Opinion ID: 2828566
Heading Depth: 3
Heading Rank: 1

Heading: Evidence Involving the Anti-Smoking Contract

Text: At trial, the government presented evidence of Mr. Kupfer’s role in a contract between the New Mexico Attorney General’s Office and Dr. Gutierrez. This contract called for Dr. Gutierrez to produce commercials on smoking prevention and cessation. Mr. Kupfer moved to preclude evidence of this contract, arguing that (1) the evidence was not relevant and (2) it constituted inadmissible evidence of uncharged misconduct under Federal Rule of Evidence 404(b). The court overruled the objection, holding that (1) the evidence was probative as intrinsic evidence and (2) the probative value was not substantially outweighed by the danger of -6- unfair prejudice. 2 We conclude that the district court acted within its discretion in admitting the evidence.
Mr. Kupfer challenges the characterization of the anti-smoking contract as intrinsic evidence. We reject that challenge. The district court acted within its discretion in concluding that the evidence was inextricably intertwined with the charged conduct. When we apply Rule 404(b), we distinguish between evidence that is extrinsic or intrinsic to the charged crime. United States v. Pace, 981 F.2d 1123, 1135 (10th Cir. 1992), abrogated on other grounds as recognized in United States v. Bell, 154 F.3d 1205, 1209– 10 (10th Cir. 1998). Evidence of other acts may be inadmissible under Federal Rule of Evidence 404(b), but this rule does not cover evidence that is considered “intrinsic.” United States v. Irving, 665 F.3d 1184, 1212 (10th Cir. 2011). Evidence is considered  “intrinsic” when it is “directly connected to the factual circumstances of the crime and provides contextual or background information to the jury,” and  “extrinsic” when it “is extraneous and is not intimately connected or blended with the factual circumstances of the charged offense.” 2 In the alterative, the district court held that the evidence would be admissible as extrinsic evidence. We need not address the alternative rationale. -7- United States v. Parker, 553 F.3d 1309, 1314 (10th Cir. 2009) (quoting Thomas M. DiBiagio, Intrinsic and Extrinsic Evidence in Federal Criminal Trials: Is the Admission of Collateral OtherCrimes Evidence Disconnected to the Fundamental Right to a Fair Trial, 47 Syracuse L. Rev. 1229, 1231 (1997)). We regard evidence as intrinsic when it  was “inextricably intertwined” with the charged conduct, 3  occurred within the same time frame as the activity in the conspiracy being charged, 4  was a necessary preliminary to the charged conspiracy, 5  provided direct proof of the defendant’s involvement with the charged crimes, 6  was “entirely germane background information, . . . ‘directly connected to the factual circumstances of the crime,’” 7 or 3 United States v. Lambert, 995 F.2d 1006, 1007 (10th Cir. 1993) (quoting United States v. Williams, 900 F.2d 823, 825 (5th Cir. 1990)). 4 See United States v. Parker, 553 F.3d 1309, 1315 (10th Cir. 2009) (“The three transactions within the charged conspiracy timeframe are intrinsic to the crime and substantiate the criminal conspiracy.”). 5 Lambert, 995 F.2d at 1007. 6 Parker, 553 F.3d at 1314–15. 7 United States v. Irving, 665 F.3d 1184, 1212–13 (10th Cir. 2011) (quoting Parker, 553 F.3d at 1314). -8-  was necessary to provide the jury with background and context of the nature of the defendant’s relationship to his accomplice. 8 The district court could reasonably conclude that evidence of the anti-smoking contract had satisfied these criteria: Dr. Gutierrez’s payments to Mr. Kupfer and the anti-smoking contract amendments occurred together within a short time-period and tended to show the conspiracy being charged and Mr. Kupfer’s involvement. See United States v. Parker, 553 F.3d 1309, 1315 (10th Cir. 2009). The district court regarded the anti-smoking contract as intrinsic because it (1) was intertwined with payments Dr. Gutierrez had made to Mr. Kupfer and (2) showed Elizabeth Kupfer’s involvement in issuing payments. R., vol. VIII, at 3081–82. The district court based its ruling on the government’s theory of the intertwined relationship between the federal grant and the antismoking contract amendments, which is reflected by the timing of the payments to Mr. Kupfer. Within five months of receiving a $250,000 increase in the anti-smoking contract, Dr. Gutierrez paid $140,000 to Mr. Kupfer’s consulting company even though it had not yet begun work on the project. Id. at 1866–67, 2620–21. The court could wonder why Dr. 8 United States v. Hall, 508 F. App’x 776, 779–80 (10th Cir. 2013) (unpublished). -9- Gutierrez was willing to pay Mr. Kupfer’s consulting company in advance. See id. at 1808 (discussing the facts that “the contract became effective 9-9-04, and that invoice [for $2 million] came in the day after”). Then, within thirteen months of the largest price increase under the anti-smoking contract ($350,000), Dr. Gutierrez made three more monthly payments (totaling $200,000) to Mr. Kupfer’s consulting company. Based on this timing, the jury could infer a connection between (1) Dr. Gutierrez’s price increases under the anti-smoking contract and (2) his payments to Mr. Kupfer under the voter-awareness contract. Mr. Kupfer argues that the voter-awareness and anti-smoking contracts were distinct because the contracts involved different agencies, only one of the contracts involved federal funds, and the anti-smoking contract preceded the voter-awareness contract by four years. It is true that the contracts were distinct. But the government theorized that Dr. Gutierrez had used money from the voterawareness contract to pay Mr. Kupfer for increasing the payments under the anti-smoking contract. Under this theory, both contracts (the voter-awareness and the anti-smoking contracts) were integral to -10- the scheme. The differences between the contracts did not invalidate the government’s theory. According to Mr. Kupfer, the government changed its theory at trial, characterizing the payments to Mr. Kupfer as kickbacks on the voter-awareness contract (rather than for the price increases on the anti-smoking contract). This argument reflects Mr. Kupfer’s confusion over the government’s theory. The government never accused Mr. Kupfer of doing something illegal to get Dr. Gutierrez the voter-awareness contract; the government’s theory―before, during, and after the trial―was that Mr. Kupfer and his wife had worked to land Dr. Gutierrez over $950,000 in additional payments under the anti-smoking contract. Under the government’s theory, Dr. Gutierrez had to pay Mr. Kupfer to secure the extra payments. Mr. Kupfer had no responsibilities under the anti-smoking contract, but he had a subcontract to help Dr. Gutierrez with the voter-awareness contract. That subcontract involved Mr. Kupfer’s production-related work on a short training video. For that work, Dr. Gutierrez paid Mr. Kupfer over $740,000. The government attributed those payments to kickbacks for the anti-smoking contract’s price increases. The kickbacks, however, were disguised as payments for Mr. Kupfer’s work on the voter-awareness contract. -11- Mr. Kupfer contends that the government dropped this theory at trial, but the government never wavered from this theory. At trial, for example, the government explained its conspiracy allegation in opening statements: And you may ask why during the course of this trial, why the Defendant Gutierrez would pay $750,000 to Defendant Joseph Kupfer. The evidence, as I previously mentioned, is going to show that there were favors back and forth between these two men over the course of the years, political allies, friends. But $750,000? Here’s what you’re also going to learn, that in addition to the [voterawareness] contract that the defendant had with the Secretary of State’s office during this time frame, he also -12- had contracts with the Attorney General’s office where Elizabeth Kupfer was the chief financial officer. And these were lucrative contracts, you will learn. R., vol. VIII, at 1383–84. The government then discussed the amendments to Dr. Gutierrez’s anti-smoking contract, which increased his pay from $150,000 to over $1,100,000. Id. at 1384. The government repeated this theory in closing argument. Id. at 2931–33. In our view, the government’s theory has been consistent throughout the proceedings. In these circumstances, the district court had the discretion to treat the evidence as intrinsic.
Mr. Kupfer also contends that the district court erred in applying Federal Rule of Evidence 403. Under this rule, the district court can exclude evidence if the probative value is substantially outweighed by the danger of unfair prejudice. Fed. R. Evid. 403. The district court concluded that the danger of unfair prejudice did not require exclusion. In reviewing this conclusion, we apply the abuse-of-discretion standard. United States v. Archuleta, 737 F.3d 1287, 1292 (10th Cir. 2013). Under this standard, the ruling was permissible. The court could reasonably view the evidence as highly probative. Mr. Kupfer acknowledges that the anti-smoking contract -13- was “highly suspicious” because it “ballooned Gutierrez’s pay by over $800,000.” Appellant’s Opening Br. at 31. The Increases in Dr. Gutierrez’s Anti-Smoking Contract The biggest jumps occurred in May 2004 and December 2004, with amendments that increased Dr. Gutierrez’s compensation by $250,000 and then $350,000. Between these two huge jumps, Dr. Gutierrez paid Mr. Kupfer’s company $140,000, before Mr. Kupfer had done any work on the anti-smoking campaign. And within thirteen months of obtaining the unexplained increase of $350,000 under the anti-smoking contract, Dr. Gutierrez paid Mr. Kupfer’s company another $200,000. Mr. Kupfer ultimately -14- collected a total of $746,375 for work on the voter-awareness contract. But even after being subpoenaed, Dr. Gutierrez never furnished a contract between himself and Mr. Kupfer (or Mr. Kupfer’s consulting company) and took two years to furnish invoices that had been subpoenaed. And in the invoices eventually furnished, Mr. Kupfer had provided only vague descriptions of his work (without any itemization). In these circumstances, the district court could view the $746,375 in payments to Mr. Kupfer’s company as compensation for the extraordinary increases in Dr. Gutierrez’s anti-smoking contract. As a result, the court could reasonably view evidence of the antismoking contract as highly probative. Under Rule 403, the court could still exclude the evidence if the probative value was substantially outweighed by the danger of unfair prejudice. But the court could reasonably view any prejudice as fair, rather than unfair. In urging unfair prejudice, Mr. Kupfer denies involvement in the numerous increases in Dr. Gutierrez’s anti-smoking contract. Mr. Kupfer says it was his wife, not himself, with the connections and position to engineer these price increases. According to Mr. Kupfer, the evidence was unfairly prejudicial because the jury could -15- impermissibly find him guilty by association because of his wife’s conduct, without finding any wrongdoing on the part of Mr. Kupfer. But the district court could view the situation differently. There was evidence that both Kupfers (not just Ms. Kupfer) had strong ties to the Secretary of State. And sandwiched between two extraordinary compensation increases for Dr. Gutierrez were equally generous, unexplained payments from Dr. Gutierrez to the company owned by Mr. Kupfer, not his wife. In these circumstances, the district court could reasonably conclude that Mr. Kupfer was being held accountable for his own role―not his wife’s―in the huge increases paid to Dr. Gutierrez under the anti-smoking contract. 9 Thus, the district court did not abuse its discretion in applying Rule 403.