Opinion ID: 701842
Heading Depth: 2
Heading Rank: 1

Heading: Exclusion of Relevant Evidence

Text: 9 Elliott and Melhorn contend that the district court erred by excluding proffered testimony from satisfied Elliott Enterprises customers. 4 These customers, none of whom was named in the indictment, were to have testified to their belief that Elliott and Melhorn had committed no wrongdoing; they also would have testified that the two defendants had kept their promise to secure these particular investments with collateral. We review evidentiary rulings by the district court for abuse of discretion. United States v. Adair, 951 F.2d 316, 320 (11th Cir.1992). 10 Although the admission and exclusion of evidence falls within the broad realm of judicial discretion, such discretion does not extend to the exclusion of crucial relevant evidence necessary to establish a valid defense. United States v. Williams, 954 F.2d 668, 671 (11th Cir.1992). Relevant evidence is evidence that has any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence. Fed.R.Evid. 401. To the extent that Elliott and Melhorn proffered the witnesses to show that these investors did not believe that they had been defrauded, that they had received a portion of their money back upon request, that Elliott had told these investors to testify truthfully before the SEC, or that Elliott had backed these investors with the appropriate collateral as he had promised, the district court properly excluded this testimony as irrelevant. See Fed.R.Evid. 402. The fact that Elliott and Melhorn avoided wrongdoing in their dealings with five customers not named in the indictment is inconsequential in determining whether both made fraudulent representations to the nineteen victims listed in the indictment. 11 Elliott and Melhorn's main contention, however, is that the testimony of satisfied customers is relevant to the issue of their intent to defraud. In support of this proposition, they rely on the Ninth Circuit's decision in United States v. Thomas, 32 F.3d 418 (9th Cir.1994). In Thomas, the defendant was charged with mail fraud for implementing an averaging scheme. Id. at 419. Under the scheme, the defendant quoted false prices to fruit growers to even out fluctuations in the market. The growers affected by this scheme collectively came out ahead by approximately $175,980, but the trial court in Thomas excluded testimony from growers, who had benefitted under the scheme but were not named in the indictment. The Ninth Circuit reversed the district court and held that the testimony of all growers impacted by the scheme was relevant to the defendant's intent in devising the scheme. The court further noted that there was no basis for concluding that the scheme defendant had devised was intended to impact unnamed individuals any differently than those the government chose to name. Id. at 420. 12 While Elliott and Melhorn proffered the same type of testimony as that excluded in Thomas, we note that the scheme and intent at issue in Thomas differ significantly from the scheme and intent at issue in this case. In Thomas, the defendant made two, distinct misrepresentations: when fruit prices rose above an average price, the defendant falsely quoted a lower price to growers; when fruit prices dropped below average, the defendant falsely quoted a higher price. Overall, the growers impacted by the averaging scheme actually came out ahead by approximately $175,980; thus, testimony from satisfied growers could have helped the defendant establish that he did not intend to profit from his admittedly fraudulent representations. 13 Proving intent in this case, however, is not a simple matter of accounting for economic surplus. The material misrepresentations here center on the purported financial health of the Elliott Enterprises businesses and the performance and safety of its investments. No amount of testimony from satisfied customers could average out Elliott and Melhorn's intent to defraud when they continued to solicit new investments and reassure old investors while concealing millions of dollars in losses per year with fictitious audits and phantom collateral. To a much greater degree than was the case in Thomas, the proof of Elliott and Melhorn's intent to defraud lies in the substance of their misrepresentations, not in the cumulative impact of those misrepresentations on all of their customers. Thus, the district court did not err by excluding the proffered testimony as irrelevant. 5 14