Particularized Testimony On Fraud Transactions Admissible As Lay Testimony

In mortgage fraud trial, convicted attorney provided lay testimony concerning fraud transactions based on his personal knowledge, including transactions involving the defendant; it was not necessary to qualify this testimony as expert testimony, in United States v. Graham, _ F.3d _ (11th Cir. June 14, 2011) (No. 08-14736)

The line between expert testimony under FRE 702 and lay testimony under FRE 701 can be hard to discern. It is also possible that a witness can provide both forms of testimony as recognized in the ACN. See FRE 701 ACN (“The amendment does not distinguish between expert and lay witnesses, but rather between expert and lay testimony. Certainly it is possible for the same witness to provide both lay and expert testimony in a single case.”) (2000 amendment). The Eleventh Circuit recently considered a challenge to the testimony of an attorney concerning fraud transactions in a mortgage fraud case.

In the case, defendant Graham and seventeen other defendants were charged with committing mortgage fraud. His trial was severed from the others. At trial, a real estate attorney who was convicted for participating in fraudulent mortgage transactions. The attorney testified about mortgage fraud transactions including some in which the defendant had participated. Following the defendant’s conviction by the jury, he claimed on appeal that the trial court erred in admitting “’expert’ testimony by lay witness.”

The Eleventh Circuit found to error in admitting the convicted attorney’s testimony. As the circuit explained:

We have held that a witness who has particularized knowledge by virtue of his position in a certain company can give an opinion about the manner in which that company conducts its business, even if the witness is not qualified as an expert under Fed. R. Evid. 702. See Tampa Bay Shipbuilding & Repair Co. v. Cedar Shipping Co., 320 F.3d 1213, 1223 (11th Cir. 2003) (“Tampa Bay’s witnesses testified based upon their particularized knowledge garnered from years of experience within the field.”). Key provided some testimony about the kind of conduct he engaged in or personally witnessed during fraudulent mortgage transactions, and he testified about his personal knowledge concerning the conduct of other participants in the mortgage fraud scheme. He did so based on his own experience.
Graham, _ F.3d at _.

There was one area in which the attorney had discussed real estate options. However, the defendant opened the door to this area during cross-examination. Additionally, the defendant discussed this area during his testimony. Having asked for this testimony, the defendant could not complain about it on appeal. As the circuit summarized, there was no error in the lay testimony:

Because the part of [attorney] Key’s testimony that was elicited by the government was based on his own personal knowledge of mortgage fraud, which he had acquired through his experience as a former real estate closing attorney who had engaged in fraudulent transactions of that nature, he did not have to be qualified as an expert under Fed. R. Evid. 702. See Tampa Bay Shipbuilding & Repair Co., 320 F.3d at 1222–23.
Graham, _ F.3d at _.

The government argued that the defendant had failed to lodge an objection at trial on the failure to bring expert testimony. The circuit found it unnecessary to resolve this issue since the testimony was properly admitted. Certainly, it would have been possible for the government to call an expert witness with specialized knowledge about the fraud transactions. Based on the personal knowledge of the convicted attorney, his lay testimony was sufficient.

Federal Rules of Evidence