Opinion ID: 524322
Heading Depth: 2
Heading Rank: 1

Heading: The Prostitution Issue

Text: 13 We need to see how and why the prostitution issue got into this stolen property case, and what difference it makes. 14 After the trial was several days along, the prosecutor advised defense counsel that he had just received a transcript of DeGeratto testimony in a separate matter before a federal grand jury in Chicago. That grand jury, working with the Department of Justice Strike Force, was investigating possible violations of federal law in connection with a certain Chicago prostitution business. Several persons were suggested as grand jury targets including a person named Doris Fischer. However, the Strike Force prosecutor specifically advised DeGeratto when he appeared before that grand jury that he was neither a target or [sic] a subject of this Grand Jury's investigation. The prosecutor in the present case advised defense counsel that he intended to use the prostitution transcript to cross-examine DeGeratto if he took the stand in his own defense. Defense counsel objected, but the trial judge, after examining the transcript, ruled that it involved a bad act of the defendant, and that therefore it could be used to impeach the credibility of DeGeratto if he testified. 15 The transcript of that grand jury testimony contains an explanation of DeGeratto's relationship to Stern, his former business partner, and to Doris Fischer, both targets of the prostitution investigation. In brief, in the grand jury transcript DeGeratto explains that he was a signatory on Loren Corporation's checking account, that he was asked to sign a check to Fischer, that he checked with his bookkeeper and was advised that the check had been prepared at the direction of Stern. DeGeratto then asked Stern about the check. Stern explained that Fischer was a business friend of his who had no means of honoring credit cards. Therefore, he was helping Fischer out by providing the credit card service through the Buddy Bear account for a fee of 15% of the credit card charges. DeGeratto thereafter proceeded to sign checks as presented payable to Fischer or her company, Butterfly Enterprises. About 90 Loren Corporation checks were processed in that manner. DeGeratto testified that he did not know Fischer at the time or the nature of her business. He met her only after the credit card arrangement was terminated. That was at a party which Stern hosted at DeGeratto's house. 16 After DeGeratto testified on direct in the present case, the government, under a continuing objection from defense counsel, opened up the prostitution issue on cross-examination. DeGeratto was asked about meeting Fischer at the party at his house. He explained that it was Stern's party, not his. DeGeratto was asked if he had been told that Fischer was a madam. He denied that he had been told that, but explained that nevertheless that was his impression. DeGeratto was then asked to explain to the jury what a madam is. She is an older woman, he said, who used younger women to go out and produce income. The prosecutor then put it more bluntly, stating that a madam runs what is commonly referred to as a whorehouse. DeGeratto denied knowledge that Fischer ran a whorehouse, but admitted he later found out about her business. The prosecutor then questioned DeGeratto about Loren Corporation's processing of the credit card charges generated by Fischer's prostitution business. DeGeratto continued to deny that he knew that the credit card charges were the result of, as the prosecutor put it, persons having sex at her establishment. According to DeGeratto, Stern, also a lawyer, had told him that the credit card processing was legal. The prosecutor inquired about Loren Corporation checks given to Fischer at the end of every month. Were they, he inquired, for the amount of money that had been accumulated at the house of prostitution during the last month? Again, DeGeratto denied that he knew of the house of prostitution. He also denied that he got any of the 15% processing fee as that went to Loren Corporation. The prosecutor continued to pursue DeGeratto's signing of the monthly checks to Fischer. DeGeratto admittedly signed most of the checks for the Loren Corporation. The prosecutor, in further questioning, suggested that DeGeratto would sign checks to a food company, a bread store, another for lettuce, and then there would be one to a house of prostitution. Again DeGeratto denied he knew of the house of prostitution. DeGeratto further explained that he asked Stern about the checks and was told just to sign them as Stern knew Fischer. It was Stern, DeGeratto explained, who owned Loren Corporation, and that he only had a management contract with it. Therefore, he signed what he was told to sign by Stern. The prosecutor then asked, What kind of food did you believe that Butterfly Enterprises was supplying your store with? DeGeratto answered that he had no idea. He conceded that the checks written to Fischer from the credit card processing amounted to about $64,000 over a three-year period. The prosecutor then asked DeGeratto if that would be a lot of lettuce or tomatoes? DeGeratto explained that Loren Corporation only profited about $9,000 from the credit card processing. Again DeGeratto denied that, at the time, he knew a prostitution business was involved. He found out about the prostitution later. DeGeratto was then asked several times if, after finding out about the nature of Fischer's business, he contacted the authorities. He explained that Stern at that time was already on trial in the prostitution case, that Loren Corporation was bankrupt, and that he himself had not been aware of any wrongdoing. The prosecutor left prostitution for the moment with the question whether DeGeratto was aware of the stolen turkeys being sold to his store, which DeGeratto denied. The prosecutor then returned to prostitution with additional inquiries about DeGeratto being subpoenaed before the grand jury, and inquired again about DeGeratto's knowledge of the prostitution business. With the same denials from DeGeratto that he did not know at the time, cross-examination was terminated. 17 The prosecutor returned to the prostitution issue briefly in rebuttal closing argument, This guy [referring to DeGeratto] is not a sweet guy, a soft touch. He's a smart sophisticated operator making 700 grand a year that we know of, prostitution rings going through his business, buying stolen food, loan business. 2 18 DeGeratto strongly urges that all of the government's prostitution exploration was prejudicial error, admissible neither under Fed.R.Evid. 404(b) (prior bad act) 3 nor under 608(b)(1) (impeachment). 4 The trial judge did not specify which rule was deemed by him to permit the prostitution cross-examination and argument. In overruling DeGeratto's objections, the judge found only that the prostitution evidence involved a bad act, that the probative value outweighs any prejudice, and therefore, it can be used to impeach the credibility of the defendant. 19 The government defends its use of the Strike Force investigation of the Fischer and Stern prostitution ring by arguing that the cross-examination was permitted as a proper attempt to impeach the defendant's credibility under Fed.R.Evid. 608(b), as well as bad act evidence under Fed.R.Evid. 404(b). The government, in its brief, characterizes the government's cross-examination as the prosecutor merely asking the defendant several questions about his involvement with Stern and Fischer in the prostitution activity. That cross-examination, however, cannot be so blandly minimized. The government continues in its brief to argue that the defendant admitted that each month he wrote a check to Butterfly Enterprises for the net amount of the prostitution ring's credit card receipts, and further that the store kept 15% as a commission for allowing the prostitution ring to use its credit card account. That characterization by the government is not quite accurate. DeGeratto only admitted writing the checks; he steadfastly denied knowledge of the prostitution activities. DeGeratto's denials are labeled by the government as ludicrous. 20 The government argues for the application of Fed.R.Evid. 608(b), permitting, within the trial court's discretion, inquiry on cross-examination into specific instances of the conduct of the witness, provided the particular conduct is probative of truthfulness or untruthfulness, or concerns the witness's character for truthfulness or untruthfulness. The government relies upon United States v. Fulk, 816 F.2d 1202 (7th Cir.1987). In Fulk, the defendant was charged with interstate transportation of fraudulent securities. On cross-examination he denied ever being accused of misrepresentation. An effort was then made to impeach the defendant with evidence that his chiropractor's license had been suspended because of his deceptive practices. Although the district court sustained the defendant's objection, this court indicated that such questioning was proper under Rule 608(b). Fulk, 816 F.2d at 1206. Fulk is of little present help, however, as DeGeratto was never charged with any involvement in prostitution (in fact he was explicitly advised by the Strike Force attorney that he was not a grand jury target), and he never denied that he signed the checks issued to Butterfly Enterprises, merely that he did not know the nature of Fischer's business until after the fact. Fulk, on the other hand, directly denied any past misconduct, when in fact he had lost his chiropractor's license as a result of former misdeeds. 21 The government also relies on United States v. Taylor, 728 F.2d 864 (7th Cir.1984). The defendant in Taylor was charged with possession of an unregistered machine gun. The defendant claimed that he had no knowledge of the gun's presence, nor of the 10 grams of cocaine found when he was arrested. On cross-examination he denied any familiarity with cocaine. He was then confronted with the fact that cocaine had been found in his home on a previous occasion and that he had been arrested for cocaine possession in Florida at one time. We held this to be proper cross-examination probative of defendant's untruthfulness. There is nothing similar in the present record, however, that sufficiently reveals the defendant's knowing connection with prostitution, only the prosecutor's questions, statements and argument, all of which DeGeratto denied. 22 Likewise, United States v. Covelli, 738 F.2d 847 (7th Cir.), cert. denied, 469 U.S. 867, 105 S.Ct. 211, 83 L.Ed.2d 141 (1984), is distinguishable. Covelli also involved a prosecution for transportation of stolen goods in interstate commerce. The prosecutor was allowed to cross-examine the defendant about his admission to a police officer that he had at one time faked an insanity defense and avoided trial. Corelli's credibility was at issue and the related inquiry constituted proper impeachment. In the present case, however, there was no admission or other evidence of DeGeratto's involvement in prostitution, only the government's questions and DeGeratto's denials. 23 In United States v. Howard, 774 F.2d 838, 844-45 (7th Cir.1985), we held it proper in a vote fraud prosecution to cross-examine the defendant about false statements on two recent employment applications. There was a demonstrated lack of credibility. In contrast, there is no such demonstration in the present case, and a prosecutorial hunch that DeGeratto knew more about the prostitution business than he admits is not enough. 24 The government responds to DeGeratto's argument that the prostitution prejudice was so great that it deprived him of a fair trial by saying that his argument runs contrary to common sense, because DeGeratto was being charged with felonies and prostitution ... is a misdemeanor. For the government to advance such an argument is what runs counter to common sense. The prejudice from alleged prostitution involvement, at least with many citizens, does not turn on whether prostitution is a felony or only a misdemeanor, but on the very nature of the conduct. In any event the jury was given no such felony or misdemeanor characterization. The government adds that no suggestion was made that DeGeratto had any actual involvement in prostitution, only that DeGeratto helped facilitate the prostitution ring's financial situation. The government, in effect, argued a prostitution conspiracy. The government now unrealistically tries to minimize the prejudice from its prostitution questions injected and pursued at trial. That effort defies the government's own common sense standard which it seeks to have this court apply. 25 In any event, the government argues that the probative value of the prostitution questioning outweighed any prejudice, and therefore was proper credibility impeachment, citing United States v. Fountain, 768 F.2d 790, 794-95 (7th Cir.1985), cert. denied sub nom. Gometz v. United States, 475 U.S. 1124, 106 S.Ct. 1647, 90 L.Ed.2d 191 (1986). Fountain can be read to sustain the balancing of probative value and prejudice, which is a generally acknowledged process. In Fountain, however, the subject of the actual prior crimes of the defendant was touched on in direct, and thereafter not dwelt on in great detail by the prosecution. In those circumstances we held that the prosecutor was entitled to amplify them slightly. Ordinarily error is found only when a prosecutor dwells at great length and in further detail on the particulars of prior crimes. 768 F.2d at 755. 26 In the present case, there was not only no actual evidence of prior prostitution crimes, there was not even a prior allegation against DeGeratto regarding prostitution. In fact, the Strike Force attorney denied that DeGeratto was a grand jury target. The present case is not a situation where a defendant's link to another criminal prosecution was amplified only slightly. The transcript strongly suggests that an effort was made by the prosecutor to convict DeGeratto of an uncharged prostitution conspiracy. The prosecution's emphasis on prostitution was extremely prejudicial and excessive. It could not but depict DeGeratto before a jury as a bad man in ways unrelated to the stolen property charge upon which he was being tried. Whatever weighing and balancing there may have been in the admission of that evidence we hold it to have been a clear abuse of discretion. United States v. Shoffner, 826 F.2d 619, 635 (7th Cir.), cert. denied sub nom. Stange v. United States, --- U.S. ----, 108 S.Ct. 356, 98 L.Ed.2d 381 (1987). The prostitution questioning was not proper under Rule 608 because what alleged prostitution evidence the government had was not sufficient to permit a good faith belief that DeGeratto knowingly helped the prostitution operation. Even if the subject of prostitution could have been properly approached for impeachment purposes, this cross-examination went much too far with too little; the prosecutor should not have been allowed to continually focus on it. It was an unworthy attempt by the government. 27 Nor can this excursion into prostitution involvement be saved by an application of Fed.R.Evid. 404(b), in spite of the government's efforts to misapply the rule. The government does concede that evidence of other crimes or bad acts cannot be used to prove that a defendant committed the crime charged simply because he has committed crimes in the past. The govenment, citing Shoffner, 826 F.2d at 633, argues that prior crimes or bad acts may be used, however, to demonstrate that the defendant, as in the instant case, had the opportunity and the intent to commit the crimes for which he is on trial as well as to show that he had knowledge of their commission. Shoffner involved a massive chop shop conspiracy. Evidence of a series of threats by the defendant against a possible government witness was properly admitted. The threats were the subject of a separate witness intimidation indictment. There was evidence that the defendant had told third parties shortly after the service of search warrants that the squealers would be shot before he went to court. 28 Further, the jury in Shoffner, was instructed about the limited use of bad act evidence. In the present case no limiting instruction was given at the time the evidence was admitted, or later. Evidence of other bad acts can be very prejudicial. The use of that type of evidence is limited by the rule, and is to be considered by the jury only for certain purposes. A limiting instruction should ordinarily and routinely be given at the time the evidence is admitted, and again at the close of the case. DeGeratto's counsel did submit a Rule 404(b) limiting instruction for use at the conclusion of the trial, but the court failed to give it. Defense counsel thereafter failed to object to its not being given by the court, thereby ordinarily causing that failure to be reviewable only on a plain error standard. United States v. Young, 470 U.S. 1, 15-16, 105 S.Ct. 1038, 1046-1047, 84 L.Ed.2d 1 (1985). Plain error is a concept to be used sparingly to prevent the miscarriage of justice. We have found plain error for failing to give a limiting instruction in some circumstances. United States v. Johnson, 515 F.2d 730 (7th Cir.1975). Furthermore, where misuse of Rule 404(b) results in the admission of extremely prejudicial evidence, as in this case, a limiting instruction may fail to prevent broad prejudicial consideration by the jury. Thus, even if the prostitution evidence were properly admissible under Rule 404(b), we would hold it plain error to have failed to give a limiting instruction. 29 However, this case need not turn on the failure to give one or two instructions. The prostitution evidence, contrary to the government's argument, should not have been admitted as bad act evidence because it does not meet the requirements of United States v. Shackleford, 738 F.2d 776, 779 (7th Cir.1984). We set forth in Shackleford four requirements for the admission of bad acts evidence. The first of these requirements is that the bad act evidence be addressed to some matter in issue other than the defendant's propensity to commit the crime charged. In the present case, prostitution had nothing to do with any issue connected with the meat thefts. And no issue was created when DeGeratto denied knowledge of both the meat thefts and the prostitution ring. The government improperly sought to use DeGeratto's denial of knowledge about the prostitution ring to impeach his denial of the meat thefts. Further, there was no proof on the prostitution issue; there was no evidence from which the jury could reasonably infer that DeGeratto knowingly facilitated the prostitution ring, only innuendo from the government's cross-examination. Moreover, the trial judge did not inform the jury why it was hearing the prostitution dialogue, increasing the risk that the jury, left free to use the evidence as it saw fit, would infer that DeGeratto had a propensity to commit the meat thefts. 30 Under the second Shackleford requirement the other bad act must be similar enough and close enough in time to be relevant, in this case, to the meat theft charges. The existence of any such relationship between prostitution and the theft of meat escapes us. 31 The third original Shackleford requirement mandated that the bad act evidence be clear and convincing, but the Supreme Court moderated that strict requirement in Huddleston v. United States, 485 U.S. 681, 108 S.Ct. 1496, 1501, 99 L.Ed.2d 771 (1988). Now it is only necessary that a jury could reasonably find by a preponderance of the evidence that the defendant engaged in the other alleged bad act. DeGeratto, appearing before the Strike Force grand jury, was told specifically that he was not a target. He continually denied knowledge of the prostitution aspects of Fischer's use of the Loren Corporation's credit card account. His denials were not contradicted by any government evidence, only by the skepticism of the prosecutor. Mere skepticism, even if reasonable, does not meet the necessary burden of trial proof. 32 The last Shackleford requirement demands that the probative value of the bad act evidence outweigh the danger of unfair prejudice. The trial judge stated that rule but made no analysis of its application in this case. Whatever exception was thought by the court to be applicable was not identified nor evaluated other than perfunctorily. We asked in United States v. Beasley, 809 F.2d 1273, 1279 (7th Cir.1987), that more be done before bad act evidence be admitted. It was not in this case. Unfair prejudice patently outweighed the probative value of the prostitution evidence--for any legitimate purpose. 33 DeGeratto's counsel did not object to the use of this bad act evidence in the prosecution's final argument. Unless defense counsel's original continuing objection to the prostitution inquiry carries over to the closing argument, we must review the reference to prostitution in closing argument under the plain error standard. United States v. Young, 470 U.S. 1, 105 S.Ct. 1038, 84 L.Ed.2d 1 (1985). DeGeratto's attorney should have objected to the prosecution's reference to prostitution in closing, but we view his original continuing objection in these particular circumstances as continuing for the purpose of the final argument. Because the trial court admitted the evidence there was no reason to believe the court would not allow the government to argue it. In closing, the prosecutor argued that the prostitution business was significant. The prosecution then claimed that DeGeratto knew about the prostitution business, just as he knew that the meat had been stolen. There was evidence that DeGeratto knew the meat was stolen, but there was no actual admissible evidence by any standard that DeGeratto knew he was assisting a prostitution ring. The prosecution abused the fair trial process by engaging in the prostitution excursion which was clearly prejudicial error.