Opinion ID: 670509
Heading Depth: 2
Heading Rank: 2

Heading: The Victim Impact Evidence

Text: 34
35 During its case in chief, the government called to the stand a number of the funeral directors who had put their money in Copple's hands. They testified about their losses, and about the impact of those losses on their lives. Copple argues that evidence about the victims' losses was irrelevant under Federal Rule of Evidence 401, and that the testimony about the impact of the losses was both irrelevant (or at least of negligible probative worth) and unfairly prejudicial, and hence excludable under Federal Rules of Evidence 401 and 403. Our review of these challenges to the conviction is for abuse of discretion. See United States v. Versaint, 849 F.2d 827, 831 (3d Cir.1988). 36 With respect to the testimony about the financial losses, Copple properly argues that the government does not have to show that the victims actually suffered a loss to satisfy the elements of the mail fraud statute. The essential elements of the crime of mail fraud are 1) a scheme or artifice to defraud; 2) participation by the defendant with specific intent to defraud; and 3) use of the mail in furtherance of the scheme. 18 U.S.C. Sec. 1341; see United States v. Burks, 867 F.2d 795 (3d Cir.1989). Proof of actual loss by the intended victim is not necessary. See United States v. Kelley, 929 F.2d 582, 585 (10th Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 341, 116 L.Ed.2d 280 (1991); United States v. King, 860 F.2d 54, 55 (2d Cir.1988), cert. denied, 490 U.S. 1065, 109 S.Ct. 2062, 104 L.Ed.2d 628 (1989). 37 But that does not mean that evidence of loss was irrelevant. Proving specific intent in mail fraud cases is difficult, and, as a result, a liberal policy has developed to allow the government to introduce evidence that even peripherally bears on the question of intent. See United States v. Foshee, 606 F.2d 111, 113 (5th Cir.1979), cert. denied, 444 U.S. 1082, 100 S.Ct. 1036, 62 L.Ed.2d 766 (1980). 16 Proof that someone was victimized by the fraud is thus treated as some evidence of the schemer's intent. See United States v. Heimann, 705 F.2d 662, 669 (2d Cir.1983) (While technically the success or failure of a scheme to defraud is irrelevant in a mail fraud case, realistically, when the contested issue is intent, whether or not victims lost money can be a substantial factor in a jury's determination of guilt or innocence. (citation omitted)). Also relevant is the defendant's failure to take any steps to ameliorate the loss. See Anderson v. United States, 369 F.2d 11, 15 (8th Cir.1966), cert. denied, 386 U.S. 976, 87 S.Ct. 1171, 18 L.Ed.2d 136 (1967). The government submits that the evidence about the victims' losses and Copple's refusal to make good those losses was relevant to show Copple's specific intent to defraud. We agree, with the qualification that district judges should exercise their wise discretion in imposing limits on such testimony. The following discussion is a case in point. 38 Copple's defense was that he had simply made a bad business decision when he, as trustee, had relied on the advice of experts to invest in rare coins. Yet the funeral directors had to pay for their losses out of their own pockets, while he refused to part with any of the luxuries he had purchased with the Mechem pre-need funds. The evidence of Copple's refusal to part with the property under such circumstances was, we believe, evidence of Copple's fraudulent intent. It tended to show that Copple intended to convert the Mechem pre-need money to his own personal use, something he had no right to do. 39 In addition, the testimony about the funeral directors' losses also corroborated the testimony of insurance agent James Domino, who said that he had never issued a surety bond to Mechem despite Copple's requests. Yet a few of the funeral directors testified that they had received a letter on Domino's stationary stating that the surety bond had been issued, and that letter was offered into evidence. Thus the fact that the funeral directors had to pay the losses out of their own pockets corroborated Domino's testimony that no such bond was issued and showed Copple's intent to mislead the funeral directors with the letter. Since the evidence about the extensive losses suffered by the funeral directors was relevant to show Copple's failure to repay and his intent to defraud, the evidence was admissible under the low threshold of Rule 401. 40 When the district court ruled on the admissibility of the testimony about the funeral directors' losses, however, its ruling encouraged the government to introduce a wide range of victim impact testimony in addition to the testimony about the size of the losses. Some of the victim impact testimony went beyond anything that was reasonable to prove Copple's specific intent to defraud. 41 A number of the funeral directors testified that the money they had used to pay back the losses came from money they had saved for their children's college educations. Others testified that paying back the money had affected their health, or had been taken from savings dedicated to other special purposes. For example, in response to the question of what effect the loss of money had on his business, Frank Mihalcik answered: [w]ell, the situation.... has affected my health. I have lost over 60 pounds, and I am currently under a doctor's care. Terry Starr testified that he had to use every bit of personal savings he had in order to retrust the lost money. He then stated that, in order to obtain the money, he and his wife were forced to break a contract to purchase a home and to use the down payment money to retrust the money they had lost. 42 Testimony such as this had either no, or very little, probative value and was unfairly prejudicial. We believe that it was irrelevant either for the purposes of proving that Copple had failed to make up the loss to the funeral directors or for any other reason. Even if there had been some marginal relevance to the testimony about the particular personal or professional impact the losses had on the funeral directors, its principal effect, by far, was to highlight the personal tragedy they had suffered as victims of the scheme. The testimony was designed to generate feelings of sympathy for the victims and outrage toward Copple for reasons not relevant to the charges Copple faced. It arguably created a significant risk that the jury would be swayed to convict Copple as a way of compensating these victims wholly without regard to evidence of Copple's guilt. 43 In short, we believe that the probative value of the victim impact testimony was outweighed by unfair prejudice, and that such testimony should have been excluded under Federal Rule of Evidence 403. 44
45 Although the district court abused its discretion by allowing all of the victim impact testimony into evidence, we need not reverse if that error was harmless. Trial error is harmless if it is highly probable that the error did not affect the judgment. United States v. Simon, 995 F.2d 1236, 1244 (3d Cir.1993). High probability exists if the court has a sure conviction that the error did not prejudice the defendant. Id. at 1244 (internal quotations omitted). There is no need to disprove every reasonable possibility of prejudice. Id. at 1244 (internal quotations omitted). We believe that the error of admitting the victim impact statements was harmless because of the overwhelming evidence of both the scheme to defraud and Copple's specific intent. 46 First, Copple's claim that he had bought the rare coins in order to get a higher return for Mechem was refuted by the bankruptcy trustee's testimony that Copple had sold $877,000 worth of the coins just before declaring bankruptcy and had made the checks from the coin companies payable to himself--not Mechem. Although $450,000 of that money was eventually transferred to Mechem, Copple could not remember where the other $427,000 of the proceeds from the sale went. 47 Second, Copple spent immense amounts of money for personal use while he was drawing money from the Mechem account. Copple's personal spending during the three-year life of Mechem included the following purchases: 48 $228,000 Home improvement, Sesler Builders 196,334 Furniture, Russell's Country Manor 67,694 Home improvement, Kitchens by Meade 70,000 Home improvement, architects and contractors. 62,081 Jewelry, Les Crago 70,279 Jewelry, Fortunoff's 398,000 Jewelry, Neiman-Marcus 48,712 Sable coat 11,000 Other fur coats 480,000 Gifts for family members 230,000 Payments to other Copple-owned businesses 61,000 Automobiles 6,000 Country club fees 3,000 Gambling, Caesar's Palace 49 At the time of the bankruptcy, Copple had also just put a $110,000 deposit down on a $450,000 diamond from Neiman-Marcus that weighed 38.33 carats. Nearly all of the money for these expenditures came from money in the pre-need accounts that Copple had transferred to himself. 50 Third, the evidence was overwhelming that Copple had prepared wholly fictitious reports about how Mechem was investing the money, about the interest earned on the investments, and about fidelity or surety bonding. Particularly incriminating is the false letter Copple caused to be sent from Mechem to its investors six months after it was incorporated stating that Mechem's investments have been made in insurance companies, annuities, T-bills, long-term municipal bond funds, short-term CD's and money markets, and that Mechem's performance has reflected our excellent investment posture for the last fifteen years. Also highly probative of both the scheme to defraud and Copple's fraudulent intent was the evidence that funeral directors were sent fabricated quarterly reports showing the interest that had accrued on the trust investments, and the evidence that Copple had ordered a salesman to alter a general liability policy to make it look like a fidelity or surety bond. 51 We believe that all of this evidence overwhelmingly indicates that Copple knowingly devised or participated in a scheme to defraud and did so with the specific intent to defraud the funeral directors and others who had invested in Mechem. We are satisfied that it was highly probable Copple would have been convicted for violating the mail fraud statute even if the victim impact testimony had been excluded. For these reasons, we hold that the error was harmless. 17