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United States v. Levine

July 18, 2005


The opinion of the court was delivered by: Wilson, District Judge.


Pending is Defendant Scott Levine's Motion in Limine to Prohibit Reference to Certain Matters Before the Jury (Doc. No. 40). Plaintiff has responded (Doc. No. 41) and Defendant has replied (Doc. No. 45). Oral arguments have been heard during breaks in the trial.


The indictment initially had one hundred forty-four (144) specific charges against Defendant Scott Levine ("Defendant" or "Levine"). The Government has dismissed six of those charges. The remaining one hundred thirty-eight (138) charges are: one count alleging that Levine conspired with other persons to violate the laws of the United States in violation of 18 U.S.C. section 371 by committing certain offenses that are the subject of the subsequent counts. The indictment lists overt acts allegedly taken in furtherance of the conspiracy. The indictment further charges Levine with one hundred thirty-three (133) counts of gaining unauthorized access to a protected computer in violation of 18 U.S.C. section 1030; two counts of possessing more than fifteen access devices for fraudulent purposes in violation of 18 U.S.C. section 1029; one count of laundering money from the proceeds of unlawful activity in violation of 18 U.S.C. section 1957; and one count of attempting to corruptly alter, destroy, mutilate or conceal an object in order to obstruct justice in violation of 18 U.S.C. section 1512.

The Government wants to introduce information pertaining to a 1998 civil proceeding brought by the Securities and Exchange Commission ("SEC") against Defendant and his wife for the sale of unregistered securities in violation of Rule 10(b) of the Securities Act.*fn1 Defendant was the Chief Executive Officer of a company called Friendly Power Co., LLC. It was created to sell electricity in the deregulated California energy market. The SEC brought suit alleging that Defendant sold "partnership shares" in Friendly Power that were actually unregistered securities.

After a bench trial, the Florida District Court found, among other things, that Defendant had violated the securities laws using a "deliberate scheme through which [he] sought investors in such a way as to avoid the securities laws...[which] created a substantial risk that the investors would lose their investments."*fn2 The court ordered Defendant to pay a civil sanction of $2,175,000, and permanently enjoined him and his agents and employees from, among other things, directly or indirectly participating in the sale of securities.*fn3 The court described Defendant as "a recidivist securities and commodities law violator."*fn4

Defendant appealed to the Eleventh Circuit. Before oral arguments were heard in the circuit court, the entire matter was settled for $225,000, and the district court entered an order, dated December 22, 2000, accepting the parties' stipulations.*fn5

During oral argument, the Government has offered various theories supporting the admissibility of information regarding this former civil proceeding.


I don't recall that the Government included "admission" in support of its argument that reference to the earlier civil proceeding is appropriate; but I believe a brief reference to that SEC sanction proceeding is permissible under FRE 801, et al.

Irving Younger claimed that the drafters of the FRE and the Uniform Rules of Evidence ("URE") engaged in "intellectual foppery" when they removed admissions from the exceptions to the hearsay rule. Actually, this removal was, in part, a bow to Edmund Morgan and other evidence stalwarts who argued that admissions should not be treated as an exception, i.e., that they should stand alone as substantive evidence.*fn6 McCormick points out:

The decision to classify admissions as non-hearsay in the Federal Rules, rather than as a hearsay exception, was not based purely on theoretical grounds. Believing that no catalog of hearsay exceptions could possibly include all trustworthy hearsay evidence that might evolve, the Advisory Committee included provisions in general terms for hearsay not within one of the enumerated exceptions but having comparable guarantees of trustworthiness. The inclusion of admissions, which possess no objective guarantee of trustworthiness, as an exception would not have been consistent with this pattern.*fn7

It is hard for me to accept the assertion that admissions possess "no objective guarantee of trustworthiness." A party may not, in some instances, realize that an admission is an admission at the time he makes it; but usually he will, and it seems to me that this provides a considerable measure of trustworthiness. Be that as it may, however, FRE 801(d)(2) treats admissions as non-hearsay.

I recall a Younger lecture during which he defined an admission as "anything a party ever said which is contrary to a position the party is taking at the trial." This definition may be a tad rough ...

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