Opinion ID: 158518
Heading Depth: 2
Heading Rank: 3

Heading: Hearsay Testimony Regarding Losses Attributable to Schweitzer Checks

Text: 23 Hanzlicek claims the district court abused its discretion in admitting hearsay evidence that banks paid out $1.8 million on Schweitzer checks similar to those used by Hanzlicek. This court upholds the district court's admission of evidence unless the admission constituted an abuse of discretion. See United States v. Lugo, 170 F.3d 996, 1005 (10th Cir. 1999). 24 During trial, the government elicited testimony from Agent Canady that banks had paid out $1.8 million on Schweitzer's fraudulent checks. Defense counsel objected to the admission of this testimony on hearsay grounds and because the government had never complied with a discovery order to produce documentation of these alleged payments. The district court, however, allowed this testimony to show the effectiveness of the scheme. The district court also reasoned that Mrs. Hanzlicek's counsel had opened the door on this issue by questioning Agent Canady about several checks written by Schweitzer in an effort to prove that the Hanzliceks thought the checks were valid because nothing adverse had happened to Schweitzer. During closing arguments, the government repeatedly referred to the $1.8 million, arguing that this evidence indicates that the checks must have looked authentic. 25 Federal Rule of Evidence 801(c) defines hearsay as a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted. Hearsay is not admissible at trial, unless otherwise provided by the Federal Rules of Evidence or other statutory authority. See Fed. R. Evid. 802. The district court found this evidence not to be hearsay because it was admitted to show the effectiveness of the scheme. To prove the effectiveness of the check scheme, however, evidence that $1.8 million in fraudulent checks were actually cashed was necessary. 26 This case provides a prime example of why the hearsay rule is a crucial and necessary evidentiary safeguard to insure a criminal defendant a fair trial. The hearsay rule seeks to eliminate the danger that evidence will lack reliability because faults in the perception, memory, or narration of the declarant will not be exposed. 5 Jack B. Weinstein & Margaret A. Berger, Weinstein's Federal Evidence § 802.02[3], at 802-9 (2d ed. 1999). Here, the jury heard unreliable testimony regarding $1.8 million in fraudulent checks being paid out. While the government may prove this point through the use of admissible evidence, 8 Agent Canady's hearsay testimony is simply not admissible. 27 Having determined that this evidence was erroneously admitted, this court must now determine whether the error was harmless. See Fed. R. Crim. P. 52(a). The harmless error inquiry in these circumstances focuses on whether the erroneously admitted evidence had a substantial influence on the jury's verdict or leaves this court in grave doubt about whether it did. See United States v. Cass, 127 F.3d 1218, 1225 (10th Cir. 1997); see also Kotteakos v. United States, 328 U.S. 750, 765 (1946). This court reviews the record as a whole de novo to evaluate whether the error is harmless, examining the context, timing and use of the erroneously admitted evidence at trial and how it compares to properly admitted evidence. See United States v. Glass, 128 F.3d 1398, 1403 (10th Cir. 1997). 28 Hanzlicek argues that the effectiveness of the scheme was critical to the government's case. The bank fraud and mail fraud charges in this case both require a showing of fraudulent intent. See United States v. Cochran, 109 F.3d 660, 667 (10th Cir. 1997). Neither charge, however, requires that the scheme to defraud result in a monetary loss. See United States v. Hollis, 971 F.2d 1441, 1451 n.4 (10th Cir. 1992) (holding that success of scheme not an element of mail fraud); United States v. Young, 952 F.2d 1252, 1257 (10th Cir. 1991) (holding that monetary loss not required for bank fraud conviction). The jury was so instructed. Accordingly, the government was not required to prove that the alleged conspiracy resulted in monetary loss. 9 29 While not unmindful of the effect that evidence of an actual loss could have upon a jury, this court is required to view the record as a whole in the context of arguments raised. Although the evidence strengthened the government's case concerning the existence of a scheme to defraud and the resemblance of the instruments to genuine obligations, we conclude that the admission of this evidence was harmless error. This court cannot overlook that Mrs. Hanzlicek introduced, over the government's objection and without objection from Hanzlicek, evidence concerning nine Schweitzer checks totaling over $35 million that had come to the attention of authorities. Furthermore, Mrs. Hanzlicek persisted in this inquiry at some length, including eliciting details about how some of the checks aroused suspicion. Mrs. Hanzlicek introduced this information to establish that she believed the checks were valid and this belief was supported by the government's inaction against Schweitzer. Moreover, Mrs. Hanzlicek testified as to her understanding that the checks had been accepted and effective. Although she apparently was attempting to show that she had no fraudulent intent or knowledge, the evidence directly supports the existence and effectiveness of the scheme. Mrs. Hanzlicek's counsel repeatedly characterized the items as bogus checks in his questioning, which also suggests that the scheme was effective, not merely a ruse that no one would take seriously. Under these circumstances, admission of evidence concerning the $1.8 million allegedly paid is harmless. 30