Opinion
Crim. File No. 04-18 (PAM/RLE).
September 25, 2004
MEMORANDUM AND ORDER
This matter is before the Court on various Motions in Limine brought by Defendant Raymond H. Wirtz.
DISCUSSION
A. Guilty Plea Jury Instruction During Trial
Defendant asks the Court to instruct the jury about guilty pleas of government witnesses. The Government does not object to the request. Accordingly, when a guilty plea of a witness is called to the attention of the jury, the Court will instruct the jury that the witness has pled guilty to a crime that arose out of the same events for which Defendant is on trial. The Court will further instruct the jury that the guilty plea of the witness cannot be considered as evidence of the guilt of Defendant, but that it may be considered only for the purpose of determining the credibility of the witness.
B. Bifurcation of Trial
Defendant moves to bifurcate the trial in light of Blakely v. Washington, 124 S. Ct. 2531 (2004). The Government does not oppose the Motion. In Blakely, the United States Supreme Court held that the sentencing guidelines scheme implemented by the State of Washington violated the Sixth Amendment of the United States Constitution. Id. at 2537-38. Thus, facts that trigger an enhancement under the state sentencing guidelines must be submitted to a jury and proved beyond a reasonable doubt. Id.
Courts are currently uncertain whether Blakely affects the Federal Sentencing Guidelines. See United States v. Mooney, 2004 WL 1636960 (8th Cir. July 23, 2004) (opinion vacated and rehearing en banc granted on Aug. 6, 2004). As a precautionary measure to guarantee Defendant's constitutional rights, the Court will bifurcate the trial. The parties will first present evidence relating to whether Defendant is guilty of a charge in the Superseding Indictment. If the jury determines that Defendant is guilty of a charge, the parties will then present evidence and argument as to loss amount and as to whether Defendant's role in the alleged charges meets an enhancement under the Sentencing Guidelines.
C. Brady Material
Defendant requests that the Court order the Government to disclose all exculpatory and impeachment evidence pursuant toBrady v. Maryland, 373 U.S. 83 (1963) and its progeny. He claims that the Government failed to produce exculpatory evidence during the trial of United States v. Kerry Baubie and Raymond Wirtz, Crim. File No. 04-169 ("commercial airlines fraud trial"). The Government responds that it has met its Brady obligations by disclosing all interview reports, grand jury testimony, and immunity offers pertaining to its entire investigation.
While the Government produced some documents that clearly fall within Brady, the Government did not produce notes from an interview of T. Michael Clarke, who was identified as a witness in the commercial airlines fraud trial. The Government interviewed Clarke on August 13, 2004, while the trial was underway. Interview notes indicate that Clarke made several statements during the interview that may have exculpated Defendant. Defendant contends that he would have called Clarke as a witness had he known of the statements. Notwithstanding the Government's failure to disclose the interview notes, Defendant was acquitted of charges that he conspired to commit fraud.
Brady holds that the Government's suppression of material evidence favorable to the defendant violates due process. 373 U.S. at 87. Evidence is material for purposes of Brady analysis if there is a reasonable probability that, had the evidence been disclosed to the defense, the result of the proceeding would have been different. United States v. Bagley, 473 U.S. 667, 682 (1985); see also Kyles v. Whitley, 514 U.S. 419, 432-37 (1995) (explaining the materiality standard). To establish aBrady claim, Defendant must show that the information was favorable to him, the prosecution suppressed the evidence, and the evidence was material to the issue of guilt or punishment.Strickler v. Green, 527 U.S. 263, 281-82 (1999); United States v. Brown, 360 F.3d 828, 832 (8th Cir. 2004).
Only the Government can know what is undisclosed. Thus, the Government is assigned the duty to gauge the effect of the evidence and make disclosures when it determines that the evidence is material. Kyles, 514 U.S. at 437. It must resolve doubtful questions in favor of disclosure. Id. (citations omitted).
The Government's failure to disclose exculpatory material to Defendant during the commercial airlines fraud trial disturbs this Court. The Court acknowledges that Brady does not require pretrial disclosure as long as ultimate disclosure is made "before it is too late for the defendant to make use of any benefits of the evidence." Nassar v. Sissel, 792 F.2d 119, 121 (8th Cir. 1986). However, the Government failed to disclose the exculpatory evidence during trial and prevented Defendant from using the exculpatory evidence in his defense. See United States v. Kime, 99 F.3d 870, 882 (8th Cir. 1996) (Brady rule limited to the discovery of information after trial that was known to the prosecution but unknown to the defense).
The Court recognizes that the alleged Brady violation occurred in a separate matter. However, that matter involved the same parties and similar allegations. The Court is concerned that the Government will employ the same tactics in this matter, and therefore orders the Government to disclose by September 27, 2004, all interview notes, testimony, and inducements of every individual the Government has contacted during the course of its investigation relating to the charges in this matter.
D. Evidence of Katun's Plea and Plea Agreement
Defendant seeks to exclude evidence of the plea agreement and guilty plea entered by Katun Corporation relating to charges of computer, mail, and wire fraud. The Government does not oppose the Motion. The Court therefore grants the Motion, finding specifically that the danger of prejudice substantially outweighs the probative value of the plea agreement and plea. See United States v. Brown, 913 F. Supp. 1324, 1330 (D. Minn. 1996) (Doty, J.) (granting a new trial to corporate executive because the corporate guilty plea was highly prejudicial and likely to have affected the jury verdict); see also United States v. Andreas, 23 F. Supp. 2d 835, 848-49 (N.D. Ill. 1998), aff'd 216 F.3d 645 (7th Cir. 2000) (evidence of corporate plea agreement raised concerns of unfair prejudice that the jury would be unable to separate the corporation from the individual executives on trial).
E. Evidence and Argument of "Unethical" and "Wrong" Acts
Defendant seeks to enjoin the Government from eliciting subjective evaluations from witnesses that certain acts of Katun officers were "unethical" or "wrong." The Government sought to elicit similar testimony during the commercial airline fraud trial, even after this Court sustained numerous objections to the inquiries. Defendant now points to Jencks material relating to testimony that Katun officers acted unethically, terribly, and wrongly.
Although the line between illegality and immorality may be blurred at times, the line does exist. An act that is immoral or abhorrent is not necessarily criminal. See United States v. Goodman, 984 F.2d 235, 240 (8th Cir. 1993) (reversal of a mail fraud conviction where conviction was based on unethical business acts, observing that the mail fraud statute does not reach all "sleazy or shrewd" acts); United States v. McNeive, 536 F.2d 1245, 1252 (8th Cir. 1976) (reversing mail fraud conviction even though some people may view acts of the defendants as inappropriate or despicable). Nevertheless, courts recognize that evidence that the defendant knew his conduct was unethical or wrong is relevant to show a defendant's intent to defraud. See, e.g., In re Administrative Subpoena John Doe v. United States, 253 F.3d 256, 268 (6th Cir. 2001) (documents relating to ethics and professional responsibility relevant because the documents could prove that individual knew his conduct was wrongful — whether illegal or unethical). Thus, the Court will allow testimony relevant to the issue of whether Defendant believed his conduct was unethical or wrong. However, the Court will not permit the subjective opinion of others as to whether those individuals believed that the conduct of Defendant or other Katun executives was wrong or unethical.
F. Evidence of Immunity Agreements
Defendant moves to exclude evidence of immunity agreements of the Government's witnesses. The Government opposes the Motion as it pertains to one witness: Neal Becker, an alleged co-conspirator who was provided the equivalent of statutory immunity when he disclosed information regarding his knowledge and involvement in arranging alleged kickbacks. The Government also reserves its right to inquire about immunity matters on direct examination of government witnesses that Defendant plans to impeach with reference to their plea agreements.
Evidence of an immunity agreement and the witness's understanding of obligations under that agreement may help the jury to evaluate and weigh the credibility of the witness.United States v. Tate, 915 F.2d 400, 401 (8th Cir. 1990). Thus, the Government may elicit testimony regarding a plea or immunity agreement on direct examination even before the witness's credibility has been attacked. Jenner v. Class, 79 F.3d 736, 739 (8th Cir. 1996); United States v. Willis, 997 F.2d 407, 414 (8th Cir. 1993). The evidence may also explain why the witness possesses first-hand knowledge the events to which he is testifying, and may eliminate concerns that the government is selectively prosecuting the defendant. United States v. Universal Rehab. Servs., Inc., 205 F.3d 657, 667 (3d Cir. 2000). Defendant's Motion is therefore denied.
G. Evidence of Settlement Agreements Between Katun and Minolta
Defendant seeks to exclude evidence relating to the settlement agreements between Katun Corporation and Minolta Business Systems, Inc., contending that the Government will offer the evidence to show that the alleged kickbacks were unlawful. The Government maintains that it will use the settlement agreements to show that Defendant was put on notice that Minolta informed Defendant — as a Katun officer — that Minolta disapproved of Katun's payment practices. The Court notes that the settlement agreements specifically deny that Katun officers and employees committed any unlawful act or wrongdoing, and releases all Katun officers from any liability based on these acts. The Court also notes that Defendant allegedly disguised the settlement payment in Katun's business records.
Under Rule 408, settlement negotiations and agreements are "not admissible to prove liability for or invalidity of the claim or its amount." Fed.R.Evid. 408. However, such evidence is admissible when offered "for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving effort to obstruct a criminal investigation or prosecution." Id. The exceptions identified in Rule 408 are not exclusive but merely exemplify purposes that fall outside the scope of the Rule. Fed.R.Evid. 408 cmt. ("Since the rule excludes only when the purpose is proving the validity or invalidity of the claim or its amount, an offer for another purpose is not within the rule.").
The Government's use of the settlement agreements to show Defendant's knowledge that Minolta disapproved of Katun's ticketing practices is permissible. See United States v. Austin, 54 F.3d 394, 400 (7th Cir. 1995) (evidence relating to civil settlement admissible to show that defendant was aware that his actions were illegal and that he acted with criminal intent); United States v. Hauert, 40 F.3d 197, 200-01 (7th Cir. 1994) (settlement documents admissible to show defendant's knowledge and intent regarding his obligation to pay taxes);Bradbury v. Phillips Petroleum Co., 815 F.2d 1356, 1363-64 (10th Cir. 1987) (evidence relating to previous settlement admissible to show defendant's intent and absence of mistake). The Court therefore denies Defendant's Motion. It further concludes, however, that a limiting instruction is needed to militate any potential prejudice to Defendant. The Court therefore approves the limiting instruction proposed by the Government, which informs the jury that Katun denied all liability under the settlement agreements and that the settlement agreements may be considered only to evaluate Defendant's notice or intent.
H. Leading or Argumentative Questions
Defendant requests that the Court forbid the Government from using leading and argumentative questions during direct examination. Rule 611 of the Federal Rules of Evidence prohibits leading questions during direct examination except when necessary to develop a witness's testimony. Fed.R.Evid. 611(c). The Court warns that it will not tolerate a pattern of leading or argumentative questions like that displayed by the Government during the commercial airlines fraud trial. Nevertheless, the Court denies Defendant's Motion, and will reserve ruling on individual objections as the trial proceeds.
I. Evidence and Argument of Accountability
Defendant seeks to exclude evidence and arguments that Defendant, as a corporate officer, is culpable for acts of a corporation. He also seeks to exclude evidence and arguments that a corporate officer may be criminally liable if he fails to detect and prevent a crime by others in the corporation. The Government opposes the argument, explaining that it will offer evidence of Defendant's active participation in the alleged kickback and bribery schemes — and will not argue that Defendant is responsible for the crimes committed by others merely by virtue of his position. The Government further agrees not to argue that Defendant's intent is conclusively presumed because of the acts of his subordinates.
Defendant is charged with conspiracy to commit mail fraud. If Defendant is guilty of the crime, he is vicariously liable for each substantive offense committed by his co-conspirators in furtherance of a conspiracy. Pinkerton v. United States, 328 U.S. 640, 647 (1946). Accordingly, the Court denies the Motion as it relates to evidence and arguments that Defendant is guilty of crimes committed by his alleged co-conspirators. However, the Court grants the Motion as it relates to the Government presenting evidence or argument that Defendant may be criminally liable by failing to detect and prevent a crime by other Katun employees.
J. Vouching for Government Witnesses
Defendant seeks to enjoin the Government from examining government witnesses about the terms of their plea agreements. Defendant submits that such questions effectively vouch for the witnesses's veracity. Improper vouching occurs when a prosecutor refers to facts outside the record, implies that the witness's testimony is supported by facts not available to the jury, implies a guarantee of truthfulness, or expresses a personal opinion about the credibility of a witness. United States v. Benitez-Meraz, 161 F.3d 1163, 1167 (8th Cir. 1998). Examining a witness about the terms of a plea or immunity agreement, and asking if the witness understands the consequences of failing to comply with the terms, is not vouching. Id. at 1168. Presumably, the plea and immunity agreements will be received into evidence and will be available to the jury during deliberations. Accordingly, Defendant's Motion is denied. The Government may question the witness about portions of a plea agreement obligating the witness to testify truthfully.
CONCLUSION
Accordingly, IT IS HEREBY ORDERED that:
1. Defendant's Motion in Limine for Jury Instruction During Trial (Clerk Doc. No. 134) is GRANTED;
2. Defendant's Motion in Limine with Respect to Blakely (Clerk Doc. No. 136) is GRANTED;
3. Defendant's Motion in Limine for Immediate Disclosure of Exculpatory Material (Clerk Doc. No. 137) is GRANTED;
4. Defendant's Motion in Limine to Exclude Evidence of Katun Corporation's Plea Agreement and Guilty Plea (Clerk Doc. No. 138) is GRANTED;
5. Defendant's Motion in Limine to Exclude Evidence and Enjoin the Government from Arguing Certain Acts were "Unethical," "Wrong" or the Like (Clerk Doc. No. 139) is GRANTED in part and DENIED in part;
6. Defendant's Motion in Limine to Exclude Evidence of Witness Immunity Agreements (Clerk Doc. No. 140) is DENIED;
7. Defendant's Motion in Limine to Exclude Evidence of the Settlement Agreement Between Katun and Minolta Corporations (Clerk Doc. No. 141) is DENIED;
8. Defendant's Motion in Limine to Enjoin the Government's Use of Leading and Argumentative Questions During Examination of its Witnesses (Clerk Doc. No. 142) is DENIED;
9. Defendant's Motion in Limine to Enjoin the Government's Evidence and Arguments Corporate Officers Must be Accountable for the Acts of their Corporation (Clerk Doc. No. 143) is GRANTED in part and DENIED in part; and
10. Defendant's Motion in Limine to Enjoin the Government from Vouching for its Witnesses (Clerk Doc. No. 144) is DENIED.