State v. Buttars

2020 UT App 87THE UTAH COURT OF APPEALS
STATE OF UTAH,
Appellee,
v.
DAVID BRUCE BUTTARS,
Appellant.
Opinion
No. 20170436-CA
Filed June 4, 2020
Third District Court, Salt Lake Department
The Honorable Vernice S. Trease
No. 131901512
Alexandra S. McCallum, Attorney for Appellant
Sean D. Reyes and Jeffrey D. Mann,
Attorneys for Appellee
JUDGE GREGORY K. ORME authored this Opinion, in which
JUDGES MICHELE M. CHRISTIANSEN FORSTER and DIANA HAGEN
concurred.
ORME, Judge:
¶1 David Bruce Buttars appeals his convictions on four
counts of securities fraud and one count of pattern of unlawful
activity. Among other things, Buttars argues that the district
court erred in admitting his bank records under the residual
exception of rule 807 of the Utah Rules of Evidence. We reverse
and remand for a new trial.
State v. Buttars
BACKGROUND 1
Ellipse and MovieBlitz
¶2 In 2005, Buttars and a business partner (Partner) created
a company called Ellipse Technology (Ellipse). Ellipse was a
“startup” that attempted to create kiosks where customers could
“take a memory key similar to a USB . . . and download . . .
movie[s] or any other media content,” “take it home, watch it
on a playback device, and then never have to return it
again.” Buttars and Partner each owned 50% of the company,
with Buttars acting as CEO and Partner as president. For about
two years, both Buttars and Partner worked for Ellipse full
time and drew a salary. Other individuals were subsequently
brought in to assist with research and development, fundraising,
and other corporate responsibilities, but Buttars remained in
control.
¶3 Buttars, an electrical engineer, was the “brains” behind
the project. He was “in charge of fundraising,” managing the
finances, establishing “relationship[s] with the investors,” and
developing the kiosk and USB technology. As CEO, Buttars was
essentially “over everything,” and from the start it “was made
very clear” that he was the “top decision maker” and “in
charge.”
¶4 Buttars’s home served as Ellipse’s corporate headquarters.
It was equipped with an email server and a phone system, and it
contained a room in the basement that was used for weekly
meetings. It was also common for visitors on Ellipse-related
business trips to stay at the home.
1. “On appeal, we recite the facts from the record in the light
most favorable to the jury’s verdict and present conflicting
evidence only as necessary to understand issues raised on
appeal.” State v. Daniels, 2002 UT 2, ¶ 2, 40 P.3d 611.
20170436-CA 2 2020 UT App 87State v. Buttars
¶5 In 2007, after Ellipse raised more than $600,000 from
approximately 50 individual investors, Ellipse’s legal counsel
advised the company that it “had too many individual,
non-accredited investors” and that it should instead focus its
fundraising efforts “on accredited or institutional investors”
with “significant financial reserves.” Buttars discussed this
advice with Partner and others in the company, “[a]nd it was
understood that money could no longer be raised . . . the way it
had been.” Subsequently, from 2007 to 2008, a number of
interested institutional investors made offers in the
millions-of-dollars range in exchange for significant shares of the
company. Partner and others involved with Ellipse wanted to
accept the offers, which would have provided sufficient funding
to have gotten Ellipse “to a true product, one that was actually
functional and that [they] could go beta with.” 2 Ultimately,
however, the offers “were all rejected” because Buttars, as the
one “in charge,” “said he didn’t want to do it.”
¶6 Late in 2008, Buttars involved his friend (Friend) in
Ellipse because Friend “claimed to have access to large amounts
of institutional funding overseas,” which claim turned out to be
false. Friend was made a board member and executive of Ellipse.
Ellipse then funded a trip to Switzerland for Friend to secure
funding, but the funding did not materialize.
¶7 With no institutional investors on board, Ellipse was soon
in need of funding and, at this point, Partner discovered that
Buttars was again soliciting investments from individual
investors “at the micro level,” against the advice of counsel. In
early 2009, Ellipse had “no money” and Partner and three other
individuals on the board filed a lawsuit against Buttars in an
attempt to “get control of the company so that [they] could try
2. The beta version of a product “is a nearly complete prototype
of a product.” Beta, Merriam-Webster, https://www.merriam-
webster.com/dictionary/beta [https://perma.cc/CPP7-DTQX].
20170436-CA 3 2020 UT App 87State v. Buttars
and find another way to get [the technology] to completion so
that [they] could pay back . . . all of the investors.”
¶8 In response, Buttars resigned as Ellipse’s CEO, but “he
would not relinquish his shares or his voting rights” and would
not allow Ellipse to “go forward because it was his technology.”
Due to Partner’s and Buttars’s dispute, the patents for the
technology, registered in both their names, became encumbered
and were of “no value to the company.” Ellipse’s bank account
was closed on May 1, 2009, and the company “ultimately just
dissolved.”
¶9 At some point in 2009, before Ellipse’s demise, board
members discovered that Ellipse funds were being used to make
mortgage payments on Friend’s home, and they generally
“suspected that funds were being misused.” Another individual
tasked with fundraising for the company said that during this
time, Buttars called him and was angry he had not raised more
funds, asking, “[H]ow do you expect me to support two families
on what you’ve brought in?”
¶10 During the collapse of Ellipse, Buttars and Friend formed
a new company, MovieBlitz, to develop the same technology,
and they began raising money anew from individual investors.
From approximately 2007 to 2010, Buttars raised over $815,000
on behalf of the two companies.
Investors
¶11 The mother of an Ellipse employee (Mother) initially
invested $10,000 in Ellipse in 2007. Buttars informed Mother that
her money “would be used in producing the [kiosk] product and
getting it to market.” In March 2009, Mother invested another
$5,000 after being told that Ellipse “needed just a little bit more
money so they could get [the kiosk] to market.” Mother stated
that the “general tone of the conversation with” Buttars “was
positive in that . . . this was going to be a great thing that they
20170436-CA 4 2020 UT App 87State v. Buttars
had going.” Mother was never informed that her “investment
funds might be used for any other purpose.”
¶12 In late May and early June of 2009, Buttars’s neighbor
(Neighbor) and her boyfriend (Boyfriend) each invested $2,000
in MovieBlitz. Before investing, they met with Buttars and
Friend, who showed them “that [they] had patents and . . . they
were ready to roll.” Buttars and Friend explained the investment
opportunity in “fabulous terms” that “seemed to be so close . . .
to com[ing] to fruition.” The “overall tone of the meeting” was
“[p]ositive” with “[n]o risks involved.”
¶13 But there were risks involved, of which Buttars failed to
inform the two investors. Buttars also informed them that their
money would be used to incorporate the company in Nevada
and “to produce this [memory] key [and] the kiosk.” Buttars did
not inform Neighbor and Boyfriend about the predecessor
company, Ellipse, and its ultimate failure to bring the same
technology to market. In January 2010, Boyfriend invested
another $7,000 in MovieBlitz because Buttars and Friend
“painted such a pretty picture that this [was] . . . really going to
be something” that “sounded too good to be true.” 3
¶14 In February 2010, Neighbor introduced her ex-husband
(Ex-husband) to Buttars, and Ex-husband invested $10,000 in
MovieBlitz that same month. Before making the investment,
Ex-husband met with Buttars, Friend, and other investors. This
was “a positive meeting,” in which Buttars told Ex-husband that
his investment “would be used to develop the [memory] key and
the kiosks.” There was no discussion that his investment “would
be used for any other purpose.” Buttars did not inform
Ex-husband about Ellipse and its collapse or about previously
invested money being used for nonbusiness purposes.
3. Boyfriend apparently forgot the other half of this cautionary
adage: “If it sounds too good to be true, it probably is.”
20170436-CA 5 2020 UT App 87State v. Buttars
Investigation
¶15 In early 2011, an agent with the State Bureau of
Investigation (Agent) began investigating Buttars for his actions
regarding Ellipse and MovieBlitz. Agent obtained multiple
investigative subpoenas—which a magistrate approved
following a review of Agent’s good cause statement—for the
bank records of Buttars, Friend, Ellipse, and MovieBlitz. The
banks involved were Frontier Community Bank (Frontier) and JP
Morgan Chase Bank (Chase). The first subpoena was issued on
April 21, 2011, for Buttars’s and Ellipse’s Frontier records from
January 1, 2007, through April 1, 2011. A second subpoena was
issued on March 5, 2012, for Buttars’s and Ellipse’s Chase
records from January 1, 2007, through April 1, 2011. A third and
final subpoena was issued, again to Frontier, on August 20, 2012,
for the account records of MovieBlitz and Friend ranging from
June 1, 2008, through December 31, 2010. Frontier produced the
requested records in “three or four” batches but failed to attach
custodial certificates to any of the batches. 4 Instead, Frontier
4. The rule of evidence that allows records such as these to be
admitted into evidence is known as the business records
exception to the hearsay rule. See Utah R. Evid. 803(6). This rule
requires that (1) “the record was made at or near the time by . . .
someone with knowledge”; (2) “the record was kept in the
course of a regularly conducted activity of a business [or]
organization”; and (3) “making the record was a regular practice
of that activity.” Id. R. 803(6)(A)–(C). The party seeking
admission of these records through this rule must show that
these conditions are met through either “the testimony of the
custodian or another qualified witness, or by a certification that
complies with Rule 902(11).” Id. R. 803(6)(D). In short, the party
must provide foundation for the records through a witness or a
certificate from the custodian “that must be signed in a manner
that, if falsely made, would subject the signer to criminal
(continued…)
20170436-CA 6 2020 UT App 87State v. Buttars
provided only two free-standing custodial certificates to Agent.
Chase, however, produced the records requested of it with an
adequate custodial certificate.
¶16 Each subpoena directed the banks “that pursuant to
§ 77-22a-1(4), Utah Code, . . . you are not to disclose to any
person the existence or service of the subpoena, the information
being sought, or the existence of an investigation, as it could
impede this ongoing criminal investigation.” The district court
later found that because “[t]he State did not seek or obtain a
secrecy order from the Court [as required by section
77-22-2(6)(a)(i) of the Utah Code] 5 to keep the investigation or
material obtained through the subpoenas secret,” “[t]he
inclusion of [the secrecy] language was in error.” The banks
adhered to these instructions, however, and Buttars did not
receive notice from the banks of the subpoenas or of the
subsequent disclosure of his bank records to Agent.
¶17 After interviewing the investors and reviewing the bank
records, Agent discovered that Buttars had not informed the
investors of Ellipse’s and MovieBlitz’s low account balances at
the time they invested and that Buttars had been using investor
funds from the companies’ business accounts for illegitimate
purposes. He further discovered that investor money had been
(…continued)
penalty.” See id. R. 902(11). Otherwise, the records do not qualify
for admission under the exception.
5. The statute requires that before a subpoena with the
complained-of secrecy language can be issued, the State must
show that there is “a reasonable likelihood that publicly
releasing information about . . . the substance of the evidence
resulting from a subpoena or interrogation would pose a threat
of harm to a person or otherwise impede the investigation.”
Utah Code Ann. § 77-22-2(6)(a)(i) (LexisNexis 2017).
20170436-CA 7 2020 UT App 87State v. Buttars
directly deposited into Buttars’s personal checking account on
multiple occasions and that Buttars had initiated a number of
transfers from Ellipse’s and MovieBlitz’s accounts to his own
personal account, from which questionable payments had been
made.
¶18 Agent found that at the time Mother invested her $5,000,
Ellipse had only $1,299 in its account, and within six weeks, all
of Mother’s investment had been spent. The records showed that
Buttars used that money, along with $10,000 from another
investor, to pay his ex-wife for legal fees, purportedly for patent
work she performed months earlier; to pay a private
investigator; and for personal expenses such as groceries,
restaurant tabs, and gas. Buttars also transferred some of that
money to his own personal checking account to pay for personal
items such as a phone bill, insurance, and a satellite television
bill.
¶19 The records also revealed that at the times Buttars
convinced Neighbor and Boyfriend to invest in MovieBlitz, its
account balance ranged between $0 and $597. Overall, Neighbor
and Boyfriend invested $11,000, of which $8,500 was directly
deposited into MovieBlitz’s account and $2,500 was directly
deposited into Buttars’s personal checking account. Soon after
these deposits were made, $5,715 of the amount deposited into
MovieBlitz’s account was transferred to Buttars’s personal
account and $500 was transferred to Friend’s personal account.
In general terms, the records showed that Neighbor’s and
Boyfriend’s investment money—found in both MovieBlitz’s
business account and Buttars’s personal checking account—was
used to pay another investor; make a debt settlement payment;
and pay for restaurant tabs, a talent agency, gas, groceries,
natural gas bills, child support, electric bills, clothing, and other
personal expenses. Only $859 was used toward MovieBlitz’s
incorporation in Nevada—one of the uses to which Buttars told
Neighbor and Boyfriend he would be putting their money. Not
long after Neighbor and Boyfriend invested with Buttars, the
20170436-CA 8 2020 UT App 87State v. Buttars
account balances in the MovieBlitz account and Buttars’s
personal checking account were either zero, close to zero, or in
the negative.
¶20 Finally, at the time of Ex-husband’s $10,000 investment,
MovieBlitz’s account had a balance of only $294 and, within a
month, all but $5 of his investment had been spent. The records
showed that Ex-husband’s $10,000 was initially deposited into
MovieBlitz’s account, but nearly $6,000 was soon transferred to
Buttars’s personal account while another $3,000 was transferred
to Friend’s personal account. The money transferred to Buttars’s
personal account was first used to make up a negative balance in
the account and then to pay for gas, groceries, restaurant tabs,
music, debt settlement, bail bonds, child support, and other
personal expenses. Agent also discovered that at the time the
investors invested in either Ellipse or MovieBlitz, those company
accounts were significantly underfunded, ranging from $0 at the
lowest to about $1,300 at the highest.
¶21 As a result of Agent’s investigation, the State charged
Buttars with four counts of securities fraud and four counts of
theft—one count each for his dealings with the four investors
previously discussed—and one count of engaging in a pattern of
unlawful activity.
Bank Records, Summaries, and Cover Sheets
¶22 Before proceeding to trial, Buttars moved to suppress the
Frontier and Chase bank records. Buttars argued that Agent
obtained the records in violation of “the Fourth Amendment to
the United States Constitution and Article I, § 12 of the Utah
State Constitution.” Specifically, he claimed that the subpoenas
issued to the banks “were unlawful” because “the State
inexplicably demanded that the subpoenaed parties not disclose
the existence of the subpoenas, [improperly] relying up[on] Utah
Code Ann. § 77-22a-1” and that “[t]his erroneous demand for
secrecy violated [Buttars’s] constitutionally protected rights to
privacy in [his] bank records.” Later, Buttars opposed the
20170436-CA 9 2020 UT App 87State v. Buttars
admission of the records on the additional ground that “the
affidavits of the record custodians are either entirely missing or
otherwise fatally flawed,” rendering the records “inadmissible
hearsay [that] do not fall within the business records exception”
of rule 803(6) of the Utah Rules of Evidence.
¶23 The district court denied Buttars’s motion to suppress the
records, ruling that (1) under the Subpoena Powers Act, the State
is not required “to provide notice to the subject of a criminal
investigation when the State initiates an investigation or issues
subpoenas”; (2) the improper the “inclusion of the secrecy
language . . . did not make the subpoenas unlawful or
unreasonable under” the United States or Utah constitutions
because “[t]he state met all the requirements of obtaining a
lawful subpoena”; and (3) even if the subpoenas were unlawful,
the good faith exception would apply because “the State
obtained judicial review of the investigative subpoenas and
reasonably relied on the Court’s approval of the subpoenas.”
The court did not address Buttars’s rule 803(6) argument in its
order.
¶24 Following the court’s ruling, the State had an expert
(Expert) prepare summaries of the bank records, with detailed
cover sheets containing Expert’s notations and opinions on
certain transactions, which gave an overview of the financial
information previously discussed. See supra ¶¶ 17–20. The cover
sheets also tracked Buttars’s use of the investment money from
the four investors. The State then sought a pretrial ruling on the
admissibility of the summaries and the underlying bank records
under rules 703, 803(6), 807, and 1006 of the Utah Rules of
Evidence.
¶25 The district court ruled that the underlying bank records
were not admissible as business records under rule 803(6)
because the State was not “able to establish the necessary
foundation” under rule 902(11) due to the missing and
untethered custodial certificates. But it ruled that both “the bank
20170436-CA 10 2020 UT App 87State v. Buttars
records and bank summaries [were] admissible under the
residual hearsay exception” of rule 807 because the bank records
and summaries met the rule’s admissibility criteria. 6 Finally, the
court ruled that because the bank records were admissible, the
summaries of the bank records were also admissible under rule
1006. And “[b]ecause the bank records and summaries [were]
admissible for their substance under Rule 807, the Court [did]
not address whether the records or summaries [were] also
admissible under Rule 703.” The court did not distinguish
between the summaries and cover sheets, apparently
considering the cover sheets to be part of the summaries.
Trial
¶26 The State called Expert to testify and had the summaries
and the attached cover sheets admitted through him, but the
actual bank records were not admitted. Expert testified that the
summaries he compiled were based on the bank records he
examined and that they “fairly and accurately reflect[ed]” those
records. The cover sheets contained Expert’s commentary and
opinions labeling certain transactions, such as the payments for a
private investigator, groceries, a talent agency, and phone bills
as “questionable” or “potentially legitimate,” and money in
Buttars’s personal checking as being “commingled” with
“investor money.” Over the course of his direct examination,
Expert went through a detailed explanation of the cover sheets
6. Rule 807 requires that for hearsay to be admissible under the
residual exception it must (1) have “equivalent circumstantial
guarantees of trustworthiness,” (2) be “offered as evidence of a
material fact,” (3) be “more probative on the point for which it is
offered than any other evidence that the proponent can obtain
through reasonable efforts,” and (4) be such that “admitting it
will best serve the purposes of these rules and the interests of
justice.” Utah R. Evid. 807(a)(1)–(4). The district court found that
the bank records satisfied these four requirements.
20170436-CA 11 2020 UT App 87State v. Buttars
and, to a lesser extent, the summaries themselves, explaining
why he labeled certain transactions as questionable and money
in the bank accounts as commingled. Overall, Expert’s testimony
was tied to the cover sheets he created, and the State used these
cover sheets and the summaries as the primary evidence to show
how Buttars misused investor funds.
¶27 After hearing testimony from Expert, the four investors,
Partner, and other board members and corporate officers of
Ellipse, the jury found Buttars, who did not testify, guilty on all
counts of securities fraud and one count of pattern of unlawful
activity, but it acquitted him of the four theft charges. Buttars
appeals.
ISSUES AND STANDARDS OF REVIEW
¶28 Buttars primarily argues that “[t]he Frontier bank records
were inadmissible hearsay” and thus the summaries that “relied
either solely or mostly on the Frontier records” were likewise
inadmissible. Conversely, the State asserts that the bank records
and the summaries were properly admitted by the district court
under the residual exception to the hearsay rule found in rule
807 of the Utah Rules of Evidence. 7 “In reviewing hearsay
7. The State also asserts that even though the court ruled that the
Frontier records were not admissible under the business records
exception to the hearsay rule, “the majority of the records were
properly certified and should have been ruled admissible under
that exception.” The State claims that the bank records received
from Frontier in response to the first subpoena “were produced
in two distributions, each with its own custodial certification,”
and that the records received as a result of the second subpoena
“were produced via a secure email . . . with[out] a custodial
certificate,” resulting in Agent receiving only three batches of
records from Frontier.
(continued…)
20170436-CA 12 2020 UT App 87State v. Buttars
rulings, we review legal questions for correctness, factual
questions for clear error, and the final ruling on admissibility for
abuse of discretion.” State v. McNeil, 2013 UT App 134, ¶ 14, 302
P.3d 844, aff'd, 2016 UT 3, 365 P.3d 699.
(…continued)
The record on appeal is fairly confusing on this point. There
are two custodial certificates in the record from Frontier dated
after the first subpoena and before the second subpoena,
seeming to indicate that the certificates were for the two batches
that were produced as a result of the first subpoena issued to
Frontier. But we cannot conclusively state that this is the case
because the batches are not part of the record on appeal and
there was confusion below as to whether there were only two
batches delivered before the second subpoena was issued and
only three batches in total. Agent testified that he obtained
records from Frontier “three or four times.” Agent also said that
he “probably picked up physical[] records twice” and then
Frontier “mail[ed] [him] a duplicate copy of one of the sets of
records” and then he received the last batch through “a secure
email with those records attached.”
The district court subsequently found that “[t]he testimony is
that there were three or four batches of records from Frontier
Bank [and] [t]here are two certificates of authentication or
declaration.” It continued, however, that “[i]t is unclear from the
testimony and evidence what certificates go with which batch”
because “there was no testimony to support where these
certificates of authentication went, and with what records.”
In considering an alternative ground for affirmance, we are
“limited to the findings of fact made by the trial court and may
not find new facts or reweigh the evidence in light of the new
legal theory or alternate ground.” Bailey v. Bayles, 2002 UT 58,
¶ 20, 52 P.3d 1158. Because the State’s alternative theory of
admissibility is contrary to the district court’s findings, it does
not provide an alternative ground for affirmance.
20170436-CA 13 2020 UT App 87State v. Buttars
¶29 Second, Buttars asserts that the district court erred in
denying his motion to suppress the bank records because they
were “unconstitutionally seized” due to the subpoenas’
inclusion of the secrecy language contained in Utah Code section
77-22a-1(4). “We review a trial court’s decision to grant or deny a
motion to suppress for an alleged [constitutional] violation as a
mixed question of law and fact.” State v. Fuller, 2014 UT 29, ¶ 17,
332 P.3d 937. “[T]he court’s factual findings are reviewed for
clear error [while] its legal conclusions, . . . including its
application of law to the facts of the case,” are reviewed for
correctness. Id. Even though we reverse Buttars’s convictions on
another ground, we address this issue because it will likely arise
again on remand. See generally State v. Low, 2008 UT 58, ¶ 61, 192
P.3d 867 (recognizing an appellate court’s ability to address
“other issues presented on appeal that will likely arise during
retrial”). 8
ANALYSIS
I. Admissibility of Bank Records
¶30 Hearsay is an out-of-court statement offered “to prove the
truth of the matter asserted in the statement,” Utah R. Evid.
801(c), and is ordinarily inadmissible at trial, 9 id. R. 802. But the
Utah Rules of Evidence provide certain exceptions to the general
8. Buttars also contends that the district court erred in allowing
Expert to give “testimony that violated rules 702, 704, and 403”
of the Utah Rules of Evidence and that his trial counsel provided
ineffective assistance in three respects. Because we reverse
Buttars’s conviction on the ground that the court erred in
admitting his bank records and the summaries, we do not
consider these further assertions of error.
9. It is undisputed in this case that the bank records are hearsay.
20170436-CA 14 2020 UT App 87State v. Buttars
prohibition on the admission of hearsay evidence. Pertinent to
the issue at hand are two exceptions. The first is what is known
as the business records exception, found in rule 803(6). This rule
allows records of a regularly conducted activity to be admitted if
(A) the record was made at or near the time by—or
from information transmitted by—someone with
knowledge;
(B) the record was kept in the course of a regularly
conducted activity of a business, organization,
occupation, or calling, whether or not for profit;
(C) making the record was a regular practice of
that activity;
(D) all these conditions are shown by the testimony
of the custodian or another qualified witness, or by
a certification that complies with Rule 902(11) or
(12) or with a statute permitting certification; and
(E) neither the source of information nor the
method or circumstances of preparation indicate a
lack of trustworthiness.
Id. R. 803(6).
¶31 The party seeking the admission of business records
under rule 803(6) must show that these conditions are met
through either “the testimony of the custodian or another
qualified witness, or by a certification that complies with
Rule 902(11).” Id. R. 803(6)(D). Under rule 902(11), a party
must provide foundation for the relevant records through a
certificate from the custodian “that must be signed in a manner
that, if falsely made, would subject the signer to criminal
penalty.” Id. R. 902(11). And regarding summaries of these
types of records and their admissibility, we have previously
20170436-CA 15 2020 UT App 87State v. Buttars
held that “a summary cannot be used as a cover for
bringing inadmissible hearsay evidence into the courtroom.” 10
Sunridge Dev. Corp. v. RB & G Eng'g, Inc., 2013 UT App 146, ¶ 20,
305 P.3d 171 (quotation simplified). “Thus, the proponent of
a summary must also show that the underlying records
are admissible, which typically requires a showing that
the records qualify under the business records exception to
the hearsay rule.” Id. See also International Harvester Credit Corp.
v. Pioneer Tractor & Implement, Inc., 626 P.2d 418, 422 (Utah 1981)
10. Buttars argues that the summaries were inadmissible in
their own right because they “did not prove the content of
the underlying bank records.” But because we ultimately hold
that the underlying Frontier records were inadmissible and
reverse on this basis, we do not need to address the presentation
of the summaries to the jury. This issue may arise again
on remand, however, so we note that the cover sheets
themselves—not necessarily the summaries—are concerning.
See generally State v. Low, 2008 UT 58, ¶ 61, 192 P.3d 867.
Under rule 1006 of the Utah Rules of Evidence, a party may
present “a summary, chart, or calculation to prove the content
of voluminous writings, recordings, or photographs that cannot
be conveniently examined in court.” Utah R. Evid. 1006
(emphasis added). These summaries can only “prove the
content” of what they are summarizing, and Expert’s notations
on the cover sheets, characterizing certain transactions as
“questionable” and that money was “commingled” was an
inappropriate use of this rule, because these notations are
Expert’s opinion and not part of the content of the actual
underlying records. Although the cover sheets may well be
admissible as demonstrative evidence illustrating Expert’s
testimony, they do not constitute substantive evidence under
rule 1006. See generally State v. Perea, 2013 UT 68, ¶¶ 45–46, 322
P.3d 624 (explaining the distinction between substantive and
demonstrative evidence).
20170436-CA 16 2020 UT App 87State v. Buttars
(“Rules governing the admissibility of documentary summaries
and of hearsay evidence must both be complied with.”). 11
¶32 The second pertinent rule is the residual hearsay
exception found in rule 807 of the Utah Rules of Evidence. That
rule provides:
Under the following circumstances, a hearsay
statement is not excluded by the rule against
hearsay even if the statement is not specifically
covered by a hearsay exception in Rule 803 or 804:
(1) the statement has equivalent
circumstantial guarantees of trustworthiness;
(2) it is offered as evidence of a material fact;
(3) it is more probative on the point for which
it is offered than any other evidence that the
proponent can obtain through reasonable
efforts; and
(4) admitting it will best serve the purposes
of these rules and the interests of justice.
Utah R. Evid. R. 807(a).
11. In the present case, the court deemed all the underlying bank
records admissible under the residual exception, but the State
did not seek to admit those records directly. Instead, it had
Expert prepare summaries of the records pursuant to rule 1006
and succeeded in having the summaries admitted. Therefore,
because the summaries were created from the underlying bank
records, if the bank records were inadmissible hearsay, then the
summaries are on no stronger footing and would likewise
constitute inadmissible hearsay.
20170436-CA 17 2020 UT App 87State v. Buttars
¶33 “The residual exception is a catchall provision that may
be applied when a hearsay statement ‘is not specifically covered
by a hearsay exception in Rule 803 or 804.’”
State v. Clopten, 2015 UT 82, ¶ 23, 362 P.3d 1216 (quoting Utah R.
Evid. 807(a)). This exception “was intended for use in those rare
cases where, although the out-of-court statement does not fit into
a recognized exception, its admission is justified by the inherent
reliability of the statement and the need for its admission,” State
v. Nelson, 777 P.2d 479, 482 (Utah 1989), and is therefore “to be
used rarely and construed strictly,” State v. Workman, 2005 UT
66, ¶ 12, 122 P.3d 639. “Furthermore, several federal circuit
courts have said that [the residual exception] is to be ‘used very
rarely, and only in exceptional circumstances.’” State v. Webster,
2001 UT App 238, ¶ 26, 32 P.3d 976 (emphasis in original)
(quoting United States v. Trujillo, 136 F.3d 1388, 1395 (10th Cir.
1998)).
¶34 We interpret our rules of evidence “like statutes, . . .
according to their plain language.” Burns v. Boyden, 2006 UT 14,
¶ 19, 133 P.3d 370. And when confronted with two potentially
applicable provisions, the “more specific in application governs
over the more general provision.” Carter v. University of Utah
Med. Center, 2006 UT 78, ¶ 12, 150 P.3d 467 (quotation
simplified). In the present case, this means that the bank records
should not have been admitted on the strength of the residual
rule given the precise applicability and primacy of the business
records exception.
¶35 Here, the business records exception is the specific rule
dealing with the bank records, and it therefore governs over the
more general, less favored residual exception. The business
records exception is in place so that parties can, in a regularized
and predictable way, seek to have these exact types of records
admitted into evidence. Parties are therefore required to comply
with this rule if they wish to seek admission of such records
because the residual exception was only intended to be used
when the records “do[] not fit into a recognized exception.”
20170436-CA 18 2020 UT App 87State v. Buttars
Nelson, 777 P.2d at 482. The bank records in question absolutely
“fit” within the scope of the business records exception.
¶36 We are not necessarily prepared to say that parties could
never seek to have business records admitted under the residual
rule, as we can envision scenarios in which a custodian of
business records has long since passed away or a company has
gone out of business and cannot produce the necessary
documentation to authenticate them under rule 902(11). In such
scenarios, parties might be able to have the business records
admitted under the residual exception, provided that they make
a compelling showing explaining why, even though the business
records do not satisfy the business records exception, the records
should nevertheless come in under the residual rule.
¶37 But in the present case, it was error to admit the bank
records under the residual rule without a more compelling
explanation for why the business records exception would not
suffice. On appeal, the State concedes that “nothing in the record
. . . suggest[s]” that it could not have called a witness to testify or
obtained certification as required by rules 803(6) and 902(11).
Therefore, there is nothing to indicate that this case would be
one of those “rare cases,” Nelson, 777 P.2d at 482, featuring
“exceptional circumstances” that would warrant the use of the
residual exception, Trujillo, 136 F.3d at 1395 (quotation
simplified). See Clopten, 2015 UT 82, ¶ 23; Webster, 2001 UT App
238, ¶ 26. Thus, the bank records were not admissible under the
residual rule and, by extension, the summaries of those records,
which is one step removed from the business records
themselves, was also inadmissible.
II. Prejudice from Admission of the Frontier Records
¶38 Having determined that the district court erroneously
admitted the bank records under the residual rule, we must now
consider whether the error prejudiced Buttars. See Utah R. Crim.
P. 30(a) (“Any error, defect, irregularity or variance which does
not affect the substantial rights of a party shall be disregarded.”).
20170436-CA 19 2020 UT App 87State v. Buttars
To do this, “we must determine whether there is a reasonable
likelihood that the outcome of [Buttars’s] trial would have been
more favorable to him” had the court not erred in admitting the
bank records. See State v. Knight, 734 P.2d 913, 920 (Utah 1987).
“This determination . . . is based upon a review of the record . . .
[and] require[s] us to determine from the record what evidence
would have been before the jury absent the error.” Id.¶39 While the district court ruled that all the bank records
were inadmissible under the business records exception and
admitted them under the residual rule, it is clear that the Chase
records had the proper custodial certificates and were readily
admissible under the business records exception. Thus, we
analyze whether Buttars was prejudiced by the court’s error in
admitting the Frontier records, which lacked such certificates.
See supra note 7.
¶40 The State asserts that Buttars has not suffered prejudice
from this error, arguing that the State could have simply called a
witness to testify or obtained certification as required by rules
803(6) and 902(11) of the Utah Rules of Evidence to authenticate
the Frontier records, thereby allowing their admission. But
nothing in the record suggests that this was actually the case. In
fact, the opposite is more likely. One assumes that if the State
could have so easily called a witness to vouch for the records or
obtained the necessary certification, it would have done so.
Instead, the State and Buttars litigated the admissibility of these
records at some length, and the State put all its eggs in the
residual rule basket. In April 2016, after the State moved for the
records to be admitted under rule 70312 or 803(6), the district
12. Rule 703 states that
[a]n expert may base an opinion on facts or data in
the case that the expert has been made aware of or
personally observed. If experts in the particular
field would reasonably rely on those kinds of facts
(continued…)
20170436-CA 20 2020 UT App 87State v. Buttars
court ruled that the records were not admissible under rule
803(6) because the State “need[ed] to provide foundation in
support of the bank records to establish an indicia of reliability.”
It did not rule on the rule 703 portion of the State’s motion
because neither party fully briefed the issue, and it asked for
further briefing so that it could more fully consider that
rationale. In the requested briefing, the State strengthened its
rule 703 analysis but alternatively asked the court to admit the
records under the residual exception. Nearly two months after
its initial ruling, the court granted the State’s motion,
disregarding the rule 703 portion of the State’s analysis and
concluding that the bank records were admissible under the
residual rule.
¶41 This procedural history appears to contradict the State’s
position on appeal that it could have easily called a witness to
testify and provide authentication or obtained certification for
the Frontier records under rules 803(6) and 902(11). 13 As
(…continued)
or data in forming an opinion on the subject, they
need not be admissible for the opinion to be
admitted. But if the facts or data would otherwise
be inadmissible, the proponent of the opinion may
disclose them to the jury only if their probative
value in helping the jury evaluate the opinion
substantially outweighs their prejudicial effect.
Utah R. Evid. 703.
13. Rule 803(6) requires that the party seeking the admission of
records through the business records exception provide
foundation for the records through “the testimony of the
custodian or another qualified witness, or by a certification that
complies with Rule 902(11).” Utah R. Evid. 803(6)(D). Rule
902(11) provides that for business records to be admitted, the
foundation of the records must be “shown by a certification of
(continued…)
20170436-CA 21 2020 UT App 87State v. Buttars
indicated, if it was such a simple task, we fail to see why the
State did not undertake it in the two-month period after the
court’s first ruling in April when it informed the State of the
problem with the records’ authentication. Rather than
continuing to try and get the records admitted under a different
rule—which result was less assured than if the State had simply
attempted to get them admitted under rule 803(6)—calling upon
the custodian to testify or furnish the required certification in
compliance with rule 803(6) would have been a much more
sensible way to proceed. And if, contrary to its position on
appeal, the State could not have done this, then it should have
made a more compelling showing of the problems with
authenticating the records in the usual way and then moved to
admit them under the residual exception. But the State did not
do so. Therefore, in analyzing prejudice, we are unwilling to
conclude that the State could have simply called the custodian as
a witness or obtained certification for the records to be admitted
under the business records exception.
¶42 This is not the end of the prejudice inquiry, however,
because we must also determine whether, without these
inadmissible records, Buttars would have been likely to receive a
more favorable result at trial. To convict Buttars of securities
fraud, the State had to prove that he, “in connection with the
offer, sale, or purchase of any security, . . . [made] any untrue
statement of a material fact or . . . omit[ted] to state a material
fact necessary in order to make the statements made, in the light
of the circumstances under which they are made, not
misleading.” Utah Code Ann. § 61-1-1(2) (LexisNexis 2018). And
to convict him of a pattern of unlawful activity, the State was
required to prove that Buttars “engag[ed] in conduct which
(…continued)
the custodian or another qualified person that must be signed in
a manner that, if falsely made, would subject the signer to
criminal penalty.”
20170436-CA 22 2020 UT App 87State v. Buttars
constitute[d] the commission of at least three episodes of
unlawful activity, which episodes [were] not isolated, but have
the same or similar purposes, results, participants, victims, or
methods of commission, or otherwise are interrelated by
distinguishing characteristics.” Id. § 76-10-1602(2).
¶43 The cover sheets and the underlying summaries provided
the jury with a detailed explanation of how much money was in
the business accounts when Buttars solicited the investor money,
where the investor money was deposited, and how Buttars used
that money. The majority of the evidentiary backing for these
summaries and the cover sheets came directly from the
inadmissible Frontier records, and our review of the record on
appeal shows that it is not reasonably likely that Buttars would
have been convicted based on the Chase records alone. Indeed,
the summaries and cover sheets contained only fleeting
references to the Chase account, indicating that the State
understood that if it were to get a conviction, the Frontier
records were vital to its case.
¶44 The State’s case hinged on the Frontier records, and
without those records, the State would have had an extremely
difficult task of proving that Buttars made misleading statements
that amounted to a pattern of unlawful activity. The Frontier
records were tied directly to testimony from the investors, who
explained what Buttars had told them regarding how he was
going to use their money and the great shape the companies
were in. The Frontier records showed that he did not use the
money in the manner which he told the investors he would and
that the companies were actually severely underfunded at the
time he solicited the investors’ money, thus making his
statements to the investors misleading or untrue. In conjunction
with the investors’ testimony, then, the Frontier records gave the
jury an adequate basis on which to find Buttars guilty on four
counts of securities fraud and one count of a pattern of unlawful
activity. But without these records, it is reasonably likely that the
jury would not have found that Buttars committed securities
20170436-CA 23 2020 UT App 87State v. Buttars
fraud, much less that he perpetrated a pattern of unlawful
activity.
¶45 The district court’s error in admitting the Frontier records
under the residual exception prejudiced Buttars because nothing
in the record on appeal establishes that the State could have
actually called a witness to authenticate the Frontier records or
obtained certification, and without the Frontier records there is a
“reasonable likelihood that the outcome of [Buttars’s] trial
would have been more favorable to him.” See State v. Knight, 734
P.2d 913, 920 (Utah 1987).
III. Suppression of the Bank Records
¶46 Buttars asserts that the district court erred in denying his
motion to suppress the Frontier and Chase records, arguing that
the erroneous inclusion of the secrecy language from Utah Code
section 77-22a-1(4) rendered the subpoenas illegal, resulting in
the bank records being “unconstitutionally seized.” While the
statute was violated in a technical manner, mere violations of
statutes do not automatically rise to the level of a constitutional
violation. See Screws v. United States, 325 U.S. 91, 108 (1945)
(“Violation of local law does not necessarily mean that federal
rights have been invaded.”); Creative Env’ts, Inc. v. Estabrook, 680
F.2d 822, 833 (1st Cir. 1982) (“The violation of a state statute does
not automatically give rise to a violation of rights secured by the
Constitution.”) (quotation simplified). Buttars has not met his
burden of showing that the mere inclusion of the erroneous
secrecy language, which resulted in Buttars not receiving notice
of subpoenas he could not have quashed in any event, renders
the seizure of the bank records unreasonable and violative of his
Utah and United States constitutional rights.
¶47 Insofar as Buttars asserts that he was entitled under the
statute to suppression of the bank records, his argument is
unavailing because he fails to demonstrate prejudice in that
regard. Rule 30(a) of the Utah Rules of Criminal Procedure
“foreclose[s] reversal of a conviction unless the error is
20170436-CA 24 2020 UT App 87State v. Buttars
substantial and prejudicial in the sense that there is a reasonable
likelihood that in its absence there would have been a more
favorable result for the defendant.” State v. Dominguez, 2011 UT
11, ¶ 22, 248 P.3d 473 (quotation simplified). Buttars has not
shown that had the complained-of language not been included
in the subpoena and had he received notice of the subpoenas
that he would have been able to quash them. He argues that he
“was entitled to a pre-compliance opportunity to object [to the
subpoenas] regardless of whether he would ultimately succeed
in quashing them.” This is incorrect. Buttars must show that
“there is a reasonable likelihood that [absent the error] the
outcome . . . would have been more favorable to him.” State v.
Knight, 734 P.2d 913, 920 (Utah 1987). See Utah R. Crim. P. 30(a)
(“Any error, defect, irregularity or variance which does not
affect the substantial rights of a party shall be disregarded.”).
Buttars has not attempted to show that he would have
succeeded in quashing the subpoena and therefore has not
shown prejudice on this claim.
¶48 Thus, we agree with the district court that “even if the
secrecy provision was not included in the subpoena[s], there is
no evidence that [Buttars] would have . . . successfully moved to
quash them” and thus that absent the error there is a reasonable
likelihood that he would have received a more favorable result.
“We therefore conclude that the [secrecy language] constituted
nothing more than [a technical error] which did not affect the
validity of the [subpoenas] and the search conducted
thereunder.” State v. Anderton, 668 P.2d 1258, 1262 (Utah 1983).
CONCLUSION
¶49 Absent a showing by the State that the circumstances
required it to seek admission under rule 807 rather than under
the usual business records exception found in rule 803(6), the
district court erred in admitting the Frontier bank records under
the residual exception found in rule 807 of the Utah Rules of
Evidence. This error prejudiced Buttars because those records
20170436-CA 25 2020 UT App 87State v. Buttars
constituted the bulk of the critical evidence presented, on which
the jury found Buttars guilty on four counts of securities fraud
and one count of pattern of unlawful activity. Without those
records, there is a reasonable likelihood that Buttars would have
received a more favorable result at trial. Accordingly, Buttars is
entitled to the new trial he requests, and we reverse and remand
for that trial or for such other proceedings as may now be
appropriate.
20170436-CA 26 2020 UT App 87