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U.S. v. Casoni

filed: December 12, 1991.

UNITED STATES OF AMERICA, APPELLEE
v.
HARRY P. CASONI, A/K/A PETE CASONI, APPELLANT



Appeal from the United States District Court for the Middle District of Pennsylvania. (D.C. Criminal Action No. 89-00066-02)

Present: Becker and Hutchinson, Circuit Judges, and Atkins, District Judge*fn*

Author: Hutchinson

Opinion OF THE COURT

HUTCHINSON, Circuit Judge.

I.

Harry Casoni (Casoni) appeals his convictions on one count of conspiracy to commit a crime against the United States, two counts of interstate travel in aid of racketeering, one count of bribery and four counts of mail fraud. We will affirm. Casoni's convictions followed a jury trial in the United States District Court for the Middle District of Pennsylvania. Casoni argues that various evidentiary rulings the district court made were wrong, that they were prejudicial and that therefore the district court erred in denying his motion for a new trial. In making these arguments, Casoni challenges the district court's admission of testimony by Richard Guida (Guida), attorney for James Gabler (Gabler), and documents Guida had prepared that corroborated Guida's testimony.

More specifically, after Gabler had testified against Casoni under a grant of immunity, Guida's testimony about what Gabler told Guida about Casoni and co-defendant Kenneth Reeher (Reeher) was admitted under Federal Rule of Evidence 801(d)(1)(B) as evidence of a prior consistent statement by Gabler. Guida's written proffer of what Gabler proposed to say, as Guida prepared and submitted it to the United States Attorney in pursuit of Gabler's successful bid for immunity from prosecution, and Guida's notes of a meeting with Gabler were also admitted as evidence of Gabler's prior consistent statement under the "records of regularly conducted activity" exception to the hearsay rule set forth in Federal Rule of Evidence 803(6). Gabler's disclosures to Guida and Guida's notes about them formed much of the basis, but not all the details, of the proffer Guida prepared and presented to the government in Gabler's successful bid for immunity.

While Gabler's prior consistent statement would not be hearsay under Rule 801(d)(1)(B), Guida's written out-of-court declarations about Gabler's prior consistent statement, when offered as evidence of Gabler's prior consistent statement, are hearsay subject to the prohibition found in Federal Rule of Evidence 802 unless they fall within one of the exceptions to the hearsay rule.

At trial and here, Casoni contends that Guida's testimony about what Gabler told Guida, as well as the notes and the proffer, are not admissible under Rule 801(d)(1)(B) as prior consistent statements. Casoni maintains that the statements are not entirely consistent with Gabler's testimony at trial and argues that all three statements were made after Gabler's recognition of his own potential criminal liability gave him a motive to falsify that should have led to the statements' exclusion.*fn1 With respect to the proffer itself, Casoni attacks not just the admission of the document under Rule 803(6) as Guida's business record but argues that the district court compounded the error when it permitted the jury, during deliberations, to examine the document that Guida had shaped into narrative form from his notes of conference with Gabler. Finally, Casoni attacks a district court ruling that he says improperly prevented him from fully cross-examining Guida about an unrelated government criminal investigation concerning Guida.

For the reasons set forth below, we reject Casoni's argument that Gabler's declarations to his attorney, Guida, were not prior consistent statements within the meaning of Rule 801(d)(1)(B). We hold that Gabler's statements to Guida fall within Rule 801(d)(1)(B)'s definition of prior consistent statements because the rule does not require them to be consistent in every detail with Gabler's testimony at trial. We also hold that they were not inadmissible for the limited rehabilitative purpose the government offered them in this case even though they were made after Gabler's knowledge of the personal risk of criminal liability gave him motive to falsify.*fn2 Gabler's statements to Guida were also relevant within Federal Rule of Evidence 401's broad rule of relevancy, and they were not so unfairly prejudicial as to warrant their exclusion under Federal Rule of Evidence 403. Therefore, we hold that the district court did not abuse its discretion or otherwise err in permitting Guida to testify about Gabler's statements to him. With respect to the notes and the proffer, we hold that the district court abused its discretion in ruling that the hearsay declarations Guida set out in his notes and proffer fall under Rule 803(6)'s business records exception to the hearsay rule. The proffer did not meet Rule 803(6)'s requirement of trustworthiness. Since Guida was present and testified about Gabler's prior statement based on Guida's own recollection, as refreshed by the notes, and the notes were prepared with litigation implicating Gabler in criminal conduct in mind, we also believe the district court abused its discretion in admitting the notes.

If the district court had simply permitted the jury to hear what was in the notes and proffer, however, its error in admitting them would have been unquestionably harmless. The availability to the jury of the exhibits that embodied the notes and proffer during its deliberations, particularly the jury's possession of the proffer, is more troubling. We are nevertheless satisfied that the other evidence against Casoni is so strong that it is highly probable that the jury would have convicted him even if the exhibits containing the notes and the proffer had not been available to it. Accordingly, we hold that this error too is harmless. Finally, we hold Casoni's argument that the district court did not err in limiting his cross-examination of Guida about the criminal investigation involving Guida's violations of the federal drug laws that began after Guida interviewed Gabler and prepared the notes and proffer.

II.

Casoni and Reeher were indicted by a federal grand jury on April 14, 1989, for their roles in the award of a Pennsylvania state contract to Gabler's company, Gabler Educational Management Services, Incorporated (GEM). Reeher was the director of the Pennsylvania Higher Education Assistance Agency (Agency), a state agency charged with granting and administering federally guaranteed student loans. Casoni was his deputy. The indictments charged one count of conspiracy to commit an offense against the United States, 18 U.S.C.A. § 371 (West 1966); three counts of interstate travel in aid of racketeering, 18 U.S.C.A. § 1952(a)(3) (West Supp. 1991) and 18 U.S.C.A. § 2 (West 1969); one count of bribery, 18 U.S.C.A. § 666 (West Supp. 1991) and 18 U.S.C.A. § 2; one count of extortion, 18 U.S.C.A. § 1951 (West 1984) and 18 U.S.C.A. § 2; and six counts of mail fraud, 18 U.S.C.A. § 1341 (West Supp. 1991) and 18 U.S.C.A. § 2.

The trial began just over four months later. Among those who testified were Gabler and Loren Carlson (Carlson). Carlson and Gabler were the co-founders of GEM. Their testimony described Casoni's role in a scheme to obtain a valuable state contract for GEM from the Agency. Other witnesses testified about the steps Casoni took to see that the Agency's contract with GEM came to fruition. Yet others testified to Casoni's transferring cash and other gifts to Reeher through third persons. GEM's corporate counsel, Andrew Semmelman (Semmelman), testified about statements Gabler made to him of a plan to secure the contract for GEM by offering valuable but unlawful personal benefits to Casoni and Reeher in exchange for official action favorable to GEM. Semmelman also described certain incriminating representations that Casoni made to him when GEM was about to enter into the contract with Reeher's state agency.*fn3

Gabler appeared at trial pursuant to an agreement that he would be immune from prosecution if he testified against Casoni and Reeher along the lines set forth in the proffer that Guida had prepared. On cross-examination, Casoni sought to impeach Gabler by suggesting that he had fabricated his testimony to implicate Casoni and Reeher in order to gain immunity for himself. Casoni pointed to various differences in detail between Gabler's testimony at trial and the information he had given the Federal Bureau of Investigation (FBI) during the eight times the Bureau interviewed him in preparation for indictment and trial. For example, Gabler told the FBI that Reeher's demand for a share of the GEM/Agency contract was made at a meeting at Reeher's house. Gabler testified at trial that Reeher's demand was made in a phone call before Casoni, Carlson, Gabler and Reeher first met in Chicago, where GEM had its principal office. Gabler had also told the FBI that he could not remember who said that a discussion in a meeting in Gabler's basement should be kept secret. At trial he testified that he remembered it was Reeher who urged they keep the discussion a secret.

In the fall of 1987, Gabler had written a chronology of events surrounding his efforts to land the contract at issue for GEM. He presented this chronology to his first attorney, Scott Adams (Adams). It was inconsistent with his trial testimony. Perhaps, most significantly, Gabler's early chronology lacked any mention of the Chicago meeting that loomed large in his trial testimony. At trial, Gabler said that the written chronology and the story that he told Adams were both lies.

To rehabilitate Gabler the government called Guida, an experienced criminal lawyer to whom Adams had referred Gabler. Guida testified about his first meeting with Gabler. Guida's testimony about this interview was admitted as Gabler's prior consistent statement. Guida said that after hearing Gabler's story he advised Gabler to seek immunity by offering testimony to incriminate Reeher and Casoni. Guida also described and identified the written proffer that he dictated and gave to the government shortly thereafter along with the notes upon which the proffer was based, all in the interest of securing immunity for Gabler. At trial, the notes and the proffer were marked as exhibits, admitted into evidence as Guida's business records, and went out with the jury.

By the time of trial Guida had himself been under investigation by federal prosecutors for drug use in 1986. He was also under investigation for other criminal activity at the time that he testified. The United States Attorney advised the court that the evidence currently available indicated that Guida may not have taken part in any criminal activity. Because of this representation and the fact that Guida was testifying about events that predated the investigation against him by almost two years, the district court did not let Casoni cross-examine Guida about Guida's status as the target of a criminal investigation or Guida's prior use of cocaine. Guida was eventually charged and pleaded guilty to distribution of cocaine and possession of cocaine with intent to distribute.

The jury found Reeher not guilty on all counts, but convicted Casoni on one count of conspiracy, two counts of interstate travel in aid of racketeering, one count of bribery, and four counts of mail fraud. The jury acquitted Casoni on four other counts.

The district court denied Casoni's post-trial motions and sentenced him to five years of imprisonment, seven other concurrent five-year sentences and a $15,000.00 fine. Casoni then filed this timely appeal.

III.

In 1986, Casoni was the Senior Deputy for Contract Services at the Agency. The Agency is a state governmental organ that guarantees federally subsidized student loans.

When a borrower becomes delinquent in repaying a student loan, federal law requires the holder of the loan to make diligent collection efforts for 180 days. The collection efforts the holder must make include letters and phone calls to the borrower demanding payment. At the lender's request, an intermediate guarantor of the loan, in this case the Agency, must also assist the lender in its collection efforts from the 60th to the 120th days of the delinquency. The intermediate guarantor's efforts are called "preclaim assistance." If the holder properly and diligently makes these efforts to collect, but no payment is forthcoming within 180 days, the student loan is considered to be in default and ultimately the United States government's obligations as guarantor of last resort are triggered.

In the spring of 1986, Congress passed legislation that required additional collection efforts by the intermediate guarantors of delinquent student loans before a loan could be declared in default and so trigger the federal guarantee. Under the 1986 legislation, intermediate guarantors had to continue collection efforts from the 120th day of the delinquency until the 180th day. These later efforts are called "supplemental preclaims assistance." Congress allowed state agencies to contract these additional collection efforts out to private entities. Most of the cost of these supplemental preclaim efforts is underwritten by the federal government.

Gabler and Carlson saw an opportunity in the 1986 law. Gabler had previously worked for the Student Loan Division of the State of Illinois and Van Ru Credit Corporation, a company that lobbied strongly for the supplemental preclaims assistance legislation. Carlson was involved in the student loan industry as an investment banker specializing in bond issues for student loans. To pursue the opportunity they saw, Gabler, with Carlson and others, formed a company, GEM, to offer supplemental preclaims assistance to the state agencies that approve federally subsidized student loans.

Gabler knew Casoni and Reeher through Gabler's work in the student loan industry. In March of 1986, Casoni, Carlson, Gabler and Reeher met in Chicago to discuss the possibility of the Agency's contracting out some of its preclaim supplemental assistance work to GEM. Gabler told Guida that Reeher, during the Chicago meeting, told Gabler and Carlson that Reeher and Casoni were considering retiring from the Agency and seeking employment with a company like GEM.

Later that month, the four met in Harrisburg, Pennsylvania. Casoni helped Gabler make travel arrangements. During the Harrisburg meeting, Gabler openly worried about whether GEM's resources were adequate to handle the $1,500,000.00 supplemental preclaims assistance contract the Agency could give it. A solution was found. It involved billing the Agency up front for services not yet completely performed in order to increase GEM's working capital.

According to Gabler and Carlson, all four went to Reeher's house after dinner that night and discussed an arrangement between GEM and the Agency for preclaim assistance. Carlson testified that they discussed an ownership interest in GEM for Reeher and a job for Casoni with GEM after Casoni retired from the Agency. The possibility of Casoni's retirement as early as the next month was mentioned. No final understanding was reached at this meeting, but those present agreed the discussion about a contract with GEM should be kept secret.

Casoni then started to negotiate his own post-government employment contract with GEM. GEM's counsel, Semmelman, was at first skeptical about hiring Casoni. He objected on both legal and ethical grounds. Casoni hastened to Illinois to quell Semmelman's fears and explained to Semmelman the Agency's statutory framework. He assured Semmelman that there would be a full disclosure of the contract between the Agency and GEM and his own contract with GEM and that this would cure any legal problem because such arrangements were common in Pennsylvania and brought no opprobrium on the state officials who benefitted from them. Casoni also told Semmelman that he would play no role in the awarding of the contract. Semmelman was persuaded and withdrew his objections on condition of full disclosure.

A tentative agreement on Casoni's role with GEM in the not so distant future followed. GEM was to give Casoni a thirty-five percent commission on the "first contract" he acquired plus a base salary of $130,000.00 "per year." The salary would begin when Casoni went to work for GEM. The phrase "first contract" was a euphemism. It meant the GEM/Agency contract. Casoni hit on the term "first contract" instead of "Agency contract" to avoid public disclosure of his conflicting involvement with the Agency and GEM. The commission on the "first contract" was to be $450,000.00 in the first year of its performance and commissions on the "first contract" were to continue thereafter during that contract's life. Casoni later sought removal of the "first contract" language in favor of alternative compensation methods with a value equal to the discarded commission on the "first contract." He asked that the draft agreement that included the phrase "first contract" be destroyed and a consulting contract providing equivalent compensation with a more deeply disguised linkage to GEM's proposed contract with Casoni's Agency be substituted.

Apparently Semmelman did not, at first, see the disguised inconsistency between Casoni's promise to stay aloof from the GEM-Agency contract and the terms of Casoni's own employment contract with GEM. In any event, contrary to the promises that he made to Semmelman, Casoni did not step aside in the Agency's handling of the $1,500,000.00 contract between GEM and the Agency for supplemental preclaims assistance. Instead, he pushed other Agency personnel to get this work out to GEM more quickly. While he was still negotiating his own contract with GEM, Casoni drafted part of an equipment contract between GEM and the Agency. Even after he left the Agency, in 1987, Casoni continued to gather information for GEM from internal Agency reports.

The Agency returned an executed contract for supplemental preclaims assistance to GEM on September 17, 1986. The next day, Casoni mailed a signed employment contract to Gabler. Gabler objected to certain terms that Casoni had altered and additional negotiations ensued. Eventually, Casoni mailed a revised copy of the contract to GEM. In a cover letter accompanying the contract Casoni wrote: "Now we can concentrate on hitting the jackpot and having fun at the same time." Appellee's Supplemental Appendix (Supp. App.) at 51. Gabler executed the contract on November 4, 1986. However, Casoni did not leave the Agency until January 1, 1987. Casoni never disclosed his relationship with GEM or the GEM/Agency contract to the public or to any responsible state official, except perhaps Reeher, his boss and head of the Agency. If so, Reeher made no objections.

Between October, 1986 and December, 1987, the Agency paid GEM $1,766,962.22. During this time GEM paid Casoni $360,000.00 for working about fifty to seventy hours. This made Casoni GEM's highest paid employee, outearning even Gabler.

Casoni gave Reeher various gifts during his first year with GEM. They were petty in comparison to what GEM paid Casoni. He bought air conditioners for Reeher's home. He gave an insurance agent $2400.00 and asked him to write a $2400.00 check to Reeher.

The world of state government in Harrisburg is a small one. In November of 1987, perhaps inevitably, Casoni's relationship with GEM leaked out and became a subject of public knowledge among those on the Harrisburg scene. Gabler, concerned about the effect of these leaks, sought legal advice from a lawyer named Adams. Adams referred Gabler to Guida. Guida had once been the Chief Deputy Attorney General for Pennsylvania. He met with Gabler on November 6, 1987. Guida listened to Gabler's story and advised him that he could be subject to criminal liability. Guida explained Gabler's options to him. The options included a bid for immunity in return for damaging testimony against Casoni and Reeher. Guida thought testimony against Reeher would be particularly attractive to prosecutors because Reeher, unlike Casoni, had left no incriminating paper trail about his dealings with GEM. Gabler decided to seek immunity. Hoping to save himself from the specter of jail, Gabler authorized Guida to pass Gabler's information on to the authorities.

Guida did not delay. On the night of November 6, a Friday, he contacted Pennsylvania prosecutors and set up a meeting the next morning with representatives of both state and federal prosecutors. The representatives expressed interest in Gabler's proposed testimony against Reeher and Casoni as Guida generally described it but apparently asked for details in writing. Guida left the meeting and began to prepare a narrative proffer of Gabler's testimony. He delivered the proffer to federal authorities on Monday, November 9, 1987.

The proffer was based, in the main, on notes that Guida took during his meeting with Gabler on November 6. Guida described it as "a chronology of the events my client related to me concerning improprieties on the part of high ranking state officials." Appellant's Appendix (App.) at 61. The notes themselves were taken before Guida and Gabler discussed the possibility of immunity.

The proffer, after outlining the sequence of events that led to its delivery, went on to spell out Gabler's employment history and the concept of "supplemental preclaims assistance." It then tracked the creation of GEM and the contacts between Gabler, Carlson, Casoni and Reeher. This portion of the proffer included the following language:

Mr. Gabler said there was a stong [sic] inference given by Mr. Reeher that any business from [the Agency] would be directly connected to financial opportunities and employment which would flow from GEM, Inc., to Reeher and Casoni personally.

Id. at 64. This part of the proffer omitted a statement in Guida's notes that Gabler said "[Casoni] had nothing to do with it . . . . He wanted to distance himself." Id. at 78. The proffer set out Semmelman's opinions about the propriety of the arrangement with Casoni. It also stated that Casoni provided Semmelman with "purported copies of the PA Code and other Pennsylvania legislation" during Casoni's meeting with Semmelman. Id. at 67.

The rest of the proffer narrates Gabler's recollections about the negotiation of both the Casoni and Agency contracts, their terms and Casoni's work history with GEM. The proffer includes statements about the actual signing of the GEM/Agency contract:

On September 17, 1986, Kenneth Reeher returned to James Gabler a fully executed contract with the Commonwealth of Pennsylvania which purports to be signed by Mr. Reeher on August 13, 1986 said date being changed to August 11, 1986. The contract is approved for form and legality by John Killion, Esq., [Agency] legal counsel, and, in an updated approval section, signed by what now appears to be a stamped signature. The contract returned also has an original received stamp dated August 14, 1986 by the Office of Attorney General but the received stamp is not initialed, nor is the contract number which is part of the stamp filled in on the back of the contract.

Id. at 68-69.

The information Guida's notes and proffer contained about Casoni's dealings with GEM for his own benefit, while still acting in an official capacity with respect to the contract between his agency and GEM for supplemental pre-claims assistance, was independently confirmed, not just by Gabler's trial testimony, but also in the trial testimony of Carlson and Semmelman.

IV.

The sentence the district court imposed on Casoni is included in a final order. Thus, we have jurisdiction over Casoni's appeal by virtue of 28 U.S.C.A. § 1291 (West Supp. 1991). The United States District Court for the Middle District of Pennsylvania had jurisdiction over the charges against Casoni pursuant to 18 U.S.C.A. § 3231 (West 1985).

We review the district court's evidentiary rulings for abuse of discretion. United States v. Stewart, 806 F.2d 64, 68 (3d Cir. 1986). Its decision to limit Casoni's cross-examination of Guida is also reviewed for abuse of discretion. See United States v. Beros, 833 F.2d 455, 465 (3d Cir. 1987). Our scope of review is so restricted because "the admission or exclusion of evidence is a matter particularly suited to the broad discretion of the trial judge." In re Merritt Logan, Inc., 901 F.2d 349, 359 (3d Cir. 1990). That discretion, however, is not unlimited.

If we conclude that any of the evidentiary rulings are an abuse of discretion, then we must review that error to see if it is harmless. Harmless error is "any error, defect, irregularity or variance which does not affect substantial rights." Fed. R. Crim. P. 52(a). An error is harmless when, as we stated in United States v. Stevens, 935 F.2d 1380, 1406-07 (3d Cir. 1991):

We are . . . left with "a sure conviction that the error did not prejudice the defendant," United States v. Jannotti, 729 F.2d 213, 220 n.2 (3d Cir.), cert. denied, 469 U.S. 880 (1984), and can say that it is "highly probable" that the district court's errors did not contribute to [sic] jury's judgment of conviction. Government of Virgin Islands v. Toto, 529 F.2d 278, 284 (3d Cir. 1976).

With these standards in mind, we turn to the merits of Casoni's arguments.

V.

On the merits, we reject all of Casoni's contentions save one. We agree with Casoni's argument that the district court committed error when it allowed Gabler's notes and proffer to be admitted and then compounded the problem by letting the jury take them to the jury room and examine it during deliberations.

The problem is particularly acute with respect to the proffer. It was a highly incriminating narrative carefully constructed by skilled criminal defense counsel seeking immunity for his client in exchange for testimony against Casoni and a prominent state government official. It was especially incriminating with respect to Casoni. A skilled criminal advocate like Guida would be duty bound to shape and prepare the proffer in the manner he thought most likely to accomplish his goal of securing immunity for his client. Guida was frank about this. He said he recommended that Gabler offer to incriminate Casoni and Reeher because a prosecutor would be highly interested in convicting such high-ranking public officials of crimes involving corruption. Moreover, the proffer's presence in the jury room could have emphasized the prosecution's version of events over Casoni's testimonial denials. Nevertheless, this record contains so much other damning evidence against Casoni that we hold the jury's possession of Guida's notes and proffer during its deliberations was harmless error. We do so ...


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