Opinion ID: 1189282
Heading Depth: 1
Heading Rank: 10

Heading: Admission of Evidence of the Civil Injunction against Hoffecker

Text: Hoffecker also argues that the District Court abused its discretion when it admitted evidence of a civil injunction that had been entered against him. As we discussed above, the Federal Trade Commission brought an action in 1989 against Hoffecker and a business named Uni-Vest alleging deceptive and unfair acts and practices. App. vol. 9 at 11. The FTC action was successful for in July 1991 a district court entered a permanent injunction against him in the Southern District of Florida forever enjoin[ing] and restrain[ing him] from telemarketing precious metals when the purchasing of precious metals is to be made in whole or in part with financing. Id. at 11-12. Hoffecker moved prior to the first trial to exclude evidence of the entry of permanent injunction but the District Court denied his motion because it found that the evidence was intrinsic to the offenses charged in this case. Hoffecker renewed the motion prior to the second trial but the court denied the motion and made the further finding that evidence of the injunction was relevant on the question of whether Amitex's customers would have invested in Amitex's LPCIP, particularly in light of Hoffecker's likely defense that the customers were not victims of a conspiracy but merely were disappointed investors who had been given the information they needed to make their investment decision. During the second trial, the Government introduced evidence of the injunction several times in its case-in-chief by asking witnesses who were former customers of Amitex whether they knew about the order imposing the lifetime ban on Hoffecker and, if they had been unaware of it, whether they would have wanted to know about the ban before deciding whether or not to send money to Amitex to purchase physical commodities. Even former Global employee, Fran Leone, who, after all, was in frequent contact with Hoffecker, also testified that she was not aware of the lifetime ban on Hoffecker when she worked for him at Global. Clearly, Hoffecker was keeping quiet about the injunction. Hoffecker argues that the District Court abused its discretion when it admitted evidence of the injunction, which he contends was irrelevant and prejudicial evidence of uncharged conduct that placed his character in a bad light and conditioned the jury to conclude that Hoffecker and Myers were fraudsters. Appellant's Br. at 50-52. The Government answers that evidence of the injunction was intrinsic to the charged offenses and thus was admissible. The Government further argues that, even if this evidence was not intrinsic, it was admissible under Federal Rule of Evidence 404(b) because it was introduced to prove something other than bad character. We review a district court's decision to admit evidence for abuse of discretion. United States v. Gibbs, 190 F.3d 188, 217 (3d Cir.1999). Rule 404(b) governs the admissibility of evidence of other acts and states in pertinent part: Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, 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). Thus, Rule 404(b) does not apply to evidence of uncharged offenses committed by a defendant when those acts are intrinsic to the proof of the charged offense. Gibbs, 190 F.3d at 217 (holding that the defendant's participation in uncharged acts of violence was admissible as direct proof of his participation in cocaine conspiracy); see also Fed.R.Evid. 404, Advisory Committee Notes (1991 Amendment). [A]cts are intrinsic when they directly prove the charged conspiracy. United States v. Cross, 308 F.3d 308, 320 (3d Cir.2002). Even if the evidence is extremely prejudicial to the defendant, the court would have no discretion to exclude it because it is proof of the ultimate issue in the case. Gibbs, 190 F.3d at 218 (quoting 22 Charles A. Wright & Kenneth W. Graham, Jr., Federal Practice and Procedure § 5239, at 450-51 (1978)); see also United States v. Bobb, 471 F.3d 491, 497-98 (3d Cir.2006) (holding that evidence of an uncharged assault by the defendant was admissible because it was direct evidence of his participation in and enforcement of conspiracy to distribute crack and cocaine). Evidence of the lifetime ban on Hoffecker was part of the charged offense. The indictment charged that [i]t was part of the conspiracy that ... Hoffecker ... intentionally concealed and failed to disclose to investors in the LPCIP that, as a result of a lawsuit brought by the Federal Trade Commission in 1991, ... Hoffecker was permanently prohibited from selling, or offering to sell, precious metal on a financed basis. As a result of this prohibition... Hoffecker ... operated Amitex outside the United States and claimed that [he] did not engage in transactions involving commodity futures or options in order to avoid regulation by the U.S. Commodity Futures Trading Commission and other U.S. regulatory authorities. App. vol. 1 at 18-19. Moreover, the Government was required to prove Hoffecker's intent to commit the charged crimes of conspiracy to commit mail fraud and mail fraud. During the second trial, in anticipation of Hoffecker's defense that he lacked the intent to defraud and that he never intended to misrepresent or omit material facts in developing his commodities program, the Government used evidence of the lifetime ban against him to show that Hoffecker purposefully was engaging in forbidden conduct and that he structured Amitex off-shore to avoid regulatory and law enforcement scrutiny. The ban further explained why Hoffecker set up the fraud in a sophisticated manner, using at least two companies: Amitex that was incorporated off-shore as a financial institution and Global and other boiler rooms that were located within the United States. The ban also explained why Hoffecker created layers of false pretenses to hide his ownership of the two companies. The Government also used the evidence to show that Hoffecker had failed to disclose a material fact to potential Amitex customers and that concealment of this material fact constituted fraud. In the circumstances, the District Court properly admitted the injunction evidence because it was intrinsic to the charged offenses. Hoffecker claims that the District Court's decision to admit the evidence of the injunction allowed the Government to have it both ways: he argues that it was unfair that he was not permitted to argue that Field was his attorney between 1996 and 1998 even though the court allowed the Government to use evidence of the 1991 injunction entered in an action in which Field acted as his attorney. Appellant's Rep. Br. at 53. But the District Court admitted the evidence that Field was Hoffecker's lawyer during the case that resulted in the 1991 injunction; there is no evidence supporting his argument that Field still was acting as his lawyer during the 1996-98 Amitex conspiracy. Accordingly, the District Court did not err in admitting the evidence of the entry of the injunction. Hoffecker also argues that the admission of different evidence regarding a different consent decree arising out of yet another company called Uni-Met prejudiced him. But the court admitted evidence of this consent decree exclusively against Hoffecker's co-defendant Myers. Only the person whose prior acts are at issue may raise a Rule 404(b) challenge on appeal. See United States v. Davis, 154 F.3d 772, 779 n. 3 (8th Cir.1998) (defendants lack standing to challenge evidence of other defendant's other acts on Rule 404(b) grounds); United States v. David, 940 F.2d 722, 736 (1st Cir.1991) (Objections based on Rule 404(b) may be raised only by the person whose `other crimes, wrongs, or acts' are attempted to be revealed.); see also United States v. Washington, 12 F.3d 1128, 1135 n. 2 (D.C.Cir. 1994). Accordingly, Hoffecker cannot raise a Rule 404(b) challenge to the admission of the Uni-Met consent decree against Myers. Moreover, the District Court twice instructed the jury regarding the Uni-Met evidence, making clear that this evidence was not admissible as to Mr. Hoffecker and cannot be considered by you in evaluating the case involving Mr. Hoffecker. App. vol. 49 at 21; vol. 15 at 12. These instructions minimized any spillover prejudice to Hoffecker arising from the admission of this evidence. See United States v. Johnson-Dix, 54 F.3d 1295, 1308 (7th Cir.1995) (stating that [e]ven if Rule 404(b) evidence is properly admitted against one defendant in a joint trial, ... the district court must consider whether the evidence may have a `spillover' effect that could deprive the other defendants to whom the evidence does not apply of their right to a fair trial and that a limiting instruction would minimize[] any spillover prejudice); David, 940 F.2d at 736 (limiting instruction to the jury is the proper course to ensure against prejudicial spillover). In the circumstances, the District Court did not err in admitting this evidence at trial.