## Facts

- First Guaranty Metals (FGM), a Florida precious-metals leveraged futures business, marketed itself as fully hedging customer contracts and maintaining narrow buy/sell spreads.
- During major market volatility (July 1979–January 1980), FGM reduced hedging and widened spreads, causing substantial customer losses; FGM filed for bankruptcy on January 29, 1980.
- The next day, federal agents executed a search warrant at FGM’s offices, and the Commodity Futures Trading Commission (CFTC) filed a civil enforcement action alleging customer fraud and seeking to freeze assets and obtain disgorgement.
- In the CFTC case, the government deposed FGM’s president (Herbert Sanburg) and two managers (Richard Feldman and Richard Martenson). Feldman and Martenson (or their counsel) did not attend or cross-examine at Sanburg’s deposition.
- One day before his deposition, Sanburg entered a cooperation agreement with the government to testify against Feldman and Martenson in exchange for not being targeted criminally; the government did not disclose this agreement to Feldman and Martenson until shortly before the later criminal trial.
- Sanburg died less than a month after the deposition.
- Feldman and Martenson were later indicted and tried for wire fraud. Because Sanburg was unavailable, the government offered his CFTC deposition as former testimony under Fed. R. Evid. 804(b)(1); the district court admitted it, and the jury convicted both defendants.
- Trial also proceeded less than 30 days after a superseding indictment adding new charges.

## Issues

1. Whether admitting a deceased witness’s civil deposition at a later criminal trial satisfied Fed. R. Evid. 804(b)(1) and the Sixth Amendment when defendants had no prior cross-examination and lacked a similar motive to develop testimony in the civil proceeding.
2. Whether commencing trial less than 30 days after a superseding indictment adding new charges violated the Speedy Trial Act, 18 U.S.C. § 3161(c)(2).

## Decision

- The Seventh Circuit reversed the convictions and remanded.
- The court held that admitting Sanburg’s civil deposition violated the Confrontation Clause and did not meet Rule 804(b)(1)’s “opportunity and similar motive” requirement.
- The court held that trying defendants less than 30 days after a superseding indictment adding charges violated the Speedy Trial Act’s minimum preparation period.

## Legal Principles

- Former testimony is admissible under Fed. R. Evid. 804(b)(1) only if the party against whom it is offered had a genuine opportunity and a similar motive to develop the testimony by cross-examination in the prior proceeding.
- Notice of a civil deposition does not, by itself, establish a meaningful opportunity for cross-examination when the defendant lacks information that materially affects incentive and ability to cross-examine (including undisclosed bias evidence such as a cooperation agreement).
- Motive to cross-examine in a civil regulatory/enforcement proceeding may materially differ from motive in a later criminal prosecution; differences in stakes and strategy can defeat Rule 804(b)(1)’s similar-motive requirement.
- The Confrontation Clause generally requires adequate reliability for admitted former testimony; undisclosed cooperation arrangements and absence of cross-examination can render such testimony constitutionally inadmissible.
- Under 18 U.S.C. § 3161(c)(2), when a superseding indictment adds new charges, defendants are entitled to at least 30 days to prepare for trial on those charges; commencing trial sooner violates the Act.

## Conclusion

The court reversed wire-fraud convictions because the prosecution’s use of an uncross-examined civil deposition from a deceased cooperating witness failed Rule 804(b)(1) and the Sixth Amendment, and because trial began too soon after a superseding indictment added charges, violating the Speedy Trial Act.


United States v. Feldman, 761 F.2d 380 (7th Cir. 1985)