Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States v. Lundstrom

United States District Court, D. Nebraska

November 2, 2015




The defendant has proffered into evidence testimony taken by the SEC from Gale Furnas and Gene Witkowicz in 2010 and 2011, respectively. The evidence is definitionally hearsay. The Court was provided by the defendant with complete transcripts of both interviews pursuant to its Order of October 15, 2015 (filing 108) and the Court has reviewed those transcripts thoroughly. Both parties were also given an opportunity to provide any other evidence bearing on the admissibility of the testimony, and no other evidence has been provided.

It is the defendant's burden, as the proponent of the evidence, to establish that an exception to the hearsay rule applies. See United States v. Shields, 497 F.3d 789, 793 (8th Cir. 2007).


The defendant primarily contends that the evidence is admissible pursuant to Fed.R.Evid. 804(b)(1), as the former testimony of an unavailable witness. There is no dispute that both witnesses are unavailable to testify, and the Court so finds: Furnas is deceased and Witkowicz is medically unable to travel or testify. There is also no dispute that the testimony was given at the SEC's equivalent of a "lawful deposition": each witness was placed under oath and examined by SEC counsel while represented by counsel of his own.

But Rule 804(b)(1)(B) also requires that the evidence be offered "against a party who had . . . an opportunity and similar motive to develop it by direct, cross-, or redirect examination." In other words, admitting the testimony under Rule 804(b)(1)(B) would require the Court to find that the SEC and United States Department of Justice are the same party for these purposes, and that at the time the testimony was taken, the SEC had the same motive and opportunity to develop the testimony as the United States Attorney has now. The Court finds, however, that the defendant has failed to carry his burden on both points.


To begin with, the Court finds that the SEC and United States Attorney are not the "same party" for these purposes. The Court acknowledges the Seventh Circuit's decision in United States v. Sklena, cited by the defendant, in which the Court of Appeals found that the Commodity Futures Trading Commission and Justice Department were the same party for purposes of Rule 804(b)(1). 692 F.3d 725 (7th Cir. 2012). The Court finds that case to be distinguishable.

The SEC, unlike the CFTC, does not have the same coordinated relationship with the DOJ. The defendant has not directed the Court to any authority comparable to the statute relied upon in Sklena that directed the CFTC to report its litigation activities to the DOJ. In fact, Furnas' testimony contains a telling exchange in which Furnas refers to a subpoena he had received from the Department of Justice, and the SEC's counsel instructs Furnas not to tell him about the subpoena.

The rationale for the "same party" requirement is that "it is generally unfair to impose upon the party against whom the hearsay evidence is being offered responsibility for the manner in which the witness was previously handled by another party." Fed.R.Evid. 804 advisory committee's note. That rationale implies that parties are not the same, for these purposes, if the party against whom the evidence is offered had no such responsibility. The Court finds that to be the case here.


For related reasons, the Court finds that the DOJ does not have an opportunity and similar motive to develop the testimony as the SEC did. The Court has considered several cases presenting comparable issues arising under Rule 804(b)(1). See, United States v. Whitman, 555 F.App'x 98, 103 (2d Cir. 2014); SEC v. Jasper, 678 F.3d 1116, 1127-29 (9th Cir. 2012); United States v. Sklena, 692 F.3d 725, 731-33 (7th Cir. 2012); United States v. Kennard, 472 F.3d 851, 855-56 (11th Cir. 2006); United States v. Martoma, No. 12-cr-973, 2014 WL 5361977, at *4 (S.D.N.Y. Jan. 8, 2014). Those cases have generally distinguished between an examination that was undertaken for investigatory purpose-often in the early stages of an investigation-and an examination that was adversarial in nature.

The Court, having carefully examined the SEC transcripts, finds that the questioning was investigatory. While some of the questions were pointed at times, it is evident to the Court that the intent of the questioning was to develop information, not challenge the witness-in other words, the SEC was finding out how the witnesses would answer the questions they were asked, but the SEC lawyers did very little to press the witnesses and challenge the answers that were given. Nothing in the SEC testimony resembles the sort of questioning that would be expected in an adversarial setting at trial.

And perhaps most importantly, even if the SEC was questioning the witnesses with an eye toward litigation, that litigation was materially different from the charges that the defendant now faces. The Court acknowledges that the SEC ultimately did pursue a civil enforcement action against the defendant based on violations of securities laws, case no. 8:12-CV-343; Judge Bataillon entered a consent judgment against the defendant and imposed a substantial civil penalty of just over half a million dollars. And those violations resemble the securities fraud charges that are brought in this case. But the defendant is not just charged with securities fraud. He is also charged with wire fraud affecting a financial institution, and making false entries in a bank's books, and conspiring to commit each of those offenses- none of which are ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.