Reply Brief — Mugford v. United States

No. 93-349

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1993

EDWIN W. MUGFORD, JIL,

Petitioner,

UNITED STATES OF AMERICA.

Respondent.

Petition for Writ of Certiorari

to the United States Court of Appeals

for the Eleventh Circuit

REPLY TO BRIEF IN OPPOSITION

Anton J. Stelly

William S. Smithers, Jr.

R. Paul Childress, Jr.

THOMPSON, SMITHERS,

NEWMAN & WADE

Post Office Box 6357

5911 West Broad Street

Richmond, Virginia 23230

(804) 288-4007

E COPY

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Counsel for Petitioner

———

LANTAGNE DUPLICATING SERVICES

80) t-ast Main Street Suite 100 Richmond. V irgimia 23219 (800) 847-0477

BEST AVAILABL

EDWIN W. MUGFORD, III v. UNITED STATES

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 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

MISSTATEMENTS IN OPPOSITION BRIEF

THE CREDIT APPLICATIONS WERE NOT

ADMISSIBLE AS NON-HEARSAY

SIXTH AMENDMENT VIOLATIONS

THE EVIDENCE WAS INSUFFICIENT

CONCLUSION

li

17

19

ai

TABLE OF AUTHORITIES

CASES

California v. Green, 399 U.S. 149

155-56, 90 S.Ct. 1930 1934 (1970) .. 16

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

63 (1980) . «

Park v. Huff, 493 F.2d 923, 933-934

(Sth Cir. 1974), reversed on rehearing

en banc (six justices dissenting),

506 F.2d 849, cert. denied 423 0.8.

824 (1975) ‘ ee ae ae ee ee 17

State v. McGann, 132 Ariz. 296, 645

Pete Bit CASGR) Ge 6 ee lores 14, 15

Sullivan v. Louisiana, 113 S.Ct.

EUTO. (1993) 5) sees ew ek - « « 2

United States v. Adams, 446 F.2d 681,

683 (9th Cir.), cert. denied, 404 U.S.

943, 92 S.Ct. 294,

30 L.Ed.2d 257 (2914) «4s & = & A eee

United States v. Evans, 572 F.2d 455,

490 (5th Cir.) cert. denied, 439 U.S.

870 (1978) a ie oe er ee ae ll

United States v. Frady, 456 U.S. 152,

163 (1982) - ¢ © #656 Sie 2 oo) eee

United States v. Lieberman, 637 F.2d

7> (20 Cie, 3960) . i252". .o « AG

United States v. Olano, 113 S.Ct. 1770,

S730 41903) oe & ae «© Be

iii

United States v. Urbanik, 801 F.2d 692,

698 (4th Cir. 1986) .....

Federal Rules of Evidence

801(d)(2)(D)

801(d) (2) (E)

631052 ss eee ee

MISCELLANEOUS

Supreme Court Rule 15

2

1

+

I. MISSTATEMENTS IN OPPOSITION BRIEF

There are misstatements of fact in

the opposition brief. Contrary to the

government’s assertions at page 2 that

Mugford’s employment began at or about the

time of the commencement of the conspiracy

in January 1985, the evidence did not

establish his employment at Royal Buick

until the spring of 1986 (R42-pp. 5-22).

The opposition also takes out of

context testimony referred to as “other

evidence" supporting the convictions. No

evidence was presented from which it could

be reasonably inferred Mugford discussed

illegal acts with others to further the

conspiracy, falsified loan applications,

or engaged in any illegal acts (Opn.Br.,

pp- 2, 4, 8 n.3, 13, 14 & n.6).?

+ Wilkerson, Scarborough and McMillen gave

testimony which the government contends

establishes “other evidence” of Mugford’s guilt.

Although it is a well-settled legal principle that

on appeal, all reasonable inferences of fact are

to be construed in the light most favorable to the

government, the natural corollary which evolves

from that principle is that unreasonable

inferences and distortions of the record are not

perinitted. See, Supreme Court Rule 15.

Notwithstanding the government’s “spin,” the

record does not support the contentions in the

Opposition brief.

Wilkerson testified that Mugford would have

"had occasion to attend” sales meetings at which

the falsification of credit applications was

discussed, but did not place him at any of them

(R18-p.70). He further testified the meetings he

referenced might have occurred in 1985 (R19-p.42),

which pre-dated Mugford’s employment in the

Spring, 1986 (R42-pp.5-22).

Though Wilkerson could not recall the

customer or find the credit application among the

files admitted into evidence, he also claimed he

saw Mugford add a second job or income to a credit

application that he (Wilkerson) found “creative”

(R18-p.72). That testimony is incredible because

the government could not produce a single credit

application attributable to Mugford with a second

job or income.

Scarborough (a manager, not a salesman) did

not testify that he discussed a credit application

with Mugford in which Mugford said “to put a VISA

On 1t or give him some credit.” Op.Br., p. 13. A

review of Scarborough’s testimony reveals (R21l-

pp-37,38) he was discussing an application with

another salesman on the showroom floor. In the

context of the “joking” among salesman about which

Scarborough was then testifying, Mugford’s comment

was at most a casual remark of no probative value.

See, United States v. Urbanik, 801 F.2d 692, 698

(4th Cir.1986) [holding “not harmless error" to

admit under Rule 801(d)(2)(E) “casuaI aside” that

touches upon hut does not “further” conspiracy].

The testimony of McMillen (R16-pp.29,30)

also was not correctly put forth in the opposition

brief. Rather than show Mugford’s participation in

the conspiracy, McMillen’s testimony tends to

disprove it. Moreover, while acknowledging he

discussed falsification of credit applications

with other employees of Royal Buick, he

3

That this "other evidence" was not a

factor in the convictions is evident in

the exchange between the district court

and the prosecutor at the close cf the

government’s case-in-chief when the court

was considering Mugford’s Rule 29 motion

for judgment of acquittal. After hearing

the court’s summation of the evidence

against Mugford (consisting only of the

false statements appearing in the credit

applications), and its inquiry, "How could

the jury conclude ... beyond a reasonable

Goubt ... that the [false] entries

were the figments of [Mugford’s}

Specifically denied any such discussion with

Mugford.

The government’s references to the "rebates"

and other charges as being indicative of Mugford’s

guilt is misstated. The government’s evidence at

trial established the salesmen had no role in the

rebates and the “add-ons.” Rebates and other “add-

ons" to the final amount financed were by the

managers (R19-pp.7,8; R18-p.76; R21-pp.74,77; R23-

p.66), were located on the lowest part of the

credit application reserved specifically to the F

& I department, and written in a different hand

than the rest of each application.

4

imagination as distinguished from that of

the customer?", the prosecutor replied:

.+. we suggest the jury can

certainly infer that when false

information is placed on the

loan applications * * * that

the salesmen [sic] did it

pursuant to the scheme to

defraud and the conspiracy."

(R38-pp. 58-60)[{emphasis

added].

Neither during the course of this

argument to the court, nor in its closing

argument to the jury (R45-pp.12, 15-17),

did the government make reference to this

"other evidence." It relied solely on the

false entries in the credit applications

to support the charges in the indictment

against Mugford.

I. THE CREDIT APPLICATIONS WERE

NOT ADMISSIBLE AS NON-HEARSAY

The government admits there exists a

split among the circuits as to the

admission of the credit applications under

Rule 803(6). It does not refute, and

wr

5

apparently concedes, the trial court erred

in admitting the nine credit applications

pursuant to the business records exception

to the hearsay rule because the source of

the information (the customer) was not

acting in the regular course of

business.’ It also abandoned its argument

in the Court of Appeals--that the credit

applications were otherwise admissible as

hearsay exceptions under Rules

801(d)(2)(D) and 801(d)(2)(E).? The

government contends the applications were

admissible as non-hearsay because they

were not offered in evidence for the truth

* Brief in Opposition, pp. 8-9: “Petitioner

is correct that other courts of appeal have held

that documents are not admissible under the

business records exception if any participant in

the production of the record is not acting within

the regular course of the his business’s activity,

and that the business records exception does not

apply to an entire business record when some of

the information in it is based on statements of

persons not acting in the regular course of that

business.” [Citations omitted]

* Brief of Appellee, p.107. (C.A. llth Cir.).

a

6

of the matter asserted. Nothing could be

further from the truth because that was

precisely the reason the evidence was

offered, and how it was used to convict!

Supra., p. 4.

A review of the record proves the

government sought introduction of the

files and the credit applications pursuant

to the business records exception by

laying a foundation to qualify Wilkerson

as a non-custodial witness under Rule

803(6), F.R.Ev. (R17, pp. 163-172).°

Moreover, both in arguing against a

judgment of acquittal and in its final

speech to the jury, the government

. Contrary to the government’s assertion,

there was objection to the admission of the

documents on that basis. By pre-trial order and

agreement of counsel, Mr. Winkles, counsel for

Royal Buick, was designated to be lead counsel for

all defendants. The court specifically stated that

objections made by Mr. Winkles would be deemed

adopted by all other defendants unless a

particular defendant specifically made known to

the court his intent to not ally himself with the

objection. Mr. Winkles’ objection appears in the

record (Rl7?-pp.169,170).

-

referred only to the credit applications

in support of the charges subject to this

appeal, ibid., because there was no

evidence other than his name as salesman

on the credit applications to connect

Mugford to the fraud alleged in the

indictment!

Mugford does not dispute the credit

applications contained false statements.

But that fact alone does not make them

admissible as non-hearsay. The government

misplaces its reliance on that argument

(and upon the cases in recites in support)

for the simple reason that there was no

evidence demonstrating who, other than the

customer, made the false statements

contained in the eleven credit

applications. In each and every case cited

in opposition where evidence was admitted

as non-hearsay (to prove the falsity of a

statement or assertion) there was no

8

question of the identity of the declarant.

Contra, the facts of this case where

the identity of the declarant of the false

information was never proved to be the

defendant against whom they were used to

convict. Authorship of the false entries

in each of the credit applications is the

critical question the government left

unanswered at trial. The question remained

unanswered in the court of appeals, and in

the brief in opposition to this petition.

The government has not pointed to a single

decision in which an oral or written

declaration made out of court has been

deemed admissible substantive evidence

against a defendant when the identity of

the declarant has not’ first been

established because no_ such_ holding

exists.

For that reason, the testimony of the

introduction witness, Wilkerson, was

eeEeEeEeEEeeeeEEOeeeeeee

insufficient for the admissibility

purposes the government claims. Wlkerson’s

testimony was speculative on the point,

suggesting the false information in the

credit applications may have originated

from either of three sources: 1) the

customer providing the information to the

Salesman; 2) the salesman; or 3) some

other person at the dealership with access

to it.

Moreover, the presumption that the

customer was the source of the falsity is

particularly strong in Mugford’s case.

Each of the eleven "“Mugford" credit

applications was signed by the customer

attesting that the information was

accurate and complete.°® Admitted for any

purpose, on their face the applications

° Each standard application form contained

the following statement, immediately above a line

for the customer’s signature: "You certify that

the above information is accurate and complete..."

10

purport to be the declarations of the

customer, and Wilkerson’s testimony

Supports that premise. None of the

customers was indicted, and none of the

nine whose credit applications relate to

the convictions appealed were called to

testify.

It logically follows that to be

admissible as non-hearsay evidence, the

relevance of each of the credit

applications to the charges had to appear

either on the face of the credit

application itself or be shown by other

evidence. The credit applications

themselves were not sufficient for that

purpose. Neither was Wilkerson’s testimony

alone, nor the remaining documents in the

files.‘

* The government maintains the other

documents in the file were admissible under Rule

803(6). These documents were not relevant evidence

against Mugford for similar reasons as the credit

eeEeEOEOEOEOEOEeEE eee

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The appearance of his name as

Salesman in the nine documents was the

only link between Mugford and the false

Statements in the credit applications

forming the basis of his convictions. Had

these documents not been admitted, or

their use properly limited by the court,

it would not have been possible for the

jury to convict Mugford. Therefore, their

admission without a limiting instruction ’

applications were not. Only Mugford’s name in the

documents linked him to them, nothing else. Given

Wilkerson’s testimony that the documents were

prepared from the information on the credit

application supplied by the customer, they contain

inadmissible double hearsay.

The government’s reliance on the Similarity

of the handwriting and signatures in the various

papers to prove Mugford’s involvement is

inconsistent with its own concession that another

salesman completed the Burns application, though

the handwriting in all eleven has also been

referred to by the government as “similar” and

"distinct." Also, its own witness, Mosley, did not

identify Mugford as the salesman with whom he

dealt when afforded the Opportunity at trial.

” See United States v. Evans, 572 F.2d 455,

490 (5th Cir.), cert. denied, 439 U.s. 870 (1978),

cited at p. 8, Op.Br., holding that introduction

of large groups of exhibits at once "not unfair”

12

was not harmless, but "particularly

egregious," resulting in "a miscarriage of

justice." United States v. Olano, 113

S.Ct. 1770, 1790 (1993); United States vy.

Frady, 456 U.S. 152, 163 & n.14 (1982).

II. SIXTH AMENDMENT VIOLATIONS

The government contends no

Confrontation Clause issues exist because

the credit applications were not used to

prove the matters asserted, Mugford had

the right to cross-examine the introducing

witness, and the remaining file documents

were properly admissible under Rule

803(6). Op.Br., pp. 11-13. Its reasoning

is flawed because its Supporting case

authority does not apply to the facts of

this case.

when trial court made clear that introduction en

masse was conditioned upon defense counsel’s right

to object at a later time to the admission of any

specific document, and the jury was properly

instructed as to the weight to be given to each

such document.

a

13

First, the credit applications lacked

the requisite “indicia of reliability”

with which "firmly rooted" exceptions to

the hearsay rule are clothed. These

documents, the crucial evidence to the

convictions, were improperly admitted for

that reason.

Second, merely having the right to

confront the introducing witness does not

cure the problem raised here. Wilkerson’s

testimony did not link Mugford to the

credit applications, to the falsification

of them, or to the conspiracy itself.

Moreover, Mugford did successfully refute

Wilkerson’s testimony in significant part.

On cross examination, Wilkerson could not

identify or produce (and neither could the

government) the credit application to

which he claimed he saw Mugford add a

"creative" second job or income, nor could

he place Mugford at the sales meetings

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falsification was discussed. The

government never referred either in

argument or in closing to Wilkerson’s

"other evidence" in ascribing guilt to

Mugford. The prosecution relied only upon

the credit applications and the implied

hearsay each contained.

This was exactly the question posed

by the admission of 57 credit cards

receipts in State v. McGann, 132 Ariz.

296, 645 P.2d 811 (1982). See, Pet., pp.

38-42, 46-47. Those credit card receipts

also were admitted for the "falsity" of

the information they contained (the

customers’ Signatures) without the

customer’s testimony. The opposition brief

avoids any reference to that holding;

per’ aps for the obvious reason that the

Arizona Supreme Court found fundamental

error affecting the defendant’s right to

confront the witnesses by the admission

eeEEEoEoEoEoEEE ————————

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(through a third party without first-hand

knowledge of the fraud) of documents the

accused may or may not have falsified. In

McGann, as in this case, the admission was

wrongful for the hearsay implied in the

documents. In both instances, the jury was

allowed to infer improperly from the —.

combination of two unrelated factors (the

charge against the accused and the absent

customer) that the accused falsified a

document and violated the law. The result

was more egregious in Mugford’s case than

in McGann because of the lack of “other

evidence" of Mugford’s wrongdoing.*

The “application of a _ recognized

hearsay rule exception does not

necessarily evidence compliance with the

* In McGann there was testimony from a

customer that the signatures on four other credit

card receipts were not his, nor authorized by him.

No such customer testimony existed in this case.

Moreover, in this case, the two customers called

by the government dia not tie Mugford to the

falsification of their credit applications.

ee

16

Confrontation Clause." United States v.

Adams, 446 F.2d 681, 683 (9th Cir.), cert.

denied, 404 U.S. 943, 92 S.Ct. 294, 30

L.Ed.2d 257 (1971). Nor has this Court, as

the government implies, held that

admission under a well-recognized hearsay

exception satisfies Confrontation Clause

problems. In fact, this Court has

expressly rejected such a construction.’

The fact remains that given the

opportunity to cross-examine the customer

witnesses about the source of the false

informaticn ‘n their credit applications,

Mugford was able to establish his

innocence as to those transactions. His

convictions flow from the nine instances

° see California v. Green, 399 U.S. 149,

155-56, 90 S.ct. 1930, 1934 (1970), wherein it is

said, “Our decisions have never established such

a congruence; indeed, we have more than once found

a violation of confrontation values even though

the statements in issue were admitted under an

arguably recognized hearsay exception. [citations

omitted)"

ea

17

in which he was not afforded that

Opportunity by the government.?°® Under

such circumstances, the opposition’s

position that there are no Confrontation

Clause issues raised is without merit.

III. THE EVIDENCE WAS INSUFFICIENT

As stated in page 1 & n. 1, supra.,

there was no “other evidence" to Support

the convictions. The loan applications do

not prove Mugford was the salesman

*° Because the burden is on the government to

prove each and every element of the offense

charged, Sullivan _v. Louisiana, 113 s.ct.2078

(1993), requiring an accused to subpoena the

hearsay declarant if the government does not

produce him shifts the burden of proof to the

defendant and is inconsistent with the

constitution’s “preference for face-to-face

encounters at trial," Ohio v. Roberts, 448 U.S.

56, 63 (1980). It is respectfully suggested the

abuse of the business records exception in this

case vindicates Judge Coleman’s holding in Park v.

Huff, 493 F.2d 923, 933-934 (5th Cir.1974),

reversed on rehearing en banc (six justices

dissenting), 506 F.2d 849, cert. denied 423 U.s.

824 (1975), that “the burden of producing

witnesses to meet the accused’s right of

confrontation falls on the State.” Judge Coleman

sagely reasoned that is the sure way to prevent

the government from hiding a weak case and

avoiding the risk the testimony of the declarant

would exculpate the accused.

18

involved merely because his name appears

on them as the salesman. United States v.

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

Recognizing this, the government called

Burns and Mosley to prove Mugford

falsified their credit applications and

thereby lay a foundation to argue that he

falsified the remaining nine, without

having to call the other customers to

testify.

The government admits its failure to

prove not only Mugford’s guilt on the

Burns and Mosley applications, but even

his connection to them.** Inexplicably,

while conceding another salesman completed

the Burns application, the government

still maintains that the same, distinctive

handwriting and signatures, appearing on

all eleven credit applications (including

1} See footnote 2, page 6, Brief in Opposition.

ee

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Burns’), proved Mugford was the source of

the false information on the remaining

nine in which no customer testimony or

other evidence was offered linking them to

Mugford. Br.Opp., p. 14.

The contrary would appear to be

proved by that admission, for if the same

hand which wrote the Burns application

wrote the remaining nine, it follows that

Mugford did not write the nine at issue.

A reasonable jury, having found

reasonable doubt that Mugford falsified

the Mosley and Burns applications, was

required to find reasonable doubt as to

the other charges for which there was no

other evidence presented.

CONCLUSION

The opposition’s reliance on the

admissibility of the credit applications

and its contentions that "other evidence"

existed to sustain the convictions are

20

Specious, and inconsistent with the facts

and of the applicable law. Petitioner’s

convictions of conspiracy and fraud were

the result of the improper admission of

the credit applications and other

documents, the denial of his right to

confront the customers in the nine

transactions at issue, and the jury’s

impermissible inferences that were

inconsistent with the evidence presented.

As a result, an innocent man was

convicted of crimes he did not commit. For

these reasons, the petition should be

granted.

EDWIN W. MUGFORD, III

By: Atlin Sete lly

Anton Joseph Stelly

William S. Smithers, Jr.

R.Paul Childress, Jr.

THOMPSON, SMITHERS, NEWMAN & WADE

Richmond, Virginia 23230

January 3, 1994

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Vg eel ia a a ee ae SA eed Se Than oa. te er ts -