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United States v. Majeed

August 4, 2009


The opinion of the court was delivered by: Legrome D. Davis, J.


I. Motion to Exclude Tax Evidence and Evidence of Straw Purchase

A. Background

Defendant Majeed moves to exclude the Government's proposed evidence showing that he did not file tax returns for the years 2001-2004 and 2006 and that he filed a tax return in 2005 reporting $53,452 of rental income. Majeed also seeks to exclude the Government's proposed evidence that, on June 30, 2006, Majeed purchased a home in Delaware for $468,190 in cash. Majeed argues that the evidence should be excluded under Federal Rule of Evidence 404(b), which limits the admission of relevant evidence that relates to other charged or uncharged crimes, wrongs, or acts. He also argues that the evidence is excludable under Federal Rule of Evidence 403 because its probative value is outweighed by the danger of unfair prejudice.

B. Discussion

Under governing precedent, "[i]n order to be admissible under [Federal Rule of Evidence] 404(b), the evidence of other acts must: '(1) have a proper evidentiary purpose, (2) be relevant under Rule 402, (3) satisfy Rule 403 (i.e., not be substantially more prejudicial than probative), and (4) be accompanied by a limiting instruction, when requested pursuant to Federal Rule of Evidence 105, that instructs the jury not to use the evidence for an improper purpose.'" United States v. Kemp, 500 F.3d 257, 296 (3d Cir. 2007) (internal citations omitted). Below we will address each of these issues as they pertain to the evidence related to the tax returns and the alleged straw purchase.

To show a proper evidentiary purpose, the Government must "'clearly articulate how that evidence fits into a chain of logical inferences' without adverting to a mere propensity to commit crime now based on the commission of crime then." Id. (quoting United States v. Mastrangelo, 172 F.3d 288, 295 (3d Cir. 1999)). Here the Government argues that the tax return evidence has a proper purpose because "[e]vidence that the defendants sustained themselves without a legitimate source of income is clearly relevant to" help establish that the "communications and concert of action" between the defendants were drug-related. (Gov't's Mot. 11.) The Third Circuit has held that "[i]n a narcotics prosecution, it is well established that the government may introduce evidence of cash purchases coupled with tax evidence tending to show that a defendant had no legitimate source of cash." United States v. Chandler, 326 F.3d 210, 215 (3d Cir. 2003) (internal citations and quotation marks omitted). Therefore, "to the extent that a defendant's failure to file tax returns evidences a lack of legitimate income, that evidence, in combination with evidence that the defendant possesses a significant sum of cash, generally is admissible in support of the government's contention that the defendant obtained the cash through the distribution of narcotics." Id.

In the present case, in order to support its chain of logical inferences regarding the purpose of the tax evidence, the Government must establish that the amount of money in Defendant's possession or the value of his purchases is inconsistent with his apparent lack of income. Here, the Government's only mention of a purchase that they will seek to introduce for this purpose is the alleged purchase by Majeed of a Delaware home for $468,190 in cash on June 30, 2006, for which he allegedly used his girlfriend as a straw purchaser. (Gov't's Mot. 6 n.2.) Therefore, the tax evidence has a proper purpose only when coupled with the evidence of the cash purchase, which, as evidence of unexplained wealth, has a proper purpose to show possible involvement in illegal dealings. See United States v. Cooley, 131 Fed. App'x 881, 883 (3d Cir. 2005) (finding that "[a] defendant's access to unexplained or unaccounted for wealth is strong circumstantial evidence of involvement in illegal activity"); see also United States v. Newton, 891 F.2d 944, 948 (1st Cir. 1989) (holding that "the possession of large amounts of unexplained cash in connection with evidence of narcotics trafficking is generally relevant and admissible"). Under Federal Rule of Evidence 104(b):

When the relevancy of evidence depends upon the fulfillment of a condition of fact, the court shall admit it upon, or subject to, the introduction of evidence sufficient to support a finding of the fulfillment of the condition.

Fed. R. Evid. 104(b). The Supreme Court in Huddleston v. Unites States explained that, to determine whether conditionally relevant evidence can be admitted, "[t]he court simply examines all evidence in the case and decides whether the jury could reasonably find the conditional fact . . . by a preponderance of the evidence." 485 U.S. 681, 690 (U.S. 1988). Therefore, because the tax evidence is conditionally relevant and depends on the Government establishing that Majeed funded the straw purchase, the Government may only introduce the tax evidence at trial if, upon presentation of the straw purchase evidence, this Court concludes that a jury could reasonably find by a preponderance of the evidence that Majeed provided the funds with which his girlfriend purchased the home.

The next requirement for the evidence to be admissible under Rule 404(b) is that the evidence be relevant under Rule 402. Rule 402 states simply:

All relevant evidence is admissible, except as otherwise provided by the Constitution of the United States, by Act of Congress, by these rules, or by other rules prescribed by the Supreme Court pursuant to statutory authority. Evidence which is not relevant is not admissible.

Fed. R. Evid. 402(b). As we explained above, it is well recognized in this circuit that evidence of failure to file tax returns, when combined with evidence of unexplained wealth, is relevant to show that a defendant had no legitimate source of income. See Chandler, 326 F.3d at 215. In this case the evidence is clearly relevant because the fact that Majeed was allegedly able to purchase a home while apparently unemployed and having little reported income makes it more ...

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