United States v. Saada ( 2000 )

Opinions of the United
2000 Decisions States Court of Appeals
for the Third Circuit
5-15-2000
United States v. Saada
Precedential or Non-Precedential:
Docket 99-5126 & 99-5148
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Filed May 15, 2000
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 99-5126 & 99-5148
UNITED STATES OF AMERICA,
Appellee,
v.
NEIL SAADA and ISAAC SAADA, a/k/a Zuckie,
Appellants.
Appeal from the United States District Court
for the District of New Jersey
D.C. Criminal No. 96-cr-00047
District Judge: Honorable John C. Lifland
Argued: December 16, 1999
Before: NYGAARD and RENDELL, Circuit Judges, and
HARRIS, District Judge.*
(Filed: May 15, 2000)
_________________________________________________________________
* Stanley S. Harris, Senior District Judge for the District of Columbia,
sitting by designation.
Edna Ball Axelrod, Esq. (Argued)
76 South Orange Avenue, Suite 305
South Orange, N.J. 07079
Paul Brickfield, Esq.
70 Grand Avenue
River Edge, N.J. 07661
Norman Gross, Esq. (Argued)
Office of the United States Attorney
One John F. Gerry Plaza
Fourth and Cooper Streets
Camden, N.J. 08101-2098
James F. McMahon, Esq.
Office of the United States Attorney
970 Broad Street
Newark, N.J. 07102-2535
OPINION OF THE COURT
HARRIS, District Judge.
This appeal arises out of a factual setting of unusual
corruption, involving a flooded portion of a warehouse
resulting from a broken sprinkler head; a fraudulent
insurance claim filed by a father and son; a cousin who
took part in the scheme, but later testified against his
relatives as a government witness, only to be caught on
tape by the government encouraging an individual to falsely
implicate someone in a different crime; and the use at trial
of a statement by a deceased state court judge who had
been removed from the bench and disbarred for unethical
conduct. It requires us to apply our standards governing
new trials under Federal Rule of Criminal Procedure 33 and
a prosecutor's vouching for the credibility of witnesses, and
to interpret the intersection of two rules of evidence.
A jury convicted Isaac Saada and his son, Neil Saada
(collectively "appellants" and sometimes identified by their
first names), of one count of conspiracy to defraud an
insurance company in violation of 18 U.S.C. S 371, two
counts of mail fraud in violation of 18 U.S.C. S 1341, and
2
one count of wire fraud in violation of 18 U.S.C.S 1343.
The District Court sentenced Isaac to concurrent prison
terms of 36 months, and Neil to concurrent prison terms of
30 months. Shortly after being sentenced, appellantsfiled
a motion for a new trial on the basis of newly discovered
evidence, which the District Court denied. Appellants
challenge the District Court's denial of their motion for a
new trial, a number of its evidentiary rulings made during
the trial, and the propriety of certain statements made by
the government during its rebuttal argument. We will
affirm.
I. BACKGROUND
A. Factual Background
Appellants owned and operated a business named
Scrimshaw Handicrafts ("Scrimshaw") in New Jersey that
purchased, manufactured, and sold items made from ivory,
jewels, gold, and other materials. Appellants faced
significant financial difficulties. In August 1990, they were
sued on a $6 million bank loan made to an entity named
Kiddie Craft; each appellant had personally guaranteed the
total amount of the loan, and each thus was liable for the
amount of the subsequent settlement of the lawsuit-- $3.8
million. During this period, Scrimshaw was operating at a
net loss, and ultimately it filed for bankruptcy in June
1991.
The government's evidence at trial showed that, in 1990,
appellants contacted Ezra Rishty, Isaac's cousin, for help in
an insurance fraud scheme. Rishty was a public insurance
adjuster in New York City who had conspired with various
clients in over 200 fraudulent insurance schemes in the
past. Rishty agreed to assist Isaac in filing a fraudulent
insurance claim, and enlisted the help of Morris Beyda, a
former employee who by then owned his own business.
Rishty also enlisted the help of Sal Marchello, a general
adjuster for the Chubb Insurance Group ("Chubb"), which
was Scrimshaw's insurer. Marchello assured Rishty that
Chubb would assign him to handle the future Scrimshaw
claim.
3
The basis of the fraudulent insurance claim was a staged
flooding in Scrimshaw's warehouse caused by a broken
sprinkler head. Beyda testified that, on November 28, 1990,
he went to the warehouse and, with the assistance of Neil,
broke a sprinkler head located above a caged area
containing Scrimshaw's most valuable merchandise. When
Neil and Beyda broke the sprinkler head, Isaac was in his
office with Tom Yaccarino, a vice-president of Scrimshaw
and former New Jersey state court judge. Breaking the
sprinkler head caused a flood of dirty water to fall on the
boxes in the cage, which triggered an automatic alarm and
prompted police and fire fighters to go to the Scrimshaw
warehouse. Neil told them the agreed-upon cover story --
that he had accidentally broken the sprinkler head while
moving a heavy box that was piled on top of other boxes in
the storage area, near the ceiling. A few days later, Beyda
returned to the warehouse and increased the damage by
spraying water on boxes of merchandise that previously
had not been damaged.
Appellants submitted an insurance claim and proof of
loss to Chubb for the merchandise damaged by the
purported accident. The proof of loss contained an
inventory of the damaged items, which included items that
had in fact not been damaged. Appellants retained Rishty's
company, United International Adjusters, to assist them
with this claim. Chubb assigned Marchello to investigate
the claim, who in turn hired Kurt Wagner -- an insurance
salver -- to assess the extent of damage and to valuate the
merchandise. Wagner took part in the fraudulent scheme
by vouching for the accuracy of the proof of loss, without
actually inspecting the inventory listed.
Chubb hired an accounting firm to review the valuation
in the proof of loss. Appellants were unable to provide
invoices for certain merchandise valued at approximately
$500,000 that was listed in their claim. Neil informed the
accountants that they were having trouble locating these
invoices because they were old and stored away in a trailer.
Appellants thereafter submitted forged invoices indicating
that Scrimshaw had purchased the merchandise in
question from a jewelry wholesaler in New York. When the
accountants became suspicious about these invoices
4
because they were in "pristine" condition, Marchello told
them to accept the invoices and not to investigate any
further.
Chubb also sent an investigator to interview appellants
regarding the water damage claim. In separate interviews,
at which Rishty was present, appellants stated that their
business was not facing financial difficulties. Isaac also
stated that he had hired Rishty as a public adjuster
because he had seen an advertisement of his company, but
did not state that he was related to Rishty.
Chubb ultimately paid appellants $865,000 on the
fraudulent claim, $270,000 of which appellants paid to
Rishty for his role in the scheme. Rishty paid Beyda,
Marchello, and Wagner for their roles in the scheme out of
his share of the money.
B. Procedural Background
In December 1992, federal agents executed search
warrants for the business offices of Rishty and Beyda in
New York. Shortly thereafter, Rishty and Beyda agreed to
cooperate with the government.1 Between 1992 and 1997,
Rishty spent approximately 3,000 hours, and Beyda spent
over 1,000 hours, cooperating with the government in
various insurance fraud investigations. In the course of this
cooperation, Rishty admitted to having participated in over
200 fraudulent insurance claims. Rishty and Beyda also
advised the government of the fraudulent water damage
claim submitted by Scrimshaw. Pursuant to their
cooperation agreements, Rishty and Beyda pleaded guilty to
various fraud-related offenses in the United States District
Court for the Eastern District of New York. Rishty also
pleaded guilty to conspiracy to commit mail fraud in the
United States District Court for the District of New Jersey
for his role in the Scrimshaw claim.
_________________________________________________________________
1. Rishty entered into one cooperation agreement with the United States
Attorney for the Eastern District of New York, and another with the
United States Attorneys for the District of New Jersey and the District of
Connecticut. Beyda entered into a cooperation agreement only with the
United States Attorney for the Eastern District of New York.
5
In an indictment filed in the United States District Court
for the District of New Jersey, appellants were charged with
one count of conspiracy to defraud an insurance company,
three counts of mail fraud, and one count of wire fraud.2
Before trial, the District Court dismissed one of the mail
fraud counts pursuant to a government motion. At trial,
both Rishty and Beyda testified for the government,
pursuant to their cooperation agreements, as to appellants'
involvement in the fraudulent water damage claim.
Appellants' defense was that Rishty and Beyda were falsely
implicating them in order to receive the benefit of motions
for reduced sentences on the charges to which they had
pled guilty. The jury convicted appellants on the four
remaining counts in the indictment. After being sentenced,
appellants moved unsuccessfully for a new trial on the
basis of newly discovered evidence. We now turn to the
contentions raised in this appeal.
II. MOTION FOR A NEW TRIAL
Appellants first challenge the District Court's denial of
their motion for a new trial under Federal Rule of Criminal
Procedure 33. We review that decision for an abuse of
discretion. See Government of the Virgin Islands v. Lima,
774 F.2d 1245, 1250 (3d Cir. 1985); United States v.
Adams, 759 F.2d 1099, 1108 (3d Cir. 1985).
The new evidence forming the basis of appellants' motion
consists of a crime committed by Rishty after appellants
had been convicted. In July 1997, Rishty advised an
individual named Robert Falack to give false testimony
against an innocent third party, under the guise of
cooperating with the government, in order to receive a
reduced sentence on a pending criminal charge.3 Rishty's
urging was captured on audio tape, as Falack wore a wire
_________________________________________________________________
2. The indictment also charged Isaac separately in five other counts, but
the District Court granted a motion to sever those counts.
3. Because Rishty's conduct violated the terms of his cooperation
agreement with the government, the United States Attorney for the
Eastern District of New York did not file a motion under S 5K1.1 of the
Sentencing Guidelines for a reduced sentence on the charges to which
he had pled guilty.
6
during the conversation. The tape reveals that Rishty also
told Falack that he would "back up" his story"100
percent," that Rishty admitted to withholding information
from the government during his cooperation, and that the
government sometimes gave him information about a
particular crime when asking him whether it had occurred.
Appellants claim that this newly discovered evidence
warrants a new trial because it undermines Rishty's
testimony and bolsters their trial defense by providing
powerful evidence of Rishty's willingness falsely to implicate
innocent people in order to receive leniency at sentencing.
At the outset, we note that the newly discovered evidence
may also be characterized as "newly created" evidence
because Rishty did not encourage Falack to give false
testimony until after appellants had been convicted. We
share the skepticism expressed by the trial court over the
viability of a defendant's application for a new trial that
relies solely on evidence of a government witness' bad acts
committed after the defendant has been convicted.
However, we need not resolve whether this type of evidence
may ever warrant a new trial because the relevant evidence
in this case does not meet our well-established standard for
a new trial. Our case law makes clear that five
requirements must be met before a trial court may grant a
new trial on the basis of newly discovered evidence:
(a) the evidence must be in fact newly discovered, i.e.
discovered since trial; (b) facts must be alleged from
which the court may infer diligence on the part of the
movant; (c) the evidence relied on must not be merely
cumulative or impeaching; (d) it must be material to
the issues involved; and (e) it must be such, and of
such nature, as that, on a new trial, the newly
discovered evidence would probably produce an
acquittal.
Lima, 774 F.2d at 1250 (quoting United States v. Ianelli,
528 F.2d 1290, 1292 (3d Cir. 1976)). The movant has a
"heavy burden" in meeting these requirements. United
States v. Ashfield, 735 F.2d 101, 112 (3d Cir. 1984). We
agree with the District Court that appellants did not meet
their burden.
7
First, the new evidence in this case fails the requirement
that it not be merely cumulative or impeaching. The
evidence is only impeaching because there is no
exculpatory connection between Rishty's act of counseling
Falack to falsely implicate an innocent person in another
case and appellants' acts of causing a flooding of their
storage area and filing a fraudulent insurance claim.
Nothing in Rishty's conversation with Falack supports an
inference that appellants were innocent of the charges for
which they were convicted.4 The evidence is only cumulative
because the jury heard an overwhelming amount of
evidence impeaching Rishty's credibility. Among other
things, that evidence probed the extent of Rishty's
participation in over 200 fraudulent insurance schemes, his
criminal record, and his cooperation agreement with the
government, under which he was eligible to receive the
benefit of a S 5K1.1 motion for a reduced sentence.5 This
evidence undoubtedly caused the jury to question the
veracity of Rishty's testimony implicating appellants in the
fraudulent insurance scheme. Given the abundance of
impeachment evidence presented at trial detailing Rishty's
propensity for deceitful acts and his incentive for testifying
as a government witness, we conclude that the District
Court did not abuse its discretion in ruling that the new
evidence was merely cumulative.
_________________________________________________________________
4. In his conversation with Falack, Rishty referred to Isaac as a "moron"
who had "caused his own problem" by backing out of a purportedly
favorable plea offer with prosecutors. This comment is not probative of
innocence because it evidences Rishty's belief that appellants were
guilty.
5. For example, the jury heard evidence that: (1) the total value of the
fraudulent claims in which Rishty had participated was approximately
$38 million; (2) approximately 20 of Rishty's employees had participated
in his fraudulent insurance schemes; (3) Rishty had routinely bribed
insurance adjusters and others in the insurance industry in connection
with these schemes; (4) Rishty had taken money from his clients by
telling them that he needed it for bribes, but had then kept it for
himself;
(5) Rishty had received approximately $5 million for his work on
fraudulent claims over 6 years; (6) Rishty had pled guilty to mail fraud
and tax evasion in federal court in New York, and had pled guilty to
insurance fraud in federal court in New Jersey; (7) Rishty had another
prior conviction for larceny; and (8) Rishty was testifying as a
cooperator
with the hope of receiving a reduced sentence.
8
Nor did the District Court err in concluding that the new
evidence failed another requirement for a new trial-- that
it would probably produce an acquittal. The District Court
reasoned that there was sufficient evidence, independent of
Rishty's testimony, to support the jury's findings of guilt.6
In doing so, it emphasized that portions of Beyda's
testimony indicating his presence at the Scrimshaw
warehouse on the night of the staged flooding had been
corroborated by independent evidence. This corroborating
evidence established Beyda's familiarity with the layout of
the warehouse, the individuals present on the night of the
flooding, and the details of the flooding as they unfolded,
and accordingly laid the foundation for his elaborate
testimony implicating appellants in the fraudulent scheme.
Appellants contend, however, that the new evidence would
lead a jury to discredit Beyda's testimony because his
testimony was inextricably linked to Rishty's testimony.
Appellants seek to account (as they must) for the
independent corroboration of Beyda's testimony by arguing
that Beyda could have learned about the warehouse and
flooding from Rishty, who would have acquired those
details through his purportedly lawful role as Scrimshaw's
public claims adjuster.7
Appellants' argument is unpersuasive. First, the jury did
not credit it at trial, even though it heard evidence that
Rishty and Beyda had been debriefed together by the
government, and had continued to communicate with each
other while they were cooperating. The new evidence would
not prompt a jury to accept appellants' theory because
_________________________________________________________________
6. Appellants argue that the District Court's conclusion was based on an
incorrect legal standard insofar as it assessed whether there was
sufficient independent evidence to support a conviction, instead of
whether the new evidence was likely to create a"reasonable doubt."
Appellants' argument is unavailing; we previously have employed an
approach focusing on the sufficiency of evidence when reviewing the
denial of a motion for a new trial. See Adams , 759 F.2d at 1108 (stating
that "other [non-tainted] evidence in the case was more than sufficient
to sustain a finding of guilt").
7. At trial, the defense denied Rishty's and Beyda's presence at the
warehouse on the night of the flooding, but did not deny that Rishty
subsequently had assisted appellants in filing their insurance claim.
9
Rishty's incriminating conversation with Falack does not
suggest that Beyda was falsely implicating people in crimes.
In any event, appellants' argument does not account for
certain aspects of Beyda's independently corroborated
testimony. For example, Beyda correctly testified that a
police officer responding to the alarm triggered by the
broken sprinkler head had radioed his headquarters, upon
arriving at the warehouse, to inform it that there was no
fire; there is no indication that Rishty knew of this
statement because Rishty was not present during the
flooding and would not necessarily have learned of it
through his role as a public adjuster. Thus, we conclude
that the new evidence did not undermine the strength of
Beyda's testimony implicating appellants in the fraudulent
insurance scheme. The government also presented other
evidence probative of appellants' guilt, such as their
financial motive to commit insurance fraud, their false
statements to the Chubb investigator, their forging of
invoices for merchandise they claimed had been damaged
during the staged flooding, and the positioning and design
of the sprinkler head, which undermined the strength of
their cover story about the cause of the broken sprinkler
head. Given this independent evidence of appellants' guilt,
and the strength of Beyda's untainted testimony, the
District Court's conclusion that the new evidence would not
probably produce an acquittal was hardly erroneous.
Because the District Court did not abuse its discretion in
concluding that the new evidence failed not only one but
two of the necessary requirements for a new trial, we will
affirm its decision denying appellants' Rule 33 motion.
III. EVIDENTIARY RULINGS
Appellants challenge the admission of two pieces of
evidence at trial: evidence of prior misconduct by Tom
Yaccarino, a former judge and vice-president of Scrimshaw
at the time of the flooding, and evidence of Isaac's
participation in another fraudulent insurance scheme with
Rishty. We find error in the admission of thefirst piece of
evidence, but conclude that it was harmless. We also
conclude that there was no error with respect to the second
piece of evidence.
10
A. Evidence of Yaccarino's Prior Misconduct
Appellants contend that the District Court improperly
admitted evidence of specific instances of misconduct by
Yaccarino to impeach his credibility. The impetus for the
admission of this evidence was the prior admission of a
statement made by Yaccarino at the time of the water
damage. Linda Chewning, a Scrimshaw employee, testified
that she was working in the warehouse on the night in
question. During cross-examination by defense counsel,
she testified that Yaccarino had run into the office kitchen
screaming words to the effect of "oh my God, Neil did
something stupid, [threw] something, now he has got a
mess . . . . I can't believe it. He is so stupid. He threw it.
He is stupid, he is dumb." Yaccarino was deceased at the
time of trial. The District Court admitted his statement as
hearsay under the excited utterance exception in Fed. R.
Evid. 803(2).8
_________________________________________________________________
8. Rule 801(c) defines hearsay as "a statement, other than one made by
the declarant while testifying at the trial or hearing, offered in
evidence
to prove the truth of the matter asserted." As this makes clear, not every
extrajudicial statement constitutes hearsay. Rather,"[i]f the significance
of an offered statement lies solely in the fact that it was made, no issue
is raised as to the truth of the matter asserted, and the statement is not
hearsay." Fed. R. Evid. 801(c) advisory committee's note. Typically
known as "verbal acts" (or perhaps more logically as "verbal utterances"),
such statements thus give rise to legal consequences independent of
their assertive quality. See, e.g., Mueller v. Abdnor, 972 F.2d 931, 937
(8th Cir. 1992); United States v. Cardascia, 951 F.2d 474, 486-87 (2d
Cir. 1991); Weinstein's Evidence P 801.03[2] (1999).
Appellants sought to have Yaccarino's statement admitted to prove the
truth of the assertion that Neil had accidentally broken the sprinkler
head, while the government maintained that his statement was for
"show" and merely part of the larger cover story. The excited utterance
exception, pursuant to which the District Court admitted Yaccarino's
statement, allows admission of a hearsay "statement relating to a
startling event or condition made while the declarant was under the
stress of excitement caused by the event or condition." Fed. R. Evid.
803(2). We are doubtful, however, that appellants were entitled to
admission of Yaccarino's statement under this exception because case
law imposes a requirement that the declarant "personally perceived the
event or condition about which the statement is made." United States v.
Mitchell, 145 F.3d 572, 576 (3d Cir. 1998) (citing Miller v. Keating, 754
11
Yaccarino's statement was important to appellants'
defense because it purportedly provided contemporaneous
evidence supporting their claim that Neil accidentally had
broken the sprinkler head. Accordingly, the government
sought to attack the statement by impeaching Yaccarino's
credibility. The government asked the District Court to take
judicial notice of two New Jersey Supreme Court decisions
ordering Yaccarino's removal from the bench and
disbarment for unethical conduct, as well as the factual
details supporting those decisions, which reflected his
unethical conduct.9 Appellants objected to that evidence on
the grounds that the credibility of a hearsay declarant may
not be impeached with extrinsic evidence of bad acts, and
that the danger of unfair prejudice from this evidence
substantially outweighed its probative value. Overruling
these objections, the District Court took judicial notice of
the two New Jersey Supreme Court decisions and their
factual underpinnings. Appellants renew their objections to
this evidence, and raise new challenges on the grounds that
judicial notice of the facts in the two court opinions was not
proper, and that the District Court conveyed an
unfavorable assessment of Yaccarino's credibility to the jury
in taking such judicial notice.
_________________________________________________________________
F.2d 507, 511 (3d Cir. 1985)). The record is bereft of any suggestion that
Yaccarino perceived Neil's purported act of throwing a box and
accidentally breaking the sprinkler head; to the contrary, it shows that
Yaccarino was in Isaac's office when the sprinkler head was broken, and
that Neil subsequently ran into the office to inform them of the alleged
accident. Nevertheless, despite our skepticism over whether the personal
perception requirement was in fact met, for review purposes we defer to
the District Court's ruling admitting Yaccarino's statement for the truth
of the matter asserted under the excited utterance exception.
9. The extent of Yaccarino's unethical conduct was substantial. Among
other things, Yaccarino had attempted to buy real estate that was the
subject of litigation before him and, after learning that the property
owner had recorded incriminating statements he had made, Yaccarino
attempted to persuade the property owner to submit a false affidavit or
give false testimony in court which would exonerate him. Yaccarino also
failed to disclose his interest in two liquor licenses that he held in
violation of New Jersey law. See generally In the Matter of Yaccarino, 101
N.J. 342, 502 A.2d 3 (1985).
12
Appellants first argue that the judicially noticed evidence
was admitted improperly because, although Federal Rule of
Evidence 806 provides for the impeachment of a hearsay
declarant, it limits that impeachment to "any evidence
which would be admissible for [impeachment purposes]
. . . if declarant had testified as a witness." Here, the
judicially noticed evidence involved specific instances of
Yaccarino's misconduct and, as the government
acknowledged at trial, constituted extrinsic evidence.
Federal Rule of Evidence 608(b) states:
Specific instances of the conduct of a witness, for the
purpose of attacking or supporting the witness'
credibility, other than conviction of crime as provided
in rule 609, may not be proved by extrinsic evidence.
They may, however, in the discretion of the court, if
probative of truthfulness or untruthfulness, be
inquired into on cross-examination of the witness (1)
concerning the witness' character for truthfulness or
untruthfulness, or (2) concerning the character for
truthfulness or untruthfulness of another witness as to
which character the witness being cross-examined has
testified.
Appellants argue that if Yaccarino had testified, Rule 608(b)
would have prevented the government from introducing
extrinsic evidence of his unethical conduct, and would have
limited the government to questioning him about that
conduct on cross-examination. Thus, appellants argue,
judicial notice of the evidence constituted improper
impeachment of a hearsay declarant. The government
correctly avers that it would have been allowed to inquire
into Yaccarino's misconduct on cross-examination if he had
testified at trial because Rule 806 allows a party against
whom a hearsay statement is admitted to call the declarant
as a witness and "to examine the declarant on the
statement as if under cross-examination." Because
Yaccarino's death foreclosed eliciting the facts of his
misconduct in this manner, the government argues that it
was entitled to introduce extrinsic evidence of his
misconduct. In effect, the government argues that, read in
concert, Rules 806 and 608(b) permit the introduction of
extrinsic evidence of misconduct when a hearsay declarant
is unavailable to testify.
13
Our standard of review is tied to the resolution of the
very issue about which the parties disagree -- the interplay
of Rules 806 and 608(b). We afford a district court's
evidentiary ruling plenary review insofar as it was based on
an interpretation of the Federal Rules of Evidence, but
review a ruling to admit or exclude evidence, if based on a
permissible interpretation of those rules, for an abuse of
discretion. See, e.g., United States v. Sokolow, 91 F.3d 396,
402 (3d Cir. 1996); United States v. Console, 13 F.3d 641,
656 (3d Cir. 1993). In this case, the District Court implicitly
interpreted Rule 806 to modify Rule 608(b)'s ban on the
introduction of extrinsic evidence in the context of a
hearsay declarant.10 Accordingly, we must determine
whether that interpretation is permissible to ascertain
whether the District Court's admission of the evidence
should be reviewed for an abuse of discretion.
At the outset, we note that the issue of whether Rule 806
modifies Rule 608(b)'s ban on extrinsic evidence is a matter
of first impression in this circuit, and a matter which the
majority of our sister courts likewise has not yet addressed.
Indeed, there are only two circuit court opinions construing
the effect of Rule 806's intersection with Rule 608(b). Those
cases are themselves in conflict. In United States v.
Friedman, 854 F.2d 535 (2d Cir. 1988), the Second Circuit
held that the trial court properly excluded impeachment
evidence that a hearsay declarant had lied to the police
because that evidence was not probative of the truthfulness
of the hearsay statement there at issue. Id. at 569-70. In
doing so, however, the court suggested that extrinsic
_________________________________________________________________
10. In ruling that the evidence of Yaccarino's misconduct was admissible,
the District Judge stated, in part:
The situation involving former Judge Yaccarino clearly comes within
Rule 806 in that his statement has been admitted in evidence, and
the question is an attack upon his credibility. Rule 806 says it
may
be attacked by any evidence which would be admissible if former
Judge Yaccarino had testified. If former Judge Yaccarino had
testified, I would allow the government to cross-examine him with
respect to the removal from office, and disbarment under the second
sentence of Rule 608(b). Certainly his disbarment and removal from
office would relate to his character for truthfulness or
untruthfulness.
14
evidence of such misconduct would have been admissible
had the misconduct been probative of truthfulness:"[Rule
608(b)] limits such evidence of `specific instances' to cross-
examination. Rule 806 applies, of course, when the
declarant has not testified and there has by definition been
no cross-examination, and resort to extrinsic evidence may
be the only means of presenting such evidence to the jury."
Id. at 570 n.8. The Second Circuit's position in Friedman
conflicts with the District of Columbia Circuit's more recent
statement in United States v. White, 116 F.3d 903 (D.C. Cir.
1997). In that case, the district court had allowed defense
counsel to cross-examine a police officer about a hearsay
declarant's drug use, drug dealing, and prior convictions,
but had not allowed defense counsel to impeach the
declarant's credibility by asking the officer whether the
declarant had ever made false statements on an
employment form or disobeyed a court order. Id. at 920.
The declarant was unavailable because he had been
murdered. Id. at 911. The court of appeals concluded that
defense counsel should have been allowed to cross-examine
the officer about the declarant's making false statements
and disobeying a court order.11 In doing so, the court
observed that defense counsel "could not have made
reference to any extrinsic proof of those acts" during cross-
examination. Id. at 920. Thus, in contrast to the Second
Circuit in Friedman, the D.C. Circuit in White took the
position that the ban on extrinsic evidence of misconduct
applies in the context of hearsay declarants, even when
those declarants are unavailable to testify.
We agree with the approach taken by the court in White,
and conclude that Rule 806 does not modify Rule 608(b)'s
ban on extrinsic evidence of prior bad acts in the context of
hearsay declarants, even when those declarants are
unavailable to testify. We perceive our holding to be
dictated by the plain -- albeit imperfectly meshed--
language of Rules 806 and 608(b). As discussed, Rule 806
allows impeachment of a hearsay declarant only to the
_________________________________________________________________
11. The court in White went on to conclude that the district court had
not abused its discretion in disallowing the testimony because the
testimony would have been of marginal utility given the declarant's
already damaged credibility. Id. at 920.
15
extent that impeachment would be permissible had the
declarant testified as a witness, which, in the case of
specific instances of misconduct, is limited to cross-
examination under Rule 608(b). The asserted basis for
declining to adhere to the clear thrust of these rules is that
the only avenue for using information of prior bad acts to
impeach the credibility of a witness -- cross-examination --
is closed if the hearsay declarant cannot be called to testify.
We are unpersuaded by this rationale. First, the
unavailability of the declarant will not always foreclose
using prior misconduct as an impeachment tool because
the witness testifying to the hearsay statement may be
questioned about the declarant's misconduct -- without
reference to extrinsic evidence thereof -- on cross-
examination concerning knowledge of the declarant's
character for truthfulness or untruthfulness.12 And, even if
a hearsay declarant's credibility may not be impeached with
evidence of prior misconduct, other avenues for impeaching
the hearsay statement remain open. For example, the
credibility of the hearsay declarant -- and indeed that of
the witness testifying to the hearsay statement-- may be
impeached with opinion and reputation evidence of
character under Rule 608(a), evidence of criminal
convictions under Rule 609, and evidence of prior
inconsistent statements under Rule 613. The unavailability
of one form of impeachment, under a specific set of
circumstances, does not justify overriding the plain
language of the Rules of Evidence. Cf. United States v.
Finley, 934 F.2d 837, 839 (7th Cir. 1991) ("Rule 806
extends the privilege of impeaching the declarant of a
hearsay statement but does not obliterate the rules of
evidence that govern how impeachment is to proceed").
_________________________________________________________________
12. We recognize the dilemma presented if the witness has no knowledge
of the hearsay declarant's misconduct. One solution:firm adherence to
the hearsay rules (Rules 801-807) in determining whether a proffered
statement truly is admissible in the first instance. It is, of course, not
the role of the trial judge to make a credibility determination in a
criminal jury trial. Nonetheless, when an out-of-court declaration is
offered for the truth of the matter asserted, it becomes "hearsay,"
subject
to the exclusions in Rule 801(d), and is presumptively inadmissible,
subject only to carefully defined exceptions. See Fed. R. Evid. 802-804,
807.
16
We also read the language of Rule 806 implicitly to reject
the asserted rationale for lifting the ban on extrinsic
evidence. Rule 806 makes no allowance for the
unavailability of a hearsay declarant in the context of
impeachment by specific instances of misconduct, but
makes such an allowance in the context of impeachment by
prior inconsistent statements. Rule 613 requires that a
witness be given the opportunity to admit or deny a prior
inconsistent statement before extrinsic evidence of that
statement may be introduced. If a hearsay declarant does
not testify, however, this requirement will not usually be
met. Rule 806 cures any problem over the admissibility of
a non-testifying declarant's prior inconsistent statement by
providing that evidence of the statement "is not subject to
any requirement that the declarant may have been afforded
an opportunity to deny or explain." See generally Fed. R.
Evid. 806 advisory committee's notes. The fact that Rule
806 does not provide a comparable allowance for the
unavailability of a hearsay declarant in the context of Rule
608(b)'s ban on extrinsic evidence indicates that the latter's
ban on extrinsic evidence applies with equal force in the
context of hearsay declarants.
In reaching this conclusion, we are mindful of its
consequences. Upholding the ban on extrinsic evidence in
the case of a hearsay declarant may require the party
against whom the hearsay statement was admitted to call
the declarant to testify, even though it was the party's
adversary who adduced the statement requiring
impeachment in the first place. And, as here, where the
declarant is unavailable to testify, the ban prevents using
evidence of prior misconduct as a form of impeachment,
unless the witness testifying to the hearsay has knowledge
of the declarant's misconduct. See generally 4 Mueller &
Kirkpatrick, Federal Evidence S 511 at 894 n.7 (2d ed.
1994); Margaret Meriwether Cordray, Evidence Rule 806
and the Problem of Impeaching the Nontestifying Declarant,
56 Ohio St. L.J. 495, 525-530 (1995). Nevertheless, these
possible drawbacks may not override the language of Rules
806 and 608(b), and do not outweigh the reason for Rule
608(b)'s ban on extrinsic evidence in the first place, which
is "to avoid minitrials on wholly collateral matters which
tend to distract and confuse the jury . . . and to prevent
17
unfair surprise arising from false allegations of improper
conduct." Carter v. Hewitt, 617 F.2d 961, 971 (3d Cir.
1980) (internal quotations and citation omitted); accord
United States v. Martz, 964 F.2d 787, 789 (8th Cir. 1992);
Foster v. United States, 282 F.2d 222, 223 (10th Cir. 1960).
From our conclusion that the ban on extrinsic evidence
of misconduct applies in the context of hearsay declarants,
it follows that the District Court's ruling admitting evidence
of Yaccarino's misconduct was based on an incorrect
interpretation of Rules 806 and 608(b). We conclude,
therefore, that the District Court erred in admitting such
evidence. Nevertheless, we find the error to be harmless. An
error is harmless if "it is highly probable that the error did
not contribute to the judgment." United States v. Gibbs, 190
F.3d 188, 213 n.16 (3d Cir. 1999) (quoting United States v.
Mastrangelo, 172 F.3d 288, 297 (3d Cir. 1999)). That
standard is met "when the court possesses a `sure
conviction' that the error did not prejudice the defendant."
Id. The District Court's admission of extrinsic evidence of
Yaccarino's misconduct did not prejudice appellants
because, at the request of appellants' trial counsel, it also
took judicial notice of Yaccarino's obituary to rehabilitate
his credibility. The obituary cast Yaccarino in a very
favorable light, as it contained salutary comments from two
other judges, stated that he had done a lot of charitable
work in the years preceding his death, and portrayed him
as someone who believed steadfastly in the justice system,
but who felt that the system had "let him down." In this
last respect, the obituary provided an explanation for
Yaccarino's conduct underlying his removal from the bench
and his disbarment by describing his belief that his
conduct resulted from a temporary mental disability he had
suffered after undergoing open heart surgery in 1979. We
are confident that the strength of these favorable comments
counteracted the effects of the evidence impeaching
Yaccarino's credibility.13 We conclude that the admission of
Yaccarino's obituary, coupled with the District Court's
_________________________________________________________________
13. Isaac's trial counsel acknowledged this point when he stated to the
court: "I have no problem admitting the good with the bad. If they want
to slam his character, all I want is an attempt to support his character."
Although this comment referred more immediately to the mix of favorable
and unfavorable comments about Yaccarino in the obituary, it evidenced
counsel's belief in the rehabilitative effect of the favorable comments.
(It
also should be noted that the obituary itself included multiple examples
of blatant inadmissible hearsay, but we shall not dwell on that facet of
the puzzle.)
18
instruction to the jury that it could not use evidence of
Yaccarino's misconduct to find appellants guilty by
association, removed any prejudice to appellants from the
court's taking judicial notice of the two New Jersey state
court opinions.14 The District Court's error in admitting the
extrinsic impeachment evidence was, therefore, harmless.
Our conclusion as to harmless error renders it
unnecessary to address appellants' other two contentions
challenging the admission of the impeachment evidence --
that the requirements for taking judicial notice were not
satisfied and that the evidence was unduly prejudicial.
Thus, all that remains of appellants' challenge to the
evidence of Yaccarino's prior misconduct is their objection
to the manner in which it was admitted.
Appellants contend that the District Court conveyed an
unfavorable impression of Yaccarino's credibility when
taking judicial notice of the facts of his misconduct.
Specifically, they argue that the trial judge communicated
a "personal concern" to the jury that, because Yaccarino
was unavailable to be cross-examined, he had to advise it
of certain negative facts bearing on Yaccarino's character,
leaving the jury with "the clear message that the judge
could not allow them to evaluate Yaccarino's statements
without his warning . . . ." We review this claim for plain
error because appellants did not make such an objection at
trial. See Failla v. City of Passaic, 146 F.3d 149, 159 (3d
Cir. 1998); United States v. Gambino, 926 F.2d 1355, 1363
n.6 (3d Cir. 1991). Accordingly, we consider whether there
was "error" that was "plain" and that affected "substantial
rights." United States v. Olano, 507 U.S. 725, 732 (1993).
We find no such error here because the fair and neutral
approach of the District Court is evident from the overall
record. In advising the jury of certain facts regarding
Yaccarino's misconduct, the trial judge explained that he
was doing so because Yaccarino would have been subject to
_________________________________________________________________
14. Our skepticism as to the admissibility of Yaccarino's hearsay
statement in the first instance, see supra n. 8, further assures us that
appellants suffered no cognizable prejudice from the admission of
extrinsic evidence impeaching his character for truthfulness or
untruthfulness.
19
cross-examination if he had been alive, and instructed the
jury that it was not required to consider those facts or
accept them as conclusive. Appellants' claim that the effect
of the judge's comments was to communicate a personal
concern to the jury as to Yaccarino's credibility is meritless.
B. Evidence of Isaac Saada's Participation in Another
Fraudulent Insurance Scheme
Appellants also challenge the District Court's decision
admitting Rishty's testimony that Isaac had conspired with
him to commit another insurance fraud -- the "Diadem
claim" -- shortly after the warehouse flooding. We review
the District Court's ruling for an abuse of discretion and
will reverse only if it was "clearly contrary to reason and not
justified by the evidence." United States v. Balter, 91 F.3d
427, 437 (3d Cir. 1996) (quoting United States v.
Bethancourt, 65 F.3d 1074, 1079 (3d Cir. 1995)). That
standard is not met here.
Appellants first argue that the government and the trial
judge did not properly articulate a basis for admission of
Rishty's testimony under Fed. R. Evid. 404(b), which bars
evidence of crimes and other bad acts to establish an
individual's propensity for such acts "to show action in
conformity therewith," because the government only read
the "laundry list" of permissible, non-propensity bases
under Rule 404(b), which the District Court accepted
without analysis. We disagree. At trial, the government did
not merely read the list of non-propensity bases under Rule
404(b), but rather explained that the evidence of Isaac's
involvement in another fraud was admissible because it
showed his intent to defraud, knowledge of the fraudulent
nature of the water damage claim, and financial motive to
commit insurance fraud, as well as the unlawful nature of
his relationship with Rishty -- which rebutted the defense's
position that Rishty had served as Scrimshaw's public
adjuster in a lawful capacity -- and the absence of any
accident. Following that explanation, the District Court
indicated that it was admitting the evidence on the bases
recited by the government. We conclude that the court
properly admitted this evidence under Rule 404(b) and, by
20
referencing the government's position, reflected an adequate
basis for its decision.15
Appellants also raise a Rule 403 challenge to the
admission of Rishty's testimony on the grounds that it
created a danger that the jury would convict Isaac for being
a repeat offender who had escaped punishment on another
crime, and that this prejudice would spill over onto Neil. As
relevant here, Rule 403 states that "evidence may be
excluded if its probative value is substantially outweighed
by the danger of unfair prejudice . . ." Evidence of Isaac's
participation in the Diadem claim was highly probative
because it rebutted the defense's contention that Rishty's
involvement in the Scrimshaw claim was attributed to his
purportedly lawful role as a public adjuster by establishing
the unlawful nature of his relationship with Isaac. By
contrast, the danger of unfair prejudice from the evidence
was slight because Rishty already was implicating Isaac in
the fraudulent Scrimshaw claim, and there was no evidence
of the Diadem claim apart from his testimony; if the jury
had been inclined to reject Rishty's testimony as to the
Scrimshaw claim, Rishty's testimony as to the Diadem
claim certainly would not have dissuaded it from doing so
under a belief that Isaac was a repeat offender who should
not escape punishment. The District Court's instruction to
_________________________________________________________________
15. Appellants' citation to United States v. Murray, 103 F.3d 310 (3d.
Cir.
1997), is unavailing. In that case, we stated that trial judges should
exercise care in admitting evidence under Rule 404(b) by insisting that
the party offering such evidence articulate the basis for its
admissibility,
and by explaining the ruling admitting the evidence. Id. at 316; see also
United States v. Himmelwright, 42 F.3d 777, 781 (3d Cir. 1994). Here,
the government's articulation, and the court's acceptance, of the non-
propensity bases for admitting evidence of Isaac's participation in
another fraudulent claim satisfy our admonition in Murray.
Consistent with the language of Rule 404(b), virtually all such issues
are raised pretrial, and the evidentiary subtleties are discussed other
than before the jury. However, often the full context of Rule 404(b)
evidence may not be evaluated until all evidence has been presented,
following which the jury may be carefully instructed as to the limited
way in which the evidence may be considered. See Huddleston v. United
States, 485 U.S. 681, 691 (1988); United States v. Jemal, 26 F.3d 1267,
1272 n.2 (3d Cir. 1994).
21
the jury limiting the admission of the evidence to Isaac, and
only for the limited purposes set forth by the judge, further
minimized the danger of unfair prejudice. Thus, the District
Court did not abuse its discretion in concluding that the
danger of unfair prejudice did not substantially outweigh
the highly probative value of the evidence.
IV. VOUCHING
Appellants contend that the prosecutor improperly
vouched for the credibility of Rishty and Beyda during
rebuttal argument. Appellants' failure to object to what was
said mandates a plain error analysis. See United States v.
Walker, 155 F.3d 180, 187-88 (3d Cir. 1998); Bethancourt,
65 F.3d at 1079. Accordingly, we may reverse only if we
"find error in the prosecutor's comments so serious as to
undermine the fundamental fairness of the trial and
contribute to a miscarriage of justice." Walker, 155 F.3d at
188 (internal quotations omitted). That standard is not met
here; the prosecutor's arguments were entirely proper.
As we stated recently in Walker, "[v]ouching constitutes
an assurance by the prosecuting attorney of the credibility
of a Government witness through personal knowledge or by
other information outside of the testimony before the jury."
Id. at 184. A prosecutor's vouching for the credibility of
government witnesses poses two dangers:
. . . such comments can convey the impression that
evidence not presented to the jury, but known to the
prosecutor, supports the charges against the defendant
and can thus jeopardize the defendant's right to be
tried solely on the basis of the evidence presented to
the jury; and the prosecutor's opinion carries with it
the imprimatur of the Government and may induce the
jury to trust the Government's judgment rather than
its own view of the evidence.
United States v. Young, 470 U.S. 1, 18-19 (1985); accord
United States v. Molina-Guevara, 96 F.3d 698, 704 (3d Cir.
1998). Two criteria must be met in order to find vouching:
(1) the prosecutor must assure the jury that the testimony
of a government witness is credible, and (2) this assurance
must be based on either the prosecutor's personal
22
knowledge or other information not contained in the record.
See Walker, 155 F.3d at 187.
The prosecutor did not engage in vouching because he
grounded his comments on the evidence presented at trial.
Appellants complain that during closing argument, the
prosecutor improperly argued that Rishty and Beyda were
not lying because (1) the S 5K1.1 motion depended on the
government's recommendation; (2) they knew the S 5K1.1
motion required truthful testimony; (3) they would go to
prison and possibly be prosecuted for perjury if they did
not testify truthfully; and (4) they had plenty of other
crimes on which to cooperate, and thus had no need to
falsely implicate appellants. Appellants concede that the
evidence had established the following: under the terms of
their cooperation agreements, Rishty and Beyda were
required to testify truthfully; the government would not be
required to recommend a reduced sentence if they did not
present truthful information; and Rishty had spent some
3,000 hours, and Beyda had spent at least 1,000 hours,
cooperating with the government.16 Because the
prosecutor's comments as to why Rishty and Beyda had an
incentive to tell the truth were based on this evidence, they
constituted proper argument and not improper vouching.17
_________________________________________________________________
16. Appellants also argue that the District Court erred in admitting this
evidence because it improperly bolstered the credibility of Rishty and
Beyda. We have approved the admissibility of a plea agreement's
provision requiring truthful testimony by a cooperating witness on other
occasions, see, e.g., United States v. Ramos, 27 F.3d 65, 67 n.4 (3d Cir.
1994), and have stated that such evidence constitutes permissible
rehabilitation where, as here, it is presented in response to, or in
reasonable anticipation of, defense counsel's impeachment of the
witness' credibility, see United States v. Oxman , 740 F.2d 1298, 1302-03
(3d Cir. 1984), vacated on other grounds, sub nom. United States v.
Pflaumer, 473 U.S. 922 (1985). Appellants' bolstering argument lacks
merit.
17. The cases cited by appellants, see United States v. DiLoreto, 888 F.2d
996, 999 (3d Cir. 1989), overruled on other grounds, United States v.
Zehrbach, 47 F.3d 1252 (3d Cir. 1995) (en banc); United States v. Dispoz-
O-Plastics, Inc., 172 F.3d 275, 284 (3d Cir. 1999), are distinguishable;
in
both cases, the prosecutor's statements were considered improper
vouching because they referred to evidence outside the trial record.
23
See Walker, 155 F.3d at 187 (citing United States v.
Pungitore, 910 F.2d 1084, 1125 (3d Cir. 1990)).
Appellants argue that the prosecutor's comments and the
related evidence at trial implied that the "government had
some extra-record knowledge and capacity to monitor the
truthfulness of the cooperating witnesses." The prosecutor,
however, never suggested that the government's evaluation
of the witnesses' testimony would be based on anything
other than the testimony at trial. The District Court did not
commit any error, much less plain error, in allowing the
prosecutor's comments as to Rishty's and Beyda's
credibility during rebuttal argument.
V. CONCLUSION
Because we find the District Court's error in admitting
extrinsic evidence of a hearsay declarant's prior bad acts to
be harmless, because we conclude that the District Court
did not err or abuse its discretion in its other challenged
rulings, and because the prosecutor's closing argument
presented no error, we will affirm the convictions.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
24