have been involved in with NPWU officials. Therefore, the government has not satisfied the third element of showing there is sufficient evidence to support a jury finding of similarity.
The government's motion to admit Rule 404(b) evidence will be denied.
The government also intends to present evidence of statements Li and Tokunaga made to union officials admitting that they had made payments to Hogan. The government contends that these statements are admissible against all defendants because either made in furtherance of the conspiracy, see Fed. R. Evid. 801(d)(2)(E), or because an admission against interest, see Fed. R. Evid. 804(b)(3). Defendants contend that each statement is only admissible against the particular defendant who made the statement and, if admitted as against that defendant only, requires that each defendant be tried separately. To the extent any statement is admissible against a particular defendant only, the government contends that redaction of references to the other defendants is a sufficient means to prevent prejudice to the other defendants.
According to the allegations of the indictment and the government's Santiago proffer, the kickback conspiracy occurred in 1987 and 1988. In its Santiago proffer, the government represents that Richard Wesley was a trustee of and plan administrator for the Trust Fund. On behalf of the Trust Fund, Wesley signed the service agreement with Health Administrators. It is also alleged in the Santiago proffer that, during fall 1992 discussions of renewal of the service contract, Tokunaga stated to Wesley that the rates quoted factored in commissions being paid to Hogan. Although made in 1992, the government labeled this as a statement in furtherance of the conspiracy. In response to defendants' motions, the government clarified that, although it only has evidence to support payments made in 1987 and 1988, it contends that the conspiracy, or a joint venture, continued through 1992. Tokunaga's 1992 statement to Wesley is evidence that defendants conspired to continue the kickback scheme into 1992. Therefore, it qualifies as a statement made in furtherance of the conspiracy and is admissible against all defendants pursuant to Fed. R. Evid. 801(d)(2)(E).
Alternatively, the government contends that Tokunaga's statement is a statement against penal interest that is admissible given Tokunaga's unavailability to testify. Evidence is admissible pursuant to Rule 804(b)(3) if it is found "that, (1) the declarant's statement was against the penal interest of the declarant, (2) corroborating circumstances exist indicating the trustworthiness of the statement, and (3) the declarant was unavailable." United States v. Gio, 7 F.3d 1279, 1288 (7th Cir. 1993) (quoting ( United States v. Garcia, 897 F.2d 1413, 1420 (7th Cir. 1990)). The corroborating circumstances must "clearly indicate" the trustworthiness of the statements. Garcia, 897 F.2d at 1420. An inculpatory statement of a codefendant is presumed unreliable, but the presumption is rebuttable. United States v. York, 933 F.2d 1343, 1362 (7th Cir.), cert. denied, 112 S. Ct. 321, 116 L. Ed. 2d 262 (1991). "The fear that inculpatory statements are unreliable stems largely from the presumption that such statements are self-serving, offered only to shift the blame from the declarant to another. But when, as here, the inculpatory portion of a statement is also against the declarant's interest, or when it is neutral because the declarant has not attempted to diminish his own role, there is little reason to suspect that portion of an otherwise reliable statement is untrustworthy." Id. at 1363.
This exception only applies if the particular defendant chooses not to testify. If Tokunaga testifies at the trial, then the prior statement would not be admissible against the other defendants as a statement against penal interest (but would still be admissible against the other defendants as a statement in furtherance of the conspiracy). For purposes of today's ruling, it will be assumed that Tokunaga is not intending to testify.
Tokunaga's statement that he paid "commissions" to Hogan must be found to be a statement against penal interest. There is nothing to indicate that the payments could be perceived as legal "commissions," not illegal kickbacks. Defendant do not contend that this requirement is not satisfied.
The remaining question is whether the corroborating circumstances clearly indicate trustworthiness. The burden is on the government to present sufficient evidence of corroborating circumstances. The government argues: "Finally, corroborating evidence will demonstrate the trustworthiness of Tokunaga's statement. Witness testimony (including Frank Stroud's testimony about a conversation he had with Tokunaga regarding a different union local),
co-conspirator statements, documentary evidence, handwriting analysis and tax records corroborate Tokunaga's statement to Wesley." While such corroborating evidence is given some weight, see, e.g., Gio, 7 F.3d at 1288; United States v. Harty, 930 F.2d 1257, 1264 (7th Cir.), cert. denied, 112 S. Ct. 262 (1991), the primary focus is on the corroborating circumstances of the giving of the statement itself. See Harty, 930 F.2d at 1264-65. See, e.g., Gio, 7 F.3d at 1288; York, 933 F.2d at 1363.
The government's argument does not focus on the circumstances of the giving of the statement. Those circumstances are that the statement was made during a discussion with the plan administrator about renewal of the service contract. Tokunaga did not attempt to downplay his own role by mentioning Hogan. That indicia of untrustworthiness is not present. While Tokunaga may have been seeking to curry favor in order to continue to have a service contract with the benefit fund, there is nothing to indicate that such a motive would have also been motivation to exaggerate the role of Hogan or Li. Even if the statement to Wesley is not admissible as a statement in furtherance of the conspiracy, it would be admissible against the other defendants as a statement against interest.
The government also intends to present evidence that, in 1992, Li made admissions to Local 73's then-president regarding his involvement in the kickback scheme and, in 1993, Li made admissions to a business associate regarding his involvement in the kickback scheme. The government contends that this evidence is also admissible against Tokunaga and Hogan because it involves statements against interest admissible under Rule 804(b)(3).
According to the government's proffer, an FBI interview, and grand jury testimony, Harry Kurshenbaum can testify that he and Li had the following conversation in December 1992. At the time, Kurshenbaum was the president of Local 73, but he has since been suspended from that position. The circumstances of the conversation were that Kurshenbaum had called Li into his office after hearing from Wesley reports that Li had admitted to paying kickbacks under threats from Hogan. Kurshenbaum was conducting an investigation of the kickbacks. Kurshenbaum can testify that Li admitted that he paid cash kickbacks to Hogan because Hogan represented that he could influence the awarding of contracts. Li also told Kurshenbaum that Li did not report to Kurshenbaum the initial request for a kickback because Hogan had threatened violence. Specifically, Li stated Hogan threatened to put an axe in Li's head. When Kurshenbaum questioned Li about whether he understood that unions were regulated by the government and that this was a serious matter, Li responded, "I know. Kito [Tokunaga] paid the monies." During the conversation, Li also asked Kurshenbaum whether this meant Li would lose the service contract.
The government also intends to present evidence of statements Li allegedly made to a business associate, Clayton Hayes. The government makes the following proffer.
In December 1993, Clayton Hayes met with Li in Las Vegas. During this meeting, Li advised that he had been indicted for making illegal payments to a union business agent ("BA"). Li explained that he had been approached by a BA whose wife owned a graphic design company. The BA offered to help Li obtain his union's dental business and also recommended his wife's graphic design business to Li. Li said that he subsequently met with the BA and the BA's wife regarding graphic design work. Li admitted that he had paid the BA's wife in order to obtain the dental business from the BA's union, although she had performed no work. Li also said that Tokunaga was indicted because he had made a payment to the BA from his personal bank account when Li was on vacation. Li had later reimbursed Tokunaga. Hayes advised Li that Li was in an untenable position.
As with Tokunaga's statement, it will be assumed that Li is unavailable because he will not be testifying at the trial. If he does choose to testify, his statements would not be admissible as statements against penal interest. There is also no dispute that Li's statements were against his penal interest. The only question is whether there are corroborating circumstances of trustworthiness.
As with Tokunaga's statement, the government relies only on other evidence consistent with Li's statements. The government again ignores the issue of whether the circumstances of the giving of the statements supports trustworthiness.
The statements were given to the Union president who was investigating possible kickbacks to Hogan or others. It would have been obvious that admissions of making kickbacks would be against Li's penal interest. Li obviously knew that any admission as to paying kickbacks would be against his penal interest. In initially admitting that he made payments to Hogan in order to influence the award of contracts, Li did not seek to shift blame between himself and Hogan. Assuming Li does not take the stand, those statements are admissible against all defendants as statements against penal interest.
After making the initial admissions, however, Li began to seek to shift blame to the other defendants. He claimed that he only began making payments because Hogan threatened him, thereby seeking to portray Hogan as the primary instigator of the scheme. Li also claimed that Tokunaga was the one who made the payments. That statement seeks to shift blame to Tokunaga and is inconsistent with the government's documentary evidence that Tokunaga made only one payment. The evidence about threats and the statement "I know. Kito paid the monies." is not admissible against the other defendants because lacking sufficient indicia of trustworthiness.
The statement "I know. Kito paid the monies." is still admissible against Li as an admission by a party. Fed. R. Evid. 801(d)(2)(A). However, since not admissible against Tokunaga, mention of Kito must be omitted from any testimony Kurshenbaum gives. If the government intends to present evidence of this statement, Kurshenbaum should be instructed to only testify that Li said "I know. Someone else paid the monies." Entirely deleting the second sentence was considered, but it is necessary for completeness.
The government does not intend to present evidence that Li stated Hogan threatened him with an axe. Hogan opposes admission of that statement, while Li has indicated he wants it in. Li may be raising a coercion defense, though he has not formally made such a representation. Contrary to Li's contention, the statement as to the axe is not necessary for completeness. It will not come in as part of the government's case. Also, the government is not to elicit any testimony from Kurshenbaum as to any other statements of Li that threats were made by Hogan. Threats are not necessary to prove the government's case.
Still to be considered are the statements to Hayes.
These statements were made after Li had been indicted, when he clearly knew the statements would be against penal interest. They were made to a friend, not an investigator. In the conversation, Li did not attempt to shift blame to the other defendants. He states that Tokunaga made one payment, but also admits that he reimbursed Tokunaga for the payment. He also does not attempt to blame Hogan for forcing him into the relationship through threats of violence. Assuming Li does not take the stand, the statements to Hayes will be admissible against Tokunaga and Hogan as statements against interest.
With the exception of the statement about Kito paying money, the statements are admissible against all the defendants. The statement about Kito, once redacted to omit Tokunaga's name and with an appropriate limiting instruction being given, is not a basis for granting severance for either Tokunaga or Hogan. See United States v. Strickland, 935 F.2d 822, 826 (7th Cir.), cert. denied, 112 S. Ct. 324 (1991); United States v. Chrismon, 965 F.2d 1465 (7th Cir. 1992).
IT IS THEREFORE ORDERED that:
(1) Defendants' [1,2,3] motion to dismiss and request for discovery and hearing  is denied.
(2) Defendants' [1,2] motion to dismiss count four for failure to state an offense  is denied.
(3) Defendant Li's  motion to preclude hearsay  is denied.
(4) Defendant Tokunaga's  motion to preclude admission of a portion of defendant Li's alleged statement implicating Tokunaga is granted in part and denied in part and his alternative motion for severance is denied.
(5) Defendant Hogan's  motion for severance is denied.
(6) Government's motion in limine to admit evidence pursuant to Rule 404(b) is denied.
William T. Hart
UNITED STATES DISTRICT JUDGE
Dated: APRIL 1, 1994