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United States v. Rodgers

United States District Court, E.D. Kentucky, Central Division, Frankfort

July 27, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
RONNIE C. RODGERS, Defendant.

          MEMORANDUM OPINION & ORDER

          GREGORY F. VAN TATENHOVE UNITED STATES DISTRICT JUDGE.

         The Government filed a notice of its intention to introduce evidence of Mr. Rodgers's criminal history and prior bad acts. [R. 31.] At the final pretrial conference for this matter, counsel for Mr. Rodgers made an oral motion to exclude that evidence. [R. 43.] For the following reasons, Mr. Rodgers's motion is GRANTED IN PART and DENIED IN PART.

         I

         On December 7, 2017, Mr. Ronnie C. Rodgers was charged by indictment with one count conspiracy to commit mail fraud in violation of 18 U.S.C. § 1341, wire fraud in violation of 18 U.S.C. § 1343, and securities fraud in violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240-10b-5, all in violation of 18 U.S.C. § 371. [R. 1.] A few weeks ago, the Government filed notice of its intent to present evidence of prior bad acts at trial. [R. 31.] Mr. Rodgers objects, stating the introduction of these acts would be unfairly prejudicial. [R. 36.]

         The Government seeks to introduce five prior bad acts of Mr. Rodgers: a guilty plea for criminal solicitation to commit murder from 1990; a guilty plea to misdemeanor wanton endangerment from 1988; a conviction for misdemeanor theft by deception from 1982; a 2011 temporary restraining order against Mr. Rodgers, his brother Rickey Rodgers, and Rick-Rod Oil Company, Inc., to prevent them from selling and/or making offers to sell interests in oil and gas programs; and a 2015 Order of Permanent Injunction against Mr. Rodgers enjoining him from working in the securities industry for five years. [R. 31 at 2-3; R. 33.] The Government argues that Mr. Rodgers had a duty to make his investors privy to this information when he asked them to invest in an oil operation with him. [R. 31 at 4.] Therefore, the Government continues, evidence of his history and convictions should be admissible as intrinsic to the offense or background evidence. Id. at 5. The Government contends that Mr. Rodgers's history is admissible as res gestae, not subject to analysis under Federal Rule of Evidence 404(b) and survives an analysis under Federal Rule of Evidence 403. Id. at 5-9.

         II

         A

         Generally, the Government may not introduce evidence of prior bad acts at trial because of the concern that the introduction of such evidence may lead to an improper guilty verdict. Fed.R.Evid. 404. In some limited circumstances, however, the Government may introduce evidence of past conduct if the conduct is sufficiently tied to the presently charged offense. As has been explained by the Sixth Circuit:

[p]roper background evidence has a causal, temporal or spatial connection with the charged offense. Typically, such evidence is a prelude to the charged offense, is directly probative of the charged offense, arises from the same events as the charged offense, forms an integral part of a witness's testimony, or completes the story of the charged offense.

United States v. Marrero, 651 F.3d 453, 471 (6th Cir. 2011) (quoting United States v. Hardy, 228 F.3d 745, 748 (6th Cir. 2000)). When background or res gestae evidence is presented in this way, it is not subject to the strictures of Rule 404(b). United States v. Adams, 722 F.3d 788, 810 (6th Cir. 2013) (citing United States v. Clay, 667 F.3d 689, 697 (6th Cir. 2012)). The United States claims that evidence of Mr. Rodgers's 1988 plea to wanton endangerment, 1990 plea to solicitation, 1982 conviction for theft by deception, 2011 temporary restraining order, and 2015 permanent injunction are all admissible as background evidence because they are “intrinsic evidence” and directly probative of allegations contained in the indictment. [R. 31 at 6-7.]

         First, the Court must consider whether the evidence the Government seeks to introduce has a sufficient “causal, temporal, or spatial connection with the charged offense.” Marrero, 651 F.3d at 471 (quoting Hardy, 228 F.3d at 748). While several of the convictions took place far before the crime currently being prosecuted, the Government argues that Mr. Rodgers's past convictions and injunction are sufficiently connected because they are intrinsic to and directly probative of the present allegations. [R. 31 at 6-7.] In Count 1 of the Indictment, Mr. Rodgers is charged with conspiracy to commit mail fraud, wire fraud, and securities fraud. [R. 1.] Therein, the Indictment alleges Mr. Rodgers and his associates “failed to disclose material facts to investors, ” including that he was a convicted felon and that he had been “enjoined by the Commonwealth of Kentucky from offering investments in oil and gas.” Id. at 5-6. To prove mail fraud or wire fraud, the Government must show Mr. Rodgers's “scheme included a material misrepresentation or concealment of a material fact.” Sixth Circuit Pattern Jury Instructions, 10.01 Mail Fraud (18 U.S.C. § 1341); Sixth Circuit Pattern Jury Instructions, 10.02 Wire Fraud (18 U.S.C. § 1343). Information is “material” if there is a “substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix' of information made available.” United States v. Donohue, 726 Fed.Appx. 333, 342 (6th Cir. 2018) (quoting Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988)).

         As an initial matter, Mr. Rodgers's convictions for theft by deception (1982) and wanton endangerment (1988) are not felonies, and therefore, not probative of his failure to disclose that he was a convicted felon. However, in the Government's eyes, investors would have considered Mr. Rodgers's criminal history as important when deciding whether or not to invest with him. And so, they argue that his past unlawful conduct is admissible to show that he made material misrepresentations when promoting the oil scheme.

         The Sixth Circuit has confirmed that evidence of a previous injunction related to the offering securities for sale or selling securities is admissible under this analysis. United States v. Ramer, 883 F.3d 659, 669 (6th Cir. 2018). The facts of the 2011 Temporary Restraining Order and 2015 Permanent Injunction are the same facts that Mr. Rodgers allegedly concealed from investors, and thus those facts are relevant for the purposes of Rule 404(b). See id. The conspiracy indicted against Mr. Rodgers runs from 2007 to December 2017, during which time both the Temporary Restraining Order and Permanent Injunction were entered against him. [Compare R. 1 at 3 with R. 33 at 147 and R. 33 at 150.] This evidence has a temporal connection with the charged offense, “is directly probative of the charged offense, arises from the same events as the charged offense, ” and “completes the story of the charged offense.” Marrero, 651 F.3d at 471. Therefore, the 2011 Temporary Restraining Order and 2015 Permanent Injunction are admissible as proper background evidence.

         The three other convictions provide a closer call. The two violent crimes, wanton endangerment and solicitation to commit murder, have no temporal or spatial connection with the charged crime. The wanton endangerment occurred in 1988, but the Court has few additional details. The record provides the relevant dates, charge, conviction, and sentence, but little else. [R. 33 at 28.] Further, he was convicted for solicitation to commit murder in 1990, nearly twenty years before the charged conspiracy began. The conviction for theft by deception occurred twenty-five years before the charged conspiracy, and though the subject matter may be similar, the record does not indicate any casual connection or shared facts with this conspiracy. Similar to the conviction for wanton endangerment, the record provides dates and logistical information, but no facts. However, in securities fraud, a false assertion or omission is material if there is a “substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix' of information made available.” Donohue, 726 Fed.Appx. at 342 (quoting Basic Inc., 485 U.S. at 231-32). Here, there is a substantial likelihood that the disclosure of Mr. ...


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