U.S. v. Brown, 548 F.2d 1194 (1978)
Author: Anonymous

Relevant Facts: The Df was a part-time tax preparer. He was convicted for counseling, procuring, and advising the preparation and presentation of fraudulent income tax returns.  The govt based its proof on the testimony of one spouse taxpayer for each of the 17 counts, and the testimony of the IRS agent who conducted the audit.  Almost all testified that their true deductions were less than the figures stated on their returns.   The agent testified that 160 returns had been audited and 90-95% had overstated itemizations.  She did not have the list of taxpayers, their names, or their records with her, nor did she have access to the documents to refresh her memory before testifying.

Legal Issue(s):Whether the agent’s testimony, where her conclusions rested on the information she obtained from the out of court statements of taxpayers, constituted hearsay?

Court’s Holding: Yes, the jury had no way to examine the trustworthiness of the agent’s testimony, b/c it could not examine the statements of the declarant taxpayers or others on which her testimony was directly and substantially founded.

Procedure: Jury found Df guilty of 12 cnts, 5 were dismissed for lack of sufficient evidence.  Vacate and remand for new trial.

Law or Rule(s):   FRE 801 “a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted,” is hearsay and inadmissible.

Court Rationale: The agent’s testimony that 90-95% of the returns she audited contained overstated itemization deductions was introduced solely to prove the element of “willfulness,” the intent portion of the offense.  The govt’s proof consisted either of statements by these taxpayers to the agent or that they were unable to substantiate their deductions b/c they did not have any supporting documents.  Thus, the information the agent obtained was absolutely vital to her in court conclusion. B/c her testimony had to have been based directly on the out of court statements by the taxpayers, the Df had no opportunity to cross examine and test their assumptions.  Df could not even cross examine the agent b/c she did not have any of her records with her.  Given the rationale of the hearsay rule, a clearer case of hearsay testimony would be difficult to imagine.