Opinion ID: 381348
Heading Depth: 1
Heading Rank: 6

Heading: Evidentiary Use of Bankruptcy Proofs of Claim

Text: 38 The prosecution introduced into evidence 700 proofs of claim, totaling 1.2 million dollars, that were filed against Masterson in bankruptcy court one-half year after the business commenced operation. The purpose of this evidence was to raise an inference that Masterson was run in a highly unusual manner and not as a normal, legitimate enterprise. Appellants objected, asserting that the evidence was hearsay. This assertion would have been correct if the evidence had been introduced to prove how much Masterson actually owed its creditors (thereby raising the inference that it was not conducting business in good faith). However, as the district court correctly recognized, the proofs of claim were not hearsay for the purpose of establishing the fact the 700 claims totaling 1.2 million dollars were filed against Masterson within a half year after it commenced operations. This fact the filing of an inordinate number and amount of claims in such a short time also raised at least an inference that Masterson was not a typical, good faith business operation. 8 That the proper use of this evidence resulted in raising essentially the same inference that its improper use would have raised is by no means a sufficient reason to bar its admission.