Summary of a Recent
Judicial Development in
Finance and Credit

Applications and Bribery
Reversed by the Fifth Circuit

Harrison M. Pittman
Staff Attorney

The United States Court of Appeals for the Fifth Circuit has reversed a jury verdict entered by the United States District Court for the Southern District of Mississippi which found that a Mississippi farmer was guilty of bribery and knowingly making false statements on farm loan applications. United States v. Hart, No. 01-60304, 2002 WL 1285810 (5th Cir. 2002). The Fifth Circuit ruled that the district court abused its discretion when it allowed a government witness to testify about the debts the farmer allegedly should have reported on his loan applications. Id. The Fifth Circuit also ruled that without the government witness's testimony, the remaining evidence was insufficient to prove the farmer's guilt beyond a reasonable doubt. Id. The district court's conviction was vacated, and the matter was remanded for a new trial. Id.

Rodalton Hart lived and farmed in Holmes County, Mississippi for most of his life. Id. His brothers, Larry, Chester, and Cleveland were also involved in farming. Id. Rodalton and his brothers formed five farm partnerships in 1993, so that they could manage their farming operations more efficiently. Id. The partnerships required financial assistance in 1997 and 1998. Id. The Hart brothers submitted applications to the Farm Service Agency ("FSA") for financial assistance in each of these years. Id.

The brothers worked with their local FSA agent, Orlando Kilcrease, for several months to prepare these loan applications. Id. The applications required disclosure of the partnerships' debts, liabilities, expenses and income projections. Id. Rodalton signed the applications on behalf of the partnerships and submitted them to the FSA office. Id.

Kilcrease used the information provided on the applications to create a "Farm and Home Plan" ("FHP") for each of the partnerships. Id. at *2. The FHP is "a computer generated ‘projection that accurately reflects the borrowers' plan of operation for the production or market cycle.'" Id. at *2 (quoting 7 C.F.R. § 1924.54). The FHP's basic purpose is to show that the farmer applying for the FSA loan expects a positive cash flow for the projected crop year. Id. (citing 7 C.F.R. § 1924.56). Rodalton and his brothers signed the FHPs and submitted them to the FSA. Id.

The government subsequently began investigating the Hart brothers' farm partnerships. Id. The investigation resulted in a 1999 grand jury indictment, in which Rodalton, Cleveland, and Larry were charged with "engaging in a conspiracy to defraud the government and making false statements to the government in the 1997 and 1998 FHPs." Id. In addition, Cleveland was charged with disposing of property which had been pledged to the FSA, and Rodalton was charged with bribing a FSA official. Id.

At trial, the jury found Cleveland, Larry, and Rodalton not guilty of conspiracy to defraud the government. Id. Larry and Cleveland were also found not guilty on all other charges that had been brought against them. Id. However, Rodalton was found guilty of "knowingly making material false statements to the FSA in 1997 and 1998 for the purpose of influencing the grant of loans, in violation of [18 U.S.C.] § 1014, and of corruptly giving $1,000.00 to a public official with the intent to influence the official to commit fraud on the United States–in the form of approving operating loans to the Hart brothers' partnerships–in violation of [18 U.S.C.] § 201(b)(1)(B)." Id.

Rodalton argued that the district court abused its discretion when it permitted a government witness to testify as a summary witness, and when it allowed the witness to present several FHPs which the witness personally prepared. Id. at *3. The Federal Rule of Evidence governing the use of in court summaries states in relevant part, "The contents of voluminous writings, recordings, or photographs which cannot conveniently be examined in court may be presented in the form of a chart, summary, or calculation." Id. (quoting Fed. R. EvId. 1006). A witness providing this type of information is referred to as a "summary witness."

Because charts and similar materials can have a significant influence on a jury, the Fifth Circuit has repeatedly cautioned that trial judges "‘must carefully handle their preparation and use.'" Id. (quoting United States v. Jennings, 724 F.2d 436, 441 (5th Cir. 1984). The Fifth Circuit also stated that use of such evidence must be "‘support[ed by] evidence [that] has been presented previously to the jury' to establish any assumptions reflected in the summary. Id. (quoting Jennings, 724 F.2d at 442).

The government witness introduced "revised FHPs that she had [personally] prepared, and testimony about the revised Plans." Id. The government contended that this testimony was proper because it merely illustrated what the result would have been if all the debts included by the government witness had been included on the FHPs submitted by Rodalton and his brothers. Id.

Rodalton argued that the government did not present any evidence prior to the witness's testimony which demonstrated or established that the debts the government witness included in her FHP summaries "should actually have been reported in the categories she selected, should even have been reported in the five Farm and Home Plans at all, or even the proper amounts of such debts that should or should not have been reported on the Farm and Home Plans." Id. at *3-4. In other words, Rodalton contended that the testimony exceeded the proper scope of Fed. R. EvId. 1006 because the testimony was not supported by evidence which had been previously presented to the jury. Id. (see Jennings, 724 F.2d at 442). In an in camera conference with the trial judge, Rodalton reasoned, "By not requiring them to prove that the debts themselves are debts that should be reported, allowing them to simply call a witness to put them into a category without knowledge, without–and not an expert prejudices us, and it goes beyond a summary witness, your Honor." Id. at *4.

After reviewing the entire record the Fifth Circuit concluded that it was "apparent to us that [the government witness] functioned as the government's sole expert regarding the proper preparation of (1) FHPs generally, and (2) the Hart brothers' FHPs in particular, thereby unquestionably exceeding the scope of FRE 1006." Id. The court noted that the government could have simply had an expert witness testify for this purpose, but chose not to do so at its own peril. Id. at *6.

Finally, the court ruled that without the testimony of the government witness, there was not sufficient evidence to support Rodalton's conviction. Id. at *7. The Fifth Circuit stated, "We are convinced, in fact, that absent [the government witness's] testimony and accompanying documents, the government failed to prove a critical element of its case against Rodalton beyond a reasonable doubt, and that Rodalton's substantial rights were affected by the admission of [the witness's] revised FHPs and her explanatory testimony." Id. The court held that this constituted reversible trial error, in which the proper remedy was to vacate the judgment, and remand the case for a new trial. Id.

This case summary was prepared June, 2002.