[EDITOR'S NOTE: PART 2 OF 3. THIS DOCUMENT HAS BEEN SPLIT INTO MULTIPLE PARTS ON LEXIS TO ACCOMMODATE ITS LARGE SIZE. EACH PART CONTAINS THE SAME LEXIS CITE.]
7. Motions for a Mistrial
On 29 June 1993, Bertoli moved for a mistrial based on certain comments, outside of the presence of the jury, to Bertoli (the "29 June Motion for Mistrial"). See Trial Transcript at 2680. The motion was denied. See id. at 2681. In the 2 July 1993 Letter, Bertoli summarized these comments as follows: "The court has told the parties in no uncertain terms that it believes Eisenberg to be a credible witness -- a statement which unmistakably evidences the court's view that it believes the undersigned to be guilty." 2 July 1993 Letter at 1.
"The decision whether to grant a mistrial is within the sound discretion of the trial court. . . ." United States v. Saldarriaga, 987 F.2d 1526, 1531 (11th Cir. 1993); see United States v. Clair, 934 F.2d 943, 945 (8th Cir. 1991); United States v. Rocha, 916 F.2d 219, 234 (5th Cir. 1990), cert. denied sub nom., Hinojosa v. United States,500 U.S. 934, 111 S. Ct. 2057, 114 L. Ed. 2d 462 (1991); United States v. Crosley, 634 F. Supp. 28, 32 (E.D.Pa. 1985), aff'd mem., 787 F.2d 584 (3d Cir. 1986). "The single most important factor in making [this] determination is the extent to which the defendant has been prejudiced." United States v. Tarantino, 269 U.S. App. D.C. 398, 846 F.2d 1384, 1413 (D.C.Cir.), cert. denied, 488 U.S. 867, 102 L. Ed. 2d 143, 109 S. Ct. 174 (1988); see United States v. Moore, 917 F.2d 215, 220 (6th Cir. 1990), cert. denied, 499 U.S. 963, 113 L. Ed. 2d 654, 111 S. Ct. 1590 (1991); United States v. Vastola, 899 F.2d 211, 235 (3d Cir.), vacated on other grounds, 497 U.S. 1001 (1990); Brown v. Doe, 803 F. Supp. 932, 942 (S.D.N.Y. 1992).
As an initial matter, Bertoli's characterization of the comments upon which he based the 29 June Motion for Mistrial was incorrect. The Trial Transcript reads:
BERTOLI: Your honor, it's my contention that Leo Eisenberg cut a deal, created a story to come up with a family package to get his two sons off the hook and himself. . . .
COURT: Let's assume all of what you say is correct. The underlying conduct is irrelevant. It has nothing to do with it. If he was trying to lie and, frankly, the story he related here is so internally consistent, so consistent with everybody else's testimony that your argument really does not strike a true note here, but that's for the jury to make up their mind. If I was the finder of fact, I would reject it out of hand. All the documents support him, as the documents support [Government witness Louis] Foti [("Foti")].
Id. at 2608 (emphasis added).
This comment merely observed that Eisenberg's testimony was internally consistent and consistent with that of other witnesses. See id. at 2946. The comment did not suggest Bertoli was guilty. It was merely stated that, given the internal consistency of Eisenberg's testimony, the court would reject the argument then offered by Bertoli on that point. In fact, as the record reflects, it was specifically explained to Bertoli: "The only view I have is that you're presumed innocent. I have [so] instructed the jury and I've operated that way." Id. at 2946-47.
There was no basis for a mistrial in light of these comments. The comments and any subsequent discussion regarding the comments were made outside of the presence of the jury. As Bertoli was reminded on more than one occasion, fact finding and credibility determinations were the province of the jury, who remained unaware of the comment to which Bertoli objected.
See id. at 2608, 2681-82. Moreover, the jury was instructed at both the beginning and the end of the case that Bertoli was to be presumed innocent, see id. at 6729-30, 6809, that the jury was the sole judge of the facts, see id. at 280, 282-83, 6721, 6723-25, 6732, 6805, and that the court maintained no position in the case. See id. at 277, 6719, 6732, 6734-35. Because Bertoli suffered no prejudice as a result of the comments he cited, and because his argument was factually baseless, his 29 June Motion for Mistrial was denied. See Tarantino, 846 F.2d at 1413.
Bertoli again moved for a mistrial on 6 July 1993 (the "6 July Motion for Mistrial"). The basis for this motion was also a comment made at sidebar, outside the presence of the jury. Bertoli made specific reference to an exchange which followed certain improper comments made by Bertoli during his cross-examination of Eisenberg. Bertoli concluded his cross-examination of Eisenberg with a sarcastic, testimonial question regarding Eisenberg's criminal history. See Trial Transcript at 3152 ("Bottom line, Mr. Eisenberg, you say you're a stand-up guy and you haven't spent a day in jail, have you?"). Bertoli then sarcastically stated: "I have no further use for this witness, your honor." Id. at 3153.
Following the Government's objection to these comments, a sidebar conference was convened. The conference took place at the side of the bench farthest from the jury. The jury's view of the parties was blocked by the bench, and the court's back was to the jury box. In a firm, low voice, Bertoli was admonished about the impropriety of offering testimony while questioning a witness:
The last two comments are way out of line. I have been cautioning you constantly. . . . You have abused your right of cross-examination. Don't do it again. I've given you another warning. You're totally out of line. . . .
Your sarcasm -- all that's meant to do is to try to testify. You want to testify, you take the stand. You do not have the right to do that [while questioning another witness]. You're acting as an attorney. . . .
Following a recess, Bertoli moved for a mistrial. Bertoli argued: "At the sidebar, his Honor impacted on my Sixth [sic ] Amendment
right to testify or not to testify because you were loud enough to be heard, not only at this table, but back in the rear. Clearly the jury must have heard that."
Id. at 3156. Bertoli's motion, being meritless, was denied. Id.
Bertoli's motion was baseless as a factual matter. As indicated, the comments of which Bertoli complained were made at sidebar, well out of the range of the jury's hearing. The denial of Bertoli's 6 July Motion for Mistrial was based on the factual finding that the jury could not possibly have heard the comments cited by Bertoli.
Bertoli has introduced no reason to revisit that factual finding. Because Bertoli could not have been prejudiced by the comments of which he complained, his 6 July Motion for Mistrial was properly denied.
See Tarantino, 846 F.2d at 1413.
8. Objection to Admission of Cayman Islands Documents After Beginning of Trial
During trial, Bertoli objected to the admission, pursuant to 18 U.S.C. § 3505, of certain immigration records received from the Cayman Islands Government after the beginning of the trial. See Trial Transcript at 4772, 4788. In so doing, Bertoli relied on the unpublished decision in United States v. Marcos, No. 87 Cr. 598 (JFK), 1990 U.S. Dist. LEXIS 3280 (S.D.N.Y. 27 March 1990). Bertoli's objection was without merit.
Section 3505 provides that a party intending to offer foreign records must provide written notice of the intention "at the arraignment or as soon after the arraignment as practicable." 18 U.S.C. § 3505. Moreover, as previously discussed, section 3505 requires that a motion opposing the introduction into evidence of foreign documents "shall be made by the opposing party and determined by the Court before trial." Id.
In Marcos, the court held, pursuant to section 3505, that foreign documents could not be submitted following the commencement of trial. See Marcos, 1990 U.S. Dist. LEXIS 3280, at **17-18. The Marcos court reasoned that, because section 3505 required that a motion to exclude documents under section 3505, as well as a ruling on that motion, be made prior to trial, section 3505 "plainly foreclosed" the introduction of documents pursuant to section 3505 after trial had commenced. Id.
Contrary to the explanation in Marcos, section 3505 does not explicitly require that only documents provided prior to trial are admissible under section 3505. Instead, section 3505 provides a flexible rule, allowing the documents to be produced "as soon after the arraignment as practicable." 18 U.S.C. § 3505(b). In this case, because the immigration records in question were not provided to the Government by the Cayman Islands Government until after trial had commenced, the Government produced the documents to Bertoli as soon as "practicable" under the circumstances, in compliance with Section 3505(b).
Neither the rationale of Marcos nor Bertoli provided a convincing reason for excluding evidence which was otherwise relevant and reliable simply because the Government received that evidence, through no fault of its own, after trial had commenced. The Marcos reasoning appears to impose a restriction on the operation of section 3505 that simply is not present in the statute. To the extent section 3505(b) requires a motion opposing the admission of foreign documents pursuant to section 3505 be made and decided prior to trial, the more reasonable, consistent and fair interpretation of that language is to require that such a motion and ruling be made when, contrary to this situation, the parties have notice of the foreign documents prior to trial. Indeed, as already discussed, section 3505 "was not intended to add technical roadblocks to the admission of foreign records, but, rather, to streamline the admission of such records." United States v. Strickland, 935 F.2d 822, 831 (7th Cir. 1991), cert. denied, 502 U.S. 1036, 112 S. Ct. 884, 116 L. Ed. 2d 787 (1992).
9. Objections to the Government's Use of Summary Charts and Demonstrative Charts
Fed. R. Evid. 1006 allows a party to prove the contents of voluminous writings which cannot be examined in court without inconvenience by presenting evidence of the contents of those documents in the form of charts, summaries or calculations. See Pelullo, 964 F.2d 193, 204; see also Martin v. Funtime, Inc., 963 F.2d 110, 115-16 (6th Cir. 1992); Harris Mkt. Research v. Marshall Mktg. & Communications, Inc., 948 F.2d 1518, 1525 (10th Cir. 1991); United States v. Evans, 910 F.2d 790, 800 (11th Cir. 1990), aff'd, 504 U.S. 255, 112 S. Ct. 1881, 119 L. Ed. 2d 57 (1992). Specifically, Rule 1006 states:
The contents of voluminous writings, recordings, or photographs which cannot conveniently be examined in court may be presented in the form of a chart, summary, or calculation. The originals, or duplicates, shall be made available for examination or copying, or both, by other parties at [a] reasonable time and place. The court may order that they be produced in court.
The language of Rule 1006
recognizes that it often takes a great deal of court time to introduce a legion of documents to establish a single point. As the Advisory Committee notes indicate, it would be a grueling waste of time to examine all of the underlying evidence in court, and hence charts and summaries are permitted within the court's discretion.
United States v. Strissel, 920 F.2d 1162, 1163-64 (4th Cir. 1990). In addition, courts "cannot rationally expect an average jury to compile summaries and to create sophisticated flow charts to reveal patterns that provide important inferences about the defendants' guilt." United States v. Duncan, 919 F.2d 981, 988 (5th Cir. 1990), cert. denied, 500 U.S. 926, 114 L. Ed. 2d 121, 111 S. Ct. 2036 (1991).
Rule 1006 does not require "that it be literally impossible to examine all the underlying records [before a summary chart may be utilized], but only that in-court examination would be an inconvenience." United States v. Possick, 849 F.2d 332, 339 (8th Cir. 1988); see United States v. Briscoe, 896 F.2d 1476, 1495 (7th Cir.), cert. denied sub nom., Usman v. United States, 498 U.S. 863, 112 L. Ed. 2d 137, 111 S. Ct. 173 (1990); United States v. Stephens, 779 F.2d 232, 239 (5th Cir. 1985); United States v. Jennings, 724 F.2d 436, 441-42 (5th Cir.), cert. denied, 467 U.S. 1227, 81 L. Ed. 2d 877, 104 S. Ct. 2682 (1984); United States v. Scales, 594 F.2d 558, 562 (6th Cir.), cert. denied, 441 U.S. 946, 60 L. Ed. 2d 1049, 99 S. Ct. 2168 (1979). For example,
where a fact could be ascertained only by the inspection of a large number of documents made up of very numerous detailed statements [,] . . . it is obvious that it would often be practically out of the question to . . . require the production of the entire mass of documents and entries to be perused by the jury or read aloud to them.
4 Wigmore, Evidence § 1230 at 535 (1972) (emphasis in original); see also Fagiola v. National Gypsum Co., 906 F.2d 53, 57 (2d Cir. 1990); Jennings, 724 F.2d at 441-42.
One of the most significant aspects of Rule 1006 is that there is no prerequisite that the underlying documents have been submitted into evidence.
See Strissel, 920 F.2d at 1163-64; United States v. Meyers, 847 F.2d 1408, 1412 (9th Cir. 1988); United States v. Clements, 588 F.2d 1030, 1039 (5th Cir.), cert. denied, 440 U.S. 982 (1979). As long as summary charts meet the following requirements, they are admissible: (1) the underlying documents must be admissible, even if they are never admitted; (2) the underlying documents must be too voluminous for convenient in-court review; (3) the charts must accurately summarize the underlying documents; (4) the summary charts and the underlying documents must have been made available at a reasonable time and place for inspection by the opposing side; and (5) the person who prepared the charts must have been made available for cross examination. See Pelullo, 964 F.2d 193, 204; Stich, 730 F.2d 115, 119; see also United States v. Nivica, 887 F.2d 1110, 1125 (1st Cir. 1989), cert. denied, 494 U.S. 1005, 108 L. Ed. 2d 477, 110 S. Ct. 1300 (1990); Davis & Cox v. Summa Corp., 751 F.2d 1507, 1516 (9th Cir. 1985).
Once it is determined the charts have met the above-listed requirements, their admission is committed to the discretion of the trial court. United States v. Paulino, 935 F.2d 739, 753 (6th Cir.), cert. denied, 502 U.S. 917, 112 S. Ct. 323 (1991); see Nivica, 887 F.2d at 1126; United States v. Norton, 867 F.2d 1354, 1362 (11th Cir.), cert. denied, 491 U.S. 907, 105 L. Ed. 2d 701, 109 S. Ct. 3192 (1989). Upon being found admissible under Rule 1006, the summary charts are considered evidence. Winn, 948 F.2d at 158; United States v. Smyth, 556 F.2d 1179, 1184, reh'g denied, 557 F.2d 823 (5th Cir.), cert. denied, 434 U.S. 862, 54 L. Ed. 2d 135, 98 S. Ct. 190 (1977); see Osum, 943 F.2d at 1405 n.9; Gomez v. Great Lakes Steel Div., Nat'l Steel Corp., 803 F.2d 250, 257 (6th Cir. 1986). Indeed, where the chart summarizes data not in evidence, the chart is the only evidence available for the jury's consideration of the matters set forth therein.
The summary charts used by the Government in the instant case were introduced through Fuentes (the "Fuentes Summary Charts"), who was assigned by the NASD to work with the Government preparing charts depicting the fraudulent trading schemes. Trial Transcript at 1205-06. The Fuentes Summary Charts, for the most part, summarized information regarding the LCI Scheme, the Toxic Waste Scheme and the High Tech Scheme. They consisted of four categories of charts: (1) charts listing the names of customers who purchased units in the LCI IPO, the Toxic Waste IPO and the High Tech IPO and the quantity of units they purchased, (2) charts depicting trading by individual accounts in the securities of LCI, Toxic Waste, High Tech, Nature's Bounty, Solar Age and Cinematronics (the "Individual Charts"), (3) daily trading charts showing trading at Monarch in the securities of LCI, Toxic Waste and High Tech in the first few days after the closing dates of their respective IPOs and (4) graphs showing the highest sale prices paid at Monarch for the securities of LCI, Toxic Waste, High Tech, Nature's Bounty and Solar Age. Id. at 1211-25; Rule 104 Hearing Transcript at 443-52.
The Fuentes Summary Charts were prepared using information gathered from various Monarch trading documents including, order tickets, the purchase and sales blotter, customer confirmations, broker-dealer confirmations, monthly account statements, customer ledger sheets, stock transfer sheets and the stock delivery and receipt blotter. Id. The underlying Monarch trading records were voluminous; in-court examination during the trial would have been impracticable and inconvenient. The admissibility of those underlying documents was considered at the Rule 104 Hearing.
to stipulate that the [Fuentes Summary Charts] fairly and accurately represent the backup materials used to prepare them and that the figures shown in the summary trading sections of the charts are accurate.
Id. at 509. Bertoli so stipulated.
When Bertoli was asked whether he had any objections concerning the Fuentes Summary Charts, Bertoli replied:
With respect to the posting accuracy of the charts I take no exception. With respect to the underlying documentation, my objection would be continuing. It's my belief that the underlying documentation with respect to Monarch . . . is not accurate, so the basic documents themselves are unreliable.
Id. ; see also id. at 525 (objection, pursuant to Fed. R. Evid. 404(b), to Fuentes Summary Charts which concerned Nature's Bounty). Bertoli also objected that one particular chart was not based on voluminous documents. Id. at 510. In response, the Government explained:
What we have done is taken all these charts and put all the information on one huge chart, all the trading records of [the] accounts. . . . It's clear that when you take the records all together, they're voluminous. We've simply broken them down in different charts.
At the conclusion of direct questioning of Fuentes by the Government during the Rule 104 Hearing, Bertoli cross examined her about the charts. Id. at 519-20. Primarily, Bertoli's questions went to the accuracy of the underlying documents. However, he was instructed to limit his questions, for purposes of the Rule 104 Hearing, to the charts.
The Fuentes Summary Charts met all of the requirements of Rule 1006. First, the underlying documents were found to be admissible under the business records exception and the public records exception, pursuant to Fed. R. Evid. 803(6) and (8). Rule 104 Hearing Transcript at 430, 436-37. Second, the Monarch trading documents which formed the bases for the charts were voluminous, and in-court examination of those documents by the jury would have created substantial inconvenience and delay. Third, Bertoli agreed that the Fuentes Summary Charts accurately reflected the underlying documents. Id. at 510. Fourth, the Fuentes Summary Charts and the underlying documents were made available to Bertoli in advance of the Rule 104 Hearing for his inspection. See id. at 509. Fifth, Fuentes, the person who prepared the charts, was made available to Bertoli for cross examination both at the Rule 104 Hearing and at trial. See id. at 519-20; Trial Transcript at 1354-71, 1383-1475. Accordingly, the Fuentes Summary Charts were admissible under Rule 1006. See Pelullo, 964 F.2d at 204; Stitch, 730 F.2d at 119; Nivica, 887 F.2d at 1125.
Compilations or charts which are used only to summarize or organize testimony or documents which have themselves been admitted into evidence are distinguished from those used as evidence pursuant to Rule 1006. Where the summaries or charts are "pedagogical devices 'more akin to argument than evidence' [because] they organize the jury's examination of testimony and documents already admitted into evidence," they do not come within Rule 1006. Paulino, 935 F.2d at 753. These pedagogical devices, unlike Rule 1006 summaries, are not evidence, but only a party's organization of the evidence already presented. The difference between Rule 1006 summary charts and demonstrative charts has been explained as follows:
There is a distinction between a Rule 1006 summary and a so-called "pedagogical" summary. The former is admitted as substantive evidence, without requiring that the underlying documents themselves be in evidence; the latter is simply a demonstrative aid which undertakes to summarize or organize other evidence already admitted. . . . [A] pedagogical summary can itself be admitted into evidence where the trier of fact will find it helpful and will not be unduly influenced thereby.
White Indus. v. Cessna Aircraft Co., 611 F. Supp. 1049, 1069-70 (W.D.Mo. 1985); see United States v. Pinto, 850 F.2d 927, 935 (2d Cir.), cert. denied sub nom., Vence v. United States, 488 U.S. 867, 102 L. Ed. 2d 143, 109 S. Ct. 174 (1988); Possick, 849 F.2d at 339; United States v. Gardner, 611 F.2d 770, 776 (9th Cir. 1980); Scales, 594 F.2d at 563-64; Smyth, 556 F.2d at 1182-84; accord United States v. Goichman, 407 F. Supp. 980, 998 (E.D.Pa.), aff'd, 547 F.2d 778 (3d Cir. 1976); Bader Coal Co. v. Quemahoning Coal Co., 14 F.2d 743, 747 (3d Cir. 1926).
Rule 611(a), which permits trial judges to make common-sense determinations as to how the trial should be run, allows the introduction of demonstrative summaries and charts. Specifically, Rule 611(a) provides:
Control by Court: The court shall exercise reasonable control over the mode and order of interrogating witnesses and presenting evidence so as to (1) make the interrogation and presentation effective for the ascertainment of the truth, (2) avoid needless consumption of time, and (3) protect witnesses from harassment or undue embarrassment.
Fed. R. Evid. 611(a). As discussed in the Advisory Committee's Note to Rule 611, the rule covers such matters as the presentation of evidence, the use of demonstrative evidence and "the many other questions arising during the course of a trial which can be solved only by the judge's common sense and fairness in view of the particular circumstances." Fed. R. Evid. 611 Advisory Committee's Note. Demonstrative evidence "is universally offered and submitted as an aid to understanding." Fed. R. Evid. 401 Advisory Committee's Note.
The use of demonstrative charts to "aid the jury's comprehension is well within the court's discretion." Possick, 849 F.2d at 339; Paulino, 935 F.2d at 753; Gardner, 611 F.2d at 776. However, when Rule 611 charts are used, it is required the charts be accompanied by an instruction from the court which "informs the jury of the summary's purpose and that it does not constitute evidence." Paulino, 935 F.2d at 753; see Holland v. United States, 348 U.S. 121, 128, 99 L. Ed. 150, 75 S. Ct. 127 (1954), reh'g denied, 348 U.S. 932, 99 L. Ed. 731, 75 S. Ct. 334 (1955); Scales, 594 F.2d at 561-62.
The Ford Demonstrative Charts
were all part of the 7000 series of Government exhibits, specifically exhibit numbers 7000-7029. They were flow charts illustrating the movement of money into and out of the Cayman Islands accounts in connection with trading in the securities of LCI, Toxic Waste, High Tech, Nature's Bounty and Mega Energy. Trial Transcript at 4854-4945, 4965-89. The Ford Demonstrative Charts also summarized documents and testimony which had been previously introduced into evidence. The charts were organized so that each listed its sources and was presented together with its underlying documents. See id. at 4854. Special Agent Ford testified about what the charts were meant to summarize and explained how the charts made use of the previously admitted evidence.
During the trial, on 10 June 1993, Fuentes was called to testify regarding the Fuentes Summary Charts and the Fuentes Demonstrative Charts. At the conclusion of her direct testimony, the Government submitted "Government Exhibit A," a list of the charts prepared by Fuentes. Trial Transcript at 1243. The charts listed on Government Exhibit A were admitted; the jury was given the following instruction regarding the difference between summary charts and demonstrative charts:
The sources for the information on the demonstrative charts are noted right on the notes [on the bottom of the chart]. . . . That will give you an indication they're demonstrative charts as I use that term.
Th[e demonstrative] charts are shown to you . . . in order to make the other evidence in this case more meaningful and aid you in considering all the evidence, all the underlying data.
The information on these demonstrative charts is based upon other exhibits which are in evidence and upon testimony presented during the course of this case. . . .
These demonstrative charts . . . are no better than the testimony or the documents upon which they are based and . . . the charts themselves are not independent evidence. . . .
It's for you to decide whether the demonstrative charts correctly present the evidence obtained in the testimony and exhibits upon which they are based. . . .
Summary charts don't have sources listed, they are offered into evidence in lieu of underlying documents. The summary charts are based upon the principle that the underlying documents are so voluminous that these summary charts are just that, summaries of underlying documentation.
The Rules of Evidence permit the presentation of such summary charts in order to save time and to simplify your task of considering all of the exhibits that have been admitted into evidence. . . .
These summary charts are themselves evidence and you should consider these summary charts as you would any other evidence and give them such weight as you determine they deserve.
At a later point in the trial, on 22 July 1993, at a hearing outside the presence of the jury, some of the Ford Demonstrative Charts, specifically exhibit numbers 7022-7029, were discussed. Bertoli objected to the use of those charts for a variety of reasons: (1) he contended one chart, Government exhibit 7028, was argumentative and "highly prejudicial" in violation of Fed. R. Evid. 403, Trial Transcript at 4980-81; (2) he argued that another chart, Government exhibit 7026, neither summarized multiple documents nor was based on issues which were "confusing" or in need of summarization, id. at 4967; (3) he argued that another chart, Government exhibit 7024, violated Fed. R. Evid. 3505 and 403, Trial Transcript at 4968; and (4) he objected to several charts, Government exhibits 7024, 7022 and 7025, on the ground that the underlying facts were in dispute. See id. at 4968, 4983, 4984. Each of the objections was overruled. Id. at 4967, 4969, 4982, 4983, 4984, 4985. When the Government concluded its direct examination of Special Agent Ford, Bertoli cross examined Special Agent Ford about the Ford Demonstrative Charts and attempted to point out inaccuracies in the charts. Id. at 4945-58, 4997-5007, 5016.
Given the complexity of the facts in the case and the volume of documents and exhibits used to illustrate the fraudulent trading schemes, the charts, which summarized trading activities and cash flows, were tools likely to aid the jury in comprehending the case. In-court examination of all the underlying documents would have been burdensome, time-consuming and confusing without the aid of the charts.
The use of the charts in this case was accompanied by the necessary safeguards. The charts were introduced by persons familiar with the underlying documents and how the charts were prepared. Because charts may be introduced either through a person who prepared the chart or a person who has reviewed the underlying documents and confirmed the accuracy of the chart, both Fuentes and Special Agent Ford were proper chart witnesses. See United States v. Caswell, 825 F.2d 1228, 1235-36 (8th Cir. 1987); United States v. Lemire, 232 U.S. App. D.C. 100, 720 F.2d 1327, 1349 (D.C. Cir.), cert. denied, 467 U.S. 1226, 81 L. Ed. 2d 874, 104 S. Ct. 2678 (1983); Scales, 594 F.2d at 563. Furthermore, Bertoli had ample opportunity to point out any inaccuracies reflected in the charts during his cross examination of Fuentes and Special Agent Ford, who he questioned at length about the underlying documents. See Rule 104 Hearing Transcript at 519-20; Trial Transcript at 1354-71, 1383-1475, 3806-14, 4994-58, 4997-5007, 5016. The jury, therefore, was presented with evidence from both sides and was well-equipped to draw its own conclusions as to whether the information summarized in the charts was accurate.
The objections based on the assertion that the underlying documents were inaccurate, see Trial Transcript at 4968, 4983-85; Rule 104 Hearing Transcript at 509-501, were not grounds for disallowing the charts. Charts may summarize records that the opposing side claims are inaccurate or incomplete. As the court in Evans stated: "In an adversarial proceeding, it is not unusual for testimony offered by one side to be contradicted by testimony by the opposing side." 910 F.2d at 800. In such cases, the charts are nevertheless permissible as long as the other requirements are met and the charts are made available to the other side so that a proper cross examination can be developed. In re Richardson-Merrell, Inc. "Bendectin" Prod. Liability Litig., 624 F. Supp. 1212, 1224-26 (S.D.Ohio 1985), aff'd, 857 F.2d 290 (6th Cir. 1988), cert. denied sub nom., Hoffman v. Merrell Dow Pharmaceuticals, Inc., 488 U.S. 1006, 102 L. Ed. 2d 779, 109 S. Ct. 788 (1989); see Strissel, 920 F.2d at 1164; Nivica, 887 F.2d at 1125-26; United States v. Porter, 821 F.2d 968, 974-75 (4th Cir. 1987), cert. denied, 485 U.S. 934, 99 L. Ed. 2d 269, 108 S. Ct. 1108 (1988); United States v. Driver, 798 F.2d 248, 253 (7th Cir. 1986); see also Fagiola, 906 F.2d at 57-58. The ability to cross examine "'alleviates any danger of inaccuracy or unfair characterization.'" Paulino, 935 F.2d at 753 (citation omitted). Accordingly, any complaints Bertoli had with regard to the accuracy of the information reflected in the charts should have been and was addressed during his cross examination of Fuentes and Special Agent Ford.
Bertoli also contended that a particular Ford Demonstrative Chart, Government exhibit 7028, was based on Government inferences and assumptions about the case rather than undisputed facts. Trial Transcript at 4980-81. That objection was also not a ground for disallowing the use of that chart. The fact that certain conclusions reflected by a summary chart are based on assumptions or inferences made by the party introducing the chart does not render the chart inadmissible. See United States v. Radseck, 718 F.2d 233, 237-38 (7th Cir. 1983), cert. denied, 465 U.S. 1029, 79 L. Ed. 2d 693, 104 S. Ct. 1291 (1984). Such assumptions are allowed where they are supported by the underlying documents. See id. ; Norton, 867 F.2d at 1362; Jennings, 724 F.2d at 441-42. "'The essential requirement is not that the charts be free from reliance on any assumptions, but rather that these assumptions be supported by evidence in the record.'" Jennings, 724 F.2d at 442 (citation omitted); see Norton, 867 F.2d at 1363. The trial court is charged with the discretion to determine whether the chart is unduly argumentative. Possick, 849 F.2d at 339; Driver, 798 F.2d at 253. In the instant case, it was determined that the chart was not argumentative; any inferences made in the chart were supported by the evidence. See Trial Transcript at 4982.
10. Objections to Evidence of Other Acts: Rule 404(b)
During the proceedings, Bertoli made several objections to 'other act' evidence proffered by the Government. This evidence related to prior misconduct by Bertoli which was not charged in the Redacted Second Superseding Indictment.
Rule 404(b) of the Federal Rules of Evidence provides in relevant part:
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. . . .
As indicated by its language, Rule 404(b) concerns evidence of "other crimes, wrongs or acts." Id. (emphasis added). Evidence of prior acts which are part and parcel of the charged conduct is not covered by Rule 404(b). As the Second Circuit has stated:
Evidence of uncharged criminal activity is not considered "other crimes" evidence under Fed.R.Evid. 404(b) if it "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. Towne, 870 F.2d 880, 886 (2d Cir.) (quoting United States v. Weeks, 716 F.2d 830, 832 (11th Cir. 1983)), cert. denied, 490 U.S. 1101 (1989); see United States v. Blyden, 27 V.I. 381, 964 F.2d 1375, 1378 (3d Cir. 1992) ("Rule 404(b) presupposes the existence of other crimes. When evidence of another crime is necessary to establish an element of the offense being tried, there is no 'other crime.'" (emphasis in original)); United States v. Williams, 900 F.2d 823, 825 (5th Cir. 1990) (acts "inextricably intertwined" with charged conduct not barred by Rule 404(b)); United States v. Brownlee, 890 F.2d 1036, 1039 (8th Cir. 1989) (same); United States v. Foster, 889 F.2d 1049, 1053 (11th Cir. 1989) ("Evidence that forms integral and natural part of the witness's accounts of the circumstances surrounding the offenses for which the defendant was indicted is admissible even if it tends to reflect negatively on the defendant's character.").
Where, as here, the crime charged requires the establishment of the defendant's continuing pattern of criminal activity,
other acts which are part of the pattern may be used to prove the existence of the pattern without invoking the restrictions of Rule 404(b). In United States v. Gonzalez, 921 F.2d 1530 (11th Cir.), cert. denied, 502 U.S. 860, 112 S. Ct. 178, 116 L. Ed. 2d 140 (1991), the court addressed the objection of a RICO defendant to the admission of evidence of prior crimes not listed as predicate acts in the indictment. The Circuit held that the prior acts "were clearly admissible nonetheless," and did not refer to Rule 404(b)'s restrictions:
In addition to predicate crimes, a RICO conspiracy charge requires proof of an enterprise, of the continuity of racketeering activity, and of the defendant's knowledge of, agreement to, and participation in the conspiracy. [The prior acts], while not to be used as RICO predicates, are clearly relevant and admissible in proving RICO's other elements.
921 F.2d at 1547; see United States v. Kaplan, 886 F.2d 536, 544 (2d Cir. 1989) (prior uncharged acts of racketeering admissible to prove continuity of racketeering activity in RICO case), cert. denied, 493 U.S. 1076, 107 L. Ed. 2d 1033, 110 S. Ct. 1127 (1990); United States v. Perholtz, 268 U.S. App. D.C. 347, 842 F.2d 343, 359 (D.C.Cir.) (Evidence of racketeering schemes not included in RICO charge were admissible "to prove the association-in-fact had a continuity of structure and personnel in order to establish the existence of an enterprise"; Rule 404(b) issue expressly not reached), cert. denied, 488 U.S. 821, 102 L. Ed. 2d 42, 109 S. Ct. 65 (1988); United States v. Finestone, 816 F.2d 583, 587 (11th Cir.) (Unindicted prior acts "were admissible to prove a pattern of racketeering activity and overt acts, elements of the . . . RICO conspiracy. Furthermore, those events were admissible to prove the membership and participation in the RICO conspiracy. . . ."), cert. denied, 484 U.S. 948, 98 L. Ed. 2d 365, 108 S. Ct. 338 (1987), reh'g denied, 485 U.S. 972, 99 L. Ed. 2d 449, 108 S. Ct. 1252 (1988); United States v. Neapolitan, 791 F.2d 489, 501 (7th Cir.) (Unindicted acts "would be admissible as circumstantial evidence that [defendant] was a member of a conspiracy."), cert. denied, 479 U.S. 940, 93 L. Ed. 2d 372, 107 S. Ct. 422 (1986); see also Carter v. Hewitt, 617 F.2d 961, 967 (3d Cir. 1980) (Prior false complaints were admissible because they "prove the plans [to file false complaints] directly and not inferentially [and therefore], they fall outside the scope of Rule 404. The [complaints] are not evidence of other acts used as indirect proof of a plan, but direct evidence of the existence of the plan itself.").
Even where evidence of other acts is not inextricably intertwined with the charged conduct, such evidence may yet be admissible under Rule 404(b) "if it is logically relevant . . . to any other issue than the defendant's propensity to commit the [charged] crime." United States v. Sampson, 980 F.2d 883, 886 (3d Cir. 1992). Rule 404(b) "is inclusive, not exclusive, and emphasizes admissibility." Id. ; see Government of Virgin Islands v. Edwards, 903 F.2d 267, 270 (3d Cir. 1990); United States v. Scarfo, 850 F.2d 1015, 1019 (3d Cir.), cert. denied, 488 U.S. 910, 102 L. Ed. 2d 251, 109 S. Ct. 263 (1988).
The Supreme Court and the Third Circuit have recognized four requirements for the admission of other act evidence under Rule 404(b):
(1) the evidence must have a proper purpose under Rule 404(b); (2) it must be relevant under Rule 402; (3) its probative value must outweigh its prejudicial effect under Rule 403; and (4) the court must charge the jury to consider the evidence only for the limited purpose for which it is admitted.
Sampson, 980 F.2d at 886; see Huddleston v. United States, 485 U.S. 681, 691, 99 L. Ed. 2d 771, 108 S. Ct. 1496 (1988); United States v. McGlory, 968 F.2d 309, 338 (3d Cir. 1992), cert. denied, 507 U.S. 962, 113 S. Ct. 1388, 122 L. Ed. 2d 763 (1993); Government of Virgin Islands v. Pinney, 27 V.I. 412, 967 F.2d 912, 914 (3d Cir. 1992).
'Proper purposes' under Rule 404(b) include proving "motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident." Fed.R.Evid. 404(b); see Sampson, 980 F.2d at 887. "The possible uses of 'other crimes' evidence listed in Rule 404(b) 'are not the only proper ones.'" McGlory, 968 F.2d at 338 (quoting Scarfo, 850 F.2d 1015). "Other crime evidence is admissible if offered for [any] proper purpose apart from showing that the defendant is a person of criminal character." Pinney, 27 V.I. 412, 967 F.2d 912, 914.
In a RICO or other type of fraud case, evidence of unindicted acts similar to or in furtherance of those charged will often be admissible under Rule 404(b) to prove the defendant's motive, intent or absence of mistake. See United States v. Scop, 940 F.2d 1004, 1008 (7th Cir. 1991) (In securities fraud action, evidence of unindicted acts of securities fraud may be properly be used to prove a defendant's "intent, opportunity, or plan to engage in the [securities fraud] or . . . relationship with another defendant."); United States v. Johnson, 893 F.2d 451, 453 (1st Cir. 1990) (unindicted acts of tax fraud admissible in tax fraud prosecution to show intent, absence of mistake); United States v. Traitz, 871 F.2d 368, 389 (3d Cir.) (unindicted acts of violence admissible in RICO extortion case to show "shared tradition of violence," "symbiotic relationship" between defendants and "the background of the charges, the parties' familiarity with one another and their concert of action"), cert. denied, 493 U.S. 821, 107 L. Ed. 2d 44, 110 S. Ct. 78 (1989); United States v. Rivera-Medina, 845 F.2d 12, 15-16 (1st Cir.) (evidence of extortion scheme identical to one charged in indictment, with close temporal proximity and same co-conspirators, was admissible to "prove absence of mistake, knowledge and intent"), cert. denied, 488 U.S. 862 (1988); United States v. Davis, 576 F.2d 1065, 1067-68 (3d Cir. 1978) (evidence of unindicted acts of racketeering admissible in RICO case to prove intent or motive), cert. denied, 439 U.S. 836, 58 L. Ed. 2d 132, 99 S. Ct. 119 (1978).
"Courts have long held that evidence of financial difficulties, [such as a personal bankruptcy filing or financial reports,] is admissible in fraud prosecutions to demonstrate knowledge, motive, intent, design and absence of mistake." United States v. Metallo, 908 F.2d 795, 798, reh'g denied en banc, 917 F.2d 570 (11th Cir. 1990), cert. denied, 503 U.S. 940, 112 S. Ct. 1483, 117 L. Ed. 2d 625 (1992); see United States v. Bonnett, 877 F.2d 1450, 1461 (10th Cir. 1989) (in bank fraud case, evidence that defendant frequently had insufficient funds to cover checks in bank account and that defendant was at legal lending limit at various banks was admissible to show "a pattern, practice, and method of obtaining the illegal use of bank funds for his own gain"); United States v. Whaley, 786 F.2d 1229, 1233 (4th Cir. 1986); United States v. Pichnarcik, 427 F.2d 1290, 1291 (9th Cir. 1970).
As stated, if the proffered 'other act' evidence is relevant and has a proper purpose under Rule 404(b), the evidence will be admissible if its probative value is not substantially outweighed by the danger of unfair prejudice.
See Huddleston, 485 U.S. at 691; Sampson, 980 F.2d at 886. A relevant example of this balancing test is provided by Scop, 940 F.2d 1004. In Scop, the defendants were indicted for several counts of securities fraud. Specifically, the defendants were charged with the manipulation of the prices of certain stocks listed in the indictment. See id. at 1008. At trial, the Government proffered evidence that the defendants had manipulated the prices of other stocks not named in the indictment. Id. The district court admitted the evidence under Rule 404(b); upon conviction, the defendants appealed.
On appeal, the defendants argued the 'other act' evidence should not have been admitted under Rule 404(b) because "the probative value of this evidence was substantially outweighed by the danger of unfair prejudice." Id. at 1009. The Seventh Circuit rejected the defendants' argument:
The evidence regarding [the manipulation of other stocks] was highly probative because it revealed a common and indeed inseparable scheme. The defendants traded in the [non- named securities] at the same time they allegedly carried out the fraudulent . . . trades [named in the indictment]. They victimized some of the same investors in manipulating the [named and unnamed] stocks. The defendants used identical methods of price manipulation with respect to the stock in each company. . . . The evidence about the manipulation of [the stocks not named in the indictment] was properly used to reveal the common pattern of a crime that is not commonplace.
Some of the evidence was also critical to the jury's understanding of the relationship between the defendants. . . . Other acts evidence is admissible to complete the story of defendants' familiarity or relationship. Here the evidence was helpful and even necessary to round out the jury's understanding of the conspirators' debts and attachments to one another.
The evidence also was not unduly prejudicial. It concerned truly similar criminal activities rather than inflammatory criminal acts. Though undoubtedly much evidence at trial concerned [the unnamed stocks], there was no shortage of evidence regarding [the defendants'] use of nominee accounts, for example, to buy [the named stocks].
Id. at 1009. The Circuit concluded that the 'other act' evidence was properly admitted by the district court. See id. ; see also United States v. Eufrasio, 935 F.2d 553, 573 (3d Cir.) ("The uncharged Mafia crimes evidence admitted in this case went to prove important elements of the RICO counts charged . . .: the existence and nature of the [criminal] enterprise and conspiracy, acts undertaken in furtherance of it, and [defendants'] knowing association with it. . . . Thus, the relevance of the uncharged crimes evidence to the government's case against [defendants] was substantial, certainly enough to offset its potential to cause prejudice for [defendants]."), cert. denied sub nom., Idone v. United States, 502 U.S. 925, 116 L. Ed. 2d 280, 112 S. Ct. 340 (1991); Rivera-Medina, 845 F.2d at 16 (in extortion case, tendency of evidence of prior extortion scheme "to prove absence of mistake, knowledge and intent clearly exceeds its admittedly prejudicial impact"); Perholtz, 842 F.2d at 358 (script made in furtherance of RICO scheme was more probative than prejudicial because script was "closely tied to the crimes charged and only indirectly suggests distinct offenses").
The fourth and final requirement for the admission of other act evidence is that "the court must charge the jury to consider the evidence only for the limited purpose for which it was admitted." Sampson, 980 F.2d at 886; see Huddleston, 485 U.S. at 691-92. However, "it is not error for a trial court to fail to [so] instruct the jury . . . in the absence of a proper request by counsel." United States v. Record, 873 F.2d 1363, 1376 (10th Cir. 1989); see United States v. Barbee, 968 F.2d 1026, 1032 (10th Cir. 1992) ("Absent an appropriate objection [to jury charge during trial], we review the record only for plain error"); Jordan v. Clayton Brokerage Co. of St. Louis, Inc., 861 F.2d 172, 177 (8th Cir. 1988) ("We cannot say that the trial court's failure to give, sua sponte, a cautionary instruction during the course of the proceedings constituted an abuse of discretion."), vacated on other grounds, 499 U.S. 914 (1991). Moreover, the time during trial at which to give the limiting instructions is within the discretion of the trial court. See Murray v. Superintendent, Kentucky State Penitentiary, 651 F.2d 451, 454 (6th Cir. 1981).
Additionally, in criminal proceedings, Rule 404(b) requires that the prosecution "shall provide reasonable notice in advance of trial, or during trial if the court excuses pretrial notice on good cause shown, of the general nature of any ('other act') evidence it intends to introduce at trial." Fed.R.Evid. 404(b).
In the instant case, the Government sought to admit evidence of several prior acts not listed in the Redacted Second Superseding Indictment. Because Bertoli was convicted only on Counts Three and Six of the Redacted Second Superseding Indictment, only those 'other act' proffers made in support of those counts will be addressed in this opinion.
a. The 1977 Suit by Executive Securities Against Bertoli and Bertoli's Filing for Bankruptcy
In 1977, Executive Securities Corp. ("Executive Securities")
filed suit against Bertoli in the United States District Court for the Southern District of New York, seeking approximately $ 2.9 million in damages (the "SIPC Suit"). Trial Transcript at 675-79. In 1982, the complaint in the SIPC Suit was amended to add Securities Investor Protection Corporation ("SIPC")
as a plaintiff. Id. at 679. At trial in the instant matter, the Government sought to introduce certain documents evidencing the existence of the SIPC Suit.
Id. at 678, 680, 682.
The Government explained that the existence of this large potential liability was "relevant to show one of Bertoli's motives for not owning stock in his own name, for using secret Cayman Islands accounts, for attempting to prevent the Government from obtaining evidence of those Cayman Islands accounts, and for destroying Cayman Islands records." Government's 21 May 1993 Brief at 5. Bertoli objected to the introduction of such evidence under Rule 404(b). Trial Transcript at 678, 680, 682.
On or about 11 October 1983, Bertoli filed for personal bankruptcy protection under chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 1101, et seq., in the United States Bankruptcy Court (the "Bankruptcy Court") for the District of New Jersey (the "Bankruptcy Petition"). Trial Transcript at 682. At trial, the Government sought to introduce various filings made by Bertoli in relation to the Bankruptcy Petition, which filings the Government argued failed to list certain of Bertoli's assets (the "Bankruptcy Filings"). See Government's 21 May 1993 Brief at 2; Trial Transcript at 697, 735, 914-15. The Government argued this evidence was probative of Bertoli's motive to obstruct justice and participate in the charged racketeering activity:
The Bankruptcy [Petition] and financial statements subsequently filed in the bankruptcy action are relevant to show one of Bertoli's motives for attempting to prevent the Government from obtaining evidence of Bertoli's Cayman Islands accounts and for destroying records in the Cayman Islands. In both the original Bankruptcy Petition and the financial statements, Bertoli was required to set forth all his assets. Bertoli, however, failed to disclose in the petition and subsequent financial statements various accounts in the Cayman Islands. As noted above, one of Bertoli's motives for concealing these accounts was to shield his assets from the SIPC suit. . . . Such evidence could also have supported bankruptcy fraud, tax fraud, and perjury or false statement charges against Bertoli. Thus, Bertoli's attempts to prevent the Government from obtaining evidence of his accounts in the Cayman Islands and his destruction of Cayman Islands documents served to conceal the fraudulent nature of the Bankruptcy Petition and his subsequent financial statements.
Government's 21 May 1993 Brief at 5-6. Bertoli objected to this evidence under Rule 404(b). Trial Transcript at 697, 735.
Evidence relating to the SIPC Suit, the Bankruptcy Petition and the Bankruptcy Filings was admitted into evidence. It was recognized that the evidence relating to these events may not in fact have been evidence of "other crimes, wrongs or acts," within the meaning of Rule 404(b). It was noted: "There is a substantial basis to argue that this evidence is intertwined inextricably with the other aspects of the [Redacted Second Superseding Indictment] and a strong argument can [therefore] be made under that aspect that it is not [Rule] 404(b) evidence, but essential evidence." Trial Transcript at 708
The SIPC Suit, the Bankruptcy Petition and the Bankruptcy Filings formed essential background information for the allegations of racketeering activity contained in Counts One and Two. As stated by the Government, these events were necessary in explaining Bertoli's motivation for engaging in the charged racketeering activity. See Government's 21 May 1993 Brief at 5-6. Moreover, these events helped to form the context and manner in which Bertoli obstructed justice, as alleged in Counts One, Three, Four, Five and Six. See Id. at 6. Evidence relating to the SIPC Suit, the Bankruptcy Petition and the Bankruptcy Filings "arose out of the same transaction or series of transactions as the charged offense, [and was] necessary to complete the story of the crime on trial." Towne, 870 F.2d at 886. Accordingly, such evidence was not 'other act' evidence and could not be barred by Rule 404(b). Id. ; see Blyden, 964 F.2d at 1378.
Even if evidence of the SIPC Suit, the Bankruptcy Petition and the Bankruptcy Filings were considered 'other act' evidence, and Rule 404(b) were applicable, such evidence was admissible under Rule 404(b)'s inclusion guidelines.
As noted at trial, evidence relating to the SIPC Suit and the Bankruptcy Petition was "offered for a purpose other than to prove propensity or other than character purpose. They do have a proper basis." Trial Transcript at 707; see Sampson, 980 F.2d at 886.
As indicated during the proceedings in this case, the existence of the SIPC Suit and the Bankruptcy Petition:
goes . . . to the . . . reason or motive [Bertoli] would try to conceal documents or impede the Government in getting evidence concerning frauds, Monarch or any other frauds in this case or, indeed, bankruptcy fraud.
28 May 1993 Tr. at 43. It was further explained:
Obviously, the [SIPC Suit] with the approximately $ 3 million in contingent liability provides the motive to hide assets. The [evidence of the ] Bankruptcy Filings is obvious with regard to motive.
It also goes to the intent as to why certain conduct was carried out and they're both helpful.
The fact of the matter is the jury can clearly find that this [SIPC Suit] was filed, that these other documents were filed as were the Bankruptcy [Filings]. The evidence in both these categories demonstrates the reason why there would be ongoing efforts with regard to the schemes and conduct charged in the indictment.
The Bankruptcy Filings were particularly relevant to the Government's case, as they evidenced under-reported assets, and therefore evidenced further fraudulent conduct on Bertoli's part. As stated, unindicted acts of fraud related to those charged in the indictment are relevant to prove the existence of a plan or scheme of fraudulent or racketeering activity. See Scop, 940 F.2d at 1008; Traitz, 871 F.2d at 389. Moreover, the Bankruptcy Petition, evidencing as it does Bertoli's financial difficulties, was relevant "to demonstrate knowledge, motive, intent, design and absence of mistake." Metallo, 908 F.2d at 798. As was observed at trial:
With regard to these bankruptcy documents, they're entirely appropriate under (Rule) 404(b). . . .
They demonstrate the motive or the reason with regard to hiding assets, transferring documents -- transferring funds, to demonstrate benefit to Mr. Bertoli. It shows that he's -- some of them show that he's more than an agent.
With regard to the monthly [Bankruptcy] Filings, [the relevance] is obvious with regard to the minimization of assets and the hiding of assets.
The probative value of the evidence concerning the SIPC Suit, the Bankruptcy Petition and the Bankruptcy Filings outweighed any potential undue prejudicial effect this evidence might have had. As recognized at trial:
The 403 Balancing is obvious. As I said, there is a genuine need for this evidence. The chance that there would be improper use by the jury is remote, at best, when evaluating this and considering the impact on the jury, [the purpose of the evidence is] obvious. . . . It's not inflammatory. Clearly, the probative value does . . . substantially outweigh any prejudice. The confusion or waste of time issue is clearly not something of substance with regard to this testimony.
Keeping in mind that all relevant evidence is prejudicial, this is not unduly prejudicial. It seems to me that as I pointed out, it's not inflammatory and the acts do have a clear relevance. There is no necessity that the jury pursue any extended or complex chain of inferences in order to arrive at what the Government is seeking to prove here. The evidence is certainly sufficient to support a finding with regard to the 404(b) conduct.
Trial Transcript at 708; see Scop, 940 F.2d at 1009; Eufrasio, 935 F.2d at 573; Rivera-Medina, 845 F.2d at 16. Moreover, the likelihood of undue prejudice from evidence of the SIPC Suit was particularly slight in light of the Government's agreement to stipulate that Bertoli contested the SIPC Suit. See Trial Transcript at 556.
Finally, any potential for improper use of the evidence of the SIPC Suit, the Bankruptcy Petition and Bankruptcy Filings was curbed by appropriate limiting instructions to the jury. See Sampson, 980 F.2d at 886. These instructions were given at Bertoli's request when certain documents relating to the SIPC Suit, the Bankruptcy Petition and the Bankruptcy Filings were offered into evidence.
See Murray, 651 F.2d at 454 (time during trial during which to give limiting instruction is within discretion of trial judge). It was stated:
As you'll recall yesterday, I admitted into evidence a series of documents, . . . together with the additional documents this morning.
The documents yesterday concern the [SIPC Suit], [and] one document concerned [the] Bankruptcy [Petition]. The documents today concern [the] Bankruptcy [Petition].
I want you to understand that the Government has offered this evidence or will be offering other evidence, indeed, by which the Government will attempt to prove that on different occasions Mr. Bertoli engaged in conduct similar to the charges in the indictment.
In that connection, I point out to you, Mr. Bertoli is not on trial for committing these other acts which are not charged in the indictment. Accordingly, you may not consider this evidence of other acts as substitute for proof that the defendant, Mr. Bertoli, committed the crimes charged in the indictment. Nor may you consider this evidence as proof that Mr. Bertoli has a criminal personality or bad character.
The evidence of other acts has been admitted, and if others are offered may be admitted, for a much more limited purpose. You may consider this evidence only for the limited purpose.
If you determine that the defendant committed the other acts as these documents are concerned with and the testimony is concerned with, then you may but need not consider this evidence for other purposes such as proof of Mr. Bertoli's motive or intent or plan, knowledge, identity, absence of mistake or other related matters to the indictment.
Now, this evidence of other acts -- and I'll use that term, sort of a generic term -- may not be used by you for any other purpose. You may not use this evidence to conclude that if or because the defendant committed other acts, he must also have committed the acts charged in the indictment. It's not to be used for that purpose and would be inappropriate. You would be violating your duty if you did use it for that purpose. This is just used to demonstrate motive, intent, plan, knowledge, et cetera.
Trial Transcript at 735-737 (emphasis added). These instructions insured that the jury would not use the evidence relating to the SIPC Suit, the Bankruptcy Petition and the Bankruptcy Filings in a manner prohibited by Rule 404(b).
b. The SEC Investigation and the SEC Action
On 9 September 1985, as a result of the SEC Investigation, the SEC filed the SEC Action against Bertoli, Cannistraro, Eisenberg, Monarch and a former Monarch broker, Cloyes. Trial Transcript at 1197-98. The SEC Action alleged certain manipulative and fraudulent conduct on the part of these defendants in connection with the trading of LCI and Toxic Waste securities. Trial Transcript at 1198. In the SEC Action, the SEC sought a permanent injunction and other equitable relief. Id.
At trial, the Government sought to introduce into evidence certain documents relating to the SEC Investigation and to the SEC Action, including the complaint in the SEC Action (the "SEC Complaint"). Trial Transcript at 927, 1189. Bertoli objected to the introduction of the SEC Complaint on Rule 404(b) grounds. Trial Transcript at 927.
The SEC Complaint was admitted into evidence because it was not in fact 'other act' evidence under Rule 404(b). Trial Transcript at 929, 1192. As stated, Count Three of the Redacted Second Superseding Indictment charged, inter alia, that Bertoli was involved in a conspiracy to obstruct both the SEC Investigation and the SEC Action. See Redacted Second Superseding Indictment, Count Three, P 14. As indicated at trial, the SEC Complaint was evidence of the SEC Action and as such was direct evidence relating to Count Three. Trial Transcript at 929. It was, therefore, not 'other act' evidence within the meaning of Rule 404(b). See Towne, 870 F.2d at 886. Accordingly, Rule 404(b) could not operate to exclude the SEC Complaint, or any other evidence relating to the SEC Action or SEC Investigation.
c. The SEC's 1979 Bar of Bertoli from Association with Broker-Dealers
In July 1975, the SEC brought administrative proceedings against Bertoli in connection with his activities at Executive Securities (the "1975 SEC Proceedings"). During the 1975 SEC Proceedings, the SEC alleged Bertoli and another employee of Executive Securities had violated anti-fraud provisions of the Federal securities laws. On 25 September 1979, the SEC ordered that Bertoli be "barred from association with any broker or dealer [(the "SEC Bar")]. . . ." Trial Transcript at 616.
The existence of the SEC Bar was relevant to and probative of Bertoli's motive to unlawfully conceal his role at Monarch and High Tech. Moreover, the existence of the SEC Bar was probative of Bertoli's motive to obstruct the SEC Investigation and the SEC Action, as charged in Count Three of the Redacted Second Superseding Indictment. Accordingly, the Government sought to offer evidence of the existence of the SEC Bar into evidence at trial.
Bertoli at first indicated his opposition to the introduction of evidence of the SEC Bar, but later stipulated to its admissibility. Trial Transcript at 503, 615.
Bertoli objected to the introduction of certain other evidence which he contended constituted prohibited 'other act' evidence under Rule 404(b). Although these items do not relate to Counts Three and Six, they will be discussed briefly:
i. Unindicted Stock Manipulation Schemes
The Government sought to introduce evidence of two stock manipulation schemes in which Bertoli was involved, but which were not listed in Count One of the Redacted Second Superseding Indictment. These schemes related to the securities of Nature's Bounty (the "Nature's Bounty Scheme") and Solar Age (the "Solar Age Scheme") (collectively, the "Unindicted Schemes"). See Brief of Government, dated 28 May 1993 (the "Government's 28 May 1993 Brief") at 2. Bertoli objected under Rule 404(b) to the introduction of any evidence relating to these unindicted stock manipulation schemes. See, e.g., Trial Transcript at 875, 1076.
Evidence of the Unindicted Schemes was admitted over the objection by Bertoli. As recognized at trial, this evidence was not 'other act' evidence within the meaning of Rule 404(b). The Unindicted Schemes provided essential background information to the indicted racketeering schemes. See Trial Transcript at 916-17; Towne, 870 F.2d at 886. Moreover, the Unindicted Schemes provided direct evidence of the existence of "an enterprise, of the continuity of racketeering activity, and of [Bertoli's] knowledge of, agreement to, and participation in the conspiracy." Gonzalez, 921 F.2d at 1530. All of these were elements of the RICO and RICO conspiracy charges contained in Counts One and Two. See 18 U.S.C. § 1962; Reves, 507 U.S. at 178, 113 S. Ct. at 1169-70; Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162, 1165 (3d Cir. 1989). Because the evidence of the Unindicted Schemes was direct evidence of elements of the Government's case, such evidence was not 'other act' evidence, and as such could not be excluded under Rule 404(b). See Blyden, 964 F.2d at 1378.
Even if analyzed under Rule 404(b), however, evidence of the Unindicted Schemes was admissible.
The Unindicted Schemes were acts of fraud and racketeering similar to those charged and were relevant to prove Bertoli's motive, intent and plan to engage in the racketeering activity charged in Counts One and Two. See Scop, 940 F.2d at 1008; Traitz, 871 F.2d at 389. As indicated at trial:
In addition to demonstrating the background, it assists in understanding the overall intent and action that went on here, demonstrates the awareness of Mr. Bertoli that the conduct he engaged in was not otherwise innocent, it goes to proof of an essential element of the offense, demonstrating knowledge.
It's clearly relevant to an issue other than Mr. Bertoli's character. It is clearly classified as a similar wrong. It fits in the same pattern with regard to [the] RICO counts and the conduct with regard to Monarch and as far as Mr. Bertoli's participation in that conduct, it's relevant to that.
The probative value of the Unindicted Schemes far outweighed any possible undue prejudicial effect. Specifically, because the Unindicted Schemes were similar in nature to the indicted schemes, there was little possibility that the jury would believe the Unindicted Schemes constituted separate and distinct criminal acts for which Bertoli was on trial. See Scop, 940 F.2d at 1008 ("Though undoubtedly much evidence at trial concerned [the unnamed stocks], there was no shortage of evidence regarding [the defendants') use of nominee accounts, for example, to buy [the named stocks].").
Finally, any potential for undue prejudice resulting from the admission of evidence of the Unindicted Schemes was minimized by limiting instructions given to the jury. See Sampson, 980 F.2d at 886. At trial it was stated:
Ladies and gentlemen, with regard to this evidence on Nature's Bounty and Solar Age, I again remind you that defendant is not on trial for committing the acts concerning these two entities or involved with these two entities.
He's not on trial for anything that's not included in the indictment. You may not consider that evidence that's referred to, either testimonially or in the documents themselves, as a substitute for proof that defendant committed the crimes charged in the indictment. Nor, as I indicated to you in the past, [are you] to consider this . . . evidence as proof that the defendant has a criminal personality or a bad character.
The evidence of these so-called other bad acts is admitted for a more limited purpose and can be used only for this limited purpose. That is, it may be considered for motive or intent, plan or knowledge, identity, absence of mistake as is related to the charges in the indictment. You may not consider the evidence for any other purpose.
Trial Transcript at 1077.
Because the guidelines for admissibility under Rule 404(b) had been met, the evidence relating to the ...