In criminal securities fraud (pump and dump scheme) prosecution against defendant brokers of a securities firm, affirming there was no error in striking guilt-assuming hypotheticals which were “impermissible in the context of the government's cross-examination of a defendant's character witnesses”; noting no error in the trial court permitting the prosecution to ask “its own fact witnesses otherwise relevant questions that may have a guilt-assuming element” provided the questions were “plainly relevant and probative,” in United States v. Laurienti, __ F.3d __ (9th Cir. June 16, 2010) (Nos. 09-50081, 07-50365, 07-50240, 07-50367, 07-50358)
At the beginning of the year, the Federal Evidence Blog noted that the Tenth Circuit had decided United States v. Parker, 553 F.3d 1309 (10th Cir. Jan. 9, 2009) (No. 07-6239). Parker was a case that involved a "a close question" of "whether the cross-examination of character witnesses crossed the line by including guilt-assuming hypotheticals." See Close Question On Impermissible Guilt-Assuming Hypotheticals. In Parker, the circuit examined the record of a cross-examination of a character witnesses for the defendant and concluded that the questioning did not include impermissible guilt-assuming hypothetical questions because the questions were "based on the charges" in the case. But in any event, had this been an error, the circuit also noted that it was harmless based on overwhelming evidence of guilt. Recently the Ninth Circuit elaborated a bit further on the use and mis-use of guilt-assuming hypothetical questions, noting situations when they were prohibited and also when they were admissible.
In that recent Ninth Circuit case, defendant Laurienti and other stock broker colleagues were charged with conspiring in a securities fraud “pump and dump” scheme. In early proceedings, some defendants admitted their guilt, but this left in the dock the defendants who “conceded that a fraudulent scheme existed but argued that they had not joined the conspiracy or engaged in fraudulent acts; rather, they were innocent brokers selling stocks to their clients.... The jury found otherwise and convicted [the] Defendants on all counts.” The defendants appealed citing as error that the court allowed "the government [to] use[ ] improper 'guilt-assuming hypotheticals' during its direct examination of government fact witnesses and during its cross-examination of Defendant Laurienti's character witnesses." The Circuit noted that the defendants argued, with some merit, that "under this court's decision in United States v. Shwayder, 312 F.3d 1109, 1120-21 (9th Cir. 2002), the government's questions violated Defendants' right to due process." However, the Circuit found this contention too sweeping, because while under circuit law the prosecution's cross-examination of a defense character witness was improper, the same was not true of prosecution questions of its "own fact witnesses." Laurienti, __ F.3d at __.
The distinction, according to the circuit, was elementary:
"We have held that guilt-assuming hypotheticals are impermissible in the context of the government's cross-examination of a defendant's character witnesses. That rule derives from the fact that, when a character witness is asked a guilt-assuming hypothetical, the answer 'can have only negligible probative value as it bears on the central issue of guilt.' Consistent with our holding, the district court sustained Defendant Laurienti's objections to the government's guilt-assuming hypotheticals posed to his character witnesses."
Laurienti, __ F.3d __ (citing United States v. Shwayder, 312 F.3d 1109, 1120-21 (9th Cir. 2002) (internal quotation marks omitted)).
On the other hand, not all questions that have a guilt-assuming aspect are precluded, notably:
"With respect to the government's fact witnesses, however, there appears to be no support for the proposition that the government cannot ask its own fact witnesses otherwise relevant questions that may have a guilt-assuming element. The government's questions in this case were plainly relevant and probative: In order to establish materiality of Defendants' actions, the government asked questions such as, 'If you had known prior to purchasing [a house stock] that Hampton Porter prevented or discouraged their brokers from allowing their clients to sell their shares of [the house stock], would you have purchased the [shares of the house stock]?' Because those questions have much more than 'negligible probative value as it bears on the central issue of guilt,' our primary concern with respect to character witnesses simply does not apply. We therefore hold that the district court did not abuse its discretion by permitting the government's questioning of its own fact witnesses."
Laurienti, __ F.3d at __ (citing United States v. Jennings, 487 F.3d 564, 581-82 (8th Cir. 2007) (holding that, unlike with respect to character witnesses, it is generally permissible to ask guilt-assuming hypotheticals of fact witnesses to prove materiality); United States v. Kellogg, 510 F.3d 188, 196 (3d Cir. 2007) (distinguishing between opinion character witnesses and reputation character witnesses and holding that “there is nothing inherent in guilt-assuming hypotheticals, in the abstract, that makes them unfairly prejudicial, let alone so prejudicial as to constitute a per se violation of due process”)).
The Kellogg case, cited by the Ninth Circuit above, contains an instructive analysis of the positions of the circuits with regard to guilt-assuming hypotheticals. The Third Circuit noted in Kellogg, 510 F.3d at 193-95, that most of its sister-circuits "have broadly held such questions are improper" because "a guilt-assuming hypothetical impairs the presumption of innocence and thus violates the defendant's due process rights." However, a few courts "have also noted that an alternative basis for holding guilt-assuming hypotheticals are improper is that they are unfairly prejudicial to the defendant ... which would indeed seem to follow necessarily from a conclusion that there had been a due process violation." Laurienti stands as a useful - and recent - reminder that the bar on guilt-assuming hypotheticals may not apply where due process is not affected by the questions used.
Under FRE 405, guilt-assuming hypothetical questions during the cross-examination of a character witness pose particular problems. Most Circuits interpret FRE 405 so that guilt-assuming hypothetical questions are not an appropriate vehicle for inquiry in that context. For more background on this, the first issue of the Federal Evidence Review (published in October 2004) presented a "Developing Consensus" article that briefly reviewed the positions of the circuits on this matter. Complementary copies of that article, "Developing Consensus: Methods of Proving Character" of Vol I, No. 1 of the Federal Evidence Review is available here.
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