United States Court of Appeals
For the First Circuit
No. 03-1686
UNITED STATES OF AMERICA,
Appellant,
v.
GARY P. DECICCO,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
Before
Torruella, Circuit Judge,
Lourie,* Circuit Judge,
and Howard, Circuit Judge.
Robert E. Richardson, Assistant United States Attorney, with
whom Michael J. Sullivan, United States Attorney, was on brief, for
appellant.
Kimberly Homan, with whom Joseph S. Oteri and Oteri & Lawson,
P.C., were on brief, for appellee.
June 7, 2004
*
Of the Federal Circuit, sitting by designation.
TORRUELLA, Circuit Judge. The government appeals from a
pair of orders excluding evidence in the prosecution of Gary P.
DeCicco ("DeCicco"). The government indicted DeCicco for four
counts of violating 18 U.S.C. § 1341 and two counts of violating 18
U.S.C. §§ 844(h)(1) and (2). The district court excluded evidence
related to prior bad acts by DeCicco. After careful review, we
reverse.
I. Factual Background
DeCicco purchased a two-story brick warehouse located at
17 Rear Heard Street, in Chelsea, Massachusetts, on August 8, 1989
("the Heard Street warehouse"). Before securing the mortgage on
the Heard Street warehouse, DeCicco applied to the City of Chelsea
for an occupancy permit to use the building as a warehouse for his
moving companies. The city denied the application, noting that the
Heard Street warehouse was surrounded by residential properties and
had a narrow driveway to provide access to and from the street.
DeCicco used the building as a warehouse, notwithstanding the City
of Chelsea's opposition. In the ensuing dispute, the City of
Chelsea prevented DeCicco from using the property as a warehouse.
After the permit was denied, DeCicco paid $65,000 for the
Heard Street warehouse. The purchase was financed with a $104,000
loan from Somerset Bank, which was secured by a mortgage on the
property. As proof of insurance on the property, DeCicco submitted
an insurance binder from the John M. Biggio Insurance Agency,
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signed by Andrew Biggio, and covering the property for the first
month that DeCicco owned it.1
DeCicco was in arrears on his mortgage to Somerset Bank
by September 1991. Somerset Bank obtained a foreclosure order on
the Heard Street warehouse. DeCicco had other outstanding
obligations to Somerset Bank: a $400,000 loan used to build a new
warehouse in Revere, Massachusetts ("the Revere warehouse") and a
short-term $80,000 commercial loan. Liens were imposed on both the
Heard Street warehouse and the Revere warehouse, as well as on
other properties owned by DeCicco's businesses.
In October 1991, two years after purchase, DeCicco
obtained insurance on the Heard Street warehouse. Two applications
were completed by the broker: a standard form application and an
"arson" application. An insurance binder was issued by Lincoln
Insurance Company and an expert was retained to examine the
property. The inspector never managed to speak with DeCicco, but
he visited the property and determined that, contrary to DeCicco's
representations that the property was occupied, the Heard Street
warehouse was in fact empty. On March 3, 1992, Lincoln Insurance
Company cancelled the policy on the Heard Street warehouse due to
DeCicco's alleged misrepresentations. A notice advised DeCicco
1
The validity of this binder was questionable since Andrew Biggio
did not work for the John M. Biggio Insurance Company, and the
record contains no other indication that the insurance binder was
otherwise valid.
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that the policy would be cancelled effective at 12:01 a.m. on
March 13, 1992.
In the meantime, Somerset Bank informed DeCicco that he
was behind on his payments and that foreclosure proceedings would
follow unless the bank received the amount owed by March 2, 1992.
On March 11, 1992, a fire broke out at the Heard Street
warehouse. Investigators of the Chelsea Fire Department determined
that the fire was started intentionally; the arsonist used a liquid
accelerator on the support pillars, in order to bring down the
building as quickly as possible. Due to the Fire Department's
quick response, little damage was done to the warehouse. DeCicco
did not file a claim related to this fire and a period of three
years and two months transpired during which the Heard Street
warehouse went uninsured.
In the meantime, DeCicco hired Richard Stewart
("Stewart"), an accountant. Stewart was allegedly retained because
DeCicco had significant tax liabilities and wanted to institute
sound bookkeeping practices for his businesses. Regardless, it is
undisputed that DeCicco owed more than one million dollars to the
Internal Revenue Service ("IRS") and other monies to the
Massachusetts Department of Revenue ("DOR").2 DeCicco also owed
2
In addition to his tax liabilities, DeCicco was also informed by
Somerset Bank of its intention to foreclose on the Revere
warehouse.
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over $10,000 in real estate taxes to the City of Chelsea and an
undisclosed amount to the City of Revere.
On May 7, 1995, Scottsdale Insurance Company
("Scottsdale") issued an insurance policy for the Heard Street
warehouse, listing DeCicco as the beneficiary. DeCicco told the
Scottsdale agent that the building was a new purchase, even though
DeCicco had owned it for nearly six years. He also told the
Scottsdale agent that there was no mortgage on the property. The
policy was for a one-year term and provided coverage of up to
$125,000.
On July 9, 1995, the Heard Street warehouse was
intentionally set on fire by means of four separate fires started
on the second floor. The Fire Department again responded quickly
and the property was spared. DeCicco hired an insurance adjustor
to assist him in filing an insurance claim, but that claim was
never filed.
During the early morning hours of July 21, 1995, a third
fire broke out in the Heard Street warehouse. Investigators
determined that the fire was set with an accelerant poured at the
base of the support columns. The third time proved to be the last.
This time, a much larger fire injured several firefighters as well
as some surrounding residential property. Per the City of
Chelsea's order, the Heard Street warehouse was demolished because
the damage was too extensive.
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DeCicco obtained payments for the third fire from
Scottsdale, for a total aggregate amount of $116,964.
The government alleges that, in violation of 18 U.S.C.
§ 1341, DeCicco transmitted false and fraudulent insurance claims
for building loss insurance proceeds to Scottsdale. Four distinct
acts of mail fraud are alleged.3 In addition, DeCicco was charged
with two counts of knowingly using fire to commit a felony, in
violation of 18 U.S.C. §§ 844(h)(1) and 2.
DeCicco filed a motion in limine seeking the exclusion of
the following evidence at trial: any testimony of Richard Stewart,
the accountant; and any evidence related to any fires at the Heard
Street warehouse or any other property which pre-dated July 9,
1995.4 The district court orally granted the motion on the first
day of trial. The government appeals from this ruling.
II. Standard of Review
We review a district court's ruling to exclude evidence
under Fed. R. Evid. 404 (b) for abuse of discretion. See United
States v. Williams, 985 F.2d 634, 637 (1st Cir. 1993). "[A]n abuse
3
Count One alleges a fraudulent mailing on October 17, 1995 (a
Sworn Statement in Proof of Loss Form); Count Two alleges a
fraudulent mailing on November 9, 1995 (a partial insurance
settlement check from Scottsdale sent to DeCicco); Count Three
alleges a fraudulent mailing February 19, 1996 (a Sworn Statement
in Proof Of Loss Form); and Count Four alleges a fraudulent mailing
on February 27, 1996 (a final insurance settlement check from
Scottsdale sent to DeCicco).
4
The district court also excluded evidence related to a fire at
Revere warehouse, a ruling which is not on appeal.
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of discretion occurs when a relevant factor deserving significant
weight is overlooked, or when an improper factor is accorded
significant weight, or when the court considers the appropriate mix
of factors, but commits a palpable error of judgment in calibrating
the decisional scales." United States v. Gilbert, 229 F.3d 15, 21
(1st Cir. 2000)(citing United States v. Roberts, 978 F.2d 17, 21
(1st Cir. 1992)(internal quotation marks omitted)).
III. Analysis
A. Exclusion of Evidence Related to 1992 Fire
DeCicco sought to exclude evidence of the March 1992 fire
from the government's case in chief. DeCicco argued, inter alia,
that the fire was evidence of other crimes which should be excluded
under Fed. R. Evid. 404(b), and that there was insufficient
evidence that he committed the prior bad act.
Federal Rule of Evidence 404(b) provides that:
Evidence of other crimes, wrongs or acts is
not admissible to prove the character of a
person in order to show action in conformity
therewith. It may, however, be admissible for
other purposes, such as proof of motive,
opportunity, intent, preparation, plan,
knowledge, identity or absence of mistake
. . . .
Therefore, mere propensity evidence is never admissible
solely to show a character inclined towards unlawful behavior. The
same evidence may be admissible, however, even if it may be
construed as propensity evidence, if it is used to show any of the
other elements set out in the rule. See United States v. Taylor,
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284 F.3d 95, 101 (1st Cir. 2002)(stating that Rule 404(a) codified
the general prohibition against bad acts evidence, but Rule 404(b)
allows for the admission of evidence of prior bad acts to prove
elements other than propensity); United States v. Frankhauser, 80
F.3d 641, 648 (1st Cir. 1996). We review the admissibility of this
type of evidence under a two-pronged test: first, a court must
determine whether the evidence in question has any special
relevance exclusive of defendant's character or propensity; and
second, notwithstanding its special relevance, whether the evidence
meets the standard set forth in Fed. R. Evid. 403.5 See United
States v. Sebaggala, 256 F.3d 59, 67 (1st Cir. 2001); Frankhauser,
80 F.3d at 648.
The government argues that evidence of the March 1992
fire is probative of a common plan or scheme to burn the Heard
Street warehouse for the insurance proceeds, or, in the
alternative, that it is probative of identity. Before delving into
these arguments, we consider the threshold question whether the
government has proffered enough evidence to show, by a
5
In full, this Rule provides:
Although relevant, evidence may be excluded if its
probative value is substantially outweighed by the danger
of unfair prejudice, confusion of the issues, or
misleading the jury, or by considerations of undue delay,
waste of time, or needless presentation of cumulative
evidence.
Fed. R. Evid. 403.
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preponderance of the evidence, that DeCicco committed the March
1992 fire.
1. Sufficiency of the Evidence Argument
Under Huddleston v. United States, 485 U.S. 681, 689
(1988), "similar act evidence is relevant only if the jury can
reasonably conclude that the act occurred and that the defendant
was the actor." (citing United States v. Beechum, 582 F.2d 898,
912-13 (5th Cir. 1978)(en banc)). In the instant case, DeCicco
does not question the occurrence of the March 1992 fire but
vigorously defends his innocence as to the arson.
The government proffered the following circumstantial
evidence that DeCicco committed the 1992 arson:
that 29 hours before he [knew] that the
insurance on the building [was] going to be
cancelled and at a time when he [was] under
financial pressure both from the City of
Chelsea, which [had] filed a tax title
proceeding based on nonpayment of city taxes,
and he's being chased by his bank for payment
on the loan, there is a fire.
DeCicco's counsel stated that "[t]here was no evidence [as to the
1992 fire]. There's a lot of circumstantial stuff, but there's no
evidence that ties the defendant to this fire, either that he did
it, [or] that he hired anybody to do it. There's no physical
evidence." The government attempted to develop its "common scheme
or plan" theory by stating that
the fact that three years goes by is actually
significant because . . . the standard
insurance form requires you to tell an
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insurance company if you've had an insurance
cancelled within the previous three years.
Now a false answer on that will -- when it's
discovered, which it almost surely will be --
is a basis for voiding the policy.
So after the fire in 1992 failed to
work, three years goes by, and then the
defendant insures the building again. Maybe
six or seven weeks after he gets the insurance
there's a second fire intentionally set in the
building. That's one of the charged fires.
That doesn't work.
Twelve days later there's a huge fire
that finally takes the building down. So if
you look at the time table . . . .
At this point in the discussion, the district court decided to
exclude the evidence from the government's case in chief.
We find that circumstantial evidence was presented from
which a jury could find by a preponderance of evidence that the
1992 arson occurred and that DeCicco was responsible. See
Huddleston, 485 U.S. at 690 (stating that there must be enough
evidence for a jury to reasonably conclude by a preponderance of
the evidence that the prior bad act was committed). The jury can
weigh the totality of the evidence to determine whether a
preponderance of the evidence shows that DeCicco committed the
first arson. See Huddleston, 485 U.S. at 690 (citing 21 C. Wright
& K. Graham, Federal Practice and Procedure § 5054, p. 269 (1977)).
The evidence adduced as to the timing of the 1992 fire and the fact
that DeCicco was the sole beneficiary on the policy, as well as
other evidence, such as the similar accelerant and method used, are
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probative as to the 1992 fire. Therefore, we agree with the
government that there is enough evidence for a jury to find that
DeCicco started the 1992 fire.
2. Special Relevance as to Common Scheme or Plan
The district court abused its discretion when it refused
to consider the government's argument as to the common scheme or
plan in this case. As to the special relevance under Rule 404(b),
the government argued to the district court, inter alia, that there
was a common scheme or plan to burn the Heard Street warehouse for
the insurance proceeds. "We have focused on two factors to
determine the probative value of prior bad act evidence: 'the
remoteness in time of the other act and the degree of resemblance
to the crime charged.'" United States v. Varoudakis, 233 F.3d 113,
119 (1st Cir. 1996)(quoting Frankhauser, 80 F.3d at 648).
In this case, the first fire occurred three years prior
to the two fires charged in the Indictment. In United States v.
González-Sánchez, 825 F.2d 572, 581-83 (1st Cir. 1987), we affirmed
the admissibility of other fires for the purpose of showing a
common scheme to defraud using arson of property. In González-
Sánchez, the fires occurred two months and six months before the
final fire that destroyed the property. Id. at 577. Nevertheless,
the distinction here (that three years elapsed) can be explained
when viewed in the context of the cancellation of the Lincoln
Insurance policy. DeCicco had to wait three years to obtain
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insurance because any other policy provider would have reviewed
prior cancellations, i.e., Scottsdale would have found out about
the Lincoln Insurance policy cancellation and Scottsdale's
insurance policy never would have issued. In addition, three years
is not so remote a time as to reduce the probative value of this
evidence. See Frankhauser, 80 F.3d at 649 (time span of seven
years is not too remote); see also United States v. Hadfield, 918
F.2d 987, 994 (1st Cir. 1990)(five years between prior bad act and
charged act is acceptable).
The degree of resemblance of the crimes also favors
inclusion of the evidence. Both the 1992 fire and the final fire
were set in the same manner: an accelerant was poured on the base
of the support pillars on the first floor of the Heard Street
warehouse. They are the same type of crime, and, more importantly,
the object of all fires was the same property. These factors tend
to show that the previous offense leads in progression to the two
charged fires, or, put more simply, that DeCicco had one common
scheme to burn the Heard Street warehouse, which had previously
proven financially unsuccessful. Cf. United States v. Lynn, 856
F.2d 430, 435 (1st Cir. 1988)(reversing the admission of prior bad
act evidence under the common scheme or plan theory, because the
prior bad act did not lead in progression to the second act).
Therefore, the district court erred in not considering whether the
1992 fire was relevant to a common scheme or plan to burn the Heard
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Street warehouse for the insurance proceeds. The evidence is
probative of a common scheme or plan and should be introduced to
that effect.
3. Rule 403 Analysis
The second bar to the admission of prior bad acts
evidence is Rule 403. See Varoudakis, 233 F.3d at 121 (stating
that a district court must exclude 404(b) evidence where its
probative value is outweighed by the danger of unfair prejudice,
confusion of issues, misleading the jury or other considerations);
see also Gilbert, 229 F.3d at 22. The district court did not make
a finding in this respect. We find that, while this evidence is
prejudicial, it does not violate Rule 403. "[T]here is always some
danger that the jury will use [Rule 404(b) other act] evidence not
on the narrow point for which it is offered but rather to infer
that a defendant has a propensity towards criminal behavior."
United States v. Trenkler, 61 F.3d 45, 56 (1st Cir. 1995). The
risk here is not too great as to surpass the probative value of
evidence, which, if found credible by a properly instructed jury,
would show that the defendant had a common plan to burn the Heard
Street Warehouse. Cf. Gilbert, 229 F.3d at 25 (affirming the
exclusion of evidence under Rule 403, in a murder case, that
defendant attempted to murder her husband because it was
particularly inflammatory and highly susceptible of being misused
by the jury). Therefore, we find that the district court abused
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its discretion and reverse the exclusion of the evidence regarding
the 1992 fire.
B. Exclusion of Accountant's Testimony
DeCicco argued to the district court that the testimony
of Stewart was not admissible to show motive or intent under Fed.
R. Evid. 404(b), and was otherwise unduly prejudicial under Fed. R.
Evid. 403. The government argues that this evidence was limited to
Stewart's testimony regarding the calculation of individual taxes
DeCicco owed as of the time of the July 1995 fires (including
penalties and interest), the tax years for which those
determinations were made, and other information regarding DeCicco's
tax liabilities at the time of the July 1995 Heard Street warehouse
fires, and that this testimony was relevant to the issue of motive
to commit arson and the other crimes charged in the Indictment.
When the government attempted to introduce Stewart's
testimony, the district judge asked the prosecutor if DeCicco was
charged with any crimes related to his tax obligations. The
district court stated that it was reluctant to "put in evidence of
a crime when [DeCicco]'s not charged with it." Subsequently, the
prosecution clarified that any evidence of tax liability would be
introduced not to show that DeCicco was criminally liable for a tax
crime, but merely for the proposition that he hired an accountant
and that accountant determined DeCicco's outstanding tax liability
to be a substantial sum. The tax liability was to be introduced as
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relevant to motive -- that DeCicco sought to burn the Heard Street
warehouse to obtain the insurance proceeds and defray his tax
liability. The district court nevertheless excluded the testimony
of Stewart from the government's case in chief.
First, the district court's analysis should not have
relied on the specific crime charged. Rule 404(b)'s purpose is to
provide an exception to the common law rule barring evidence of
prior bad acts. The rule is permissive in nature, and the district
judge's restriction of tax liability evidence, as a rule, to cases
where a defendant is charged with criminal acts under the tax code
directly contravenes the permissive purpose of Rule 404(b). As
such, it was an abuse of discretion because the district court
improperly accorded one factor significant weight -- the relation
between the prior bad act and the crime charged -- and
inappropriately excluded other considerations. See Gilbert, 229
F.3d at 21.
Second, when the prior bad act evidence is analyzed under
the 404(b) framework, it is clear that Stewart's testimony is
relevant to DeCicco's purported motive for committing the charged
mail fraud offenses. Mindful that, "[w]hen prior bad act evidence
is offered to prove a motive for the crime, courts must be on guard
to prevent the motive label from being used to smuggle forbidden
evidence of propensity to the jury," Varoudakis, 233 F.3d at 120
(citations and internal quotation marks omitted), we nevertheless
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believe the district court abused its discretion, because the mail
fraud counts charged in the Indictment allege that the object of
DeCicco's mail fraud was to extract the insurance money from
Scottsdale. There is no indication here that the tax liability
suggests "propensity as a necessary link in the inferential chain."
Id. (citing Frankhauser, 80 F.3d at 648)(internal quotations
omitted). The government did not seek to establish that because
DeCicco did not meet his tax obligations he is more likely to
commit arson. The government did seek to establish the tax
liabilities in order to show for what purpose the fraudulently
obtained insurance proceeds were intended. Therefore, the motive
of the charged mail fraud can be properly alleged to have been
pecuniary gain, and therefore, the evidence was improperly
excluded. See Sebaggala, 256 F.3d at 67-68 (affirming the
admission of evidence under Rule 404(b) of stolen and altered
travelers' check as probative of motive on the charged false
statement counts). Stewart's testimony is especially relevant here
because it tends to establish the motive for the alleged mail fraud
and the arson.6
DeCicco argues that notwithstanding any special
relevance, Stewart's testimony should be excluded under Rule 403.
6
Both the government and DeCicco make much of the amount of the
tax liabilities and the entities involved. However, it is not our
province to determine the credibility of the motive put forth by
the government, merely the admissibility of the evidence.
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We disagree. While the district court did not make specific
findings under Rule 403 in its oral decision, we are of the view
that, when offered for the limited purpose of showing motive, and
viewed in the context of the government's charges, any danger of
unfair prejudice in this case is minimal. See Varoudakis, 233 F.3d
at 122-23; see also Frankhauser, 80 F.3d at 648-49. Therefore,
the district judge's exclusion of Stewart's testimony is reversed.
IV. Conclusion
For the reasons stated above, we reverse and remand for
further proceedings consistent with this opinion.
Reversed and remanded.
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