1994 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

6-20-1994

United States of America v. Jemal

Precedential or Non-Precedential:

Docket 93-5172

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Recommended Citation

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1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

________________ 

NO. 93-5172 

________________ 

UNITED STATES OF AMERICA, 

 Appellee

v. 

DAVID JEMAL, 

 Appellant

______________________________________ 

On Appeal From the United States District Court 

For the District of New Jersey 

(D.C. Crim. No. 91-00535-02) 

______________________________________ 

Argued: May 12, 1994 

Before: BECKER, and LEWIS, Circuit Judges, and 

POLLAK, District Judge.

1

(Filed: June 21, 1994) 

 RICHARD E. MISCHEL, Esquire (ARGUED) 

 233 Broadway 

 New York, NY 10279 

 Attorney for Appellant

 MICHAEL CHERTOFF, 

 United States Attorney 

 EDNA B. AXELROD (ARGUED) 

 JOHN J. FARMER, JR. 

 

1Honorable Louis H. Pollak, United States District Judge for the 

Eastern District of Pennsylvania, sitting by designation. 
2 

 Assistant U.S. Attorneys 

 Office of the U.S. Attorney 

 970 Broad Street 

 Room 502 

 Newark, NJ 07102 

 Attorneys for Appellee

_____________________________ 

OPINION OF THE COURT

_____________________________ 

BECKER, Circuit Judge. 

 This appeal from a judgment in a criminal case presents 

an important question under Federal Rule of Evidence 404(b): 

whether a defendant may, by offering a comprehensive and 

unreserved stipulation that he possessed the knowledge, intent, 

motive, opportunity, or other fact sought to be established by 

Rule 404(b) evidence, prevent the government from putting on 

evidence of the defendant's prior bad acts. This question arises 

in a mail fraud case stemming from a "bust-out" scheme allegedly 

masterminded by defendant David Jemal. Along with co-conspirator 

Norman Levy, Jemal allegedly started a business (Capital 

Merchandise), increased its credit rating by fraudulent means, 

bought goods for resale on credit with no intention of paying the 

sellers, sold the goods, kept the money, and declared the 

corporation bankrupt. For this, a jury convicted him of one 

count of conspiracy to commit mail fraud, 18 U.S.C. § 371, and 

for six substantive counts of mail fraud, 18 U.S.C. § 1341. 

 Over Jemal's objections, the district court allowed the 

government to introduce evidence of Jemal's involvement in prior 
3 

insurance frauds and bust-outs in order to prove he knew and 

intended Capital Merchandise to be a bust-out. Jemal argues that 

because he indicated his willingness to stipulate to knowledge 

and intent, the prior bad acts evidence should have been 

excluded. Although we agree with Jemal that a district court 

should generally refuse to admit evidence of a defendant's prior 

bad acts to show knowledge and intent when the defendant has 

profferred a comprehensive and unreserved stipulation that he 

possessed the requisite knowledge and intent (or other fact 

sought to be established by the prior bad acts evidence), Jemal's 

offer was not sufficiently comprehensive to remove those issues 

from this case. Inasmuch as the Rule 404(b) evidence was 

otherwise admissible and not subject to exclusion under Federal 

Rule of Evidence 403, we hold that the district court did not 

abuse its discretion in admitting the evidence. The judgment of 

the district court will therefore be affirmed.2

I. FACTS AND PROCEDURAL HISTORY 

 In September 1985, Jemal approached his attorney, 

Joseph Indick, about incorporating a business for him and a 

relative. In November 1985, Jemal began discussing this plan 

with Levy, his cousin. In January 1986 he specifically proposed 

to Levy that they start a "wholesale jobbing business" in the 

 

2The only other contention advanced by Jemal on appeal -- that it 

was plain error for the district court to fail to give the jury a 

cautionary instruction that the guilty plea of Jemal's alleged 

co-conspirator did not constitute evidence of Jemal's guilt -- 

is, in light of other instructions the court gave, clearly 

without merit and does not warrant discussion. 
4 

back office of Big Bargain Stores -- one of Jemal's retail 

stores. He suggested that they buy merchandise and resell it to 

"mom and pop" retail stores. At the end of January, Jemal 

informed Levy that he could raise the capital if Levy was willing 

to "operate the business." They agreed to incorporate the 

business under the name Capital Merchandise. 

 Jemal then formed a corporation and asked Levy to be 

the corporation's president. In March 1986 he brought Levy with 

him to Indick's office. At the meeting, Levy, but not Jemal, 

signed corporate by-laws and board resolutions listing Levy as 

the president, vice-president, treasurer, secretary, and 

subscriber to the stock of Capital Merchandise. These documents 

had been backdated to September 23, 1985, which Indick testified 

was not inappropriate as a means of reflecting the "reality" that 

Levy had been operating the "corporation" on the dates indicated. 

Levy also signed a lease, which he said Jemal had prepared, for 

part of Jemal's premises at 143 Newark Avenue -- a lease 

backdated to October 22, 1984 and purporting to run from November 

1, 1984 to October 31, 1986, although Levy did not move into the 

office until March, 1986. The lease was purportedly assigned to 

Capital Merchandise in November 1, 1985. 

 On March 10, 1986, Levy opened a bank account for 

Capital Merchandise for which he signed a signature card allowing 

him to withdraw funds. The next day, according to Levy, Jemal 

signed an additional signature card with the name "Mike Levy" 

saying that he "just want[ed] to use that name." Levy told the 
5 

bank that "Mike" was his brother and would sign for funds in case 

of emergency. 

 Levy and Jemal then began to purchase merchandise from 

wholesalers, substantiating their credit worthiness by stating 

that they had been in business for a couple of years as evidenced 

by the backdated lease. But Capital Merchandise needed to 

establish a more significant credit history in order to begin 

buying large quantities of merchandise. Thus, Jemal approached 

Sam Kassin, an acquaintance who had familiarity with bust out 

schemes and asked for advice on how to inflate the credit history 

of the corporation. Kassin provided this advice in June 1986, 

and agreed to write purchase orders for Capital Merchandise. 

Jemal also approached his acquaintance Richard Beda, told him 

(according to Beda) that he was "going to make a bust-out" of 

Capital Merchandise, and asked if he could used Beda's company as 

a credit reference. Beda agreed and sent out 20 to 40 references 

indicating that Capital Merchandise's credit was very good. 

 During this period, Jemal advised Levy to remove his 

name from the corporate documents "after discussions we had that 

we were planning to scam the company;" Kassin provided similar 

advice. In August, although made to look as if it was in July, 

Levy resigned as director and president of the corporation and 

inveigled his invalid father Morris Levy to sign the name "Jack 

Levy" on documents naming Jack Levy the sole shareholder, 

director, and president of Capital Merchandise. Also in August 

1986, Capital Merchandise submitted a credit statement, signed by 

"Jack Levy", to Dun and Bradsteet. Jemal apparently fabricated 
6 

the statement to show equities, sales, and profits far above 

their actual values. 

 Soon thereafter, according to Levy, Jemal and Levy 

discussed their strategy of running the corporation into 

bankruptcy and then satisfying creditors by having a marshal 

liquidate remaining assets. They began ordering merchandise in 

large quantities with no intention of paying for it. Levy 

testified that most orders and sales were made by Jemal. However, 

Jemal and Levy began feuding, and, after November, Levy's 

involvement in Capital Merchandise was very limited. In January 

1987 Levy received his remaining "payoff" of $5,000, bringing his 

total compensation to $14,000. Jemal took 80-85% of the income, 

some of it allegedly for rent. By March 1987 Capital Merchandise 

was essentially defunct, with the corporate bank account closed 

for insufficient funds. 

 Jemal was indicted for engaging in a conspiracy to 

commit mail fraud, 18 U.S.C. § 371, and for six substantive 

counts of mail fraud, 18 U.S.C. § 1341. Norman Levy, who was 

named as a co-conspirator and a co-defendant, pleaded guilty to 

conspiracy to commit mail fraud. After a jury trial, Jemal was 

convicted on all counts. 

II. PRIOR BAD ACT TESTIMONY 

 A. The Evidence and Defendant's Offer to Stipulate

 Jemal's defense was essentially that he was an innocent 

landlord who had no involvement in the bust-out scheme 

perpetrated by Levy and others. He sought to impeach Levy and 
7 

the government's other witnesses by demonstrating that they were 

testifying because of deals they had made with the government, by 

showing their past tendency to lie, their past crimes, and, with 

regard to Levy, by his history of drug abuse. 

 Over continuous objections, the government introduced 

evidence of prior crimes Jemal had allegedly committed, 

ostensibly to show Jemal's knowledge of the nature of a bust-out 

scheme and his intent to perpetrate one. Kassin testified that 

Jemal had been one of his partners in a bust-out of a store 

called SBL Trading in 1976 or 1977; Jemal had served as SBL 

Trading's landlord and had received 25% of the profits. Kassin 

also testified that he had operated a bust-out in 1979 of which 

Jemal was aware and from which Jemal had wanted to purchase 

discounted merchandise. Finally, Kassin testified that he had 

operated a bust-out in 1982 or 1983 which moved into a building 

housing one of Jemal's businesses -- a business which then ceased 

operations (apparently implying that Jemal decided to use the 

space for the bust-out scheme). 

 Richard Beda testified that in 1986 Jemal had purchased 

damaged clocks from him so that he could "stage" a flood and file 

an insurance claim (allegedly a regular practice of Jemal). Beda 

also testified that during a bust out operation he had operated 

in 1985, Jemal had advised him to make a lease agreement similar 

to that later entered into by Capital Merchandise. 

 Just before trial, Jemal voiced his opposition to the 

introduction of this prior bad acts evidence. His counsel 

stated: 
8 

This case should be distinguished from one in 

which we acknowledge that the defendant was 

either an employee or an officer of the 

corporation, that he was committing some acts 

which were otherwise innocent. Then the 

issue of the defendant's knowledge becomes 

important. The issue of his intent becomes 

important. In this case, our contention, 

quite simply, is that the defendant was not 

involved. The government alleges that my 

client was a signatory on the checking 

account and that he used the name "Mike Levy" 

as an alias. We deny that the defendant ever 

signed a check or had any power to sign any 

checks. We deny that my client used the name 

"Mike Levy." 

Defense counsel continued that in order to preclude the 

introduction of the prior bad acts evidence: 

I'm prepared to stipulate that if the 

government can establish that my client was 

the signatory on the checking account, and 

that if he participated in the other acts as 

described by Norman Levy, that they can find 

that the defendant had the requisite 

knowledge and intent as far as the mail fraud 

is concerned. 

 Nonetheless, the district court ruled that the prior 

bad acts testimony was admissible as showing modus operandi, 

intent, and lack of mistake. The court indicated that its 

probative value outweighed any undue prejudice and that it was 

too difficult to obtain a useful stipulation on intent in this 

case. Id.

 Defense counsel then offered a new stipulation saying: 

[w]ith regard to the Count 1 of the 

indictment charging conspiracy, I would 

stipulate to all of the elements of the -- of 

that count of the indictment, save the 

defendant's membership in the conspiracy. 

With regards to Counts 2 through 7 alleging 

mail fraud, I would submit that the only 
9 

issue remaining is the issue of acting in 

concert. And even with regard to the issue 

of acting in concert, I will stipulate that 

if the government -- if the jury finds that 

the testimony of Norman Levy is truthful, 

then the jury may find that the defendant had 

the requisite intent and may consider the 

remaining elements of acting in concert. 

After considering this stipulation, the court concluded that 

"[e]ven with the proposal . . ., I think it's highly relevant 

under the issue of knowledge of what bust-outs are, how they 

operate. I think it works also as evidential on the issue of 

lack of mistake, so that even though intent may not be in play, 

those others certainly are." 

 Finally, after the prosecution had presented fifteen 

witnesses, defense counsel again raised the Rule 404(b) issue, 

offering to stipulate that: 

Levy testified that David Jemal committed the 

following acts: 1. Knowingly and 

intentionally entering into a fictitious 

lease arrangement. 2. Participating in the 

preparation and back-dating of corporate 

documents. 3. Supplying false financial 

information to Dun & Bradstreet, and to 

creditors. 4. Ordering merchandise on 

behalf of Capital Merchandise, Inc. 5. 

Selling merchandise by Capital Merchandise, 

Inc. By his plea of not guilty David Jemal 

denies having committed any of these acts. If 

you find that the government has proven 

beyond a reasonable doubt any one or more of 

the acts alleged above, then I instruct you 

that you must find that the defendant 

possessed the requisite knowledge and intent. 

Relying on its prior rationale, the district court again rejected 

the offer to stipulate, but it did give limiting instrutions to 

the jury with respect to the use of the bad acts evidence. 
10 

 B. The Proper Rule

 1) Background 

 Fed.R.Evid. 404(b) begins by stating that: 

[e]vidence of other crimes, wrongs or acts is 

not admissible to prove the character of a 

person in order to show that he acted in 

conformity therewith. 

We have stated that: 

[c]haracter evidence is not rejected because 

it is irrelevant. On the contrary, `it is 

said to weigh too much with the jury and to 

so overpersuade them as to prejudice one with 

a bad general record and deny him a fair 

opportunity to defend against a particular 

charge.' Michelson v. United States, 335 

U.S. 469, 475-76, 69 S. Ct. 213, 218, 93 

L.Ed. 168 (1948). 

United States v. Sampson, 980 F.2d 883, 886 (3d Cir. 1992) 

 Nonetheless, while prior bad acts evidence is 

inadmissible to prove that the defendant "acted in conformity 

therewith," "[character] evidence may . . . be admissible for 

other purposes, such as proof of motive, opportunity, intent, 

preparation, plan, knowledge, identity, or absence of mistake or 

accident." Fed.R.Evid. 404(b). We have recognized that Rule 

404(b) is a rule of inclusion rather than of exclusion. See

United States v. Scarfo, 850 F.2d 1015, 1019 (3d Cir.), cert. 

denied, 488 U.S. 910, 109 S. Ct. 263 (1988). Evidence can be 

admitted even if it does not fit one of the specific exceptions 

listed in the rule, so long as it is used for a purpose other 

than proving a defendant's likelihood to have committed this 
11 

particular crime based on an inference drawn from evidence 

pertaining to his character. Id. at 1019. 

 Despite our characterization of Rule 404(b) as a rule 

of admissibility, we have expressed our concern that, "[a]lthough 

the government will hardly admit it, the reasons proffered to 

admit prior bad act evidence may often be potemkin village, 

because the motive, we suspect, is often mixed between an urge to 

show some other consequential fact as well as to impugn the 

defendant's character." See Sampson, 980 F.2d at 886. 

As a result, we held in Sampson that, "[i]f the government offers 

prior offense evidence, it must clearly articulate how that 

evidence fits into a chain of logical inferences, no link of 

which can be the inference that because the defendant commited . 

. . offenses before, he therefore is more likely to have commited 

this one." Id. at 887. Moreover, once the government 

articulates how the evidence fits into such a chain, the district 

court must weigh the probative value of the evidence against its 

potential to cause undue prejudice and articulate a rational 

explanation on the record for its decision to admit or exclude 

the evidence. Id. at 889.3

 

3These steps follow the test for admissibility set out by the 

Supreme Court in Huddleston v. United States, 485 U.S. 681, 691, 

108 S. Ct. 1496, 1502 (1988). The Supreme Court stated that for 

prior bad acts evidence to be admitted: 1) it must have a proper 

purpose under Rule 404(b); 2) it must be relevant under Rule 402; 

3) its probative value must outweigh its prejudicial effect under 

the standard of Rule 403; and 4) the court must charge the jury 

to consider the evidence only for the purpose for which it was 

admitted. See id.
12 

 We review the Rule 404(b)/Rule 403 weighing process 

only for abuse of discretion; hence the district court has 

significant leeway in reaching its decision. Id. at 886. "If 

judicial self-restraint is ever desirable, it is when a Rule 403 

analysis of a trial court is reviewed by an appellate tribunal." 

United States v. Long, 574 F.2d 761, 767 (3d Cir.), cert. denied, 

439 U.S. 985, 99 S. Ct. 577 (1978). 

 2) Stipulations 

 The Second Circuit has held that, as a matter of law, 

it is an abuse of discretion for district courts to admit prior 

bad acts evidence to prove an issue such as knowledge or intent 

if the defendant takes sufficient steps to remove that issue from 

the case. See, e.g., United States v. Manafzadeh, 592 F.2d 81, 

87 (2d Cir. 1979); United States v. Mohel, 604 F.2d 748, 753 (2d 

Cir. 1979), United States v. Figueroa, 618 F.2d 934, 941-42 (2d 

Cir. 1980). The initial question we are faced with in this case 

is whether we should follow the Second Circuit's rule. 

 Under the Second Circuit's rule, if the government 

offers Rule 404(b) evidence to prove knowledge or intent, the 

defendant can avoid introduction of the evidence if his defense 

is that "he did not do the charged act at all." United States v. 

Ortiz, 857 F.2d 900, 903 (2d Cir. 1988), cert. denied, 489 U.S. 

1070 (1989). Thus, where a defendant has claimed that he did not 

distribute drugs at all rather than claiming that he distributed 

a substance that turned out to be drugs without knowledge that 

the substance was drugs, the Second Circuit has precluded the 

admission of prior crime evidence. See, e.g., Mohel, 604 F.2d at 
13 

755; Figueroa, 618 F.2d at 944; United States v. Colon, 880 F.2d 

650, 662 (2d Cir. 1989). Many other courts of appeals 

essentially agree with the Second Circuit. See United States v. 

Jenkins, 7 F.3d 803, 807 (8th Cir. 1993) (observing that this 

interpretation comports with the clear language of the rule which 

makes bad acts evidence inadmissible to prove character); cf.

United States v. Silva, 580 F.2d 144, 148 (5th Cir. 1978) 

(reasoning that where defendant's sole defense is denial of 

participation in the act, there is no issue of intent), United 

States v. Palmer, 990 F.2d 490, 495 (9th Cir. 1993), cert. 

denied, 114 S. Ct. 1120 (1994) (holding that where defendant's 

theory was that he had moved onto the property and had no part in 

growing the marijuana that was there, his statement that he had 

sold marijuana before was inadmissible). 

 In contrast, the Seventh Circuit has held that, "`[i]n 

cases involving specific intent crimes, intent is automatically 

an issue, regardless of whether the defendant has made intent an 

issue in the case.'" United States v. Mazzanti, 888 F.2d 1165, 

1171 (7th Cir. 1989), (quoting United States v. Monzon, 869 F.2d 

338, 344 (7th Cir.), cert. denied, 490 U.S. 1075, 109 S. Ct. 2087 

(1989)). At a minimum, this means that in conducting the Rule 

403 balancing test, district courts in the Seventh Circuit have 

been directed to consider prior bad acts evidence to be 

significantly probative regardless of the defense employed by the 

defendant. Mazzanti itself upheld a district court decision 

allowing the introduction of evidence of prior drug dealing where 
14 

the defendant conceded his presence at or near the scene but 

denied any wrongdoing. See id.4

 We have not yet taken a definitive position on the use 

of stipulations to remove Rule 404(b) evidence from a case, 

although we have expressed ourselves in the context of Rule 403 

balancing generally. In United States v. Provenzano, 620 F.2d 

985 (3d Cir.), cert. denied, 449 U.S. 899, 101 S. Ct. 267 (1980), 

we considered the government's attempt to prove that a 

corporation was a sham corporation by introducing evidence that 

the defendant was in jail during the time period that he was 

supposedly running the corporation. In considering the 

defendant's offer to stipulate that he was unavailable, we held 

that: 

[a]n offer to stipulate does not 

automatically mean that the fact may not be 

proved instead, as long as the probative 

value of the proof still exceeds the 

prejudicial effect, taking into account the 

offer to stipulate. United States v. Grassi, 

602 F.2d 1192, 1197 (5th Cir. 1979) ("A cold 

stipulation can deprive a party `of the 

legitimate moral force of his evidence,' 9 

Wigmore on Evidence § 2591 at 589 (3d ed. 

1940), and can never fully substitute for 

tangible, physical evidence or the testimony 

of witnesses.") 

 

4The Fourth Circuit has taken an intermediate approach. It has 

held that the use of prior bad acts evidence must be examined 

meticulously in each case and has strongly implied that the 

probative value of prior bad acts evidence is significantly less 

when the defense is that the defendant did not perform the 

charged act at all. See United States v. Hernandez, 975 F.2d 

1035, 1040 (4th Cir. 1992). This is similar to the approach we 

will take in this case. See infra at 17-19. 
15 

Id. at 1004. We concluded in Provenzano that because the 

proposed stipulation would leave some doubt as to whether the 

defendant was completely unavailable and because of "the 

conceptual difficulty of structuring a stipulation that would 

convey the same fact of unavailability due to incarceration 

without adverting to that concept," id., admission of the 

evidence was not an abuse of discretion. 

 In United States v. Sheeran, 699 F.2d 112 (3d Cir. 

1983), we summarized Provenzano as follows: 

Although "[a]n offer to stipulate does not 

automatically mean that the fact may not be 

proved instead, as long as the probative 

value of the proof still exceeds the 

prejudicial effect taking into account the 

offer to stipulate," United States v. 

Provenzano, 620 F.2d 985, 1003-04 (3d Cir. 

1980 (emphasis added), we have held that 

evidence admissible in the absence of such a 

concession sometimes should not be admitted 

where the defendant has offered "a suitable 

stipulation . . . that would convey the same 

fact," id. at 1004. 

Sheeran, 699 F.2d at 118 n.12. In Sheeran, in the absence of an 

offer to stipulate, we upheld the admission of evidence of prior 

bad acts by alleged co-conspirators to prove their control over 

companies involved in the charged conspiracy. 

 While we did not decide Provenzano and Sheeran under 

the specific rubric of Rule 404(b), we think that Provenzano, 

which involved the question of whether to admit evidence that the 

defendant was in jail, was in essence a Rule 404(b) case 

involving prior bad acts evidence. Thus, at least in the absence 

of in banc reconsideration, Provenzano and Sheeran would seem to 
16 

prevent us from adopting the per se rule of the Second Circuit. 

That may be just as well inasmuch as there may be some cases, 

presently unforeseeable, which the district court might identify 

as properly calling for the admission of Rule 404(b) evidence 

notwithstanding a defendant's willingness to stipulate. 

 However, although we leave the door open, we believe 

that district courts should generally deem prior bad acts 

evidence inadmissible to prove an issue that the defendant makes 

clear he is not contesting. The relevance of the prior bad acts 

evidence will be minimal in most such cases, since the evidence 

will not bear on the issues being contested. And the undue 

prejudice will be quite high, since prior bad acts evidence tends 

to be quite persuasive. This is consistent with Provenzano's 

rule that stipulations should be taken into account in conducting 

a Rule 403 balancing analysis. See United States v. Hernandez, 

975 F.2d 1035, 1040 (4th Cir. 1992) (employing a Rule 403 

balancing analysis to reverse a district court's decision to 

admit evidence of defendants' prior sale of crack where the 

defense was that the defendant did not sell the crack involved at 

all and where there was no indication that the district court had 

carefully balanced the evidence). 

 We emphasize, however, that to succeed, the defendant's 

proffer must be comprehensive and unreserved, completely 

eliminating the government's need to prove the point it would 

otherwise try to establish using 404(b) evidence. As the Second 

Circuit explained, whether a defendant has removed an issue from 

the case: 
17 

depends not on the form of words used by 

counsel but on the consequences that the 

trial court may properly attach to those 

words. When the Government offers prior act 

evidence to prove an issue, counsel must 

express a decision not to dispute that issue 

with sufficient clarity that the trial court 

will be justified (a) in sustaining objection 

to any subsequent cross-examination or jury 

argument that seeks to raise the issue and 

(b) in charging the jury that if they find 

all the other elements established beyond a 

reasonable doubt, they can resolve the issue 

against the defendant because it is not 

disputed. 

Figueroa, 618 F.2d at 942. 

 When a defendant indicates a desire to preclude the 

admissibility of Rule 404(b) evidence by stipulating away a 

particular issue but the government offers a reasonable 

explanation as to why the proposed stipulation is inadequate, the 

district judge should explore the possibility of fashioning an 

agreement on a more comprehensive stipulation -- preferably in

limine, as the recent Rule 404(b) amendment contemplates. See

Fed. R. Evid 404(b) (amended in 1991). Finally, we note that 

even if the defendant is unwilling to make sufficient concessions 

to completely remove an issue from the case, the district court 

should weigh prejudice against probative value only after taking 

into account the defendant's "partial" stipulation, a weighing 

that we will review for abuse of discretion. Cf. Hernandez, 975 

F.2d at 1040 (holding that the probative value of the use of 

prior bad acts evidence can be reduced by the defendant's 

willingness to concede certain issues). 
18 

 C. Application in this Case

 We think that the district court acted properly in 

admitting prior bad acts evidence here to show that Jemal 

intended his actions to be part of a bust-out scheme and knew 

that his acts were part of such a scheme. Jemal did not offer a 

stipulation that completely removed the issues of intent and 

knowledge from the case despite an apparently sincere effort to 

do so, nor can we think of a stipulation that would have done the 

job. Cf. Garcia, 983 F.2d at 1174 ("[N]otwithstanding the 

sincerity of the defendant's offer, the concession must cover the 

necessary substantive ground to remove the issue from the 

case."). Although defense counsel asserted that "our contention, 

quite simply, is that the defendant was not involved," he had to 

concede that Jemal had participated in some of the acts alleged 

by the government to have been part of the bust-out scheme. With 

respect to those acts, defense counsel had to claim that while 

Jemal performed the acts, he did not do so with an intent to 

perpetrate a "bust out." 

 This becomes apparent from Jemal's final, and most 

complete, offer to stipulate to knowledge and intent -- an offer 

made after the district court stated its view that it was 

impossible to obtain a useful stipulation in this case. Jemal 

offered to stipulate that if the jury found that he had performed 

any of five acts described by Norman Levy, then it should find 

that he "possessed the requisite knowledge and intent." See

supra at 10-11. But Jemal's position falters at the first act 

specified in the stipulation -- the backdating of the lease. The 
19 

government's position is that Jemal knowingly entered the 

backdated lease with the intention of having Capital Merchandise 

use the lease to boost its credit rating. This act was among the 

overt acts specified in the indictment as taken by the defendant 

in furtherance of the alleged conspiracy. Yet Jemal's proposed 

stipulation to knowledge and intent with respect to the lease 

would have required the government to prove knowledge and intent: 

Jemal proposed to stipulate that if the jury found that he 

"knowingly and intentionally entered into a fictitious lease 

arrangement," it should find that he possessed the requisite 

knowledge and intent. 

 Indeed, defense counsel admitted that his client had 

signed the lease but stated that he had not intended to use the 

lease as part of a bust-out. This brings the elements of 

knowledge and intent to the fore.5 Cf. Provenzano, 620 F.2d at 

 

5The government also claims that Jemal's proposed stipulation was 

inadequate because it did not list all of the acts which 

constituted Jemal's alleged crimes (assuming that he committed 

the acts with the requisite intent). For example, the government 

argues that Jemal sought to use Richard Beda's company as a phony 

credit reference, but Jemal's proposed stipulation did not cover 

this alleged act. The government, however, did not identify this 

supposed deficiency in the stipulation at trial; nor did the 

district court point to the absence of these acts in the 

stipulation as a basis for rejecting it. Given Jemal's sincere 

attempt to eliminate intent and knowledge from the case and his 

proposal of several alternative stipulations, we think that if 

the government or the district court felt that additional acts 

needed to be part of the stipulation to make it adequate, they 

should have pointed to these acts and allowed Jemal an 

opportunity to add them to the stipulation. 

 Moreover, the additional acts specified by the 

government would not have helped the government's case, for they 

were not sufficient to allow the jury to find Jemal guilty even 

if they were performed with the requisite intent. None of these 

acts was specified in the indictment as an overt act taken in 
20 

1004 (observing that a stipulation that the defendant was 

unavailable did not completely remove the issue as to whether the 

defendant might have been able to return in an emergency to help 

run the company in question); Garcia, 983 F.2d at 1174-75 

(explaining that a concession that the defendant knew something 

about cocaine trafficking did not remove the issue of knowledge 

from the case where his defense was that he did not know of the 

presence of cocaine in his closet and did not apprehend the 

nature of drug paraphernalia that was visible in his apartment); 

Colon, 880 F.2d at 658 (observing that a stipulation to intent if 

the government proved that the defendant intended to direct an 

undercover officer to a particular person to buy drugs did not 

remove the issue of intent from the case). 

 Moreover, as the second part of the proposed 

stipulation, Jemal agreed that if the government proved that he 

had participated in the backdating of corporate documents, the 

jury could then infer knowledge and intent. Unlike the first act 

specified in the stipulation, proof of this act does not on the 

surface require proof of knowledge and intent. But Jemal's 

actual argument with respect to this backdating was that, while 

 

furtherance of the conspiracy (in fact, none was an act taken 

with Jemal's alleged co-conspirator) and none was an act which 

involved mail fraud. Thus, in order to obtain a conviction on 

either the conspiracy or the substantive counts, the government 

had to prove that Jemal performed at least one of the acts listed 

in his proposed stipulation -- and Jemal conceded that if the 

government proved that he performed any of these acts, then the 

jury should find the requisite knowledge and intent. We 

therefore do not rely on Jemal's failure to list additional acts 

in his proposed stipulation as a basis for upholding the district 

court's Rule 404(b) determination. 
21 

he did backdate the documents, he did so without the intent to 

use the documents for a bust-out. Defense counsel argued, "you 

see, if [the intent to defraud] occurred during a meeting at Sam 

Kassin's office[,] . . . if that's when Mr. Jemal allegedly made 

his mind up to bust this corporation out, then the backdating of 

the documents . . . doesn't have a sinister intent."6 Thus, 

Jemal had no real way of completely excising the issues of 

knowledge and intent from this case. 

 Hypothetically, Jemal could have removed these issues 

by contending that he did not participate in any of the acts 

alleged by the government -- including formation of the 

fictitious lease and backdating of the corporate documents -- and 

then he could have conceded that, if the government proved that 

he engaged in any of these acts, the jury should find knowledge 

and intent. But Jemal did not offer to make such a concession 

and could not have done so as part of a reasonable defense 

strategy, because the evidence that Jemal engaged in these acts 

was too strong for him realistically to contest it. 

 Jemal's proposed stipulation did reduce the role that 

knowledge and intent played in the case, since, with respect to 

the acts other than signing the fictitious lease and backdating 

 

6Defense counsel made this statement after the district court had 

refused to accept the proposed stipulation. It may be that if 

the district court had accepted his proposed stipulation, counsel 

would simply have argued that defendant did not participate in 

the backdating of the corporate documents and he would not have 

argued intent. However, the evidence of defendant's 

participation in the backdating of the documents was 

overwhelming, thus, the fact that the district court's refusal to 

accept the stipulation foreclosed the possibility of relying on 

this strategy can be deemed harmless error. 
22 

the documents, Jemal was willing to concede knowledge and intent 

if the government proved he engaged in the acts. The question 

becomes whether, given this concession, the district court abused 

its discretion in finding that the probative value of the 

evidence outweighed its undue prejudice. Jemal makes no real 

effort to argue that it did -- he expends almost all of his 

capital in the contention we have now rejected, namely, that he 

had completely removed the issues of knowledge and intent from 

the case. 

 We hold that the district court did not abuse its 

discretion. The testimony that Jemal had participated in prior 

bust-outs (in at least one case by acting as a landlord), and 

that he had advised Beda that in order to successfully engage in 

a bust-out he should formulate a lease agreement similar to that 

later used by Capital Merchandise, was highly relevant to the 

issue of whether Jemal knowingly and intentionally entered a 

fictitious lease agreement for the purpose of engaging in a bustout. The district court was well within its discretion in 

holding that the probative value of this evidence was not 

substantially outweighed by any unfairly prejudicial effect. 

 The judgment of the district court will be affirmed.