Plaintiff, the United States of America, by and through its undersigned attorneys, hereby files its trial memorandum.
1 STATUS OF CASE On November 12, 1993, the grand jury returned an eleven-count indictment against XXXXXX XXXXX XXXXXXX and XXXX XXX XXXX charging defendants with conspiracy, in violation of 18 U.S.C. § 371, and interstate transportation of falsely made, forged, altered, or counterfeited securities, in violation of 18 U.S.C. § 2314. The Indictment charges XXXXXX and XXX with operating an odometer fraud scheme involving at least the vehicles referenced in the Indictment. On January 6, 1994, both defendants were arraigned and pled not guilty to all charges.
On June 28, 1994, this Court dismissed Counts Two through Eleven which charged defendants with violations of Title 18, section 2314 relating to the interstate transportation of state securities. Count One, the conspiracy charge, remains.
On October 25, 1994, XXXXXXX filed a Motion to Strike Surplusage which sought to remove from the Indictment, inter alia, references to vehicles numbered one through five which pertained to the dismissed counts. The Government did not oppose this portion of XXXXXXX's motion.[FN1] On November 15, 1994, this Court issued an Order granting XXXXXXX's motion solely on the issue of striking vehicles numbered one through five from the Indictment.
FN1. In its November 3, 1994 Opposition to Defendant XXXXXXX's Motion to Strike Surplusage, although the Government conceded to striking references to Vehicles One through Five, as they pertained to the dismissed counts, it "preserve[d] the right to argue, at trial, that the evidence underlying th[o]se counts is admissible under Federal Rule of Evidence 404(b)." Id. at 2, n.1.
Trial in this matter is set to begin on Wednesday, February 22, 1995 at 10:00 a.m. before the Honorable Lawrence K. Karlton, United States District Judge, Eastern District of California. The Government estimates it can present its case-in-chief in 2 to 3 full days. Absent any stipulations from the defense, the Government anticipates calling approximately 12-15 witnesses.
2. THE EVIDENCE
In its case-in-chief, the Government anticipates presenting detailed documentary evidence and witness testimony showing that the defendants agreed to and did enter into a scheme to roll back the odometers on the 10 cars named in the Indictment. The government also anticipates presenting summary evidence, pursuant to Federal Rules of Evidence 1006, relating to additional cars rolled back in furtherance of the conspiracy charged in Count I.[FN2]
FN2. Defense counsel has been provided with copies of summary exhibits and all underlying documents.
Defendant XXXXXXX is expected to claim that he lacked the requisite intent to commit this crime by attempting to establish that the false low-mileage figures found on documents that he delivered to buyers and others were the result of a mistake. In the event that the defendant bases his defense on lack of intent, the government is prepared to offer evidence that the defendant has performed the same acts hundreds of times over the past four years. This concisely tailored response would be admitted solely to rebut the defendant's claim of lack of intent.
2.1 Anticipated Evidence: Government's Case-in-Chief.
The government plans to introduce documentary evidence showing that the defendants purchased over twenty late-model high-mileage cars from at least two automobile dealerships: XXXXXX Motors of XXXXXXXX, California and XXXXXX Auto Rental of XXXXX, Ohio. In each instance, the cars had high-mileage figures showing on the odometers--proof of these odometer readings lies in the documents given to the defendants at the time of purchase. The government also plans to introduce documentary evidence showing that the defendants offered and eventually sold these same cars to Arizona XXXXXXXXXXX of Phoenix, Arizona, claiming that the cars had significantly lower mileage than when they were purchased, often just days before. In between the purchase and sale, documentary evidence from the States of California, Texas, and Arizona shows that the defendants hid the true high mileage that, in each instance, appeared on the titles given to them at the time of purchase. They hid this high mileage by obtaining new titles. By taking this step, the defendants effectively "washed the title" allowing them to present a new title with false, low-mileage readings to the Arizona buyer. In summary, the following evidence will provide circumstantial proof that XXXXXXX XXXXX XXXXXXX and XXXXX XXX XXXX conspired to operate an odometer rollback scheme:
1. Purchase Records: Six of the ten vehicles identified in the Indictment (vehicles numbered 1, 5, 6, 7, 8, 9) were purchased either directly from XXXXXXX, Solon, Ohio, or indirectly through an auto auction in Tucson, Arizona. Four of the ten vehicles identified in the Indictment (vehicles numbered 2, 3, 4, 10) were purchased from XXXXXX Motors in XXXXXXXX, California. For each of these cars, the government will seek to introduce records from the seller (or, in the case of the auction, the "market-maker") that establish that XXXXXXX and XXXX purchased and took possession of these cars. Additionally, these records establish the high-mileage odometer readings on the cars at the time the defendants took possession.2. Defendants' Records: Business records seized from the defendants' place of business on March 18, 1993, corroborate, for the most part, the purchase side of these transactions. Specifically, dealer jackets,[FN3] odometer disclosure statements, repair shop invoices, and computer records taken from the defendants' place of business in Lubbock, Texas, tie XXXXXXX and XXXX to high-mileage odometer readings on these cars. In some instances, the documents also indicate the false low mileage that the defendants represented to the buyer at the time of sale. Among these documents are repair shop invoices that, in at least two instances, show that vehicles had been rolled back to just under 50,000 miles. Testimony from the dealership employees will establish that costly repairs performed under the manufacturer's warranty would have been billed to the defendants had the dealerships known the true high mileage of the vehicles.
FN3. The dealer jacket, sometimes called a "husk", is a convention in the used car business. It is simply a file folder, open only at the top, that allows a dealer to keep written records pertaining to the purchase, sale, and maintenance of the car on the pre-printed outside portion, and receipts, odometer statements, title work and other documents on the inside.
3. California, Texas, and Arizona Vehicle Records:
In furtherance of their odometer scheme, XXXXXXX, XXXX, and their agents repeatedly requested and completed applications to obtain duplicate titles from California or certified copies of titles from Texas for the motor vehicles they had purchased claiming that the original titles were lost. Many of these applications were signed by XXXXXXX or XXXX; others were requested through an automobile registration service. The applications and new titles that followed were an integral part of the defendants' odometer scheme since they allowed XXXXXXX and XXXX to "wash off" the high-mileage figure showing on the "old" title. For example, after obtaining the "new" duplicate title from California DMV, XXXXXXX or XXXX would fill in the false low-mileage reading in the blank "mileage reading" space provided on the "new" clean title. The defendants would then forward the "new" titles to XXXXXXXXXXXXXXX Cab Company. XXXXXXXXXXXXXXX Cab would unknowingly pass on the fraudulent low-mileage titles to the State of Arizona when it registered and titled the cars in Arizona.
4. Sale Records: XXXX maintained the information pertaining to the car sales to XXXXXX Cab on a computer generated spreadsheet which identified the year, make, model and vehicle identification number as well as the mileage and sale price. XXXX sent XXXXXXX Cab, by facsimile transmission, a copy of the spreadsheet identifying the vehicles sold and the amount due. All ten of the vehicles referenced in the Indictment appear in one or more of these spreadsheets; all indicate false, low odometer mileage for each vehicle at the time XXXX offered the vehicle to the buyer.
5. Defendant XXXXXXX's Statement: In a preindictment statement to law enforcement agents, XXXXXXX claimed that mileage discrepancies on the vehicles sold to XXXXXXX Cab Co. were caused by vandals who, on two separate occasions, in November and December of 1992 damaged the odometers on vehicles at his place of business. XXXXXXX also claimed that some of the cars had mileage discrepancies when purchased from XXX Auto Rental. When asked whether his act of retitling the cars was not designed to hide the true high mileage, XXXXXXX claimed that he did not intend to defraud the buyer by reporting the false low mileage figure. According to the defendant, he was only trying to "protect his interest" and make sure the seller, or its creditors, did not reclaim vehicles that he had repaired but for which he had not yet paid.
B. Anticipated Evidence: Defense and Government's Response.
The Government does not anticipate that either XXXXXXX or XXXX will contest the Government's proof that the odometers on the vehicles at issue were altered. Instead, the defense appears likely to argue that XXXXXXX and XXXX did not intend to alter the odometers or misrepresent the mileage figures on these vehicles. As stated above, XXXXXXX laid the foundation for this defense in his preindictment statement to agents when he claimed that incorrect mileage readings were due to an act of vandalism. XXXXXXX also stated that his act of retitling the cars was not intended to defraud the buyers of the cars but to secure his admittedly questionable interest in cars for which he had not yet paid.
Recently, XXXXXXX has provided some indication that he intends to bolster this defense of lack of intent by showing the jury that he sold many cars, both before and during the conspiracy period, that had not been rolled back.[FN4] This evidence should be ruled inadmissible if offered at trial since, it is not relevant to the defendant's guilt or innocence to the crime charged.[FN5] Nevertheless, it appears that the defendant is prepared to contend that the hundreds of transactions that did not involve odometer tampering shows that the cars named in the Indictment were isolated mistakes.
FN4. On December 14, 1994, XXXXXXX filed a motion to compel, seeking to force the government to identify, in discovery, evidence relating to cars that he bought and sold but did not roll back. Additionally, the defendant has turned over Rule 16 material that appears to show numerous "legitimate" transactions both before and during the period of the conspiracy as charged.
FN5. See United States v. Bryan, 868 F.2d 1032, 1037 (9th Cir.) cert. denied, 493 U.S. 858 (1989) (holding defendant charged with defrauding class of taxpayers not entitled to discover every statement by any class member in which false representations were not reported or mentioned; information which did not incriminate defendant was not necessarily exculpatory); United States v. Marrero, 904 F.2d 251, 260-61 (5th Cir.), cert. denied, 498 U.S. 1000 (1990) (holding that examples of the defendant's good character were irrelevant to whether she committed the charged offenses); United States v. Winograd, 656 F.2d 279, 284 (7th Cir. 1981), cert. denied, 455 U.S. 989 (1982) (evidence that defendant engaged in certain legal transactions is irrelevant to whether he knew of or participated in other illegal transactions; district court did not err in refusing to admit evidence showing that defendant properly entered into many contracts).
XXXXXXX's anticipated defense of lack of intent is clearly negated by a multitude of prior similar acts. First, in 1990, XXXXXXX pled guilty to, and served one year of imprisonment for odometer fraud committed during the years 1985 and 1986. Further, in July 1987, in Lubbock, Texas, XXXXXXX gave a voluntary, sworn statement in which he admitted to rolling back odometers to low mileage and "correcting" titles to correspond to the new low mileage. Finally, the government has developed evidence that during 1989 and 1990, even after pleading guilty to felony charges of odometer tampering, XXXXXXX continued to roll back odometers and wash titles by ordering duplicate titles from the State of California. In fact, when agents searched the defendant's business in March of 1993, they found over 100 original titles in his desk drawer. Records from the California DMV show that XXXXXXX had reported most of these titles as lost in duplicate title applications. California records also show that when XXXXXXX received the new duplicate California titles he entered either no mileage figures or false low-mileage figures before passing them on to buyers.[FN6] Finally, less than two years after being released from federal prison,[FN7] XXXXXXX was back to his practice of rolling back the odometers and washing titles as charged in the current indictment.
FN6. Five of these transactions formed the basis for Counts 2 through ll, dismissed by this Court in June of last year for reasons unrelated to the fact that the odometers on these cars were rolled back.
FN7. In fact, less than six months from his release date, XXXXXXX was selling rolled back vehicles supplied by a California dealer, XXX, who died during this investigation. Unlike the cars bought and sold in 1989 and 1990, or the later cars named in the Indictment, these cars were titled using XXX's numerous straw dealership names. Meanwhile, XXXXXXX transported the cars to Texas and sold them after XXX provided him with a clean, low-mileage, California title.
To be admissible under Fed Rule Evid 404(b), evidence of prior acts and crimes must: (i) prove a material element of the crime currently charged; (ii) show similarity between the past and charged conduct; (iii) be based on sufficient evidence; and (iv) not be too remote in time. United States v. Hinton, 31 F.3d 817, 822 (9th Cir. 1994), cert. denied, 115 S.Ct. 773 (1995). Certainly, evidence of XXXXXXX's prior crimes is relevant and should be admitted in the likely event that the defendant claims that he lacked intent to commit the crime charged.
Defendants are charged with conspiring to violate the mail fraud statute, among others. In order to prove a violation of this statute, the government must show that XXXXXXX acted with an intent to defraud. (See infra at page 14). Thus, XXXXXXX's prior violations in which he clearly evinced an intent to defraud are relevant to establish that the conduct at issue in the coming trial was not the result of an innocent mistake. In fact, XXXXXXX's title wash scheme in 1989 and 1990 was identical to the scheme employed here. In each case, he reported to the State of California that he had lost the title given him by the buyer. He then forged the names and initials of previous owners of the vehicle on a California duplicate title application and transmitted the document to DMV's Special Processing Unit in Sacramento. Like the instant case, XXXXXXX used the new title he received from the State to complete the fraudulent transaction. Such evidence is admissible. See United States v. Ross, 886 F.2d 264, 267 (9th Cir. 1989), cert. denied, 494 U.S. 1093 (1990) (admission of evidence of prior act 13 years before approved where prior and instant offense virtually identical).
As stated above, evidence of these prior acts is also highly probative. The defendant's own statements form the basis for two series of acts--in one case a plea of guilty and the other a statement under oath. These statements are admissible. See United States v. Houser, 929 F.2d 1369, 1373 (9th Cir. 1990) (prior conviction for similar offense satisfies requirement that there must be clear and convincing proof of the earlier crime to admit it under FRE 404(b)). As to the 1989 and 1990 conduct, documentary evidence including records collected from State record's archives and seized from the defendants' place of business provide compelling evidence of these crimes. Nor are the prior acts remote in time: the last violation was less than two years from the beginning of the conspiracy currently charged. In fact, XXXXXXX spent almost a year of this time in federal prison. See Walters v. Maass, No. 92-35226, 1995 WL 24201 at 1 (9th Cir. Jan. 24, 1995) (prior bad act found not too remote since defendant spent much of time between prior act and instant offense in jail). The evidence of defendant's prior odometer tampering activities provides proper and persuasive proof of the defendant's intent to defraud.[FN8]
FN8. In addition to the anticipated defenses addressed above, XXXX appears likely to contend that he was unaware of, and therefore not a party to, the odometer fraud scheme. Additionally, XXXX may contend that he was singled out for selective prosecution since other employees working for and with XXXXXXX did some of the same things such as applying for titles yet no charges have been brought against them. Cross examination questions going to a selective prosecution theory should be ruled an improper area of examination before a jury since prosecutorial discretion is not a jury issue. Moreover, to present this defense, XXXX may be forced to take the stand which would allow the government to impeach him pursuant to Fed.R.Evid. 609(a)(2) using his previous conviction for bank fraud.
3 APPLICABLE STATUTES and PERTINENT LAW
3.1 Title 18 U.S.C. § 371.
Title 18, United States Code, Section 371 provides:
If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined not more than $10,000 or imprisoned not more than five years, or both.
3.2 Required Elements
Count One of the Indictment charges XXXXXXX and XXXX with conspiracy. To prove the conspiracy charge, the Government must prove three elements: (1) that during the period of approximately June 1992 to April 1993, Michael David XXXXXXX and XXXXX XXX XXXX agreed, either expressly or through their actions, with each other or at least one other individual, to commit odometer tampering in violation of 15 U.S.C. §§ 1984 and 1990c, or to commit mail fraud in violation of 18 U.S.C. § 1341; (2) that XXXXXXX and XXXX knew the unlawful purpose of the agreement and each joined it willfully, and; (3) that at least one of the overt acts charged in the Indictment was accomplished by XXXXXXX, XXXX, or one of their co-conspirators for the purpose of carrying out the conspiracy.
3.3 Title 15 U.S.C. §§ 1984, 1990(c).
Title 15, United States Code, Section 1984 provides:
Change of mileage indicated on odometer prohibited.
No person shall disconnect, reset, or alter or cause to be disconnected, reset, or altered, the odometer of any motor vehicle with intent to change the number of miles indicated thereon.
Title 15, United States Code, Section 1990(c) provides:
Criminal penalties; liability of director, etc., of corporation.
(a) Any person who knowingly and willfully commits any act or causes to be done any act that violates any provision of this subchapter or knowingly and willfully omits to do any act or causes to be omitted any act that is required by any such provision shall be fined not more than $50,000 or imprisoned not more than one year, or both.
(b) Any individual director, officer, or agent of a corporation who knowingly and willfully authorizes, orders, or performs any of the acts or practices constituting in whole or in part a violation of any section of this subchapter shall be subject to penalties under this section without regard to any penalties to which that corporation may be subject under subsection (a) of this section.
3.4 Required Elements
To prove the odometer tampering charges set forth in Count One, the Government must prove that XXXXXXX XXXXX XXXXXXX or XXXXX XXX XXXX knowingly and willfully caused the odometer of a motor vehicle to be disconnected, reset, or altered with the intent to change the number of miles indicated on the odometer.
3.5 Weight and Sufficiency
Evidence that XXXXXXX or XXXX purchased motor vehicles and kept them in their possession and control until the date on which the altered odometers were observed is sufficient to sustain a conviction under the odometer tampering statute. United States v. Brandon, 599 F.2d 112, 113 (6th Cir.), cert. denied, 444 U.S. 837 (1979). The Government need not identify the person or persons who actually disconnected, reset, or altered the odometers in order to obtain a conviction under this statute. United States v. Hugh Chalmers Chevrolet-Toyota, Inc., 800 F.2d 737, 738 (8th Cir. 1986).
3.6 Title 18 U.S.C. § 1341.
Title 18, United States Code, Section 1341 provides, in pertinent part:
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises . . . for th epurpose of executing such scheme or artifice or attempting to do so, . . . knowingly causes to be delivered by mail according to the direction thereon, . . . any such matter or thing, shall be fined not more than $1,000 or imprisoned not more than five years, or both.
3.7 Required Elements
To prove the mail fraud charges set forth in Count One, the Government must prove five elements: (1) that from approximately June 1992 through April 1993 XXXXXXX or XXXX devised a scheme or artifice to defraud or to obtain money or property by means of false or fraudulent pretenses, representations, or promises; (2) that XXXXXXX or XXXX knew the misrepresentations or promises were false; (3) that the misrepresentations or promises were of a kind that would reasonably influence a person to part with money; (4) that XXXXXXX or XXXX acted with the intent to defraud, and; (5) that XXXXXXX or XXXX mailed something, caused something to be mailed, or reasonably foresaw that something would be mailed,[FN9] for the purpose of carrying out the scheme.
FN9. United States v. Licciardi, 30 F.3d 1127, 1132-33 (9th Cir. 1994) (Karlton, C.J., judge below).
4 EVIDENTIARY ISSUES4.1 Evidence of Specific Incidents:
Since Count One is a conspiracy charge, evidence of specific odometer rollback incidents are admissible as direct evidence of the conspiracy. See United States v. Vicarro, 816 F.2d 443, 452 (9th Cir.), cert. denied, 484 U.S. 928 (1987); United States v. Uriarte, 575 F.2d 215, 216-17 (9th Cir.), cert. denied, 439 U.S. 963 (1978); United States v. Tecta, 548 F.2d 847, 851 (9th Cir. 1977).
4.2 Evidentiary Testimony on Handwriting and Questioned Documents: Federal Rules of Evidence 702, 703, and 901.
A signed writing can be authenticated by the testimony of an expert witness who has compared the handwriting with the handwriting on a specimen admitted for comparison purposes. Robles v. United States, 279 F.2d 401, 404-05 (9th Cir. 1960), cert. denied, 365 U.S. 836 (1961).
4.3 Records of Regularly Conducted Activity: Federal Rule of Evidence 803(6).
The custodian or other qualified witness referred to in the rule need not be an employee of the business that has custody of the document or the business that generated the document at the time of its making. United States v. Smith, 609 F.2d 1294, 1301 (9th Cir. 1979); United States v. Hines, 564 F.2d 925, 928 (10th Cir. 1977), cert. denied, 434 U.S. 1022 (1978)
4.4 Self-Authentication: Federal Rule of Evidence 902(1).
Documents bearing a seal of any state and a signature purporting to be an attestation or execution are admissible without extrinsic evidence of authenticity.
4.5 Summary Charts: Federal Rule of Evidence 1006.
The Government may introduce charts to summarize voluminous documentary evidence, and to explain the complex nature of the Government's proof. Under Federal Rule of Evidence 1006, the contents of voluminous writings may be presented in the form of a summary. The purpose of the rule is to allow the use of summaries when the documents are unmanageable or when the summaries would be useful to the judge and jury. United States v. Johnson, 594 F.2d 1253, 1255 (9th Cir.), cert. denied, 444 U.S. 964 (1979). Federal Rule of Evidence 1006 codifies existing case law. See United States v. Scales, 594 F.2d 558 (6th Cir. 1979), cert. denied, 441 U.S. 946 (1979), for a review of the case law pertaining to the admissibility of charts. Such charts are routinely admitted. Id. at 564.
DATED: February 7, 1995.
CHARLES J. STEVENS United States Attorney
RICHARD J. BENDER Assistant U.S. Attorney
______________________________ PETER J. AINSWORTH ANGELA M. GUNTER U.S. Department of Justice P.O. Box 386 Washington, DC 20044 Telephone: (202) 616-2376
[cited in USAM 4-8.310]