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Showing posts from December, 2007

Third Circuit widens circuit split on guilt-assuming hypotheticals; reaffirms breadth of Rule 404(b) in fraud cases

In affirming a mail fraud conviction, the Third Circuit has held in a 2-1 decision that guilt-assuming hypothetical questions may sometimes be asked of defense character witnesses, widening an existing circuit split on this issue. The Court also approved the admission of a substantial amount of other-bad-acts evidence to prove intent, thereby reaffirming the broad reach of Rule 404(b) in fraud cases.

The case, United States v. Kellogg, No. 05-1893, involved allegations that the owner of a water testing laboratory defrauded his customers by reporting to them that certain analyses were performed using one particular EPA methodology when, in fact, a different EPA methodology had been used. Intent to defraud was the principal issue at trial, with the defendant maintaining that any reporting errors as to the methodology used were accidental. Substantial evidence supported the defendant's claim, including a lack of motive arising from the near-identical scope and cost of the two methodol…

3d Circuit reverses probationary sentences in fraud case

In United States v. Ali, (3d Cir. Nov. 27, 2007), the Third Circuit reversed probationary sentences in a fraud case, in which defendants Faridah Ali and Lakiha Spicer obtained federal money allocated to a community college to fund an adult education program. The Third Circuit held that the district court erred in its initial Guidelines calculation, that it relied on inappropriate factors for the downward departures, and that the resulting sentences were unreasonable, and thus vacated the sentences and remanded for resentencing.

The Third Circuit determined that the district court erred under step one of the sentencing process, the Guidelines calculation, because it rejected a preponderance standard for the loss calculation in favor of a reasonable doubt standard in Ali’s case and, further, failed to specify an estimate of the loss amount. The district court ultimately assessed a 15-21 month Guideline range (level 14, category I) for Ali, whereas Probation had calculated a 41-51 month r…