosecutor's opinion concerning

the guilt of Mervis and Zehrbach.    As the Supreme Court has held,

when a prosecutor expresses his personal opinion concerning the

guilt of the accused, he creates two risks:
          such comments can convey the impression that
          evidence not presented to the jury, but known
          to the prosecutor, supports the charges
          against the defendant and can thus jeopardize
          the defendant's right to be tried solely on
          the basis of the evidence presented to the
          jury; and the prosecutor's opinion carries
          with it the imprimatur of the Government and
          may induce the jury to trust the Government's
          judgment rather than its own view of the
          evidence.


United States v. Young, 470 U.S. at 18-19.

          In addition, the statement was improper as an

expression of the prosecutor's personal belief regarding the
guilt of the two witnesses themselves.11   As the district court
    11
       Although counsel may state his views of what the evidence
shows and the inferences and conclusions that the evidence
supports, it is clearly improper to introduce information based
on personal belief or knowledge.       Standard 3-5.8(b) of the
American Bar Association Standards for Criminal Justice provides:
     It is unprofessional conduct for the prosecutor to
          express his or her personal belief or opinion
          as to the truth or falsity of any testimony
          or evidence or the guilt of the defendant.
See also ABA Model Rules of Professional Conduct, Rule
3.4(e)(stating that a lawyer shall not "in trial . . . assert
held, however, "[i]t is not impermissible to argue the conclusion

that witnesses other than the accused are guilty of a crime when

evidence of such has been produced."    United States v. Zehrbach,

No. 92-0218, mem. op. at 8.   Evidence regarding Drizos and

Smith's decision making and supervision of the bid buy-out

scheme, including testimony by both witnesses as to their active

participation, supported the prosecutor's challenged remark,

prompting the district court to conclude that the remark was

"based on evidence adduced at trial."   Id.   Nonetheless, to the

extent that the sentence was an expression of the prosecutor's

personal belief, it was inappropriate and is subject to review

for prejudicial effect, as is the second sentence of the

prosecutor's remarks.

          The second sentence, which entreated the jury not to

assume that Drizos and Smith were "not going to get what's coming

to them," was improper and irrelevant, because it referred to

information outside of the record and sought to influence the

decision of the jury on an illegitimate basis.    This Court has

long acknowledged a defendant's "right to have his guilt or

innocence determined by the evidence presented against him, not

by what has happened" -- or by what may happen -- "with regard to

a criminal prosecution against someone else."    United States v.
(..continued)
personal knowledge of facts in issue except when testifying as a
witness, or state a personal opinion as to the justness of a
cause, the credibility of a witness, . . . or the guilt or
innocence of an accused").
Thomas, 998 F.2d 1202, 1207 (3d Cir. 1993) (quoting United States

v. Toner, 173 F.2d 140, 142 (3d Cir. 1949)).12

          As the district court concluded in denying Zehrbach's

motion for a new trial, the prosecutor may have made the remark

"to keep the jury from reaching a verdict on an improper basis,

i.e. that all of the guilty parties had not been brought to

justice, and only the defendants then on trial had been singled

out for prosecution."     United States v. Zehrbach, No. 92-0218,

mem. op. at 8-9.   The court's conclusion was consistent with the

grounds that counsel for Zehrbach originally stated to support

his motion for a mistrial.    Nonetheless, the remark effectively

encouraged the jury to reach a guilty verdict on irrelevant and

illegitimate grounds.

          Furthermore, given that the prosecutor made the

statement in question immediately after telling the jury that the

witnesses should not be believed because they were themselves

guilty, the comment could also be construed as a comment on the

witnesses' credibility.    Thus, Zehrbach and Mervis argued that

    12
          Likewise, standard 3-5.8(d) of the American           Bar
Association Standards for Criminal Justice explains:
     The prosecutor should refrain from argument which
          would divert the jury from its duty to decide
          the case on the evidence, by injecting issues
          broader than the guilt or innocence of the
          accused under the controlling law . . . .
Standard 3-5.9 further advises:
     It is unprofessional conduct for the prosecutor
          intentionally to refer to or argue on the
          basis of facts outside the record.
this court's holding in United States v. DiLoreto, 888 F.2d at

996, required reversal per se.

            In DiLoreto, the defendants objected to the

prosecutor's comments in closing argument regarding the

credibility of the defendants' accomplices, who testified for the

Government after entering into plea agreements themselves.       The

prosecutor stated:    "We don't take liars.    We don't put liars on

the stand.    We don't do that."   DiLoreto, 888 F.2d at 998.

Although the defendants characterized the comments as "improper

prosecutorial vouching depriving them of a fair trial," the

district court denied both their motions for mistrial and their

subsequent request for curative instruction.      On appeal, this

court vacated and remanded, holding that "a prosecutor's remarks

regarding the defendant's guilt or a witness' credibility, if

based on information not adduced at trial, require reversal per

se."    Id. at 999.

             The per se reversal standard announced in DiLoreto,

however, conflicts with Supreme Court case law requiring the

court to analyze prosecutorial comments case by case, in the

context of the entire trial, and to reverse only where the

defendant has suffered prejudice.     United States v. Young, 470
U.S. at 111-12.    Therefore, we expressly overrule DiLoreto

insofar as it established a per se, rather than a case by case,

rule.   We will, therefore, analyze the prosecutor's remark

pursuant to the harmless error doctrine.      In light of that
analysis, we conclude that both comments, though truly improper

and unfortunate, do not constitute reversible error.

                                  D.

          Although it is true that irreparable harm may be

inflicted in a moment, the comments at issue were but two

sentences in a closing argument that filled forty pages of

transcript.   Immediately after the objection, the court gave a

specific instruction to disregard the prosecutor's comment, an

instruction that the court repeated just a short time later at

the close of the prosecutor's argument.   As a general matter, the

court told the jurors to disregard any personal opinion of

counsel and to base their decision solely on the evidence.    And,

in its final instructions, the court cautioned the jury members

that the arguments of counsel are not evidence; that they must

not be persuaded by bias, prejudice, or sympathy; and that they

must not consider any evidence that they were earlier instructed

to disregard.    We believe that this extensive cautioning by the

court was sufficient to cure the prosecutor's error.

          Furthermore, the extensive evidence of Zehrbach and

Mervis's intent to defraud supports our conclusion that the

prosecutor's remarks would not have prejudiced the jury's

deliberations.   The evidence clearly supports the government's

burden of proving that Zehrbach and Mervis knowingly and

fraudulently paid other bidders to refrain from bidding for

assets in a bankruptcy auction.
            Zehrbach and Mervis acted in blatant disregard of

questions about the legality of their actions, and they

repeatedly mischaracterized the transaction.    In response to

Polychron's inquiry as to whether the buy-outs were "kosher,"

Mervis promised to obtain an opinion letter from an attorney

approving the transaction.    Mervis failed to produce such a

letter.    Moreover, when Attorney Vollmer sent an unsolicited

letter quoting the relevant criminal statute and strongly

advising against further participation in the bid buy-out scheme,

Mervis and Zehrbach chose to disregard it.    Zehrbach made some

effort to obtain another opinion, from Attorney Crane, to assuage

concerns.    But Crane's positive opinion affirming the legality of

"the transaction" rested on a misrepresentation of the

transaction as a joint-venture rather than a bid buy-out.       In

fact, in seeking Crane's legal opinion, no one had mentioned to

him the payments made to Starman and Eckard to refrain from

bidding.    Mervis was similarly selective in his discussions with

the bankruptcy trustee and the FBI, referring to the transaction

as a "merger of interests" or a "joint-venture" and remaining

silent about the payments.

            We find the evidence of knowledge and of deception to

be substantial.    Under these circumstances and given the court's

curative instructions, we find that the remarks of the prosecutor

constitute harmless error.
                               IV.

          For the foregoing reasons, we will affirm the judgments

of conviction of the district court.



United States v. Darus H. Zehrbach

United States v. Alex A. Mervis

Nos. 93-7477 and 93-7493




LEWIS, Circuit Judge, dissenting.

          I join in Parts I and II of the majority opinion, and

in Part III insofar as it overrules the per se rule of DiLoreto.

However, I cannot join in Part III of the opinion to the extent

it concludes that the error here was harmless.

          It is difficult for me to imagine a statement which

would carry a more powerful impact upon a jury, or which would be

more likely to deter it from acquitting, than to imply in no

uncertain terms that the defendants' two chief witnesses were

going to be indicted for their participation with the defendants

in the underlying criminal activity.   That is exactly what

happened here.   The prosecutor's statement was tantamount to

telling the jury that the defendants' two main witnesses were in
fact as guilty as the defendants were and would themselves be

brought to answer criminal charges, despite the fact that there
was no evidence to suggest that these individuals were going to

be indicted and despite the more compelling fact that they never

were indicted.

          The majority acknowledges that "the remark effectively

encouraged the jury to reach a guilty verdict on irrelevant and

illegitimate grounds."    Maj. Op. Typescript at 34.   How, then,

can we be confident that "it is highly probable that the error

did not contribute to the judgment"?    See Maj. Op. Typescript

at 31, citing Govt. of Virgin Islands v. Toto, 529 F.2d 278, 274

(3d Cir. 1976).    "Highly probable" requires us to be virtually

certain, as that standard is only satisfied when we hold a "sure

conviction that the error did not prejudice" the defendant.       See

Maj. Op. Typescript at 31, citing United States v. Jannotti, 729

F.2d 213, 219-20 (3d Cir.), cert. denied 469 U.S. 880 (1984).

The majority acknowledges this also, but then shifts its focus

from the impact of the remarks to the prosecutor's motive in

uttering them.    I believe this diversion to be the fundamental

flaw in the majority's analysis.    Since we must be convinced that

a criminal defendant was not prejudiced for harmless error to

apply, what difference does it make to that inquiry that the

prosecutor might have meant something else in uttering the

offending remarks?    It is not what the prosecutor meant that

should control, but rather the effect of what he said upon the

defendants' right to be judged by an untainted jury.     Our focus

should be to determine that it is almost certain that the error
did not contribute to the conviction.   In my view, the majority

does not place sufficient emphasis upon this critical inquiry.

          And it is precisely for this reason that I believe the

majority fails to perceive the violence which remarks such as

those at issue are capable of inflicting upon the unfettered

fact-finding and truth-seeking mission of the jury, preferring

instead to rely upon the court's cautionary instructions and the

quantum of evidence properly before the jury which pointed toward

guilt.   As I stated in my original dissent, "I cannot imagine any

curative instruction that would be sufficient to purge the jury

of the powerful impact of such an improper, unfounded assertion

by the prosecutor."   United States v. Zehrbach, Nos. 93-7477 and

93-7493 at 8 (Lewis, J. dissenting).    I believe this is

particularly true in view of the fact that to a considerable

degree, the defendants' convictions rested upon the jury's

assessment of the credibility of Drizos and Smith.   Moreover, I

am not persuaded that the jury could not have been influenced by

these improper remarks, to the prejudice of the defendants,

regardless of the weight of additional evidence demonstrating

their guilt.

          For these reasons, I respectfully dissent.
