EvidenceProf Blog

Editor: Colin Miller
Univ. of South Carolina School of Law

Thursday, January 22, 2009

Giving Him The Business: Second Circuit Overanalyzed Confrontation Clause In Fraud Appeal

The recent opinion of the Second Circuit in United States v. Kelley, 2009 WL 19083 (2nd Cir. 2009), seems to me to have reached the correct conclusion regarding the admissibility of a corporate tax return signed by a managing partner of a defendant's corporation.  But I think that it did so on the wrong grounds.

In Kelley, Kevin O. Kelley, who owned a majority interest in First Venture Leasing (FVL), appealed from his convictions on four counts of securities fraud and three counts of wire fraud.  And part of the basis for his appeal was that the prosecution improperly secured these convictions by presenting evidence of FVL tax returns in violation of his rights under the Confrontation Clause.

Readers of this blog know that in its opinion in Crawford v. Washington, the Supreme Court

     essentially found that the Confrontation Clause of the U.S. Constitution is violated when hearsay is "testimonial," admitted against a criminal defendant, and the hearsay declarant does not testify at the defendant's trial, unless (1) the declarant was unavailable for trial, and (2) the defendant was previously able to cross-examine the declarant.  The Court in Crawford set forth various formulations of the term "testimonial," with the most commonly adopted one defining a "testimonial" statement as one that "was made under circumstances which would lead an objectively reasonable declarant to believe or anticipate that the statement would be available for use against an accused at a later trial.

Based upon Crawford, it is easy to see why the Second Circuit found that the Confrontation Clause was not violated by introduction of FVL's tax returns which were signed by a managing partner.  It found no problem because the tax returns were not "testimonial" in that they were not prepared with the expectation that they would be used at a later trial (unlike, say, statements made to the police).

But in my mind, the Second Circuit didn't even need to get to this step of the analysis because the Confrontation Clause did not cover the tax returns.  As the Second Circuit noted, the tax returns were admissible notwithstanding the rule against hearsay based upon Federal Rule of Evidence 801(d)(2)(D), which indicates that:

     "A statement is not hearsay if...[t]he statement is offered against a party and is...a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship."

In other words, because Kelley and the managing partner were business partners, the tax returns signed by the managing partner were admissible against Kelley as if he had signed the returns himself.  Therefore, the Confrontation Clause was inapplicable.  As the Seventh Circuit noted in United States v. Chappell, 698 F.2d 308, 312 (7th Cir. 1983),

     "The exclusion of party admissions from the definition of hearsay, unlike most hearsay exceptions, is not grounded on a probability of trustworthiness but rather on the idea that a party cannot object to his failure to cross-examine himself. See 4 Weinstein and Berger, Weinstein's Evidence ΒΆ 801(d)(2)[01] (1981)....This Court has repeatedly held...that extrajudicial statements properly admissible under FRE 801(d)(2)(E) (admissions by coconspirators) do not violate a defendant's Sixth Amendment rights....The similarities between coconspirators and agents are readily apparent, and we see no reason to differentiate between them for Confrontation Clause analysis purposes."



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