## Facts

- Richard Joseph Finley operated a law bookstore business and sought investors to expand it nationally.
- After a dispute with the IRS, he could not obtain traditional bank financing.
- Finley attended an investment seminar presenting a lien-based theory and negotiable instruments purportedly usable to draw on claimed liens.
- Finley used these instruments in transactions that led to charges for making a false claim against the United States, attempting to interfere with IRS administration, and bank fraud.
- Intent to defraud was a required element of the bank-fraud charges.
- Finley’s defense was that he lacked fraudulent intent because he sincerely (though irrationally) believed the instruments were legitimate.
- Finley proffered testimony from a psychologist, Dr. John Wicks, who would describe Finley as having an “abnormal,” “closed” belief system that explained his adherence to the instrument scheme.
- Mid-trial, the government sought exclusion of the expert testimony, asserting inadequate expert disclosure under Federal Rule of Criminal Procedure 16(b)(1)(C).
- After discussions outside the jury’s presence and a Daubert hearing, the district court excluded all of Wicks’s testimony as (1) a Rule 16 discovery sanction and (2) unreliable and irrelevant under Federal Rule of Evidence 702, with concern that it effectively addressed ultimate intent barred by Rule 704(b).
- The jury convicted Finley on all counts except one bank-fraud count that was later dismissed after a hung jury; Finley received a 48-month sentence.

## Issues

1. Whether the district court abused its discretion by excluding all defense psychological expert testimony as a sanction for an asserted Rule 16(b)(1)(C) disclosure violation.
2. Whether the district court abused its discretion by excluding the testimony under Federal Rule of Evidence 702 and Daubert as unreliable or irrelevant to intent.
3. Whether Rule 704(b) required wholesale exclusion, or instead permitted admission with limits to prevent an opinion on the defendant’s specific mental state element.

## Decision

- The Ninth Circuit reversed the convictions and remanded for a new trial.
- The court held that total exclusion as a Rule 16 sanction was unjustified and disproportionately severe on the record presented.
- The court held that the proffered expert testimony was sufficiently relevant to intent and supported by an identifiable psychological evaluation methodology to satisfy Rule 702 for at least some admissible form.
- The court held that Rule 704(b) did not justify blanket exclusion; any risk of an impermissible ultimate-issue opinion could be addressed by limiting the testimony and questioning.

## Legal Principles

- Excluding a criminal defendant’s expert witness for a Rule 16 violation is an extreme remedy; when prejudice can be cured by less severe measures (e.g., continuance or limits), wholesale exclusion is generally improper.
- Expert psychological testimony may be admitted to help the jury evaluate whether the defendant acted knowingly or with specific intent, where it explains mental characteristics or belief systems bearing on the defendant’s conduct.
- Under Rule 702 and Daubert, methodological disputes and challenges to an expert’s conclusions typically go to weight for the jury, not categorical inadmissibility, when accepted methods support the testimony and it is probative of a material issue.
- Rule 704(b) bars an expert from stating whether the defendant did or did not possess the specific mental state that is an element of the charged offense, but it permits testimony describing the defendant’s mental condition and tendencies; courts should use narrowing remedies rather than total exclusion when feasible.

## Conclusion

The Ninth Circuit ordered a new trial because the district court’s blanket exclusion of the defense psychologist—based on Rule 16, Rule 702, and Rule 704(b)—was an abuse of discretion where narrower remedies could address disclosure and ultimate-issue concerns and the testimony was probative of the defendant’s intent defense.


United States v. Finley, 301 F.3d 1000 (9th Cir. 2002)