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

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Tuesday, October 29, 2013

Residual Effects: Federal Rule of Evidence 807 & Plea Agreements

Federal Rule of Evidence 807 reads as follows:

(a) In General. Under the following circumstances, a hearsay statement is not excluded by the rule against hearsay even if the statement is not specifically covered by a hearsay exception in Rule 803 or 804:

(1) the statement has equivalent circumstantial guarantees of trustworthiness;

(2) it is offered as evidence of a material fact;

(3) it is more probative on the point for which it is offered than any other evidence that the proponent can obtain through reasonable efforts; and

(4) admitting it will best serve the purposes of these rules and the interests of justice.

(b) Notice. The statement is admissible only if, before the trial or hearing, the proponent gives an adverse party reasonable notice of the intent to offer the statement and its particulars, including the declarant’s name and address, so that the party has a fair opportunity to meet it.

Statements are rarely deemed admissible under this residual exception. But, according to the recent opinion of the United States Bankruptcy Court for the District of New Mexico in In re Vaughan Co. Realtors, 2013 WL 5744727 (Bkrtcy D.N.M. 2013), the is at least one circumstance where this exception is frequently invoked.

In Vaughan, Plaintiff Judith Wagner, Chapter 11 Trustee of the bankruptcy estate of the Vaughan Company Realtors ("VCR") sought to recover certain payments made to the the defendants as fraudulent transfers. Vaughan sought to use  To prove these fraudulent transfers, Wagner sought to introduce into evidence the plea agreement of Douglas F. Vaughan, the chairman, chief executive officer, president, and majority owner of VCR.

In response, the defendants claimed that the plea agreement was inadmissible hearsay. The court disagreed, concluding that the plea agreement was admissible under Federal Rule of Evidence 807. According to the court,

The residual exception is to “be used very rarely, and only in exceptional circumstances.”...Here, however, such circumstances exist. The Plea Agreement is offered as evidence of material facts ( i.e. that Vaughan operated a Ponzi scheme and that VCR was insolvent); Vaughan's admissions are more probative on these issues than any other evidence the Trustee could procure; and as Vaughan specifically contemplated that the Plea Agreement would be used in the bankruptcy case, the interests of justice are best served by its admission. Further, courts routinely admit plea agreements under Rule 807, particularly when they are offered against the perpetrator of a Ponzi scheme. See In re Slatkin, 525 F.3d 805, 811–813 (9th Cir.2008) (affirming admission of a plea agreement entered into by a Ponzi scheme perpetrator)....In Thomas v. Durastanti, 607 F.3d 655, 666 n. 8 (10th Cir.2010), the Tenth Circuit cited Slatkin with approval and determined that “to the extent [defendant's] plea agreement is offered to prove his intent and is thus hearsay, it is admissible under Fed.R.Evid. 807.” (emphasis added).

-CM

http://lawprofessors.typepad.com/evidenceprof/2013/10/federal-rule-of-evidence-807reads-as-follows-a-in-generalunder-the-following-circumstances-a-hearsay-statement-is-not-e.html

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