## Facts

- Terry Davis, national treasurer of the Phi Beta Sigma fraternity, was accused of stealing fraternity funds by writing checks to “cash” and diverting money for personal expenses rather than fraternity payroll and other obligations.   
- The fraternity’s new treasurer, Jimmy Hammock, discovered that approximately $29,000 in checks written to cash had not been deposited into the fraternity’s payroll account as Davis had claimed.   
- Hammock confronted Davis about the discrepancy; Davis responded by asking whether they could “just split this $29,000 and make this situation just go away,” effectively offering to pay a portion to resolve the matter.   
- Hammock told Davis that the fraternity believed that more than $100,000 was missing; Davis replied that he could not pay that much and was again directed to speak with the fraternity’s president or counsel if he wished to resolve the dispute.   
- At Davis’s federal criminal trial on theft and bank‑fraud charges, the government introduced Hammock’s testimony about Davis’s repayment offer; the prosecution stated it was not using the statements to prove obstruction, but as evidence bearing on Davis’s guilt.   
- Davis objected, arguing that his discussions with Hammock were settlement negotiations over a civil dispute and that Federal Rule of Evidence 408 barred admission of that evidence to prove liability or guilt; the district court overruled the objection, and the jury convicted Davis on multiple counts.   
- Davis appealed to the United States Court of Appeals for the District of Columbia Circuit, challenging the admissibility of Hammock’s testimony under Rule 408 and seeking reversal of his convictions.   

## Issues

1. Does Federal Rule of Evidence 408 apply in a criminal case to bar admission of a defendant’s statements made during negotiations to resolve an underlying civil dispute, when the government offers the statements to prove the defendant’s guilt on related criminal charges?  
2. If Rule 408 applies, did the district court err in admitting Hammock’s testimony about Davis’s offer to “split” the missing funds, and was that error sufficiently prejudicial to require reversal of Davis’s bank‑fraud and theft convictions?  

## Decision

- The D.C. Circuit held that Federal Rule of Evidence 408 can apply in criminal cases to exclude evidence of settlement offers or negotiations when the evidence is offered to prove liability or guilt on a disputed claim that is civil in character.   
- The court concluded that Davis’s conversations with Hammock about paying money to make the matter “go away” were settlement negotiations concerning a disputed civil claim between Davis and the fraternity.   
- Because the government offered Hammock’s testimony to support Davis’s guilt on the fraud charges, the evidence fell squarely within Rule 408’s prohibition and should not have been admitted.   
- The court determined that the erroneous admission of Hammock’s testimony was not harmless; it directly suggested consciousness of guilt and likely influenced the jury’s assessment of Davis’s intent and credibility.   
- The D.C. Circuit therefore vacated Davis’s convictions and remanded for further proceedings; in later proceedings, Davis ultimately pled guilty to a single count of bank fraud and received a sentence of time served plus five years of supervised release.   

## Legal Principles

- **Federal Rule of Evidence 408**: Evidence of (1) furnishing, promising, or offering valuable consideration in compromising or attempting to compromise a claim, and (2) conduct or statements made during compromise negotiations about a claim, is not admissible to prove liability for, invalidity of, or amount of a disputed claim.   
- Rule 408’s protection extends beyond civil trials and can apply in criminal proceedings when the statements arise from negotiations over a civil dispute and are offered to prove guilt on related criminal charges.   
- The critical questions under Rule 408 are:  
  - whether there was a “claim” that was disputed as to validity or amount; and  
  - whether the challenged statements were made in the course of compromise negotiations about that claim.   
- Offers to pay money or “split” an alleged loss, made in response to an accusation of financial misconduct and aimed at resolving the dispute, can constitute settlement offers within the meaning of Rule 408.   
- Admission of Rule 408‑barred evidence can be reversible error when the statements are central to the prosecution’s theory and materially affect the jury’s view of the defendant’s intent or credibility.   

## Conclusion

The D.C. Circuit ruled that Davis’s discussions with the fraternity’s treasurer about paying money to resolve accusations of missing funds were settlement negotiations protected by Federal Rule of Evidence 408. Because the government used those statements as substantive evidence of guilt in his criminal fraud trial, their admission was erroneous and not harmless. The court vacated Davis’s convictions and remanded, reinforcing that Rule 408 can bar the government in a criminal case from using a defendant’s civil settlement efforts to prove guilt.


United States v. Davis, 596 F.3d 852 (D.C. Cir. 2010)