Opinion ID: 65776
Heading Depth: 2
Heading Rank: 3

Heading: Gregory Setser IssueEvidentiary Rulings

Text: Evidentiary rulings are reviewed for an abuse of discretion. United States v. King, 541 F.3d 1143, 1146 (5th Cir.2008), cert. denied, ___ U.S. ___, 129 S.Ct. 947, 173 L.Ed.2d 144 (2009). When, as here, the defendant did not object to admission of the evidence at trial, this court reviews only for plain error. United States v. Valuck, 286 F.3d 221, 228 (5th Cir.2002). Setser argues that the district court erred in allowing the prosecution to make various references to the guilty pleas entered by his co-conspirators, because the prosecution sought to use such evidence as substantive evidence of guilt and not for legitimate purposes. Setser particularly complains about other guilty pleas being mentioned at these times: during the government's opening statement; during the examination of Setser's daughter, Cassie Setser Schmidt; during the examination of an unindicted IPIC employee, Charmaine Sears; and, at greatest length, during the examination of Joshua Setser, Gregory Setser's son, who pled guilty to securities fraud. While a guilty plea by a co-conspirator may not be used as evidence of guilt, it `may be admitted into evidence if it serves a legitimate purpose and a proper limiting instruction is given.' Id. (quoting United States v. Marroquin, 885 F.2d 1240, 1247 (5th Cir.1989)). In analyzing an admission of a co-conspirator's guilty plea, this court considers: (1) presence or absence of a limiting instruction; (2) proper evidentiary purpose in introducing the guilty plea; (3) improper use of the guilty plea as substantive evidence of the defendant's guilt; and (4) whether the introduction was invited by defense counsel. United States v. Samak, 7 F.3d 1196, 1198 (5th Cir.1993). Preemptively introducing a plea to counteract anticipated defense efforts at impeachment is a proper purpose. Valuck, 286 F.3d at 228. A defense strategy that itself heavily relies on the guilty pleas with frequent, pointed, and direct references, defeats subsequent attempts to claim error in the government's use of the pleas. United States v. Leach, 918 F.2d 464, 467 (5th Cir.1990). We apply these principles. First, the district court gave thorough limiting instructions that are similar to those approved by this court in Valuck. 286 F.3d at 228. As to the second and third factors, the government asserts that it was using the pleas for the permissible purpose of rebutting anticipated impeachment. The government does acknowledge that it could be said to have placed undue weight on the guilty pleas at a few specific instances. While the lengthy questioning of Joshua Setser is justifiable, since Joshua Setser pled guilty and was testifying against his father, the government's much more limited references in the examinations of the two women are suspect, since those witnesses had not pled guilty. The government may have mentioned the pleas there in an attempt to make the witnesses' denials that they knew about criminal activity seem implausible. Nonetheless, the references were quite limited, so this factor weighs only slightly against the government. The fourth factor, the defense's own use of the pleas, weighs against finding error. With respect to Joshua Setser, the record confirms that the defense devoted a significant portion of its cross-examination to the plea agreement, Setser called another witness and inquired about the details of his plea agreement, and the defense's closing argument suggested that plea agreements gave Joshua Setser an incentive to lie. We find no reversible error.
Decisions regarding the admission of testimony are reviewed for an abuse of discretion and are subject to harmless error analysis. United States v. Griffin, 324 F.3d 330, 347 (5th Cir.2003). Under such an analysis, this court may not reverse unless there is a reasonable possibility that the improperly admitted evidence contributed to the conviction. United States v. Hawley, 516 F.3d 264, 268 (5th Cir. 2008), cert. denied, ___ U.S. ___, 129 S.Ct. 994, 173 L.Ed.2d 291 (2009). Setser argues that the district court improperly allowed the receiver to function as an expert witness by testifying that Setser's operations constituted security fraud and a Ponzi scheme. Setser finds the testimony objectionable because it asserted legal conclusions, a practice barred by Federal Rule of Evidence 704(a). The government concedes that allowing the security fraud statement was erroneous. Given the weight of the evidence against Setser, though, and the cautionary instructions given by the district judge, the government argues the error was harmless. The error was confined to, at most, two lines of testimony at the beginning of a four month trial. The judge gave instructions both specifically informing the jury not to draw inferences about Setser's state of mind from the receiver's testimony, and emphasizing that the jury was not bound by the receiver's conclusions and must undertake an independent evaluation of the evidence. Setser argues that while the references may have been brief, the receiver's stature as a central character in the collection and review of the evidence gave him a status, in the eyes of the jury, above an ordinary expert witness. Accordingly, it would be reasonable to conclude that the jury gave inappropriate weight to the testimony. Setser also argues that the jury should have been specifically instructed that it could not use the testimony as evidence Setser committed securities fraud, rather than just not as probative of his state of mind. We find that any error was harmless. Both cases cited by Setser on the issue conclude that the error was harmless based on the overwhelming weight of the incriminating evidence. United States v. Williams, 343 F.3d 423, 435 (5th Cir.2003); United States v. Rich, 145 Fed.Appx. 486, 488 (5th Cir.2005). The government's evidence against Setser was considerable, with numerous other witnesses whose testimony could independently have allowed the jury to convict. There is no reversible error with respect to this issue.
The standard for reviewing an alleged violation of Federal Rule of Evidence 403, which prohibits unfairly prejudicial testimony, is especially high and requires a clear abuse of discretion for reversal. United States v. Fields, 483 F.3d 313, 354 (5th Cir.2007). Setser objects to the admission of evidence regarding the failure of his enterprises to file federal income tax returns or pay taxes. He argues that because he was not charged with tax offenses, and the evidence was that the businesses had not filed tax returns even outside the period of time charged in the indictment, his tax compliance was not probative of whether he was engaged in fraud and served only a prejudicial purpose. The district court granted Setser's motion to exclude evidence about his personal tax returns, but found that the government's theory that Setser had lied to investors about the existence of the corporate tax returns made that evidence intrinsic to the alleged conspiracy, and thus admissible. Intrinsic evidence is usually admissible in order to give a complete explanation of the crime. Freeman, 434 F.3d at 374 & n. 2. Setser quotes some testimony in which the failure to pay taxes was discussed in a more general way, with reference to both Setser personally and his corporations. On one such occasion, the district court interrupted the line of questioning. The government then returned to the previously approved use of the corporate tax returns to illustrate fraud. Other occasions did not concern the filing of tax returns per se, but statements made by Setser to others bragging about the low amount of taxes he paid. Setser must show that the probative value of the challenged evidence was substantially outweighed by the danger of unfair prejudice before its admission will be error. Fed.R.Evid. 403. Setser offers no meaningful response to the trial court's conclusion that the corporate tax return evidence was intrinsic to the conspiracy. That was because it showed he lied to potential investors to gain their confidence. His main complaint seems directed at the scattered references to his personal taxes. Those references largely were accounts of what Setser had told potential investors or employees about the tax benefits he enjoyed. Thus, that evidence could also be characterized as intrinsic to the conspiracies charged against Setser. In addition, the district court gave instructions that Setser was not charged with any tax crimes and, as noted, the court barred the admission of Setser's personal tax records. Because the tax evidence was intrinsic to the offenses charged, and not introduced simply to prejudice Setser by implying he committed uncharged offenses, the district court did not err in admitting it.