EvidenceProf Blog

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

Tuesday, April 17, 2018

Seventh Circuit Finds That Failure to Disclose Inadmissible Recording of Loan Officer Was a Brady Violation

Pursuant to Brady v. Maryland, the State has an affirmative obligation under the Due Process Clause to timely disclose material exculpatory evidence to the defendant. Since the Supreme Court's opinion in Wood v. Bartholomew, a circuit split has developed over whether the failure to disclose inadmissible evidence can ever be the basis for a Brady violation. In my first law review article, I argued that inadmissible evidence can be material for Brady purposes because, inter alia, inadmissible evidence can still sometimes be used at trial, e.g., to impeach a witness. In its recent opinion in United States v. Ballard, 885 F.3d 500 (7th Cir. 2018), the Seventh Circuit reached the same conclusion.

In Ballard, the State alleged the following fraudulent scheme by Daniel Ballard:

Ballard obtained a $280,000 construction loan from the State Bank of Herscher (“SBH”) to construct a residence at 3013 Stone Fence Drive in Kankakee, Illinois (“the Stone Fence Property”). After some time, he realized he was “in over his head” and requested an additional $90,000 loan to finish the property. As there was insufficient equity to cover the requested amount, SBH only lent him $20,000. To make up the balance, Ballard sought and obtained construction loans on two other properties in Bradley, Illinois: 411 North Center and 248 North Center (“the North Center Properties”). Joseph Grant was the SBH loan officer for all three properties.

After he was convicted,

Ballard filed a motion for a new trial. Ballard’s motion centered on a surreptitious audio recording of Grant made during a prior, unrelated federal investigation centering on Scott Fitts (“the Fitts investigation”). Notably, Lawrence Beaumont—Ballard’s attorney here—represented Fitts during those criminal proceedings. In 2007, Fitts obtained a personal loan from SBH, with Grant serving as his loan officer. Fitts later pleaded guilty to at least one criminal violation related to the loan. Fitts signed a cooperation agreement as part of his plea, and was later directed to audio record a conversation with Grant. In that approximately one-hour recording, Fitts and Grant discussed various matters relating to Fitts’s alleged misconduct and Grant and SBH’s involvement.

The district court found that the recording was Brady material and granted Ballard a new trial. On appeal, Judge Manion dissented from the opinion affirming that ruling, concluding, inter alia, that the recording

would be inadmissible at a new trial. Federal Rule of Evidence 608(b) provides that “[e]xcept for a criminal conviction under Rule 609, extrinsic evidence is not admissible to prove specific instances of a witness’s conduct in order to attack or support the witness’s character for truthfulness.” So although Ballard’s counsel might make use of the recording to cross-examine Grant at a new trial, counsel would be stuck with Grant’s answers....The jury will never hear the recording. That makes the recording much less valuable than Ballard would like to admit.

The majority, however, upheld the district court's finding of a Brady violation, concluding that

the district court made a legal determination that the Grant recording provided “ample fodder for impeaching Grant’s credibility.”...[W]e cannot say that such a finding was in error. For one, some of the acts arguably admitted by Grant in the recording—such as falsifying a SAR and accepting signed, blank loan applications—are probative to attacking his character for truthfulness. See Fed.R.Evid. 608(b)(1). Additionally, the recording supports an inference that Grant not only admitted to illegal activity, but also thought he was being criminally investigated for his misconduct. Because Grant was never prosecuted, it can be further inferred that Grant received some benefit from the government. Thus, Grant was arguably biased in favor of the prosecution, especially given that many of the main characters in the Fitts investigation took part in the Ballard investigation—most notably the prosecutor, investigating agent, and Grant. If believed, such a motive would damage Grant’s credibility as a witness against Ballard. That’s because, at trial, Grant’s testimony directly contradicted Ballard’s statement as to whether Grant and SBH sanctioned Ballard’s conduct. If a jury did not believe Grant’s testimony, it might have found Ballard generally more credible. This may have made Ballard’s defense that he did not read the loan statements more believable.



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