U.S. v. Brown

• Decision Date: 08 September 1982
• Docket Number: Nos. 81-1757,81-1758,s. 81-1757
• Citation: 688 F.2d 1112
• Parties: 11 Fed. R. Evid. Serv. 708 UNITED STATES of America, Plaintiff-Appellee, v. James R. BROWN and Carol Herklotz, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1112

688 F.2d 1112

11 Fed. R. Evid. Serv. 708

UNITED STATES of America, Plaintiff-Appellee, v. James R. BROWN and Carol Herklotz, Defendants-Appellants.

Nos. 81-1757, 81-1758.

United States Court of Appeals Seventh Circuit.

Argued Feb. 16, 1982.

Decided Sept. 8, 1982.

Charles W. Giesen, Eisenberg, Giesen, Ewers & Hayes, Madison, Wis., for respondent-appellant.

Judith M. Hawley, Asst. U. S. Atty., Madison, Wis., for plaintiff-appellee.

Before PELL, Circuit Judge, FAIRCHILD, Senior Circuit Judge, and BAUER, Circuit Judge.

BAUER, Circuit Judge.

Carol Herklotz and James R. Brown were charged with violating 18 U.S.C. § 665 by conspiring to embezzle and misapply property belonging to an employment training program funded under the Comprehensive Employment and Training Act of 1973 (CETA), 29 U.S.C. § 801 et seq. The eight count indictment also charged each defendant with one count of embezzlement and misapplication of government property and three counts of causing a false material statement to be made in a matter within the jurisdiction of an agency of the United States, in violation of 18 U.S.C. §§ 2, 1001.

The case was tried to a jury. The evidence at trial showed that James Brown and Carol Herklotz worked for the Western Dairyland Supported Work Program (Program), a program designed to teach ex-offenders, recovering alcoholics and welfare recipients marketable job skills. Brown was hired as Program Director. After his appointment, he hired Herklotz as Personnel Coordinator.

Trainees in the Program received salaries and fringe benefits from CETA funds obtained through contracts between the Department of Labor and the Wisconsin Department of Industry, Labor and Human Relations (State Agency) and between the State Agency and the Program. The federal government funded other Program costs with non-CETA funds. These funds were made available through contracts between the Department of Labor and the Manpower Demonstration Research Corporation (Manpower), a private non-profit corporation which manages federally funded social programs, and between Manpower and the Program.

Documentation of all Program costs was required. The evidence showed that Brown and Herklotz improperly diverted resources and services paid for by CETA funds for their own use. They assigned Program trainees to perform tasks benefitting Cataract Corporation, a private corporation of which Brown was president and sole stockholder, and Herklotz was secretary-treasurer. They also used the Program's vehicles, office personnel and stationery supplies to conduct Cataract business. In an attempt to hide these facts they falsified, or had others falsify, time cards and time sheets.

The jury found each defendant guilty on all charges. Thereafter defendants renewed their motion to dismiss or consolidate Counts III, IV and V and Counts VI, VII and VIII which they had made prior to and during trial, alleging that these counts were multiplicitous. The district court granted the motion and ordered the government to dismiss two of the three counts. The government dismissed Counts IV and V and Counts VII and VIII.

Brown and Herklotz raise numerous issues on appeal. First, they claim that the admission of certain business documents and "bad acts" evidence and the government's violation of the court's order barring certain testimony was harmful error. Appellants also contend that their constitutional right to a fair trial was violated because the trial judge and the prosecutor improperly commented on Brown's silence and because the court restricted the scope of defense counsel's closing arguments. Further, they claim that the court's denial of the motion to dismiss or consolidate the falsification counts was unduly prejudicial because: (1) these counts should have been dismissed for failure to satisfy the materiality test; and (2) submission of multiplicitous counts to the jury exaggerated the extent of their alleged criminality. Finally, they challenge the jury instructions on the elements necessary to support a conviction under 18 U.S.C. § 1001. For the reasons discussed below, we affirm.

I

Appellants claim that the district court's evidentiary rulings on the admission of Cataract's business records and other "bad acts" evidence deprived them of a fair trial. Since the trial court has broad discretion to assess the admissibility of proffered evidence, we may reverse these rulings only upon a clear showing of abuse of discretion. United States v. West, 670 F.2d 675 (7th Cir. 1982). Appellants have failed to make this showing.

A

The business records admitted into evidence were initially produced before the grand jury. Brown had been subpoenaed to appear and produce Cataract's records. However, instead of appearing, Brown informally negotiated an agreement with the government whereby Brown's attorney would produce the documents but Brown would not appear. After his indictment, Brown maintained that these records were inadmissible at trial because a proper foundation had not been laid. At the pretrial hearing Brown, claiming fifth amendment privilege, refused to authenticate these records. The trial judge ruled that Brown's refusal to identify the records was not a proper claim of privilege against self-incrimination, tr. at 54, and ordered him to respond. When he refused, he was held in contempt. The records were then identified by two government witnesses, an Assistant United States Attorney and an FBI Special Agent. They testified that Brown's attorney delivered Cataract's records to them, representing that he was Brown's agent and that the records he was delivering were the Cataract documents which had been subpoenaed. Tr. at 93-95, 104. The documents were admitted into evidence on the basis of this testimony.

Brown maintains that identification by the government witnesses was not proper authentication. He concedes that the documents were produced in lieu of compliance with a subpoena, but argues that, at the time of production, his attorney did not make any representations as to their authenticity. Moreover, he alleges that his counsel could not have authenticated these documents because he had no association with Cataract and, thus, lacked any knowledge regarding their authenticity.

Brown's argument is totally without merit. First, we do not agree with Brown that producing the records pursuant to an agreement with the government after being served with a subpoena is significantly different from responding to the subpoena itself. Even Brown admits that if he had produced the documents personally in response to the subpoena, the very act of producing them and representing them to be the documents described in the subpoena would have authenticated them. Tr. at 55. The mere fact that Brown was able to negotiate with the government to agree to produce the records without going before the grand jury does not give him the right, several months after production, to assert that the documents he voluntarily produced were not the ones he represented them to be. Brown cannot have it both ways. Once he voluntarily produced the documents and implicitly represented them to be Cataract's records, he cannot be heard to contend that they are not Cataract's records.

Federal Rule of Evidence 901 provides that "(t)he requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what the proponent claims." Brown produced the documents voluntarily and, as an officer of the corporation, he was in a position to vouch for their authenticity. Just as he could have identified the records by oral testimony, his very act of production was implicit authentication. ¹ Moreover, Brown's counsel, who was clearly acting as the agent of Cataract's president when he produced the documents, concedes that the documents "originate(d) somewhere in some connection with the corporation." Tr. at 48. There is ample evidence that the documents were Cataract's records.

Finally, there is no merit to Brown's claim that admission of Cataract's documents after Brown's implicit authentication impinged on Brown's constitutional privilege against self-incrimination. Authentication relates only to whether the documents originated from Cataract; it is not synonymous to vouching for the accuracy of the information contained in those records. The records were properly admitted.

B

Appellants contend that the introduction of "bad acts" evidence constituted reversible error because its "marginal probative value" was "far outweighed by both its prejudicial effects and its tendency to shift the focus of the trial from the substantive offenses to ... collateral and trivial incidents." Appellants' br. at 47. The challenged evidence established that: (1) James Herklotz, husband of defendant Herklotz, did electrical work for the Program and submitted an excessive bill under the name S and S Electric; (2) James Brown used the Program's stamps for personal business; (3) James Brown used the Program's secretarial services and supplies for personal letters; (4) defendant Herklotz padded her lunch expense voucher; (5) James Brown encouraged another Program employee to double bill his gas expenses.

The trial judge, who saw and heard the evidence firsthand, can best balance probity and prejudice, and the reviewing court may reverse only upon a showing of abuse of discretion. United States v. Watson, 623 F.2d 1198 (7th Cir. 1980). In reviewing the admissibility of relevant, potentially prejudicial evidence, we view the evidence in the light most favorable to its proponent, maximizing its probative value and minimizing the prejudicial effect. United States v. Brady, 595 F.2d 359 (6th Cir.), cert. denied, 444 U.S. 862, 100 S.Ct. 129, 62 L.Ed.2d 84 (1979).

Contrary to appellants' assertions that the trial judge permitted the wholesale admission of collateral evidence without "any thorough...