Opinion ID: 202083
Heading Depth: 1
Heading Rank: 4

Heading: The accountant's testimony

Text: 55 DeCicco's final argument is that the district court erred in admitting the testimony of his accountant Stewart regarding his (DeCicco's) missing expense documentation. We review the admission of evidence under Fed.R.Evid. 404(b) for abuse of discretion. United States v. Smith, 292 F.3d 90, 98 (1st Cir.2002). [A]n abuse of discretion occurs when a relevant factor deserving significant weight is overlooked, or when an improper factor is accorded significant weight, or when the court considers the appropriate mix of factors, but commits a palpable error of judgment in calibrating the decisional scales. United States v. Gilbert, 229 F.3d 15, 21 (1st Cir. 2000) (citing United States v. Roberts, 978 F.2d 17, 21 (1st Cir.1992) (internal quotation marks omitted)). 56 In DeCicco I, we held that the district court abused its discretion in excluding the testimony of DeCicco's accountant, Richard Stewart, regarding DeCicco's outstanding income tax liabilities, concluding that it was relevant to DeCicco's motive to commit arson and mail fraud and, hence, admissible under Fed.R.Evid. 404(b). We also found that the evidence was not excludable under Fed.R.Evid. 403, because when offered for the limited purpose of showing motive, and viewed in the context of the government's charges, any danger of unfair prejudice in this case is minimal. DeCicco, 370 F.3d at 214. 57 When Stewart's testimony was offered at trial, the government informed the district court that it intended to elicit from Stewart not just the amount of tax liability which he had calculated — the issue before this Court in DeCicco I — but also that Stewart had sought additional documentation from DeCicco to support claimed deductions which would have reduced DeCicco's tax liability to about ten percent of what Stewart had calculated. The appellant objected to this additional testimony by Stewart. The district court, however, ruled that the testimony was admissible because this Court said that it was. 58 Appellant contests this ruling, noting that although this Court has ruled that Stewart's testimony regarding DeCicco's tax liabilities was admissible under Fed. R.Evid. 404(b), the question of Stewart's testimony regarding DeCicco's failure to provide him with documentation supporting expenses he claimed as deductions was not before the Court. Contrary to the district court's position, appellant argues that this Court's decision in DeCicco I did not require it to admit this portion of Stewart's testimony. 59 We believe that the district court made the correct decision in admitting the evidence. Federal Rule of Evidence 404(b) provides that: 60 Evidence of other crimes, wrongs or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity or absence of mistake. . . . 61 Fed.R.Evid. 404(b). Therefore, as we noted in DeCicco I, mere propensity evidence is never admissible solely to show a character inclined towards unlawful behavior. The same evidence may be admissible, however, even if it may be construed as propensity evidence, if it is used to show any of the other elements set out in the rule. DeCicco, 370 F.3d at 210-11 (citations omitted). 62 We use a two-part test to evaluate the admissibility of evidence under Rule 404(b). First, we must determine whether the evidence in question has any special relevance exclusive of defendant's character or propensity. See United States v. Sebaggala, 256 F.3d 59, 67 (1st Cir.2001) (the proffered evidence must not merely show a defendant's reprehensible character or predisposition toward knavery. . . .). Second, even if some special relevance is found, the evidence must nonetheless be excluded if its probative value is substantially outweighed by the danger of unfair prejudice. Rule 404(b) incorporates sub silentio the prophylaxis of Federal Rule of Evidence 403. Id. 63 Regarding the first prong of the test, the appellant argues that Stewart's testimony regarding DeCicco's failure to provide him with the documentation necessary to reduce his tax liability by 90% was not relevant to the question of DeCicco's motive to commit arson or mail fraud, nor did the government ever articulate a basis for its admissibility under Rule 404(b). He states that this was evidence which the jury would have used purely for propensity purposes. In his eyes, the jury would draw only two conclusions from this evidence: (1) that DeCicco had misrepresented his business expenses to Stewart in hopes of limiting his tax liability, and (2) that his businesses must have been conducted dishonestly if he could not produce even something so routine as payroll records. Thus, the jury would have reasoned that because DeCicco had attempted to defraud the federal and state taxing authorities and because he must have been conducting his businesses in a dishonest manner, as evidenced by the lack of even the most routine recordkeeping, he was more likely to have perpetrated a fraud on Scottsdale. As such, he argues, this evidence was pure propensity evidence and should not have been admitted under the first prong of Rule 404(b). 64 We, however, believe that Stewart's testimony relating to the missing expense documentation contained a special relevance exclusive of DeCicco's character and propensity. In particular, such testimony was relevant to DeCicco's motive for committing the charged mail fraud offenses. 65 In DeCicco I, we came to a similar conclusion when we stated that Stewart's testimony relating to DeCicco's tax liabilities could be used in order to show for what purpose the fraudulently obtained insurance proceeds were intended — i.e., to show that the money obtained from Scottsdale would be used to defray DeCicco's tax liabilities. DeCicco, 370 F.3d at 214. In this appeal, we find that Stewart's testimony relating to the missing expense documentation also related to DeCicco's motive, but in a different way. In his opening, DeCicco had argued that he had to have been making a lot of money to generate such large tax liabilities and therefore had no motive to commit the charged fraud. Stewart's testimony relating to the missing expense documentation helped provide a response to this contention. It was used to show that the appellant's net income was likely significantly less than the available documentation suggested and that the appellant likely did not have money on hand to pay what he owed. Thus, Stewart's testimony helped the government demonstrate that DeCicco did indeed have a motive to fraudulently obtain insurance proceeds from Scottsdale — i.e., the alleged mail fraud provided him with the funds he needed to pay his debts. 5 66 The appellant also argues that Stewart's testimony should be excluded under Fed.R.Evid. 403, which is incorporated into the second prong of the Rule 404(b) test, because any probative value which Stewart's testimony had was substantially outweighed by the effect of unfair prejudice. However, this argument fails as well, because, as we stated in DeCicco I, we are of the view that, when offered for the limited purpose of showing motive, and viewed in the context of the government's charges, any danger of unfair prejudice in this case is minimal. DeCicco, 370 F.3d at 214. We continue to hold this belief, and it is fatal to DeCicco's claim here. Accordingly, we find that the district court did not abuse its discretion in admitting Stewart's testimony about DeCicco's missing expense documentation.