Third Circuit Holds Foreign Bank Documents Admissible (5/6/13)

In United States v. Turner, 718 F.3d 226 (3rd Cir. 2013), here, the Third Circuit affirmed a tax conviction in which foreign bank documents were admitted in the Government's case in chief.  At trial, the defendant objected to the admission of those documents.  On appeal, the defendant renewed his objections.  The defendant raised two objections -- authenticity and admissibility.  The Third Circuit affirmed.

The background was as follows:  The defendant was the author of a tax evasion program to "escape federal and state income taxation."  The defendant sold the program to a veterinarian named Leveto.  The program was essentially a mirage, with Leveto retaining control of the income which apparently found its way to foreign and domestic bank accounts.  The IRS obtained and executed a search warrant on Leveto's home and business.  In that search, the IRS seized certain documents, including foreign and domestic bank records.  The grand jury indicted the defendant, Leveto and the Leveto's wife for a Klein / defraud conspiracy.

At trial, over defendant's objection, the court admitted (i) recorded conversations of the veterinarian with an IRS sting agent under FRE 801(d)(2)(E); and (ii) the bank documents.  I focus here on the bank documents.

1.  Authenticity.

Documents require authentication.  The defendant argued that the foreign bank documents were not authenticated.  The record showed only that they were seized from the veterinarian's premises.  The Court held that the authentication requirement had been met:

Federal Rule of Evidence 901(a) requires the authentication of evidence before a district court may admit it. The standard for authenticating evidence is "slight," McQueeney v. Wilmington Trust Co., 779 F.2d 916, 928 (3d Cir. 1985), and may be satisfied by "evidence sufficient to support a finding that the item is what the proponent claims it is." Fed. R. Evid. 901(a). This Court does not require conclusive proof of a document's authenticity, but merely a prima facie showing of some competent evidence to support authentication. McQueeney, 779 F.2d at 928; United States v. Goichman, 547 F.2d 778, 784 (3d Cir. 1976) (per curiam). "Once a prima facie case is made, the evidence goes to the jury and it is the jury who will ultimately determine the authenticity of the evidence, not the court." Goichman, 547 F.2d at 784.

Federal Rule of Evidence 901(b) provides examples of appropriate methods of authentication, including reliance on "[t]he appearance, contents, substance, internal patterns, or other distinctive characteristics of the item." Fed. R. Evid. 901(b)(4). This list is not exhaustive, however, and it is clear that the Government may authenticate documents with other types of circumstantial evidence, including the circumstances surrounding the documents' discovery. See McGlory, 968 F.2d at 329 (considering that notes were found in trash outside of defendant's residence as evidence of authenticity); McQueeney, 779 F.2d at 929 (considering that documents were produced in response to a discovery request as evidence of authenticity) (citing Burgess v. Premier Corp., 727 F.2d 826, 835-36 (9th Cir. 1984) (holding that exhibits found in defendant's warehouse were adequately authenticated simply by their being found there)). We have also considered whether the information included in the evidence is widely known. See McQueeney, 779 F.2d at 929-30 (concluding that small number of people who knew the information in the evidence supported finding of authenticity). 

The Government easily met its slight burden here. First, the appearance of the documents support their authentication: the documents have the official appearance of bank records. They bear the insignia of foreign banks, see, e.g., A. 1735, A. 1784, and contain the type of transaction data typically present on bank records, see, e.g., A. 1727, A. 1785. The documents are also internally consistent in their appearance. Compare A. 1689 with A. 1693. 

Second, the contents of the documents provide evidence of their authenticity. The documents were addressed to Leveto's home and business addresses and post office box. See, e.g., A. 1718, A. 1722. Several of the documents were responsive to faxes that Leveto sent. And the Government reconciled many of the foreign bank documents with domestic bank records—the authenticity of which Turner does not challenge. Moreover, the bank records included information that was not widely-known, including Leveto's personal account information and aliases. 

Third, the IRS seized the records from Leveto's home and office and safes inside Leveto's office, which strongly supports a finding of authenticity because it is likely that Leveto would have stored his bank records there, and his possession of the documents indicates his belief that they were important. 

Finally, although we agree with Turner that it is the Government's burden to prove authentication, Turner has not suggested any reason why the Court should doubt the authenticity of the documents. This only bolsters our conclusion that the District Court did not abuse its discretion in concluding that the documents were properly authenticated.  As such, we will affirm the District Court's holding that the documents were properly authenticated.

2.  Admissibility

The defendant argued that, well, even if the foreign bank documents were properly authenticated, they still were not admissible because they were hearsay that did not qualify under an exception to the hearsay rule.  The Court's analysis is (footnotes omitted):

Turner argues that the District Court erred in admitting the foreign bank documents under Federal Rule of Evidence 807 because the Government did not prove that the documents had exceptional guarantees of trustworthiness. We review for clear error a district court's finding that evidence was sufficiently trustworthy to be admissible under Rule 807. United States v. Wright, 363 F.3d 237, 246 (3d Cir. 2004). 

The residual hearsay exception permits a district court to admit an out-of-court statement not covered by Rules 803 or 804 if the court determines that: 

(1) the statement has equivalent circumstantial guarantees of trustworthiness; (2) it is offered as evidence of a material fact; (3) it is more probative on the point for which it is offered than any other evidence that the proponent can obtain through reasonable efforts; and (4) admitting it will best serve the purposes of these rules and the interests of justice. 

Fed. R. Evid. 807. The exception is "'to be used only rarely, and in exceptional circumstances' and 'appl[ies] only when certain exceptional guarantees of trustworthiness exist and when high degrees of probativeness and necessity are present.'" Wright, 363 F.3d at 245 (quoting United States v. Bailey, 581 F.2d 341, 347 (3d Cir. 1978)). The determination of whether a document is sufficiently trustworthy to be admitted under Rule 807 is a highly fact-specific inquiry. Id. at 246. In making this determination, the district court may not rely exclusively on corroborating evidence. See Bailey, 581 F.2d at 349. 

In United States v. Pelullo, we analyzed whether bank records should be admissible under the residual hearsay exception and noted that in general, bank records "provide circumstantial guarantees of trustworthiness because the banks and their customers rely on their accuracy in the course of their business." 964 F.2d 193, 202 (3d Cir. 1992). Other courts of appeals have similarly concluded. See United States v. Wilson, 249 F.3d 366, 376 (5th Cir. 2001) (admitting foreign bank records under the residual hearsay exception), abrogated on other grounds by Whitfield v. United States, 543 U.S. 209, 125 S. Ct. 687, 160 L. Ed. 2d 611 (2005); United States v. Nivica, 887 F.2d 1110, 1127 (1st Cir. 1989) (same); Karme v. Comm'r, 673 F.2d 1062, 1064-65 (9th Cir. 1982) (same).

The District Court concluded that the same evidence that supported the foreign bank documents' authenticity was also sufficient to support the documents' trustworthiness, and therefore, admissibility under Rule 807. Turner contends that this was error for three reasons. First, relying on Bohler-Uddeholm America, Inc. v. Ellwood Group, Inc., 247 F.3d 79 (3d Cir. 2001), Turner asserts that it is "impossible" to admit the records under Rule 807 because the declarants of the bank documents are unknown. Second, Turner argues that Karme and Wilson are distinguishable because in those cases, the sources of the documents were banks—in contrast to here, where the IRS seized the documents from Leveto's residence and business. Third, Turner maintains that the District Court improperly relied only on corroborating evidence in admitting the documents. 

We find that Turner's arguments lack merit and that the District Court did not clearly err in concluding that the documents possessed sufficient indicia of trustworthiness. First, contrary to Turner's assertion, the Government is not required to identify the declarant of the foreign bank documents in order for the documents to be admissible under Rule 807. See Wilson, 249 F.3d at 375-76 (admitting bank records under the residual hearsay exception with no mention of declarant); Nivica, 887 F.2d at 1127 (same); Karme, 673 F.2d at 1064-65 (same); see also Fed. R. Evid. 807. Bohler-Uddeholm does not suggest otherwise. In Bohler-Uddeholm, this Court affirmed the district court's ruling admitting the affidavit of a person who died before trial under Rule 807. We explained that the factors that the district court analyzed in admitting the affidavit, including whether the declarant was known and whether the statements were based on personal observation, were sufficient for this Court to uphold the district court's order. Bohler-Uddeholm, 247 F.3d at 113. We did not hold, however, that these factors were necessary for hearsay evidence to be admissible under Rule 807, and we decline to require those factors here where many of the documents were computer-generated. 

Second, as discussed supra, that the IRS seized the documents from Leveto's residence, office, and safes within his office, weighs in favor of the reliability of the documents—not against it. Turner does not dispute that the IRS seized the documents from Leveto. He does not identify any break in the chain of custody of the documents. And he does not suggest any reasons why Leveto would have been storing false bank documents that implicated him in tax fraud. 

Third, the District Court did not improperly rely only on corroborating evidence in admitting the bank records. As detailed above, the District Court relied on: (1) the appearance of the records, including their internal consistency; (2) the contents of the records; and (3) the circumstances surrounding the discovery of the records. Those grounds are entirely legitimate. 

Finally, it bears repeating that Turner has not identified any document that he claims is a forgery or in any way inaccurate. Accordingly, we will not disturb the ruling of the District Court.