03/06/98

By Bill Lodge / The Dallas Morning News

Defendants in the Dallas fraud trial of nine Republic of Texas separatists told jurors Thursday that they are patriotic citizens waging a painless paper war for Texas independence.

But Assistant U.S. Attorney Michael Uhl said Richard L. McLaren, the group's self-described ambassador, and eight co-defendants attempted to distribute $1.8 billion in worthless securities because they are criminals.

"What it all boils down to, folks . . . it's a scheme to defraud businesses, credit card companies, banks," Mr. Uhl told jurors in opening arguments. "They're all guilty."

More than $3 million of the securities, resembling cashier's checks and called Republic of Texas warrants, were issued in late 1996 and early 1997 before the Secret Service and U.S. Postal Inspection Service intervened.

Law enforcement officials say businesses lost more than $350,000.

Republic of Texas members say Texas was unlawfully annexed by the United States. They filed a lien against state assets several years ago.

Tom Mills, attorney for Mr. McLaren, said Republic members believed they had authority to issue their own currency.

Mr. Mills said jurors may conclude that Mr. McLaren, 44, is "as loony as a mockingbird eating too many chinaberries," but they should not convict him because he was not "acting with intent to defraud."

"Every one of us are legal, lawful, upstanding citizens," Mr. McLaren's wife, Evelyn McLaren, 50, told the jury. "We had no intentions of defrauding anyone."

She said she and her husband believe Texas is an independent nation.

"This case is not about bank fraud or mail fraud or any criminal act," said Ms. McLaren, a co-defendant who is representing herself. "It's about reinstating Christian values in Texas."

Joseph W. Shearin, attorney for defendant Jasper E. Baccus, said his client believed Mr. McLaren and other Republic members who told him that they would establish a $100 million bank that would grant interest-free loans to needy South Dallas residents.

Because of that belief, Mr. Shearin said, the 69-year-old Mr. Baccus attempted to process more than $500,000 of the warrants through two Dallas banks.

"He placed his faith in what these people told him," Mr. Shearin said.

Mark Anthony Hernandez, 28, became involved with the Republic at the request of his longtime friend and co-defendant, Steven Craig Crear, 37, defense attorney Charles Banker III said.

Mr. Crear and other Republic officials promised the hospital worker a $120,000 job, Mr. Banker said. But instead of receiving money from the Republic, Mr. Hernandez charged more than $50,000 on his credit cards for the group's expenses, including a Lear jet trip to the Davis Mountains area for a meeting with Mr. McLaren.

Mr. Hernandez "did what Mr. Crear would ask," Mr. Banker said.

George E. Ashford III, attorney for 32-year-old Linh Ngoc Vu, also said his client gave cash to Mr. Crear and the Republic.

Repaid with warrants that were impossible to negotiate, Mr. Ashford said, "Mr. Vu became frustrated with the entire Republic of Texas process. He discovered the Republic of Texas was just people. They weren't perfect. There wasn't going to be any utopia."

"Those warrants are legitimate," defendant Richard George Kieninger, 70, told the jury. He urged them to listen closely to testimony because "this is probably one of the most momentous things to occur in Texas this century."

Mr. Crear and defendants Joe Louis Reece, 57, and Erwin Leo Brown, 34, did not make initial statements to the jury.

The trial before U.S. District Judge A. Joe Fish is expected to last about a month.