Federal Evidence Review

In a bank fraud prosecution, bank board minutes were admitted under FRE 803(7) to show the non-existence of information; in particular, that the board did not receive material information about certain loan transactions, in United States v. Munoz-Franco, 487 F.3d 25, 40 (1st Cir. May 22, 2007) (Nos. 04-1532, 04-1533, 04-1534, 04-1535)

FRE 803 allows the absence of information in business records to be admitted as an exception to the rule excluding hearsay. As the drafters of the rule have noted, “Failure of a record to mention a matter which would ordinarily be mentioned is satisfactory evidence of its nonexistence.” ACN. A bank fraud case provides an interesting application of the rule concerning bank board minutes.

In the case, the defendants were officers of a federally insured financial institution which made unapproved loans to a co-conspirator land developer. The bank fraud scheme persisted for a decade. At trial, the government introduced board minutes as business records, which were kept in the ordinary course of business, to show that material information about certain loans had not been presented to the board. After the defendants were convicted, they challenged the introduction of the board minutes as inadmissible hearsay and violating their Confrontation Clause rights.

The circuit affirmed the admission of “the minutes to demonstrate that the Board did not receive material information about many of the transactions it considered.” Munoz-Franco, 487 F.3d at 40. The government had established the board minutes were admissible as business records and the missing information would normally have been recorded. The fact that the minutes were a summary record of the meeting did not demonstrate a lack of trustworthiness. To the contrary, the circuit concluded the manner in which the minutes were maintained supported “a finding of trustworthiness” and “given the minutes’ thorough description of information discussed at the meetings, we conclude that the missing information relating to the loan transactions was a “matter … of a kind of which a memorandum, report, record, or data compilation was regularly made and preserved.” Munoz-Franco, 487 F.3d at 40.

The circuit also rejected the Confrontation Clause challenge under Crawford v. Washington, 541 U.S. 36 (2004). As a business record, it was “beyond debate that the Board minutes are non-testimonial in character and, consequently, outside the class of statements prohibited by the Confrontation Clause. The Court in Crawford plainly characterized business records as ‘statements that by their nature [are] not testimonial.’ 541 U.S. at 56. If business records are non-testimonial, it follows that the absence of information from those records also must be non-testimonial. Thus, the Confrontation Clause presents no bar to reliance on the absence of certain information from the Board meeting minutes to prove that the Board was not given that information.” Munoz-Franco, 487 F.3d at 38-39.