Federal Evidence Review

In tax and fraud trial, computer records, including Quickbooks financial records, seized from a co-defendant’s computer, were admissible as records in furtherance of the conspiracy under FRE 801(d)(2)(E), in United States v. Moran, 482 F.3d 1101 (9th Cir. 2007) (per curiam)

In introducing electronic evidence, such as the contents of records from a computer, any statements remain subject to the hearsay rules. One Ninth Circuit case considered whether financial records from a co-defendant’s computer could be admitted under the co-conspirator exception.

The defendants, who were married, provided “tax reduction plans” to clients through an entity known as Anderson’s Ark and Associates (AAA). Under the AAA programs, participants could have their U.S. funds directed to Costa Rican entities and would receive either tax deductions, tax shelter, or tax-free returns on transferred funds. During the investigation, the government seized a computer from a residence of co-defendant Anderson.

As the court described, “Access to the computer was protected with a password. At least one account was in Anderson’s name. The computer contained numerous documents relating to AAA, including a Quickbooks database reflecting financial data about the various AAA principals, clients and programs.” Moran, 482 F.3d at 1108. The defendants were charged with conspiracy, fraud and aiding and assisting in the preparation and filing of false federal income tax returns counts, along with other offenses.

At trial, the government admitted financial records from the seized computer, including statements of defendant Anderson, against the co-defendants. After the defendants were convicted, they challenged the admission of the financial records evidence as inadmissible in furtherance of the conspiracy.

The Ninth Circuit affirmed, and concluded there was no clear error in the trial court’s finding that the records were co-conspirator statements. The circuit rejected the defense claim that “the records were inaccurate, suggesting that they were meant to deceive, not inform Anderson’s co-conspirators, which would render them inadmissible.” Moran, 482 F.3d at 1108. The records were used to keep track of complex financial transactions, which furthered the conspiracy. The statements would have been inadmissible if “made for personal objectives outside the conspiracy or as part of idle conversation.” Id. (citation omitted). The challenged statements were “made to keep coconspirators abreast of an ongoing conspiracy’s activities, so that it satisfied the ‘in furtherance’ of requirement.” Id. (citation omitted). Any claim of inaccuracies in the records went to the weight of the evidence but not their admissibility. Id. (citing Bourjaily v. United States, 483 U.S. 171, 183 (1987) (“[A] court need not independently inquire into the reliability of [coconspirator] statements.”)).

The Moran case represents a useful example of how computer records may be considered for admission under the co-conspirator exception. Other evidence issues concerning electronic evidence are considered in the continuing series for Electronic Evidence and Internet Evidence.