United States v. Scully

United States Court of Appeals for the Second Circuit · 2017 · Evidence

EvidenceAdvice-of-counsel defenseRule 403HearsayJury instructionsstate of mindnot hearsayRule 403

Facts

Scully was convicted on fraud and FDA-related charges arising from his importation and resale of foreign pharmaceutical products through Pharmalogical and Taranis. At trial, his only defense was that he lacked fraudulent intent because he relied in good faith on legal advice from attorneys Richard Gertler and Peter Tomao. The defense presented Gertler, but when Scully testified that Tomao had told him the business was completely legal, the district court struck that testimony and later excluded further testimony about Tomao's advice under Rule 403, emphasizing Tomao's availability to testify and the prejudice to the government. The jury convicted Scully on nearly all remaining counts.

Issue

Whether the district court abused its discretion by excluding Scully's testimony about legal advice he received from attorney Peter Tomao when that evidence was offered to show Scully's state of mind in support of an advice-of-counsel defense. Also, whether the district court's treatment of the advice-of-counsel defense improperly suggested that Scully bore the burden of establishing that defense.

Rule

A defendant's testimony about statements made by counsel is not hearsay when offered as circumstantial evidence of the defendant's state of mind rather than for the truth of the statements asserted. In a fraud case, advice of counsel is not an affirmative defense; it is evidence that may raise a reasonable doubt as to fraudulent intent, and the government always bears the burden of proving the required intent beyond a reasonable doubt. Once there is sufficient evidence that the defendant honestly sought legal advice, fully disclosed the material facts, and followed the advice in good faith, the issue goes to the jury, and Rule 403 does not permit exclusion merely because the court suspects the testimony is unreliable or uncorroborated.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In a federal securities-fraud trial in Chicago, defendant Nora Patel testifies that before sending investor emails, attorney Eli Mercer told her the emails were lawful. Patel offers the testimony only to show why she believed her conduct was legal, not to prove Mercer was correct.

How should the court rule on the government's hearsay objection?

Explanation. Testimony about what counsel said is not hearsay when offered to show the defendant's state of mind—why she believed her conduct was lawful—rather than to prove the truth of the legal advice. The majority held that such testimony is, by definition, not hearsay at all when used this way.