U.S. v. Franco

• Decision Date: 21 April 1989
• Docket Number: No. 88-2006,88-2006
• Citation: 874 F.2d 1136
• Parties: 27 Fed. R. Evid. Serv. 1353 UNITED STATES of America, Plaintiff-Appellee, v. Antonio FRANCO, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1136

874 F.2d 1136

27 Fed. R. Evid. Serv. 1353

UNITED STATES of America, Plaintiff-Appellee, v. Antonio FRANCO, Defendant-Appellant.

No. 88-2006.

United States Court of Appeals Seventh Circuit.

Argued Feb. 8, 1989.

Decided April 21, 1989.

Allan A. Ackerman, Chicago, Ill., for defendant-appellant.

Steven Shobat, Asst. U.S. Atty., Chicago, Ill., for plaintiff-appellee.

Before WOOD, Jr., POSNER and COFFEY, Circuit Judges.

HARLINGTON WOOD, Jr., Circuit Judge.

The principal issue involves the business records exception to the hearsay rule, Rule 803(6) of the Federal Rules of Evidence. Is a drug enforcement agent qualified to authenticate business records under Rule 803(6) if he does not have an accounting background and bases his testimony primarily on statements made by witnesses unavailable at trial? The defendant Antonio Franco argues that under those circumstances an agent is not qualified and appeals the district court's decision to admit records based on such testimony. We affirm the district court's decision and also hold that the district court did not abuse its discretion with regard to supplemental instructions it gave to the jury.

I. FACTS

On June 16, 1987, a grand jury named Antonio Franco, along with nineteen codefendants, in an eleven count indictment for conspiracy to sell marijuana. Franco was charged with one count of conspiring to knowingly possess with intent to distribute or to knowingly distribute 1,000 kilograms of marijuana in violation of 21 U.S.C. Secs. 841(a) and 846. Government agents arrested Franco at his home in McAllen, Texas and removed him to Rockford, Illinois. He was the sole defendant in a trial that began on March 21, 1988. On March 29, a jury found Franco guilty of the conspiracy charge; the district court sentenced Franco to thirty-five years imprisonment on May 17, 1988. Franco now appeals his conviction.

At trial, the prosecution produced numerous witnesses who testified that Franco participated in an extensive marijuana distribution network. In 1982 Franco and a friend named Richard Carlson developed a plan to import marijuana from Mexico using vehicles with secret compartments. Franco provided El Camino Chevrolets that Carlson would "remodel" to include fake walls or ceilings. Eventually they added vans and airplanes to their fleet of vehicles. By using fake compartments in the vehicles' interiors, Franco and Carlson transported marijuana from Mexico to Illinois and Texas. Undisputed evidence indicated that between 1982 and 1983 alone Franco and Carlson were responsible for bringing several hundreds of pounds of marijuana to Rockford, Illinois.

Evidence also indicated that Franco and his coconspirators distributed the marijuana in the Rockford area. Richard Carlson's wife testified that she kept extensive records concerning aspects of the drug transactions: payments to Antonio Franco, the costs of parts added to the cars and vans, quantities of marijuana that Richard Carlson kept for himself and for resale, and details about distribution to dealers. Bertha Villareal DeDios stated that in 1982 she worked as a "runner" for her husband. On three separate occasions DeDios testified she went to Franco's house to pick up Ziploc bags filled with marijuana and then gave them to the cook at the restaurant where she worked. The proceeds from these sales were distributed to Franco and DeDios's husband.

In addition to this and other evidence at trial, the government sought to introduce records and ledgers taken from Oscar's Money Exchange (Oscar's), one of approximately twenty money exchanges in the border town of Hildago, Texas. Government agents seized Oscar's records, along with $2.6 million, during a search executed in June 1987 and connected to the indictment of Franco. The records included a listing of the accounts kept at Oscar's, a ledger sheet indicating deposits and withdrawals, two ledger sheets which appeared to be neater reprints of the ledger sheet listing deposits and withdrawals, a list of Oscar's clients, and a binder detailing activity related to accounts, wire transfers, money orders, and cashier's checks.

Outside the presence of the jury, the government sought the admission of Oscar's records and ledgers under the business records exception to the hearsay rule. Fed.R.Evid. 803(6). The government relied primarily on the testimony of Narcotics Agent Jose M. Garza, who searched Oscar's and spoke to Oscar Alvarez, the owner, and Blanca Isabel Ramirez, an employee. Agent Garza testified that he had reviewed the records and had spoken to Alvarez and Ramirez concerning the manner in which they kept the records. At the time of trial, however, neither Alvarez nor Ramirez was available to testify. The defense objected that the records were inadmissible hearsay because Garza was not qualified under the business records exception to introduce the records and the records themselves were untrustworthy. The district court ruled that the records were admissible because they appeared trustworthy and were prepared and maintained in the ordinary course of Oscar's business. The district court refused, however, to admit into evidence statements made by Oscar Alvarez and Blanca Ramirez to Agent Garza.

Agent Garza then described to the jury the contents of the records. Franco had an account at Oscar's that showed a great amount of activity between January and June of 1987. During that time, Franco made over fifteen deposits, the total amount of which exceeded $5.5 million dollars. The balance on Franco's account indicated that $949,000 of the $2.6 million confiscated from Oscar's belonged to Franco. Franco withdrew $250,000 the day before his arrest.

II. DISCUSSION

A. Business Records Exception

Franco contends that the district court should not have admitted the records taken from Oscar's under the business records exception to the hearsay rule. Franco argues that Agent Garza was not qualified to testify about the manner in which Oscar's employees prepared and maintained the records because he did not personally observe their actions. Furthermore, Franco asserts that the unavailability of the records' custodian and various deficiencies in the accounting practices at Oscar's indicate that the records are untrustworthy.

Rule 803(6) of the Federal Rules of Evidence defines business records or "records of regularly conducted activity" as

record[s], or data compilation[s], in any form, of acts, events, conditions ... made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the ... record[s], or data compilation[s], all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.

Fed.R.Evid. 803(6).

It is within the trial court's discretion to determine whether a proper foundation was laid for application of the business records exception to a particular document and whether the circumstances of the document's preparation indicate trustworthiness. United States v. Keplinger, 776 F.2d 678, 693 (7th Cir.1985), cert. denied, 476 U.S. 1183, 106 S.Ct. 2919, 91 L.Ed.2d 548 (1986). See also United States v. Zapata, 871 F.2d 616, 625-26 (7th Cir. Feb. 24, 1989). When making preliminary factual inquiries about the admissibility of evidence under a hearsay exception, the district court must base its findings on the preponderance of the evidence. Bourjaily v. United States, 483 U.S. 171, 107 S.Ct. 2775, 2778, 97 L.Ed.2d 144 (1987). That evidence, however, may include hearsay and other evidence normally inadmissible at trial. Fed.R.Evid. 104(a) (trial court not bound by the rules of evidence except with respect to privileges); Fed.R.Evid. 1101(d)(1) (rules of evidence do not apply, except with respect to privileges, to determinations of questions of fact preliminary to admissibility of evidence); Bourjaily, 107 S.Ct. at 2780 (Rule 104 permits court to consider any evidence whatsoever, bound only by the rules of privilege).

(1) Qualified Witness

Franco claims that Agent Garza was not qualified to testify on Oscar's record-keeping practices. He argues that Agent Garza did not have an accounting background and did not personally witness the preparation or maintenance of the business records at Oscar's. Garza admitted that he did not personally know whether entries in the records were made at the same time or near the time of the transaction. Garza also explained that the records contained alterations and did not always correspond with each other.

A qualified witness is not required, however, to have "personally participated in or observed the creation of the document," United States v. Moore, 791 F.2d 566, 574 (7th Cir.1986), or know who actually recorded the information, United States v. Dominguez, 835 F.2d 694, 698 (7th Cir.1987). We broadly interpret the term "qualified witness" as requiring only someone who understands the system used. Moore, 791 F.2d at 574-75. "The witness 'need only be someone with knowledge of the procedure governing the creation and maintenance of the type of records sought to be admitted.' " Dominguez, 835 F.2d at 698 (quoting United States v. Keplinger, 776 F.2d 678, 693 (7th Cir.1985), cert. denied, 476 U.S. 1183, 106 S.Ct. 2919, 91 L.Ed.2d 548 (1986)); United States v. Wables, 731 F.2d 440, 449 (7th Cir.1984).

Although this court has not previously examined whether a law enforcement agent may act as a "qualified witness" in this context, we and other circuits have liberally interpreted the term "qualified witness" under Rule 803(6). This court in United States v. Chappell, 698 F.2d 308, 311-12 (7th Cir.), cert. denied, 461 U.S. 931, 103 S.Ct. 2095, 77 L.Ed.2d 304 (1983), held that two former employees of the defendant's company (who testified that the now...