Hypothetically Speaking: Southern District Of Texas Finds No Problem With Hypothetical Testimony Under Rule 704(b)

Federal Rule of Evidence 704(b) provides that 

In a criminal case, an expert witness must not state an opinion about whether the defendant did or did not have a mental state or condition that constitutes an element of the crime charged or of a defense. Those matters are for the trier of fact alone.

Often, prosecutors will circumvent Rule 704(b) in cases in which defendants are charged with possession of drugs with intent to distribute by having officers testify that, based upon their experience, the amount of drugs possessed would typically be associated with an intent to distribute. But in United States v. Lopez, 2012 WL 4663530 (S.D.Tex. 2012), it was the defendant finding a way around Rule 704(b).

In Lopez, Gilbert Lopez,

an accountant, joined Stanford Financial Group (“SFG”) in September 1997 as its Assistant Controller. After joining SFG, Lopez worked in several positions within the company, and in September of 2006, Lopez was named SFG’s Chief Accounting Officer. In 1997, [Mark] Kuhrt was initially hired as an accountant by an SFG affiliate company, Stanford Leasing Company (“SLC”). After working for SLC and later SFG, Kuhrt became the Global Controller of Stanford Financial Group Global Management (“SFGGM”). Both SFG and SFGGM are affiliate companies to Stanford International Bank (“SIB”).

The Government allege[d] that SIB and its affiliated companies sold Certificates of Deposit (“CDs”), marketing the CDs as “safe and secure investments” through its promotional materials, financial statements, and other published reports. The Government contend[ed] that the sales of the CDs was actually a scheme by Defendants and others to defraud depositors “in order to enrich themselves through the payment of wages, bonuses, and other monies.” The Government contend[ed] that Lopez and Kuhrt, as Chief Accounting Officer and Global Controller of their respective companies, misrepresented information to investors in furtherance of the scheme to defraud.

Before trial, Lopez and Kuhrt indicated that they planned to call certified public accountants as expert witnesses at trial. In response, the government filed a motion that sought, inter alia, to preclude these experts from opining “on what either Defendant knew, believed, or relied upon.”

The United States District Court for the Southern District of Texas agreed in part, finding that these experts could not testify about what Lopez or Kuhrt actually “knew, believed, or relied upon” because of Rule 704(b). The court, however, also disagreed in part, finding that

expert testimony is permissible under 704(b) if the testimony does not go to the mens rea of the crimes charged, but merely provides the expert’s opinion on a predicate matter in which the jury could “extropolate whether the defendants possessed the necessary mens rea.”… As a result, the Court finds that expert testimony related to the general knowledge, understanding, or beliefs of a professional in a similar position to Kuhrt or Lopez, may be admissible if (1) a foundation can be laid showing that the expert has the requisite qualifications to opine on such matters; and (2) the Defendants have established relevance for such information. Therefore, the Government’s motion—as it relates to what a hypothetical person in either Lopez’s or Kuhrt’s position would know, believe, or rely upon—must be denied at this time. 

In other words, just as officers can testify about whether the average defendant with 100 grams of marijuana likely has intent to distribute it, CPAs can testify about whether the average accountant who engages in certain acts likely has the intent to defraud. But these experts cannot testify about the mental state of the actual criminal defendant. Based on this does anyone see a point to 704(b)?

-CM