*2 Before WIDENER MURNAGHAN, Judges, POTTER,* Circuit District Judge. *3 ** MURNAGHAN, Circuit Judge: King Daniel Q. Halton Bit- tick, appeal Jr. from their convictions on numerous counts related to alleged partici- in a pation fraudulent investment scheme. We reverse and remand for newa trial. I. and Bittick were owners of Na- Planners, (NEP), Executive
tional Inc. company investment small located Greensboro, North Carolina. Brainard had with Chicago dealt Sheldon busi- nessman, on several occasions. In July, telephoned pro- Moss posed that NEP offer to its clients the to make opportunity compa- loans Moss’ Marketing Corporation Television ny, (TVM), at annual interest rate of twelve percent.
Brainard flew Chicago, where Moss him a gave tour of the TVM facilities and explained further the proposal. Moss claimed that TVM distributed and market- products ed sold national retail stores, Tigue, Jr., John J. New City (Wil- York that, because retailers generally paid Wachtel, liam B. Ritholz, Kostelanetz & for merchandise from thirty to ninety days received, after it was experienced TVM City, brief), York on New and Rodney A. problem. flow cash In order to avoid Guthrie, pay- C.,N. Fayetteville, for appellants. ing high charges interest to banks for inter- Allen Gwyn, Jr., Holt Sp. financing, im Asst. U. suggested, S. TVM would Atty., Douglas Cannon, money borrow Asst. U. Atty., clients, NEP S. and se- Greensboro, (Kenneth N. C. McAllister, cure the W. loans assignments of accounts Atty., Greensboro, C., U. S. receivable from brief), N. well for known national retail- appellee. ers.
* ** Potter, D. The Honorable Robert opinion represents Part III of the the views of Judge alone, Judge Murnaghan for the Western District North District and so has Carolina, sitting by designation. concurring opinion. divergence effect of a panel point members does not affect the outcome case. corporation. were beneficial owners of the Bit- with proposal
Brainard discussed measures to investi- NEP took several Bittick traded his interest in In tick investigation extent $20,000 TVM. gate plus Brainard’s release of least Brai- disputed; is at clear that it salesmen interest in IFP.1 NEP beneficial obtained a Dun and Brad- nard IFP, through it registered with there is report, conflicting evi- street registered securities. sold to which the extent other informa- dence broker-dealer, IFP required As any event, it was obtained. tion reports any change the SEC when file opportunity offer to invest decided ownership April, Bit- occurred. NEP clients. IFP, tick, form president verified SEC popular, TVM was Investment it with the reflect a and filed SEC to BD large NEP’s part became a gradually *4 ownership. The list change of form did not was for Brainard active in sales business. IFP, a beneficial Moss as owner of Sheldon Bittick, NEP, although in and not involved previ- not mention-'that did Moss had and sales, well. promoted investments as from enjoined unregister- ously selling been outset investors interest received the At securities.2 ed they promised, had and payments 1978, 28, loans September Secretary matured. repaid when On were addition, pur- them received what most of of North issued a cease and Carolina State directing selling to Uniform Commercial Code Moss ported stop order desist assignments verifying The forms in TVM. and United SEC investments security receivable for investiga- accounts soon began Postal Service States loans. tions, and the fraudulent nature was revealed. and scheme Brainard 1974, legitimate market- By late TVM’s agree that the fraudu- scheme was Bittick compa- were curtailed ing activities and lent, they, everyone maintain like a shell through reduced ny was duped else, unwittingly Moss. money. to funnel continued investors’ Moss with the Secretary never filed Moss Brainard, Bittick, Moss, and Sheldon investors, he UCC forms sent to State Rothman, officer, a TVM on were indicted were no accounts receivable to there and 28, 1980, eighteen on January counts of the loans. secure in of 18 fraud violation mail U.S.C. §§ As the scheme the relations progressed, count of making and on one a mate- and Moss, Brainard devel- and Bittick between rially misleading false and NEP early 1975 fi- experienced oped. seq. in violation of 15 et U.S.C. 78a § SEC problems, and Moss lent Brainard nancial 2. Brainard was 18 U.S.C. deleted § $13,800. Later year Bittick in a superseding Count 19 indictment from $36,000 NEP, another in contributed February 1980. pleaded on filed for loans an payment given was charges, all and charges against guilty in NEP. interest dismissed. Rothman jury were tried to a Bittick and convicted interim, In the Bittick purchased had 18; through controlling interest Financial on Counts Investors on (IFP), a Count Planning, also convicted 19. Count Inc. licensed broker-deal- was contrib- conclusion of the corporation. and Moss dismissed er IFP, case, payments Bittick’s for Count 16 was dis- government’s uted to disagree parties as to the time of the investments were secured had claimed that 1, 1976, transfer; appellants place April mortgage undeveloped Arizona a second July argues it was while the marketed Golden West until its land. Brainard 27, 1972, September collapse in late 1972. On West, enjoined and others were Golden operated invest- 2. Moss earlier a similar selling unregistered in an action securities promised investors He had ment scheme. brought the SEC. pay- monthly interest West Utilities” “Golden percent, and an rate of twelve ments at annual jury ostensibly receivable were paid missed while deliberated. to TVM by 1, 2, not guilty returned verdicts on Counts within 180 days, Sears victims received 17.3 form, one even if UCC their investments years. lasted three more When investors II. complained that they had not received their appellants’ outset we address con- At the the delivery UCC forms dates were the evidence was insufficient tention that changed, and some date instances no guilty verdict on the support mail promised, Brainard’s direction. Some in- counts,4 contention, since that if fraud ac- who wanted their money vestors back were require cepted, would us to enter judg- repaid piecemeal fashion. rather acquittal than merely ment of. Additionally, there was testimony trial. new remand for describing appellants, TVM potential argue that the evidence Appellants investors, description embellished their support did inference investigation of Brainard’s They firm. specific intent defraud necessary falsely NEP assured salesmen review E.g., conviction. a mail fraud United of Moss’ finances showed he had a substan- Pearlstein, 576 F.2d (3d tial net worth. An inconclusive Dun and 1978); v. Payne, report Bradstreet by appel- described (9th Cir. Viewing the evi *5 showing as TVM’s lants creditworthiness. light the most dence in favorable to the Finally, Moss’ other dealings appel- with v. States, government,. Glasser United 315 provided lants could have support further 80, 457, 60, 469, 62 S.Ct. L.Ed. that inference intended to de- Bobo, (1942), 974, United States v. 477 F.2d fraud When investors. NEP had financial (4th denied, difficulties, provided $49,800 to main- 1557, 43 909, (1975), L.Ed.2d 774 we company, tain the and in acquired return a the evidence find that was sufficient to in it. financial interest previ- Brainard had that inference support an Brainard and Bit- ously unregistered sold Golden West Securi- requisite the tick had intent to defraud. by ties Moss as part marketed of a similar elements of the Several scheme were suf- scheme. support ficiently obvious to an inference aggregation The that Brainard Bittick of circumstantial evi- knew it was by The government UCC offered the provided fraudulent. forms dence was suffi- to copies finding were xeroxed a permit which cient to that investors bore filing recordation, or knowingly participated no evidence no Bittick. sig- in the fraud. the secured party, nature of Accordingly, proceed and often no we appellants’ oth- of the debtor. signature Although allegations.5 accounts er 3. Both defendants received sufficiency concurrent sen- the addresses evidence. He 4, 5, 3, years five on Counts argues tences of the that evidence showed that Moss had concurrent, years, remaining on two the power no control IFP after March mail counts. Bittick also received a fraud con- that, buying financing, since stock is not $10,000 year sentence and a current three fine Thus, concludes, finance Moss did not IFP. $2,000 19, and fine the on Count on mail required he was not to list Moss on BD Form as fraud counts. person controlling who exercised influence applicant’s management over the or who fi- only by argument 4. The made Brainard business, prior nanced the the disclose brief, adopts arguments by all Bittick raised injunction. they are insofar as relevant him. ample support There was evidence to the 28(i). F.R.App.P. the Since facts incrim- opposite There was conclusion. evidence that similar, appellants are inate two so we the IFP Moss did not surrender his interest until properly ques- Bittick the assume that raised July power and thus had the to control sufficiency of the tion evidence. 20, 1976, company April the on the when form that there is a 5. Bittick asserts fatal variance was filed. There was also that loans purchases financing. indictment and the evidence between the constitute for stock The actually respect The contention to Count Callanan, United States III. Cir, 1971), dissent, the relied the Assistant closing argument In his tax our conclusion. that eva- supports Attorney stated that Bittick States
United government improper- prosecution, sion Brainard, essence, that TVM had told taken ly deductions de- described fraud” downright and “a hairbrain “awas illegal. The court relied on fendant scheme,” something “there is fraudu- finding prosecu- factors three “something here,” wrong here” and lent prejudicial: were not the evi- tor’s remarks thing stinks.” “this Bittick’s actu- overwhelming, the comments dence did were “that normally high- al statements case, issue pertain to central not return, risk,” higher and that er the prosecutor as well as the court more about TVM he he knew until jury clear to the defendant toit Appellants clients. recommend not false charged with not deductions. government’s misquota- contend Here, present. those factors is none of On prejudicial. tions knowledge, the question of case was a only direct one. The evidence —the close of counsel are arguments closing testimony and hearsay state- defendants’ in evidence facts “limited by Moss—indicated that ments flowing reasonable inferences therefrom.” Bittick did know of the fraudulent Ojala, F.2d of the scheme. The nature circumstantial also, e.g., See relied Bell, (D.C.Cir.1974). 225-26 support finding of knowl- sufficient Here, prosecutor went beyond well ar compel edge, finding. but did such a inferences guing which were reasonable. pertained misstatements central Instead, so far as went attribute to only issue—in the issue—indeed case. occasions unequivocal on five incul general instruction, Finally, the court’s ech- respect statements with patory prosecutor, oed should *6 the issue in case. Particularly in a disputed its own recollection of rely on the evidence is the evidence voluminous and where case specific the far short of admonition in fell we complex, cannot excuse facts such the respect the comments that with to Callanan distortion. The prosecutorial misquotations improper. At no the deductions time become “may firmly implanted well have so jury disregard instructed to the the as to jurors’ minds cloud the actual on the misquotations of Bittick. repeated Cf. States, v. testimony.” Wallace United 281 Guajardo-Melendez, supra v. States (4th 1960) 668 (misquotation Cir. F.2d (misquotation closing of witness in argu- witness). government See also United prejudicial notwithstanding ment was the Guajardo-Melendez, v. States on four instruction occasions court’s that 1968) (where (7th prosecutor Cir. the 40 trust their own jury should the recollection government to a witness testi attributed counsel).6 than rather that inculpated defendant, which the mony and witness had government so not testi Defense the counsel object failed to to required). fied, prosecution’s Nevertheless, a new trial the remarks.7 support give prosecutor to sufficient Bittick’s evidence was does not the license to distort testimony respect 19. on Count with conviction the defendant’s the subsequent issue on four central occasions. prosecutor’s jury statement the that “I say what Mr. Bittick mean to that’s said don’t summation, the defense 7. After counsel moved quotes” justify put it is insufficient alia, mistrial, citing, govern inter the misquotations. Even if the heeded the misquotations. A motion for a mistrial ment’s disclaimer, it was never told that the initial that not, however, after the summation substi when, quoting prosecutor twen- objection prejudicial for an at the time the tute prose- pages transcript, ty-one later the the Elmore, are made. United States comments stinks,” thing “this to Bittick (4th cutor attributed F.2d 780-81 de 423 later, nied, “that’s a hairbrain scheme” and still 27 L.Ed.2d downright single (1970). A fraud.” disclaimer "it’s a ‘exceptional subject court can m cernmg cir- the appellate matter of his state- intemperate notice cumstances’ remarks if ment” is unavailable. Here Moss never ac- ‘devious, or they they if otherwise tually the took stand claimed Fifth fairness, seriously the integrity affect[ed] privilege against Amendment self-incrimi- reputation public judicial pro- nation, [the] the district court never occa- so had ” ceedings.’ Elmore, United States v. su- formally the sion to rule on matter. How- is difficult pra, 423 F.2d ever, attorney Moss’ stated court that if comments more imagine would seri- subpoenaed, Moss were “I will him advise affect a trial ously fairness than accept he my will advice to claim misquotations of the repeated defendants Amendment,” privilege of Fifth respect disputed issue.8 agreed district court assertion constitute plain The remarks error. F.R. would privilege be valid. 52(b). Crim.P. require We decline defense actual
ly
produce
Moss and obtain a formal
IV.
ruling on his assertion
the privilege
un:
Brainard, Bittick,
der those circumstances.
trial,
At
elicited from
properly proceed
their counsel could
a number of witnesses statements made
that,
light
the basis
statement
by Sheldon Moss which were arguably
attorney, he
Moss’
plead
privilege
would
of Brainard
inculpatory
and Bittick. How
self-incrimination,
against
and that the dis
ever,
on cross-examination
Karen Gam
in view
judge,
said,
trict
of what
bala,
secretary to
a former
defense
in favor of
privilege
rule
“not
claim.10
were instructed
ask
counsel
her
“It
mere
abjure
Mr.
would be
formalism to
matter of Moss’
about
merits
the Defendants are
claim.” United
the effect
inno
[Moss’]
proffered
Thomas,
1978)
Ms. Gambala’s
cent.”
her that
(where
stand,
Moss had told
“Hal Bittick
a witness did
take
King
no knowledge of
claim
relying
on his
of the Fifth Amend
was excluded from evidence.9
privilege,
scheme]”
ment
was unavailable for the
[the
Appellants contend
exculpatory
Moss’
purposes
804(a)(1)
F.R.Evid.
although
were admissible
under
hear
court had never ruled
assertion of
rules,
alternatively,
say
the Con
privilege).
Lowery Mary
See also
required
frontation Clause
be ad
land,
F.Supp. 604,
(D.Md.1975),
agree
mitted. Since we
with their first
aff’d,
that Bittick. The state- behalf a Appellants raise number other issues. made Moss on a number ments light of our determination that a new The circumstances clearly indi- occasions. required, we trial is decline address mat- the statements were not that fabricat- cate trial, ters which arise a new or therefore They should have ed. been ad- may significantly arise under cir- different the district court.14 mitted are, however, There cumstances. two addi- attempt successful government’s require points present our tional con- exculpatory hearsay Moss’ exclude state- sideration. same at the time but introduce ments particular inculpatory statements is of con- A. inculpatory to us. statements cern Wilcox, 2,1978, On November Lilian not, under Sixth could Amendment’s employee, a began “routine” non SEC Clause, be against used ap- Confrontation investigation at NEP criminal offices. Her Moss was unless pellants unavailable and 9; lásted investigation until November she bore adequate statements indicia of reli- gathered information and documents with Roberts, ability. 56, 65-66, Ohio respect to TVM and other matters. On 2531, 2538-39, 65 L.Ed.2d 597 November she informed J. Larry (1980). government Yet the now contends Grant, Regional available, Assistant Administrator in and that his excul- the Atlanta Enforcement Division of the statements patory unreliable. The SEC, attempt investigation criminal have it NEP government’s ways both imprudent being Gulas, postal us conducted Mike unfair. Were strikes accept inspector. the contention that we to Moss was Grant directed her to disclose and his exculpatory any pertinent available statements information to Gulas. She unreliable, then, absent a showing that his Gulas with the provided information she admitted, present, simply testify Had could not that Brainard argue innocent, been free to and Bittick were their innocence be- req- were not credible. The ing question jury, for the could corroborating uisite circumstances need be testify respect knowledge to their respect to remove all doubt with sufficient hearsay Moss’ scheme. that defend- hearsay requires only statement. The rule knowledge no ants had scheme its “corroborating clearly circumstances indi- properly construed, pur- details should trustworthiness cate the statement.” least, admissibility poses to mean 804(b)(3). F.R.Evid. scheme, Moss had not told them about competence, statement within and that he government’s 15. The contention Moss’ position to afford factual was in expressions opinion, *9 of his statements supportive of the conclusion favorable to Brai- if not admissible even within a hear- and were nard and Bittick. say exception, is without merit. The district Moss, correctly noted that if he court mation violated the Investment Advisors obtained, then returned NEP and up list of clients delegate NEP The can picked Act Commission she also brought which Gulas. approve the of infor- employees, power to disclosure its authorities, governmental to other mation court ruled the list itself The district 203.2,17 it had authorized 17 C.F.R. § obtained, and therefore in- improperly permit disclosure of information Grant admissible, once Ms. since knew of Wilcox investigations. in informal Wil- gathered investigation obliged she was criminal requisite approval Com- cox had of his constitutional to warn mission, through delegate, Larry its Grant. found court also that since the rights. The list had been indepen- information elsewhere, it did dently obtained not taint B. case. government’s Brai- rest Bittick argues that the district court challenges finding, the second and also nard refusing to sever 19 from Count erred argues Wilcox’s disclosure of the infor- fraud counts. He contends that mail inspector postal violated the mation to counts, 19 was unrelated the other Count Act of Advisers 15 U.S.C. Investment the evidence introduced for Count and that seq.,16 required which 80b-l et her to § established connection which between approval prior obtain Commission disclo- prejudicial. We disa position, accepted, if sure. Since government’s case, gree. we would eviscerate now. it address charged may or more be Two offenses ruling that the information in The court’s if or the same indictment based “two independently had been obtained the list togeth- or transactions connected more acts clearly A erroneous. elsewhere parts constituting common er or met, Gulas Wilcox week before Gulas plan.” 8(a). F.R.Crim.P. The or scheme grand subpoena served NEP alleged in 19 was false statement Count production required of NEP and capacity Bittick in his as control- records, personnel as well as other of IFP. ling shareholder subpoenaed materials con- documents. IFP, had an interest in and Brai- Moss also required independent source stitute Bittick, nard, and NEP’s salesmen were list. E.g., in the Brewer v. the information representatives registered sale of Williams, n.12, through with the securities SEC IFP. n.12, (1977); L.Ed.2d 424 broker-dealer, was not a Since NEP relied States, v. United McLindon registered to sell on IFP securities. (D.C.Cir.1964). were, alleged in Count 19 false government’s theory, do find merit in intended Nor we Brainard’s under discovering Wilcox’s claim that disclosure infor- SEC Moss’ prevent record, 80b-10(b) public non-public, provides part: shall deemed § 16. 15 U.S.C. approves practice Commission, any member, officer, the Commission but whereby or or [T]he thereof, public employee Division Enforce- shall not make officials investigation any or at the of Assistant Director or examination ment level fact conducted, subchapter being Regional higher, or under this and officials Offices at any during Regional facts ascertained or the results Administrator or of Assistant level higher, investigation; any in, or may engage such examination authorize member, officer, employee or of the Com- engage no staff to of the Commission’s members in, any person shall disclose other representatives mission do- discussions officer, member, employee or than a foreign governmental authorities mestic or any obtained as a information Commission self-regulatory organizations concerning any investiga- such examination result investiga- in individual obtained information except approval of the Commis- with the tion tions, including examinations and formal in- sion. pursuant vestigations to Commis- conducted order. sion Information or documents obtained § 203.2. C.F.R. any investiga- course Commission examination, unless made a matter of tion or
1127 NEP, IFP in three of in and order to which were sustained. involvement In two instances, gave fraudulent scheme. That rela- the court protect curative instruc requirements 8(a). of Rule Brainard’s attorney satisfied tions. did not for tion move v. Jamar, 1103, any objec States 561 at the time of of United a mistrial these Cf. tions, (4th 1977) Cir. was corrected instruction (perjury charge 1105-06 or not. joined at the conclusion of properly charges of unlawful was both summa uttering the jury and of and after possession a stolen tions been excused United check, for treasury where motion mistrial was perjury States made. Ab particularly in preliminary egregious circumstances, sent hearing occurred on the uttering sit charges). counsel cannot possession silently through a sum mation, and then move a mistrial, for claim course, although joinder proper, Of ing that there were prejudicial remarks. would have permitted severance been any if v. Polytarides, 1350, United States 584 F.2d have would been prejudiced by defendant (4th 1978); Cir. 1354 v. El F.R.Crim.P. joint trial. 14. That decision more, (4th 423 F.2d Cir.), 780-81 cert. the district is committed court’s discre denied, U.S. 27 L.Ed.2d Foutz, United States tion. 540 F.2d Here, (1970). the facts are even strong We find no of abuse against awarding a er judge mistrial. The here, since the discretion concealment gave curative instructions on account of in in charged any Count event objections. two It is patently unfair in separate been admissible mail defense for counsel to allow closing prosecution to show intent de fraud argument proceed under the supposition Grow, fraud. Cf. sufficient, curative instructions were denied, claim, at then end the argument, (1968) L.Ed.2d 111 that such instructions are not sufficient and (evidence of concealment of ownership a mistrial is necessary. fraud in mail prosecution). admitted respect part of Judge IV With Murna- appellants’ trial Since deficient I opinion, concur ghan’s opinion in his respects, important we reverse and remand agree improper prohibit that it was intro- for new trial. secretary duction Moss’ statements REVERSED. that this was reversible error. Never- theless, I there think is another more WIDENER, Judge, concurring Circuit for compelling finding basis improper. dissenting: elicited con- I, II, parts Judge I and V concur sisting of statements made Sheldon Moss Murnaghan’s opinion. I also concur part inculpatory which trial, thus favor IV and for a new remand was, course, Bittick. This panel that, would add left to my I de- own out, points opinion hearsay testimony. vices, would reach same I result a Nevertheless, testimony by Moss’ former route which direct does depend more secretary as to statements made by Moss abuse of I upon an discretion. dissent from exculpatory III. part was excluded. attacking hearsay Part opinion III concerns testimony, Rule 806 of the Federal Rules of Attorneys the United States provides, part: Evidence part made as closing arguments. of their hearsay When a . . . has would obtain Judge the same result as Potter evidence, credibility admitted in part II of opinion. do separate While I may attacked, be declarant if disagree necessarily Potter, with Judge supported, by evi- any attacked this decision I reach different reasons. that would be dence admissible for the During prosecution summations, the two if declarant had as a purposes testified attorney objections, Brainard’s four Evidence a statement con- witness. *11 time, I. any incon- duct the declarant by statement, hearsay is not sistent complex a very case involved This requirement subject any of investment fraud and scheme intricate opportunity to deny or be afforded by four of trial. Initiated weeks consumed explain. fraud was one of sub- Sheldon for As the The basis this rule is obvious. whereby financial dimensions some stantial of Advisory Rules Evidence Com- Federal citizens of North Carolina one thousand hearsay “The declarant of a said: mittee to invest four and a half were convinced is admitted in evidence is statement a sham investment known million dollars His credibility a witness. should in effect as a “Ponzi scheme.” As a result of this subject impeachment be in fairness scheme, brokerage and Bittick’s though he had in fact as testified. support NEP, firm, $550,000 received over com- By 609.” introducing Rules 608 See Although pleaded Moss missions. Sheldon by Moss, made hearsay pros- statements Brainard and Bittick raised the de- guilty, put credibility Moss’ in issue. Prior ecution duped they by just were Moss as fense that statements are recog- a well inconsistent been, impeaching they a witness. the investors had and that means FRE nized secretary’s testimony, 613.1 The knowing participants Rule or willful have included conversations which would fraud. had showing Moss stated that Brainard and good igno- this faith defense not know the did true Bittick nature of government fraud rance TVM, have been such an would inconsistent believe, repeatedly challenged, I even- such, it As would have been statement. destroyed tually by the substantial incrimi- Rule under and failure to admissible nating presented evidence at trial. First of reversible it was error.2 admit all, TVM investment was not an obscure POTTER, *, District Judge dissenting. item, inspection among NEP’s hidden respectfully I dissent from Part Four of investments; rather, TVM NEP’s other opinion and majority’s disagree with offering. The commissions from the star Murnaghan’s Judge position concurring approximately for sale TVM accounted Three of his opinion. in Part stated during years NEP’s income 45% of .it majority has reversed the convictions sold, offering produced and no other that the grounds trial court wrong- on the Yet, income to even half much NEP. certain fully exculpatory excluded state- had enough, prospectus, no no oddly co-defendant, by a third ments made statement, no report, annual financial defendants, Brainard and Bit- prejudice any written financial other information I believe that Because claim tick. this does junior any Inquiring salesmen of sort. error, to reversible in any not amount by were told Brainard and NEP Bittick event, record that the reflects find substan- they simply things “checked out.” guilt in this matter tial so as to any prejudice, The evidence further undue established overcome would af- convictions. thoroughly ac- firm prior they co-conspirator. of a FRE Rule 613 concerns inconsistent the statements Thus testifying. hearsay. 801(d)(2)(E). who is a witness statements FRE not be would recognizes assuming Rule inconsistent out-of- were the of a statements Even same, co-conspirator, court could been either result hearsay prior subsequent statement specifically provides to or for for FRE originally thus it offered as evidence and allows impeachment inconsistent statement of of “a statement or conduct introduction into evidence under FRE admitted any Advisory See Commit- declarant time.” 801(d)(2)(E). Rule 806. tee Note to * Potter, District D. Court Robert contends that state- also Judge District of North the Western Caroli- tending to others ments show the by designation. sitting na guilt Bittick were admissible as up by Bittick, chase set with Sheldon Moss and were on deal Ms. Burzell quainted with him. intimate business relations was determined make sure an investment quite previ- knew safe. evening defendants that Moss would be On the Both in TVM target investiga- day that he criminal ously the same received cease *12 his investment schemes and had from the desist order and Ex tion Securities enjoined been by TVM, S.E.C. from on previously change Commission sale of securities. When selling NEP had financial went to Ms. Burzell’s and Brainard home own, arranged $30,000 of its to have her to invest problems her hus persuaded of $49,000 As pension transferred to NEP. some retirement fund in TVM. band’s transfers, testified, of these and Bit- Brainard although result Ms. Burzell she was As $13,800 NEP, relieved of a investment, wary tick were debt TVM as Brainard owning safe, Moss ended up 30% of and Sheldon her that investment was it sured by Sears, of NEP. From pay- such direct he the stock backed had run a Dun & was money to them by of and from check on ments Sears her Bradstreet and that sizeable commissions guaranteed. on the sale of their investment stock, Brainard and profited Bittick TVM Staub, an investment broker in Robert substantially from their various business Carolina, North that Fayetteville, testified dealings with Moss. by been contacted he had Brainard designed the TVM Part of the sales scheme sell in his Bittick to investment credibility an being of TVM as attrac- After told Brainard that boost area. repre- were repeated approved Illinois had tive investment state of the sale of TVM, Bittick Brainard and had issued a sentations TVM and certificate to Sears, statements, backing Roebuck Co. agreed Mr. totally that false Staub paper. acknowledged Brainard of the stock sell some to his investors. commercial that he had no proof However, July attempt- trial direct of at Sears’ when he TVM, $18,000 backing yet investors who also get investment returned to ed at trial buyers, stated that repeated testified of his encountered one personally assured them excuses from Brainard and difficulties safe, it Eventually, was backed the money was returned investment Moss. Sears, had checked things over six or in installments seven months. regard specific to his representa- With this incident problems, and other out. Because pur- one occasion that on Sears had no tion informed would Staub product cases of a ten million fur- longer handle investments. He chased TVM, statement, totally through “something false to Brainard ther stated Brainard, trial, at wrong” could the re- offer to be with TVM when was had “I am sure money that I much sponse taking yet have erred in in so diffi- (Tr. my verbiage.” 3172). returning lump Brai- investments in culty single some repeatedly (Tr. stated to his sales- also nard sums. the TVM investment had been men For all their bravado and confidence with, or by, registered approved otherwise jun- TVM to the representing investors Illinois. This statement was the State as a safe investment ior salesmen and would have been discovered
also untrue
thoroughly
out,
grim-
they had
checked
it is
really
had Brainard
so
“checked
to be
Bittick,
ly
having
ironic that
out.”
things
enriched
more than half a million
sales,
Perhaps
examples
the most
on
blatant
in commissions
the TVM
dollars
misrepresentations
ignorance
re
claimed total
eventually
Brainard’s
testimony
compa-
Burzell
of TVM: a
Merlene
nature
non-existent
vealed
true
already
Having
directly
Robert Staub.
lost
which went
the investments
ny,
questionable
money
pur
pockets
Florida land
Sheldon
After a
Moss.
into
TVM,
very
security
company
did not reveal to Ms.
1. Brainard
Burzell wheth
formed
per
Bradstreet had been
about.
not a Dun and
was concerned
of which she
er or
way designed
in a
emphasize
how
review of the entire record of the
unrea-
careful
below, it is clear that
there was sub-
igno-
trial
it was for Brainard to remain
sonable
to support
jury’s
evidence
de-
stantial
prosecutor’s
of the fraud. The
charac-
rant
guilt
charged.
on the
crimes
termination
argument
was more an
as to the
terization
my
the substantial
opinion,
claim of
reasonableness
defendants’
to overcome any preju-
was sufficient
guilt
ignorance
attempt
than an
insert admis-
resulted
dice which
as-
evi-
otherwise
sions
signments of errors
below.
discussed
From the context
in which these
dence.
made,
find that a
II.
as argument,
would have viewed them
Judge
opinion,
of his
Part Three
have attributed the
remarks
*13
opinion
concurring
the
Murnaghan offers
Bittick.
testimony
of Bittick’s
misquotations
Judge Murnaghan’s concurrence in Part
argu
closing
in his
prosecutor
made
the
opinion
of his
Wallace v.
cites
United
Three
IWhile
defendants.
the
prejudiced
ment
States,
(4th
F.2d 656
1960),
Cir.
may have been
agree
prosecutor
the
Guajardo-Melendez,
United States
argument
in his
overzealous
somewhat
supportive
as
of his
his
preju
I do not believe
indiscretion
jury,
view,
holding.3
my
In
these cases involved
case so as to require
the defendants’
a
diced
egregious
more
conduct
the
of
part
far
new trial.
prosecution than that
the
which occurred in
A reading
question
of the
in
statements
Furthermore,
present case.
Wal
the
since
appear
full context
in which
they
as
Guajardo-Melendez,
lace and
this Court has
indicates that
they
prosecu-
the
were
adopted the standard
the
of
District of Co
fact specifically put
in
tor did
words
determining
prejudicial
lumbia in
the
effect
of
the mouth
defendant
into
Bittick or oth-
improper
prose
statements made
of
specific testimony
attribute
to him.2
erwise
That standard
articulated in
in
cution.
Rather,
prosecutor,
an
effort
show
Callanan,
145, 151
States v.
450 F.2d
the defendants knew or
have United
what
should
known,
1971)
words
characterized
of Bittick
as follows:
Marketing.
may
prosecutor’s closing
portions
argu-
It
able
of the
to float for
[be]
2. The
a
question
while,
are set
below:
Maybe
products
out
ment in
who knows?
these
will
words,
involved,
company get
“In
if we are to
Mr. Bit-
off. He lets his
but
other
believe
take
tick,
telling King right
you
say
suggest
then and there
is
I
the evidence
fair to
King’s
Chicago,
things
back
‘some-
thought
probably
pretty
return
that
risky
right
got
thing
about what we
ain’t
there.
(Tr.
3601-02)
. .”
at
there.
you’re giving
product
description
me
is
something
There
fraudulent
Guajardo-Melendez,
not accurate.
the court found that
got
pitch wrong.
You’ve
There’s
there.
something
prosecutor
improper
“
and,
wrong
personally,
I
there.’
hearsay
‘testimony’
alleged
of an
amounted
say
that’s what
I don’t mean
Mr.
course
their
which denied
defendants
statement”
put
quotes.
it in
said and
You recall
Bittick
right
confrontation,
Sixth Amendment
say,
you
did not
but
said and
believe
what he
by jury
could not be cured
instruc-
error that
something to the
T
effect that won’t
will recall
F.2d at
tions. 401
any my
(Tr.
customers.’
recommend that
Wallace,
Attorney
the United States
on six
3577)
argu-
during
closing
in
trial and
his
occasions
Bittick,
respect
according to
to Mr.
his
“With
misquoted
ment
testimony,
thing
Mr.
this
he told
Brainard that
“repeated
this series of
witness.
It was
anything
never did
and he
about
stinks
misquotes”
seemingly deliberate
which the
3598)
(Tr.
it.
prejudicial. Additionally,
found
court
you
happened
suggest
what
with Mr.
“I
improperly argued
impres-
own
prosecutor
his
company
good
was not in
Bittick
it; may
They
the defendant and
character of
sion
not.
need
make
straits.
that
Chicago
jurors
edge.
goes up
sought
competitive
draw an unfavorable
Mr. Brainard
to have the
down,
and Mr.
call
char-
and comes back
from Wallace’s failure to
as
inference
says
(A)
attorneys
either
that’s
this
from his com-
hears about
witnesses fellow
acter
fraud,
scheme,
(B)
downright
it’s a
munity.
hairbrain
at 667-68.
281 F.2d
product
they
such
Television
but
needed
untoward remarks
Court as
preju
Whether
set forth in United States v. Soco
must
diced
be tested
ny-Vacumn
Co.,
150, 239-40,
Oil
[the defendant]
case,
closeness
the centrality
811, 851-52,
“the
in,
S. Ct.
84 L.Ed.
as cited
error,
affected
the issue
Elmore,
423 F.2d
mitigate
steps taken to
the effects of the
(4th Cir.),
denied,
quoting, Gaither
error.”
(1970):
courtroom other than
H33 requirement the corroborating Moss lacked credibility, was a [t]he “con- man”, Oz”, ‘clearly the “Wizard of circumstances indicate’ the trust- and a liar. Un- circumstances, der these and in view of all worthiness should be presented the evidence at trial and the lack the trial permit judge, who construed corroborating circumstances which would opportunity judge has the the credibili- clearly indicate the trustworthiness of the witness, to exercise ty of discretion in question, statements would find that determining whether he is satisfied that trial court was within its discretion is trustworthy. the statement If there is it excluded Moss’ when statements to his him before from which he could evidence Additionally, secretary. even if sufficient that the statement was not ac- conclude corroborating circumstances present (or would not be tually made reliable court, the district under the standard truth evidence matter as- above, was “clearly discussed erroneous” in serted) exclusion of the statement statements, excluding the I find that no affirmed, (emphasis supplied). should prejudice defendants, resulted as the majority indicates that Moss’ state- were substantially outweighed opinion not mere ments the ulti- the other evidence of guilty knowledge guilt, should be mate issue construed trial. presented See United States v. Hinkson, Moss had not to mean that told was a fraud. If this Consequently, for the reasons -discussed analysis further, were taken one step Moss’ above, prejudicial I would find no error and statements, if he even himself believed affirm the convictions. true, only prove could them to be that Brai- Bittick had not
nard and told him they were his fraud.
aware of Viewed in light, this appear Moss’
does statements were truth
“reliable of the mat-
ter asserted” —Brainard Bittick’s lack knowledge guilty way had no FISHER, —as Appellant, J. Caricia knowing what Brainard and Bittick actu- ally fraud, knew about regardless of WASHINGTON METROPOLITAN AREA had or passed what communications had not AUTHORITY; TRANSIT J. Elwood them. between Clements; Mickelson, Appellees, C. C. The trial court had before it substantial *16 evidence that Brainard other and Bittick Arlington County; 1, 2, 3, John ## 4 & 5 participated knowingly fraud Doe; Doe; Depu # # 2 & 3 Jane All deliberately inquiries and had avoided ty Employees Arlington Sheriffs verify the attempts to authenticity of the County Department, Sheriffs Names Un Additionally, TVM investment. the state- known, Defendants. question ments in here were made Shel- No. 81-1596. pleaded a man who had guilty don masterminding fraud perpetu- which was of Appeals, United States Court lies, ated the use of endless series of Fourth Circuit. fabrications, and cover-ups. Considering Argued Feb. confessór, of the crime and the nature 7, 1982. Decided Oct. any consider Moss, other than admissions of his Sheldon guilt, to be highly suspect.7 Ironically,
own the defense
even counsel argued defendants, denying post-trial trial, exculpate motion for new the trial court reaf- premised upon ruling, stating that was Sheldon motion firmed its earlier that “such a willingness unworthy to take the stand in Moss’s order to man is of belief.”