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United States v. Iverson

United States Court of Appeals, Tenth Circuit

March 16, 2016

UNITED STATES OF AMERICA, Plaintiff - Appellee,
MARVIN IVERSON, Defendant - Appellant


         Grant Russell Smith, Research and Writing Specialist, Cheyenne, Wyoming (Virginia L. Grady, Federal Public Defender, Districts of Colorado and Wyoming, Jim Barrett, Assistant Federal Public Defender, Cheyenne, Wyoming, with him on the briefs), for Defendant - Appellant.

         Jason M. Conder, Assistant United States Attorney (Christopher A. Crofts, United States Attorney, District of Wyoming, Stephanie I. Sprecher and David A. Kubichek, Assistant United States Attorneys, on the brief), District of Wyoming, Casper, Wyoming, for Plaintiff -- Appellee.

         Before HARTZ, O'BRIEN, and PHILLIPS, Circuit Judges. O'BRIEN, J., concurring. PHILLIPS, Circuit Judge, dissenting.


         HARTZ, Circuit Judge.

         Defendant Marvin Iverson was convicted after a jury trial of engaging in a scheme to defraud JPMorgan Chase and Big Horn Federal Savings. See 18 U.S.C. § 1344. The statute requires that the victims be " financial institutions." Id. To establish that element of the offense, the government offered the testimony of an FBI agent to try to prove that JPMorgan and Big Horn were insured by the Federal Deposit Insurance Corporation (FDIC). See id. § 20(1) (defining financial institution to include " an insured depository institution (as defined in [12 U.S.C. § 1813(c)(2)])" ); 12 U.S.C. § 1813(c)(2) (" The term 'insured depository institution' means any bank or savings association the deposits of which are insured by the [FDIC] pursuant to this chapter." ).

         On appeal Defendant argues that the agent's testimony was inadmissible hearsay and violated the best-evidence rule. He also argues that even if the evidence was admissible, it was insufficient to prove that JPMorgan and Big Horn had FDIC insurance at the time of the offense. Despite the government's concession to the contrary, we hold that the agent's testimony was not inadmissible hearsay; it was either not hearsay or fell within a hearsay exception. As for the best-evidence rule, Defendant did not raise the issue below and he has not shown plain error. Finally, because there was sufficient evidence that JPMorgan had FDIC insurance at the time of the offense, we reject Defendant's sufficiency-of-the-evidence challenge.

         I. BACKGROUND

         Defendant has been a member of the " sovereign citizens" group called " Wyoming Free State." Among other practices, such groups instruct their members on various debt-elimination schemes. The scheme here was called the electronic-funds-transfers (EFT) scheme. A member writes a check on a closed account to pay off a debt, with the hope that an unaware financial institution will release title or a lien before the check bounces.

         Defendant used the EFT scheme to try to eliminate debts owed to JPMorgan and Big Horn. First, on June 22, 2012, using a closed checking account with First Interstate Bank, Defendant wrote Big Horn two checks totaling over $27,000 to pay off a vehicle loan and a mortgage. On the back of each check was written:

Not for deposit
For discharge of debt
Marvin Leslie Iverson
Authorized representative
Without Recourse

R., Vol. 2 at 28 (internal quotation marks omitted). Despite this notation, the checks were processed by Big Horn, and the vehicle lien and mortgage were released. After being notified that the checks were drawn on a closed account, the bank demanded that Defendant pay the debt. Defendant refused until he was arrested for this offense. Second, on August 18, 2012, Defendant wrote a check from his closed First Interstate account to JPMorgan in the amount of $369,300 to pay off his daughter's mortgage. The check had the same EFT notation as before. JPMorgan did not process the check or release the mortgage.

         Defendant was charged with scheming to defraud the financial institutions in a one-count indictment filed in the United States District Court for the District of Wyoming. The case went to trial on July 28, 2014. Defendant represented himself with the aid of standby counsel.

         Defendant's issues on appeal focus on the prosecutor's afterthought questioning of FBI Special Agent Kent Smith:

[PROSECUTOR]: I don't have any other questions. Thank you.
[DEFENDANT]: No questions.
THE COURT: You may step down.
[PROSECUTOR]: Your Honor, I neglected to ask one question.
THE COURT: Very well.
. . . .
Q. Agent, did you do any research to determine whether or not JPMorgan Chase and Black--or Big Horn Federal Savings were FDIC insured or federally insured institutions?
A. Yes, and both First Interstate--you said Big Horn?
Q. Big Horn.
A. Yes, Big Horn Federal Savings is. I received the F--
[DEFENDANT]: Objection. Foundation.
THE COURT: Sustained.
. . . .
Q. What research did you do?
A. Different for different banks. On JPMorgan Chase I pulled up the FDIC website and found their information and their certificate number. For Big Horn Federal Savings Bank, having been to that actual bank, I requested a copy of their FDIC certificate which included their number.
Q. All right. I ask again. Can you--when you, when you looked at the website--
[DEFENDANT]: Objection.
[Standby Defense Counsel]: Hearsay.
. . . .
Q. --is that a normal course of business to check to see if a bank is FDIC insured--
[DEFENDANT]: Hearsay.
. . . .
Q. --in your normal course of business as an FBI agent?
A. To determine if they're FDIC insured?
Q. Yes.
A. Yes, it is.
Q. And do you rely on those records to be accurate to determine if a bank is FDIC insured?
A. Yes, we do.
Q. And I'd ask again. Do you know if the banks of Big Horn Federal Savings and--
[DEFENDANT]: Objection.
. . . .
Q. --JPMorgan Chase are federally insured?
[DEFENDANT]: Hearsay again.
THE COURT: Overruled.
A. Yes, in my research both Big Horn Federal Savings Bank and JPMorgan Chase bank are federally insured.

R., Vol. 3 at 84-86.


         A. Admissibility of the Evidence

         Defendant raises two challenges to the admissibility of the testimony that the victim institutions were FDIC insured. He claims (1) that Agent Smith's testimony about FDIC insurance coverage was hearsay and (2) the testimony violated the best-evidence rule, which required introduction into evidence of the FDIC certificates of coverage. Both the hearsay rule and the best-evidence rule are exceptions to the general rule that a witness can testify to what the witness saw or heard. The hearsay rule ordinarily excludes testimony about what someone wrote or said out of court when " offer[ed] in evidence to prove the truth of the matter asserted in the statement." Fed.R.Evid. 801(c). And the best-evidence rule ordinarily excludes testimony about what appeared in a document when offered to prove " its content." Fed.R.Evid. 1002.

          We review a district court's evidentiary decisions for abuse of discretion. See United States v. Trujillo, 136 F.3d 1388, 1395 (10th Cir. 1998). The government confesses error on Defendant's hearsay issues, but we are not bound by this concession. See United States v. Resendiz-Patino, 420 F.3d 1177, 1182-83 (10th Cir. 2005). We first address hearsay and then the best-evidence rule.

         1. Hearsay

         Agent Smith's testimony about Big Horn's FDIC-insured status was based solely upon his review of the bank's FDIC certificate. In essence he was reporting on what the certificate said. His testimony about JPMorgan was based on his review of the FDIC website. There are two possible assertions in this testimony. One is Agent Smith's assertion that he is accurately reporting what he saw concerning the certificate and the website. The other is what the certificate and website said was true--that the banks were insured by the FDIC. The first assertion presents no hearsay problem because the assertion is made by the witness at trial. See Fed.R.Evid. 801(c)(1) (hearsay is limited to " a statement that . . . the declarant does not make while testifying at the current trial or hearing" ). Agent Smith could be carefully cross-examined about the accuracy of his perception and memory of what he saw. (The probability of witness error in reporting the content of a document is, however, a concern of the ...

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