In fraud indictment focused on one primary victim, divided panel concludes trial court erred in granting motion to strike surplusage and exclude evidence of other act fraud allegations, in United States v. Siegal, 536 F.3d 306 (4th Cir. Aug. 12, 2008) (No. 07-4551)
At what point may an indictment contain other acts evidence which may be surplusage? That was the question recently posed in an appeal involving a fraud scheme in the Fourth Circuit.
According to the indictment allegations, defendant Siegel defrauded numerous individuals over a twenty year period by using their names, including former husbands and her daughters, to obtain credit, loans, and money without their authorization. The core fraud counts involved Watkins, who was a widower nearly thirty years older than her. The indictment charged twenty-counts, including seven counts of converting Watkins’s Social Security checks, six counts of bank fraud, one count of identity theft, two counts of mail fraud, two counts of wire fraud, one count for murdering Watkins to prevent him from reporting her fraud, and one count for impeding an official investigation by transporting Watkins’s body across state lines.
One week before trial, the court heard the defense motion to strike surplusage from the indictment which she argued contained inadmissible character evidence under FRE 404(a), and exclude the other act evidence at trial. The trial court concluded that “the case that should have been indicted is the murder case involving Mr. Watkins and the related defrauding of Mr. Watkins and the banks, insurance company and the Social Security Administration thefts, [and] that’s the case we’re going to try.” While some of the other acts evidence may be “relevant in a very expansive way,” the defrauding of the family members was “inflammatory, unduly prejudicial, is certain to give rise to a waste of time, [and] it is cumulative and its probative value is significantly outweighed by its . . . unfair prejudicial effect.” Siegal, 536 F.3d at 313-14. The government filed an interlocutory appeal.
A divided Fourth Circuit panel reversed the trial court ruling. The majority concluded that some of the challenged allegations were intrinsic to the counts involving Watson. The fraud allegations involving her husband Eric Siegel provided context for the Watson charges by explaining why she left Watkins after using much of his money for another wealthy man. Other allegations were not intrinsic to the charged counts. However, the panel majority found it unnecessary to “definitively determine whether each piece of the Other Crime Evidence may be viewed as intrinsic to the crimes for which Siegel has been indicted,” since the other evidence was admissible under FRE 404(b). The other fraud evidence was probative to show the defendant’s motive in murdering Watkins to prevent him or others from going to law enforcement. Siegal, 536 F.3d at 318 (citing United States v. Willoughby, 860 F.2d 15, 24 (2d Cir. 1988) (in obstruction of justice case, admitting robbery evidence under FRE 404(b) as “highly probative of their motive, and the intensity of that motive, to seek to prevent certain witnesses from testifying at their trial for robbery”). Other fraud evidence was relevant to show the defendant’s modus operandi in how she “obtain[ed] the personal information of another person, use[d] that information to obtain credit in that person’s name, and take whatever steps were necessary to prevent that person from learning about the new accounts until it was too late.” Siegal, 536 F.3d at 318 (citing United States v. Tanner, 61 F.3d 231, 237 (4th Cir. 1995) (in prosecution for selling controlled substances from his drugstore without a prescription, other act “testimony was relevant to show the defendant's modus operandi. She explained how Tanner took refill orders without a prescription, provided double or triple amounts to his customers prior to going on vacation, and did most of this business on an informal cash basis without bills or other records”); see alsoUnited States v. Queen, 132 F.3d 991, 997 (4th Cir. 1997) (noting “the more similar the prior act is (in terms of physical similarity or mental state) to the act being proved, the more relevant it becomes” under FRE 404(b)).
Senior District Judge Kiser dissented in part, concluding that under an abuse of discretion of standard the trial court did not err. In his view, “That the government chose to denominate these other crimes as part of a scheme does not free them from scrutiny by the trial judge as to whether they qualify as part of the scheme. Nor does it free the evidence from the constraints of Rules 404(b) and 403.” Siegal, 536 F.3d at 323.
There are many ways in which a fraud scheme can be defined. Given the similar manner in which the individuals were defrauded, it may have been possible to include all the fraud acts under one fraud scheme. Nonetheless, this case highlights the distinction between intrinsic and extrinsic fraud allegations and how FRE 404(b) may be considered to salvage some of the allegations.
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In a diversity alienation of affections trial, excluding evidence that the defendant had affairs with other co-workers because this evidence would not logically show the defendant’s intent to alienate the affections of the plaintiff’s husband, as required under applicable state law, and was inadmissible propensity evidence under FRE 404(b) and unfairly prejudicial; case highlights the application of FRE 404(b) in civil diversity actions, in Kebede v. Hilton, 580 F.3d 714 (8th Cir. Sept. 4, 2009) (No. 08-3326)
Although written nearly three decades before the adoption of the FRE, Justice Jackson writing for the majority in Michelson v. United States, 335 U.S. 469, 475–76 (1948) seemed to describe the thinking behind FRE 404’s exclusion of propensity evidence:
“Courts that follow the common-law tradition almost unanimously have come to disallow resort by the prosecution to any kind of evidence of a defendant’s evil character to establish a probability of his guilt. Not that the law invests the defendant with a presumption of good character, but it simply closes the whole matter of character, disposition and reputation on the prosecution’s case-in-chief. The state may not show defendant’s prior trouble with the law, specific criminal acts, or ill name among his neighbors, even though such facts might logically be persuasive that he is by propensity a probable perpetrator of the crime. The inquiry is not rejected because character is irrelevant; on the contrary, it is said to weigh too much with the jury and to so overpersuade them as to prejudge one with a bad general record and deny him a fair opportunity to defend against a particular charge. The overriding policy of excluding such evidence, despite its admitted probative value, is the practical experience that its disallowance tends to prevent confusion of issues, unfair surprise and undue prejudice.”Michelson v. United States, 335 U.S. 469, 475–76 (1948) (citation omitted) (emphasis added).
However, FRE 404(b) provides an exception that allows other act evidence to be admitted when circumstantially relevant to show “motive, opportunity, intent, preparation, plan, knowledge....” In a recent case, the Eighth Circuit explored the application of the FRE 404(b) exception to other act evidence proffered to show intent in a civil trial proceeding under state statute. The case illustrates how a federal court, in applying FRE 404(b) in a civil diversity case, accounts for the requirements of state law while applying the requirements of a federal procedural rule.
In the case, Kebede who had lived in Minnesota with her husband Christiansen sued Hilton, one of Christiansen’s co-workers (and a South Dakota resident), for alienating the affections of Christensen under South Dakota law. Apparently Hilton carried on an affair with Christensen and upon discovery of the affair, Kebede and Christensen divorced. Prior to the jury trial in the U.S. District Court for South Dakota, the judge granted Hilton’s motion in limine to exclude evidence from Hilton’s deposition “that she had affairs with two co-workers other than Christiansen. The first affair, which occurred prior to her affair with Christiansen, involved a married co-worker. The second affair, which occurred in December 2002 (shortly after Christiansen returned to Minnesota), involved a single co-worker.” The court concluded that this evidence was irrelevant and substantially more prejudicial than probative. After the jury returned a verdict for the defendant, Kebede appealed based solely on the exclusion of the other affairs evidence.
The Eighth Circuit affirmed the exclusion of the other affairs evidence. The circuit noted two grounds for its exclusion. First, it appeared to be offered solely to show propensity and second, it was not relevant to establish the defendant’s intent under the charged state tort. The first ground of propensity required little analysis. The defendant’s affairs with co-workers, concluded the circuit, “tended to show Hilton’s propensities for this type of activity” and accordingly under FRE 404(a) was “not admissible to prove that Hilton had a propensity to have affairs.” Kebede, 580 F.3d at 717.
Since it was excluded propensity evidence, the circuit also noted that it would not be admissible as an exception, set out by FRE 404(b) (allowing propensity evidence to demonstrate the defendant’s intent). To reach this determination, the federal court examined the state law elements of the civil tort at issue, alienation of affections. Under applicable South Dakota law, “[a]lienation of affections is an intentional tort and it was necessary for [the plaintiff] to prove intent.... As the defendant rarely admits the crucial element of intentional wrongful conduct, it must be established by the plaintiff through circumstantial evidence….” Kebede, 580 F.3d at 717 (citing Veeder v. Kennedy, 589 N.W.2d 610, 620 (S.D. 1999) (in state alienation of affections case, whether there were affections in marriage to alienate and whether superior intended to entice employee’s affections away from her spouse were for the jury)).
That fact that intent is essential to the cause of action, however, does not mean that under FRE 404(b) evidence of other affairs are “always relevant,” explained the circuit. The state law cause of action made it clear that other affairs evidence was relevant only when: “(1) the defendant’s affair with his co-worker, which the plaintiff sought to introduce into evidence, occurred prior to the affair with the plaintiff’s spouse-the root of the alienation of affections action; (2) the prior affair lead to the breakup of the co-worker’s marriage; and (3) the defendant, who eventually married his co-worker, was presumably aware that the affair lead to the breakup of his co-worker’s marriage. It could thus rationally be inferred that the defendant entered into the subsequent affair with the same goal.” Kebede, 580 F.3d at 717 (citing Veeder v. Kennedy, 589 N.W.2d 610, 620 (S.D. 1999)).
With the applicable cause of action in mind, the circuit’s path was clear. It was not erroneous to exclude the other affairs evidence in the defendant’s case because:
“Kebede points to no evidence in the record that Hilton either alienated the affections of the other co-workers with whom she had affairs or was aware that her co-workers’ affections had been alienated. Evidence of Hilton’s other affairs would only prove intent if it were shown that she knew, based on those affairs, that alienation was the likely result of her actions with Christiansen. In the absence of such proof, evidence of Hilton’s other affairs would have only been relevant to prove that she had a propensity for having affairs, which is a prohibited purpose under Rule 404(a). Even assuming that evidence of Hilton’s other affairs was relevant, without additional evidence establishing her intent, evidence of the affairs would be unfairly prejudicial and could be ruled inadmissible on that ground. On this record, the district court did not abuse its discretion in excluding evidence of Hilton’s affairs with two co-workers other than Christiansen.”Kebede, 580 F.3d at 717-18 (citation and footnote omitted).
Even had the court erred in omitting the other act evidence, the circuit noted that it was not prejudicial and therefore would be no ground for relief. This was because:
“[a] close review of the trial transcript reveals considerable testimony from multiple witnesses suggesting that there was very little affection and, in fact, a fair amount of emotional, verbal, and physical abuse by the plaintiff, Kebede, towards her husband. Because the record reflects that the state of the marriage was a much greater point of contention in this particular case, we cannot see how introducing evidence of the other affairs would have accomplished much more than character assassination. The evidence of the other affairs was not at the heart of the matter in this case; therefore, the district court was well within his discretion to exclude the evidence as overly prejudicial.”Kebede, 580 F.3d at 718 n.4.
The Eight Circuit’s careful dissection of the admissibility of the other affairs evidence under FRE 404(a) and FRE 404(b) closely reflects the assessment by another circuit about the admissibility of similar evidence in a sexual harassment action. SeeWilson v. Muckala, 303 F.3d 1207, 1217 (10th Cir. 2002) (evidence of alleged instances of past sexual harassment by doctor was not admissible other acts evidence in sexual harassment suit against hospital or doctor because plaintiff nurse did not allege that hospital had notice of alleged prior incidents, so as to make such evidence relevant to prove hospital’s discriminatory intent, nor was there a discriminatory intent element in claims brought against the doctor and the alleged prior incidents occurred in places outside hospital, so that they were not relevant to establish hostile work environment claim).
As the Kebede case demonstrates, the federal court applied the FRE to the diversity action. However, the analysis of whether to admit the other act evidence under FRE 404(b) required an analysis of the alleged state tort. Under this approach, an assessment could be made on whether to admit the proffered evidence.
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