Sunday, November 22, 2009
Summary Judgement: First Circuit Finds Summary Evidence Summarizing Testimony Admissible Under Rule 1006 In Tax Appeal
Federal Rule of Evidence 1006 provides that
The contents of voluminous writings, recordings, or photographs which cannot conveniently be examined in court may be presented in the form of a chart, summary, or calculation. The originals, or duplicates, shall be made available for examination or copying, or both, by other parties at reasonable time and place. The court may order that they be produced in court.
In its recent opinion in United States v. McElroy, 2009 WL 3932266 (1st Cir. 2009), the First Circuit had to decide whether and when this Rule applies to summary evidence that summarizes testimony as opposed to summary evidence that summarizes documents.
In McElroy, Daniel McElroy and Aimee King McElroy were indicted by a grand jury on one count of conspiring to defraud the United States of employment and income taxes and to commit insurance fraud by use of the mails, three counts of mail fraud, and fourteen counts of procuring false tax returns. At trial,
IRS Special Agent Joseph Guidoboni testified as a summary witness about the defendants' reporting obligations to the IRS. He testified that, based on his review of the companies' business records, the defendants paid taxes on the payroll they distributed in check form, but paid no taxes on the payroll they distributed in cash. He concluded that the total amount of unpaid federal taxes from 1997 to the first quarter of 2001 was $9,982,690.51. An insurance fraud investigator, Neil Johnson, also testified as a summary witness about employers' obligations to maintain workers' compensation insurance and how insurers calculate premiums based, in part, on reported payroll. He concluded that the total loss in insurance premiums to the workers' compensation companies was $6,457,500.
Apparently, both of these witnesses provided testimony that summarized testimony as well as documents. After the defendants were convicted, they appealed, claiming that Federal Rule of Evidence 1006 "only allows the introduction of summary evidence that summarizes documents, as opposed to evidence that summarizes testimony." The First Circuit disagreed, noting that it has urged caution with regard to the admission of summary evidence that summarizes testimony but that it has generally allowed such testimony in the context of tax cases. According to the court,
With regard to summary witness testimony, we have urged caution, noting that such witnesses are allowed only in limited situations....We noted: "The reluctance of courts to allow the government an additional opportunity to present its case in a tidy package at the end of its presentation of evidence, even when the summary evidence is, by definition, completely consistent with the rest of the trial record, confirms that the imprimatur problem with such repetitive testimony is inescapable whether that testimony comes at the beginning or end of the government's case."...Nevertheless, we have found summary witnesses to be appropriate within the context of tax cases: "We have recognized as a general proposition that testimony by an IRS agent that allows the witness to apply the basic assumptions and principles of tax accounting to particular facts is appropriate in a tax evasion case."...We held that "in a tax evasion case, a summary witness may be permitted to summarize and analyze the facts of record as long as the witness does not directly address the ultimate question of whether the accused did in fact intend to evade federal income taxes.
Based upon my review of precedent, I think that this ruling is fairly consistent with the decisions reached by courts across the country. Indeed, the court noted in a footnote accompanying the above block quote that
Our cases are generally consistent with other circuits' treatment of summary witness evidence offered in complex cases. See, e.g., United States v. Harms, 442 F.3d 367, 375-76 (5th Cir. 2006); United States v. Pree, 408 F.3d 855, 869-72 (7th Cir. 2005); United States v. Sabino, 274 F.3d 1053, 1067 (6th Cir. 2001), modified on other grounds, 307 F.3d 446 (6th Cir. 2002); United States v. Pinto, 850 F.2d 927, 935 (2d Cir. 1988); see also 4 Jack B. Weinstein & Margaret A. Berger, Weinstein's Federal Evidence § 611.02[a][vii] (2d ed.2009); 6 Jack B. Weinstein & Margaret A. Berger, Weinstein's Federal Evidence § 1006.08 (2d ed. 2009).