Opinion
No. 16 CR. 786-2 (NSR)
05-31-2019
UNITED STATES OF AMERICA, v. JACQUELINE GRAHAM, Defendant.
OPINION & ORDER
Defendant Jacqueline Graham ("Graham" or "Defendant") is charged in a one count Indictment with conspiracy to commit mail fraud, wire fraud and bank fraud in violation of 18 U.S.C. §1349. (ECF No. 2, Indictment). It is alleged that Graham, along with several co-conspirators, as partners of and/or employees of an entity identified as the Terra Foundation ("Terra"), engaged in a scheme to defraud clients of Terra and financial institutions and conspired to commit the underlying offenses of mail fraud, wire fraud and bank fraud in violation of 18 U.S.C. §§ 1341, 1343 and 1344. (Id.) Before the Court are multiple motions in limine from both the Government and Defendant seeking pre-trial rulings on evidentiary and trial procedural issues.
The Government submitted a motion in limine (ECF No. 164)("Government's Motion"), Defendant Graham submitted a response in opposition (ECF No. 168)("Defendant's Response"), and the Government submitted its reply (ECF No. 172) ("Government's Reply"). The Government submitted a supplemental motion in limine. (ECF No. 178)("Government's Supplemental Motion"), to which Defendant Graham submitted a supplemental objection (ECF No. 179)("Supplemental Objection"). The Government submitted a reply to Defendant's Supplemental Objection. (ECF No. 188)("Goverranent's Supplemental Reply"). In addition, Defendant submitted a motion in limine to exclude testimony based on speculation. (ECF No. 180)("Defendant's Motion") and a notice of her intent to use the defense of "good faith advice of counsel." (ECF No. 181). Defendant Graham also submitted a Rule 404(b) evidence motion. (ECF No. 189)("Defendant's 404(b) Evidence Motion") and an additional motion by letter to the Court regarding the alleged EFT Scheme. (ECF No. 190)("Letter Motion.") The Government submitted an opposition to Defendant's motion to preclude the Government's 404(b) Evidence. (ECF No. 191)("Government's Opposition to Defendant's 404(b) Evidence Motion").
For the reasons that follow, the Government's and Defendant's Motions are GRANTED in part and DENIED in part.
FACTUAL ALLEGATIONS
The Government alleges that from in or about 2011 to in or about 2012 Graham, along with several co-conspirators, solicited mortgage borrowers who were having difficulties making the payments on their loans to be clients of Terra. (Id.) Graham and her co-conspirators told potential clients that, in exchange for a fee, Terra could eliminate their mortgage debt in a three-step procedure that involved: (1) an audit, (2) a qualified written request to the client's mortgage lender, and (3) the filing of a discharge of mortgage in the local clerk's office. (Id.) Graham and her co-conspirators knew the procedure they were marketing was not authorized by law and would not actually result in the satisfaction of the clients' mortgage obligations. (Id.) Graham and her co-conspirators filed nearly sixty (60) false mortgage discharges ("False Discharges"), knowing that the mortgage debts had not been satisfied, with the county clerks in Westchester and Putnam Counties in New York and in Connecticut. (Id.) Each of the False Discharges involved a loan that had been made by a financial institution, the deposits of which were insured by the Federal Deposit Insurance Corporation or other federal deposit insurers. (Id.) The False Discharges purported to discharge the mortgages with an aggregate loan principal of over $33 million and were signed by Graham's co-conspirators, Defendants Bruce Lewis ("Lewis") and Rocco Cermele ("Cermele"). (Id.)
As payment for their services, Graham and her co-conspirators, charged their clients a monthly fee and instructed some of their clients to obtain a second or reverse mortgage secured by the properties from which the original mortgages had been fraudulently discharged. (Id.) Some of these new mortgage loans were federally-insured loans made under the Home Equity Conversion Mortgage Program ("HECM") of the United States Department of Housing and Urban Development's Federal Housing Administration. (Id.) Graham, along with her co-conspirators, retained substantial portions of the proceeds of the new mortgage loans as fees for their services. (Id.) In some instances, the Defendant and her co-conspirators collected fees from their clients for audits which did not take place. (Id.)
LEGAL STANDARD
"A district court's inherent authority to manage the course of its trials encompasses the right to rule on motions in limine." Highland Capital Mgmt., L.P. v. Schneider, 551 F. Supp. 2d 173, 176-77 (S.D.N.Y.2008) (citing Luce v. United States, 469 U.S. 38, 41 n. 4 (1984)). An in limine motion is intended "to aid the trial process by enabling the Court to rule in advance of trial on the relevance of certain forecasted evidence, as to issues that are definitely set for trial, without lengthy argument at, or interruption of, the trial." Palmieri v. Defaria, 88 F.3d 136, 141 (2d Cir. 1996). "Because a ruling on a motion in limine is 'subject to change as the case unfolds,' this ruling constitutes a preliminary determination in preparation for trial." United States v. Perez, No. 09-CR-1153 (MEA), 2011 WL 1431985, at *1 (S.D.N.Y. Apr. 12, 2011) (quoting Palmieri, 88 F.3d at 139 citing Luce v. United States, 469 U.S. at 41(1984)).
The Federal Rules of Evidence provide that only relevant evidence is admissible. Fed. R. Evid. 402. Evidence is relevant if "it has any tendency to make a fact more or less probable than it would be without the evidence . . . and the fact is of consequence in determining the action." Fed. R. Evid. 401 (a)-(b). Relevant evidence may still be excluded by the Court "if its probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence." Fed. R. Evid. 403. Though the "standard of relevance established by the Federal Rules of Evidence is not high," United States v. Southland Corp., 760 F.2d 1366, 1375 (2d Cir. 1985), the Court has "broad discretion to balance the probative value against possible prejudice" under Fed. R. Evid. 403. United States v. Bermudez, 529 F.3d 158, 161 (2d Cir. 2008).
Evidence of similar bad acts or conduct, not charged in an indictment or information, are typically sought to be introduced pursuant to Fed. R. Evid. 404. Fed. R. Evid. 404(b) provides in relevant part, that:
Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident ...Such evidence, if relevant, may not be offered solely to prove character, Huddleston v. United States, 485 U.S. 681, 687 (1988), but not to demonstrate a propensity to commit the charged offense(s). United States v. Mohamed, 148 F. Supp. 3d 232, 239 (E.D.N.Y. 2015). Extrinsic acts evidence has been deemed admissible to establish the truth to a disputed issue, especially when that issue involves the actor's state of mind and the only means of ascertaining that mental state is by drawing inferences from conduct. Huddleston v. United States, 485 U.S. at 685. To determine the admissibility of "evidence of other [similar] crimes, wrongs or acts," under Fed. R. Evid. 404(b), the Court conducts a three-part inquiry. (Id. at 691.) A reviewing court must consider whether the evidence (1) is offered for a proper purpose; (2) is it relevant to a material issue in dispute; and (3) has probative value such that it substantially outweighs its prejudicial effect. (Id. at 691-692). If after conducting the relevant inquiry the evidence is deemed admissible, the Court shall give an appropriate limiting instruction to the jury, if requested by the party opposing its admission. (Id.)
DISCUSSION
The Government moves in limine asking for the following relief: (1) to preclude the Defendant from introducing documentary evidence which explains or defines what the law is; (2) for a limiting instruction that evidence of the Defendant's views on the law is only relevant to establish a good-faith defense; (3) to preclude the Defendant from offering evidence of Graham's belief that banks and other financial institutions are corrupt and should be wiped out; (4) for the admission of evidence that Graham continued to engage in her fraudulent scheme after her arrest; and (5) for the admission of "other acts" evidence of an electronic funds transfer scheme for debt elimination (the "EFT Scheme").
The Defendant moves in limine asking for the following relief: (1) the exclusion of evidence related to an interaction between a prospective witness, Martin Hopple ("Hopple"), and the Defendant regarding Graham's alleged offer of services which would improve the witnesses credit score; (2) to preclude the introduction of evidence regarding Defendant's alleged participation in a fraudulent scheme in February and March, 2016, wherein she claimed to be able obtain a tax refund from the IRS; and (3) the exclusion of evidence based on speculation.
Documentary Evidence About the Law
The Government seeks to preclude the Defendant from presenting copies of laws which are purportedly related to Defendant's alleged beliefs that certain laws allowed Graham and her co-conspirators to be representatives of their alleged victims' banks. Thus, the Government seeks to preclude the Defendant from introducing at trial documentary evidence or copies of laws such as the Federal Administrative Procedures Act, the Uniform Commercial Code or the common law. (Government's Motion at 4.) The Government asserts that documentary evidence regarding the law should be precluded because permitting the Defendant to introduce her version of what the law is would lead to jury confusion and about their own role, as fact-finders, in the trial process. (Id.)
The Court agrees. It is well settled that questions of law are solely within the province of the court to decide, and questions of fact are for the jury. United States v. Kraeger, 711 F.2d 6, 7-8 (2d Cir. 1983); Hygh v. Jacobs, 961 F.2d 359, 364 (2d Cir. 1992) (the judge has exclusive role of instructing the jury on the law). Permitting the admission of such evidence would not only undermine the Court's role of instructing the jury on the applicable law but could lead to confusion. United States v. Kraeger, 711 F.2d at 8.
The Defendant does not dispute the Government's contention and indicates that she has no intention of offering documentary evidence at trial as to what the law is or should be. (Defendant's Response at 2.) Accordingly, the Government's request is granted.
Testimony About Graham's Views on The Law
The Government asserts that should Graham choose to testify, her testimony about what she believed the law to be, should only be elicited for the purpose of asserting a good-faith defense and it should be accompanied by a limiting instruction. (Government's Motion at 5). Graham states that she intends to present the good-faith defense and/or a good faith reliance on counsel's advice to show her lack of intent to defraud. (Supplemental Opposition at 2-3.)
Good faith is a complete defense to a fraud charge. United States v. Bronston, 658 F.2d 920, 931 (2d Cir.1981); United States v. Gole, 21 F. Supp. 2d 161, 166 (E.D.N.Y. 1997), aff'd, 158 F.3d 166 (2d Cir. 1998). The good faith defense is premised on the precept that a defendant charged with fraud acted in good faith and did not have the requisite intend to defraud the victim. See United States v. Watts, 934 F. Supp. 2d 451, 470 (E.D.N.Y. 2013) (citing United States v. Alkins, 925 F.2d 541, 550 (2d Cir. 1991)). Stated differently, a defendant's honest belief in the truth of the statements or representations made in perpetrating the alleged fraud is a defense, however inaccurate the statement may turn out to be. United States v. Alkins, 925 F.2d at 550; see also United States v. Gole, 21 F. Supp. at 166 (E.D.N.Y. 1997), aff'd, 158 F.3d 166 (2d Cir. 1998) (good faith belief in the honesty of the representations is a complete defense).
A defendant has no burden to establish a defense of good faith, however, the burden is on the government to prove fraudulent intent and consequent lack of good faith beyond a reasonable doubt. United States v. Alkins, 925 F.2d at 550. Much like the good faith defense, "the claimed advice of counsel [defense] is evidence that, if believed, can raise a reasonable doubt in the minds of the jurors about whether the government has proved the required element of the offense that the defendant had an 'unlawful intent.'" United States v. Scully, 877 F.3d 464, 476 (2d Cir. 2017) (quoting United States v. Beech-Nut Nutrition Corp., 871 F.2d 1181, 1194 (2d Cir. 1989)).
It is the Court's determination that the Defendant may proffer admissible evidence and/or testify - should she choose to do so - about what her beliefs were regarding the law at the time of the offense(s) and the sources of those beliefs. Such evidence is relevant to Graham's intent, willfulness and knowledge or lack thereof. The Court, however, agrees with the Government's reliance on United States v. O'Donnell, 02 Cr. 411 (CM) (S.D.N.Y. May 2, 2003), wherein the Court held, that although the Defendant could not present written materials about his beliefs, he could testify about his beliefs. That "quite sensible" approach:
neither inhibits the defendant from putting on a defense nor floods the jury with material that might well confuse them because it is at variance with the Court's legal instruction. The defendant is free to offer a justification for what otherwise might seem to the average juror as a completely irrational and unfounded belief, but the jurors do not read the documents.O'Donnell, slip op. at 7 (attached as Exhibit 1.)
Fed. R. Evid. 105 states that when evidence that is admissible for one purpose but not admissible for another purpose, the Court, upon request, shall restrict the evidence to its proper scope and instruct the jury accordingly. In sum, the Defendant is permitted to proffer admissible evidence about what her beliefs were regarding the law at the time of the offense and the sources of those beliefs with the instruction that such evidence is admissible for the limited purpose of demonstrating her lack of intent to commit the crime.
Admission of Post- Arrest Evidence
The Government seeks to introduce evidence on its direct case that a husband and wife, identified as M.H. and S.H., contacted Graham in 2008 to obtain a modification of the terms of their mortgage loan. (Government's Motion at 5.) Graham, working with her co-conspirator Bruce Lewis, agreed to "audit" their mortgage loan and then extinguish the lender's lien on their home in exchange for a fee. (Id.) Over time, S.H. and M.H. gave Graham and Lewis approximately $25,000 but never obtained a modification of their mortgage loan. (Id.) S.H. and M.H. did, however, receive documents purporting to be liens on their home that Graham told them to file in their local county clerk's office. (Id.)
Graham was arrested on December 1, 2016. (Id. at 6.) The Government alleges that the very next day, after having been released on bail, Graham emailed her former client, S.H., who was unaware of Graham's arrest, for the purpose of assisting her former clients, M.H. and S.H, find a new home and purchase said home from Graham's "investors." (Id.) Five days later, Graham instructed S.H. to "[u]se other email to send me stuff"—what the Government characterizes as an "apparent reference to Graham's direction to S.H. in March 2016 to use a "totally encrypted and private offshore" email service when communicating with Graham because "as we go after the bank I am finding that they are getting into peoples [sic] emails." (Id.) The Government alleges that Graham's post-arrest communications with S.H. appears to have been a continuation of the scheme and her awareness that law-enforcement agents were monitoring her. (Id.)
The Government further alleges that Graham continued to communicate with S.H. regarding the scheme into late January 2017, when she told S.H. over the supposedly secure email account that she wanted "to see if with what I [sic] learned in the supreme law if that can be used in your case ...because you were damaged and harmed by Ocwen and they in fact frauded [sic] you ..."(Id.) Ocwen Financial Corporation is purportedly a mortgage-servicing company. (Id.) The Government asserts that Graham's email communications and her citation to "supreme law" is a reference to the same false legal principles that she, Defendant Bruce Lewis, and her other conspirators, have been citing throughout the course of the criminal scheme charged in the Indictment. (Id.)
The Government alleges that Graham and her co-conspirators would often speak of purported legal principles common in the so-called "sovereign citizen" movement and its offshoots. The sovereign citizen movement is a group of anti-government extremists who believe that "even though they physically reside in this country, they are separate or "sovereign" from the United States." FBI Counterterrorism Analysis Section, Sovereign Citizens: A Growing Domestic Threat to Law Enforcement, FBI Law Enforcement Bulletin (September 1, 2011). --------
The Government asserts that the emails Graham sent to S.H. post-arrest in January 2017 should be part of its case in chief. (Government's Motion 5-6.) and is admissible for several purposes under Rule 404(b). (Id. at 6-7). The Government argues that such evidence shows Graham's fraudulent intent, and her corresponding lack of good faith, because Graham continued to engage in her scheme even after: (1) being put on notice following her arrest and indictment that her financial scheme was contrary to law; and (2) being released subject to a court order that she not engage in any federal, state or local crimes. (Id. at 8.) In addition, the Government asserts that such evidence is relevant because it demonstrates a lack of mistake by the Defendant as well as the criminal nature of her relationship with her co-conspirator, Bruce Lewis. (Id.)
The Second Circuit "follows the 'inclusionary approach,' which admits all 'other act' evidence that does not serve the sole purpose of showing the defendant's bad character and that is neither overly prejudicial under Rule 403 nor irrelevant under Rule 402." United States v. Moran-Toala, 726 F.3d 334, 345 (2d. Cir. 2013) (quoting United States v. Curley, 639 F.3d 50, 56 (2d. Cir. 2011)(citation omitted). However, this approach does not "obviate the need to identify the fact or issue to which the evidence is relevant." United States v. Figueroa, 618 F.2d 934, 940 n.2 (2d. Cir. 1980). The Government must demonstrate that there is "a clear connection between the prior act evidence and a disputed issue at trial." U.S. v. Mercado, 573 F.3d 138, 143 (2d. Cir. 2009). "Without such connection, Rule 404's general prohibition against offering character evidence to show a propensity to commit crimes would be violated." (Id.) The Court also must be mindful of evidence that is "propensity evidence in sheep's clothing." United States v. McCallum, 584 F.3d 471, 477 (2d. Cir. 2009). A District Court has "broad discretion" when determining the admissibility of extrinsic acts pursuant to Fed. R. Evid. 404(b) and such decisions will only be reversed for abuse of discretion. Berkovich v. Hicks, 922 F.2d 1018, 1022 (2d. Cir. 1991).
As previously discussed, a defendant charged with fraud does not have the burden to establish a defense of good faith, however, the burden is on the government to prove fraudulent intent and consequent lack of good faith beyond a reasonable doubt. United States v. Alkins, 925 F.2d at 550. When considering whether to permit the admission of evidence of similar crimes, wrongs or acts," under Fed. R. Evid. 404(b), a reviewing court must consider, inter alia, whether the evidence is relevant to a material issue in dispute, is offered for a proper purpose, and whether its probative value substantially outweighs its prejudicial effect. Huddleston v. United States, 485 U.S. at 691-692. Proof of state of mind, such as intent, has been deemed to be a "proper purpose." United States v. Teague, 93 F.3d. 81,84 (2nd Cir. 1996).
The post-arrest evidence at issue are relevant to a material issue in dispute, the Defendant's mental state and good faith believe. Moreover, the probative value of the evidence substantially outweighs the danger of undue prejudice. In light of the broad latitude accorded to trial courts in determining the admissibility of evidence (United States v. Guang, 511 F.3d 1178, 1182 (2d Cir. 1993)), the Court determines that such evidence is admissible and subject to a limiting instruction.
Evidence of Graham's Beliefs Regarding Banks and Financial Institutions
The Government seeks to exclude any evidence of Graham's beliefs that banks and financial institutions are corrupt and should be wiped out. (Government's Supplemental Motion at 2.) As previously discussed, the Federal Rules of Evidence provide that only relevant evidence is admissible. Fed. R. Evid. 402. For evidence to be deemed relevant, it must have the tendency to make a fact more or less probable than it would be without the evidence and the fact must be of some consequence in determining the action. Fed. R. Evid. 401 (a)-(b). Even if evidence is deemed relevant, it may be excluded "if its probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence." Fed. R. Evid. 403. Defendant's mere believe that banks and other financial institution are corrupt is neither relevant to the charged crimes, her good faith believe nor would it be indicative of a defendant's lack of intent to defraud. Such evidence merely provides an opinion and is not relevant to Defendant's good faith belief. Though the "standard of relevance established by the Federal Rules of Evidence is not high," United States v. Southland Corp., 760 F.2d 1366, 1375 (2d Cir.1985), the court finds the evidence irrelevant under Fed R. Evid. 401. Accordingly, the evidence must be excluded.
Evidence of "Other Acts" of Fraudulent Schemes
The Government seeks the admission of, "other acts" evidence of an electronic funds transfer scheme for debt elimination (the "EFT Scheme"). The Government asserts that during the relevant time period charged in the Indictment, Graham and her co-conspirators directed a Terra employee, who is a cooperating witness ("CW-1"), to attempt to discharge thousands of dollars of debts by issuing fraudulent checks drawn on closed checking accounts. (Government's Supplemental Motion at 3.) The Government asserts that CW-1 will testify the extent of the directions received by Graham and her coconspirators, and the scope of the scheme. (Id.)
The Government asserts that such evidence is admissible pursuant to Fed. R. Evidence 404(b) because it demonstrates the nature of the relationship between Graham and her co-conspirators, is indicative of Graham's fraudulent intent, lack of good faith and the absence of mistake or accident. Additionally, the Governments asserts that such evidence is permissible because the Government is permitted to elicit evidence that bears on the credibility of a witness and may contradict any inference that the government is concealing a witness' bias. Defendant opposes the admission of such evidence on the basis that it merely serves to show propensity to commit bad acts and it's prejudicial affect outweighs any probative value.
As previously referenced, Fed. R. Evid. 404(b) permits the admission of uncharged acts to prove "motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident." When considering such evidence, the Court must, inter alia, determine whether the evidence is offered for a proper purpose, is relevant to a material issue in dispute, and is more probative or prejudicial. Huddleston, 485 U.S. at 691-692. Furthermore, regarding the admissibility of the other uncharged acts or conduct under Fed. R. Evid. 404(b), and more specifically, uncharged evidence related to financial schemes, courts in our Circuit have stated that "the government must explain the uncharged transactions, identify similarities between the charged and uncharged transactions, and articulate how the similarities identified support an inference of knowledge or intent." United States v. Stein, 521 F.Supp.2d 266, 270 (S.D.N.Y. 2007); United States v. Rajaratnam No. S1 13 Cr. 211(NRB) 2014 WL 2696568 at *3 (S.D.N.Y. June 10, 2014).
Here, there is a strong similarity and connection between the charged and uncharged transactions. Graham is principally charged with unlawfully discharging approximately sixty mortgages by filing fraudulent satisfaction of liens and/or similar documents. The EFT scheme purportedly involved an attempt to discharge outstanding debts by fraudulently issuing checks on bank accounts known to be closed. Additionally, it is well settled that the government may question an accomplice witness' testimony regarding his prior bad acts which bear on his credibility and to contradict any inference that the government is concealing a witness' bias. See United States v. Louis, 814 F.2d 852, 856 (2d Cir. 1987) (internal citations omitted).
Evidence of Credit-Score Services
The Government plans to introduce evidence that Defendant Graham along with her co-conspirator allegedly engaged in a scheme to improve Martin Hopple's ('Hopple") credit score ("Credit Score Improvement Scheme"), although Government alleges that improvement never happened. The Government anticipates that Hopple will testify that he was desperate to stay in his home and turned to Graham for help as early as 2009 and their communications continued until early 2017. (Government's Opposition to Defendant's 404(b) Evidence Motion at 2.) The Government anticipates that Hopple will testify that Graham, along with Bruce Lewis, collected roughly $25,000 from Hopple (including payments in 2011 and 2012) and, in exchange, Graham (1) instructed Hopple that he should stop making mortgage payments, and (2) provided advice as to how they could "eliminate" Hopple's mortgage which included Graham and Lewis mailing and e-mailing various documents to financial and/ or reporting institutions on behalf of Hopple and his wife (including qualified written request documents in at least July and August 2011). (Id. at 2.) The Government further anticipates that Hopple will testify that after following Graham's advice, his credit score dropped, and he eventually lost his home. (Id. at 2-3.) As part of Graham's continual reassurances to Hopple, the Government anticipates that Hopple will testify that Graham claimed that she would work "undercover" at the mortgage lender's offices to help save the Hopple's home, and for a fee, Graham would provide services to improve Hopple's credit score. (Id. at 3.) Despite Graham assistance, Hopple's credit score did not improve and he is unaware of any efforts made by Graham to improve his credit score. (Id.).
The Government argues that testimony from Hopple should be admitted as direct evidence or, in the alternative, pursuant to Rule 404(b) because it establishes Graham's intent (corresponding lack of good faith, knowledge, absence of mistake, and lack of accident. (Id.)
The Second Circuit has "emphasized that evidence of criminal behavior may be admissible as direct evidence of the crime charged" (and not subject to a Rule 404 (b) analysis) if the evidence: "'arose out of the same transaction or series of transactions as the charged offense, if it is inextricably intertwined with the evidence regarding the charged offense, or if it is necessary to complete the story of the crime on trial.'" United States v. Hsu, 669 F.3d 112, 118 (2d. Cir. 2012)(quoting United States v. Carboni, 204 F.3d 39, 44 (2d. Cir. 2000)). In addition, courts have also viewed attempts to "lull" a defrauded party into a fall sense of security as relevant to charges of mail or wire fraud. U.S. v. Rogers, WL 8544 at *3 (S.D.N.Y. January 24, 1991). See also, United States v. Lane, et. al., 474 U.S. 438, 451-452 (1986).
Here, the alleged advice Defendant Graham, along with her co-conspirators, gave to Hopple on how he could eliminate his mortgage debt is undated. However, the Government alleges that the advice was concurrent with Graham and her co-conspirator, Lewis, mailing and emailing various documents to and on behalf of Hopple in July and August 2011, the relevant time period of the crimes charged in the Indictment. Furthermore, the Government anticipates testimony that Hopple made $25,000 in payments during the relevant time period in the Indictment (2011-2012), which also suggests that the Credit Score Improvement Scheme arose out of the same series of transactions as the charged offense. The Court believes that the evidence the Government proffers is "necessary to complete the narrative" concerning Hopple's interaction with Graham in furtherance of the charged fraud. United States v. Carboni, 204 F.3d at 44. Graham's alleged offer to resuscitate Hopple's credit rating mirrors the claimed scheme of being able to eliminate mortgage debt(s).
It is further the Court's view that the evidence is admissible under Rule 404(b) to establish Graham's absence of mistake and lack of accident. See Huddleston v. United States, 485 U.S. at 691- 692. Graham's alleged continual false reassurances to Hopple demonstrates Graham's intent, lack of good faith, knowledge and absence of mistake or accident, in committing the fraudulent acts. Particularly, evidence that Graham, if found credible, is relevant on the issue of Defendant's intent, knowledge and absence of mistake. The Court further concludes that the Government has sufficiently "explained the uncharged transactions, identify similarities between the charged and uncharged transactions, and articulate how the similarities identified support an inference of knowledge or intent." United States v. Stein, 521 F. Supp. 2d 266, 270 (S.D.N.Y. 2007).
Fraudulent IRS Refund Program
Defendant seeks to preclude the Government from introducing on its direct case any evidence concerning an alleged fraudulent scheme by Graham and her co-conspirator to obtain IRS refunds. The Defendant asserts that it received untimely notice of the Government's intention to introduce such evidence and that such evidence is merely being offered to show propensity to commit bad acts. The Government states that it no longer plans to introduce this evidence at trial. (Opposition to 404(b) Evidence Motion at 2.) Accordingly, the Defendant's motion is granted.
Evidence Based on Speculation
Without giving any specific examples, Defendant moves to exclude evidence that improperly offers conclusory opinions or speculates about Graham's guilt or knowledge of criminal activity in this matter. Should the Government seek, to introduce speculative evidence, the Court will entertain timely objections on its admissibility. It is the role of the Court to decide any preliminary question about whether a witness is qualified, a privilege exists, or evidence is admissible. Fed. R. Evid. 104 (a).
Rule 701 of the Federal Rules of Evidence provides as follows:
If the witness is not testifying as an expert, the witness' testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perceptions of the witness, (b) helpful to a clear understanding
of the witnesses testimony or the determination of the fact in issue, and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702. Fed.R.Evid. 701.
Lay witnesses may not speculate in their answers to questions posed and their testimony must be grounded in observation or other first-hand knowledge; their opinions may not be based on speculation, intuition, rumors or matters remote from their experience. United States v. Awadallah, 401 F. Supp. 2d 308, 314 (S.D.N.Y. 2005), aff'd, 436 F.3d 125 (2d Cir. 2006)("[U]nder Rule 701, lay opinion testimony is limited to those opinions or inferences that are (a) rationally based on the perception of the witness, and (b) helpful to a clearer understanding of his testimony of the determination of the fact in issue.") A lay witnesses' opinion must be rationally based on the perception of the witness and the inference they offer must be based on "first-hand knowledge" and is one in which a normal person would form on the basis of observed facts. United States v. Rea, 958 F.2d 1206, 1214-15 (2d Cir. 1992). Thus, if the Government elicits testimony that causes witnesses to speculate and make conclusory statements about what Graham knew or might have known void of observation or first-hand knowledge, the Court, upon a proper objection, will deem this evidence inadmissible.
CONCLUSION
For the foregoing reasons, the motions are resolved as follows: the Defendant is precluded from introducing at trial documentary evidence or copies of laws, such as the Federal Administrative Procedures Act, the Uniform Commercial Code or the common law; the Defendant is permitted to proffer admissible evidence and/or testify - should she choose to do so - about what her beliefs were regarding the law at the time of the offense(s) and the sources of those beliefs in support of her asserted good-faith defense; the Defendant is preclude from offering opinion testimony concerning whether or not banks and other financial institutions are corrupt; the Government's is granted leave to introduce on its direct case post-arrest evidence as proof of the Defendant's state of mind, in support of her intent to defraud, lack of good faith belief and or lack of mistake; the Government is granted leave to introduce evidence of credit-score services to establish the Defendant's intent, lack of good faith, and to complete the narrative concerning witness Hopple's interaction with the Defendant in furtherance of the charged crime; the Government is precluded from introducing on its direct case evidence concerning an alleged scheme to obtain IRS Refunds; and lastly the Court reserves the right to rule on the admissibility of "speculative evidence" based upon a timely and proper objection.
The Clerk of the Court is respectfully requested to terminate the motions at ECF Nos. 164, 172, 178, 180, 189, 190. May 31, 2019
White Plains, New York
SO ORDERED:
/s/_________
NELSON S. ROMÁN
U.S. DISTRICT JUDGE, S.D.N.Y.