US v. Weinstock, 94-CR-10 S.

• Decision Date: 07 September 1994
• Docket Number: No. 94-CR-10 S.,94-CR-10 S.
• Citation: 863 F. Supp. 1529
• Parties: UNITED STATES of America, Plaintiff, v. Frank J. WEINSTOCK, Defendant.
• Court: U.S. District Court — District of Utah

863 F. Supp. 1529

UNITED STATES of America, Plaintiff, v. Frank J. WEINSTOCK, Defendant.

No. 94-CR-10 S.

United States District Court, D. Utah, Central Division.

September 7, 1994.

Stewart C. Walz, Mary Beth Walz, Esq. Asst. U.S. Attys., Salt Lake City, UT, for plaintiff.

M. David Eckersley Prince, Yeates & Geldzahler, Salt Lake City, UT, for defendant.

MEMORANDUM & ORDER

BOYCE, United States Magistrate Judge.

The defendant, Frank J. Weinstock, has made a motion in limine pursuant to Rule 104, F.R.E. to prohibit the Government from offering or attempting to offer into evidence an out-of-court declaration of Dr. Vladimir Skondia, deceased. The defendant is charged by indictment with securities fraud in connection with the purchase and sale of securities (Counts 1 and 2, 15 U.S.C. § 78j(b), 17 C.F.R. § 240.10b-5 and 15 U.S.C. § 78ff); interstate transportation of stolen property (Counts 3 and 4, 18 U.S.C. § 2314); and mail fraud (Count 5, 18 U.S.C. § 1341). In Count 1, it is alleged that the defendant's fraudulent course of conduct involved misdealings with a stock certificate for Diversified Technologies, Inc. (DTI). The certificate in question (# 4938) represents 35,000 shares of restricted DTI stock and was allegedly owned by Vladimir Skondia. (Indt. p. 3, ¶ 1). It is alleged defendant never had an ownership interest in the stock or the certificate nor any right to dispose of the certificate except for the benefit of DTI. It is the Government's theory that defendant forged an endorsement on the certificate and improperly used the certificate to obtain a line of credit and transferred the certificate to a third person to obtain a loan and defaulted on the loan. Skondia reported to DTI that the certificate was lost. A secured lender on the certificate sought to have the certificate transferred into his name. (Indt.)

The defendant's memorandum in support of his motion in limine contends that Weinstock received the stock certificate from Skondia to use as Weinstock saw fit. (File Entry # 8, p. 2). To establish the contrary, and that Certificate # 4938 was stolen, the government seeks to introduce an affidavit of Skondia given in March, 1989, before he died, which is a document from the records of Securities Transfer, Inc. Securities Transfer, Inc. was DTI's transfer agent located in Sandy, Utah (Indt. p. 3, ¶ 10). The Skondia affidavit was apparently submitted in order for him to receive a new certificate based on Skondia's claim of ownership.

The Government intends to offer foundation for the Skondia affidavit through Mr. Kim McReynolds. (Tr. May 18, 1994, p. 4, hereinafter Tr. ____). McReynolds is expected to testify as to Weinstock's and Skondia's involvement in DTI. McReynolds was an officer in DTI. McReynolds will testify as to the loss of the stock certificate from DTI records and a communication from DTI to the stock transfer agent, Securities Transfer, Inc., expressing an intent to stop transfer. (Tr. pp. 5-6). Exhibit 2 is a letter from McReynolds to Janet Johnson at Securities Transfer directing a "stop transfer" be placed on the stock certificate. Frank Weinstock's office was that last known location of the certificate. (Id.) In addition, McReynolds will testify that DTI approved by corporate resolution the issuance of a new stock certificate to Vladimir Skondia. (See Pl. Exh's 3 & 4). A new stock certificate was issued. (Tr.p.6).

The affidavit which the government seeks to introduce, and defendant opposes, recites in its material portion that Skondia is the "legal and beneficial owner of 35,000 shares of the capital stock of Diversified Tech, Inc." The stock certificate affidavit lists the certificate number, 4938, the date, "July 30, 1987," registered in the name of "Vladimir Skondia." (Pl.Exh. # 1). It is further stated:

"That said certificates were not endorsed; that neither the said certificates nor the rights of said stockholders therein have, in whole or in part, been assigned, transferred, hypothecated, pledged, or otherwise disposed of.

That circumstances concerning the loss or destruction of the certificates and the efforts made to locate them are: Certificate never delivered to me.

That this Affidavit is made for the purpose of inducing said Company to issue new certificates in lieu of those alledged sic to have been lost or destroyed, deponent hereby agreeing immediately to surrender to said company the said lost certificates should they hereafter come into deponents possession or control."

The affidavit is signed and sworn to, with notarization. It is dated March 1, 1989. The affidavit was in the custody of the transfer agent, Securities Transfer. (Tr.p.6). McReynolds will testify to aiding Skondia in the preparation of the affidavit. (Id). DTI executed an indemnification agreement in case the lost certificate turned up.

The Government has stated it does not rely on the regularly kept records exception under Rule 803(6), F.R.E. for the admission of the affidavit. (Tr.p.11). At hearing on the motion, the Government also indicated it did not rely on the exception to the hearsay rule for statements against pecuniary or proprietary interests. Rule 804(b)(3).¹

The government relies on rule 803(15), F.R.E. as the basis to admit Vladimir Skondia's affidavit. It also contends the affidavit is admissible under the residual exception to the hearsay rule, Rule 804(b)(5), F.R.E. The defendant contends Rule 803(15), F.R.E. does not apply to allow the admission of the Skondia affidavit, that the general exception to the hearsay rule is also inapplicable, and that the confrontation clause to the Sixth Amendment would be violated by the admission of the affidavit.

Rule 803(15), F.R.E. provides:

"A statement contained in a document purporting to establish or affect an interest in property if the matter stated was relevant to the purpose of the document, unless dealings with the property since the document was made have been inconsistent with the truth of the statement or the purport of the document."

Notes of the Advisory Committee on the 1972 Proposed Rules states that:

"Dispositive documents often contain recitals of fact. Thus a deed purporting to have been executed by an attorney in fact may recite the existence of the power of attorney, or a deed may recite that the grantors are all the heirs of the last record owner. Under the rule, these recitals are exempted from the hearsay rule. The circumstances under which dispositive documents are executed and the requirement that the recital be germane to the purpose of the document are believed to be adequate guarantees of trustworthiness, particularly in view of the nonapplicability of the rule if dealings with the property have been inconsistent with the document. The age of the document is of no significance, though in practical application the document will most often be an ancient one. See Uniform Rule 63(29), Comment."

However, nothing in the wording of Rule 803(15) requires a dispositive document. The statement in the notes of the Advisory Committee is correct as far as it goes,² however it cannot be taken as a limitation on the types of documents to which Rule 803(15) applies. For example, an affidavit accompanying a notice of the death of a joint tenant "affects an interest in property," but is not dispositive. Matters allied to interests in real or personal property, that relate to the property may affect an interest in it but not be dispositive.

Rule 527 of the American Law Institute Model Code of Evidence provided a specific exception to the hearsay rule for recitals in dispositive documents and contained language similar to Rule 803(15) relating to an "other document purporting to affect an interest in realty or personalty." The language of Rule 527 expressly relating to dispositive documents was not carried over in the federal rules. Rule 63(19) of the Uniform Rules of Evidence, 1953 provided for admission of an official record of a document purporting to establish or affect an interest in property. This provision is not akin to Rule 803(15), but a specialized public records exception to the hearsay rule. Rule 63(29) of Uniform Rules of 1953 refers to recitals in documents affecting property and applies to a "deed of conveyance or a will or other document purporting to affect an interest in property ..." This rule seems to be the nucleus of Rule 803(15), but Rule 803(15) does not refer to a deed, conveyance or will. A broader reference of purporting to "establish or affect an interest in property" is used. Establish is used in the rule separately from affect.

In Louisell and Mueller, Federal Evidence § 463 (1980) the authors refer to Rule 803(15) as applicable to dispositive documents, but set forth three elements for the rule's application: (1) The document must purport to establish or affect an interest in property; (2) The statement must be relevant to the purpose of the document, and; (3) Subsequent dealings with the property cannot be inconsistent with the truth of the statement or purport of the document. Id. p. 814. These standards do not necessarily require a dispositive document. See also Graham, Handbook of Federal Evidence, 3rd Ed. § (1991).

Several cases construing either Rule 803(15), F.R.E. or a state counterpart have not required that the statement be in a dispositive document. In Taylor v. United States, 1993 WL 597379 (D.Ariz., 1993); 72 A.F.T.R.2d 93-6577, 93-2 USTC p. 50, 583 the court held real estate settlement documents, escrow instructions and supplemental escrow instructions were admissible under 803(15) as "affecting" an interest in property even though they would not necessarily be dispositive in "effect" but could "affect" an interest in property.

In Compton v. Davis Oil Co., 607 F.Supp. 1221, 1229 (D.Wyo.1985) the court held "records and instruments affecting interests in property" were admissible. The court, in discussing the rule, said:

"Such instruments are executed in relation to serious

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