United States v. Morley ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
12-8-1999
United States v Morley
Precedential or Non-Precedential:
Docket 98-1894
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Filed December 8, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 98-1894
UNITED STATES OF AMERICA,
v.
MICHAEL J. MORLEY, II,
Appellant
Appeal from the United States District Court
of the Eastern District of Pennsylvania
Criminal Action No. 97-cr-00430-2
District Judge: Hon. Robert F. Kelly
Argued: October 1, 1999
Before: MANSMANN, McKEE, Circuit Judges and
STAPLETON, Senior Circuit Judge
(Filed: December 8, 1999)
ERIC W. SITARCHUK, ESQ. (Argued)
MARTIN C. BRYCE, JR., ESQ.
TERESA E. KIBELSTIS, ESQ.
SALLY A. STEFFEN, ESQ.
Ballard Spahr Andrews & Ingersoll,
LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Attorneys for Appellants
ROBERT A. ZAUZMER, ESQ.
(Argued)
WALTER S. BATTY, JR., ESQ.
THOMAS M. GALLAGHER, ESQ.
Office of United States Attorney
615 Chestnut Street
Philadelphia, PA 19106
Attorneys for Appellee
OPINION OF THE COURT
McKEE, Circuit Judge.
We are asked to decide whether the District Court abused
its discretion by allowing the prosecution to introduce
"prior bad acts" evidence during Michael Morley's trial on
charges of criminal conspiracy, bank fraud, mail fraud and
wire fraud. Those charges arose from Morley's attestation to
a forged signature on a fake will. The evidence in question
pertained to an incident that occurred 14 months prior to
the events charged in the indictment when Morley asked
his parents (both of whom were notaries) to notarize
signatures on bonds that had been signed out of their
presence. The signatures were forgeries, although the
government does not contend that Morley knew that when
he asked his parents to notarize the bonds. Rather, the
government now contends that the evidence that Morley
caused his parents to improperly notarize documents was
relevant to his "intent, knowledge, and absence of mistake
in signing the fake will of a dead man he had never met."
Appellee's Br. at 11. We agree that the District Court
abused its discretion by allowing the prosecution to
2
introduce evidence about the improperly notarized bonds.
Accordingly, we will vacate the defendant's conviction and
order that Morley be given a new trial.1
I.
David Thompson died on January 22, 1996, survived by
three cousins: Raymond, Robert and Kenneth Thompson.
Shortly after David's death, Robert Thompson contacted
Robert Morley in order to get advice on the administration
of David's estate. Morley is a Certified Public Accountant.
Morley referred Robert to an attorney named Daniel Holmes
who was Morley's long-time friend and business partner.
Neither Holmes nor Morley had known David Thompson.
It is unclear whether or not David Thompson actually left
a will, and no will was found during the ensuing search of
David's home. Accordingly, Holmes devised a fraudulent
scheme to create a fake will that would appear to leave the
entirety of David's estate to Robert and Raymond. Pursuant
to their agreement with Holmes, Robert and Raymond each
were to receive one-third of David's estate, and Holmes was
to receive the remaining third. According to the
government, Holmes was to split his share with Morley. The
fake will thus made no provision for Kenneth Thompson.
Pursuant to that scheme, Holmes drafted a will, forged
_________________________________________________________________
1. Morley also argues that there was insufficient evidence to convict him
of bank fraud under 18 U.S.C. S 20, that the District Court erred in
calculating his sentence by not limiting the loss calculation to 2/3 of
the
amount due under the missing will, and that the court incorrectly
calculated the total loss under the Sentencing Guidelines. We hold that
these arguments are without merit except for his challenge to his
conviction for bank fraud.
The government concedes that it did not introduce evidence that the
victim bank was a financial institution as defined in 18 U.S.C. S 20. This
issue was not raised in the District Court, but the government concedes
that "there was insufficient evidence presented on this essential element
and agrees that the conviction on Count Two should be vacated."
Appellee's Br. at 24. We commend the government for its candor, and we
agree that the conviction on that count must be vacated. The
government will be precluded from introducing additional evidence to
prove this element during the defendant's retrial.
3
David's signature, and then had the defendant and two
other persons "witness" the forged signature.2
The fake will that Holmes subsequently drafted was later
admitted to probate in Camden County, New Jersey.
Thereafter, Holmes and Raymond Thompson took control of
David's estate. They established an account under the
name "Estate of David L. Thompson," and consolidated and
liquidated estate assets.
At trial, the government presented evidence that Morley
received substantial sums from the estate account.3 Morley
also arranged for a $100,000 loan from the estate to C&H
Drilling, a new business venture of one of Morley's clients.
The loan repayments were then directed to Morley who kept
some of the proceeds, and distributed the balance to
Raymond and Robert Thompson.4
In June of 1996 the FBI interviewed Morley in connection
with its investigation into the fraudulent bank transactions.
During that interview Morley admitted that he had signed
the attestation on a document as requested by Holmes.
However, Morley insisted that he assumed the signature he
was attesting to was genuine because Holmes and another
business associate had already witnessed it. Thereafter,
_________________________________________________________________
2. The precise order of these events is not clear. The government argues
that Morley was present for discussions about creating the fraudulent
will, but Morley denies that. He insists that, although he signed the will
as a witness to David Thompson's signature, he did not know that
David's signature was forged. Robert and Raymond Thompson testified
during trial that Morley was present when they discussed fabricating
David's will. However, it does appear that Morley and Holmes had an
agreement by which they would share one-third of the estate. A letter
from Morley to Holmes dated May 22, 1996 stated:"Please let me know
where I stand in relation to this because my portion of an Estate valued
at $2,021,000 would equal $336,833.33. That is a substantial sum and
the payments thereof needs [sic] to be documented." (Appellee's
Supplemental Appendix ("Supp. App.") at 259a-261a).
3. The evidence showed that Morley received (1) $120,000 in the form of
a cashier's check on February 9, 1996, (2) $150,000 on February 21,
1996, (3) $5,000 on March 5, 1996, (4) $17,000 on March 19, 1996 (for
"services to the estate," although Morley later admitted at trial that he
did not render any services to the estate).
4. C&H Drilling later defaulted on the loan.
4
Morley, Holmes, Raymond and Robert were all indicted on
various charges arising from the fraudulent scheme.
Holmes, Raymond and Robert pled guilty and cooperated
with the government in the prosecution of Morley.5
Prior to Morley's trial, the government informed Morley
that it intended to introduce evidence that 14 months prior
to David's death, Holmes had asked Morley to have his
parents notarize approximately 100 savings bonds
purportedly signed by Joseph DiStefano (the rightful
owner), and that Morley had done so. The government
would establish that Morley's parents had notarized the
bonds as Morley requested, however, DiStefano's signature
had actually been forged by Holmes. Morley filed a motion
in limine to preclude the government from introducing this
evidence.
The government filed a "Response to Defendant's Motion
to Preclude Proffered Evidence" in which it argued that the
evidence was admissible "pursuant to Fed. R. Evid. 404(b)
to prove the defendant's motive, opportunity, intent,
preparation, planning, knowledge and absence of mistake."
The government also stated that "[e]vidence that the
defendant obtained the notarization of over 100 U.S.
Savings Bonds. . . when the signatory was neither known
nor present is proper to show the defendant's knowledge,
intent, plan and modus operandi of falsely witnessing the
will of a dead man, who was neither known nor present."
The government did not then, nor does it now, argue that
the defendant knew that the signatures on the bonds were
forgeries, or that it was the defendant who actually
notarized the bonds.
The District Court denied the defense motion to exclude
the evidence and the matter proceeded to trial where Morley
took the witness stand and denied knowingly engaging in a
fraudulent scheme. Morley did not deny signing the fake
will as a witness, rather he insisted that he had done so
believing that the purported signature was genuine.
On cross examination, the Assistant United States
_________________________________________________________________
5. Both Raymond and Robert testified against the defendant at trial,
however Holmes was not called as a witness.
5
Attorney inquired into the incident regarding the notarized
bonds. The government was able to establish that 14
months before Holmes forged Thompson's will, Holmes had
asked Morley to get his parents to notarize the
aforementioned U.S. Savings Bonds, and that Morley had
agreed to do so in return for $5.00 per bond. The
government's evidence also showed that the signatures on
those bonds were forged. In closing argument, the Assistant
United States Attorney referred to the prior incident as
follows:
And here's the big CPA who gets over a hundred bonds,
two times in a one-month period, and what's he do? He
puts his parents at risk. He asks his parents to do
something he knows is wrong. . . . And Michael Morley
puts his parents in jeopardy and has them falsely
witness the savings bonds. He doesn't want to take the
big risk then, he wants his parents to do it.
(Appendix ("App.") at 142a-143a). In addition, despite the
fact that the government failed to introduce any evidence
tending to show that Morley knew the bonds had been
forged, the Assistant United States Attorney argued in
closing that the bond evidence should cause the jury to
conclude that Morley knew the signing of the will was part
of a fraudulent scheme:
Why does he allow Dan Holmes to bring him a will and
ask him to sign it when he knows it's illegal, he knows
it's wrong, he knows it's criminal. Why does he do it?
Well, Dan Holmes had done this before. And he saw
Dan Holmes do this before and he worked with Dan
Holmes doing this before and he only got a little bit of
money when Dan Holmes did it before and he saw Dan
Holmes get a lot of money when he did it before and
maybe it could work again. So if you could just go
along with it and keep his hands off of it as much as
possible, maybe he could ride the coattails of Dan
[Holmes].
(Supp. App. at 347a) (emphasis added).
6
Morley was convicted of all charges, and this appeal
followed.6
II.
Fed. R. Evid. 404(b) provides:
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
. . . .
However, in order for such evidence to be admissible under
Rule 404(b), its probative value must outweigh the
prejudice inherent in testimony about a defendant's prior
"bad acts," Fed. R. Evid. 403. The trial court must inform
the jurors of the limited use they may make of such
evidence, and also instruct them not to draw any inference
of bad character from it. Huddleston v. United States, 485
U.S. 681, 691-92 (1988).
Evidence admitted under Rule 404(b), like all other
evidence, must be relevant to some proper purpose.
"Evidence is admissible under Rule 404(b) only if it is
relevant." Id. at 689. Evidence is relevant if it has "any
tendency to make the existence of any fact that is of
consequence . . . more probable or less probable than it
would be without the evidence." Fed. R. Evid. 401. Here, as
in so many cases, inquiries of relevance and proper
purpose are intimately intertwined. Evidence that is not
relevant, by definition, cannot be offered for a proper
purpose, and evidence that may be relevant for some
purposes may be irrelevant for the purpose for which it is
offered. Moreover, there is no alchemistic formula by which
"bad act" evidence that is not relevant for a proper purpose
under Rule 404(b) is transformed into admissible evidence.
_________________________________________________________________
6. We exercise appellate jurisdiction pursuant to 28 U.S.C. S 1291. We
review a trial judge's decision to admit evidence of uncharged offenses
for abuse of discretion. United States v. Traitz, 871 F.2d 368, 389 (3d
Cir. 1989).
7
Thus, a proponent's incantation of the proper uses of such
evidence under the rule does not magically transform
inadmissible evidence into admissible evidence."Relevance
is not an inherent characteristic," Huddleston, 485 U.S. at
689, "nor are prior bad acts intrinsically relevant to ``motive,
opportunity, intent, preparation, plan, knowledge, identity,
or absence of mistake.' " United States v. Sampson, 980
F.2d 883, 888 (3d Cir. 1992). Thus, when prior bad act
evidence is both relevant and admissible for a proper
purpose, "the proponent must clearly articulate how that
evidence fits into a chain of logical inferences, no link of
which may be the inference that the defendant has the
propensity to commit the crime charged." United States v.
Himelwright, 42 F.3d 777, 782; United States v. Jemal, 26
F.3d 1267 (3d Cir. 1994).
Here, the government asserts that the challenged
evidence was relevant to Morley's "knowledge and intent at
the time Holmes asked him to sign the will as a``third
witness.' " Appellee's Br. at 17. This refrain is repeated
throughout the government's brief.7 Yet, upon close
examination, the only connection between Morley's request
to his parents to notarize the bonds, and his alleged
attestation on the forged will is the inference that Morley
was likely to have been guilty of the latter merely because
he had previously engaged in "similar" impropriety. This is
the very evil that Rule 404(b) seeks to prevent. Evidence
pertaining to the notarized bonds is simply not relevant to
whether Morley knew the signature on Thompson's will was
forged absent the natural (and improper) inference that
lurks beneath the surface of the government's use of this
evidence. At trial the prosecution did not even attempt to
_________________________________________________________________
7. The government argues: "Morley placed his knowledge and intent at
issue by denying his involvement in the conspiracy .. . ." Appellee's Br.
at 18. "The key element of his involvement in the conspiracy was his
witness signature on the will of a dead man he never met." Id. "Evidence
of the same two individuals (Holmes and Morley) participating together
to obtain false notarization of the signature of another person on U.S.
Savings Bonds is highly relevant to show the knowing and intentional
behavior of Morley in this case." Id. at 19.
8
establish that Morley knew the signature on the bonds was
forged.8
At oral argument before us, the government was
represented by an Assistant United States Attorney who
had not tried the case, and he had the unenviable task of
defending the trial prosecutor's closing argument, and the
hodgepodge of explanations the government had offered for
the Rule 404(b) evidence. Although he valiantly attempted
to do so, his attempts to justify the government's conduct
were unsuccessful. When we asked for an articulation of a
proper purpose for this evidence at argument, the
government responded:
The evidence was offered to show Mr. Morley's criminal
knowledge and criminal intent in engaging in a scheme
with Mr. Holmes regarding the fake will. The evidence
specifically was that he had gotten his parents to
falsely notarize documents that attest the signatures
were authentic, made by people in front of them, and
that was not actually the case. And this was probative
of the fact that Mr. Morley had dealt before with Mr.
Holmes knowingly and intentionally in obtaining false
signatures on documents, a material issue that had to
proved with respect to the fake will.
Transcript of Oral Arguments at 19-20. We then asked: "Q:
What is the relevance of what happened in the bond issue
to whether on this occasion, sixteen months later . . . he
signed the will knowing that the testator wasn't present?"
Id. at 23. The government responded:
The relevance is that he previously knowingly agreed to
help his friend, Mr. Holmes, obtain false notary seals
on documents attesting that these signatures were
placed on the documents by the people whose names
_________________________________________________________________
8. We do not mean to suggest that the evidence would necessarily have
been proper if the government had shown that Morley knew the
signature on the bonds was a forgery. We do suggest, however, that the
government's failure to establish that guilty knowledge further
undermines the government's assertion that the prior conduct was
relevant to Morley's intent in attesting to the forged signature on the
fake
will.
9
appeared there when that was not true. . . . [I]t's a
fraudulent act by itself to place those fraudulent seals.9
Id. at 23-24. We then asked if the government's explanation
was merely an assertion that the evidence of Morley's prior
bad acts simply established that he was someone of bad
character who was, therefore, more likely to have knowingly
engaged in the fraudulent will scheme with Holmes. We
asked: "And because he's the kind of guy who had done it
before, he's the kind of guy who will do it again[?]" Id. at
24-25. The Assistant United States Attorney responded:
"Right." Id. at 25. That refreshingly candid response is the
best (and we think the only) explanation of why this
evidence was offered in the first place. However, we sought
further clarification. We asked: "Why else is it relevant,
other than he did it once before, he's the kind of guy that
will do it again?" Id. The government responded:
It's not to show that he did it before, he'll do it again.
It's to show that he had the prior knowledge of Holmes
and what Holmes was doing. He engaged previously
with the same intent.
Id. However, that argument assumes that Morley knew that
the bonds were forged when he took them to his parents.
The prosecution could have called Holmes (who was
apparently cooperating pursuant to his plea agreement) to
attempt to establish that Morley was told that the
signatures on the bonds were forgeries when Morley took
them to his parents, but it made no effort to do so.
Ironically, after now suggesting that Morley knew the
signatures on the bonds were forged, the government
asserts in its brief that Morley's belief as to the genuineness
of the signatures on the bonds was irrelevant, and there
was therefore no need to call Holmes during Morley's trial.
The government states, "Despite Morley's complaint about
Holmes' absence at trial, there was no need for Holmes to
testify about matters not in dispute." Appellee's Br. at 18,
n. 5.
During our exchange at oral argument, the government
shifted gears. It seized upon Morley's trial testimony that
_________________________________________________________________
9. Morley's parents, not Morley, placed the seals on the bonds.
10
the signature on the attestation looked like his, but that he
did not remember signing it. The government used that
testimony to argue that the evidence regarding the bonds
was relevant because it showed Morley signed David
Thompson's will as a witness. We then asked the
government to explain that connection.
[By the court]: To the extent that[the evidence] comes
in to impeach [Morley] when he says that it looks like
my signature . . . I don't recall signing this, you are
saying that you used a prior document, fourteen
months earlier that he did not sign, that he gave to his
parents to show that he signed this document?
A: That's correct.
Transcript of Oral Arguments at 33-34. That explanation is
illogical. Moreover, Morley never denied attesting to the
purported signature on Thompson's will. As noted above, he
admitted that to the FBI when he was first interviewed
about the scheme to probate a fraudulent will. In its brief
on appeal, the government concedes that "Morley admitted
that he signed the will . . . Yet Morley denied knowledge or
intent that he agreed to witness a fake will and loot the
decedent's estate." Appellee's Br. at 15. Furthermore, even
if Morley had denied attesting to the testator's signature, we
fail to see how evidence of the prior notarization of bonds
would have made it more likely than not that Morley signed
the will, absent an improper inference of bad character.
Our concern is only heightened by the explanation the
government initially gave in response to defense counsel's
motion in limine to exclude this evidence. There, as noted
above, the government argued that the evidence was
admissible "to prove the defendant's motive, opportunity,
intent, preparation, planning, knowledge and absence of
mistake." It also argued that the evidence was relevant "to
show the defendant's knowledge, intent, plan and modus
operandi of falsely witnessing the will of a dead man, who
was neither known nor present." It said nothing about
handwriting, or establishing that defendant's handwriting
was on the will.
The government further strains to justify its resort to the
prior misconduct by suggesting that it was relevant to show
11
the relationship between Holmes and Morley, and bore
upon Morley's behavior in forging the attestation on
Thompson's will. We are told that "[e]vidence of the same
two individuals . . . participating together to obtain false
notarization of the signature of another person on U.S.
Savings Bonds is highly relevant to show the knowing and
intentional behavior of Morley in this case." Appellee's Br.
at 19. However, this evidence was not necessary to tie
Morley to Holmes. That was a given from the very
beginning. The government's own brief describes Holmes as
Morley's "long-time friend and business partner." Appellee's
Br. at 3. In Sampson, we reversed a conviction where the
government used evidence of prior illegal drug transactions
involving the defendant and his wife as part of the
circumstances from which the jury could infer that
defendant knew that certain drugs were in his prison cell,
and that his wife was the individual who had smuggled
them in to him. We rejected that argument because the
evidence actually served to establish criminal propensities
of the defendant; and to the extent it was relevant, the
district court had erred in failing to conduct a balancing
test under Rule 403.
Similarly, in United States v. Hans, 738 F.2d 88 (3d Cir.
1984), we rejected the government's attempt to introduce
evidence of defendant's record for bank robberies. There,
the government first tried to link the defendant to an
individual named "Bauman" and then had an agent explain
that the focus on Bauman led to the defendant. We stated:
"[T]he government had no need to introduce[the evidence]
to show that Bauman and [the defendant] knew each other.
The prosecution had already established that. . .[the
agent's] testimony was therefore cumulative, and
excludable on that ground as well." Id. at 94. Simply put,
the government can not create an issue where none exists
and then rely upon Rule 404(b) to argue that prior
misconduct is relevant to the manufactured issue.
Here, the parade of ephemeral explanations marched on
as we continued to press for clarification as to why this
evidence was relevant. The government argued:
[T]his same man earlier, Mr. Holmes, came to Mr.
Morley and asked him to help in getting false notary
12
seals placed on a document, that it makes it more
likely than not that Mr. Morley had knowledge of what
Holmes was up to when Holmes then asked him later
to put his signature on another document which turns
out to be another false statement. Just as false as
those notary representations were, they were similarly
false, that Mr. Morley was sitting there witnessing the
act of David Thompson, which was a false statement.
But there's a very clear inference that we submit that
can be drawn and that we asked the jury to draw.
Transcript of Oral Arguments at 34-35.
We believe the situation here is analogous to, though not
as egregious as (and perhaps not as clear as) United States
v. Mothershed, 859 F.2d 585, 589 (8th Cir. 1988). There,
the court was concerned about evidence of defendant's
prior conviction for possessing stolen bank money. That
prior conviction had been introduced at defendant's trial for
bank robbery 10 years later. The defendant admitted to
having been in the bank the day of the robbery, and
admitted to having a large sum of cash, but testified that
he did not rob the bank, and that he won the cash
gambling at a party before the time of the robbery. The
government argued that evidence that the defendant had
previously been convicted for possessing stolen bank money
was admissible under Rule 404(b) to prove "opportunity,
intent, preparation, plan, knowledge, identity, and absence
of mistake." Id. at 587. However, the Court of Appeals was
not impressed with the prosecution's recitation of the litany
of legitimate purposes under Rule 404(b). The courtfirst
noted that it had "not been aided in [its] review by the
``laundry list' approach taken at trial. Rather than name the
particular issue for which this conviction was relevant, it
appears that the government simply read the justifications
contained in Rule 404(b)." Id. at 588. The court then noted
that such an approach was not, by itself, reason to exclude
such evidence or to reverse the defendant's conviction, but
that "it is a practice we discourage." Id . We agree.
In rejecting the prosecution's attempt to legitimize the
prior bad act evidence in Mothershed, the court explained:
We cannot conclude that the prior conviction is
relevant to any of these issues. There is only one sense
13
in which we regard that conviction as relevant: it is
reasonable to conclude that a person who has been
convicted of possessing money that he knows was
stolen from a bank is more likely to be a bank robber
than are most other people who have no such record.
But this is simply an observation about a person's
character, and as such, is precisely the kind of
evidence that Rule 404(b) is designed to exclude. We do
not convict people of crimes simply because of their
propensities; we do so because of what they have
actually done.
Id. at 589.
Neither a trial court nor an appellate court is comforted
when a proponent attempts to justify "bad act" evidence by
resorting to a mantra-like recitation of the provisions of
Rule 404(b). Accordingly, as we noted above, we require the
prosecution to "clearly articulate how that evidence fits into
a chain of logical inferences, no link of which can be the
inference that because the defendant committed . . .
offenses before, he therefore is more likely to have
committed this one." Sampson, 980 F.2d at 887. "The
government must therefore proffer a logical chain of
inference consistent with its theory of the case," Id. at 888,
and when it does so, "[t]he district court must put a chain
of inferences into the record, none of which is the inference
that the defendant has a propensity to commit this crime."
Id.
Here, despite the government's protestations to the
contrary, evidence of Morley's prior involvement with the
improperly notarized bonds is relevant only to show that
Morley has certain criminal "propensities," and it is
therefore more likely that he knew the signature of the
testator on the fake will had been forged. "[W]hile the
government's argument was cloaked in terms of [Morley's]
intent, the goal here was actually something different; it
was to portray [Morley] as a person who" was more likely
than not guilty of the charged crimes because he had done
something that was illegal in the past. Himelwright, 42 F.3d
at 783. The nexus between the conduct Morley was indicted
for, and his prior bad acts is even more tenuous because
there is no evidence he knew the signatures on the bonds
14
had been forged, he merely presented the signed bonds to
his parents and asked them to notarize the signatures as
though the bonds had been signed in their presence.
Though Morley's conduct with regard to the bonds was
clearly wrong, we do not think that it takes on the
significance the prosecution seeks to attribute to it.10
When all is said and done, the closing argument of the
Assistant United States Attorney who tried this case
provides a far more lucid explanation for why this evidence
was admitted than the elusive justifications that the
government has parroted from the rule. As noted above, in
closing, the prosecutor argued:
And here's the big CPA who gets over a hundred bonds,
two times in a one-month period, and what's he do? He
puts his parents at risk. He asks his parents to do
something he knows is wrong. . . . And Michael Morley
puts his parents in jeopardy and has them falsely
witness the savings bonds. He doesn't want to take the
big risk then, he wants his parents to do it. . . .
App. at 142a-143a. This frontal assault upon the
defendant's character is simply not appropriate under our
system of laws, and the trial court abused its discretion in
admitting it.11 Despite the government's various
explanations, we do not think evidence of the notarization
of the bonds is probative of Morley's intent in signing the
fake will, absent the improper inference of bad character.
The government cites several cases to support its
assertion that the District Court did not abuse its
discretion in admitting this evidence.12 However, we are not
_________________________________________________________________
10. In Commonwealth v. Downing, 357 A.2d 703, 704 (Pa Cmwlth, 1976),
the Commonwealth Court of Pennsylvania stated: "[w]e suspect that it is
all too common a practice for notaries public to affix their seals to
documents not signed in their presence." Though the practice is wrong,
and can not be condoned, we doubt it is any less common in New Jersey
where Morley was tried than it was in Pennsylvania when the
Commonwealth Court made its observation.
11. Defense counsel did not object to the prosecutor's closing.
Nevertheless, we believe the initial objection to introducing this
evidence
is sufficient to preserve this issue on appeal.
12. See Appellee's Br. at 13-14.
15
persuaded. In United States v. Wood, 982 F.2d 1 (1st Cir.
1991), the Court of Appeals for the Fifth Circuit affirmed
the trial court's admission of testimony that the defendant
had previously falsely notarized documents, and signed
other persons' names to legal documents. The defendant
was an attorney who was on trial for conspiracy to obtain
forged signatures on various deeds for a friend. The trial
court allowed former members of the defendant's office staff
to testify that he had previously signed other persons'
names to documents and notarized documents that had not
been signed in his presence. During the trial, the defendant
had denied fraudulent intent in forging the deeds in
question. He insisted that he had obtained the signatures
only as an accommodation, and that he had never before
signed anyone else's name to a legal document, nor falsely
notarized any documents. Accordingly, the court of appeals
ruled that the challenged testimony of his former staff was
properly admitted under Rule 404(b) to impeach the
defendant's own testimony. "Appellant testified that his
effort to procure unauthorized signatures was a``one time
occurrence.' The proffered evidence thus directly
contradicted the testimony of appellant himself. It was also
highly relevant on the issue of appellant's intent and thus
admissible under Rule 404(b)." Id. at 4. 13
In United States v. Faust, 850 F.2d 575 (9th Cir. 1998),
the defendant was convicted of forgery and embezzlement.
During his trial, the prosecution introduced letters that
defendant had previously fraudulently altered. The trial
court allowed the testimony because it concluded that the
prior bad acts were "clearly relevant to [the defendant's]
state of mind and contradicted his professions of good faith
or mistake." Id. at 583. However, the court did so with no
analysis, and with no discussion of why the inferences
arising from the prior bad acts were consistent with the
requirements of Rule 404(b). Id. at 583. The Court of
Appeals for the Ninth Circuit affirmed with little discussion
other than stating its belief that the prior bad acts were
relevant to defendant's good faith in connection with the
charged offenses. Our jurisprudence requires more. See
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13. We do not mean to infer that evidence of prior forgeries, by itself,
is
admissible to establish intent under Rule 404(b).
16
Sampson, supra. Here, neither the government, nor the trial
court complied with the procedure that we set forth in
Sampson, and that we reiterate above. Accordingly, Faust
provides little support for the prosecution's position.
In United States v. Weiler, 385 F.2d 63 (3d Cir. 1967),14
the defendant was convicted of wilfully making false
statements in an application for a license under the Federal
Firearms Act. He signed an application for a firearms
license in which he swore that he had not previously been
convicted of a felony. At trial, the prosecution was allowed
to introduce evidence that the defendant had previously
been convicted of assault and battery, and the court
instructed the jury that the conviction subjected the
defendant to a period of imprisonment in excess of one
year. The defendant's criminal history was, of course, an
element of the offense and, therefore, admissible. However,
the prosecution also introduced evidence that the defendant
lied about his address to a government investigator, and
that he had made false material misrepresentations on an
application to the Department of Defense pertaining to his
son's miliary service. We concluded that the testimony
regarding defendant's false statements about his address
was not admissible. Id. at 68 ("We find that it was not
sufficiently probative of ``willfulness' to be admitted on that
issue."). We did not rule upon the admissibility of
defendant's prior false declarations on the Department of
Defense form. Rather, we concluded that it was sufficiently
similar to the charged offense to be "controlled by the
sound discretion rule," and we left the determination as to
the admissibility of that evidence to the discretion of the
trial court on remand for a new trial. Id.
In United States v. Allen, 76 F.3d 1348 (5th Cir. 1996),
the Court of Appeals for the Fifth Circuit affirmed the trial
court's admission of evidence of prior fraudulent acts in
defendant's trial for various charges related to a charged
bank fraud. The court reasoned that evidence of
defendant's forgeries involving repayment of a $1,600,000
loan was part of the scheme for which he was indicted and
therefore not "bad acts" evidence at all. Id. at 1364; ("The
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14. Weiler was obviously decided before Sampson.
17
forgeries were the very fraud charged in count ten, and
thus . . . not prior bad acts within the meaning of Rule
404(b)"). Evidence of additional forgeries was properly
admitted because of the uniqueness of those prior bad acts.
The court stated: "We hold that ``the circumstances of the
extraneous act were so similar to the offense in question
that they evince[d] a signature quality -- marking the
extraneous act as the handiwork of the accused.' " Allen, 76
F.3d at 1364, citing United States v. Sanchez, 988 F.2d
1384, 1393 (5th Cir. 1993) (alteration added, internal
quotation marks omitted). Conduct involving the bonds at
issue here clearly does not rise to the level of a "signature
crime." The court in Allen also allowed other evidence of
uncharged forgeries that "showed motive." Id. at 1365-66.
Still other bad act evidence was not subjected to a Rule
404(b) inquiry because the objection went to the
prosecution's closing, ("his challenge is to argument, not
evidence, and [the defendant] himself introduced the
underlying evidence."), or because defense counsel never
objected and the prior bad act evidence did not amount to
plain error. Id. at 1366 ("we review only for plain error and
we find none.").
Thus, none of these cases support the government's
position here. The government quite properly reminds us
that we have stated "that Rule 404(b) is a rule of ``inclusion'
rather than ``exclusion.' " Appellee's Br. at 12 (citing United
States v. Scarfo, 850 F.2d 1015, 1019, and Sampson,
supra). However, our recognition of the proper operation of
a rule of evidence can neither obliterate the rule, nor be
seized upon to circumvent the rule's requirements. This is
particularly true when we consider the obvious dangers
inherent in evidence of uncharged bad acts, and the
adversarial tendency of the proponents of such evidence to
be less than candid about their motives for offering
evidence that suggests that a defendant's character is
suspect. See Sampson, 980 F.2d at 886 ("Although the
government will hardly admit it, the reasons proffered to
admit prior bad act evidence . . . is often mixed between an
urge to show some other consequential fact as well as to
impugn the defendant's character").
The fact that Rule 404(b) operates as a rule of inclusion
as opposed to operating as a rule of exclusion does not
18
open the flood gates to evidence that is relevant only to
establish a defendant's bad character. Thus, we require
that such evidence meet the "chain of inference" test set
forth in Sampson. See also Himelwright, 42 F.3d at 781-82
(reversing a conviction where the government used 404(b)
evidence in closing argument to portray the criminal
propensity of the accused), Jemal, 26 F.3d at 1272, and
Government of the Virgin Islands v. Harris, 938 F.2d 401,
419 (3d Cir. 1991). This is not a difficult burden to
overcome when the evidence truly is relevant to a proper
purpose.
We realize that the District Court did give a cautionary
instruction here. In its final charge, the court instructed:
[Y]ou've heard evidence of . . . the alleged act of the
defendant obtaining notary seals on bonds of . . . Mr.
DeStefano. There are no charges pending in this case
with respect to that. You must not consider any of that
evidence in deciding if the defendant committed the
acts charged in the indictment.
However, you may consider this evidence for other
very limited purposes. If you find beyond a reasonable
doubt from other evidence in this case that the
defendant did commit the acts charged in the
indictment, then you may consider evidence of similar
alleged conduct on another occasion. . . to determine
whether the defendant had the state of mind or intent
necessary to commit the crime or crimes charged in the
present indictment. . . .
[Y]ou are only permitted to use that other conduct to
show his intent . . . in the present indictment. They are
not permitted to show that he is - his general
character. That would be an improper use of that
evidence.
Supp. App. at 371a-72a. However, as noted above, the
evidence here only tends to establish the defendant's state
of mind in witnessing the will if one views the defendant
with the jaundiced vision resulting from the prior
misconduct, and the fact that he put his parents at risk.
We can find no relevance beyond that improper inference,
and the government has not shown us any. Thus, the
19
court's charge can not cure the danger inherent in the
testimony about the bonds. "Where the government has not
clearly articulated reasons why the evidence is relevant to
any legitimate purpose, there is no realistic basis to believe
that the jury will cull the proper inferences and material
facts from the evidence." Sampson, 980 F.2d at 889. Here,
of course, there is no way to limit the government to its
clearly articulated theory because no theory was clearly
articulated, and the evidence was not relevant to any of the
theories that the government did toss against the
evidentiary wall of Rule 404(b).
III.
We note that, although the government did produce
circumstantial evidence from which the jury could infer
that Morley knew that the will was a forgery, we do not
believe that evidence was so compelling, nor the
prosecution's transgression so inconsequential, that we can
conclude that admission of Morley's prior impropriety was
harmless error. Accordingly, we will vacate the defendant's
conviction, and remand the matter to the District Court for
a new trial consistent with this opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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