The president of a multibillion-dollar gas company, Mark Hazelwood, was accused of participating in a manual-rebate scheme by shorting customers of purchased diesel fuel and cooking the books to avoid detection. The government had a key piece of evidence. It had an audio recording of Hazelwood. The government's recording of Hazelwood didn't contain anything that suggested Hazelwood participated in the fraud. But the recording did depict Hazelwood making truly odious racist statements. (As a taste, it revealed Hazelwood as a David Allan Coe fan.)
Defense counsel wisely confirmed he did not wish to open up issues of character.
So, the government came up with this clever idea. The government asked a witness whether Hazelwood was a "good businessman." He was. The government then moved to admit the offensive recording as evidence that, in fact, Hazelwood would and did jeopardize the company's reputation by making the offensive statements, tending to rebut the evidence that he was a "good businessman."
The Sixth Circuit reversed. United States v. Hazelwood, Nos. 18-6023/6101/6102 (6th Cir. 2020). The Court asks a simple question: Do the statements make it more likely defendant committed fraud? No. Do the statements make it more likely the jury will convict? Yes. Henry Ford, after all, was an excellent businessman, despite being a rabid anti-semite. Fortunately, character flaws do not have a natural correlation with business judgment.
That is why we have rules against character evidence.
The Sixth Circuit explains the other ways character evidence may be properly admitted, such as "proving motive, opportunity, intent," etc. under Rule 404(b)(2). But those did not apply here.
The error in admitting the evidence was prejudicial error because the government's evidence "was not ironclad," and the error left the conviction "in grave doubt."
Judge Donald dissented. Judge Donald thinks Hazelwood's theory that he was too good a businessman to participate in the fraudulent scheme opened the door to the recording of his racist and sexist statements. And that the recording could be admissible under Rule 404(b). And that "jury trials are not antiseptic events," and so even if a close call, the evidentiary ruling does not require reversal.