No. 90-50041.

United States Court of Appeals, Ninth Circuit.

Before CANBY and RYMER, Circuit Judges and LEVI, District Judge.^*

Harold C. Cooper appeals his conviction of one count of conspiracy to manufacture counterfeit and forged securities, 18 U.S.C. Sec. 513. We affirm the conviction.

Cooper was convicted of conspiring to manufacture counterfeit American Express traveler's checks. Cooper supplied financial support to co-conspirators Wicks and Pizzale who were to print $12 million dollars worth of counterfeit traveler's checks. According to the scheme, the conspirators hoped to negotiate with American Express for a reward for the return of the checks. They intended to represent that the checks had been forged by some unknown other persons. In early 1989, co-conspirators Wicks and Pizzale leased a printing shop, purchased various printing supplies, and began printing the background design for the traveler's checks.

Cooper and Wicks contacted Richard Smith and attorney Ronald Yengich to negotiate the surrender of the checks to American Express. Yengich testified that he was told that the checks were counterfeit, but he had the impression that the checks had already been forged. Yengich further testified that Wicks stated that he was contacting Yengich to be sure everything was completely legal.

Wicks and Pizzale were arrested in April of 1989. Prior to the arrests, federal agents saw Cooper in a car Wicks had been seen driving earlier in the operation. The agents also watched Cooper go to Pizzale's door, and later speak to Pizzale outside of a bar. Following Pizzale's arrest, Pizzale and his girlfriend agreed to cooperate with federal agents by introducing an undercover agent to Cooper. The agent and Pizzale met with Cooper at a restaurant. The agent testified that Cooper admitted that he was involved in the counterfeiting scheme, that the checks were not finished yet, and that he had contributed $5,700 of his own money to the counterfeiting operation.

We review the district court's exclusion of evidence for abuse of discretion. United States v. Mundi, 892 F.2d 817, 820 (9th Cir.1989). Error may be predicated upon the exclusion of evidence when a substantial right of the party is affected, if the substance of the evidence was made known to the court by offer or was apparent from the context within which questions were asked. United States v. Cutler, 676 F.2d 1245, 1249 (9th Cir.1982).

The district court excluded testimony from defense witnesses Smith and Yengich regarding conversations they had with Wicks, on the ground that the conversations were hearsay. The defendant's offer of proof was that the testimony would recount conversations Wicks had with Smith and Yengich in Cooper's presence, in which Wicks, Smith and Yengich discussed arrangements for the return of certain stolen bearer bonds. Although the facts are murky at best, apparently Wicks had been involved with Smith and Yengich in a separate transaction involving stolen bearer bonds in which Wicks hoped to gain a reward for the return of the bonds. Yengich and another lawyer negotiated for the return of these bonds. Cooper offered to prove that in the course of the bearer bond negotiations, Wicks told Yengich and Smith, in Cooper's presence, that he also had information about the location of counterfeit American Express checks and asked for assistance in returning them. Yengich testified that Wicks statement implied that the counterfeit traveler's checks were already in existence and merely had been discovered--not counterfeited--by Wicks. Cooper proffered that Wicks stated, in Cooper's presence, that he wanted both of these transactions to be conducted in a completely legal manner.

Cooper contends that the evidence was not offered for the truth of the matter asserted, that is, that the transaction in fact was legal, but to prove that Wicks made such a representation in Cooper's presence. Cooper argues that the evidence was offered to show his belief that the transaction was legal and his belief that the checks merely had been discovered by Wicks. He argues that the evidence was not offered for the purpose of establishing the actual legality of the check transaction or that the counterfeit checks in fact already existed. The government takes a different view and argues that the evidence was properly excluded as hearsay.

The government relies on United States v. Fernandez, 839 F.2d 639, 640 (9th Cir.1988), in which the court upheld the district court's exclusion of a defendant's self-serving exculpatory statement. In that case, as in this one, the defendant did not testify, but sought to introduce testimony of a third party which would exculpate the defendant. In Fernandez, the proffered testimony was a statement by the defendant to a police officer upon his arrest denying the offense he was charged with. The only justification offered for admitting the statement, in that case, however, was to forestall an assumption of guilt by silence. The court found that the government had not suggested that the defendant's silence was significant, and had not satisfied the prerequisites to inferring an admission by silence, rendering defendant's justification unconvincing. Id.

The present case is substantially different. In this case, Cooper offers the evidence to show what he was led to believe by Wicks--whether or not Wicks' statements were true--as evidence of his lack of criminal knowledge and intent.

The government also argues that to admit the testimony of third parties as to Cooper's exculpatory statements is a defense strategy to place the statements before the jury without subjecting Cooper to cross-examination. The government relies upon United States v. Willis, 759 F.2d 1486, 1501 (11th Cir.1985). In Willis, the court rejected the defendant's contention that an exculpatory statement was not offered for its truth but to prove defendant had no knowledge of the illicit cargo of the plane. The court held that proving the defendant had no knowledge of the illicit cargo was proving the truth of the matter and therefore, no exception was available.

Contrary to Willis, however, the statements in this case were made not by the defendant himself, but by Wicks. Establishing the effect of a third person's statements on the state of mind of the defendant is a nonhearsay use of the statement, and the statements could have been admitted absent some other objection.

We will not reverse a conviction, following trial, for error that was harmless. Fed.R.Crim.P. 52(a). Where a nonconstitutional error is involved, an appellate court will not reverse if it is more probable than not that the error did not materially affect the judgment. See United States v. Feldman, 788 F.2d 544, 557-78 (9th Cir.1986), cert. denied, 107 S.Ct. 955 (1987).

The evidence against Cooper rested primarily upon his powerfully incriminating statements to the federal agent which amounted to a full confession. Cooper put on evidence by Yengich and Smith that they had met with Cooper and Wicks, and that they believed the proposed transaction could be accomplished legally. Yengich testified that Wicks statements implied that the counterfeit checks already were in existence. The excluded evidence of what co-conspirator Wicks actually said to Yengich and Smith, concerning the supposed legality of the proposed transactions, would have added little to the testimony that Cooper did elicit. Moreover, any testimony about the separate bearer bonds transaction would seem of very marginal relevance and properly could be excluded under Fed.R.Evid. 403. In light of the evidence against Cooper, and the evidence he did present, we find that the error did not materially affect the judgment of guilt.

AFFIRMED.