Friday, November 27, 2009

Summary Witness, Exhibits and Nonexhibits

In United States v. McElroy, ___ F.3d ___ (1st Cir. 2009), the Court discusses summary evidence and charts. I am interested in this topic because of my participation in the massive KPMG related criminal trial, billed as the largest tax fraud case in history. The Government prosecuted 19 defendants involved in the creation and marketing of allegedly abusive tax shelters to many taxpayers over several years. For discovery, the prosecutors produced "over 22 million documents regarding the doings of scores of people." United States v. Stein, 541 F.3d 130, 157 (2d Cir. 2008). Before the court dismissed 13 of the defendants, the Government listed for trial 1987 “marked exhibits” with 39,000 pages and 3000+ so-called “compilation exhibits” with 89,000 pages. The prosecutors described the compilation exhibits as “tax returns, closing agreements and revenue agent reports relating to these [tax shelter] transactions." It was not entirely clear that the prosecutors were going to have those unmarked compilation exhibits formally admitted into evidence en masse (logistically, how exactly do you do that if they are not marked?). It was clear, though, that the prosecutors were going to offer a summary witness to testify as to the compilation exhibits but not submit the compilation exhibits to the jury. I think the principal focus of the summary testimony and charts (presumably there would be one or more) would have been to establish the tax due and owing element of the tax evasion charges in the case, as well as the object of the offense conspiracy charge and perhaps even the object of the Klein conspiracy charge. Before the pretrial skirmishing focused on evidentiary problems inherent in what the Government proposed to do, my client and 12 others were dismissed, so I am not sure what happened in the trial (4 eventually went to trial).

In McElroy, the Court of Appeals describes the relevant parts of the trial as follows:
Several individuals testified at trial about the amount of money that the defendants allegedly had failed to pay the IRS. IRS Special Agent Joseph Guidoboni testified as a summary witness. He related that he had computed the unreported payroll for the three companies and had concluded that the total amount of unpaid federal taxes was $ 9,982,690.51. His calculations were based on witness testimony, at least 1000 documents (including tax returns) and records of the defendants' check payroll system. Neil Johnson, an insurance fraud investigator, also testified as a summary witness. He stated that he had calculated insurance losses based on a review of the companies' workers' compensation insurance applications and related documents, tax returns filed with the IRS, tax returns provided to auditors and worksheets prepared by the insurers. He prepared summary charts estimating the total loss in insurance premiums to be $ 6,457,500. These charts were admitted into evidence over the defendants' objections.
The Court of Appeals in McElroy sustained the admission of the evidence as follows (case quotation marks and citations omitted):
Our case law permits the use of summary tools to clarify complex testimony and evidence. Although the defendants argue in their reply brief that this case can be distinguished from [prior case] because the summary evidence was admitted into evidence, that case does not rule out the possibility of such evidence being admitted. In [prior case], we said that "in most cases a Rule 1006 chart will be the only evidence the fact finder will examine concerning a voluminous set of documents." Id. at 396 (emphasis in original). In some instances, however, a Rule 1006 chart may itself be admitted into evidence or summary witness testimony may be permitted pursuant to Rule 611(a). In some cases, such pedagogical devices may be sufficiently accurate and reliable that they, too, are admissible in evidence, even though they do not meet the specific requirements of Rule 1006.

With regard to summary witness testimony, we have urged caution, noting that such witnesses are allowed only in limited situations. We noted: "The reluctance of courts to allow the government an additional opportunity to present its case in a tidy package at the end of its presentation of evidence, even when the summary evidence is, by definition, completely consistent with the rest of the trial record, confirms that the imprimatur problem with such repetitive testimony is inescapable whether that testimony comes at the beginning or end of the government's case." Nevertheless, we have found summary witnesses to be appropriate within the context of tax cases: We have recognized as a general proposition that testimony by an IRS agent that allows the witness to apply the basic assumptions and principles of tax accounting to particular facts is appropriate in a tax evasion case. We held that in a tax evasion case, a summary witness may be permitted to summarize and analyze the facts of record as long as the witness does not directly address the ultimate question of whether the accused did in fact intend to evade federal income taxes.
Applying these principles, the McElroy Court sustained the use of the testimony.

I should note that, in the process of looking at McElroy and researching one aspect of it, I did come across a very good opinion by Judge Jack B. Weinstein that deals with summary evidence and its increasing use at trial, as well as discussing related technology issues in the large document set case. See Verizon Directories Corp. v. Yellow Book USA, Inc., 331 F. Supp. 2d 136 (EDNY. 2004), subsequent history at Verizon Directories Corp. v. Yellow Book USA, Inc., 338 F. Supp. 2d 422 (EDNY 2004), but not relevant to the portion of the original case quoted in the text. Judge Weinstein, of course, knows evidence. See Weinstein’s Federal Evidence (2d ed. Lexis-Nexis); and Weinstein, Mansfield, Abrams and Berger’s Evidence (9th ed. West Publishing). In the KPMG case, given the quantum of discovery and marked and compilation exhibits, we faced many of the issues that Judge Weinstein discusses so well.

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