United States v. Mergen, No. 12-2873-cr (2d Cir. Aug. 21, 2014) (Katzmann, Jacobs, and Duffy), available here
Volkan Mergen worked for years as a paid FBI informant operating inside mob families. In 2006, he participated with mob members in an arson without alerting the FBI in time to abort the crime.
Mergen then entered into a cooperation agreement by which he would plead guilty to a Travel Act offense in connection with the arson in exchange for a Section 5K1.1 "substantial assistance" letter. One provision of the agreement tolled the statute of limitations for prosecutions resulting from Mergen's breach and "premised upon, among other things," his statements to the government, his testimony, or leads derived therefrom.
When Mergen breached the agreement, the government successfully prosecuted him in the Eastern District of New York for the Travel Act offense and other crimes (drug distribution, attempted robbery, firearm possession, and related conspiracies) that the government learned about from persons who had been convicted based on Mergen's cooperation.
On this appeal, the Circuit granted a new trial on the Travel Act count and reversed the rest of Mergen's convictions.
Though the panel held the evidence sufficient to support the Travel Act conviction, the Court ruled that the district court committed reversible error by excluding a recorded conversation between the defendant and his FBI handler. In the recording, the FBI agent assured the defendant that he had not done "anything wrong" the night of the arson. This recording should have been admitted at trial, the Circuit ruled, because it impeached the agent's testimony denying that he ever told the defendant that he did "nothing wrong." Accordingly, the recording was a "prior inconsistent statement offered for impeachment," and thus, by definition, was not hearsay. The Court also held that the error was not harmless because the evidence of the defendant's intent was ambiguous, the case against him depended largely on whether the jury believed the defendant or the FBI agent, and the recording would have undercut the agent's credibility.
The Circuit also reversed the defendant's other convictions. It agreed with the defendant that the limitations waiver in the cooperation agreement, which had to be construed strictly against the government, did not toll the statute of limitations for offenses that the government learned about from people Mergen helped convict. If the government wished to reserve its right to prosecute the defendant for any offense he ever committed, without regard to any statute of limitations, then it should have drafted the agreement to say so expressly and unambiguously.
Commentary: Notably, this was the defendant's second appeal. On the first appeal, the Circuit ruled that the recorded conversation between the defendant and the FBI agent "should not have been excluded on the basis of either hearsay or lack of authentication." The district court apparently did not get the message, for it again excluded the recording on these same improper grounds, prompting reversal.