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United States v. Mornan

June 30, 2005


On Appeal from the United States District Court for the Middle District of Pennsylvania (D.C. Criminal No. 02-cr-00242). District Judge: The Honorable Sylvia H. Rambo.

The opinion of the court was delivered by: Van Antwerpen, Circuit Judge


Argued June 9, 2005



Appellant Christopher Mornan was charged in an 18-count indictment with mail fraud, wire fraud, and conspiracy arising from an alleged telemarketing scheme. A jury found Mornan guilty of 15 of the 18 counts, and he was sentenced in accordance with the United States Sentencing Guidelines. Mornan now challenges various evidentiary rulings made by the District Court during his trial. He also appeals his sentence in light of the Supreme Court's decision in United States v. Booker, 543 U.S. __, 125 S.Ct. 738 (2005). For the reasons set forth below, we will affirm the District Court's evidentiary rulings and the conviction, vacate the sentence, and remand for re-sentencing.


A. Background

Mornan's wire and mail fraud indictment alleged that he was involved in a "cross-border advance fee scheme," whereby he and his co-conspirators, operating out of Canada, placed newspaper advertisements in the United States offering loans to high-risk borrowers. The advertisements provided a toll-free number to call for details. When a customer called the number, he or she reached one of many telephone sales rooms located in Canada. A telephone sales representative would instruct the customer to complete and return a loan application. Once the application was completed, another individual -- a "closer" -- would call the customer and represent that the loan had been approved. The customer was then told that he or she would have to purchase a life or disability insurance policy to secure the loan. In many instances, the "closer" would tell the customer that the insurance premiums would be returned upon full repayment of the loan amount.

The customers who sent money orders for the "insurance premiums" never actually received any loans, and their payments were never returned. Mornan was an assistant manager at one of the telephone sales rooms, and he also worked as a "closer," often using the alias "Richard Harding."

The Government further alleged that Mornan eventually became a "higher level manager" and had a leadership role in the scheme.

The telephone representatives would tell customers that they worked on behalf of a number of loan brokerage companies, one of which was Sun Corp. Financial Services ("Sun Corp."). On June 23, 1998, Canadian law enforcement authorities conducted a search of the Sun Corp. offices in Ontario. The police found Mornan and his alleged co-conspirator, Leslie Card, in one of the offices. The police confiscated a list of loan applicants, a list of United States newspapers, and some Sun Corp. loan applications from the desk Mornan was using.*fn2

The Canadian authorities also interviewed Mornan, who stated that he was an "[a]ssistant manager/closer" and that he and Card shared the role of office manager. (App. at 1110.) He also stated that his job was to answer phones, take customers' information, and tell them that their loan application had been accepted. (Id. at 1112.) When asked whether he believed that his company was actually providing loans to customers, Mornan responded, "No. To my knowledge it's a referral agency." (Id. at 1111.) When asked who actually contacts lenders to arrange loans, Mornan responded, "I don't know, there is no lender." (Id. at 1110.)

B. Trial and Sentencing

At Mornan's trial, conducted from April 8 to April 11, 2003, the Government presented the testimony of multiple law enforcement officials who were involved in a "strategic partnership" between the United States and Canada set up to investigate "cross-border frauds." The Government also presented the testimony of 12 individuals who claimed to be victims of the telemarketing scheme. In addition, the jury was shown videotape depositions of Jeffrey Peters, the lessor of a Toronto property that Mornan rented for use as a telephone sales room, and Michelle Fulfit, one of the telephone salespersons who fielded calls in Ontario.

Also relevant to this appeal was the testimony of Althea Burton, the cousin of Michael Willams, who owned and operated Icon Cheque Cashing Services, Inc. ("Icon") in Ontario. Burton worked for her cousin at Icon from May 2000 to January 2001, and the Government attempted to establish through her testimony that Mornan used Icon to cash money orders that had been made out to various "insurance companies." The Government was permitted to show the jury Burton's testimony in the form of a videotape deposition that she gave in Canada. During that testimony, Burton indicated that she could no longer remember the particulars of her employment at Icon.

Faced with her purported memory lapse, the Government directed Burton's attention to a statement she made to the prosecutor and United States Postal Inspector Michael Hartman on September 12, 2001, wherein she identified Mornan as the individual who routinely cashed money orders at Icon that were made out to several "insurance companies." However, Burton stated that she did not remember the particulars of the September 2001 statement either. She attributed her memory loss to back and neck injuries suffered during an August 19, 2002, automobile accident.

The Government then attempted to offer the substance of the September 2001 statement into evidence as a past recollection recorded under Fed. R. Evid. 803(5). The District Court initially ruled that the statement did not qualify under Rule 803(5). The Government alternatively argued that the statement was admissible as a prior inconsistent statement under Fed. R. Evid. 801(d)(1)(A), but the court also rejected that argument. However, after reviewing Burton's videotape testimony, the District Court changed its ruling and admitted the statement, over the defense's objection, as a prior inconsistent statement under Rule 801(d)(1)(A). The court reasoned that "it can't be concluded that the memory loss is solely due to the accident as opposed to her own volition. . . ." (App. at 383.)

The final piece of evidence that is relevant to this appeal is the testimony of Kirsten Jackson, a forensic document examiner with the United States Postal Inspection Service National Forensic Laboratory. The Government called Jackson as a handwriting expert to give her opinion regarding whether a signature on a lease, some handwritten notes, and signatures on money orders were authored by Mornan. Jackson testified as to her qualifications as a document examiner, and the District Court permitted her to testify "as an expert in the area of forensic document examination." (Id. at 399.) ...

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