885 F.3d 500
7th Cir.2018Background
- Ballard obtained construction loans from State Bank of Herscher (SBH) and diverted funds from two North Center Properties to complete the Stone Fence Property; he was charged with three counts of bank fraud and convicted by a jury.
- At trial Ballard conceded misdirection of funds but defended on (1) good-faith authorization by SBH employees (including loan officer Joseph Grant and supervisors) and (2) that he did not read or sign the loan documents.
- After conviction, Ballard learned of a previously undisclosed ~1-hour audio recording of Grant (made during a separate prosecution of Scott Fitts) in which Grant discussed potential misconduct, including alleged falsification of a Suspicious Activity Report (SAR), accepting signed blank loan applications, and belief he was under investigation.
- Ballard moved for a new trial under Brady v. Maryland, arguing the recording was favorable impeachment evidence that the government suppressed.
- The district court found portions of the recording favorable and material to Ballard’s defense, granted a new trial, and the government appealed. The Seventh Circuit affirmed.
Issues
| Issue | Ballard's Argument | Government's Argument | Held |
|---|---|---|---|
| Whether the withheld Grant recording was favorable (exculpatory or impeaching) | Recording impeaches Grant (admissions re: SAR, blank applications, belief he was investigated) and so is favorable to Ballard | Recording not sufficiently probative; government contested district court’s factual findings | Court: Recording was favorable — plausible inferences support impeachment value and potential bias/benefit to Grant |
| Whether the suppressed recording was material under Brady (reasonable probability of a different result) | Had jury learned the recording, it could have discredited Grant and made Ballard’s defenses (esp. that he didn’t read documents) more believable | Impeachment of one witness (Grant) unlikely to change verdict given 12 other witnesses and evidence; Grant’s credibility was not outcome-determinative | Court: Recording was material — trial judge reasonably could conclude it undermined confidence in the verdict; affirmed grant of new trial |
| Whether the recording was in fact suppressed by the government | Ballard: Government failed to disclose the recording pretrial | Government did not contest suppression on appeal | Not contested on appeal; court did not address further |
| Admissibility and practical effect of the recording at retrial | Ballard: Recording could be used to impeach Grant and show bias/benefit | Gov./Dissent: Extrinsic proof of specific bad acts barred by Rule 608(b); jury might not hear recording and may be limited to cross-exam answers, reducing impact | Majority: Even if Rule 608(b) limits extrinsic proof, the district court was entitled to credit the recording’s impeachment value in assessing materiality; decision affirmed |
Key Cases Cited
- Brady v. Maryland, 373 U.S. 83 (establishes government duty to disclose evidence favorable to accused)
- Agurs v. United States, 427 U.S. 97 (framework for evaluating materiality of undisclosed evidence)
- Kyles v. Whitley, 514 U.S. 419 (materiality standard: evidence that undermines confidence in outcome)
- Anderson v. City of Bessemer City, N.C., 470 U.S. 564 (clear-error standard explanation)
- United States v. Taglia, 922 F.2d 413 (7th Cir.) (impeaching evidence alone rarely warrants new trial)
- United States v. Veras, 51 F.3d 1365 (7th Cir.) (Brady and impeachment principles)
- United States v. Allender, 62 F.3d 909 (7th Cir.) (loan-officer complicity not a defense to bank fraud)