U.S. v. Catabran

• Decision Date: 06 January 1988
• Docket Number: No. 86-1134,86-1134
• Parties: 24 Fed. R. Evid. Serv. 459 UNITED STATES of America, Plaintiff-Appellee, v. Lino CATABRAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 453

836 F.2d 453

24 Fed. R. Evid. Serv. 459

UNITED STATES of America, Plaintiff-Appellee, v. Lino CATABRAN, Defendant-Appellant.

No. 86-1134.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 6, 1987.

Decided Jan. 6, 1988.

Lawrence F. Janof, Sacramento, Cal., for defendant-appellant.

John P. Panneton, Sacramento, Cal., for plaintiff-appellee.

Before BROWNING, Chief Judge, PREGERSON and REINHARDT, Circuit Judges.

OPINION

PREGERSON, Circuit Judge:

The district court found defendant Lino Catabran guilty of concealing assets during a bankruptcy proceeding and destroying or concealing records of a bankrupt corporation in violation of 18 U.S.C. Sec. 152. Catabran was sentenced to serve eighteen months on one count (destruction of records) and was placed on probation for five years on the other count. He contends that the district court erred in admitting general ledger computer printouts against him, in allowing testimony regarding removal of carpeting from the store, and in denying defendant's motions for severance and mistrial. Catabran also contends that he was denied effective assistance of counsel. We hold that the district court ruled properly on these motions and that Catabran was not denied effective assistance of counsel. We therefore affirm.

BACKGROUND

Defendant Catabran served as president of Bedder Nights, Inc., a corporation owning three waterbed stores in the Sacramento area. Co-defendant Jack Emmets served as vice-president. Each owned fifty percent of the corporation's stock. They opened the first store (the "Bradshaw" store) in 1980, the second (the "Sunrise" store) in early 1982, and, the third (the "El Camino" store) shortly thereafter.

Defendants encountered financial difficulties and in June 1982, sought the advice of a bankruptcy attorney. On June 24, 1982, they petitioned for relief under Chapter 11. Both defendants received instructions regarding their obligations as debtors in possession, including their duty to safeguard assets and make monthly reports.

In August 1982, defendants closed the Sunrise store and transferred inventory, office equipment, and supplies to the other two stores. Defendants also ordered the removal of carpeting, speakers, track lighting, and other fixtures from the Sunrise store.

At this point, defendants divided their responsibilities: Catabran took charge of the El Camino store and told one of his employees that he and Emmets had discussed splitting up the company. Catabran would receive half the Bedder Nights merchandise and open another store under a different name at the El Camino location, using the leasehold improvements from the Sunrise store. In December 1982, Catabran reserved the name "Waterbed Liquidators" and asked his sister to serve as nominal president.

During November 1982, the bankruptcy court issued an Order to Show Cause to determine if the proceedings should be converted to a bankruptcy under Chapter 7. The government argued that $180,000 worth of merchandise was at the Bradshaw and El Camino stores one week prior to this time. Shortly after the bankruptcy court issued the Show Cause Order, Catabran supervised the removal of a substantial quantity of items, including merchandise and office equipment, from the Bradshaw showroom and warehouse. Catabran had the items brought either to the Waterbed Liquidators' warehouse and showroom or to a storage location rented under another name. Catabran did not inform Emmets of these activities. Catabran ultimately sold this merchandise through Waterbed Liquidators.

At approximately the same time, Catabran held a going-out-of-business sale at the El Camino store. He instructed the sales staff to accept only checks with the payee designation left blank. Credit purchases, when insisted upon, were run through an imprinter which had the Bedder Nights nameplate removed. The name "Waterbed Liquidators" was later placed on the blank charge slips.

After the sale, Catabran closed the El Camino store, remodeled it using Sunrise fixtures, and reopened it as Waterbed Liquidators. He instructed the employees to remove all tags identifying Bedder Nights and to destroy all Bedder Nights records and forms. Waterbed Liquidators then sold Bedder Nights merchandise.

On December 1, 1982, the bankruptcy court ordered conversion of Bedder Nights' Chapter 11 reorganization to a Chapter 7 liquidation. The court appointed a trustee on December 6, 1972, but the trustee found no records or merchandise and assets totaling only $8,495. Search warrants executed in February 1983 at the Waterbed Liquidators warehouse and a storage facility turned up items traceable to Bedder Nights and some Bedder Nights records.

Catabran and Emmets were charged with conspiracy and two counts of concealing assets during bankruptcy--violations of 18 U.S.C. Sec. 152. At trial, the district court overruled Catabran's objections to the introduction of general ledger computer printouts and a chart compiled from the printouts, ruling that the former were properly admissible as business records under Fed.R.Evid. 803(6), the latter as a summary under Fed.R.Evid. 1006. The court also allowed testimony regarding the carpeting removed from the Sunrise store, denying Catabran's in limine motion and overruling similar objections made at trial.

At the close of the government's case, the district court granted defendant Emmets' motion for severance, finding that the overwhelming evidence against Catabran could unfairly prejudice Emmets even with limiting instructions. The court denied Catabran's motion for mistrial and severance. At the same time, the court dismissed the conspiracy count.

After an eleven-day jury trial, Catabran was convicted of two counts of violating 18 U.S.C. Sec. 152--concealing assets in a bankruptcy.

DISCUSSION

I. Admission of the Computer Printouts

A. Standard of Review

Appellant contends that the district court erred in admitting general ledger computer printouts and a summary chart compiled from them. We review evidentiary questions for an abuse of discretion. United States v. Smith, 609 F.2d 1294, 1302 (9th Cir.1979); United States v. Licavoli, 604 F.2d 613, 623 (9th Cir.1979); cert. denied, 446 U.S. 935, 100 S.Ct. 2151, 64 L.Ed.2d 787 (1980).

B. The Computer Printouts

1. Admissibility as Summaries Under Fed.R.Evid. 1006

Catabran contends that the computer printouts constituted a summary and were inadmissible under Fed.R.Evid. 1006 because the government failed to produce the underlying documents. His argument is without merit. The computer printouts were the company's general ledgers. They contained inventory, payroll, and other accounting data put into the computer by Bedder Nights' bookkeepers on a monthly basis.

This court has consistently treated general ledgers as business records, not as summaries. See, e.g., Mende v. United States, 282 F.2d 881, 884 (9th Cir.1960) (general ledger properly admitted as business record in mail fraud case), cert. denied, 364 U.S. 933, 81 S.Ct. 379, 5 L.Ed.2d 365 (1961); Standard Oil Co. v. Moore, 251 F.2d 188, 223 (9th Cir.1957), cert. denied, 356 U.S. 975, 78 S.Ct. 1139, 2 L.Ed.2d 1148 (1958) (entries from plaintiff's general ledger based on cash register receipts admissible as business record in antitrust suit).

The use of a computer to create the ledger does not change the result. In United States v. De Georgia, 420 F.2d 889, 893 n. 11 (9th Cir.1969), the court noted that "it is immaterial that the business record is maintained in a computer rather than in company books" assuming that the proponent lays a proper foundation. See also United States v. Miller, 771 F.2d 1219, 1237 (9th Cir.1985) (upholding admission of computerized phone billing records under the business records exception in a trial for conspiracy to fix prices). ¹ Moreover, Fed.R.Evid. 803(6), the business records exception, specifically allows for the admission of a "data compilation, in any form," which meets the requirements of the rule. Consequently, we analyze the district court's admission of the printouts as business records, not as summaries.

2. Admissibility as Business Records Under Fed.R.Evid. 803(6)

The district court properly found the computer printouts admissible as business records under Fed.R.Evid. 803(6). See Miller, 771 F.2d at 1237; De Georgia, 420 F.2d at 893 n. 11; Russo, 480 F.2d at 1240-41; Fendley, 522 F.2d at 187. The proponent of the business records must satisfy the foundational requirements of the business records exception. Rule 803(6) allows for the admission of business records when they are: (1) made or based on information transmitted by a person with knowledge at or near the time of the transaction; (2) made in the ordinary course of business; and (3) trustworthy, with neither the source of information nor method or circumstances of preparation indicating a lack of trustworthiness. See Miller, 771 F.2d at 1237.

Qualified witnesses laid the foundation required by Rule 803(6). One of the bookkeepers, Miss Keys, testified that she put into the computer sales, inventory, payroll, and tax information on a current basis; that the printout accurately set forth that information; and that Bedder Nights produced these printouts as a regular practice each month. Ms. Keys also testified that she manually checked the information put into the computer for accuracy. Other witnesses provided similar testimony.

Catabran makes two related arguments for excluding the printouts under Rule 803(6). First, he contends that the printouts were not made in the ordinary course of business because he did not rely on them for inventory purposes. Witnesses testified that the printouts were used primarily for financial reporting and to secure loans. However, there was also testimony that, although the business did not necessarily rely on the printouts for inventory, the printouts did provide accurate inventory figures. Moreover, Fed.R.Evid. 803(6) does not require that the...