Sunday, June 30, 2013
Complete the Statement: 6th Circuit Finds Rule of Completeness Doesn't Allow for Admission of Otherwise Inadmissible Evidence
Federal Rule of Evidence 106 provides that
If a party introduces all or part of a writing or recorded statement, an adverse party may require the introduction, at that time, of any other part — or any other writing or recorded statement — that in fairness ought to be considered at the same time.
One recurring question that has divided the courts regarding Rule 106, the so-called "rule of completeness," is whether it allows for the introduction of otherwise inadmissible evidence. Let's take a look at the recent opinion, United States v. Parenteau, 2013 WL 3214934 (6th Cir. 2013), to see what the Sixth Circuit had to say about the issue.In Parenteau,
[Thomas] Parenteau was a home builder in Dublin, Ohio. He owned a number of businesses with his wife, Marsha Parenteau. But Parenteau also had a girlfriend, Pamela McCarty; in 2001 he asked her to claim false deductions on her tax return. McCarty agreed and gave her unfiled return to Parenteau, who gave it to his accountant, Dennis Sartain. Sartain added to McCarty's return a $402,597 loss, which resulted in a tax refund of almost $120,000. McCarty gave the refund to Parenteau so that he could become financially independent of Marsha and eventually divorce her. Parenteau, McCarty and Sartain repeated this same fraudulent scheme for the next three years, netting approximately $575,000 in refunds. McCarty continued to give Parenteau all of the refunds so that he could leave Marsha.
In 2003, Parenteau created a trust for the purpose of purchasing a home in Columbus, Ohio. He assigned McCarty as the trustee and purchased the home for $1.8 million. Later that year, Parenteau caused the trust to apply for a $5 million loan on the property. McCarty had lost her job that year, however, so Parenteau created a fictitious company to help McCarty secure the loan. Parenteau stated on the loan application that the company paid McCarty $70,000 per month. When a loan officer called to verify, Marsha lied about McCarty's employment and income....McCarty received that loan in 2004 and again gave Parenteau the proceeds. Less than two years later, Parenteau and Marsha applied for a $10 million loan—claiming that they made $2.1 million annually—so that they could buy the Columbus home from McCarty for $15.5 million. Eventually, a bank approved them for a $12 million loan and disbursed $9 million to Parenteau.
Parenteau also created a mortgage-fraud scheme involving homes that he built. Parenteau would sell homes to buyers at falsely inflated purchase prices and the buyers would obtain inflated loans. For their participation in the scheme, Parenteau would give the buyers a kickback after the purchase. The buyers would then default on the loan. This scheme created approximately $20 million in fraudulent mortgage loans.
In 2005, the IRS began investigating McCarty's tax returns. Parenteau and Sartain thereafter began shredding incriminating documents and creating new ones to validate the fraudulent schemes. Parenteau also convinced McCarty to pretend to cooperate with the government's investigation. She did so, providing false documents and telling lies to agents on 10 separate occasions.
Parenteau was thereafter charged with a bevy of crimes, including obstruction of justice, witness tampering, conspiring to defraud the United States, and money laundering. At trial, the judge allowed the prosecution to introduce
taped conversations between Parenteau and McCarty. These tapes contained discussions about the government's investigation and the pair's efforts to evade prosecution. The district court allowed the prosecutor to play the tapes at trial to prove the conspiracy to obstruct justice charge against Parenteau.
Ostensibly, these portions of the tapes were admissible as co-conspirator statements pursuant to Federal Rule of Evidence 801(d)(2)(E). After he was convicted, Parenteau appealed, claiming, inter alia, that other portions of the tapes that tended to exonerate him should have been admissible pursuant to Federal Rule of Evidence 106.
The Sixth Circuit disagreed, finding that
This rule "allows a party to correct a misleading impression created by the introduction of part of a writing or conversation by introducing additional parts of it necessary to put the admitted portions in proper context."...But the rule does not allow a party to admit evidence that is otherwise inadmissible....Here, Parenteau loses on both points: the admitted portions of the tapes were not misleading (he does not argue otherwise), and the portions he says should have been admitted were inadmissible hearsay....The district court did not abuse its discretion in admitting the recordings.