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United States v. Mitan

October 30, 2009

UNITED STATES OF AMERICA
v.
KENNETH MITAN, FRANK MITAN



The opinion of the court was delivered by: Baylson, J.

MEMORANDUM RE: ADMISSIBILITY OF EVIDENCE

The Court has ruled on several evidentiary issues at the trial, and this Memorandum will explain the basis for these rulings. The rulings are as follows:

1. The testimony of Kenneth Mitan and Frank Mitan at an arbitration proceeding brought by the Williams Fund in relation to Engel Corporation is admissible against the declarant, and also as statements made during and in furtherance of the conspiracy, and admissible against both. Therefore, Defendants' Motions to Exclude Statements of Co-Defendants (Doc. Nos. 361, 363, 400, 414) are denied.

2. The government's Motion to Admit Evidence of IRS Tax Records (Doc. No. 380) was granted to allow testimony that no tax returns were filed for the Williams Fund. The government may argue this fact may show that it was a "shell" company, but the government may not argue that either Defendant has any criminal liability relating to this failure to file tax returns.

3. Concerning evidence that Defendants used litigation or the threat of litigation, the Court has admitted this evidence, and having done so, the Court rules that the government may mention this evidence in its closing argument, but may not refer to it as a "manner or means" because it is not alleged in the indictment.

I. Admission of Statements from Arbitration Proceedings

A. Factual and Procedural Background, and Proposed Evidence

In 2006, a dispute between the Williams Fund Private Equity Group and David Engel resulted in arbitration proceedings between the parties. On August 14 and 15, 2006, various witnesses-including Defendants Kenneth Mitan ("Kenneth") and Frank Mitan ("Frank")-gave testimony in hearings related to these proceedings. The government now seeks to introduce portions of the arbitration testimony given by both Defendants as evidence in the present case. Defendants' objections form the basis of the instant dispute.

Pursuant to the Court's Order of August 28, 2009 (Doc. No. 284), the government filed its Exhibit and Witness Disclosures on September 16, 2009 (Doc. No. 317). On page 3, in the section titled "Engel Corporation," the government noted that Government Exhibit 44 ("GX 44") encompassed "Transcripts of Arbitration, August 14-15 2006 (USA009753-USA010038)."

On September 28, 2009, Kenneth filed a Motion to Exclude Co-Defendant's Statements (Doc. No. 361). Also on September 28, 2009, Kenneth filed a Supplemental Memorandum in Support of his Motion to Exclude Statements of Co-Defendants (Doc. No. 363) ("Supp. Memo. in Support of Mot. to Exclude"), in which he argued for the exclusion of the statements made by both himself and Frank at the arbitration hearings. Specifically, Kenneth argued that the nearly 300 pages of arbitrationtestimony the government sought to introduce at trial included testimony about subjects excluded from this case and beyond the scope of the indictment, included hearsay questions quoting statements of others, would serve to confuse the jury, introduced issues and transactions not admitted as 404(b) evidence that are highly prejudicial, and would be unduly prejudicial, thereby failing Federal Rule of Evidence 403's balancing test. (Supp. Memo. in Support of Mot. to Exclude 1.) Thus, Kenneth requested that the arbitration testimony be excluded, or, at a minimum, the government narrow its proposed testimony and give notice of proposed excerpts to Defendants. (Supp. Memo. in Support of Mot. to Exclude 1, 2.)

Additionally, Kenneth argued that introducing Frank's arbitration testimony against him would violate Kenneth's Sixth Amendment right to confront witnesses against him, as explained in Crawford v. Washington, 541 U.S. 36 (2004). (Supp. Memo. in Support of Mot. to Exclude 1-2.)

The government responded in a letter to the Court dated October 2, 2009, in which it stated its intent to introduce sworn testimony made by each of Defendants at the August 14-15, 2006 arbitration hearings between the Williams Fund and David Engel. The government argued that its evidence would show that Defendants Kenneth and Frank Mitan "repeatedly attempted to further the conspiracy by using actual and threatened litigation to intimidate their victims, take their assets, and obscure the fraudulent nature of the Mitan scheme." Thus, where the evidence would show that the arbitration was used to intimidate and further victimize David Engel as part of the conspiracy, the government sought to introduce statements made at the arbitration by both Frank and Kenneth against each other as co-conspirator statements under Federal Rule of Evidence 801(d)(2)(E) ("Rule 801(d)(2)(E)"), and against each declarant-Defendant as a party admission under Federal Rule of Evidence 801(d)(2)(A) ("Rule 801(d)(2)(A)").

This issue was discussed at a hearing before the Court on October 7, 2009, and the Court requested that the parties brief the issue further. Defendant Kenneth Mitan, joined by Defendant Frank Mitan, responded on October 12, 2009 in his Memorandum Requested by the Court in Support (Doc. No. 400) ("Def.'s Memo in Support"). The government responded in a letter to the Court dated October 9, 2009. The government limited its proposed evidence from the arbitration hearing to about 30 pages. The parties' contentions are summarized below.

1. Defendant Kenneth Mitan's Contentions

Defendant Kenneth Mitan argues that the arbitration testimony is not admissible for several reasons. First, Kenneth argues that the testimony is hearsay because the statements were not made in the course and in furtherance of the charged conspiracy, and therefore, they fail to qualify as co-conspirator statements under Rule 801(d)(2)(E). (Def.'s Memo in Support 1.) Kenneth further argues that the indictment fails to allege the use of actual and threatened litigation to intimidate victims, take victims' assets, and obscure the fraudulent nature of the Mitans' purported scheme, and that the government now improperly attempts to "bootstrap" this evidence of previous litigation into the indictment's conspiracy charges. (Def.'s Memo in Support 1-2.) Thus, Kenneth argues that the statements are inadmissible hearsay and should be excluded. (Def.'s Memo in Support 2.)

Second, Kenneth argues that admitting the arbitration testimony of Frank Mitan against Kenneth (and vice versa) would violate each Defendant's Sixth Amendment right to confront witnesses against him. (Def.'s Memo in Support 2.) Kenneth argues that neither Defendant was present at the arbitration testimony of the other, and that neither was in a position to cross-examine the other to protect their individual interests. (Def.'s Memo in Support 2.) Thus, Kenneth argues that because the arbitration testimony is "testimonial" in nature, the Supreme Court's decision in Crawford v. Washington, 541 U.S. 36 (2004), bars its admission. (Def.'s Memo in Support 2-3.)

Third, Kenneth argues that the Court's introduction of the arbitration statements only against the individual declarant would violate the rule of Bruton v. United States, 391 U.S. 123 (1968), and thus would violate each co-Defendant's Sixth Amendment rights. (Def.'s Memo in Support 3.) Specifically, Kenneth argues that because the statements made by one co-Defendant necessarily implicate the other co-Defendant, Bruton is violated if the statements come in against the declarant, regardless of any limiting instruction to be given to the jury. (Def.'s Memo in Support 4.) Kenneth argues that if the statements are admitted, the trials must be severed. (Def.'s Memo in Support 3, 4.)

Fourth, Kenneth argues that the specific portions of arbitration testimony are so out of context that they are inherently unfair, necessitating exclusion ...


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