United States v. Palumbo

The appellant, Antonio John Palumbo II, was convicted on one count of conspiracy to possess and distribute cocaine, and on other counts relating to the possession and distribution of counterfeit bills. Although the indictment charges that Palumbo conspired with other individuals in the distribution of cocaine and counterfeit bills, he was the only person tried below. From our review of the record, this appeal raises two related questions. First, whether the district court properly admitted into evidence several grams of cocaine that was found in a search of an unindicted co-conspirator; and second, whether the court properly admitted the hearsay testimony of a police officer who stated that the unindicted co-conspirator had identified Palumbo as the source of the cocaine found in her possession. Because we find that this hearsay testimony was inadmissable and that, absent this testimony, there was no foundation linking the cocaine to the defendant, we reverse Palumbo’s cocaine conviction, although we affirm his convictions on all other counts.

I.

Palumbo was indicted on September 6, 1979 for the following offenses: conspiracy to possess and pass counterfeit bills, in violation of 18 U.S.C. § 371 (Count I); conspiracy to possess with intent to distribute cocaine, in violation of 21 U.S.C. § 846 (Count II); possession of counterfeit bills, in violation of 18 U.S.C. §§ 2 & 472 (Count III); transfer and delivery of counterfeit bills, in violation of 18 U.S.C. §§ 2, 472, & 473 (Counts IV, V, and VI); and possession and distribution of cocaine, in violation of 21 U.S.C. § 841(a)(1) (Counts VII and VIII).

At trial, much of the government’s case was based on the testimony of an unindicted co-conspirator of Palumbo, Mary Jane Pfaff. Pfaff testified that in early August of 1978 she entered into an agreement with John Crosson to receive $5,000 in counterfeit bills, which she was to exchange for real currency. She returned part of this currency, per their agreement, to Palumbo a week later. Palumbo and she agreed that he would supply her with counterfeit bills in the future, which she would exchange for real money and return in part to Palumbo. They engaged in several of these transactions during the fall of 1978.

Pfaff also stated that sometime between August, 1978 and October, 1978 she asked Palumbo to obtain some cocaine for her. According to Pfaff, he agreed, and later sold her one ounce of cocaine for $1,800 on two separate occasions. Pfaff stated that she resold some of the cocaine and retained some for her own use.

The principal problem raised in this appeal concerns several evidentiary rulings made by the trial court relating to the 12.7 grams of cocaine found in Pfaff’s possession (along with $10,000 in counterfeit bills) when she was arrested on October 27, 1978. Pfaff told the arresting officer and later the grand jury that she had received the cocaine from Palumbo. At trial, however, Pfaff said she could not recall where she had gotten the cocaine. The court permitted the government, over defense objections, to remind her in front of the jury of her earlier identification of Palumbo in testimony before the grand jury. Pfaff continued to maintain that she could not recall the source. The court was not requested to give any instructions limiting the grand jury testimony to the purpose of refreshing recollection or impeachment. The government, however, made no attempt to introduce the prior statement as substantive evidence, even though it later argued in summation that the grand jury statement showed Palumbo supplied the drug. The district court also permitted the police officer who arrested Pfaff with the cocaine to testify, again over defendant’s objections, that Pfaff had identified Palumbo as the source of the cocaine. The court did not explain the basis of its decision to admit this statement which occurred when defendant was not present. Later the court, once again over defendant’s objection, admitted the cocaine seized from Pfaff into evidence and permitted it to be passed among the jurors.

The jury convicted Palumbo on all of the Counts relating to the possession and distribution of counterfeit bills (Counts I, III, IV, V, and VI) and also on the charge of conspiracy to possess cocaine (Count II). It acquitted him of the Count relating to the distribution of cocaine (Count VIII). The Count relating to possession of cocaine with intent to distribute (Count VII) was dismissed during trial. The court imposed consecutive two year sentences for the two conspiracy convictions, a one year consecutive sentence for the possession conviction, and concurrent two year terms for the other three counts. The net result of the sentence was either a 5 or 6 year prison term. On appeal, Palumbo has asserted various errors by the trial judge. Although we find that his challenges to his conviction on the counterfeiting counts lack merit, we conclude that his challenge to the introduction of cocaine into evidence and certain related testimony is correct, and requires a reversal of his conviction for conspiracy to distribute that drug.

II.

There are two possible grounds under which it might be argued that the cocaine could have been admitted into evidence. We find neither rationale sufficient justification for its admission.

The first, which the district court relied on, is that the cocaine seized from Pfaff was admissible as evidence of a conspiracy between Pfaff and Palumbo to distribute cocaine, even though Pfaff may not have received that particular cocaine from the defendant. The trial court stated:

I am going to overrule the objection [to the admission of the cocaine] because I think part of the testimony here has been that there has been an agreement to distribute cocaine and that the Defendant delivered some cocaine to Pfaff, and, therefore, the cocaine, whether or not it agrees with the quantity delivered by the Defendant to Pfaff, is in part corroborating evidence of Pfaff’s testimony .with respect to the agreement to distribute, the conspiracy count. Objection will be overruled.

Transcript at 507. This rationale is impermissible. The mere fact that a co-conspirator of the defendant possessed cocaine cannot be used to implicate the defendant for possession or conspiracy to possess cocaine if, as in this case, there is no evidentiary connection made between the drug possessed by the co-conspirator and the defendant in the conspiracy in issue. See United States v. Falley, 489 F.2d 33, 37-38 (2d Cir. 1973). This precaution is certainly necessary where the witness, as here, has admitted that she was a frequent user of drugs, received drugs from various individuals, and does not recall whether she got the drugs in issue from or through the defendant.

The government argues on appeal, alternatively, that the district court properly admitted the cocaine into evidence because there was testimony from the arresting officer that Pfaff had identified Palumbo as the source. We conclude, however, that the district court should not have admitted this testimony because it was inadmissible hearsay. Although the trial judge did not offer a reason for his ruling, the government has suggested at oral argument that the statement came within the exception to the hearsay rule for declarations against interest, pursuant to Rule 804(b)(3) Fed.R.Evid. We disagree.

Rule 804(b)(3) states in pertinent part:

Hearsay exceptions. The following are not excluded by the hearsay rule if the declarant is unavailable as a witness:

* * * * * *

(3) Statement against interest. A statement ... so far tended to subject him to civil or criminal liability, ... that a reasonable man in his position would not have made the statement unless he believed it to be true.

The Rule defines “unavailable as a witness” as follows:

(A) Definition of unavailability. “Unavailability as a witness” includes situations in which the declarant—

(3) testifies to a lack of memory of the subject matter of his statement ...

* * * * * *

While it is true that Pfaff was “unavailable” within the meaning of the Rule, the reliability of her statement is less clear. The exception for declarations against interest “rests upon the assumption that one does not make statements that would damage himself unless the statement is true.” United States v. Bailey, 581 F.2d 341, 345-46 & n.4 (3d Cir. 1978) (citing 5 Wigmore on Evidence § 1455 (Chadbourne Rev. 1974)). The conclusion that a “reasonable man in [the declarant’s] position would not have made the statement unless he believed it to be true,” often requires, therefore, a sensitive analysis of the circumstances in which the statement was made and the precise nature of the statement. The Advisory Committee on the Federal Rules of Evidence has warned, in particular, that the courts should exercise special caution when the statement was made by a defendant in police custody and against a co-defendant. “Whether a statement is in fact against interest,” the committee observed,

must be determined from the circumstances of each case. Thus a statement admitting guilt and implicating another person, made while in custody, may well be motivated by a desire to curry favor with the authorities and hence fail to qualify as against interest.

Advisory Committee Note to Rule 804 reprinted in 4 J. Weinstein and M. Berger, Weinstein’s Evidence, at 804-24. Thus, this and other courts have found statements implicating a co-defendant and made in police custody to be inadmissible under the rule. See, e. g., United States v. Love, 592 F.2d 1022, 1025 (8th Cir. 1979); United States v. Bailey, 581 F.2d at 345-46 & n.4.

When viewing the totality of “circumstances of [this] case,” we conclude that Pfaff’s statement did not fall within the exception for declaration against interest. Pfaff’s identification of Palumbo as the source of the cocaine only occurred after the cocaine had already been found on her person by the police. While technically her statement could have been used to support a conspiracy conviction, or as evidence to show her possession was knowing, it is doubtful whether it is the type of statement that “so far tended to subject [Pfaff] to . .. criminal liability that a reasonable person in [her] position would not have made the statement unless [s]he believed it to be true.” The legal implications of her statement may well have been unknown to her. More importantly, the statement was made while Pfaff was in police custody in response to police questioning. There is a very real danger that the motivation for the revelation may not have been to further truth, but rather to “curry favor with the authorities.” On these grounds, although the issue is not free from doubt, we hold that it was error to admit the testimony.

We cannot discern, and the government has not suggested, any other grounds for the admission of the statement. The government concedes, as it must, that the testimony of Pfaff to the grand jury could not have supported the admission of the cocaine into evidence. The government made no attempt to introduce the testimony as substantive evidence during Pfaff’s cross examination or at any other point. Thus, we conclude that there was no properly admitted evidence to support the introduction of the cocaine. Because the prejudicial impact from the admission of the cocaine clearly outweighed its probative value under Rule 403, F.R.Evid., we hold that it was a clear abuse of discretion to admit the evidence.

Finally, it remains to be considered whether the admission of the cocaine into evidence was an error of sufficient magnitude to warrant a reversal of the conviction for conspiracy to possess cocaine. We believe that it was. The admission of the drug into evidence indicated a direct connection between the defendant and the drug. The fact that this cocaine was actually permitted to be passed among the jurors adds to its prejudicial impact. Moreover, in this case, hearsay testimony providing this link was impermissibly commented on by the prosecutor during cross examination and in his closing without an accompanying instruction by the trial court limiting its use to impeachment purposes. In these circumstances, “[t]he rule requires ‘an explicit admonition to the jury by the court at the time a prior inconsistent statement is admitted, and also an instruction at the close of trial, that the statement can be considered only as bearing on credibility.’ ” United States v. Ragghianti, 560 F.2d 1376, 1381 (9th Cir. 1977) (quoting Bartley v. United States, 319 F.2d 717, 719 (D.C.Cir. 1963)). Other courts have found the introduction into evidence of a drug not linked to the defendant constituted prejudicial error requiring reversal of the drug related conviction. See United States v. Falley, 489 F.2d at 37-38. In this case, where a hearsay statement providing the link was read to the jury with no limiting instruction, and the cocaine was admitted into evidence, there was prejudicial error requiring a reversal of appellants’ conviction for conspiracy to possess and distribute cocaine.

III.

We therefore will vacate appellant’s conviction on Count II for conspiracy to distribute cocaine, affirm his conviction on all other counts, and remand to the district court judge to consider the appropriate sentence.

. These sections provide as follows:

21 U.S.C. § 846. Attempt and conspiracy. Any person who attempts or conspires to commit any offense defined in this subchapter is punishable by imprisonment or fine or both which may not exceed the maximum punishment prescribed for the offense, the commission of which was the object of the attempt or conspiracy.

18 U.S.C. § 472. Uttering counterfeit obligations or securities.

Whoever, with intent to defraud, passes, utters, publishes, or sells, or attempts to pass, utter, publish, or sell, or with like intent brings into the United States or keeps in possession or conceals any falsely made, forged, counterfeited, or altered obligation or other security of the United States, shall be fined not more than $5,000 or imprisoned not more than fifteen years, or both.

18 U.S.C. § 473. Dealing in counterfeit obligations or securities.

Whoever buys, sells, exchanges, transfers, receives, or delivers any false, forged, counterfeited, or altered obligation or other security of the United States, with the intent that the same be passed, published, or used as true and genuine, shall be fined not more than $5,000 or imprisoned not more than ten years, or both.

21 U.S.C. § 841. Prohibited acts A — Unlawful Acts

(a) Except as authorized by this subchapter, it shall be unlawful for any person knowingly or intentionally—

(1) to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance; or

(2) to create, distribute, or dispense, or possess with intent to distribute or dispense, a counterfeit substance.

. In their briefs both parties state that the court imposed a 5 year sentence, although arguably a literal reading of the judgment could indicate that it was a 6 year sentence. This issue, however, is left to the trial judge upon the remand.

. First, appellant claims that the trial judge’s jury instructions on accomplice liability were in error. Palumbo did not object to this charge below, however, and under Rule 30, Fed.R.Crim.P., has waived this objection. Second, appellant challenges the refusal of the district court judge to permit questioning of Pfaff concerning a suicide attempt seven years earlier and her admission into a mental hospital during the weekend of the trial. The trial judge allowed extensive cross-examination of Pfaff, however, and any limitation he placed on the examination was well within his discretion. See United States v. Slade, 627 F.2d 293 (D.C.Cir.1980) (upholding district court’s limitation on cross-examination of prosecution witness regarding psychiatric history because witness had already been seriously impeached). Third, the appellant claims that the district court judge should have interrogated the jurors individually to determine whether they had learned of newspaper publicity about the trial. The appellant, however, failed to raise objection to the procedure ultimately used by the trial court to interrogate the jury. See United States v. Giacalone, 574 F.2d 328, 336 (6th Cir. 1978) (failure of appellant to raise objection during trial to judge’s failure to interrogate jurors about trial publicity waived right to challenge procedure on appeal). Appellant’s two other claims — (1) that no overt acts were proved in furtherance of the conspiracy and (2) the two conspiracies were one and the same — are without any merit.

. We are also in agreement with Judge Adams’ scholarly concurring opinion which illuminates many of the subtleties of the rule and its application to this case.

. We cannot hold on appeal that this prior statement would have been admissible under Rule 801(d)(1)(A), Fed.R.Evid. as a prior inconsistent statement. The Rule states:

A statement is not hearsay if—

(1) Prior statement of witness. The declarant testifies at the trial or hearing and is subject to cross-examination concerning the statement, and the statement is

(A) Inconsistent with his testimony, and was given under oath subject to the penalty of perjury at a trial hearing, or other proceeding, or in a deposition ...

Pfaff s assertion that she could not recall where she obtained the cocaine was not necessarily inconsistent with her prior statement that she had received the cocaine from Palumbo, as required by the Rule. Several courts have recognized that lack of memory as to the substance of a prior statement may not be inconsistent in certain circumstances with the prior statement. See United States v. Rogers, 549 F.2d 490, 496 (8th Cir. 1976); United States v. Insana, 423 F.2d 1165, 1170 (2d Cir.), cert. denied, 400 U.S. 841, 91 S.Ct. 83, 27 L.Ed.2d 76 (1970). As Judge Weinstein has written in his treatise:

[I]t would seem that the prior statement should not be included under 801(d)(1)(A) if the judge finds that the witness genuinely cannot remember, and the period of amnesia or forgetfulness is crucial as regards the facts in issue.

4 Weinstein’s Evidence § 801(d)(1)(A)[04], 801-98.

. We do not find that the improper admission of evidence and testimony relating to Count II was sufficiently prejudicial to require a new trial on the other counts.