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This Tenth Circuit bank fraud ruling in US v. Marvin Iverson helps clarify the general trend in the circuit to treat banking documents and FDIC certificates as exemptable hearsay. In this case, the court found that a number of the hearsay exceptions allowed a key piece of evidence into the body of evidence.
The defendant was convicted by a jury after he entered into a scheme to defraud JPMorgan Chase and Big Horn Federal Savings under statute 18 U.S.C sec. 1344. Under that statute, victims must be "financial institutions" in order for charges to stick. The federal government offered the testimony of Agent Smith to offer testimony proving that both JPMorgan and Big Horn were insured by the Federal Deposit Insurance Corporation. The rational is that all FDIC insured entities are "financial institutions."
The defendant appealed on two theories: that the agent's testimony was inadmissible hearsay and that his testimony otherwise violated the best evidence rule.
Hearsay, of course, is defined as any out-of-court statement that is offered to prove the truth of the matter asserted therein. What is tricky is that not all out of court statements are hearsay, a distinction that still trips up litigators to this day.
In this case, the theory of levels of hearsay was implicated but the courts quickly dismissed this. The defendant wanted to argue that the agent's testimony was hearsay but it clearly was not because he was testifying within court. Thus, the only issues of hearsay that had to be dealt with were the pieces of evidence from which the agent drew is testimony.
First was the statement of an existing FDIC certificate used to "state" that Big Horn was federally insured. Agent Smith, in the course of his investigations into the defendant's scheme, saw the FDIC certificate that supported Big Horn's financial institution status. The defendant argued that the statements therein qualified as inadmissible hearsay because it was being introduced to prove that Big Horn was FDIC insured, a material revelation.
The Tenth Circuit disagreed that it should be excluded from the body of hearsay because of several theories, the most important being that it was exempted hearsay. Either it was a business-record or it was a public record, and since either one of those classifies as a hearsay exemption, the Big Horn FDIC certificate ought to be included in the body of evidence either way.
As for the website, it was much the same story. The federal agent witness testified that he found JPMorgan's FDIC number and concluded that JPMorgan Chase was federally insured. Although this is probably within the realm of hearsay, it is exempted hearsay because courts have repeatedly found that such government statements are part of public record and that their electronic format does nothing to negatively affect their legitimacy.
Taking into account the defense's claims of hearsay, the court found that the government had adequately supported the charges for indictment against the defendant.
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