In a white collar case, the government must typically prove that the defendant had a “criminal” state of mind (i.e., that the defendant knew that what he was doing was illegal). Consequently, a popular defense in such cases is an “advice of counsel” defense. In short, the defendant argues that, because of advice received from a lawyer, he thought his actions were perfectly legal and, thus, did not possess a criminal state of mind. In United States v. Greenspan, No. 17-2458, 2019 WL 1646454, at *6 (3d Cir. Apr. 17, 2019), the Third Circuit made clear that, when a defendant presents an advice of counsel defense, the rule against hearsay typically doesn’t apply. The reason? The defendant is not offering the lawyer’s advice for its truth (i.e., that the lawyer gave sound legal advice to the defendant) but, rather, to show the effect of the advice on the defendant (i.e., to show that the defendant thought that what he was doing was legal).
Greenspan was a long-time family doctor who ran a solo medical practice. The government claimed that Greenspan had received kickbacks in exchange for referring blood tests to a particular lab. The government charged Greenspan with accepting kickbacks, in violation 42 U.S.C. § 1320a-7(b)(1)(A); using interstate facilities with the intent to commit commercial bribery, in violation of 18 U.S.C. § 1952(a)(1), (3); committing honest-services wire fraud, in violation of 18 U.S.C. §§ 1343, 1346; and conspiracy to do all of the above.
The advice of counsel issue arose with respect to certain agreements that Greenspan and his co-conspirators had entered into. Greenspan, who took the stand, wished to testify that his lawyer—who was dead at the time of trial—had reviewed and blessed the agreements. But when Greenspan attempted to get into the specifics of what his lawyer had told him, the trial court shut him down, ruling that the lawyer’s advice qualified as hearsay.
On appeal, the Third Circuit held that the trial court had erred. The Third Circuit explained that, under Federal Rule of Evidence 801(c)(2), hearsay is a statement offered “to prove the truth of the matter asserted in the statement.” Fed. R. Evid. 801(c)(2). Greenspan, the Court reasoned, was not offering his lawyer’s statements for their truth. The Court wrote: “[Greenspan’s lawyer] may have said the agreements were lawful. But Greenspan was not using the statements to show that the agreements were in fact lawful. He wanted to use them to prove their effect on his state of mind—to explain why he believed that they were lawful. So the lawyer’s advice was admissible non-hearsay.”
Ultimately, the Third Circuit held that the trial court’s error was harmless. Still, the Greenspan case is a good reminder to always consider the purpose of the out-of-court statement when working through the hearsay rules.
