Friday, October 17, 2014

Defense-favorable decision on fraud guidelines; other issues not preserved

U.S. v. Powers, 2014 WL 4801223 (9/29/14) (N.M.) (unpub'd) - The ยง 2B1.1(b)(14)(A) bump for a fraud where the defendant derives more than a million dollars in gross receipts does not apply even if the whole enterprise hauled in more than a million dollars if some of the criminally-responsible participants "earned" enough money to lower the defendant's individual take below a million dollars.

The Rule 701, lay testimony argument on appeal was not preserved below. Despite numerous objections to bank employees' testimony, none mentioned the Rule 701 issue. In your basic mortgage fraud case, it was not plain error under Rule 701 to admit hypothetical testimony by bank employees that, if the fake incomes had been lower, and the buyers truthfully said the houses were investment properties, and the bank knew the money given at closing would be going to the buyers to make the mortgage payments, the bank would not have approved the loan. The witnesses did have personal knowledge of their employers' lending practices at the time of the offenses and of the particular documents involved by the time of trial. There's nothing inherently inappropriate in asking lay witnesses to answer hypothetical questions, especially when the answers are based on personal knowledge. The questions did not call for particularly specialized knowledge, only basic math, and only relied on the witness having a limited amount of expertise by virtue of his or her position in the business, not on outside expert reports.

Mr. Powers did not preserve an objection to the admission of adoptive business records (one company keeping as business records another company's business records). He did file a proper motion in limine before trial, but the district court did not issue a definitive ruling because it denied the motion "subject to foundation being laid." Mr. Powers did not object to the relevant records at trial. So he's out of luck. Any error in admitting adoptive business records was not plain. Other circuits have adopted the adoptive-business-records doctrine and the 10th has been non-committal.