United States District Court, D. Nebraska
MEMORANDUM AND ORDER
JOHN M. GERRARD, UNITED STATES DISTRICT JUDGE
This matter is before the Court on certain evidentiary objections made by the defendant, and the defendant's Fed. R. Crim. P. 29 motion. The Court will overrule the objections and admit the controverted evidence, and deny the defendant's Rule 29 motion.
At the outset of trial, the government identified for the defendant and the Court the seven individuals who, according to the government, were the defendant's co-conspirators. The defendant asked for "a blanket objection as to any statement elicited from the identified declarants, " and the Court granted the defendant a continuing objection to any hearsay statements tendered from those individuals.
Over the defendant's objections the Court has, pursuant to United States v. Bell, 573 F.2d 1040, 1044 (8th Cir. 1978), conditionally admitted evidence of the hearsay statements alleged to have been made by six of the alleged co-conspirators: James Laphen, Gene Witkowicz, Gale Furnas, Don Langford, Tom McCool, and David Frances. (The Court notes, for housekeeping purposes, that the government also proffered David Hartman as an alleged co-conspirator; however, the Court is not aware of any hearsay statements offered into evidence that Hartman is alleged to have made.)
The government has offered these statements into evidence as co-conspirator's statements made in the course and in furtherance of the conspiracy pursuant to Federal Rule of Evidence 801(d)(2)(E). Alternatively, the government contends that the statements are admissible as the statements of an agent or employee under Rule 801(d)(2)(D), or for purposes other than the truth of the matter asserted.
To be fully admitted as co-conspirator's statements, the government must show by a preponderance of the evidence (1) that a conspiracy existed; (2) that the defendant and the declarant were members of the conspiracy; and (3) that the declaration was made during the course and in furtherance of the conspiracy. Pursuant to the Bell procedure, the Court now finds on the record that the government has met its burden of showing a conspiracy with respect to Lundstrom and Laphen, Witkowicz, Furnas, and Langford. The Court finds on the record that the government has not met that burden with respect to McCool and Frances. However, the Court finds that the statements of McCool and Frances are admissible on alternate grounds: Rule 801(d)(2)(D).
In making the determination of whether a declarant is a co-conspirator, the Court may consider the contents of the statements, although the government must also produce independent evidence outside of the statements themselves to establish the existence of the conspiracy. United States v. Young, 753 F.3d 757, 771 (8th Cir. 2014).
The independent evidence here includes the testimony of Anthony Jardieu, who testified that the OTS had warned the defendant and other TierOne employees that their appraisal methodology was lacking, and that the bank's investments were unsound. Jardieu further testified about the Supervisory Agreement TierOne and OTS entered into, which required TierOne to improve its practices, maintain an eight-and-a-half percent core capital ratio, and report to the OTS about its progress. Jardieu testified that TierOne reported that it had improved practices and exceeded that minimum ratio.
Next, Sarah Spiker, a TierOne employee, testified that she had reported to Furnas and Langford that some of the REO property was overvalued on TierOne's books, and that, consequently, TierOne was unable to sell the property at its asking price. She testified that nonetheless, Langford directed her not to reduce the selling price, and discouraged her from ordering new appraisals. She testified that Langford was instructed to do so by Laphen, Furnas, and Lundstrom. Similarly, Brian Kamler, another TierOne employee, testified that on one occasion, another employee named Ron Cheffer ordered a new appraisal and was chastised by Furnas as a result.
Laphen testified that TierOne agreed to comply with certain levels of core and risk-based capital, and would establish new appraisal procedures. However, Laphen testified that he, Lundstrom, Furnas, Langford, and others agreed to delay certain appraisals in order to delay recognition of losses, so that TierOne could maintain the required capital ratios. Additionally, Langford testified that Furnas informed him of the plan to delay appraisals by November of 2008 at the latest. He testified that he delayed obtaining these appraisals as a result, and that Furnas told him that Furnas was acting at the direction of Laphen and Lundstrom.
Laphen and others also testified that at a May 21, 2009 board meeting, Furnas and Langford presented analysis showing that TierOne needed, in the best-case scenario, an additional $36 million in reserves to meet its required ratio. On the same day, TierOne issued a press release, signed by Lundstrom, that said TierOne met or exceeded its core capital ratio requirements. Judy Klinkman, an administrative assistant, testified that Lundstrom instructed her not to include information about Furnas' and Langford's presentation in the board meeting minutes sent to OTS pursuant to the Supervisory Agreement.
According to Laphen, at a meeting in July or August of 2009, Lundstrom said that the bank could not afford its expected losses. Afterward, Laphen testified that Witkowicz told him he had come up with a plan to reduce the reported losses by altering TierOne's financial statements. Thus, according to Laphen, TierOne's financial statements, certified by Witkowicz and Lundstrom, were untruthful. Those statements were submitted to OTS in late August of 2009. Additionally, according to FBI Special Agent Maseth's testimony, TierOne issued a press release on September 4, 2009 emphasizing that it continued to meet its required core capital ratio.
Taken together, the preponderance of the evidence shows the existence of a conspiracy to defraud, and that the defendant, Laphen, Witkowicz, Furnas, and Langford were members of the conspiracy. The Court also finds that each of the hearsay statements offered into evidence, from each of those declarants, was made during the course of and in furtherance of the conspiracy. In particular, Langford's testimony establishes that the conspiracy existed as far back as September of 2008, and Langford and Laphen's testimony establishes that it continued throughout 2009, and early 2010. That testimony is corroborated by the testimony of Spiker and Kamler, who testified that various of the alleged co-conspirators had ordered them to delay new appraisals.
Based on that evidence, the Court finds that the conspiracy existed between at least September of 2008 and into early 2010, encompassing the statements at issue. The Court further finds that the statements were made in furtherance of the conspiracy. Most of the statements directly furthered the ...