Opinion ID: 729705
Heading Depth: 2
Heading Rank: 2

Heading: admission of bank records

Text: 24 The Government offered and the court admitted records from 44 banks regarding 270 credit card customers containing, among other things, customers' statements that their credit cards were stolen. The records were introduced through fraud investigators from Chase Manhattan Bank, Discover, AT&T Universal, Citibank, and MBNA American National Association (five of the issuing banks). 25 All three Appellants argue that the district court erred by admitting these documents, because they contained hearsay, and in some instances, double hearsay, and therefore violated their Sixth Amendment right to confront witnesses. We review a district court's evidentiary rulings for abuse of discretion. United States v. Moody, 903 F.2d 321, 326 (5th Cir. 1990). Confrontation Clause errors are subject to harmless-error analysis. Delaware v. Van Arsdall, 475 U.S. 673, 680-82, 89 L. Ed. 2d 674, 106 S. Ct. 1431 (1986); United States v. Stewart, 93 F.3d 189, 194 (5th Cir. 1996). We see no abuse of discretion. 26 There were essentially two types of records in which the hearsay statements appeared. 7 First, the Government introduced letters and affidavits from the cardholders stating that their cards had been lost, stolen, or not received, and that their account bills contained unauthorized charges. Typically, these affidavits were standard forms sent by the credit card issuers to the cardholders, who in turn filled out the affidavits and returned them to the issuing banks. In some cases, the cardholders themselves wrote letters to the issuing banks stating that their bills contained unauthorized charges. Along with the affidavit or letter, some cardholders also returned a copy of their bill on which they marked the fraudulent charges. 27 Second, the Government introduced computerized printouts generated by the issuing banks. These printouts were essentially reports of phone calls made by cardholders to bank personnel in which the cardholders informed the bank that their credit cards were lost, stolen, or had never been received. The cardholders relayed this information orally to the bank personnel, who in turn entered the statements directly into the bank's computer. 28 The Appellants objected to the admissibility of these records as hearsay. The cardholders' affidavits and letters are hearsay because they contain the out-of-court statements of the credit cardholders. The computer records containing the oral statements are double hearsay. The first level of hearsay is the oral statements made by the cardholders to the bank personnel. The second level of hearsay consists of the bank records themselves that were created when the bank employees recorded the oral statements of the cardholders. The district court admitted the records under the business records exception, Fed. R. Evid. 803(6), and, to the extent that such records contained double hearsay, the catch-all or residual exceptions, Fed. R. Evid. 803(24) and Fed. R. Evid. 804(b)(5). The district court admitted the documents only after hearing testimony concerning them from five cardholders and five bank custodians. 29 Read literally, the Confrontation Clause could bar the use of all out-of-court statements in a criminal case when the declarant is unavailable, but the Supreme Court has rejected such an extreme interpretation of the Clause. Idaho v. Wright, 497 U.S. 805, 814, 111 L. Ed. 2d 638, 110 S. Ct. 3139 (1990); Sherman v. Scott, 62 F.3d 136, 140 (5th Cir. 1995), cert. denied, 133 L. Ed. 2d 760, 116 S. Ct. 816, 116 S. Ct. 1279 (1996). In Ohio v. Roberts, the Court noted that when a hearsay declarant is not present for cross-examination at trial, the Confrontation Clause normally requires a showing that he is unavailable. Even then, his statement is admissible only if it bears adequate 'indicia of reliability.' Ohio v. Roberts, 448 U.S. 56, 66, 65 L. Ed. 2d 597, 100 S. Ct. 2531 (1980). The Court later clarified the scope of Roberts, noting that the case stands for the proposition that unavailability analysis is a necessary part of the Confrontation Clause inquiry only when the challenged out-of-court statements were made in the course of a judicial proceeding. White v. Illinois, 502 U.S. 346, 354, 116 L. Ed. 2d 848, 112 S. Ct. 736 (1992); accord Sherman, 62 F.3d at 140. 30 Hence the relevant inquiry in this case is whether the evidence bears adequate indicia of reliability. Evidence is considered reliable if it falls within a firmly rooted hearsay exception or is otherwise supported by a showing of particularized guarantees of trustworthiness. Roberts, 448 U.S. at 66; United States v. Flores, 985 F.2d 770, 775 (5th Cir. 1993). The business records exception is a firmly rooted hearsay exception. United States v. Norton, 867 F.2d 1354, 1363 (11th Cir.), cert. denied, 491 U.S. 907, 109 S. Ct. 3192, 105 L. Ed. 2d 701, 493 U.S. 871, 110 S. Ct. 200, 107 L. Ed. 2d 154 (1989). Residual or catch-all exceptions generally are not. Wright, 497 U.S. at 817. Therefore, if the records are admissible under the business records exception, no violation of the Confrontation Clause occurred. If, however, the records are admissible under the residual exceptions, they must be supported by particularized guarantees of trustworthiness to avoid offending the Confrontation Clause.
31 The Appellants challenge the admissibility of the records under the business records exception on the ground that the cardholders were not acting in the regular course of business when they made the oral statements to the bank employees and supplied the affidavits or letters to the issuing banks. We agree with the Appellants that neither the cardholders' oral statements nor their written affidavits and letters fall within the business records exception, Fed. R. Evid. 803(6). The business records exception does, however, encompass one level of hearsay: the bank records themselves and the computer recordation by bank personnel of the oral statements of the cardholders. 32 The cardholders statements do not qualify as business records of the cardholders because the business records exception applies only if the person who makes the statement 'is himself acting in the regular course of business.' Rock v. Huffco Gas & Oil Co., Inc., 922 F.2d 272, 279 (5th Cir. 1991) (quoting Florida Canal Industries, Inc. v. Rambo, 537 F.2d 200, 202 (5th Cir. 1976)). As the Appellants correctly point out, it is not the regular course of business for credit cardholders to fill out affidavits or otherwise give information to their banks regarding stolen credit cards. See United States v. Davis, 571 F.2d 1354, 1359 (5th Cir. 1978). 33 Second, the statements are not admissible as business records of the issuing banks because of the double hearsay involved. 34 Double hearsay exists when a business record is prepared by one employee from information supplied by another employee. If both the source and the recorder of the information, as well as every other participant in the chain producing the record, are acting in the regular course of business, the multiple hearsay is excused by Rule 803(6). However, if the source of the information is an outsider, Rule 803(6) does not, by itself, permit the admission of the business record. The outsider's statement must fall within another hearsay exception to be admissible because it does not have the presumption of accuracy that statements made during the regular course of business have. 35 United States v. Baker, 224 U.S. App. D.C. 68, 693 F.2d 183, 188 (D.C. Cir. 1982) (citing United States v. Davis, 571 F.2d 1354 (5th Cir. 1978)). In the present case, the cardholders--outsiders to the companies that generated the documents--were the sources of the information contained in the records. So although Fed. R. Evid. 803(6) provides an exception for one level of hearsay--that of the documents themselves created by the employee who recorded the cardholder statements--the sources of the information contained in the records were the cardholders, and their statements must fall within another hearsay exception to be admissible. 8 See Baker, 693 F.2d at 188. 36 The Government cites many cases that affirm the admission, under the business records exception, of a company's business records containing statements provided by outsiders. These cases, however, all involve situations in which the double hearsay problem was satisfied either by the use of multiple hearsay exceptions or because the outsider who provided the statements was also acting in the regular course of business. See, e.g., United States v. Goodchild, 25 F.3d 55, 60 (1st Cir. 1994).
37 Although the statements of the cardholders do not qualify as business records, both the written affidavits and the oral statements made to the bank personnel are admissible under the residual exceptions to the hearsay rule, Fed. R. Evid. 803(24) and 803(b)(5). The residual exceptions authorize the admission of hearsay statements having circumstantial guarantees of trustworthiness equivalent to those of the other enumerated hearsay exceptions, as long as the trial court determines that the statements are sufficiently material, probative, and in the interests of Justice. Fed. R. Evid. 803(24), 804(b)(5). 38 To satisfy the dictates of the Confrontation Clause, the evidence must be sufficiently reliable, that is, it must be supported by a showing of particularized guarantees of trustworthiness. Roberts, 448 U.S. at 66. These particularized guarantees of trustworthiness must be drawn from the totality of the circumstances surrounding the making of the statement, but they cannot stem from other corroborating evidence. Wright, 497 U.S. at 820-22; Scott, 62 F.3d at 140 & n.2. Although the Supreme Court's language in its decisions interpreting the Confrontation Clause regarding trustworthiness and reliability appears similar to the requirements set forth in the residual hearsay exceptions, we note that the two inquiries are not identical and that evidence admissible under the residual exceptions may still violate the Confrontation Clause. Wright, 497 U.S. at 814; United States v. Shaw, 69 F.3d 1249, 1253 (4th Cir. 1995). 39 The written affidavits of the cardholders and the oral statements made by the cardholders to the banks exhibit a high degree of reliability such that admission does not offend the Confrontation Clause. The Appellants impugn the reliability of the cardholders' statements on the grounds that the statements are self-serving because the cardholders, by informing the banks that they had not made specific charges, were able to avoid paying for those charges. The record, however, suggests otherwise. A fraud investigator at Citibank with 22 years of experience testified that he had participated in over 1000 fraud investigations and that he could remember only three or four instances in which the cardholder was lying about not making the charges. In addition, the record shows that issuing banks have an incentive to ensure the veracity of the cardholders' claims of fraud because loss due to fraud is borne by the issuing banks. We thus believe that the affidavits of the cardholders and the oral statements made to the bank personnel exhibit a degree of reliability similar to that of the statements Judged admissible in United States v. Simmons, 773 F.2d 1455, 1460 (4th Cir. 1985) (holding that the admission, under Rule 803(24), of an ATF gun certification form that had been filled out and signed by a weapon manufacturer did not violate the Confrontation Clause because the form was highly reliable). 40 In addition, the trustworthiness of the statements at issue is so clear from the surrounding circumstances that cross-examination of the 265 non-testifying cardholders would be of marginal utility. See Wright, 497 U.S. at 820, Shaw, 69 F.3d at 1253. In this case, the trial court delayed ruling on the admissibility of the hearsay statements until after the Government had presented the testimony of five of the cardholders whose statements are at issue. The Appellants' cross-examination of these witnesses was minimal, and they did not make an issue of whether these witnesses were being untruthful. Finally, none of the Defendants in closing argument attacked the credibility of the cardholders; the crux of the defense was not whether the cards had been stolen. We thus conclude that there was sufficient indicia of reliability supporting the out-of-court statements by the credit cardholders such that admission of these statements under the residual exceptions to the hearsay rule does not violate the Appellants' Sixth Amendment right to confront witnesses.