1

The Honorable Richard H. Kyle, United States District Judge

for the District of Minnesota.

___________

No. 95-1874

___________

United States, *

*

Appellant, *

*

v. *

*

John Charles Flaherty, *

* Appellee. *

Appeal from the United States

District Court for the

District of Minnesota

___________

Submitted: November 16, 1995

Filed: February 27, 1996 ___________

Before HANSEN, JOHN R. GIBSON, and MURPHY, Circuit Judges. ___________

MURPHY, Circuit Judge.

John Charles Flaherty appeals his conviction on two counts of

aiding and abetting arson for which he received concurrent 37 month

sentences and three years supervised release. On appeal he argues

that the district court1 erred by admitting a nontestifying

codefendant's statements in violation of Bruton v. United States,

391 U.S. 123 (1968), denying his motion for severance, and

excluding evidence tending to show that a third party might have

set the fires. He also claims that the evidence was insufficient

to support the jury's verdict. We affirm.

Eddy's Hamburger and Malt Shop in Long Lake, which was owned
2

and operated by Flaherty, was destroyed by two deliberately set

fires that occurred approximately two weeks apart. On December 31,

1988, the fire department responded to put out a fire at the

restaurant. An investigation found multiple points of origin,

evidence of a liquid accelerant, and the remains of "trailers"

consisting of commercial restroom roller towels that had been

carefully draped from one fire location to the other. There was no

evidence of forced entry, and all doors had been locked. The fire

marshal investigator concluded that the fire had been set

intentionally. On January 12, 1989 a second fire broke out at the

restaurant. That investigation uncovered evidence that flammable

liquids had been poured throughout the restaurant. There was no

sign of forced entry. The fire marshal determined that this fire

had also been deliberately set.

After an extensive investigation, Flaherty and Gregory Lee

Melina were indicted by a grand jury and each charged with two

counts of aiding and abetting arson, in violation of 18 U.S.C. §§

844(i) and 2, and one count of conspiracy to commit arson, in

violation of § 18 U.S.C. § 844(i). Both pleaded not guilty and

went to trial before a jury. Flaherty was convicted for both

fires, but Melina was convicted only of involvement in the second,

and his appeal is proceeding separately. 

The evidence at trial suggested that Flaherty was in severe

financial trouble and set the fires to collect insurance proceeds,

which he promised to share with Melina. Flaherty had incurred

significant business and personal debts. The restaurant, which was

his only source of income, was not generating a cash flow

sufficient to cover expenses. He had not paid the taxes withheld

from his employees' wages, and he owed the state significant

amounts for unemployment compensation. In addition, his second

business venture, the development of a teen nightclub across the

street from Eddy's, had failed. In the weeks prior to the first

fire, Flaherty learned that significant expenses would have to be
3

paid before the building could open and that the city council had

denied his permit applications. 

The evidence also suggested that Flaherty had an opportunity

to set or aid in setting the fires. He closed the restaurant early

on the day of the first fire. He entertained guests at his home in

the evening, but there was evidence to show that he left his guests

for nearly two hours shortly before the fire was discovered. The

night of the second fire Flaherty had an alibi; he was in bed

recovering from hernia repair surgery that he had undergone that

afternoon. The timing of the surgery was shown to be suspicious,

however. Flaherty had told others that his doctor told him to have

the operation on that day. The doctor testified at trial that he

had told Flaherty the surgery could be scheduled at will and that

Flaherty had called on January 10 to schedule the surgery for two

days later, the day of the fire.

There was physical evidence to link Flaherty to the fire

scene. Analysis of the toweling material used as a trailer in the

first fire revealed that it had been soaked with a medium petroleum

distillate similar to mineral spirits. Mineral spirits and burned

scraps of similar toweling were found inside a locked area of the

building that had been leased for the teen nightclub. Only

Flaherty and Tom Gestach, his business partner in the nightclub,

had keys. The police also recovered a half-roll of similar

toweling from the nightclub. After the second fire, Flaherty

decided to give up on the nightclub venture. When he and Gestach

were removing contents from the building, they uncovered a pile of

toweling that had been ripped into strips similar to the trailers.

Flaherty attempted to conceal the existence of these toweling

strips. He placed them in a bag and convinced Gestach to carry it

to a dumpster at a nearby Burger King. He told Gestach that he was

being framed. 

The jury also heard evidence that suggested Flaherty may have
4

attempted to divert suspicion away from himself by falsely

reporting burglaries and mysterious threats over a period of time

before the fires were set. He reported a string of burglaries at

the restaurant, but police became suspicious because there was no

sign of forced entry and no damage done. He also reported

receiving a threatening phone call about his involvement in the

teen night club, but police later found several scripts for the

call on the nightclub premises and a diary entry by Flaherty

identifying the call as a "phony harassment call." 

There was also evidence linking Flaherty with Melina. The

parties stipulated that the two knew each other, having met in the

late 1970's or early 1980's. Liz Sorenson, Flaherty's friend and

an employee at Eddy's, testified that Flaherty had used her

telephone several times to contact someone named Greg and that she

had received telephone calls for Flaherty from someone who

identified himself as Greg. She also testified that during the

time between the fires she had accompanied Flaherty when he was

looking for someone matching Melina's description. In addition, a

chalkboard found in Melina's basement had traces of an accurate

drawing of Eddy's. 

On appeal Flaherty argues that his Sixth Amendment right to

confrontation was violated by the admission of certain out-of-court

statements made by Melina, who did not testify and thus was not

available for cross examination. Flaherty claims that the

statements incriminated him in violation of Bruton v. United

States, 391 U.S. 123 (1968). 

Three separate statements were involved. First, statements

made by Melina at a deposition in a related civil case were

admitted into evidence. They concerned his contacts with Flaherty.

Hal Shillingstad, the attorney who took the deposition, testified

that Melina had told him "I ain't seen Johnny since 1980, and I've

seen him one time back maybe in '84. That was the last time I seen
5

him," and "when I knew him, he drove a white, I think it was a

Cadillac, white Cadillac or something . . .. " (T. 918-20).

Flaherty argues that this is incriminating if combined with the

testimony of Flaherty's wife that they had owned a white Cadillac

between September 1988 and March or April 1989. He argues that the

two pieces of evidence show that he and Melina had seen each other

near the time of the fire. Second, Heather Westergaard testified

about threats made by Melina during a telephone conversation in

April 1994. After she inquired about his connection to a man named

John, Melina "told me if I didn't butt out of his business and stop

asking questions, he was going to come and kick my fucking ass, and

he called me a stupid bitch and a cunt. He was going to kick my

ass and my boyfriend's ass." (T. 931). Finally, an agent from the

Bureau of Alcohol, Tobacco and Firearms (ATF) testified that Melina

told him that he had drawn a diagram found on the chalkboard, but

denied that it was of Eddy's. Instead, Melina "said that the

drawing on the board was of a bank in Mound, Minnesota" which "he

and another individual had planned to rob." (T. 974). 

Although Flaherty raised a Bruton objection to one of the

statements at trial, he did not follow through to ensure the issue

was preserved. When he objected to the admission of Melina's

deposition statement, the government argued that that testimony

contained only false exculpatory statements that did not directly

implicate either party. The district court agreed and overruled

the Bruton objection, but then asked the parties to confer about

the proffered evidence. Flaherty agreed to the use of the

statements now challenged, (Tr. 900-01), and did not object at the

time they were introduced. (Tr. 918-20). When the evidence was

brought in, the jury was instructed that "the testimony . . . with

respect to Mr. Melina's testimony is admissible only as to him or

against him and is not to be used with respect to any charges
 2

Melina's lawyer requested that the instruction be given. A

deposition statement by Flaherty was admitted at the same time,

and Melina's lawyer raised a Bruton objection related to it. He

requested that a limiting instruction be given about the

depositions of both Flaherty and Melina.

 3In response to the district court's inquiry about whether

dismissal of the conspiracy count would lead to a request for a

mistrial, Flaherty's lawyer replied:

I think in this case because of the relative quanta of

evidence that a mistrial is not appropriate, and that

the problem can be remedied by sufficient cautionary

instructions, which I believe is the first time I've

ever said that in 23 years. And we are not seeking a

mistrial. I've asked Mr. Flaherty if he is seeking a

mistrial, and he does not want a mistrial either.

(Tr. at 1130).

6

against Mr. Flaherty."2 Flaherty did not raise any Bruton

objection to the statements described in the testimony of

Westergaard and the ATF agent, but he did object to the statements

as hearsay. 

At the close of all the evidence, the district court dismissed

the conspiracy charge on the basis of insufficient evidence. At

that time, Flaherty was given an opportunity to raise any Bruton

concerns, but chose not to do so. His counsel stated that he did

not believe any admitted evidence required a mistrial and that he

believed an instruction directing the jury to consider Melina's

statements only as to himself would be sufficient.3 Although some

evidence had been admitted pending proof of a conspiracy, that

evidence involved statements made by Flaherty. The three

statements now objected to on Bruton grounds were made after the

conclusion of the charged conspiracy and were admitted at trial

with cautionary instructions, but they were not received

conditionally. Flaherty did not mention any Bruton problem, and

the court gave him the relief he requested. He did not object to

the content of the jury instructions given at the close of the
 4

Prior to deliberating, the jury was instructed:

It is your duty to give separate and personal

consideration to the case of each individual. When you

do so, you should analyze what the evidence in the case

shows with respect to that individual defendant,

leaving out of consideration any evidence admitted

solely against the other defendant.

 * * *

In certain circumstances evidence has been admitted

only concerning a particular defendant or only for a

particular purpose and not generally against both

defendants or for all purposes. 

For the limited purpose for which this evidence has

been received you may give it such weight as you feel

it deserves. You may not, however, use this evidence

for any other purpose or against any other party not

specifically mentioned. 

In addition, statements made by a defendant out of the

presence of the other defendant are to be considered by

you only with regard to the defendant making the

statement and are not to be considered by you with

regard to the other defendant.

(Jury Instruction Tr. 102, 104-05).

7

trial.4 It thus appears from the record that Flaherty waived the

right to pursue a Bruton objection on appeal. 

 Even assuming the issue was properly preserved for appeal,

however, we are not persuaded that any Bruton violation occurred.

A defendant's Sixth Amendment right of confrontation is violated

when a nontestifying codefendant's confession incriminates the

defendant and is introduced at their joint trial, even if the jury

is instructed to consider the confession only against the

codefendant. Bruton, 391 U.S. at 135-136. Bruton does not,

however, require the exclusion of all statements made by a

codefendant. If a codefendant's confession does not incriminate

the defendant on its face, but does so only when linked to

additional evidence, it may be admitted if a limiting instruction
8

is given to the jury and the defendant's name is redacted from the

confession. Richardson v. Marsh, 481 U.S. 200, 211 (1987). Bruton

does not apply at all if the codefendant's statement does not

incriminate the defendant. U.S. v. Escobar, 50 F.3d 1414, 1422

(8th Cir. 1995). 

Here, the statements made by Melina do not incriminate

Flaherty on their face, or even when linked to other evidence

received at the trial. They do not refer to the charged crimes at

all. Melina's deposition statements, even if linked to Mrs.

Flaherty's testimony about when the couple owned the Cadillac, show

only that Melina had seen Flaherty sometime near the time of the

fire. Melina's threatening statements to Westergaard may suggest

that he did not want to answer questions about his involvement with

someone named "John," but did not implicate Flaherty in arson.

Similarly, Melina's false statement to the ATF agent that the

blackboard diagram was a bank he planned to rob, shows that Melina

was willing to lie about the diagram, but does not implicate

Flaherty. Melina's statements are evasive, false, and threatening,

but not incriminating.

 

Moreover, any error in the admission of Melina's statements

was harmless. See United States v. Jones, 965 F.2d 1507, 1515 (8th

Cir.), cert. denied, 113 S. Ct. 346 (1992). If Melina's statements

are not considered, the government's evidence, including evidence

of Flaherty's motive, opportunity, connection to Melina, suspicious

behavior, and false statements, is sufficient to support Flaherty's

arson convictions. 

Flaherty also argues that his case should not have been joined

with Melina's and that the district court's denial of his motion to

sever was an abuse of discretion. He claims he was prejudiced by

the joinder because it allowed the jury to hear Melina's out-ofcourt statements. This is essentially the same as his Bruton

argument, and we reject it for similar reasons. As explained
9

above, the statements that he complains of were not actually

incriminating against him and were therefore not prejudicial to his

case. See United States v. Rimell, 21 F.3d 281, 289 (8th Cir.),

cert. denied, 115 S. Ct. 453 (1994) (defendant must show joinder

resulted in "severe or compelling prejudice"). Moreover, Flaherty

does not demonstrate that the jury was unable to compartmentalize

the evidence as it related to the codefendants. See United States

v. Agofsky, 20 F.3d 866, 871 (8th Cir.), cert. denied, 115 S. Ct.

280 (1994). The fact that the jury did not convict both defendants

of both counts is evidence of its ability to analyze and

distinguish the evidence as to each. In this case the limiting

instructions were sufficient to cure any risk of prejudice. Zafiro

v. United States, 506 U.S. 534, 113 S. Ct. 933, 937 (1993). The

district court did not abuse its discretion.

 

Flaherty also argues that he was deprived of his rights to

present a defense and to due process because the district court

excluded evidence concerning the possible culpability of a third

party. Flaherty claimed that T.E.H., a high school student who was

a former Eddy's employee and a friend of Flaherty's son, Brady, had

set a fire in Brady's school locker on October 7, 1988. T.E.H. was

charged with arson in state court, but the charge was dismissed.

During her testimony at trial, Mrs. Flaherty mentioned that someone

had started a fire in Brady's locker in October 1988, but she did

not attempt to identify the culprit. 

 Near the end of Flaherty's trial, his lawyer attempted to

introduce a copy of the dismissed state court complaint to prove

that T.E.H. set the locker fire. He hoped to create an inference

that T.E.H. was responsible for the fires at Eddy's, and he

indicated that he might be able to produce an eyewitness to the

locker fire, but he was not sure. The government objected to the

offer on the ground the evidence would be inadmissible under

Federal Rules of Evidence 404(b) and 403, and the district court
 5

The district court stated that "[t]o the extent that there

has been an offer to prove this, I am going to sustain the

government's objection to it and not allow it . . .." (Tr. 1088-

89). As the dissent points out, the court went on to elaborate

on the admissibility of the evidence under Rule 404(b), but it is

apparent from the context of the ruling that the court considered

factors pertinent to both rules. The court's colloquy with 

counsel showed its concern over what proof Flaherty could

actually offer about the locker incident to make it relevant, and

the court commented that the manner in which the locker fire had

been 

set was entirely different from the other fires. A district

court is not required to make explicit findings regarding its

Rule 403 balancing. King v. Ahrens, 16 F.3d 265, 269 (8th Cir.

1994). 

 6Because of this determination, it is not necessary to

discuss Rule 404(b).

10

sustained the objection.5

On appeal our task is not to substitute our judgment for that

of the district court, but instead to determine whether its

evidentiary ruling was an abuse of its discretion. King v. Ahrens,

16 F.3d 265, 270 (8th Cir. 1994). After a careful review of the

record, we conclude that the district court did not abuse its

discretion in this case. The probative value of the proffered

evidence was slight. At the time of its ruling Flaherty's lawyer

had made only a weak offer of proof; he had only a dismissed arson

charge and was uncertain whether an eyewitness to the school fire

could be located. He had no other evidence linking T.E.H. to the

fires at Eddy's. Moreover, the fires were not started in a similar

manner. The locker fire was simply lit with a match while the fire

at Eddy's was of more sophisticated origin. We conclude that no

reversible error occurred when the court sustained the government's

Rule 403 objection.6

Flaherty next argues that the evidence was insufficient to

prove the interstate commerce element of the offense of arson. 18

U.S.C. § 844(i) requires that the subject property was being used
11

in interstate or foreign commerce. The parties agreed at trial

that the jury should be instructed that "[t]he government may meet

its burden of proving this element of the offense by demonstrating

that the gas used to heat the building was supplied from outside

the State of Minnesota," and they stipulated to the facts that

Eddy's "was heated with . . . natural gas . . . purchased from

sources outside of the State . . . of Minnesota." Flaherty did not

object to the jury instruction or raise any issue regarding the

government's proof of an interstate nexus in his motions for

judgment of acquittal. He now asserts that the government was

required to show a substantial connection between the building and

interstate commerce, citing United States v. Lopez, 115 S. Ct. 1624

(1995). 

Flaherty's failure to raise the interstate commerce issue in

the district court resulted in a waiver of the issue, but the jury

instruction given at trial mirrors the one upheld in United States

v. Ryan, 41 F.3d 361 (8th Cir. 1994) (en banc), cert. denied, 115

S. Ct. 1793 (1995). Flaherty stipulated to facts sufficient to

meet the burden described in Ryan and is bound by that stipulation.

Based on our review of the record we find no clear error. United

States v. Jennings, 12 F.3d 836, 838 (8th Cir. 1994); United States

v. Montanye, 996 F.2d 190, 192 (8th Cir. 1993) (en banc). 

Even if the issue had not been waived, we are not persuaded

that Lopez would apply. In that case the Supreme Court held that

Congress had exceeded its authority under the Commerce Clause when

it enacted the Gun-Free School Act, 18 U.S.C. §922(q)(1)(A), which

made it a federal offense knowingly to possess a firearm in a

school zone. That statute, by its terms, had "nothing to do with

commerce or any sort of economic enterprise," nor did it contain a

requirement that the possession be connected in any way to

interstate commerce. Lopez, 115 S. Ct. at 1630-31. The arson

statute at issue here, however, criminalizes the damage or

destruction of business property and contains a jurisdictional
12

element requiring proof that the affected property is "used in

interstate or foreign commerce." The Lopez decision did not

address the amount of evidence required to prove an explicit

jurisdictional element of an offense and does not control this

case.

Finally, Flaherty asserts that the evidence is insufficient to

support the jury's verdict because it does not show that Flaherty

started the fires or aided and abetted Melina. We have reviewed

the evidence submitted at trial and conclude that it is sufficient

to support the verdict. 

For the stated reasons the judgment of conviction is affirmed,

and the motion for release pending appeal is dismissed as moot.

JOHN R. GIBSON, Circuit Judge, dissenting. 

I respectfully dissent. I think the district court abused its

discretion in excluding evidence of the fire set by T.E.H. The

court today concludes that the district court excluded the evidence

of the fire set by T.E.H. under Federal Rule of Evidence 403

because the probative value of the evidence was slight. Although

the government objected to the evidence based on Federal Rules of

Evidence 404(b) and 403, the district court's ruling could not be

more straightforward. The district court excluded the evidence

under Rule 404(b), not under 403. The district court stated:

I am going to sustain the Government's objection to it

and not allow it, concluding that it is evidence of other

crimes and its only purpose in being put forward,

notwithstanding the representations of counsel, is to

prove the character of the individual involved in order

to show action and conformity therewith. I don't think

it fits any of the other exceptions of intent,

preparation, plan, knowledge, et cetera, because I think

the fires are entirely different. . . .
13

(T. at 1089). 

In excluding the evidence under Rule 404(b), the district

court applied Rule 404(b) too broadly. The court failed to

recognize any difference between admitting similar acts evidence

for offensive and defensive purposes. Specifically, the court

ignored the fact that the defendant offered evidence of the similar

acts of a third party. "[T]he standard of admissibility when a

criminal defendant offers similar acts evidence as a shield need

not be as restrictive as when a prosecutor uses such evidence as a

sword." United States v. Aboumoussallem, 726 F.2d 906, 911 (2d

Cir. 1984); accord United States v. Cohen, 888 F.2d 770, 777 (11th

Cir. 1989). Several courts have recognized this distinction,

concluding that evidence of a third person's similar acts is not

excluded under Rule 404(b) when the defendant is seeking to admit

the evidence to prove some fact relevant to his defense. See,

e.g., United States v. Blum, 62 F.3d 63, 67-68 (2d Cir. 1995)

(court abused its discretion in excluding evidence of witness'

personal motive to fabricate evidence); Cohen, 888 F.2d at 775-77

(court erred in excluding evidence that witness had been involved

in similar scheme); Aboumoussallem, 726 F.2d at 912 (evidence that

defendant's cousins duped another person into transporting hashish

not inadmissible under Rule 404(b)). This result is justified

because Rule 404(b) typically applies to exclude evidence that the

prosecution seeks to introduce to show the accused committed a

crime on another occasion. Fed. R. Evid. 404(b), advisory

committee's note. The reason for excluding prior crimes evidence

is the danger that the jury will use the evidence of a prior crime

as a basis for inferring that the defendant committed the charged

crime. United States v. DeAngelo, 13 F.3d 1228, 1232 (8th Cir.),

cert. denied, 114 S. Ct. 2717 (1994). This justification is not

implicated when, as here, the defendant offers the evidence to

prove some fact relevant to his defense, namely, that someone else

may have committed the crime. Flaherty attempted to use evidence

of T.E.H.'s prior crime to support his defense theory. Thus, there
 7

Of interest is the fact that T.E.H.'s pretrial evaluation

and case disposition documents are dated December 26, 1988, and

January 17, 1989. The fires at the restaurant were set December

31, 1988, and January 12, 1989.

14

was no danger that the jury would make the improper inference

contemplated by Rule 404(b). See Huddleston v. United States, 485

U.S. 681 (1988) (discussing admission of similar act evidence).

The court must do a pas de chat to evade the district court's

misapplication of Rule 404(b), saying that the T.E.H. evidence is

of little probative value because Flaherty made a weak offer of

proof. The court states that Flaherty's only evidence of the

school locker fire was a dismissed arson charge and a possible

eyewitness to the fire. The court also finds the evidence lacking

because the fires were not similar.

Flaherty offered, however, a certified copy of the complaint

charging T.E.W. with arson in the first degree arising out of the

school locker fire as well as the Hennepin County attorney's file

about the incident. This file contains a police report, including

witness' statements, a pretrial evaluation, and a case disposition

summary. These documents show that T.E.H.'s arson charge was

dismissed in exchange for T.E.H.'s plea of guilty to the lesser

included offense of burglary in the second degree.7

 That the arson

charge was ultimately dismissed has no factual or legal

significance in this case. See Dowling v. United States, 493 U.S.

342 (1990) (admitting testimony about an alleged crime that the

defendant had been acquitted of committing); United States v.

Riley, 684 F.2d 542, 546 (8th Cir. 1982), cert. denied, 459 U.S.

1111 (1983). Moreover, that the restaurant fires were more

sophisticated than the school locker fire does not bolster the

court's ruling today. Flaherty did not offer the evidence of the

locker fire to prove T.E.H.'s character or that the fires were

similar acts. See Fed. R. Evid. 404(b). Flaherty offered the
15

evidence to prove the possibility that another person set the fire.

See United States v. Perkins, 937 F.2d 1397, 1400 (9th Cir. 1991)

(defendant entitled to introduce evidence that someone else

committed the crime); Blum, 62 F.3d at 68 (motive of third party to

commit crime is recognized exception to Rule 404(b)). Besides the

locker fire, there was other evidence supporting Flaherty's theory.

There was evidence that T.E.H. was fired from his job at the

restaurant and had a long-standing dispute with Flaherty's son,

Brady. T.E.H. went to school with Brady, and had several physical

and verbal confrontations with Brady. There was evidence that in

addition to threatening Brady, T.E.H. had kicked Brady in the ribs.

As the district court did not base its ruling on Rule 403, it

goes without saying that it did not perform the balancing test

required by that rule. Although the court today rules the evidence

of "slight" probative value, the court fails to balance the value

of the evidence with the danger of unfair prejudice as required by

Rule 403, if indeed an appellate court could perform this factfinding function. There has been no articulation of "unfair

prejudice." I do not see how the T.E.H. evidence "would influence

the jury to decide the case on an improper basis." King v. Ahrens,

16 F.3d 265, 269 (8th Cir. 1994) (internal citation omitted). In

my view, Flaherty should have been able to introduce this evidence

to support his defense that someone else started the fire. 

The exclusion of the T.E.H. evidence was prejudicial error.

See Michigan v. Lucas, 111 S. Ct. 1743, 1747 (1991); United States

v. Bear Stops, 997 F.2d 451, 454-57 (8th Cir. 1993). I would

reverse and remand for a new trial.

A true copy.
16

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.