Evidence Rulings in Sprawling Criminal Case with Tax Charge Add On and Some Sex (8/29/12)

I just read United States v. Dimora, 843 F. Supp. 2d 799 (ND OH 1/4/12).  It is a fascinating case involving charges in the Third Superseding Indictment for,

among other things, RICO conspiracy, conspiracy to commit mail fraud and honest services mail fraud, Hobbs Act conspiracy and Hobbs Act substantive violations, conspiracy to commit bribery in programs receiving federal funds, and conspiracy to obstruct justice. Dimora is also charged with conspiracy to commit wire fraud and honest services wire fraud; destruction, alteration or falsification of records in a federal investigation; mail fraud; and false statements on tax returns."  

Whew, that is quit a bunch of charges.

Dimora offers lessons primarily for students of federal white collar crimes.  Remember, that tax crimes are just a subset of white collar crimes, and many  of the issues presented in the trial of tax crimes are often present in white collar crimes (and vice versa).  It is a very long opinion, and I really don't recommend that even students read it except to address a particular interest piqued by reading my summary of the key points.

So, here are the points I think are key for students:

1.  The Function of the Motion in Limine

The Court resolves key evidentiary issues in advance of trial.  The parties asked the court to resolve these issues by motions in limine.  The Court describes motion in limine procedure as follows (case citaions other than Supreme Court omitted):

Although not explicitly authorized by the Federal Rules of Evidence or the Federal Rules of Criminal Procedure, the practice of ruling on motions in limine "has developed pursuant to the district court's inherent authority to manage the course of trials." Luce v. United States, 469 U.S. 38, 41 n.4 (1984). Motions in limine allow the court to rule on evidentiary issues prior to trial in order to avoid delay and to allow the parties to focus remaining preparation time on issues that will in fact be considered by the jury.  

Courts should exclude evidence on a motion in limine only when it is clearly inadmissible. If the court is unable to determine whether certain evidence is clearly inadmissible, it should defer ruling until trial so that questions of foundation, relevancy, and potential prejudice can be evaluated in proper context. Id. Ultimately, the determination whether to grant or deny a motion in limine is within the sound discretion of the trial court. In limine rulings are preliminary, and the district court may change its ruling at trial for any reason it deems appropriate.

2.  Government Representatives Avoid Sequestration Under FRE Rule 615.

The Government moved to avoid the exclusion of certain witnesses from the trial proceeding.  FRE 615, titled "Excluding Witnesses," provides:

At a party's request, the court must order witnesses excluded so that they cannot hear other witnesses' testimony. Or the court may do so on its own. But this rule does not authorize excluding:
(a) a party who is a natural person;
(b) an officer or employee of a party that is not a natural person, after being designated as the party's representative by its attorney;
(c) a person whose presence a party shows to be essential to presenting the party's claim or defense; or
(d) a person authorized by statute to be present. 

The exclusion, sometimes referred to as sequestration, is used to avoid the possibility some type of collusion or coordinating testimonies that might occur, intentionally or unintentionally, if witnesses heard other witnesses' testimonies.  Under the Rule, a party that is not a natural person -- as the U.S. -- may designate a representative to avoid exclusion.  In civil and criminal trials, Government counsel often designates the IRS case or investigating agent to be the representative, thus assuring the agent's presence during the trial.  In Dimora, given the nature of the sweeping investigation with corruption as its target, the agents involved in the investigation included both an FBI Special Agent and and IRS Special Agent.  Because of the complexity of the case and the number of documents and facts involved, the Government wanted them both in the courtroom.  The Government designated one agent under (b) and asked the court to authorize  the second under (c).  The Court addresses the arguments as to the need for the second agent and concludes that the Government had made the required showing of need.  The Court, however, did require partial sequestration as follows:

Even so, recognizing the defendants' interest in the accurate and fair presentation of testimony at trial, the Court will not permit SA Oliver to remain in the courtroom during any portion of SA Massie's testimony—or during any portion of testimony by any other government witness which is likely to overlap with Oliver's testimony—unless SA Oliver's testimony precedes that testimony. The Court believes that this restriction is necessary to safeguard the fact-finding process.

3.  IRS Agent Expert Witness Avoids Sequestration under Rule 615.

The Government also moved to avoid the exclusion for an IRS Special Agent "expert witness" who, as it turns out is also a possible fact witness, the Government proffered, "would testify: (1) as a summary witness with respect to defendant Dimora's bank accounts and credit card charges; (2) as an expert witness with respect to the taxable nature of Dimora's transactions; and (3) as a fact witness with respect to her participation in a single act of surveillance."  Such testimony by an agent involved in the investigation is frequently used in criminal cases.  The Court approved her avoidance of the exclusion as follows (case citations omitted):

Insofar as SA Fatula's testimony consists of expert witness testimony, her presence at counsel table is permissible, as the government has made a "fair showing" that her presence is "required for the management of the case." If SA Fatula were sequestered, the government would be required to repeat previous testimony in the form of lengthy hypothetical questions. SA Fatula's presence will thus serve the interests of expediency and efficiency. Given that SA Fatula will render an opinion as to whether a particular thing of value Dimora received should be classified as taxable income, the Court finds that it would be beneficial for her to be present in the courtroom to hear the testimony as to the things of value allegedly received by Dimora that the government believes should have been claimed by him as taxable income. Thus, the Court further finds that the government has established that SA Fatula's presence in the courtroom is necessary for the management of the case. Accordingly, to the extent she will testify as an expert witness, the Court will permit Agent Fatula to remain in the courtroom during trial.

The Court did, however, require her sequestration during the testimony given by other Government witnesses which overlap with the testimony she is expected to give.

3.  Uncharged Criminal Activity Evidence under FRE 404(b)

As I have noted in other blog entries, the Government will often try to use uncharged conduct -- often called bad acts evidence -- to prove its case (defense counsel would describe the process as poisoning the well (or the jury)).  FRE 404(b) precludes such evidence except for limited purposes, and is subject to the court's general discretion under FRE 403 not to admit evidence that is improperly prejudicial.  The Government proffered 11 categories of evidence of other acts on the basis that it was background evidence -- often called res gestae -- that is not FRE 404(b) evidence because it is needed to provide the background for the crimes actually charged.  The Court agreed, noting that courts apply the exception in conspiracy cases "where the uncharged crimes fall within the parameters of the conspiracy and tend to prove the existence of the conspiracy."  The Government also argued that the evidence may be admissible under FRE 404(b) because it went to knowledge and intent.  The Court ploddingly goes through the proffered evidence in concluding that some of the evidence is admissible and some not.  I recommend that students read this only if this is their first encounter with Rule 404(b) evidence.

4.  Reverse FRE 404(b) Evidence.

The Government moved to preclude defendants "from offering instances of lawfulness to counter the government's allegations of corruption and conspiracy."  This is known as "reverse 404(b)" evidence.  In the Sixth Circuit, "the admission of "reverse 404(b)" evidence is subject to the same standard Rule 404(b) analysis applicable to 'other acts' evidence most often offered by the government."  Generally, "Evidence that an individual acted lawfully on other occasions not charged in the Indictment is generally inadmissible in that it does not negate the charge that he acted with criminal intent on another occasion."  However, "It may be probative, however, where a defendant is alleged to have "always" or "continuously" committed the acts alleged."  After discussing some of the case authority, the Court concluded (some case citations omitted):

Here, the government represents that it does not intend to offer evidence or argument supporting a theory that the defendants "always" engaged in corrupt action, or that the alleged corrupt practices permeated every aspect of county business during the period of the conspiracy. To be sure, the government has alleged an expansive RICO conspiracy, with multiple schemes and hundreds of overt  [*839]  acts specifically set forth in the Indictment. Still, the government maintains that it will confine itself to proving those schemes specifically charged in the indictment, along with other schemes arising out of the same conspiracy during the relevant period. Under such circumstances, evidence that Dimora did not on other occasions receive a personal benefit for performing his official actions, or that he properly awarded a county contract to the lowest bidder in accordance with county policies and practices, would not negate allegations that he acted corruptly on those occasions set forth in the Indictment. Further, if admitted, any probative value of this evidence is substantially outweighed by the likelihood of jury confusion. The Court, therefore, will not permit Dimora to offer specific instances of lawfulness.17
   n17 While the Court finds that specific instances of lawfulness would be irrelevant, other types of "reverse 404(b)" evidence, including policies or training Dimora promoted as County Commissioner, might be relevant to negate the government's theory of the case. For example, in United States v. Hayes, 219 Fed. App'x 114, 115-16 (3d Cir. 2007), the court held that testimony that the defendant never asked direct subordinates to falsify tests, and evidence that he supported policies that were contrary to the goals of the alleged conspiracy to falsify tests, was relevant as to whether the defendant was a member of the alleged conspiracy. See, e.g., United States v. Marlinga, 457 F. Supp. 2d 769, 775 (E.D. Mich. 2006) (evidence that, prior to seeking public office, it was the defendant's practice to extend certain courtesies to cases he deemed worthy would negate his criminal intent for the charged conspiracy).

The Court stresses, however, that the government has ventured down a very narrow path. While the Indictment does identify discrete instances of alleged fraud, the government admits that it has charged "a wide-ranging RICO Conspiracy." (Doc. No. 532 at 7.) Should the government stray from its chosen path, and offer evidence or argument that supports a theory that Dimora always or ceaselessly engaged in such fraud, the Court would not hesitate to revisit its ruling. At least for now, Dimora may not present evidence of specific instances of lawfulness.

5.  Evidence Outside the Statute of Limitations

One defendant moved to preclude evidence outside the statute of limitations.  The problem was that several counts alleged various conspiracies.  A conspiracy is a continuing crime -- i.e., :continues for as long as the conspirators engage in overt acts in furtherance of the conspiracy * * *  [or] or until the goals of the conspiracy have been achieved."  "Thus, evidence of Dimora's conduct that occurred outside the applicable limitations periods is admissible so long as that conduct was part of any of the charged conspiracies alleged to have continued into the limitations period."

6.  Rule of Completeness as to Exerpts from Intercepted Telephone Recordings.

The Government had given notice of its intent to use excerpts of intercepted telephone recordings.  Apparently in an attempt to impose burdens that might make the Government give pursuing the use of this evidence or, alternatively, distract from its force, the defendants moved to have the complete telephone recordings admitted.  The Court ruled (case citation omitted):

[T]he Court will not require the government to play the entire recording of each call it wishes to offer at trial as the defendants suggest. It will, however, permit the immediate admission of any un-played portion of a wire communication, or other type of communication or correspondence, that is necessary to correct any "misleading impression" caused by the introduction of only part of the communication.

7.  Exclusion of Evidence of Acts of Infidelity and Use of Prostitutes

Now, since every long tome must have some sex in it, sure enough it is there.  So ruled the Court:

The Court finds that evidence relating to Gabor's alleged visits to his mistress on county time does not constitute "other acts" evidence under Rule 404(b) because such conduct is inextricably intertwined with evidence that he spent large parts of the county work day away from the Auditor's Office on personal matters. See United States v. Marrero, 651 F.3d 453, 470-71 (6th Cir. 2011) (Evidence that the defendant struggled with police at the time of his arrest was inextricably intertwined in that it had a "temporal connection to, and completes the story of, the charged drug offenses.") The evidence is also proper background evidence because it explains Gabor's connection to the enterprise and explains the benefits he received from allegedly paying Russo for his position with the county, namely, the collection of a public paycheck for little or no work performed. Further, the government has already represented that it does not intend to elicit any graphic details regarding Gabor's alleged sexual encounters. With a proper limiting instruction advising the jury for what purposes this evidence may and may not be considered, the Court finds that the probative value would not be substantially outweighed by any unfairly prejudicial effect. 

Evidence that Dimora received the services of prostitutes as a thing of value is also relevant. Count 8 of the Indictment charges Dimora with violating the Hobbs Act by accepting things of value, including prostitutes, from Kevin Payne and Payne's law practice, and Count 27 charges Dimora with accepting things [*855] of value from Charles Randazzo. n25  Gabor's alleged knowledge of these schemes, as well as his own alleged participation in certain activity involving prostitutes, is relevant and may be used by the government to establish Gabor's connection to the conspiracy. If requested, a proper limiting instruction can cure any potential prejudice from the introduction of such evidence.
   n25 One of the referenced calls, Session No. 2916DCT, is highly relevant to Count 1 and Counts 4 through 7 because it involves Dimora thanking Ferris Kleem for "sponsoring" the Las Vegas trip, which included Dimora's visit to the Bare Pool. The government intends to offer this call to show Dimora soliciting a thing of value from Kleem and thanking him for a prior thing of value. As is the case with many of the calls objected to by Gabor, the government points out that there is no direct reference to Gabor or any reference to him using prostitutes.