## Facts

- Gil Manuel Paguio, Jr. and Angelica D. Acosta sought to purchase property and obtained a $204,000 bank loan arranged through Paguio Jr.’s father, Gil Paguio, Sr.
- The loan application submitted to the bank stated that Paguio Jr. and Acosta earned monthly income from the father’s insurance business, though they did not earn the reported amounts.
- To satisfy the bank’s verification requests, Paguio Sr. provided fictitious tax returns and tax forms for the defendants that had not been filed with the IRS.
- The defendants’ actual financial condition suggested they could not qualify for a loan of that size, but both signed the final loan application.
- After unrelated investigative activity brought attention to Paguio Jr.’s finances, federal authorities uncovered evidence that the loan application and supporting documents were false.
- Defense counsel obtained a written statement from Paguio Sr. admitting he fabricated documents and made false representations to the bank while stating that his son had no involvement and lacked knowledge of the falsity.
- Before trial, Paguio Sr. became a fugitive on unrelated charges and was unavailable as a witness.
- At trial, the court admitted the father’s self-inculpatory admissions but excluded the portions exculpating Paguio Jr., concluding the exculpatory parts were not sufficiently against the father’s penal interest.
- A jury convicted both defendants of making false statements to influence a bank (and aiding and abetting) under 18 U.S.C. §§ 1014 and 2.

## Issues

1. Whether Federal Rule of Evidence 804(b)(3) permits admission of an unavailable declarant’s statement that both inculpates the declarant and exculpates the accused when the statement, viewed as a whole, is against penal interest and corroborated.
2. Whether the trial court erred by admitting only the self-inculpatory portions of the father’s statement while excluding the exculpatory portions.
3. Whether the exclusion of the exculpatory portions was harmless in light of the contested issues of knowledge and intent.

## Decision

- The Ninth Circuit reversed the convictions and remanded.
- The court held the trial court erred in excluding the exculpatory portions of the father’s statement under Rule 804(b)(3).
- The court concluded the statement should have been evaluated as a whole rather than mechanically separated where the exculpatory portion was interrelated with, and could intensify, the declarant’s penal exposure.
- The court found the evidentiary error was not harmless because the excluded portion directly supported the defense theory on knowledge and participation.

## Legal Principles

- Under Fed. R. Evid. 804(b)(3), a statement is admissible if, at the time made, it so tended to subject the declarant to criminal liability that a reasonable person would not have made it unless true, and the declarant is unavailable.
- When a statement against penal interest is offered to exculpate an आरोपी, it must be supported by corroborating circumstances clearly indicating trustworthiness.
- A mixed inculpatory/exculpatory narrative may fall within Rule 804(b)(3) in its entirety when the exculpatory content is integral to the against-interest account and can further increase the declarant’s apparent culpability (for example, by asserting sole responsibility).
- Courts assessing Rule 804(b)(3) should focus on whether the statement, viewed in context, is against the declarant’s penal interest and sufficiently reliable, rather than excluding interconnected portions by categorical labeling.

## Conclusion

The Ninth Circuit held that excluding the father’s exculpatory statements was erroneous under Rule 804(b)(3) because the statement, taken as a whole, was against the father’s penal interest and bore indicia of reliability; the error was prejudicial to the defendants’ ability to contest knowledge and intent, requiring reversal and remand.


United States v. Paguio, 114 F.3d 928 (9th Cir. 1997)