Evidence — hearsay

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Evidence — hearsay

In a prosecution for fraud, it was error to exclude the deposition testimony of a deceased co-defendant before the CFTC.

“[T]he CFTC and the Justice Department here had similar motives to develop Sarvey’s deposition testimony. See United States v. McClellan, 868 F.2d 210, 214-15 (7th Cir. 1989). Both were investigating the same underlying conduct with an eye to taking enforcement action, and so they shared the same motive to find out what went on. In fact, aside from the Department’s need to prove the jurisdictional fact of the use of the wires, the agency and the Department alleged and needed to prove the same allegations, as a comparison of the CFTC’s civil complaint and the indictment demonstrates.

Furthermore, although the CFTC proceeding was civil in nature and the present prosecution criminal, the deterrent effect of a large civil penalty (like the one that the court ultimately imposed against Sklena) can be similar to that of a criminal sentence. See, e.g., Hudson v. United States, 522 U.S. 93, 105 (1997); Richard A. Posner, An Economic Theory of Criminal Law, 85 COLUM. L. REV. 1193, 1204-05 (1985). We do not mean to suggest that Sklena’s civil penalty was so severe that it was in reality a criminal sanction, see Hudson, 522 U.S. at 104; rather,
we note only that deterrence is often a goal of both civil and criminal penalties. In this case, in order to enforce the laws regulating commodities markets, the CFTC and the United States (acting through the Department) had essentially the same incentive to develop Sarvey’s factual testimony about the events of April 2, 2004. We therefore conclude that Sarvey’s deposition was admissible under Federal Rule of Evidence 804(b)(1).”

Reversed and Remanded.

11-2589 U.S. v. Sklena

Appeal from the United States District Court for the Northern District of Illinois, Der-Yeghiayan, J., Wood, J.

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