United States v. Blechman
86 Fed. R. Serv. 685, 2011 U.S. App. LEXIS 18919, 657 F.3d 1052 (2011)
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Rule of Law:
The business records exception to the hearsay rule (Fed.R.Evid. 803(6)) does not permit the admission of records containing unverified "double hearsay" information provided by an outsider unless the business entity either verified the information or had a sufficient self-interest in its accuracy.
Facts:
- Issac Yass operated a California-based business called Stopco, whose sole purpose was to temporarily stop home foreclosure sales by 'attaching' foreclosure properties to fraudulent bankruptcy cases.
- Yass solicited financially troubled homeowners, offering to help them keep their properties for a monthly fee by linking their property, but not their name, to an existing bankruptcy.
- Yass prepared Short Form Deeds of Trust conveying a partial interest in foreclosure properties to fictitious companies in fraudulent bankruptcy cases, which homeowners would execute and file.
- Robert Andrew Blechman was connected to Yass’s scheme through various pieces of evidence, including emails sent from 'rablechman@aol.com' to Yass.
- Blechman's mother was captured on surveillance video mailing two bankruptcy petitions for fictitious debtors ('Murphy Investments' and 'Samuels Productions') to the U.S. Bankruptcy Court for the Western District of Tennessee.
- Robert Andrew Blechman was identified as the individual who filled out and mailed postal money orders payable to bankruptcy courts in Kansas for filing fees on behalf of fictitious debtors in the fraudulent Kansas bankruptcy cases.
- PACER records suggested that Blechman accessed fraudulent bankruptcies using both Yass’s PACER account and his own PACER account ('RB 1071').
- Yass testified at trial that he paid Blechman $500 per bankruptcy, that Blechman provided him with fraudulent bankruptcies, and that Blechman’s role was to monitor the bankruptcies using PACER.
Procedural Posture:
- On June 11, 2008, a federal grand jury in Kansas returned a thirteen-count first superseding indictment against Robert Blechman and Issac Yass, charging them with conspiracy to commit mail fraud and aggravated identity theft, mail fraud, and aggravated identity theft.
- In January 2009, Blechman and Yass were tried together in a two-week jury trial in the District of Kansas.
- On January 16, 2009, the jury found both defendants guilty of all thirteen counts charged in the indictment.
- On January 22, 2009, Blechman moved for judgment of acquittal on the identity theft counts (Counts 8-13) and on the conspiracy count (Count 1) to the extent that it charged conspiracy to commit aggravated identity theft.
- On July 6, 2009, the district court granted Blechman’s motion for judgment of acquittal, vacating his conviction as to those counts.
- On January 4, 2010, the district court sentenced Blechman to eighteen months’ imprisonment on each of the remaining counts, to be served concurrently.
- Blechman appealed his convictions to the United States Court of Appeals for the Tenth Circuit.
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Issue:
Does the business records exception to the hearsay rule, Fed.R.Evid. 803(6), permit the admission of internet-based records (such as AOL or PACER account registrations) that contain identifying information provided by a third-party user, where the business did not verify the accuracy of that user-input information?
Opinions:
Majority - EBEL, Circuit Judge
Yes, the district court erred in admitting the challenged AOL and PACER records under Rule 803(6). The business records exception requires that each actor in the chain of information be under a business duty or compulsion to provide accurate information. Information provided by an 'outsider' to the business (i.e., not an employee with a business duty to provide accurate information) must either fall within another hearsay exception or be independently verified by the business, or the business must have a sufficient self-interest in the accuracy of that information to justify trustworthiness. Here, the crucial user-identifying information in the AOL and PACER records was input by a third party over the internet, and neither AOL nor PACER verified its accuracy. AOL explicitly stated, 'Registration information is recorded but not verified. Fictitious names and addresses are common.' PACER only ensured a valid mailing address and no matching existing user, not authenticating the identifying information itself. Furthermore, nothing suggested AOL or PACER had a compelling self-interest in the accuracy of user-input identity. Therefore, these records constituted inadmissible double hearsay for proving the truth of Blechman's identity. However, this error was harmless because overwhelming other properly admitted evidence linked Blechman to the 'rablechman@aol.com' email address and Yass’s scheme, including emails with Blechman’s full signature block, the unchallenged admission of a Yahoo! record showing 'rablechman@aol.com' as his alternate email, Blechman’s own introduction of emails from that address as part of his defense, other PACER records showing his use of Yass’s account, forensic evidence of his handwriting on fraudulent money orders, and Yass’s trial testimony detailing Blechman’s role. The erroneously admitted records were cumulative and did not substantially influence the trial's outcome.
Concurring - HARTZ, Circuit Judge
Yes, I fully join the majority opinion that the district court erred in admitting the challenged documents as business records to prove Blechman's identity. However, I note that the embedded-hearsay problem could have been avoided if the documents had been properly offered for a nonhearsay purpose. Specifically, these records were admissible to show that the email address belonged to someone who claimed to be Blechman and provided his name and street address, not to prove that the person who registered was definitively Blechman himself. While the Tenth Circuit previously rejected this subtle distinction, the widespread public awareness of identity theft in recent years makes it a more common-sense distinction for jurors to grasp. Jurors are likely to understand that a user-entered name on an account might not be verified, and they would demand additional evidence before concluding the user was the person named. Given that other identifying information (like a detailed email signature block) was properly admitted, a district court might not abuse its discretion in admitting such evidence for this nonhearsay purpose if the likelihood of jury confusion is minimal.
Analysis:
This case provides crucial guidance on the application of the business records exception to digital evidence, particularly records containing user-generated content. It establishes a high bar for admitting such records when their truthfulness, especially concerning user identity, is based on unverified information from an 'outsider.' The ruling mandates that for such information to be admissible under Rule 803(6), the business must demonstrate either a policy of verifying the data or a compelling self-interest in its accuracy. This standard will influence how courts assess the trustworthiness of internet-derived data like social media profiles, email registrations, or user account information in future cases, requiring proponents of such evidence to provide a stronger foundation for reliability beyond mere inclusion in a regularly kept business record.
