Admitting Lay Opinion That Sounds Like An Excludable Expert Opinion

In fraud trial, testimony of confidential information that he concluded the defendant’s scheme was a “scam” based on his conversation with a defendant, was admissible lay opinion under FRE 701 since the testimony was based on informant’s first-hand knowledge and was helpful to the jury to explain why the informant was cooperating, and was not expert opinion, in United States v. Hoffecker, 530 F.3d 137 (3d Cir. June 16, 2008) (No. 06-3190), cert. denied, 129 S.Ct.652 (2008)

FER 701 explicitly permits a witness who does not testify as to a matter of "specialized knowledge" to offer an opinion, as well as testimony based on observation or perception. But what if that observation or perception is expressed in words that also could be viewed as expressing some specialized knowledge? Several years ago the Third Circuit examined this problem, examining why such opinion testimony could be admitted.

In the case, defendants Hoffecker and Myers formed Amitex Investment Services Limited, Inc., based in Nassau, which was used to sell physical commodities to investors. Under their scheme, telemarketers in Global Investment Corporation, another company controlled by Hoffecker, sold an Amitex Leveraged Physical Commodity Investment Program (“LPCIP”) to individuals. Customers were told that precious metals and other commodities were purchased for them and stored outside the United States. The customers made a down payment of 20 percent and the purchaser was advanced a loan for the remaining 80 percent which carried a 12 percent annual interest rate.

In reality, however, the company did not purchase or store any physical commodities and no genuine loans were made. The defendants assessed various fees and commissions on the products the paper they sold. Both companies, Amitex and Global, abruptly ceased operations. After the fraud scheme was discovered, more than 600 victims had been defrauded of more than $14 million dollars. Hoffecker, 530 F.3d at 150-51.

Criminal fraud charges were filed and the defendants' first trial resulted in a hung jury. At their second trial, a confidential informant (Field) testified that during one meeting with the defendants:

Hoffecker admitted to Field that Amitex was promoting an investment in ‘physical’ metal but did not actually purchase metal. Field testified that as a result he concluded Amitex was a ‘scam.’

Hoffecker, 530 F.3d at 170.


Over defense objection, the trial court admitted this testimony as lay opinion testimony under FRE 701. Ultimately, the defendants were convicted during this second trial and appealed, based in part of the contention that the trial court had erred in admitting the confidential informant's opinion that the defendants' scheme was fraudulent.

The circuit affirmed the admission of the testimony because the lay opinion foundational requirements under FRE 701 had been satisfied. First, the testimony was based on first-hand knowledge and rationally based, since the witness participated in the conversation. Hoffecker, 530 F.3d at 171. Second, the testimony “was helpful to the jury because Field’s perception that the Amitex program was a ‘scam’ explained why he was a Government cooperator.” Hoffecker, 530 F.3d at 171. The conversations were not entirely clear and the jury could benefit from the witness’s interpretation based on “deliberately” “guarded Responses.” Third, the witness was not providing an expert opinion.

The circuit contrasted two cases which served to highlight the two extremes of similar lay opinion testimony. The opinion testimony may be admissible where it his helpful to the jury and the other requirements of the rule are satisfied:

  • United States v. De Peri, 778 F.2d 963, 977-78 (3d Cir. 1985) (government witness provided lay opinion testimony by explaining his understanding of a recorded conversation he had with a defendant; “Martin's language on the tapes is sharp and abbreviated, composed with unfinished sentences and punctuated with ambiguous references to events that are clear only to Martin and his audience. To the uninitiated listener, Martin speaks as if he were using code. Alvaro's opinions are based upon his direct perception of the event, are not speculative, and are helpful to the determination of Martin's involvement in the protection scheme and the subsequent attempt to silence Ricci with ‘hush money.’”)
  • United States v. Dicker, 853 F.2d 1103, 1110 (3d Cir. 1988) (error in allowing agent to testify about his understanding of recorded conversations with the defendant, noting “[w]hile it is debatable whether Agent Farrell's testimony was rationally based on his perceptions, it clearly did not fulfill the helpfulness requirement of Rule 701” particularly where the agent “simply ascribed his own, illicit meaning to straightforward, potentially legitimate statements”)

Hoffecker, 530 F.3d at 170-71.

In support of its analysis of lay opinion testimony, the Third Circuit noted a Second Circuit case that the defendant proffered as authority for excluding the lay testimony. That Second Circuit case involved an expert SEC investigator who provided a legal conclusion that the defendants were “active” and “material participants” in a “fraudulent scheme in furtherance of [the] manipulation [of stock].” The circuit agreed with the trial court that the confidential informant was “a witness to the scam at the time of the scam, not someone performing 20-20 hindsight analysis.” The witness testified about his thoughts during the conversation not as he reflected on them at trial. United States v. Scop, 846 F.2d 135, 138 (2d Cir.)(expert “drew directly upon the language of the statute” and acknowledged that his positive assessment of the testimony of other Government witnesses was a basis for his opinion) , on rehearing, 856 F.2d 5 (2d Cir. 1988), relied upon by the defendant. Scop involved an expert SEC investigator who provided a legal conclusion that the defendants were “active” and “material participants” in a “fraudulent scheme in furtherance of [the] manipulation [of stock].” The circuit agreed with the trial court that the confidential informant was “a witness to the scam at the time of the scam, not someone performing 20-20 hindsight analysis.” The witness testified about his thoughts during the conversation not as he reflected on them at trial.

But even had the admission of the informant's opinion been erroneous, it would be harmless. The comment by the witness was isolated and was not referred to by the government. In addition, the evidence admitted included a statement by the defendant that admitted pretty much the same thing, as a defendant admitted in justifying the enterprise's Nassau base, its location there was desirable as “[i]n America, Amitex cannot operate. It would be a scam.”

Federal Rules of Evidence
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