DocketNumber： 91-1574
Filed Date： 2/6/1992
Status： Precedential
Modified Date： 3/3/2016
January 13, 1993
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 91-1574
UNITED STATES OF AMERICA,
Appellee,
v.
WILLIAM J. DONOVAN,
Defendant, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Shane Devine, U.S. District Judge]
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Before
Selya, Circuit Judge,
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Coffin, Senior Circuit Judge,
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and Cyr, Circuit Judge.
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Jonathan R. Saxe, with whom Twomey and Sisti Law Offices was
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on brief, for appellant.
Patrick M. Walsh, Assistant United States Attorney, with
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whom Jeffrey R. Howard, United States Attorney, and Peter E.
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Papps, First Assistant United States Attorney, were on brief, for
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appellee.
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Originally issued February 6, 1992;
Reissued as redacted January , 1993.
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SELYA, Circuit Judge. Defendant-appellant William J.
SELYA, Circuit Judge
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Donovan, Jr., a banker, was convicted in the district court on
five counts of willful failure to file currency transaction
reports (CTRs) as required by law. The offenses were allegedly
committed as part of a pattern of illegal activity respecting
banking transactions which, individually, involved more than
$10,000 in cash and, collectively, exceeded $100,000 within a
twelve-month period. Donovan appeals, contending that the lower
court erred (1) in instructing the jury about the willfulness
requirement of the currency reporting laws, and (2) in permitting
the government to cross-examine him, and introduce evidence,
about events that occurred subsequent to the offenses of
conviction. Finding Donovan's assignments of error to be
bootless, we affirm the judgment below.
I. FACTUAL PRECIS
I. FACTUAL PRECIS
We begin with an overview of the facts, taken in the
light most supportive of the verdict. See United States v. Mena,
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933 F.2d 19, 21-22 (1st Cir. 1991); United States v. Jimenez-
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Perez, 869 F.2d 9, 10 (1st Cir. 1989).
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At the time of the transactions in question, Donovan
was the president and chief executive officer of Atlantic Trust
Company, a federally insured bank based in Newington, New
Hampshire. His friend, Dr. Edward Saba, was a physician
practicing in Lowell, Massachusetts. Donovan had long attempted
to convince Saba to invest a portion of the considerable savings
that he had amassed. When Donovan learned about the availability
2
of a large tract of land in Newington, he persuaded Saba to
direct part of his savings toward acquisition and development of
the tract. In the meantime, Donovan would secure the zoning
variances, devise the business plan, and do the legwork necessary
to subdivide the parcel into approximately fifteen lots. The
partners' plan required an estimated cash infusion of $450,000,
all furnished by Saba.
So it was that, in March of 1987, Saba began to invade
the caches of hard-earned cash that he had squirreled away in
various safe deposit boxes. Donovan came to Lowell several
times, counted bundles of cash in Saba's presence, and took the
money to Atlantic Trust for deposit. On five occasions, the
deposits exceeded $10,000.1 Each time, Donovan personally
handled the crediting of the deposit to Saba's account and
prepared the currency for transshipment to Atlantic Trust's
correspondent, Bank of New England (which served as Atlantic
Trust's depository with the Federal Reserve). In so doing,
Donovan bypassed conventional channels, thus circumventing the
bank's internal auditing and tracking mechanisms. He also
neglected to file the CTRs required by federal law.
Over a period of time, several bank employees became
suspicious of the unorthodox methods used in handling Saba's
funds. These employees tried to discuss their concerns with
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1The five deposits were in the amounts of $30,000, $91,000,
$30,000, $55,000, and $30,000, respectively. They were made at
various times between March 13, 1987 and April 21, 1987. In
addition, Saba deposited the proceeds of a maturing certificate
of deposit, some $193,000, into an account at Atlantic Trust.
3
Donovan, but he curtly dismissed their qualms. When Donovan's
tenure at the bank ended, his successor arranged for an outside
audit. In the audit's aftermath, Donovan's activities came to
the attention of federal authorities. The instant indictment
ensued.
II. INDICTMENT AND TRIAL
II. INDICTMENT AND TRIAL
Donovan was charged with violating 31 U.S.C. 5313(a)
(1988) and the regulations thereunder. The statute provides in
relevant part:
When a domestic financial institution is
involved in a transaction for the payment,
receipt, or transfer of United States coins
or currency . . . in an amount, denomination,
or amount and denomination, or under
circumstances the Secretary prescribes by
regulation, the institution . . . shall file
a report on the transaction at the time and
in the way the Secretary prescribes. A
participant acting for another person shall
make the report as the agent or bailee of the
person and identify the person for whom the
transaction is being made.
31 U.S.C. 5313(a) (1988). The concomitant regulation states:
Each financial institution other than a
casino or the Postal Service shall file a
report of each deposit, withdrawal, exchange
of currency or other payment or transfer, by,
through, or to such financial institution
which involves a transaction in currency of
more than $10,000.
31 C.F.R. 103.22(a)(1) (1985).2 A willful violation of the
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2The regulation exempts from the reporting requirements
"[d]eposits or withdrawals of currency from an existing account
by an established depositor who . . . operates a retail type of
business." 31 C.F.R. 103.22(b)(2)(i) (1985). The defendant
has not contended that Saba was an exempt customer under this, or
any other, section of the regulation.
4
statute and regulation carries criminal penalties:
A person willfully violating this
subchapter or a regulation prescribed under
this subchapter . . . shall be fined not more
than $1000, imprisoned for not more than one
year, or both.
31 U.S.C. 5322(a) (1988).
At trial, Donovan conceded that he was required by law
to file CTRs for the five cash deposits at issue. He contended,
however, that he made an innocent mistake (or, more accurately, a
series of innocent mistakes). As Donovan told it, he
misunderstood the import of the regulatory scheme; knowing Saba
to be an honest person who had garnered the money lawfully and
paid taxes on it facts which the government did not dispute
Donovan thought it was unnecessary to report the transactions.
If this were so, then the charges were improvidently prosecuted.
See id. (specifying that willfulness is an element of the
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offense). A jury, disbelieving the tale, found the appellant
guilty on all five counts.
III. [This Part of the panel opinion is superseded by the
III. [This Part of the panel opinion is superseded by the
opinion of the en banc court]
opinion of the en banc court]
IV. THE ADMISSION OF CERTAIN EVIDENCE
IV. THE ADMISSION OF CERTAIN EVIDENCE
Donovan's second ground of appeal concerns the
admission of evidence about events occurring subsequent to the
offenses of conviction. To put the matter into perspective, we
recount some additional facts. Saba's initial outlays were
sufficient to fund the land acquisition. But, incremental
expenses began to accrete. To defray these costs, Saba supplied
5
an extra $100,000 for the project. Donovan then opened a $50,000
line of credit secured by a mortgage on the property, signing an
affidavit in which he attestedto the business purpose of theloan.
As matters turned out, Donovan played fast and loose
with Saba. He diverted some of the $100,000 to his own use and
employed the $50,000 line-of-credit advance for a variety of
personal ends unrelated to the partnership's business. Among
other things, Donovan used the misdirected money for a down
payment on a boat slip, the purchase of an automobile, and
partial satisfaction of a personal loan. The timing of these
expenditures was significant: when Donovan executed the
"business purpose" affidavit, for instance, he had already
written a check for the boat slip (drawn in anticipation of
funding the line of credit).
The district court permitted the prosecution, over
objection, to cross-examine Donovan about these events. The
court also admitted as full exhibits a number of documents
relating thereto, including the affidavit. Although less than
pellucidly clear about the legal fundament on which its ruling
rested, the court, in a manner evocative of Fed. R. Evid. 608(b)
(which provides, inter alia, that the district court may permit
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cross-examination about specific instances of a witness's
conduct, if probative of untruthfulness), said it was allowing
the evidence for impeachment purposes.
We need not explore the interstices of Rule 608(b)
because we believe the evidence was admissible on a different
6
rationale. Donovan's defense had three foci, viz. (1) intent,
i.e., he denied willfully violating the reporting requirements;
(2) motive, i.e., he asserted that he had nothing to gain from
ducking those requirements; and (3) mistake, i.e., he claimed
that he misunderstood the reporting laws. The testimony elicited
by the cross-examination, and the exhibits related thereto, were
relevant to assessing these issues most specifically, Donovan's
state of mind in failing to report the currency transactions as
required by law. The evidence was, therefore, admissible under
Fed. R. Evid. 404(b).3
The appellant offers four reasons why Rule 404(b) was
inapposite: the district court did not resort to it; the events
in question postdated the offenses of conviction; the events
lacked special relevance to those offenses; and the evidence was
unduly prejudicial. We find none of these reasons persuasive.
A.
A.
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The appellant's first contention need not detain us
long. To be sure, the record is tenebrous as to the district
court's theory of admissibility. Nonetheless, it is the rule in
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3The rule 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.
Fed. R. Evid. 404(b).
7
this circuit that, so long as the decision to admit evidence is
proper under some theory, the basis upon which it was actually
admitted by the district court is ordinarily of little moment.
Thus, in United States v. Walsh, 928 F.2d 7 (1st Cir. 1991), we
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concluded that, because certain evidence was admissible under
Fed. R. Evid. 404(b), it was "unnecessary to resolve the
disagreement as to which ground the district court had in mind"
in permitting its introduction. Id. at 10 n.10. To the same
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effect is United States v. Nivica, 887 F.2d 1110, 1127 (1st Cir.
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1989), cert. denied, 494 U.S. 1005 (1990), where we wrote that,
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"if the trier incorrectly admits evidence under a hearsay
exception, we will not reverse so long as the material was
properly admissible . . . under a different rule of evidence."
Other circuits agree with this practical, common sense approach.
See, e.g., United States v. Cardenas, 895 F.2d 1338, 1345 (11th
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Cir. 1990) ("'If the admission was proper on any ground, it is of
no consequence that the court might have given the wrong reason
for its admission.'") (quoting Navajo Freight Lines, Inc. v.
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Mahaffy, 174 F.2d 305, 307 (10th Cir. 1949)).
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In this case, the appellant was not unfairly prejudiced
by the district court's resort to an arguably different theory of
admissibility; after all, permitting the government to offer the
evidence strictly for impeachment purposes was a more
circumscribed use than Rule 404(b) would have allowed. Hence, if
the court's theory of admissibility was erroneous, the error
favored the appellant. Cf., e.g., United States v. Oppon, 863
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8
F.2d 141, 148 (1st Cir. 1988). Ordinarily, an error in the
admission of evidence does not afford a ground for reversal at
the behest of a party who benefitted from the error. See Fed. R.
___
Evid. 103(a) ("Error may not be predicated upon a ruling which
admits or excludes evidence unless a substantial right of the
party is affected . . . ."). Furthermore, while it is true that
the district court made no explicit findings under Rule 404(b),
such findings are not an invariable prerequisite to the admission
of Rule 404(b) evidence. See, e.g., United States v. De La Cruz,
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902 F.2d 121, 123 (1st Cir. 1990); United States v. Foley, 871
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F.2d 235, 238 (1st Cir. 1989). Here, the record is sufficiently
translucent that we can work the Rule 404(b) calculus unaided.4
B.
B.
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The appellant's second contention is equally
unavailing. The fact that the acts took place subsequent to the
transactions for which Donovan was convicted does not thwart the
Rule 404(b) regime.5 In United States v. Bank of New England,
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821 F.2d 844, 858 (1st Cir.), cert. denied, 484 U.S. 943 (1987),
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4We note that the court did refer to the evidence as tending
to show the absence of "honest mistake" a recognized basis for
allowing evidence to be introduced under Rule 404(b).
5The challenged evidence concerned events which occurred
within a year of the offenses of conviction. Thus, they were
sufficiently contiguous in time, if otherwise relevant, to be
admitted. See, e.g., United States v. Rodriguez-Estrada, 877
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F.2d 153, 156 (1st Cir. 1989) ("When, as in this case, the linked
incident occurs close in time, and is highly relevant, to the
charged conduct, the argument for admissibility is powerful.");
United States v. Fields, 871 F.2d 188, 198 (1st Cir.) (admitting
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evidence of subsequent acts that occurred three years after the
charged crimes), cert. denied, 493 U.S. 955 (1989).
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9
we stated that Rule 404(b) "has been held to allow the admission
of acts or conduct subsequent to the offense charged to prove
intent to commit the alleged illegal act." See also id. at 859
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("Rule 404(b) allows the admission of subsequent conduct to show
a defendant's mental state at the time of the charged offense . .
. ."); cf. Mena, 933 F.2d at 25 n.5 (subsequent events may be
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probative of a defendant's motive or intent at an earlier time).
In so holding, we do no more than vivify the well-
settled concept that Rule 404(b) is not to be read grudgingly.
As we stated in United States v. Fields, 871 F.2d 188 (1st Cir.),
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cert. denied, 493 U.S. 955 (1989), a case where the district
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court permitted evidence of postconspiracy activity to show the
existence of the conspiracy and the participation of a
coconspirator therein, Rule 404(b) is a rule "of inclusion which
allows the introduction of evidence of other crimes, wrongs, or
acts unless the evidence tends to only prove criminal
disposition." Id. at 196. See also Huddleston v. United States,
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485 U.S. 681, 688-89 (1988) ("Congress was not nearly so
concerned with the potential prejudicial effect of Rule 404(b)
evidence as it was with ensuring that restrictions would not be
placed on the admission of such evidence."); United States v.
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Flores Perez, 849 F.2d 1, 4 (1st Cir. 1988) (when evidence of
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other wrongs is introduced to show knowledge, motive, or intent,
Rule 404(b) has "been construed broadly").
C.
C.
__
Inasmuch as the appellant's third and fourth objections
10
lie at the heart of the matter, we treat with them in the
ensemble. Federal courts undertake a bifurcated inquiry in
deciding questions of admissibility under Rule 404(b). See,
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e.g., United States v. Rodriguez-Estrada, 877 F.2d 153, 155 (1st
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Cir. 1989); Fields, 871 F.2d at 196; Oppon, 863 F.2d at 146.
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First, the evidence must possess some "special relevance," that
is, it must be "offered not merely to show the defendant's
propensity for crime but to establish some material issue."
United States v. Devin, 918 F.2d 280, 286 (1st Cir. 1990). Once
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it is established that the evidence has such special relevance,
its probative worth must then be balanced "against the
countervailing considerations enumerated in Rule 403 in order to
gauge admissibility." Id. We think that the disputed evidence
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clears both hurdles.
1. Special Relevance. The cross-examination and
1. Special Relevance.
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related extrinsic evidence were particularly relevant to
Donovan's motive, intent, and defense of mistake.6 The material
adduced could assist in persuading a jury that Donovan's
investment idea reflected a scheme to obtain funds from Saba
which he (Donovan) could use in his self-interest. The
subsequent acts, especially the false swearing in the affidavit,
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6We note that, in the context of Donovan's defense, intent
and mistake are sisters under the skin. Such a sibling
relationship is not unusual; when mistake is asserted as a
defense to criminal charges, it is often proffered to negate an
intent requirement. See generally 22 C. Wright & K. Graham,
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Federal Practice and Procedure 5247, at 517-18 (1978)
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("'[A]bsence of mistake or accident' . . . is simply a special
form of the exception that permits the use of other crimes to
prove intent.").
11
reflected a conscious disregard of any legal requirements that
might hinder Donovan's ability to use Saba's property for his
immediate benefit. A jury could conclude, from hearing the
cross-examination and seeing the evidence about the conversion of
Saba's property, that Donovan sought to minimize all avenues of
oversight which would increase his accountability to anyone be
it Saba, the bank, or federal authorities. A jury could also
conclude, therefore, that Donovan was not in fact mistaken about
the obligations of the reporting laws and regulations, but that
he willfully sought to skirt them because he considered them
unimportant and feared that conformity with them would hinder or
prevent his use of Saba's money for his own benefit.7 In short,
because the currency transactions and the conduct which occurred
in their wake could plausibly be viewed as part of a common
scheme, the challenged evidence was specially relevant to shed
light on the appellant's intent at earlier stages of the scheme.
Before leaving this prong of the Rule 404(b) test, we
note that the cross-examination and associated evidence were also
specially relevant to depict the broader context in which the
charged conduct took place. We have frequently allowed Rule
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7The following exchange, which took place during Donovan's
cross-examination, typified the disputed evidence:
[Prosecutor]: Do you regard that affidavit
that I showed you . . . do you regard that
like the currency transaction report, as just
one of those silly forms that people have to
put up with when they conduct business
transactions?
[Donovan]: I'm afraid I do.
12
404(b) evidence to be employed for such purposes. See, e.g.,
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Devin, 918 F.2d at 287 ("'other acts' evidence which is closely
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bound up with the crimes charged is eligible for admissibility
under Rule 404(b)"); Rodriguez-Estrada, 877 F.2d at 156
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(similar); Fields, 871 F.2d at 194 (evidence of other acts
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admissible if it "is necessary to complete the picture of the
crime on trial"); United States v. Reveron Martinez, 836 F.2d
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684, 687-88 (1st Cir. 1988) (details of uncharged acts admissible
"'to show the chain of events forming the context'") (citation
omitted); United States v. D'Alora, 585 F.2d 16, 20 (1st Cir.
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1978) (similar).
2. Probative Value/Prejudicial Effect. Although the
2. Probative Value/Prejudicial Effect.
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evidence possessed the special relevance required under Rule
404(b), it must still be scrutinized under Fed. R. Evid. 403.8
Such scrutiny proceeds, of course, on the understanding that an
appellate tribunal can reverse on this basis only if admitting
the evidence was tantamount to an abuse of discretion. See De La
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Cruz, 902 F.2d at 124; Rodriguez-Estrada, 877 F.2d at 155-56;
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Fields, 871 F.2d at 196. We are unable to say that the probative
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value/prejudicial effect seesaw was so out of kilter in this case
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8The rule provides in pertinent part:
Although relevant, evidence may be excluded
if its probative value is substantially
outweighed by the danger of unfair prejudice,
confusion of the issues, or misleading the
jury, or by considerations of undue delay,
waste of time, or needless presentation of
cumulative evidence.
Fed. R. Evid. 403.
13
as to call for corrective measures.
To dwell upon the point would serve no useful purpose.
The trial judge refused to allow the prosecution to introduce the
disputed evidence during its case in chief. It was only after
Donovan took the witness stand and made "honest mistake" the
centerpiece of his defense that the court permitted the
government to show the panoramic picture of the defendant's
dealings with Saba. The picture, to be sure, was not pretty. It
placed Donovan in a harshly unflattering light. But, "[b]y
design, all evidence is meant to be prejudicial; it is only
unfair prejudice which must be avoided." Rodriguez-Estrada, 877
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F.2d at 156. Having in mind the limiting instruction given by
the court an instruction which was more restrictive than Rule
404(b) demanded we do not believe the border separating
fairness from unfairness was violated in this instance.
In fine, from the distant vista of an algid appellate
record, we are unprepared to say that, as a matter of discretion,
the jury should have been forced to pass upon the honesty of
Donovan's claimed "mistake" in a vacuum, shielded from a full
account of his coarse course of subsequent conduct. Compare,
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e.g., United States v. Sanchez-Robles, 927 F.2d 1070, 1077-78
____ _____________ ______________
(9th Cir. 1991); Doty v. Sewall, 908 F.2d 1053, 1058 (1st Cir.
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1990); Cardenas, 895 F.2d at 1342; United States v. McNeill, 728
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F.2d 5, 12-13 (1st Cir. 1984).
V. CONCLUSION
V. CONCLUSION
We need go no further. From aught that appears after
14
careful attention to the record, the briefs, and the parties'
oral arguments, the appellant was fairly tried and justly
convicted. The judgment below must therefore be
Affirmed.
Affirmed.
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15
United States v. Michael J. Fields, United States of ... , 871 F.2d 188 ( 1989 )
United States v. Jose Manuel De La Cruz A/K/A Jose Manuel ... , 902 F.2d 121 ( 1990 )
United States v. Juan Andres Cardenas , 895 F.2d 1338 ( 1990 )
United States v. Bank of New England, N.A. , 821 F.2d 844 ( 1987 )
United States v. Daniel J. D'AlorA , 585 F.2d 16 ( 1978 )
United States v. William P. McNeill , 728 F.2d 5 ( 1984 )
United States v. Bartley Walsh A/K/A Barney Walsh , 928 F.2d 7 ( 1991 )
United States v. Edward Ramon Mena , 109 A.L.R. Fed. 467 ( 1991 )
United States v. Richard E. Foley , 871 F.2d 235 ( 1989 )
Navajo Freight Lines, Inc. v. Mahaffy , 174 F.2d 305 ( 1949 )
united-states-v-joaquin-jimenez-perez-united-states-of-america-v-jose , 869 F.2d 9 ( 1989 )
Huddleston v. United States , 108 S. Ct. 1496 ( 1988 )
United States v. Luis Reveron Martinez , 836 F.2d 684 ( 1988 )
United States v. Hector M. Rodriguez-Estrada , 877 F.2d 153 ( 1989 )
United States v. Francisco Flores Perez , 849 F.2d 1 ( 1988 )
United States v. Susana Sanchez-Robles , 927 F.2d 1070 ( 1991 )
United States v. Francis E. Devin , 918 F.2d 280 ( 1990 )
Arthur Doty v. Richard Sewall, Arthur Doty v. Richard Sewall , 908 F.2d 1053 ( 1990 )