The opinion of the court was delivered by: KNOX
The defendant in this case, Myron Buttram, was convicted of one count of wire fraud in violation of 18 U.S.C. §§ 1343 and 2 on September 25, 1976, at the conclusion of an eleven day jury trial. Buttram was acquitted of two other counts of wire fraud.
The indictment charged both Frank Exum and Myron Buttram with three counts of wire fraud. However, on September 14, 1976, the court granted an oral motion of Assistant United States Attorney James West dismissing all charges against Exum.
Exum had been sent to the Federal Psychiatric Center in Springfield, Missouri, pursuant to an order of Judge Luther B. Eubanks of the Western District of Oklahoma before whom Exum faced other federal charges unrelated to this case. Initially, on June 17, 1976, a report from Jack Eardly, M.D., Chief of Psychiatry at the Springfield facility adjudged Exum competent to stand trial. However, the Springfield staff changed their mind and in a letter dated August 9, 1976, from Eardly to Judge Eubanks found Exum to have been legally insane during the period he allegedly committed federal crimes in Oklahoma. This letter stated in part:
"Although at that time [June 17, 1976] we expressed an opinion that he could have been responsible, lacking information to the contrary, it is our considered opinion that in all likelihood, and using the criterion of reasonable medical certainty, he would have to be considered to have been suffering from a mental disease that would have incapacitated him to the extent that he lacked substantial capacity to appreciate the wrongfulness of his act or could not conform his conduct to the requirements of the law, considering patient's age and the apparent chronicity of his illness."
It was in reliance on this second letter of August 9, 1976, that Judge Eubanks agreed to dismiss all charges pending against Exum in Oklahoma. On September 14, 1976, this court also granted the government's motion to dismiss charges pending against Exum in this district.
The testimony at trial disclosed that an Erie businessman, J. Robert Baldwin, received a phone call from Frank Exum on October 1, 1975, inquiring about whether Baldwin was interested in investing money in a machine that extracted gold from thermal well waters in California. (Tr. 34). For an investment of $175,000, Mr. Baldwin was offered a one-fourth interest in such a machine. (Tr. 35). Exum represented that a well currently in operation in the Imperial Valley of California was producing over one million dollars a day in gold and $177,000 worth of silver and other metals.
Suspicious of possible fraud, Baldwin contacted the local office of the FBI and informed them of the call. Special Agent John Bokal came to Baldwin's office the following day, October 2, 1975 and a call was placed to Exum. The terms of the original offer were reconfirmed and Exum requested that Baldwin come to San Diego to view the machine.
These two phone calls constituted the basis for the first two counts of the indictment of which Buttram was ultimately acquitted. A third phone call occurred on October 8, 1975, at which time Baldwin spoke to both Exum and Buttram. This phone call constitutes the basis for Buttram's conviction of one count of wire fraud and will be discussed in detail in the next section of this memorandum, infra.
The court ruled at the time of trial that Baldwin could testify to Exum's phone calls of October 1 and 2, 1975 pursuant to Rule 801(d)(2)(C) and (D) of the Federal Rules of Evidence since the government's evidence established that Exum was an agent or tool of Buttram used in devising a scheme and artifice to defraud Baldwin. This ruling was made after extensive argument at trial and the matter has been extensively reargued in counsel's briefs and oral argument concerning Buttram's motion for a new trial filed on October 4, 1976.
Defense counsel describes the court's alleged error in introducing this testimony as "the major issue on review of this conviction". Most of the remaining extensive arguments before this court by the defendant in support of a new trial concern the alleged insufficiency of the evidence to support a conviction on the third count of wire fraud. In a third miscellaneous category fall several attacks by the defendant on other rulings made by the court throughout the eleven day trial.
After considerable reflection about this complicated case, the court has decided to reaffirm its previous rulings on all legal issues and to uphold the jury's verdict as to Count 3 as being supported by sufficient evidence to sustain conviction beyond a reasonable doubt. Accordingly, the defendant's motion for new trial has been denied.
(1) Admission Into Evidence of Testimony Concerning Out of Court Declarations of Frank Exum
To be properly admissible against Myron Buttram, the out of court statements made in the October 1 and 2, 1975, phone calls by Exum to Baldwin must meet the requirements of two separate tests: they must fall within one of the exceptions to the hearsay rule and they must not violate Buttram's sixth amendment right to confront witnesses.
In the case of California v. Green, 399 U.S. 149, 90 S. Ct. 1930, 26 L. Ed. 2d 489 (1970), the Supreme Court made it clear that the hearsay rules and the confrontation clause pose separate problems in a criminal case although there is a great deal of overlap:
"While it may readily be conceded that hearsay rules and the Confrontation Clause are generally designed to protect similar values, it is quite a different thing to suggest that the overlap is complete and that the Confrontation Clause is nothing more or less than a codification of the rules of hearsay and their exceptions as they existed historically at common law. Our decisions have never established such a congruence."
With regard to the hearsay problem, two theories were propounded by the government at trial to justify admission of the Exum phone calls: the co-conspirator exception to the hearsay rule and the hearsay exception for admissions by an agent.
Defense counsel argued at trial that the conspiracy exception could not apply because Buttram could not have conspired with the legally insane Exum. Even though the court did not discover any cases holding that it is legally impossible to conspire to commit a crime with an insane person, the court did not reach this question at the time of trial and based its ruling instead on the agency exception to the hearsay rule.
The admission by an agent exception to the hearsay rule is codified in Rule 801(d)(2)(C) and (D) of the Federal Rules of Evidence:
"(d) Statements which are not hearsay. A statement is not hearsay if --
(2) Admission by party opponent. The statement is offered ...