[00:00:00] Speaker 04: Case number 21-3075, United States of America versus Eleanor R. Milligan, appellant. [00:00:08] Speaker 04: Mr. Hicks for the appellant. [00:00:09] Speaker 04: Mr. Hahn for the appellate. [00:00:11] Speaker 02: Good morning, counsel. [00:00:12] Speaker 02: Mr. Hicks, please proceed when you're ready. [00:00:20] Speaker 01: Thank you, Your Honors, and may it please the court, George Hicks for appellant Eleanor Milligan. [00:00:25] Speaker 01: There is no dispute in this case, as Miss Milligan never put intent or mistake at issue as her counsel candidly hold the district court quote, we are not contesting intent or lack of mistake and he added, quote, it's just not a live question. [00:00:43] Speaker 01: The 404b other act evidence regarding Ms. [00:00:46] Speaker 01: Milligan's uncharged conduct that the government introduced specifically to establish intent and lack of mistake had no probative value. [00:00:55] Speaker 01: And like all 404b evidence, it was prejudicial because it conveyed to the jury Ms. [00:01:01] Speaker 01: Milligan's propensity to engage in the conduct that was actually charged. [00:01:06] Speaker 01: But the prejudice was even more pronounced than in a typical 404b case for several reasons. [00:01:12] Speaker 05: What do you do with the, you quote what the counsel said at trial, but pre-trial, the district judge asked if he was prepared to stipulate intent. [00:01:25] Speaker 05: He said, no. [00:01:26] Speaker 05: He said very clearly, he said, quote, let me be very clear. [00:01:36] Speaker 05: I'm not stipulating to intent or lack of mistake. [00:01:40] Speaker 01: Your honor, Council made that statement during the pretrial conference when the motion was first being heard on July 9th. [00:01:48] Speaker 01: Later during trial on July 21st, he made very clear that they were not, Ms. [00:01:55] Speaker 01: Milligan was not contesting. [00:01:56] Speaker 01: He said, we're not contesting. [00:01:58] Speaker 01: We're not making that argument. [00:01:59] Speaker 01: It's just not a live question. [00:02:01] Speaker 01: And I think the salient question for purposes of this analysis [00:02:05] Speaker 01: about trying to determine what the probative value is and what the prejudice might be on the other side of the balance is whether the purpose for which the other act evidence is introduced is actually an issue. [00:02:18] Speaker 01: The Seventh Circuit makes that very clear in its Gomez case on Bonk where it says, [00:02:23] Speaker 01: important issue in the rule 403 balancing is the extent to which the non propensity factual proposition actually is contested in the case later says the degree to which the non propensity issue actually is disputed in the case will affect the probative value of the other act evidence and I think even the district court understood that on July 21st because he doesn't phrase his decision in terms of there being a [00:02:50] Speaker 01: formal stipulation or not, he refers to the defendant, quote, passing on contesting the issue in a live way, a trial. [00:02:58] Speaker 01: And I think that makes the difference here, at least certainly when you're looking at the probative value. [00:03:03] Speaker 01: I mean, the government's motion was premised on the proposition that intent and mistake were at issue. [00:03:10] Speaker 01: And by the time of July 21, it was made clear to all, both the district court and the government, that that was not the case. [00:03:17] Speaker 01: She was not putting on a defense. [00:03:19] Speaker 04: What do you mean? [00:03:20] Speaker 04: No criminal defendant has to put on any defense at all. [00:03:23] Speaker 04: But that doesn't mean that the elements are not at issue and that they have to be found by a jury beyond a reasonable doubt. [00:03:34] Speaker 04: And so intent was still, or the mens rea was still very much at issue and that the government had to prove it beyond a reasonable doubt to each and every single [00:03:46] Speaker 04: Sure. [00:03:47] Speaker 04: So it's still a live issue. [00:03:48] Speaker 04: It's very much a live issue with a very heavy burden on the government. [00:03:51] Speaker 01: Well, certainly it's still the government's burden to prove all that. [00:03:54] Speaker 01: But that would be the case in any situation where you've got 404B. [00:03:58] Speaker 01: And so I think that that would not be entirely consistent with the cases that say when the other act of evidence is used for a purpose, whether it's not an issue. [00:04:11] Speaker 04: The probative need remains from the government's perspective. [00:04:15] Speaker 04: from its burden, the need for probative evidence to establish intent remains. [00:04:23] Speaker 04: So I don't quite understand saying intent was not a live issue, just that the defendant chose to stay quiet on that issue. [00:04:34] Speaker 04: There's no stipulation to hand to the jury. [00:04:36] Speaker 01: There's no stipulation. [00:04:38] Speaker 01: when you're trying to determine the marginal probative value, which I think really is the question here. [00:04:43] Speaker 01: It's not simply sort of probative value, non-probative value. [00:04:46] Speaker 01: It's the marginal probative value of that other act evidence over what's already in the case and what the government would need in order to surmount some sort of defense that raises intent. [00:04:58] Speaker 01: And I think that's shown by the government's case. [00:05:00] Speaker 04: That's a different argument. [00:05:00] Speaker 04: That's a different argument that there's [00:05:03] Speaker 04: what evidence is already in the case. [00:05:05] Speaker 04: I was struggling with your it's not a live issue, and it seems to me it very much is. [00:05:10] Speaker 04: But the marginal probative value relative to other evidence in the case, it feels to me like a different argument than just saying something's not at issue. [00:05:18] Speaker 01: Well, I think when you're trying to determine what the marginal probative value is, you have to look at the extent to which it actually is contested in the case, beyond simply, well, it's an element, therefore it's always at issue. [00:05:32] Speaker 01: I mean, I think that's clear from the case that the government cites, almost all of which involve the defense putting on a defense. [00:05:41] Speaker 02: So there was evidence before the jury that went to the question of mistake. [00:05:47] Speaker 02: It came from the government. [00:05:49] Speaker 02: The government put it on, but at least the government introduced testimony that raised it. [00:05:53] Speaker 02: But there was evidence before the jury from which the jury could have thought about the question of mistake. [00:05:58] Speaker 01: Yeah, I think there was one passing statement that was, as you say, put on by the government. [00:06:03] Speaker 01: So it seems a little backwards to me that the government can put on testimony that somehow allows them to then put the you're not. [00:06:12] Speaker 02: You don't think that the government put on that testimony so that they could introduce the 404? [00:06:16] Speaker 01: Yeah, or do? [00:06:18] Speaker 01: No, I don't think so. [00:06:19] Speaker 01: But I think it was a hook that they then tried to use. [00:06:21] Speaker 01: And to be very clear, while we think that the marginal probative value of this was quite low, if [00:06:27] Speaker 01: if anything at all, when you look at the other side of the balance, I think the prejudice was significant. [00:06:32] Speaker 01: I mean, there's no dispute that 404B evidence is always prejudicial. [00:06:36] Speaker 01: That's the nature of it. [00:06:37] Speaker 01: There's no dispute that it's even more prejudicial when it's introduced for intent, as it was here in part. [00:06:44] Speaker 01: And it's even more prejudicial when the other act evidence is similar in nature to the charge defense. [00:06:50] Speaker 01: That's what we have here. [00:06:51] Speaker 01: And it was in fact almost right afterward in time as well. [00:06:56] Speaker 01: And to be very clear, [00:06:57] Speaker 01: The other act evidence in this case was extensive. [00:07:00] Speaker 01: It was over 60 pages of the trial transcript. [00:07:03] Speaker 01: That's a JA 172 to 232. [00:07:05] Speaker 01: This is the last witnesses, and it was the last evidence that the jury heard before closing argument and deliberation and instructions. [00:07:16] Speaker 01: And I think that the prejudice that it's clear is shown by the fact that the district court's analysis of the prejudice, I don't think the government even defends. [00:07:25] Speaker 01: The district court's explanation for why there was no prejudice here was that, well, the charged crime involved allegations of $1.5 million in funds, whereas the other act evidence only involved $55,000. [00:07:40] Speaker 01: And I don't think that's the right way to look at the prejudice of other act evidence. [00:07:44] Speaker 01: The salient question is, what was the conduct? [00:07:48] Speaker 01: Was the conduct similar in kind and nature? [00:07:51] Speaker 01: And we have that here. [00:07:54] Speaker 01: very similar conduct. [00:07:55] Speaker 01: It was almost just a year or two after the charge conduct. [00:07:59] Speaker 01: I think the takeaway from that for any jury would be to focus highly on the propensity evidence. [00:08:06] Speaker 02: Can I ask the following question? [00:08:07] Speaker 02: So if this piece of evidence that we were talking about earlier where a mistake comes up, if that's adduced in cross-examination by defense counsel, not [00:08:17] Speaker 02: in a direct question that asked about the question that asked about something else in the witness just volunteers that would your assessment of the balance here change. [00:08:27] Speaker 01: I think it would. [00:08:30] Speaker 01: I think it would change if that was part of the strategy of defense to on cross-examination, but I think that... No, so let's suppose it's not part of the strategy. [00:08:38] Speaker 02: It just comes up in cross-examination, wasn't planned, wasn't intended. [00:08:43] Speaker 02: It's a question that doesn't directly ask about it, but the witness volunteers it in response to that. [00:08:49] Speaker 01: I don't think it would affect the analysis too much, again, because I think it is directed towards what the defendant is trying to put at issue in his or her defense. [00:09:01] Speaker 05: Mr. Hex, let's assume you're right about that. [00:09:06] Speaker 05: The government makes a pretty strong argument that the error would be harmless. [00:09:11] Speaker 05: And the evidence is... [00:09:16] Speaker 05: only Millikan could access the paycheck system and her supervisor. [00:09:21] Speaker 05: Her supervisor testified that he never did. [00:09:25] Speaker 05: She took funds in the name of several employees and deposited them in one bank account completely controlled by her. [00:09:34] Speaker 05: And then she took steps to cover her tracks. [00:09:36] Speaker 05: So why isn't this pretty clearly harmless? [00:09:40] Speaker 01: Well, Judge Saddle, with respect, I think those are very good arguments to make to a jury on a retrial. [00:09:45] Speaker 01: without the aspect that was included. [00:09:48] Speaker 05: No, there are questions we ask also. [00:09:50] Speaker 01: Well, I don't think this court necessarily, and I think this court is clear, doesn't step into the shoes of the jury. [00:09:56] Speaker 05: But you agree that we do apply harmless error analysis to a case like this, right? [00:10:00] Speaker 01: Sure. [00:10:00] Speaker 01: I think you're trying to decide whether the government has shown. [00:10:04] Speaker 05: That's inherent in any harmless error analysis that we undertake. [00:10:08] Speaker 05: Yes, but I think also in here and in that is to look at if it's if you said we're intruding on the right of the jury, then we would never engage in a harmless air. [00:10:18] Speaker 01: Well, I think you I think what you do is you look at the the nature of the prejudice that is trying to be addressed through the harmlessness air and I and again I think this goes beyond the mind run of cases. [00:10:31] Speaker 01: where you've got just sort of mere 404B standard prejudice for the reasons that you're talking about. [00:10:37] Speaker 05: Let me just quickly change the subjects for you and ask you quickly about the sophisticated means enhancement, which you challenge. [00:10:46] Speaker 05: Assume that I think we apply a due deference standard. [00:10:51] Speaker 05: Just assume that for purposes of my question. [00:10:54] Speaker 05: How would I [00:10:56] Speaker 05: What explanation would I give for setting aside the enhancement here, given the evidence of the cover? [00:11:08] Speaker 05: How would I say I wouldn't give due deference to the district court's decision, particularly since the district court, they see these all the time. [00:11:18] Speaker 05: We don't. [00:11:21] Speaker 01: Well, Your Honor, I think that if you're asking sort of [00:11:25] Speaker 01: What are the reasons that the sophisticated? [00:11:27] Speaker 01: No, no, no. [00:11:29] Speaker 05: I'm not asking that question. [00:11:30] Speaker 05: The question I'm asking is, let's assume I agree with you. [00:11:33] Speaker 05: To me, it doesn't look very sophisticated. [00:11:36] Speaker 05: But the district court thought it was. [00:11:38] Speaker 05: And I owe due deference to the district court's assessment of that issue. [00:11:43] Speaker 05: So what would I say to that? [00:11:47] Speaker 05: to set aside that is judgment. [00:11:49] Speaker 05: Well, I would explain, uh, that I can't defer to him. [00:11:55] Speaker 05: What's the rest of the sentence? [00:11:56] Speaker 05: I can't defer. [00:11:57] Speaker 05: We can't defer to the district court in this case because what's the rest of the sense? [00:12:03] Speaker 01: I think it would be the same because that you use in your other abuse of discretion cases, your honor, which is that this would be finding the sophisticated means here would be beyond [00:12:13] Speaker 01: the range of a reasonable decision in light of the utter lack of sophistication that was inherent here. [00:12:21] Speaker 05: You just stated the conclusion, the utter lack of sophistication. [00:12:26] Speaker 05: I mean, you know, sophistication can mean one thing to one person and something to someone else. [00:12:33] Speaker 05: But let's just maybe ask the question this way. [00:12:36] Speaker 05: Let's assume I thought it was a close case. [00:12:38] Speaker 05: That is, you can make the argument either way, sophisticated, not sophisticated. [00:12:43] Speaker 05: In other words, it wasn't clear one way or the other. [00:12:46] Speaker 05: Don't I have to defer to the district court on that ground? [00:12:49] Speaker 01: Your honor, I think if it was a close question, I think that then the standard of review would come into play, as you say. [00:12:55] Speaker 01: But I think that when it is not, when the text of the sentencing requirements say especially complex, I think especially means something or especially intricate, I think you have to give some meaning to the word especially. [00:13:07] Speaker 01: And I don't think setting up a [00:13:13] Speaker 01: a different email accounts or going and, you know, getting a PO box, you know, and promptly getting caught is especially complex. [00:13:22] Speaker 01: I mean, I think I would use a, you know. [00:13:25] Speaker 01: Well, the fact that she got completely different. [00:13:27] Speaker 05: The fact that she got quickly caught doesn't mean it wasn't sophisticated, right? [00:13:32] Speaker 05: Not really related to each other. [00:13:33] Speaker 01: Well, I don't think this is a situation where there was some sort of years long [00:13:39] Speaker 01: hiding of anything that would be. [00:13:41] Speaker 05: Where do you find that standard in the guidelines? [00:13:45] Speaker 01: I mean, I think that that is indicative of something that would be especially complex or especially intricate, fictitious, creating corporate shells. [00:13:53] Speaker 01: I mean, I think when you look at that and you're trying to determine what sort of thing is especially intricate in a fraud case. [00:14:00] Speaker 01: Isn't that what she did? [00:14:03] Speaker 01: She did not create any corporate entities. [00:14:04] Speaker 01: She did not create any fictitious entities. [00:14:06] Speaker 01: She just [00:14:08] Speaker 01: But it, you know, said. [00:14:11] Speaker 01: She said there is one. [00:14:13] Speaker 01: There wasn't really, but she said it was. [00:14:16] Speaker 01: Why isn't that sophisticated? [00:14:18] Speaker 05: So you think the distinction is between the fact that she didn't really set up this reality company, but only called it one on paper? [00:14:26] Speaker 05: That's the difference between sophistication and not sophistication? [00:14:29] Speaker 01: Your Honor, if I had to describe something as utterly not sophisticated, I think it would be this. [00:14:37] Speaker 02: Thank you. [00:14:38] Speaker 02: Make sure my colleagues don't have additional questions for you. [00:14:40] Speaker 02: This time we'll give you a little bit of time for battle. [00:14:45] Speaker 02: Mr Hahn, we'll hear from you. [00:14:55] Speaker 00: Thank you, Your Honor. [00:14:59] Speaker 00: May it please the court, Ryan Hahn, for appellee of the United States. [00:15:02] Speaker 00: The trial court in this case did not abuse its discretion in admitting the University of Maryland Medical System, or UMMS, evidence. [00:15:10] Speaker 00: The trial court correctly recognized that under this court's precedent under Rule 404B, even if appellant had offered to stipulate to the element of specific intent of the fraud, that that would not prevent the government from admitting this evidence under Rule 404B, so long as it went to [00:15:30] Speaker 00: a non-propensity issue, in this case intent, for lack of mistake or accident. [00:15:36] Speaker 00: The trial court also did not abuse its discretion in conducting the rule 403 balancing in this case and determining that the UMMS evidence, the unfair prejudice of it, did not substantially outweigh its probative. [00:15:50] Speaker 04: Where did the district court do the 403 balancing? [00:15:54] Speaker 04: It essentially said it comes in because it's probative. [00:15:59] Speaker 04: And it was less money. [00:16:00] Speaker 04: But it never, or maybe you can tell me where, it talked about what Supreme Court and old chief called the relative probative value of adding this other piece of evidence on top of all the evidence that was already in the mix. [00:16:16] Speaker 04: Where did it do that? [00:16:18] Speaker 00: So we think that on page 291 to 292 of the July 21st transcript is where the trial court specifically undergoes the 403 balancing. [00:16:27] Speaker 00: And I think I agree with Your Honor. [00:16:28] Speaker 04: Sorry, which JA page are you on? [00:16:31] Speaker 00: I'm on page 291, the July 21st transcript. [00:16:35] Speaker 00: And I think I agree with the court that the trial court doesn't specifically say, you know, this is what the specific probative value here is. [00:16:44] Speaker 00: But the court does recognize that the evidence is of a probative value to intent and lack of mistake or accident. [00:16:51] Speaker 04: I don't have a 291. [00:16:53] Speaker 04: My appendix goes up into 240. [00:16:55] Speaker 00: And the JA, do you have the JA page? [00:16:57] Speaker 00: I'm sorry. [00:16:58] Speaker 00: I don't have the GA page. [00:16:59] Speaker 00: I apologize, Your Honor. [00:17:01] Speaker 04: I'm sorry. [00:17:02] Speaker 04: Remind me which date, and then if I'm at the right one. [00:17:07] Speaker 02: Are the pages in the appendix? [00:17:10] Speaker 00: I am not sure if that, Your Honor, actually. [00:17:13] Speaker 00: So I apologize. [00:17:15] Speaker 00: I only have the transcript citation in front of me. [00:17:19] Speaker 00: But I think that... Read me what the judge said. [00:17:22] Speaker 00: I don't have the specific quotation. [00:17:25] Speaker 04: We don't have the pages and we don't have the language. [00:17:28] Speaker 00: So I don't have the JA pages and I don't have the location in front of me. [00:17:33] Speaker 00: But what the trial court does say is that the defendant, what the trial court does say- It looks like it's in the supplemental appendix pages 111 and 112. [00:17:46] Speaker 02: Thank you, John. [00:17:46] Speaker 02: I appreciate that. [00:17:48] Speaker 02: I appreciate that help. [00:17:50] Speaker 00: What the trial court does say is that the government still has the burden of proof and proofing intent, that it's also probative of mistake or lack of accident because there was testimony in the case that appellants told her bosses at GMSI when they noticed that there were some payments to David Morgan that shouldn't have been paid out. [00:18:10] Speaker 00: that it must have been a mistake or accident in terms of, I think what she said was that she had accessed the system in order to, someone asked her to access the system and it must have accidentally started the payments over again. [00:18:28] Speaker 00: And I think that particularly when you're looking at the UMMS evidence, [00:18:33] Speaker 00: Both the fact that it is close in time and that the scheme is very similar to the GMSI evidence lends probative value to it for intent in this case. [00:18:44] Speaker 04: I just want to get back to, I understand that argument. [00:18:47] Speaker 04: I'm trying to get back to whether the district court did the balancing that 403 requires under precedent by the chief. [00:18:57] Speaker 04: And that is not, does this have probative value? [00:19:00] Speaker 04: And is it too prejudicial? [00:19:02] Speaker 04: It's because it doesn't have probative value. [00:19:05] Speaker 04: It's not even irrelevant, so it doesn't get to come in. [00:19:07] Speaker 04: So that's not really doing anything on that side. [00:19:09] Speaker 04: And the Supreme Court said a lot of time talking about you need to analyze relative probative value, or what your friend calls marginal probative value. [00:19:18] Speaker 04: The Supreme Court's words were relative probative value. [00:19:24] Speaker 04: Did the district court do that? [00:19:26] Speaker 04: And if so, where? [00:19:27] Speaker 00: So what the district court says specifically is that it is considering the fact that appellant did not, you know, avoided the issue of specific intent in cross-examination, and says that that does affect. [00:19:41] Speaker 04: I'm talking about all the other evidence in the record. [00:19:43] Speaker 04: Sorry? [00:19:44] Speaker 04: As I read the district court, when counsel for Ms. [00:19:47] Speaker 04: Milligan said, you need to look at marginal appropriative value, the district court said, no, I don't. [00:19:52] Speaker 04: That's not the test. [00:19:54] Speaker 04: So did not seem to engage in this analysis. [00:19:58] Speaker 00: I think I disagree. [00:20:00] Speaker 00: I think what the trial court says is that it recognizes, the trial court does recognize that the fact that appellants did not make a full-throated defense, did not cross-examine witnesses based on the issue of specific intent does affect the probative value and might do so in a marginal way. [00:20:21] Speaker 00: but that it did affect the court's view of the probitiveness. [00:20:26] Speaker 00: And I don't know of any precedent, Your Honor, that suggests that the trial court needs to explicitly lay out every single piece or factor in the Rule 403 analysis when making its decision. [00:20:39] Speaker 00: I think that the record just has to reflect that the court, in fact, did do a proper 403 analysis. [00:20:45] Speaker 00: I think it does so here because the trial court does, in fact, [00:20:48] Speaker 00: reference the fact that appellants' way of trying the case does affect what the trial court views as the probative value of the evidence. [00:20:58] Speaker 00: And then the trial court goes on to view the unfair prejudice. [00:21:02] Speaker 00: And again, I don't think the trial court explicitly talks about what the unfair prejudice is. [00:21:07] Speaker 00: I think everyone sort of knows what the unfair propensity prejudice is from formal IV-B evidence. [00:21:14] Speaker 00: But the trial court says, look, [00:21:15] Speaker 00: the amount of money that was taken from UMMS is much lower than the, it's about 55,000, I believe, much lower than the over $1.5 million that was defrauded from GMSI. [00:21:30] Speaker 00: And therefore it's unfair prejudice is lessened because of that. [00:21:34] Speaker 02: I'm not sure I completely follow that because the prejudice, it seems to me, the potential prejudice comes not from the amount of the fraud, but from the fact of it. [00:21:45] Speaker 02: It's that this is the type of stuff this person has done before. [00:21:50] Speaker 02: Ergo, they probably did it this time, too. [00:21:55] Speaker 02: And the fact that last time they might not have gotten as much money, yeah, I mean, you could sort of look at it in some abstract way and say, boy, that troubles me at level A. It might trouble me at level B if the fraud had been even more successful. [00:22:09] Speaker 02: But really, the work is being done not by the amount that's ultimately gained, but by the pattern of conduct. [00:22:15] Speaker 00: So I think I agree that there is some unfair prejudice inherent in the fact that the scheme is the same, that the conduct is the same. [00:22:24] Speaker 00: I think that as you, I think you just said that you might care about it more or less, A or B on those different levels, depending on the amount of money that was taken. [00:22:34] Speaker 00: And certainly if we were trying to bring in evidence of the GMSI fraudulent scheme in a trial for charging appellant with [00:22:44] Speaker 00: defrauding UMMF, I think that the amount of money would affect the unfair prejudice analysis there, because I do think that when a jury looks at the amount of money that's taken, if it is, you know, extremely large amount versus a much smaller amount, I think that that does affect. [00:23:05] Speaker 02: But then the jury, the jury sitting there looking at the evidence, aren't they saying, do I think this person is guilty of the offense? [00:23:12] Speaker 02: I don't know that it'd say, I think it's less likely the person is guilty of the offense because the last time they did it, they didn't get that much money. [00:23:18] Speaker 00: Well, so I think that it's, it's the, the question is how prejudicial it is in terms of like, can we attribute sort of bad character to this person, right? [00:23:29] Speaker 00: It's the unfair propensity inference and propensity to engage in the criminal conduct, which was engaged in even if it wasn't. [00:23:40] Speaker 00: Yes, but I do think that more serious criminal conduct is more prejudicial than less serious criminal conduct. [00:23:51] Speaker 00: That's part of what the trial court's analysis was. [00:23:56] Speaker 00: I do want to say that even if this court believes that the Rule 403 evidence was admitted improperly, that in this case it was harmless. [00:24:06] Speaker 00: There was substantial evidence that appellant specifically intended to defraud GMSI. [00:24:11] Speaker 00: There were many payments made to her big account in the names of many different employees over the course of several years. [00:24:21] Speaker 00: and that when her bosses noticed the discrepancies with David Morgan's payments, she engaged in this very sophisticated cover-up scheme in order to throw them off her scent and allowed her to perpetuate the scheme for additional years. [00:24:36] Speaker 00: And so I do think that in addition, the trial court gave a very detailed and specific instruction on how the jury was to use the evidence [00:24:47] Speaker 00: And of course, the government referred to it once and referred to it in conjunction with the instruction that the court gave. [00:24:54] Speaker 04: This is kind of the irony. [00:24:57] Speaker 04: It's because under 404, the government's argument is we need this evidence. [00:25:04] Speaker 04: Then we get to harmless error, and they go, we didn't need it. [00:25:07] Speaker 04: We had so much other evidence. [00:25:10] Speaker 04: And that this really wouldn't have mattered to the jury anyhow. [00:25:14] Speaker 04: And that's exactly this type of upfront inquiry that the district court was supposed to undertake when it did 403 balancing. [00:25:22] Speaker 04: So it seems like the defendant's kind of in a catch 22 here. [00:25:28] Speaker 04: If it argues the balancing and the district court says as it did, I don't think that's the test and I'm not going to do it. [00:25:37] Speaker 04: then they're never going to get it overturned because the government's going to turn around and say, we had so much evidence, this didn't really matter at all. [00:25:47] Speaker 04: How can the government say both things at the same time? [00:25:50] Speaker 00: So I think two things, Your Honor. [00:25:51] Speaker 00: First, I would say that the inquiry of the front end isn't whether or not the government needs the evidence, whether it's necessary for the government's case, of course. [00:26:00] Speaker 00: It's whether or not the evidence is probative and whether or not it's unfair prejudice. [00:26:04] Speaker 04: No, it's more than just whether it's probative. [00:26:07] Speaker 04: That's the relevance inquiry. [00:26:09] Speaker 04: It is whether it's [00:26:12] Speaker 04: relative probative value that is in the scheme of the evidence presented. [00:26:17] Speaker 04: And that's why the district court wisely waited here until the government had put on, you know, most of his case in chief. [00:26:23] Speaker 04: And so now I see what you've got. [00:26:25] Speaker 04: Now I see the sort of semi truckloads of evidence that you have brought in on this issue and nothing really pushing him back from the other side. [00:26:34] Speaker 04: Um, why, you know, what is the value of putting this in? [00:26:40] Speaker 04: And the government there says, we still need it. [00:26:42] Speaker 04: We still need it. [00:26:43] Speaker 04: So the jury will understand that it really was intent and not mistake. [00:26:49] Speaker 04: But then you can't turn around a harmless error stage and go, we didn't need it. [00:26:53] Speaker 04: It didn't matter to show intent or absence of mistake. [00:26:57] Speaker 04: That's what I'm wrestling. [00:27:00] Speaker 00: Yeah. [00:27:01] Speaker 00: I think, Your Honor, again, I would say that the inquiry isn't whether or not the evidence is necessary for the government's case. [00:27:08] Speaker 04: I think the inquiry is necessary and having relative probative value that is probative value within additional probative value within the context of the case. [00:27:21] Speaker 04: And I think the government said at the 404 stage that we don't need it. [00:27:25] Speaker 04: We've got plenty to win on this record, but we'd like it. [00:27:30] Speaker 04: And there was prejudice. [00:27:31] Speaker 04: The district court wouldn't almost necessarily abuse its discretion by letting it in if the government says, we don't need it. [00:27:36] Speaker 04: We'd like to have it just to tie a bow on this. [00:27:40] Speaker 04: But that's sort of the argument that's made at the harmless air stage. [00:27:43] Speaker 00: So we think the additional probative value of the evidence is that it's different in kind than the other evidence that was admitted to show her specific intent. [00:27:53] Speaker 00: You've got the evidence of the scheme and how broad it is. [00:27:56] Speaker 00: You've got evidence of the cover-up. [00:27:59] Speaker 00: And then now you have additional evidence in the 404B evidence that she did a similar scheme about a year later. [00:28:08] Speaker 00: And then also that when she goes through her exit interview, I'll call it her exit interview, with UMMS, that while she doesn't specifically admit to wrongdoing, she does apologize for what happened, she offers to repay the money, and she offers some sort of [00:28:26] Speaker 00: reasons why she might have needed the money, has been denied her son, she needs to pay for her son's college. [00:28:33] Speaker 00: And so that, I think, Your Honor, is different in kind and sort of has a different probative effect than the other evidence in the case. [00:28:40] Speaker 00: And that's why it's admissible under Rule 404B and Rule 403 and still can be, if erroneously admitted, harmless in the context of this case. [00:28:52] Speaker 00: I'm sure my colleagues don't have additional questions. [00:28:55] Speaker 00: if there are any questions about that. [00:28:56] Speaker 04: I wanted to ask about the enhancement. [00:28:58] Speaker 04: Of course. [00:28:58] Speaker 04: How do you define complex? [00:29:01] Speaker 00: I think I would define complex as something that is, I don't know, it's hard to not use the same words, like the guideline uses the word intricate, I think, and complex and things like that. [00:29:15] Speaker 04: I think that... Sorry, it says intricate separate from complex. [00:29:19] Speaker 00: Yeah, it does. [00:29:22] Speaker 04: What does complex mean? [00:29:23] Speaker 00: Um, I think complex is sort of like it's complicated. [00:29:27] Speaker 00: It is something that is harder than normal. [00:29:29] Speaker 00: Yes. [00:29:30] Speaker 00: I would say that's right. [00:29:33] Speaker 04: Right. [00:29:33] Speaker 04: More and well, and more maybe thought than normal. [00:29:38] Speaker 04: Yeah. [00:29:38] Speaker 04: A big stone can be harder than moving a little stone, but as this require complex, I think require some sort of right. [00:29:45] Speaker 00: Some sort of, some sort of specialized knowledge or yes. [00:29:49] Speaker 00: Okay. [00:29:49] Speaker 00: And I think that in this case, how can there's, um, [00:29:54] Speaker 04: 2.1 billion Gmail accounts in this world. [00:29:58] Speaker 00: I did not know that, Your Honor. [00:30:00] Speaker 04: Yeah, billing with a B. How can it be harder than normal and require specialized knowledge to set up a Gmail account? [00:30:10] Speaker 00: Yeah, I don't think that is the act in and of itself of setting up a Gmail account. [00:30:14] Speaker 00: Or I think it's a Y-mail account that is the sophisticated means in this case. [00:30:19] Speaker 00: What I think it is, is the use of that account to impersonate David Morgan. [00:30:23] Speaker 04: That's the fraud. [00:30:25] Speaker 00: Well, it's above and beyond the normal fraud, Your Honor, I think. [00:30:30] Speaker 00: This is additional fraud on the bosses of her company in order to try and hide the fact that she has made these. [00:30:35] Speaker 04: OK, so I've made a Gmail account, and then I send an email from it. [00:30:38] Speaker 00: That's complex? [00:30:40] Speaker 00: Well, she sends emails to them, and then she's represented to them conversations that she's had. [00:30:45] Speaker 04: But how is that complex? [00:30:45] Speaker 04: That's just lying. [00:30:47] Speaker 04: That's just lying. [00:30:48] Speaker 04: What's specialized knowledge or complexity? [00:30:50] Speaker 04: Because that's what I'm wrestling with here. [00:30:53] Speaker 04: There's a standard in the guideline. [00:30:55] Speaker 04: And this seems like stuff that in getting a PO box, oh my gosh, anyone can walk in and do it. [00:31:02] Speaker 04: So there's nothing complex about the Gmail account or the YML account or the getting the post office. [00:31:09] Speaker 04: And now you say, well, but using them to lie. [00:31:14] Speaker 04: Is what made it complex? [00:31:16] Speaker 00: And because she has the knowledge that the type of lies that she's telling her bosses will be ones that will cover the scheme. [00:31:23] Speaker 04: I think she also says- That's just covering up. [00:31:26] Speaker 04: So is every effort to cover up fraud complex? [00:31:31] Speaker 04: When you cover it up, that makes it complex. [00:31:34] Speaker 00: No, Your Honor, but I think that what makes it [00:31:36] Speaker 00: complex in this case is the additional steps that she took. [00:31:39] Speaker 00: It's, I mean, you've already mentioned the additional steps. [00:31:42] Speaker 00: So I'm sorry that right. [00:31:44] Speaker 04: So she, but I think we can agree. [00:31:45] Speaker 04: I can give you the number of post office boxes in this country if you want, but I don't think it's going to help your case. [00:31:50] Speaker 04: So, and they're really, really easy to set up. [00:31:53] Speaker 00: So if it's not the setting up the post office box and it's not the setting up the fake email account, she sends, she sends a promissory note to the GMSI and the name of David Morgan. [00:32:05] Speaker 00: agreeing to pay back the money. [00:32:07] Speaker 04: Why does that make it? [00:32:08] Speaker 04: I get that you did these things to cover up. [00:32:12] Speaker 04: Why is that complex thing to do? [00:32:14] Speaker 00: I think the interlocking of all of these separate steps is the complex interlocking. [00:32:19] Speaker 04: It's just covering up. [00:32:21] Speaker 00: I mean, I don't think that it's OK. [00:32:23] Speaker 04: Well, I'll give you that it's complex. [00:32:26] Speaker 04: Now you have to tell me how it's especially complex, because that's the standard of the guideline. [00:32:29] Speaker 04: Tell me how that is. [00:32:31] Speaker 04: We say that's complex. [00:32:33] Speaker 04: How is it especially? [00:32:35] Speaker 00: Well, I think that based on what we've already talked about, it's especially complex. [00:32:41] Speaker 00: And I don't know that it looks like you're not going to. [00:32:45] Speaker 04: I'm puzzling. [00:32:47] Speaker 04: I haven't encountered this guideline. [00:32:50] Speaker 04: I'm really puzzling about what they mean by. [00:32:54] Speaker 04: complex and intricate. [00:32:55] Speaker 04: We can sort of feel our way through that. [00:32:57] Speaker 04: But then they've got that especially complex and especially intricate, which I think we're obviously deliberately put in there as modifiers on how complex and how intricate it needs to be. [00:33:09] Speaker 04: And that's what I'm really trying. [00:33:11] Speaker 04: And then there's no sort of verbal formulation that's given by anybody. [00:33:15] Speaker 04: The district court just says, well, she created a PO box. [00:33:19] Speaker 04: She got a PO box. [00:33:20] Speaker 04: She created this account. [00:33:22] Speaker 04: use it to pretend to be this person to cover up for fraud in one instance of the frauds that she did. [00:33:30] Speaker 04: And that's all I saw the district court relying on. [00:33:33] Speaker 04: And so if I had to write an opinion to explain how that meets the standard of especially complex or especially intricate, that's why I'm asking you these questions. [00:33:45] Speaker 04: how would you write that to say this is not just more than the norm that would just be complex this is way beyond the norm it is especially it's it's it's beyond the norm of complex how would you say that i think that i would point to the the comment to the guideline i think it's 9b which says that [00:34:05] Speaker 00: Among other things, the creation of a fictitious entity to hide these fraudulent transactions. [00:34:11] Speaker 04: But she didn't create an entity, she impersonated somebody. [00:34:13] Speaker 04: An entity is not a person. [00:34:16] Speaker 04: Setting up an entity like a whole business or something, that probably does require more complex steps. [00:34:22] Speaker 04: Just lying and pretending I'm somebody else is not setting up an entity. [00:34:26] Speaker 00: Well, she did, you know, set up or at least represent that there was an entity called David Morgan rental properties when she said she set it up. [00:34:34] Speaker 04: Did she set it up? [00:34:35] Speaker 04: Did she do anything to set up or she just said it existed? [00:34:38] Speaker 00: So I agree that she did not set up, you know, formally filed paperwork with you do anything to set it up or just lie. [00:34:45] Speaker 00: But well, I don't think there was evidence that she did anything formal to set it up. [00:34:51] Speaker 04: But I think that you do anything informal to set it up. [00:34:54] Speaker 00: Well, I mean, she did, in fact, represent that it existed. [00:34:57] Speaker 00: Right, so she lied. [00:34:58] Speaker 00: She lied about it. [00:34:59] Speaker 00: And she created documents that said that it existed. [00:35:03] Speaker 02: How would you compare the level of sophistication to what was at issue in McCance? [00:35:07] Speaker 00: I think that it is less sophisticated than McCance. [00:35:12] Speaker 00: I think that in McCance, there was more sophistication there. [00:35:15] Speaker 00: It was across jurisdictions. [00:35:17] Speaker 00: That was one. [00:35:17] Speaker 00: Was this not across jurisdictions? [00:35:20] Speaker 00: This was across jurisdictions. [00:35:22] Speaker 00: It's it's true. [00:35:24] Speaker 00: This was across jurisdictions. [00:35:26] Speaker 04: I think that there was a court didn't rely on that. [00:35:29] Speaker 00: The district court didn't rely on it. [00:35:31] Speaker 00: He didn't explicitly say that it's correct. [00:35:35] Speaker 00: But there's no dispute that it was there. [00:35:38] Speaker 00: There isn't any dispute that it was though. [00:35:40] Speaker 00: Well, actually, I think the defense at trial was that there was no venue because their whole argument was no interstate commerce. [00:35:47] Speaker 04: Do we know that that's in fact true? [00:35:49] Speaker 00: But the jury rejected that argument and there was, you know, sufficient evidence for this trial for that. [00:35:55] Speaker 00: That's not being challenged. [00:35:56] Speaker 00: deal. [00:35:58] Speaker 00: But I do think McCants also says that even if you could imagine more sophisticated means of conducting the fraud, that doesn't mean that what happened in the particular case isn't sophisticated means that the enhancement doesn't apply. [00:36:13] Speaker 00: I would say, Your Honor, that, I'm sorry, do you have a question, Judge Tatel? [00:36:16] Speaker 00: That Judge Tatel, in fact, brought up this point that the standard here isn't [00:36:23] Speaker 00: is really, I think this court in Hunt said that it's really a factual finding by the trial. [00:36:31] Speaker 05: This is not a factual finding. [00:36:33] Speaker 05: This is applying the, there's no dispute about the facts here. [00:36:37] Speaker 05: This is applying the guidelines to the facts. [00:36:41] Speaker 05: These facts are not tested, at least at this point. [00:36:44] Speaker 05: That's why when I asked Mr. Hicks my questions, I asked him, isn't the proper standard too different? [00:36:52] Speaker 00: There's no fact finding. [00:36:54] Speaker 00: I think I read Hunt to say that it's essentially a question of fact. [00:36:57] Speaker 00: Isn't that right? [00:36:59] Speaker 00: I think I read Hunt to say that it's essentially a question of fact. [00:37:02] Speaker 00: But I think that whether or not that merits a clearly erroneous standard or an abuse of discretion standard, whether or not essentially a question of fact meets that standard, I'm not particularly sure. [00:37:20] Speaker 00: But I do agree that there is. [00:37:21] Speaker 05: Are you arguing with me about this because you don't think you can prevail if it's a due deference standard? [00:37:27] Speaker 00: No, no. [00:37:27] Speaker 00: I think that regardless of what standard we're talking about, there is deference owed to the trial court. [00:37:33] Speaker 00: Therefore, you know, that these things should be. [00:37:38] Speaker 00: If there are no further questions from the court, I'd ask that this court affirm the convictions attempted in this case. [00:37:45] Speaker 02: Thank you very much. [00:37:46] Speaker 02: Thank you, Mr. Hon. [00:37:47] Speaker 02: Mr. Hicks, we'll give you two minutes for rebuttal. [00:37:54] Speaker 01: Thank you, Your Honor. [00:37:57] Speaker 01: Just three quick points in rebuttal. [00:38:00] Speaker 01: First, as to the question of, did the district court address relative probative value? [00:38:07] Speaker 01: And this is it. [00:38:08] Speaker 01: I know you have it from the other appendix. [00:38:09] Speaker 01: I'll give it to you in the JA, which is [00:38:11] Speaker 01: 131 31. [00:38:12] Speaker 01: That is the entirety of the district court's analysis as to both probative value and prejudice. [00:38:19] Speaker 01: Very short. [00:38:19] Speaker 01: And the answer is no. [00:38:21] Speaker 01: Is that the same? [00:38:21] Speaker 01: Are those the same pages? [00:38:23] Speaker 01: I believe they are. [00:38:23] Speaker 01: It is the July 21st transcript. [00:38:25] Speaker 01: But if you're looking for J. A. It's one. [00:38:27] Speaker 01: Thank you. [00:38:28] Speaker 01: Um, the answer is no. [00:38:30] Speaker 01: It did not address the probative value in terms of the relative probative value in light of the non [00:38:40] Speaker 01: undisputed nondisputing of intent and mistake. [00:38:43] Speaker 01: Uh, so we think that is contrary to old chief and the case is saying that you do look at the relative probative value seconds. [00:38:50] Speaker 01: Um, as I think I can see the district or really didn't engage in a prejudice analysis other than to say, I don't think it's prejudicial because the money just wasn't as much as the first time around. [00:39:04] Speaker 01: And as we've [00:39:05] Speaker 01: said that just doesn't seem like the right way that you approach the prejudice from a 404B of evidence. [00:39:12] Speaker 01: In addition, again, to all the other prejudice that we point out that it was introduced for intent. [00:39:18] Speaker 01: It was similar in nature to the charged offense. [00:39:21] Speaker 01: It was right afterward in time. [00:39:22] Speaker 01: And it was extensive. [00:39:24] Speaker 01: It comprised over 60 pages. [00:39:26] Speaker 01: And if you're looking for that, it's a JA 172 to 232 is all of the evidence, the 404B evidence, [00:39:34] Speaker 01: at trial. [00:39:35] Speaker 01: And then the last point I'll make third is I believe I did hear the government say that the sophisticated means here was was allowed her to continue the scheme. [00:39:46] Speaker 01: And as we point out at page 40 of our opening brief, that's that's simply you can't conflate the two. [00:39:51] Speaker 01: You can't conflate the sophisticated means with the fraud that is the underlying is the underlying [00:39:59] Speaker 02: element and I thought there was a reference that cases refer to sophistication in the execution of the scheme to then all right. [00:40:06] Speaker 01: I don't think it is I think I mean I'll I'll give you what I think is the best case on this fourth circuit as the page starts at page 20 of our of our opening brief says because virtually all fraud will involve misrepresentation the realm of a special complexities and intricacies intricacies [00:40:24] Speaker 01: involves more than the forgeries, misrepresentation and concealment inherent in fraud. [00:40:29] Speaker 01: And I think that that case is important to this point, not only for what it says, but it uses that word as special, especially complex, especially intricate. [00:40:39] Speaker 01: And we're talking here, this added 15 months to the sentence. [00:40:43] Speaker 01: It added, it increased it from 81 months to 96 months at the 25% increase and all for something that [00:40:50] Speaker 01: Boy, sure doesn't seem very sophisticated to me, much less especially sophisticated or complex or intricate. [00:40:57] Speaker 04: The government said the promissory note made it complex. [00:41:01] Speaker 01: I think the promissory note, if you go back and look at the promissory note, it was the opposite of complex. [00:41:09] Speaker 01: I mean, it was written. [00:41:09] Speaker 01: Well, I thought. [00:41:11] Speaker 01: It was just kind of. [00:41:12] Speaker 04: It's better than that, right? [00:41:13] Speaker 04: It's that the promissory note was done by the company lawyers once she told them that this guy wanted to pay the money back. [00:41:19] Speaker 04: But I think that's what the district court found. [00:41:21] Speaker 04: So she didn't even do the promissory. [00:41:23] Speaker 01: Yeah. [00:41:23] Speaker 01: Again, it was, I don't think it was the, it's hard for it to be complex. [00:41:29] Speaker 04: If she didn't even do it, it's after she said the guy wanted to pay the back money back and the DMS lawyers drafted the promissory. [00:41:36] Speaker 01: Yeah. [00:41:36] Speaker 01: I mean, I think that I agree completely. [00:41:38] Speaker 01: And I think that, you know, for lack of a better word, uh, you know, the opposite of sophisticated would be somewhat hand handed. [00:41:44] Speaker 01: And I think that, uh, that does not merit 15 additional months. [00:41:48] Speaker 01: There are no further questions. [00:41:51] Speaker 02: No further questions. [00:41:53] Speaker 02: Thank you, Mr. Hicks. [00:41:54] Speaker 02: Thank you, Mr. Ron. [00:41:55] Speaker 02: Thank you, Judge Tatel. [00:41:56] Speaker 02: We'll take this case under submission.