Opinion
Cr. No. 09-137 (WHW).
September 22, 2010
ORDER
For the reasons set forth in the accompanying Opinion,
It is, on this 21st day of September, 2010:
ORDERED that Plaintiff's Motion to use Defendant's proffer statements at trial is GRANTED.
OPINION
Trial in this criminal action alleging conspiracy, mail fraud, wire fraud, bank fraud, money laundering and false statements is scheduled to begin on Tuesday, October 28, 2010. The government has moved in limine for a ruling regarding the admissibility of statements from the defendant's proffer sessions that are the basis for the false and fraudulent statements charges in its case-in-chief and, should the defendant put forth any evidence asserting his factual innocence, inculpatory statements from the proffer sessions. Pursuant to Rule 78.1 of the Local Civil Rules, applicable to criminal cases by L.Cr.R. 1.1, the Court decides the motion without oral argument. The Court finds that Moro has consented to certain uses of his proffer statements by the government. The government's motion is granted.
BACKGROUND
Defendant Moro submitted lease financing applications, with supporting documentation, to banks and lending companies. (Pl.'s Letter-Br. 2). These lenders were allegedly told that the requested money would be used to finance the acquisition of new digital broadcasting equipment necessary for the expansion of Inchon LLC, defendant's company. (Id.) The lenders then entered into contracts with Moro whereby the bank or lending company would purchase the equipment from Smart Function LLC, a vendor of digital broadcasting equipment, and then lease the equipment to Moro's companies. (Id.) The government contends that the paperwork submitted in connection with these agreements was fraudulent. The submissions allegedly misrepresented the financial information of an Inchon LLC employee who was to act as a guarantor. The submissions allegedly misrepresented the employee's ownership interest in the company, his income, and his net worth. (Id.) Moro also allegedly conspired with Smart Function LLC. Moro provided Smart Function LLC with hardware to assemble servers. This assembly cost significantly less than the price of new servers provided to the banks and lending companies. (Id.) The difference was then pocketed by Moro and Smart Function LLC.
On November 29, 2007, Moro and his attorney met with representatives of the United States Attorney's Office, the Federal Bureau of Investigation ("FBI") and Internal Revenue Service, Criminal Investigations ("IRS"). A proffer agreement was entered into between the government and Moro at this session. (Pl.'s Letter-Br., Ex. 1). A few months later, on February 22, 2008, the defendant again met with individuals from the United States Attorney's Office, FBI and IRS. This interview was also conducted subject to a proffer agreement. (Pl.'s Letter-Br., Ex. 3). Each proffer agreement was signed by both the defendant and his attorney.
The proffer agreements are substantively identical, and state in pertinent part:
2. The government may use any statement made or information provided by your client, or on your client's behalf, in a prosecution for false statements, perjury, or obstruction of justice, premised on statements or actions during or subsequent to the interview . . .
4. The government may use your client's statements and any information provided by your client to cross-examine your client and to rebut any evidence or arguments offered on your client's behalf.
(Pl.'s Letter-Br., Ex. 1, Pl.'s Letter-Br., Ex. 3).
After plea negotiations dissolved, Moro was indicted on February 27, 2009 in a 34 count indictment for mail fraud, wire fraud, bank fraud, money laundering and making fraudulent statements. (Dkt. No. 18.) The allegedly fraudulent statements were made by Moro during his proffer sessions with the government.
STANDARD OF REVIEW
Although statements made during proffer sessions are generally inadmissible, Fed.R.Evid. 410; see also Fed.R.Crim.P. 11(f), this protection may be waived by the defendant. United States v. Mezzanatto, 513 U.S. 196, 210 (1995); United States v. Hardwick, 544 F.3d 565, 569-70 (3d Cir. 2008). Determining whether a defendant has waived this protection requires an examination of his proffer agreement. Proffer agreements are contracts and their terms are governed by contract principles. United States v. Williams, 510 F.3d 416, 421-22 (3d Cir. 2007); United States v. Barrow, 400 F.3d 109, 117 (2d Cir. 2005). As such, the proffer agreement's "terms must be read to give effect to the parties' intent." Hardwick, 544 F.3d at 570.
DISCUSSION
Under Third Circuit law, a defendant may waive the protections of Fed.R.Evid. 410, and his statements made during the course of plea negotiations may be used at trial by his adversary as long as there is no "affirmative indication that the agreement [to waive] was entered into unknowingly or involuntarily." Hardwick, 544 F.3d at 570-71 (quoting Mezzanatto, 513 U.S. at 210). There is no indication that Moro's waiver of this protection was anything but knowing and voluntary. He was accompanied to each proffer session by his attorney and both Moro and his attorney noted that they read and fully understood the conditions of the proffer agreement. (Pl.'s Letter-Br., Ex. 1, Pl.'s Letter-Br., Ex. 3).
Moro's proffer agreements allow the government to introduce the statements he made that are the basis for a prosecution for "false statements, perjury, or obstruction of justice." (Pl.'s Letter-Br., Ex. 1, Pl.'s Letter-Br., Ex. 3). Moro is charged with making false statements during his proffer sessions in violation of 18 U.S.C. § 1001. This is exactly the type of prosecution contemplated by the proffer agreement's waiver. It follows that the government may use such allegedly fraudulent statements from Moro's proffer session in its case-in-chief. This evidence is admissible.
In addition to allowing the government to use statements in a prosecution for false statements, the terms of Moro's proffer agreements allow the government to "cross examine [him] and to rebut any evidence or arguments offered on [his] behalf." (Pl.'s Letter-Br., Ex. 1, Pl.'s Letter-Br., Ex. 3). This is a waiver of Federal Rule of Evidence 410's protections. Furthermore, rebut has a broad meaning which includes much more than direct contradiction. Barrow, 400 F.3d at 120. Rebuttal evidence also includes that which "fairly counters and casts doubt on the truthfulness of factual assertions advanced, whether directly or implicitly, by an adversary." Id. at 121. Indeed, rebuttal has been found to be appropriate when defense counsel implied or insinuated facts contrary to proffer statements. Hardwick, 544 F.3d at 570-71; United States v. Shaw, 354 Fed.Appx. 439, 443 (2d Cir. 2009). This is true whether or not the defendant testifies.United States v. Velez, 354 F.3d 190, 194-95 (2d Cir. 2004);United States v. Hodgeland, 2006 WL 2934828, *3 (E.D.Pa. Oct. 13, 2006). Given the proffer agreement's waiver, if Moro contradicts his prior proffer statements, either through his testimony or through arguments put forth by his counsel, the government may use statements from his proffer sessions in rebuttal.
CONCLUSION
Defendant Moro's proffer statements that are the basis for the false and fraudulent statements charges are admissible in the government's case-in-chief. Any other statements Moro made during the proffer sessions will be admissible to rebut any assertions by Moro of his factual innocence.