Petition for Writ of Certiorari — Mugford v. United States

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WHEvO 7049

SUPREME COURT OF THE’UNITED STATES .«

OCTOBER TERM, 1993

UNITED STATES OF AMERICA,

Respondent,

”

ROYAL BUICK, INC.; BRIAN SMITH;

EUGENE MARANO; RALPH RODRIGUEZ;

EDWIN W. MUGFORD, III; DAVID ROEMER,

Petitioners.

Petition for Writ of Certiorari

to the United States Court of Appeals

for the Eleventh Circuit

PETITION FOR WRIT OF CERTIORARI

OF EDWIN W. MUGFORD, III

William S. Smithers, Jr.

Anton J. Stelly

R. Paul Childress, Jr.

THOMPSON, SMITHERS, NEWMAN & WADE

Post Office Box 6357

5911 West Broad Street

Richmond, Virginia 23230

(804) 288-4007

Counsel for Petitioner

LANTAGNE DUPLICATING SERVICES

801 East Main Street Suite 100 Richmond, Virgininia 23219 (800) 847-0477

QUESTIONS PRESENTED

IN THE ABSENCE OF OTHER GROUNDS FOR

ADMISSIBILITY AND A LIMITING INSTRUCTION ON

THE JURY’S CONSIDERATION OF THE EVIDENCE,

WHETHER THE TRIAL COURT’S ADMISSION OF

NINE CUSTOMER CREDIT APPLICATIONS

PURSUANT TO RULE 803(6) OF THE FEDERAL

RULES OF EVIDENCE IS REVERSIBLE ERROR

WHERE THE SOURCE OF THE INFORMATION IN

EACH OF THEM IS A THIRD PERSON NOT ACTING

IN THE REGULAR COURSE OF THE BUSINESS WHO

IS NOT CALLED TO TESTIFY, AND THE DOCUMENTS

REPRESENT THE ONLY EVIDENCE AGAINST THE

ACCUSED IN CRIMINAL COUNTS RELATED TO THE

FALSIFICATION OF THE CREDIT APPLICATIONS?

WHETHER AN ACCUSED’S SIXTH AMENDMENT

RIGHTS TO CONFRONT THE WITNESSES AGAINST

HIM ARE VIOLATED IN A CRIMINAL PROSECUTION

CHARGING FRAUD INVOLVING THE FALSIFICATION

OF NINE CREDIT APPLICATIONS WHEN THE

GOVERNMENT FAILS TO CALL AS WITNESSES THE

CUSTOMERS WHOSE SIGNED CREDIT

APPLICATIONS ARE ALLEGED TO HAVE BEEN

FALSIFIED AND THERE IS NO OTHER EVIDENCE

PRESENTED THAT HE FALSIFIED THESE OR ANY

OTHER CREDIT APPLICATIONS?

WHETHER AN ACCUSED’S CONVICTIONS FOR

CONSPIRACY AND CRIMINAL FRAUD MUST BE

REVERSED WHEN THERE IS NO DIRECT EVIDENCE

OF HIS GUILT AND THERE IS STRONG AND

REASONABLE EVIDENCE TO SUPPORT THE

PRESUMPTION OF INNOCENCE?

United States v. ROYAL BUICK, INC.

CERTIFICATE OF INTERESTED PERSONS AND

CORPORATION DISCLOSURE STATEMENT

First Union National Bank, Successor in

interest to Florida National Bank, a

victim

Hon. Wm. Terrell Hodges, United States

District Judge

Raymond E. LaPorte, Attorney

Counsel to defendant Brian Smith

James L. Powers

Assistant United States Attorney

Trial Counsel for the United States

Susan Raab

Assistant United States Attorney

Appellate counsel for the United States

Howard J. Shifke, Attorney

Counsel to defendants Eugene Marano and

Ralph Rodriguez

Dwight M. Wells, Attorney

Counsel to defendant David Roemer

D. Frank Winkles, Attorney

Susan H. Freemon, Attorney

Counselors to Royal Buick, Inc.

Tamra Phipps

Assistant United States Attorney

Reviewing appellate counsel for United

States

TABLE OF CONTENTS

TABLE OF AUTHORITIES ....... iii

OPINIONS BELOW ....+-+« «e+ eee it

JURISDICTIONAL STATEMENT ...... 1

CONSTITUTIONAL PROVISIONS INVOLVED . 2

STATEMENT OF THE CASE ........- 3

REASONS FOR GRANTING THE WRIT... . 6

ARGUMENT « «© es © se we © © © © © © © 8 Ue

I. IT WAS REVERSIBLE ERROR TO ADMIT

THE CUSTOMER CREDIT APPLICATIONS

PURSUANT TO RULE 803(6) .... 11

II. ‘THE IMPROPER ADMISSION OF THE

NINE CREDIT APPLICATIONS DENIED

MUGFORD HIS FUNDAMENTAL RIGHT

TO CONFRONT THE WITNESSES

AGAINST HIM IN VIOLATION OF

THE SIXTH AMENDMENT ...... 42

III. THE EVIDENCE WAS INSUFFICIENT

AS A MATTER OF LAW TO SUSTAIN

THE CONVICTIONS FOR FRAUD AND

COMBPIRACT « sce se ts tb ee 6 Oe

CONCIAISTON «§ 2 8 tt te 4s oe et

APPEMDIN . 1s te oe tt 6 ht te ee thle Uc

aan eae ianeia cane

TABLE OF AUTHORITIES

CASES

Bonner v. City of Prichard, 661 F.2d

news (2200 CAP. 3008) Ss a ee Se x es! SR

California v. Green, 399 U.S. 149, 90

S.Ct. 1930, 26 L.Ed.2d 489 (1970) .. 47

Canning v. United States, 119 F.2d. 130

(PER CAP. SPGLIs «+ te tt we te lt ce | CO

Clark v. City of Los Angeles, 650 F.2d

1033 (9th Cir.1981), cert. denied, 456

U.S. 927, 102 S.Ct. 1974,

72 L.Ed.2d 443 (1982) ........ £30

Datamatic Services, Inc. v. United

States, 909 F.2d 1029 (7th Cir.1990) 29

Direct Sales Co. v. United States, 319

U.S. 703, 63 S.Ct. 1265, 87 L.Ed. 1674

(1943) toe ce « 57

Douglas v. Alabama, 380 U.S. 415,

85 S.Ct. 1074, 13 L.Ed.2d 934 (1965) 47

Dutton v. Evans, 400 U.S. 74, 91 S.Ct.

210, 27 L.Ed.2d 213 (1970) ..... 50

Glasser v. United States, 315 U.S. 60,

62 S.Ct. 457, 86 L.Ed. 680-(1942) .. 57

Hoffman v. Palmer, 129 F.2d 976 (2d

Cir.1942), aff’d, 318 U.S. 109, 63 S.Ct.

757, 87 L.Ed. 645 (1942), and reh’g

denied, 318 U.S. 800, 63 S.Ct. 757,

SF themes S202 C4908) sce ew ta e6 6

iii

Holland v. United States, 348 U.S. 121,

75 S.Ct. 127, 99 L.Ed. 150 (1954),

reh’g denied, 348 U.S. 932,

75 S.Ct. 334, 99 L.Ed. 731 (1955) .. 56

Ingram v. United States, 360 U.S. 672, 79

S.Ct. 13, 3 L.Ed.2d 1503, reh’g denied,

361 U.S. 856, 80 S.Ct. 42, 4 L.Ed.2cd 96

¢ | a a a a a es er ee cr ee oe |

Johnson v. Lutz, 253 N.Y. 124,

170 NW.E.2d 517 (1930) .....++«-«e- 3!

Mattox v. United States, 156 U.S. 237,

15 S.Ct. 337, 39 L.Ed. 409 (1895) .. 47

McDaniel v. United States, 343 F.2d 785

(5th Cir.1965), cert. denied, 382 U.S.

826, 86 S.Ct. 59, 15 L.Ed.2d 71 (1965)

Ohio v. Roberts, 448 U.S. 56, 100 S.Ct.

2531, 65 L.Bd.2d S97 (1960) ..... 13

State v. McGann, 132 Ariz. 296,

645 P.2@ Gil (i9@2Z) . «~ ses ewe ce see ss SE

Sullivan v. Louisiana, U.S. P

113 S.Ct. 2078, 124 L.Ed.2d 182,

61 U.S.L.W. 4518 (1993) . .....-. 10

United States v. Snyder, 787 F.2d 1429,

(10th Cir.1986), cert. denied, 479

U.S. 836, 107 §.Ct.136, -93 L.Ed.2d 78

(1986) 30

United States v. Thompson, 811 F.2d

S41 (Sth Cir.i967) ..-+-+«-2«2-2«« « 60

United States v. Yates, 553 F.2d 518

(6th Cir.1977) ae 4 a ae 31

United States v. Porter, 821 F.2d 968,

cert. denied, 485 U.S. 934, 108 S.Ct.1108,

99 L.Ed.2d 269; and cert. denied by Bell

v. United States, 485 U.S. 934, 108 S.Ct.

1108, 99 L.Ed.2d 269 (1988) ..... 33

United States v. Weischenberg,

604 F.2d 326 (Sth Cir.1979) ..... 61

United States v. Oates, 560 F.2d 45,

65 (2d Cir.1977), aff’d.,

$91 F.2d 1332 (1978) ....4++-+- 2

United States v. Bell, 678 F.2d 547, 550

(5th Cir. 1982), aff’d on other grounds,

462 U.S. 356, 103 S.Ct. 2398, 74 L.Ed.2d.

638 (1983) * ©. * 56

United States v. Bortnovsky, 879 F.2d 30,

34 (2d Cir. 1989) bss 30

United States v. Grassi, 616 F.2d 1295

(Sth Cir.1980), cert. denied,

449 U.S. 956, 101 S.Ct. 363,

66 L.Ed.2d 220 (1980) A ne a,

United States v. Pazsint,

703 F.2d 420 (9th Cir.1983) ‘alee

United States v. Lieberman,

637 F.2d 95 (2d Cir.1980) ...... 16

Wilson v. Zapata Off Shore Co.,

939 F.2d 260, 271 (Sth Cir.1991) .. 29

STATUTES

18 U.S.C. § 371

18 U.S.C. § 1014

18 U.S.C. § 1341

18 U.S.C. § 1344

18 U.S.C. § 3231

28 U.S.C. § 1254 (1)

28 U.S.C.§ 1291

MISCELLANEOUS

Arizona Rules of Evidence 803

Rule 29 of the Federal Rules

of Criminal Procedure

Federal Rules of Evidence

re eee

801(d)(2)(D)

801(d)(2)(E)

803(6)

OPINIONS BELOW

The Court of Appeals for the Eleventh

Circuit did not render an opinion in this

case, but on June 3, 1993, entered an

Order affirming the convictions. A copy of

the Order is attached in the appendix

hereto, p. vi, infra. By Order entered

August 6, 1993, the Court of Appeals

denied Mugford’s Suggestion for Rehearing

en banc. A copy of the Order is attached

in the appendix hereto, p. vi, infra.

No opinion was written by the United

States District Court for the Middle

District of Florida.

JURISDICTIONAL STATEMENT

This petition for certiorari is made

pursuant to 28 U.S.C. § 1254 (1).

Jurisdiction for this appeal arises

pursuant to 28 U.S.C.§ 1291, froma final

judgment entered following ttrial and

conviction of appellant for violation of

federal conspiracy and fraud laws in the

United States District Court for the

Middle District of Florida before the

Honorable Wm. Terrell Hodges.

Jurisdiction arose in the district

court pursuant to 18 U.S.C. § 3231.

CONSTITUTIONAL PROVISIONS INVOLVED

United States Constitution, Amendment

V, provides in pertinent part:

"No person shall be .. . compelled

in any criminal case to be a witness

against himself, nor be deprived of life,

liberty, or property, without due process

of law;"

United States Constitution, Amendment

VI, provides in pertinent part:

"In all criminal prosecutions the

accused shall enjoy the right ... to be

confronted with the witnesses against

him."

STATEMENT OF THE CASE

Mugford became employed as a salesman

for Royal Buick in the spring of 1986. He

was a recent college graduate. He began

working for Royal Buick to learn the

automobile sales business in anticipation

of joining his father in the management of

Royal Oldsmobile Company, a Richmond,

Virginia automobile sales dealership. At

that time, Royal Buick was owned and

managed by a childhood friend of Mugford’s

father, Mr. Ralph Ghiotto. It was at his

father’s suggestion that Mugford sought

employment with Ghiotto’s company. (R42,

pp. 5-22).

Edwin W. Mugford, III, along with

other salesmen and sales managers of his

former employer, Royal Buick, Inc., a

Tampa, Florida automobile sales company,

and a bank official, was tried by a jury

for offenses charged in a _ superseding

federal grand jury indictment of numerous

criminal counts involving fraud _ and

conspiracy. The indictment generally

alleged that the defendants, including the

corporation, conspired to defraud Florida

National Bank (a federally insured bank)

by falsifying the credit applications of a

certain class of customers who otherwise

would not have qualified for used car

loans. (Doc.No.301).

At the close of the government’s

case-in-chief, most of the charges against

Mugford were voluntarily dismissed. The

trial court denied Mugford’s motion for a

verdict of acquittal pursuant to Rule 29

of the Federal Rules of Criminal Procedure

(F.R.Cr.P.). (R38, pp. 36-38, 136, 140-

141, 143). The case continued against

Mugford on the following counts:

Count 1, general conspiracy. 18

U.S.C. § 371.

Count 10, bank fraud involving the

credit application of customer Shelby

Pryor. 18 U.S.C. § 1344.

Count 19, mail fraud involving the

credit application of customer Samuel

Caperton. 18 U.S.C. § 1341.

Count 49, submitting a false loan

application of customer Tracey Kenty

to a federally insured bank. 18

U.S.C. § 1014.

Count 50, submitting a false loan

application of customer Jeffrey

Mosley to a federally insured bank.

18 U.S.C. § 1014. (App., pp. xii-

xxviii)

Mugford was acquitted on Count 50 (Doc.

No. 600), and convicted of the remaining

counts (Doc. No. 591).

On May 9, 1991, the trial court

overruled Mugford’s motion for judgment of

acquittal and sentenced him to three years

probation on the four counts and imposed a

fine of $200.00. (App., p. x). Mugford

timely appealed the convictions to the

Court of Appeals for the Eleventh

Circuit.(Doc. No. 664). On June 3, 1993,

that court affirmed the convictions

without opinion. No petition for re-

hearing was sought. Mugford filed a

Suggestion for Rehearing en banc on June

23, 1993. The Court of Appeals denied this

petition and also denied a panel rehearing

by Order entered August 6, 1993.

REASONS FOR GRANTING THE WRIT

The Eleventh Circuit’s finding that

the business records exception to the

Hearsay Rule permits admission of hearsay

evidence when the party supplying the

information was not acting in the regular

course of business and there was no

guarantee of the trustworthiness of the

information directly conflicts with the

construction of the Rule as stated in the

decisions of this Court, other federal

courts of appeal, and at the highest

courts of at least two of the states.

Rule 803(6) of the Federal Rules of

Evidence does not permit the introduction

into evidence of the expressed or implied

hearsay statements of third parties

contained in business records when "...the

source of information or the method or

circumstances of preparation indicate lack

of trustworthiness." Wilkerson stated that

the source of the information in each of

the credit applications at issue was the

customer; and, by later implication, that

the customer could misstate his credit

history because most creditors did not

report to the credit bureau and there was

no means by which the salesman taking the

information couid verify it (R17, pp. 176-

73 R18, p.12). Even after hearing this

testimony, the district court allowed the

Government to introduce into evidence

under the 803(6) exception to the hearsay

rule eleven credit applications in which

Mugford was the named salesman.

This ruling was plain error. It was

contrary to the Advisory Committee Notes

(1987 Amend.) to Rule 803(6), the

decisions of the federal courts of appeal

for the Second, Fifth, Sixth, Seventh,

Ninth and Tenth Circuits, and of the

courts of last resort of the states of New

York and Arizona.

Because the customer supplying the

information in nine- of the - credit

applications was not called to testify,

those credit applications alone formed the

basis for the convictions on appeal.

It is patently obvious the

Government sought admission of the

documents en masse to obviate the need to

call each customer as a witness at trial

and to establish by implication that

Mugford falsified the credit applications.

However, having failed to convince

the jury that Mugford falsified Mosley’s

credit application, and later conceding

that another defendant falsified Burns’s

credit application, the Government relies

only on the nine remaining credit

applications as "proof" that Mugford

falsified the credit applications of

Caperton, Pryor, and Kenty to support his

convictions on substantive counts 10, 19

and 49, along with the other six credit

applications to support the conviction for

conspiracy. There is no legal precedence

to support the use of the questioned

documents for such a purpose under the

facts in this case, and the cases cited in

the Government’s brief do not apply.

The admission of the documents’ was

* The documents in question are the

credit applications contained in

Government Exhibits 9, 41, 53, 285, 287,

289, 291, 293, and 295. The applications

in Government Exhibits 3 (customer Hedrick

Burns) and 7 (customer Jeffrey Mosley) are

not subject to objection because these

customers testified.

prejudicial error because it denied

Mugford his fundamental right under the

Sixth Amendment to confront the witnesses

against him, and denied him due process

under the Fifth Amendment because it

reduced the government’s burden to prove

each and every element of the offenses

charged beyond a reasonable doubt.

The Eleventh Circuit and the district

court erred in refusing to reverse the

convictions when, as a matter of law, the

evidence created at most a mere

At pages 29-32 of the Government’s

appellate brief (hereafter, this will be

referred to as "GB"), the applications are

discussed in detail. Mugford adopts the

description of the false statements as

described therein, but disputes that his

convictions can be sustained on the basis

of the fraud alleged in rebates and down

payments shown on the credit applications

for customers Pryor (53A), Johnson (285A),

Delgado (291A), and Hartman (293A),

because the evidence at trial was that the

Managers closed the loans and _ were

responsible for those parts of the credit

applications. (R19, pp.35, 36; R33, pp.

153, 154).

possibility Mugford falsified the nine

credit applications in evidence about

which the customers did not testify. The

failure to reverse was prejudicial error

and is contradictory to this Court’s

recognition in Sullivan v. Louisiana,

U.S. ____, 113 S.Ct. 2078, 124 L.Ed.2d

182, 61 U.S.L.W. 4518 (1993) that the

prosecution must prove all elements of the

offense charged and must persuade the

factfinder beyond a reasonable doubt of

the facts necessary to establish each of

those elements, and its holding in Ingram

v. United States, 360 U.S. 672, 79 S.Ct.

13, 14, 3 L.Ed.2d 1503, reh’g denied 361

U.S. 856, 80 S.Ct. 42, 4 L.Ed.2d 96

(1959), that convictions obtained by

piling inference upon inference must be

reversed.

ARGUMENT

I. IT WAS REVERSIBLE ERROR TO ADMIT THE

CUSTOMER CREDIT APPLICATIONS PURSUANT

TO RULE 803(6)

Notwithstanding the Government’s

alternative arguments in its appellate

brief (at pages 104-107) that 1) the

credit applications were admissible

pursuant to other hearsay exceptions, and

2) the credit applications were not

hearsay because they were not admitted for

the truth of the matters asserted therein,

the trial court determined them to be

hearsay and admitted them under the

business records exception to the hearsay

rule under Rule 803(6) of the F.R.Ev.

(R17, p. 171). The only limitation the

trial court placed on the use of the

applications was that it would exclude

those not within the time-frame of the

alleged conspiracy. Ibid.

While Mugford does not dispute the

admissibility of the Mosley and Burns

applications because the customers later

authenticated these applications,

admission of the remaining nine

applications was reversible error. Without

testimony from the customer authenticating

them, those credit applications lacked the

requisite "indicia of reliability,"

required for admission under a proper

exception to the hearsay rule. See, Ohio

v. Roberts, 448 U.S. 56, 63, 100 S.Ct.

2531, 2539, 65 L.Ed 2d 597 (1980) and

cases recited therein.

This being the sole evidence against

him, the error was not harmless. There was

no other evidence linking Mugford to the

conspiracy or to the falsification of the

other two credit applications. Absent the

improper admission of the applications,

Mugford’s convictions could not stand.

A. The Credit Applications Were Not

Otherwise Admissible Under Any

Exception to the Hearsay Rule

The Government contended on appeal

that the documents would have been

otherwise admissible under the following

exceptions to the hearsay rule: 1) as

statements of Royal Buick agents

(801(d)(2)(D))% oF 2) as statements of

coconspirators (801(d)(2)(E)) (G.B. at

107). The appeals court apparently

concurred in this analysis, but it is an

incorrect application of the rules of

evidence for the following reasons.

To begin, Rule 801 of the Federal

Rules of Evidence defines the relevant

terms applicable to the section on

hearsay. Rule 801(@a) defines "statement"

as "(1l) an oral or written assertion;"

Rule 801(b) defines "declarant" as "a

person who makes a statement;" and Rule

801(c) defines “hearsay” as "a statement,

other than one made by the declarant while

testifying at the trial or hearing,

| “_

offered in evidence to prove the truth of

the matter asserted." The terms so defined

must be used in analyzing the proffered

evidence to reach a determination as to

their admissibility. Critical to the

analysis of this case is who is the

declarant in the questioned credit

applications.

The Government contends Mugford is

the declarant because his name appears on

the face of the credit applications and in

the other documents as the salesman. In

making this assertion the government

relies first on Wilkerson’s testimony that

the salesmen were instructed to write them

from information supplied by the customer

(R17, jp. 177), and second, on_ the

testimony of Wilkerson and others that

employees of the dealership made false

entries on them. (R21, pp. 36, 37; R27,

pp. 207-210). The Government’s own

evidence is insufficient to establish this

premise for the following reasons.

Wilkerson’s testimony that the

customer supplied the information to the

salesman imports that the customer is the

person making the statement. By definition

the person making the statement is the

"declarant." F.R.Ev. 801(b). The document

itself supports that conclusion because

the customer signed each one attesting to

the veracity of the information. This

evidence shows the salesman is the mere

scrivener of the customer’s oral statement

and is not the declarant.

Wilkerson’s testimony and the

testimony of others that managers and

other employees of the dealership

falsified the credit applications gives

rise to an inference that someone other

than the customer may be the declarant of

the false information. But there was no

evidence that Mugford falsified those in

evidence.

His name as the salesman on the

credit applications does not alone

identify him as the declarant or

scrivener. See, United States Vv.

Lieberman, 637 F.2d 95 (2d Cir.1980)

[absent proof of independent verification

by hotel employee, guest registration card

not admissible under business records

exception to hearsay rule to prove person

named therein was the defendant though it

was admissible to prove someone using

defendant’s name registered at hotel on

that date]. No testimony established it

was the regular practice of Royal Buick to

verify that the salesman shown on the

credit application was the salesman

handling the transaction, though there was

other evidence establishing salesmen

sometimes wrote up applications using

another’s name. (R27, pp. 207-210).

No customer testified that Mugford

was the salesman on any of the nine

transactions in issue. No handwriting

expert or other person familiar with

Mugford’s handwriting was called to

testify Mugford wrote the applications in

question.

To the contrary, as to one of the

credit applications not at issue here, the

government’s own witness testified that

the only false entries (Ward’s and VISA)

on Hedrick Burns’ credit application was

in the handwriting of defendant Rick

Taylor, although Mugford was shown on the

face of the application as the salesman.

(Gov’t Exhibit 3A; R33, pp. 194, 195).

Since it failed to prove Mugford was

connected to the credit applications, and

there was no other evidence (foundation or

otherwise) of his participation in the

‘eile

conspiracy alleged, the Government failed

to establish the admissibility of the

documents under either the 802(d)(2)(D)

and (E) exceptions, or under any other

exception to the hearsay rule.

B. The Documents Contained Hearsay That

the Government Used to Mugford’s

Detriment

However, confusion abounds in the

record and in the Government’s brief as to

the purpose for which the credit

applications were introduced. In addition

to the 802(d) exceptions, the Government

states the credit applications were

admissible as non-hearsay because they

were not introduced for the truth of the

matters asserted, but merely to establish

that statements relating to the customer’s

financial condition and credit history

were made which the Government, though

other evidence showed to have been false.

Taking the Government at its word,

and if the documents tend to prove an

essential element of the crime charged.

But the Government’s argument is flawed

because the documents were used not only

to prove an essential element of the

crime, but also to prove Mugford was the

person committing the crime.

In no less than three instances in

its appellate brief, the Government admits

the disputed credit applications were

necessary to prove Mugford’s participation

in the conspiracy (G.B. at 60), his

responsibility for the nine false ‘oan

the argument has merit only if the credit

applications were used for that purpose

applications (G.B. at 61), and that they

| "were the most significant documents in

| the files, those needed to prove the

fraudulent offenses." (G.B. at 108).

For the reasons previously stated

above, the documents themselves’ were

—=~eama

insufficient to identify Mugford as the

declarant of the false statements in them.

There was no foundation laid to link him

to the credit applications before their

introduction so they were not probative

evidence of his participation in the

conspiracy alleged or of criminal conduct

on his part.

Had the Government sought the

admission of the documents for the non-

hearsay purpose stated, it would have

deleted Mugford’s name from them until

such time as it laid a foundation to link

him to the questioned falsifications.

Rather, by admitting the applications

without deleting his name the Government

used them not only to demonstrate a false

entry was contained in them. but also to

prove Mugford was the person who falsified

them.

While the credit applications may

srw

have been relevant to demonstrate that

each contained one false entry, they were

not relevant to prove the declarant was

Mugford without other evidence linking him

to the false statements.

That the Government was aware of the

necessity to offer independent evidence of

Mugford’s authorship of the false

information to the questioned credit

applications is demonstrated by its

attempts to link him to the _ false

statements in the Mosley and Burns credit

applications through the testimony of

those customers.

Mosley (whose credit application

formed the basis for Count 50) was called

first to offer evidence against Mugford.

He was unable to identify Mugford as his

salesman by face or proper name, although

he testified immediately before he failed

to make an in-court identification that he

recalled what his salesman looked like and

could identify him. (R33, p. 20). On

examination by Mugford’s counsel, Mosley

was so discredited as a witness that the

jury acquitted Mugford on the charges in

Count 50.

The other customer called by the

Government to link Mugford to a false

credit application was Hedrick Burns. He

was unable to properly identify Mugford by

name and was not even asked to attempt an

in-court identification. Like Mosley,

Burns’ testimony was discredited upon

examination by the defense. As a result of

Burns’ poor testimony and the testimony of

coconspirator Glasgow (R33, pp. 194, 195),

the Government’s attorney conceded in his

closing argument to the jury that the

false information on the Burns application

was not Mugford’s work, but was placed on

the credit application by codefendant Rick

Taylor. (R44, pp. 43, 44).

As in the instances of Mosley and

Burns, the remaining credit applications

in issue merely indicate, not identify,

Mugford as the salesman in the

transactions. They do not, by themselves,

prove him to be the declarant of the false

information contained in them. But that

was the purpose for which the Government

used their admission.

In the apparent belief that the whole

is greater than the sum of its parts, the

Government sought to admit the credit

applications en masse to accomplish what

it failed to achieve through the testimony

of Mosley and Burns; to-wit, the

identification of Mugford as the person

falsifying the credit applications.

Somehow, nine disputed documents were to

buttress each other as a substitute for

the lack of other evidence necessary to

authenticate the individual documents. The

use of the nine applications to identify

Mugford as the perpetrator of the crimes

alleged refutes the Government’s claims

that they were not offered for the truth

of the matters asserted.

C. Because They Did Not Meet’ The

Threshold Requirements of The

Business Records Exception fhe Credit

Applications Were Inadmissible

Although the Government made no

proffer for the intended use of the

documents when objections were made to

their introduction, it is obvious the

court determined them to be hearsay

because it admitted them pursuant to the

803(6) exception to the hearsay rule. In

actuality, the documents contained two

levels of hearsay.

The first level of hearsay was the

information in them was contained in

Royal’s records. Apparently, this would be

admissible under the 803(6) exception to

the hearsay rule if its relevance was

shown to the prosecution’s case. As

discussed above, the dual use made of them

by the Government primarily was to show by

implication that Mugford was the declarant

who falsified the credit applications.

Standing alone they were not relevant for

that purpose.

However, the second level of hearsay

was that of the customer’s assertion,

implied from the manner in which the

Government presented its case, that the

false information was from someone at the

dealership rather than the person

supplying the information to the

dealership. By not calling the customer to

testify about the credit application, the

jury was allowed to improperly infer that

the customer was without fault.

This is not the law and its use in

this manner. flies in the face of the

personal protections underlying the

hearsay rule. The various exceptions to

the hearsay rule permit the introduction

of hearsay provided the evidence falls

within a class deemed reliable. Among the

highly regarded exceptions is the business

records exception because in traditional

settings the hearsay is reliable. But not

all business records qualify.

In applicable part, Rule _ 803(6)

provides that the admission of records

kept in the regular course of a business

are not excluded by the hearsay rule

ee , ; unless the source of

information or the method or

circumstances of preparation indicate

a lack of trustworthiness."

A fair reading of the 803(6) does not

indicate that if the questioned document

meets a part of the qualification for

admission, then the trial court may admit

the document. Rather, the exception

imports that the trial judge determine

that all requisite factors are met to

insure its veracity and reliability. To

hold otherwise frustrates the purpose and

intent of the Rule, which is to permit the

admission of evidence not otherwise

admissible as hearsay.

The Second Circuit noted 16 years

ago, Rule 803 is "...not designed to

insure the admissibility of the questioned

evidence [but] only designed to prevent

its automatic exclusion on hearsay

grounds," United States v. Oates, 560 F.2d

45, 65 (2d Cir.1977), aff’d., 591 F.2d

1332 (1978). There has been no shift in

the law on that concept in the interim.

Stated in other words, as to hearsay

evidence the business records exception is

a sieve, not a floodgate.

By upholding Mugford’s convictions

mani est ¢

the Eleventh Circuit determined hearsay

evidence to be admissible even when the

most basic prerequisites of the applicable

exception have not been met. This marks an

unprecedented departure not only from the

plain language of the law, but also from

the Advisory Committee Notes to Rule

803(6) * and the decisions of the courts

of appeal of the other federal judicial

circuits and state courts which have

* In relevant part, the Advisory

Committee [1987 Amend.] notes as follows:

Sources of information presented no

substantial problem with ordinary business

records. All participants, including the

observer or participant furnishing the

information to be recorded, were acting

routinely, under a duty of accuracy, with

employer reliance on the result, or in

short, "in the regular course of

business." If, however, the supplier of

the information does not act in the

regular course, an essential link is

broken; the assurance of accuracy does not

extend to the information itself, and the

fact that it may have been recorded with

scrupulous accuracy is of no avail.

considered this question. °

3 See, Wilson v. Zapata Off Shore Co.,

939 F.2d 260, 271 (5th Cir.1991) [hospital

record not admissible under Rule 803(6)

because it contains double hearsay where

the source of the information is an

outsider and therefore the record does not

have the presumption of accuracy that

documents prepared in the regular course

of business have]; Datamatic Services,

Inc. v. United States, 909 F.2d 1029,

1032-33 (7th Cir.1990) [where source of

information in letter was outsider Rule

803(6) does not by itself permit the

admission of a business record]; United

States v. Bortnovsky, 879 F.2d 30, 34 (2d

Cir. 1989) [although insurance adjuster’s

report might otherwise qualify as business

record within meaning of 803(6), third

party’s statement contained therein does

not satisfy the rule’s requirements

because there was no showing that source

had a duty to report the information that

he was quoted as having given]; United

States v. Snyder, 787 F.2d 1429, 1433-34

(10th Cir.1986), cert. denied, 479 U.S.

836, 107 S.Ct. 134, 93 L.Ed.2d 78 (1986)

[statements of inmates incorporated into

police officer’s report bars admission of

the report because statements not entitled

to presumption of reliability and

regularity accorded a business record and

introduction of inmates’ statements would

impermissibly insulate them from the test

of cross-examination]; United States v.

Pazsint, 703 F.2d 420, 424-25 (9th

Cir.1983) [tapes of emergency calls not

admissible though made in the regular

(continued...)

7(...continued)

course of business because callers under

no business duty to report and cannot be

given the presumption of reliability and

accuracy]; Clark v. City of Los Angeles,

650 F.2d 1033, 1037 (9th Cir.1981), cert.

denied, 456 U.S. 927, 102 S.Ct. 1974, 72

L.Ed.2d 443 (1982) [diary replete with

hearsay and multiple hearsay not

independently admissible is not otherwise

admissible under business records

exception to hearsay rule}; United States

v. Lieberman, 637 F.2d 95, 100-101 (2d

Cir.1980) [while hotel guest registration

card was admissible to show someone

representing himself as defendant

registered at hotel on particular date,

absent proof that it was regular course of

business of hotel employee to

independently verify such information,

registration card not admissible to show

defendant was the person named]; and

United States v. Yates, 553 F.2d 518, 521

(6th Cir.1977) [finding that part of

letter not within business records

exception because it contained statement

outside the scope of business]. See also,

Hoffman _v. Palmer, 129 F.2d 976, 980 (2d

Cir.1942), aff’d, 318 U.S. 109, 63 S.Ct.

757, 87 L.Ed. 645 (1942), and reh’g

denied, 318 U.S. 800, 63 S.Ct. 757, 87

L.Ed. 1163 (1943) [deceased train

engineer’s statement contained in employer

railroad’s memorandum of interview of him

relative to accident not admissible under

common law business records exception to

hearsay rule where it appears source of

information had more than minimal or

(continued...)

ela aaa a

While the trial court did inquire of

the testifying witness if the records were

of the type normally maintained in the

regular course of Royal’s business (R17,

pp. 170, 171), it failed to make the

second inquiry necessary to determine if

either the source of the information

indicated a lack of trustworthiness or if

the method or circumstances of preparation

indicated a lack of trustworthiness. Rule

803(6). Inherent in this determination was

7(...continued)

marginal motive to misrepresent]; Johnson

v. Lutz, 253 N.Y.124, 127-28, 170 N.E.2d

517 (1930) [police officer’s accident

report incorporating bystander’s

statements not admissible under business

records exception to hearsay rule because

bystander under no business duty to

report]; and State v. McGann, 132 Ariz.

296, 645 P.2d 811, 813-814, at footnote l

(1982) [customers’ statements that their

signatures on credit card receipts were

not authorized, whether shown directly by

the statements in the records by oil

company’s business’ practices, barred

admission of oil company records business

record under state’s evidence rule

803(6)].

EEE

the trial judge’s duty to be satisfied

that the source of the information, the

customer, had "no particularly powerful

motive to misrepresent." Hoffman __v.

Palmer, supra., 129 F.2d at 980. One need

look no further in the record than

Wilkerson’s testimony to conclude that the

credit applications satisfied neither

requirement, and the trial court failed to

make the necessary inquiries.

The defendants’ voir dire of

Wilkerson bears scrutiny because it raises

serious questions as to his qualification

as the witness through which the documents

could be admitted. He testified he "had

access" to all the files, but was only

familiar with those representing his

personal sales transactions. He admitted

he was not the custodian of the records,

and had left the employment of Royal Buick

in 1988, more than two years prior to his

testimony (R17, pp. 166-171). Mere access

to business records and familiarity with

them is not sufficient to qualify a

witness for the introduction of business

records. See, United States v. Porter, 821

F.2d 968, cert. denied, 485 U.S. 934, 108

S.Ct.1108, 99 L.Ed.2d 269; and cert.

denied by Bell v. United States, 485 U.S.

934, 108 S.Ct. 1108, 99 L.Ed.2d 269 (1988)

[security officer having access to files

of closed company not a qualified witness

for introduction of company’s personnel

cards because he did not work in personnel

office and was not familiar with company’s

record keeping requirements].

After the court admitted the

documents it was learned through Wilkerson

the source of the information in the

credit applications was the customer, not

the person writing it or another employee

of Royal Buick. The foundation thus laid

by Wilkerson for admission was that the

customer supplied the information in them

and the salesman wrote what the customer

related (R17, pp. 176, 177). He failed to

State that the salesmen taking the

information had a duty or the means to

verify the information. Wilkerson’s

testimony also indicated the types of

customers targeted by the "Betty Moses"

program were those having bad credit or

poor credit histories (R18, p. 20).

That foundation testimony established

that the source of the information in each

of the credit applications was a person

acting outside the scope of the business

and not an employee having a duty to

report accurately; and, who, because they

wanted to purchase a car and had bad or

poor credit, possessed an obvious motive

to lie.

Given that testimony, the trial court

was required by the plain language of Rule

803(6) to exclude the credit applications

for two reasons: first, because the source

of the information was not acting in the

regular course of business; and second,

because the methods or circumstances of

preparation indicated a lack of

trustworthiness.

The trial court disregarded these

factors in making its evidentiary ruling,

relying instead on the testimony that it

was the regular practice of the business

to keep such records. (R17, p. 171).

Notwithstanding that the defense

objection to admission of the credit

applications did not address specifically

these arguments,‘ the court’s ruling was

*‘ By pre-trial order and agreement of

the several defense counsel, counsel for

Royal Buick was designated by the court as

lead counsel for purposes of making

objection. Current counsel did not

represent Mugford at the trial.

plain error having a devastating effect on

Mugford’s defense.

In this criminal prosecution for

fraud the ultimate jury question was who

was the person making the false statement,

the person writing the information (the

Salesman) or the declarant supplying it

(the customer). The government expressed

no intent to call the nine customers, nor

did it offer explanation that the customer

was unavailable to testify. The testimony

of the foundation witness was at best

equivocal as to the source of the

information in the documents. The records

themselves do not reveal the identity of

the author of the false information. Under

such circumstances the records are without

probative value absent corroborative

evidence to show the defendant authored

the falsities. For these reasons that

evidence should have been excluded.

_ iis ia ii,

Review of a recent Arizona Supreme

Court decision evaluating a similiar fact

pattern illustrates the problems created

by the liberal construction of the

business records exception applied by the

trial court in this case.

In State _v. McGann, 132 Ariz. 296,

645 P.2d 811, 813-14, (1982), McGann was

convicted on each of four counts charging

he had forged the signature of a customer

of the gasoline service station where he

worked to obtain the cash equivalents for

those charges. Faced with a very similar

set of facts on appeal, the Arizona

Supreme Court reversed the appellant’s

fraud convictions because the trial court

improperly admitted hearsay evidence

fundamentally damaging to the rights of

the accused. The complaining customer

involved in the four counts in the

indictment testified at trial that the

Signatures on the four questioned credit

card receipts were not his, nor authorized

by him.

However, 57 credit card receipts of

three other customers who did not testify

were admitted through the service station

owner, who testified that pursuant to its

usual business practice, the oil company

back-billed him for the charges evidenced

by those receipts upon the customers’

representations that the signatures were

unauthorized. At footnote 1 to the

Opinion, the Arizona Supreme Court said:

It could be argued that the evidence

of the back-billing by Chevron fits

within the business records exception

of Rule 803(6).° The exception does

> The source of Arizona Rules of

Evidence 803 is Rule 803 of the Federal

Rules of Evidence. The business records

exception is essentially identical to Rule

303(6) of the federal rules. The text

follows:

(6) Records of regularly conducted

(continued...)

not apply in this case for _ two

reasons. First, the station manager

was not a custodian of Chevron’s

records or an otherwise qualified

Chevron employee as required by Rule

803(6)(e). Second, the evidence

°(...continued)

activity. A memorandum, report, record, or

data compilation, in any form, of acts,

events, conditions, opinions, or

diagnoses, if: (a) Made at or near the

time of the underlying event, (b) by, or

from information transmitted by, a person

with first hand knowledge acquired in the

course of a regularly conducted business

activity, (c) made and kept entirely in

the course of that regularly conducted

business activity, (d) pursuant to a

regular practice of that business

activity; and (e) all of the above are

shown by the testimony of the custodian or

other qualified witness.

However, such evidence shall not be

admissible if the source of information or

the method or circumstances of preparation

indicate a lack of trustworthiness or to

the extent that portions thereof lack an

appropriate foundation.

The term "business" as used in this

paragraph includes business, institution,

association, profession, occupation, and

calling of every kind, whether or not

conducted for profit."

involves two levels of hearsay, and

the second does not fit within the

exception. Chevron’s records are the

first level of hearsay. The fact that

Chevron’s records show that’ the

station manager was back-billed is

within the business records

exception.

But customers’ statements that their

signatures were unauthorized, whether

shown directly by the statements in

the records or by inference from

Chevron’s business practices,

constitute a second level of

potential hearsay. . . In the instant

case, the effect of the_ station

manager’s testimony was to introduce

the out-of-court statements of [the

customers who did not testify] to

Chevron to prove that their

signatures were not authorized. The

taint of hearsay is not dissipated

merely because they are contained in

business records. The testimony was

hearsay not within the _ business

records exception. [emphasis added]

Though not apparently required to do so to

reach its conclusion, the Arizona Supreme

Court sagely interpreted the business

records exception exactly as the trial

court should have done in Mugford’s case.

It is obvious in this case the trial

court failed to make the proper ruling and

the court of appeals failed to reverse it.

As a result, Mugford was convicted on this

erroneously admitted evidence because the

jury was allowed to rely upon it to

improperly infer the customers’ statements

would be that they did not lie to Mugford.

II. THE IMPROPER ADMISSION OF THE

NINE CREDIT APPLICATIONS DENIED

MUGFORD HIS FUNDAMENTAL RIGHT TO

CONFRONT THE WITNESSES AGAINST

HIM IN VIOLATION OF THE SIXTH

AMENDMENT

Under the authority of McDaniel v.

United States, 343. F.2d £785 (5th

Cir.1965), cert. denied, 382 U.S. 826, 86

S.Ct. 59, 15 L.Ed.2d 71 (1965), the trial

judge was required before making his

evidentiary ruling on the admissibility of

the credit applications "to determine in

each instance whether such documents are

constitutionally admissible under the

Sixth Amendment guarantee of

confrontation."® The record is bare the

trial court made such a determination

except to the extent that he permitted

them to come in under the 803(6) exception

to the hearsay rule.

The Sixth Amendment to the

Constitution guarantees an accused the

right to confront the witnesses against

him. In pertinent part it provides

"In all criminal prosecutions

the accused shall enjoy the

right . . . to be confronted

with the witnesses against him."

In the convictions subject to this appeal,

the sole "witnesses" against Mugford were

the credit applications. Not one customer

testified that Mugford, rather than the

customer himself, was the source of the

false information in the credit

° In Bonner v. City of Prichard, 661

F.2d 1206 (llth Cir.1981), the Eleventh

Circuit adopted as binding all decisions

of the Fifth Circuit made prior to the

close of business September 30, 1981.

application at issue. As _ specifically

explained in the preceding section of the

brief, those documents, even if they were

properly admitted, were insufficient

evidence to support the convictions

because the source of the information was

not shown by other evidence to be Mugford.

But because the credit applications

were improperly admitted, the Government

did not have to call the customers as

witnesses. Rather, the court’s ruling

wrongfully permitted the Government to

convey to the jury two implications of

fact not supported by the evidence in the

case: 1) that because none of the

customers was charged with any crime the

Government had concluded from its

investigation that the customers wexe not

the sources of the false information in

the credit applications; and, 2) had they

been called to testify, each customer

would deny he authorized the false

statements in the credit applications.

In effect, the Government’s burden of

proving the necessary elements of each of

the crimes charged which related to the

nine questioned credit applications was

substantially reduced, if not entirely

eliminated. Although the testimony of its

own witnesses established that the sources

of the false information could be the

customer (R17, p. 177), another salesman

(R27, pp. 207-210), a sales team leader or

manager (R21, pp. 36, 37; R33, pp. 194,

195), and not necessarily the salesman

shown on the application itself, the use

of the credit applications without a

limiting instruction or the need to call

the customer to authenticate it, identify

the salesman, and testify as to the source

of the false information under cross-

examination, was plainly wrong. The

iia i

Government could (and did successfully)

wave the nine credit applications before

the jury, point to the false information

each contained, and argue that’ the

documents alone proved Mugford guilty of

the three substantive counts and the

conspiracy count charged.

As previously stated herein, the

Arizona Supreme Court in McGann, supra.,

alertly recognized the “fundamental error"

("error as goes to the foundation of the

case, or which takes from the defendant an

essential right,” 645 P.2d at 813) posed

by the wrongful use of the business

records hearsay exception in such a manner

as affords the jury to consider the

implied statements of third parties which

are contained in business records:

"...The effect oof the station

manager’s testimony was to introduce

the out-of-court statements of [the

customers] to Chevron to prove that

their signatures were not

ease aeeisinmindainn insite

eee

authorized." 645 P.2d at footnote l,

p. 814.

The fundamental right referred to, though

not specifically stated in the opinion,

was the right to confront the witnesses on

the issue of whether their signatures were

authorized by them. This is exactly the

issue posed in this appeal.

This Court has long acknowledged that

the "the hearsay rules and the

Confrontation Clause are generally

designed to protect similar values."

California v. Green, 399 U.S. 149, 155, 90

S.Ct. 1930, 1933, 26 L.Ed.2d 489 (1970).

The Confrontation Clause "was intended to

exclude some hearsay * * * [and] reflects

a preference for face-to-face

confrontation at trial." Ohio v. Roberts,

448 U.S. 58, 63, 100 S.Ct. 2531, 2537, 65

L.Ed.2d 597 (1980), citing Green, supra.,

399 U.S. at 157, 90 S.Ct. at 1934 ["*it is

this literal right to ‘confront’ the

witness at the time of trial that forms

the core of the values furthered by the

Confrontation Clause"} and Douglas _ v.

Alabama, 380 U.S. 415, 418, 85 S.Ct. 1074,

1076, 13 L.Ed.2d 934 (1965). Quoting

Mattox v. United States, 156 U.S. 237, at

242-243, 15 S.Ct. 337, at 339, 39 L.Ed.

409 (1895), the Roberts opinion continues:

"In short, the Clause envisions

‘a personal examination and

cross-examination of the

witness, in which the accused

has an opportunity, not only of

testing the recollection and

sifting the conscience of the

witness, but also of compelling

him to stand face to face with

the jury so they may look at him

and judge by his demeanor upon |

the stand and the manner in

which he gives his testimony |

whether he is worthy of

belief.’" 448 U.S. at 63-64, 100

S.Ct. at 2536-2537.

The search for truth underlies this right

of an accused to confront those whose

words would serve to deny him personal

liberty and stain his name.

However, exceptions exist. In the

general case when a hearsay declarant is

not present for cross-examination at

trial, his prior statement can be admitted

if there is a required showing that he is

unavailable and if his statement bears

"adequate ‘’indicia of reliability’." Id.,

at 2539. "Reliability can be inferred

without more in a case where the evidence

falls within a firmly rooted hearsay

exception. In other cases, the evidence

must be excluded, at least absent a

showing of particularized guarantees of

trustworthiness." Id.

But in this case the evidence was

improperly admitted outside a "firmly

rooted hearsay exception." The source of

the information was not acting within the

scope of employment and possessed a strong

motivation to misrepresent his credit

_ iia

history and financial status to qualify

for a car loan. The business records

exception was therefore wrongfully applied

as the basis for admission of the credit

applications, and no other hearsay

exception applied to permit their

introduction.

This is unlike the cases decided by

this Court which have allowed hearsay

evidence to be considered under

circumstances in which the hearsay was

clothed with adequate indicia of

reliability.

For instance, in Dutton v. Evans, 400

U.S. 74, 91 S.Ct. 210, 27 L.Ed.2d 213

(1970), the confrontation issue arose

"because the jury was being invited to

infer that [the non-testifying declarant, ]}

Williams had implicitly identified Evans

as the perpetrator of the murder when he

blamed Evans for his predicament [in a

reel

statement made to Shaw, who did testify]."

Id., 800 U.8., at 88, 91 8.Ct., at 219.

This is not unlike the Government’s use of

the credit applications here to invite the

jury to infer Mugford was the person

falsifying the credit applications, rather

than the customer or someone else. While

this Court in Dutton, found there were at

least four factors surrounding the

circumstances of Williams’ statement to

Shaw to clothe it with "indicia of

reliability,” 400 U.S., at 89, 91 §S.Ct.,

at 219-220, to properly place it before

the jury without confrontation of the

declarant, no such circumstances exist in

this case to render the implied statements

of the customers “adequately reliable."

The admission of the credit applications

without customer testimony radically

departs from the prior decisions of this

Court which "make it clear that the

mission of the Confrontation Clause is to

advance a practical concern for the

accuracy of the truth-determining process

in criminal trials by assuring that ‘the

trier of fact has a satisfactory basis for

evaluating the truth of the prior

statement.’" Id., quoting, California v.

Green, 399 U.S., at 161, 90 S.Ct, at 1936.

In fact, no better example of the

effectiveness of cross-examination to

ferret out the truth, nor the injustice

that results when the right is impugned by

judicial error, exists than in the matter

now before this highest Court.

Only two of the eleven customers

whose credit applications were in evidence

against Mugford were called: Mosley and

Burns. The Government made no

representation that the other nine were

unavailable. Because the Government called

no other customers whose credit

applications showed Mugford to be the

salesman, it must be inferred that these

two witnesses represented, in the

Government's opinion, the strongest

testimony available to prove Mugford

falsified customer credit applications.

When Mugford - was afforded his

constitutional right to "test the

recollection and sift the conscience" of

these witnesses, he was proved not guilty

of fraud. Neither customer Mosley nor

customer Burns could identify him as the

salesman in their transactions, neither of

them could properly recall his name, and

each was shown by other evidence presented

in Mugford’s defense to have lied to the

jury on direct examination.

The jury, being afforded the

opportunity to "look at [Mosley] and judge

by his demeanor upon the stand and the

manner in which he [gave] his testimony

whether he [was] worthy of belief," did

not judge him well. Mosley was found by

them not to be "worthy of belief" and the

jury acquitted Mugford of the charges in

Count 50.

Although the credit application of

Burns did not figure in a substantive

count of the indictment, it did have value

to the Government’s case as to the

conspiracy charge. But as a witness to

Mugford’s wrongdoing, Burns fared no

better than Mosley. His testimony was so

discredited on Ccross-examination the

Government conceded in its Closing

argument to the jury that Mugford did not

put the false information on the Burns

credit application, Taylor did. (R44, pp.

42, 43).

As to the remaining nine credit

applications, no other customer testified,

including those whose credit applications

were the basis for the substantive counts

of mail fraud, bank fraud and submitting a

false loan application to a federally

insured bank. No coconspirator, indicted

or unindicted, testified Mugford either

knew of the conspiracy or participated in

it.

Given the opportunity to confront the

nine other customers in open court,

Mugford may have been able to discredit

their evidence as he was able to do with

Burns and Mosley. But because: he was

denied this fundamental right of

confrontation, Mugford, an innocent man,

was convicted of crimes he did not commit.

Iil. THE EVIDENCE WAS INSUFFICIENT AS

A MATTER OF LAW TO SUSTAIN THE

CONVICTIONS FOR FRAUD AND

CONSPIRACY

In order to prove Mugford guilty of

the three remaining substantive fraud

counts and the conspiracy count’ the

Government aad to prove all elements of

each offense charged and persuade the jury

beyond a reasonable doubt of the facts

necessary to establish each of those

elements. Sullivan v. Louisiana, U.S.

e 113 S.Ct. 2078, L.Ed.2d

(1993). Although the proof may be by

direct evidence or by circumstantial

evidence, Holland v. United States, 348

U.S. 121, 75 S.Ct. 127, 99 L.Ed. 150

(1954), reh’g denied, 348 U.S. 932, 75

S.Ct. 334, 99 L.Ed. 731 (1955), it must be

sufficient to overcome the presumption of

innocence to which each person is entitled

under the Due Process Clause of the Fifth

Amendment to the Constitution. The

evidence does not have to exclude every

hypothesis of innocence, or be

inconsistent with every reasonable

hypothesis except guilt, but "if a [sic]

hypothesis of innocence is sufficiently

reasonable and sufficiently strong, then a

reasonable trier of fact must necessarily

entertain a reasonable doubt about guilt."

United States v. Bell, 678 F.2d 547, 550

(Sth Cir. 1982)’, aff'd on other grounds,

462 U.S. 356, 103 S.Ct. 2398, 74 L.Ed.2d.

638 (1983). Moreover, a conviction cannot

stand if it is based "by piling inference

upon inference." Ingram v. United States,

360 U.S. 672, 680, 79 S.Ct. 1314, 1319,

quoting Direct Sales Co. v. United States,

319 U.S. 703, 711, 63 S.Ct. 1265, 1269, 87

L.Ed. 1674 (1943).

Having successfully rebutted the

Government’s evidence presented through

the testimony of Burns and Mosley that he

was the source of the false information on

their credit applications, - the’ sole

evidence against Mugford was the credit

’ Special concurring opinion of Judge

Anderson, joined by Judge Roney.

applications of the customers who did not

testify. Even when viewed in the light

most favorable to the Government, Glasser

v. United States, 315 U. S. 60, 62 S.Ct.

457, 86 L.Ed. 680 (1942), the evidence

fails to establish facts sufficient to

permit a reasonable trier of fact to infer

that Mugford falsified any of the credit

applications in evidence or that he was a

voluntary participant in the conspiracy.

No evidence was adduced at trial to

link Mugford to any wrongdoing. No witness

testified Mugford was aware of, or

participated in, the conspiracy alleged.

No customer identified him as being the

salesman in any of the transactions

charged in the indictment. No one

identified his handwriting as being on any

of the credit applications in evidence.

His name appearing on the face of the

credit applications is alone insufficient

Sia caceereemeneeeienieeneeeeaimmmeiiiaitilieiiiaaaiial

to prove, either directly or by

implication, that Mugford had any

involvement in the transactions. United

States _v. Lieberman, supra. In summary,

there was absolutely no fact in evidence

to prove Mugford falsified any credit

application or voluntarily joined in the

conspiracy alleged.

Given the absence of direct evidence

to support them, one must_ conclude

Mugford’s convictions in the four counts

only could be the result of the jury

improperly "piling inference upon

inference."

To reach such a conclusion the jury

would first have had to infer that Mugford

was the salesman in the credit

transactions in questions. There was no

fact in evidence to establish this

inference.

The jury then would have had to infer

that Mugford put the false information on

the credit applications. There was no fact

in evidence to support this inference. To

the contrary, there was evidence to

conclude Mugford did not put any false

information on any credit applications, as

was demonstrated in the Mosley and Burns

transactions.

In order for the convictions of bank

fraud of this type to stand the Government

had to prove beyond a reasonable doubt

Mugford knowingly made a false statement

to a financial institution. See, United

States _v. Thompson, 811 F.2d 841 (5th

Cir.1987). Although the Government’s

evidence did sufficiently prove that some

employees of Royal Buick conspired with

one another and with an officer of Florida

National Bank in conduct defrauding the

bank, Mugford’s mere business association

with them is insufficient to sustain his

convictions. See, Canning v. United States

119 F.2d. 130 (9th Cir.1941); United

States _v. Grassi, 616 F.2d 1295 (5th

Cir.1980), cert. denied, 449 U.S. 956,

101 S.Ct. 363, 66 L.Ed.2d 220 (1980).

In a case very similar to that of

Mugford’s the Fifth Circuit reversed the

conspiracy convictions due to

insufficiency of the evidence. Determining

the questioned conduct upon which the

charges were based could be legal or

illegal, the court reasoned the Government

must prove both a departure from the legal

conduct, and an agreement and overt act in

furtherance of the illegal objective. "It

is not enough for [the Government] to

merely establish a climate of activity

that reeks of something foul." United

States v. Weischenberg, 604 F.2d 326, 332

(Sth Cir.1979). The Government’s evidence

against Mugford failed in those aspects.

In this case, Mugford was at all

relevant times employed as a car salesman,

a legal occupational pursuit. Albeit the

Government proved some of his co-workers

departed from that legal activity to

engage in illegal conduct, that is not a

sufficient basis in law to conclude beyond

a reasonable doubt that Mugford did

likewise. It is not the conduct or pattern

of fraud proved against his co-workers

that is at issue, but the pattern of

conduct of Mugford that controls this

case.

That the jury had reasonable doubt

that Mugford joined the conspiracy alleged

and falsified the credit applications of

customers is evidenced by its not guilty

verdict in Count 50 involving customer

Mosley. When, as here, the facts adduced

at trial establish at most a mere

probability that the defendant committed

the crimes charged, a reasonable jury must

find him not guilty. Wieschenberg, 604

F.2d, at 332 and 335 ("evidence that

establishes no more than a choice of

reasonable probabilities cannot be said to

be sufficiently substantial to sustain a

criminal conviction on appeal * * * juries

‘must not be permitted to convict on

suspicion and innuendo’").

Because the Government failed to meet

its burden of proof against Mugford on the

counts charged, all his convictions must

be reversed.

CONCLUSION

An evidentiary ruling that permits

the implied hearsay of third parties

contained in business records to be

considered by the jury is plainly wrong

and is fundamental error so prejudicial to

the accused that his convictions based

thereupon must be reversed. The confusion

the Eleventh Circuit exhibits in its

decision in this case, coupled with its

conflict with similar cases decided in

other federal circuits, requires this

Court’s intervention and resolution of the

issue.

The error is compounded when the

wrongful admission of the evidence denies

the accused his fundamerial right to

confront and cross-examine his accusers,

nor allows thr jury to judge their

credibility, and ultimately has the erfect

of reducing the Government’s burden of

proof of the crimes charged.

Notwithstanding these factors, when

the jury has expressed reasonable doubt of

guilt in the face of the Government’s best

evidence against the accused, and the

Government has failed to link the accused

by either direct or circumstantial

evidence to the criminal fraud charged, a

reasonable jury must find reasonable doubt

of his guilt to the remaining charges.

EDWIN W. MUGFORD, III

J (

By: (Le wed Lazer)

Of Counsel /—

William S. Smithers, Jr.

Anton Joseph Stelly

R. Paul Childress, Jr.

THOMPSON, SMITHERS, NEWMAN & WADE

5911 West Broad Street

P.O. Box 6357

Richmond, Virginia 23230

(804) 288-4007

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.