Alleged Fraudster Gets Second Shot at Sequestration Challenge - Criminal Law - U.S. Eighth Circuit
U.S. Eighth Circuit - The FindLaw 8th Circuit Court of Appeals Opinion Summaries Blog

Alleged Fraudster Gets Second Shot at Sequestration Challenge

If you don’t think a witness sequestration violation is a big deal, think again. It could be cause for a new trial.

A jury found Marc Robert Engelmann guilty of bank fraud, wire fraud, and conspiracy. Engelmann moved for a new trial, arguing that a conversation between two government witnesses during trial, in contravention of a sequestration order, violated his rights to a fair trial and to effective assistance of counsel.

According to the Eighth Circuit Court of Appeals, the sequestration violation was worth a look.

Engelmann was a real estate attorney and represented a seller in nine different transactions that form the basis for his convictions. In each of these transactions, the buyer and seller entered into a "dual price" purchasing agreement whereby they provided lenders with inflated sales prices to secure higher loan amounts. The actual sales prices were lower than the amounts provided to the lenders, and the buyers pocketed the difference. All nine mortgages went into first payment default, and the properties were sold at foreclosure.

Engelmann's defense at trial was that he did not have the requisite intent to defraud because he thought the lenders knew of the dual pricing scheme.

During trial, a sequestration order prevented witnesses from being in the courtroom while other witnesses were testifying. After the trial, however, a man reported to the court that he had seen two of the witnesses -- FBI Special Agents Jeff Huber and Jim McMillan -- speaking together during a recess. Both witnesses had testified that Engelmann knew the lenders were unaware of the dual pricing arrangements.

Sequestration of most witnesses is mandatory when requested, but the district court is granted wide latitude in implementing sequestration orders. For example, Federal Rule of Evidence 615 explicitly "does not authorize excluding ... an officer or employee of a party that is not a natural person, after being designated as the party's representative by its attorney." A person designated as a party's representative can be present in the courtroom during witness testimony, and the decision whether to allow the government's agent to testify -- even though the agent sits at the counsel table throughout the trial -- is left to the trial court's discretion.

Here, Agent Huber was the government's designated representative in Engelmann's case, so the only dispute was whether the agents' alleged out-of-court conversation after Agent Huber's testimony but before Agent McMillan's testimony (which allegedly concerned the agents' investigation of Engelmann and Agent Huber's testimony regarding the same) violated the sequestration order.

The appellate court vacated the district court's denial of Engelmann's motion for a new trial with respect to the alleged sequestration violation, directing the district court to conduct an evidentiary hearing on the limited issue of whether the government witnesses' conversation warranted a new trial.

Related Resources: