United States v. Richard Joseph Finley
301 F.3d 1000, 2002 Daily Journal DAR 9543, 59 Fed. R. Serv. 3d 477 (2002)
Rule of Law:
A trial court abuses its discretion by excluding an expert psychological witness's testimony offered to demonstrate a defendant's mental condition that may negate intent, when the testimony is reliable under Federal Rule of Evidence 702, does not violate Federal Rule of Evidence 704(b) by compelling a conclusion about `mens rea`, and the defense provided sufficient notice under Federal Rule of Criminal Procedure 16.
Facts:
- Richard Joseph Finley owned a law bookstore and ran a bar review course, and he sought investors to open a chain of approximately twenty bookstores across the United States but could not obtain traditional bank financing due to a dispute he had with the IRS over a large tax claim.
- In November 1995, a customer suggested Finley attend an investment seminar in Montana run by Leroy Schweitzer.
- On December 22, 1995, Finley attended Schweitzer’s seminar, where Schweitzer explained he possessed recorded liens against banks and individuals and could issue negotiable instruments.
- At the seminar's conclusion, Schweitzer gave Finley three documents appearing as financial instruments, entitled “Comptroller’s Warrants” and “Certified Banker’s Checks,” made payable to Finley and the Bank of America ($6,125,000), Finley and Great Western Bank ($150,000), and the IRS and Finley ($360,000).
- Finley attempted to deposit the $6.125 million document with the Bank of America in late December 1995 and again in August 1996, but it was returned marked “fictitious check,” and the bank gave Finley a “fraud alert” about similar instruments from Schweitzer.
- On January 2, 1996, Finley attempted to use the $152,000 document to pay off his mortgage with Great Western Bank, which did not negotiate the instrument due to prior knowledge of fraud alerts regarding Schweitzer’s instruments.
- On January 5, 1996, the chief of the fraud section of the Office of the Comptroller of the Currency wrote Finley stating that the Schweitzer document was not a valid obligation and advised him to contact the FBI.
- Undeterred, Finley mailed the $360,000 document to the IRS Center on January 17, 1996, requesting a refund, and submitted it on a total of three separate occasions, but the IRS did not credit the amount due to prior knowledge of Schweitzer’s instruments.
Procedural Posture:
- On July 9, 1999, the government filed a second superseding indictment against Richard Joseph Finley, charging him with one count of making a false claim against the United States, one count of attempting to interfere with the administration of the Internal Revenue Service, and three counts of bank fraud.
- A jury trial began on December 21, 1999, in the district court.
- In the middle of the defendant’s presentation of his expert psychological witness, the government objected to the witness’ testimony and requested that it be struck as a sanction for a Federal Rule of Criminal Procedure 16(b)(1)(C) violation.
- After lengthy discussions and a hearing pursuant to Daubert v. Merrell Dow Pharm., Inc., the district court excluded the entirety of defense expert Dr. Wicks’ testimony as a sanction for violating Rule 16 and as unreliable and irrelevant under Federal Rule of Evidence 702.
- On January 5, 2000, the jury returned guilty verdicts on all but one bank fraud count; the court dismissed the remaining bank fraud count based upon the jury’s inability to reach a verdict.
- Finley appealed his conviction and forty-eight-month sentence of imprisonment to the Ninth Circuit.
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Issue:
Did the trial court abuse its discretion by excluding the entirety of Richard Joseph Finley's psychological expert's testimony regarding his mental condition, which was offered to show he lacked the intent to defraud, on the grounds that it was unreliable or irrelevant under Federal Rule of Evidence 702/704(b) or as a sanction for a discovery violation under Federal Rule of Criminal Procedure 16(b)(1)(C)?
Opinions:
Majority - BRIGHT, Circuit Judge
Yes, the trial court abused its discretion by excluding the expert psychological testimony. The exclusion was erroneous on both grounds articulated by the district court. First, regarding Federal Rule of Evidence 702 (reliability and relevance) and 704(b) (`mens rea`): The district court erred in assessing the reliability of Dr. Wicks' testimony. Dr. Wicks' diagnosis was based on proper psychological methodology, including accepted tests, a thorough patient history, interviews with Finley's spouse, and observation of behavior. The court's concern that the diagnosis relied solely on Finley's truthfulness was unfounded, as Dr. Wicks provided articulable reasons, based on clinical experience and testing designed to detect deceit, for believing Finley was not faking. The expert's nuanced choice of terminology ('atypical belief system' over 'delusional disorder') did not render the diagnosis unreliable, as mental health concepts are evolving. The testimony was relevant and would assist the jury because it provided information beyond the common knowledge of the average layperson, explaining how a seemingly normal person could reject or distort overwhelmingly true information. This type of expert testimony helps the jury understand the defendant's perspective without usurping its role in assessing credibility or `mens rea`, similar to prior cases involving 'false statements inconsistent with self-interest' or 'communication difficulties.' Furthermore, the testimony did not violate Rule 704(b) by compelling a conclusion about Finley's `mens rea`. Dr. Wicks' diagnosis of an atypical belief system did not automatically dictate that Finley lacked the intent to defraud; the jury remained free to decide if Finley knew the instruments were fraudulent, despite his rigid belief system. Second, regarding Federal Rule of Criminal Procedure 16(b)(1)(C) (discovery sanction): No discovery violation occurred, and even if one had, total exclusion was too harsh a remedy. Finley's counsel provided sufficient notice, stating in letters that Dr. Wicks would testify about Finley's 'atypical belief system' to show he 'did not have the intent to defraud, the requisite mens rea for the crime.' The prosecution and trial court misinterpreted 'atypical belief system' as a lay term rather than a term of art. The disclosure was consistent with Dr. Wicks' testimony, and the government did not seek further clarification. Exclusion as a sanction is appropriate only when the omission is willful and motivated by a desire for tactical advantage (Taylor v. Illinois). Finley's counsel did not act willfully or deceptively. Given that Dr. Wicks' testimony was 'essential to the defense,' and no willful violation occurred, a lesser sanction would have been appropriate. The prejudice resulting from the entire exclusion was not harmless.
Analysis:
This case significantly clarifies the admissibility of expert psychological testimony in federal courts, particularly for defenses aiming to negate criminal intent. It reinforces the Ninth Circuit's gatekeeping role under Daubert, emphasizing a focus on the expert's methodology and reasoning rather than the ultimate conclusions, and broadens the types of mental conditions that can be presented to a jury as relevant to `mens rea`. The ruling also establishes a high bar for imposing the severe sanction of evidence exclusion for discovery violations under Rule 16, requiring proof of willfulness and a tactical motive, thus protecting a defendant's fundamental right to present a defense. This makes it more challenging for trial courts to exclude expert psychological testimony and encourages the use of less drastic sanctions for minor procedural missteps.
