No. 14-­--1233 UNITED STATES OF AMERICA v. Jamal E. Lawson, Sr

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 14-­‐‑1233
UNITED STATES OF AMERICA,
Plaintiff-­‐‑Appellee,
v.
JAMAL E. LAWSON, SR.,
Defendant-­‐‑Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 12 CR 03 — James B. Zagel, Judge.
____________________
ARGUED JANUARY 7, 2015 — DECIDED JANUARY 20, 2015
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Before WOOD, Chief Judge, and POSNER and EASTERBROOK,
Circuit Judges.
EASTERBROOK, Circuit Judge. Evangel Capital held itself
out as a lender with $250 million in assets available to
churches and other religious institutions. It issued firm-­‐‑
commitment financing letters for multi-­‐‑million-­‐‑dollar pro-­‐‑
jects but never closed a single loan and, indeed, never had
more than $10,000 in its bank accounts. What money it did
have came from fees charged to potential borrowers. Jamal

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2 No. 14-­‐‑1233
Lawson, Sr., its owner and principal manager, told clients
that the fees would be used to pay for appraisals and re-­‐‑
quired documents; instead the fees were swiftly withdrawn
and used for personal expenses. Lawson collected some
$270,000 in fees and, despite his promises, did not return a
penny to clients when their loans went unfunded. A jury
convicted Lawson of wire fraud, 18 U.S.C. §1343, and he has
been sentenced to 52 months’ imprisonment.
Lawson does not contest the sufficiency of the evidence.
He told clients that he had a track record of financing reli-­‐‑
gious projects; actually he never financed a single one. Es-­‐‑
sentially everything he said to the clients was false, and in a
statement to federal investigators Lawson admitted divert-­‐‑
ing fees to his own use. Unfortunately, the prosecutor tried
to “strengthen” an airtight case by asking the district court’s
approval of a plan to show that Lawson had not reported the
fees as income. (Lawson had not filed tax returns at all.) The
judge told the prosecutor that he could show that Lawson
failed to report his income, but not that he failed to file tax
returns. The prosecutor followed these instructions at trial.
The judge told the jury that the evidence was admitted for
the purpose of showing whether Lawson acted with
knowledge or fraudulent intent—but not how it illuminated
those issues, creating a needless risk that the jury used it for
the forbidden purpose of treating Lawson as having a pro-­‐‑
pensity to commit crimes.
The only issue raised in Lawson’s appellate brief is
whether the district court should have excluded the tax evi-­‐‑
dence. The United States contends that the evidence was rel-­‐‑
evant and admissible, despite Fed. R. Evid. 404(b), because it
was not used to show Lawson’s propensity to commit

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No. 14-­‐‑1233 3
crimes. It was used, rather, to negate his contention that he
intended to extend loans and failed to do so only because the
state of the economy made it impossible to get financial
commitments. Tax evidence could in principle undermine
such a contention: if Lawson did not report the advances as
business income and take deductions for the expenses of
running the business, that implies that there was no legiti-­‐‑
mate business (and no legitimate business expenses). The
prosecutor also maintains that a jury could understand non-­‐‑
reporting of the income as Lawson’s implicit acknowledg-­‐‑
ment that it was the fruit of a fraud rather than a legitimate
venture. Yet the prosecutor did not ask the jury to draw the-­‐‑
se inferences (or any other) when the evidence was admit-­‐‑
ted, and all the instructions said about the subject was:
you must decide whether it is more likely than not that the de-­‐‑
fendant did the acts that are not charged in the indictment. If
you decide that he did, then you may consider this evidence to
help you decide whether the defendant acted knowingly and
with fraudulent intent when he committed the acts alleged in the
indictment. You may not consider it for any other purpose.
This does not tell the jury how it could make proper use of
the evidence. Legalese such as “knowingly and with fraudu-­‐‑
lent intent” is useless to lay jurors without concrete advice
about what sort of inferences are proper or improper.
That’s not the only problem with this evidence. Although
Rule 404(b) says that other-­‐‑act evidence may be admitted to
show knowledge or intent, Rule 403 provides for exclusion
of evidence when its potential for unwarranted prejudice ex-­‐‑
ceeds its potential for appropriate use. United States v. Gomez,
763 F.3d 845 (7th Cir. 2014) (en banc), stresses that a district
judge must apply both Rule 403 and Rule 404(b) with care
and exclude evidence that either lacks a proper use (Rule

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4 No. 14-­‐‑1233
404(b)) or poses excessive risk that the jury will draw the
forbidden propensity inference rather than an allowable one.
Rule 403 calls for a careful exercise of discretion by the dis-­‐‑
trict judge. See, e.g., Gomez, 763 F.3d at 856–60; United States
v. Beasley, 809 F.2d 1273 (7th Cir. 1987). But we can’t tell
whether the district judge did that, because he conducted the
critical conference off the record. Back in open court, the
judge put on the record what he had ruled (he would allow
evidence that Lawson failed to report income but not evi-­‐‑
dence that Lawson failed to file tax returns), but not why he
reached these conclusions or how he thought a jury could
make proper use of the tax evidence.
If Lawson had protested at the time, he might have a sol-­‐‑
id position on appeal. District judges must think carefully
and have good reasons for their dispositions under Rule 403.
Silence does not suffice. But the district judge stated (on the
record) that the earlier proceedings had been conducted off
the record by mutual consent; Lawson does not contend oth-­‐‑
erwise. And when the judge put his rulings on the record,
Lawson did not ask him to relate his reasons. There can
therefore be no contention that the judge violated the Court
Reporters Act, 28 U.S.C. §753(b), or the holdings of decisions
such as United States v. Nolan, 910 F.2d 1553, 1559 (7th Cir.
1990), that, when judges hold conferences or discussions off
the record, they must eventually record both what they con-­‐‑
cluded and why.
Nolan concerns sidebar conferences, but its approach is
equally applicable to other off-­‐‑the-­‐‑record decisions. Our
conclusion in United States v. Murphy, 768 F.2d 1518, 1535
(7th Cir. 1986), that conferences held in chambers need not
be transcribed does not suggest that it is sound practice for a

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No. 14-­‐‑1233 5
judge to keep his reasoning entirely off the record or that an
unexplained application of Rule 403 can be sustained. But
Lawson’s failure to ask that an adequate record be made in
the district court disables him from arguing on appeal that
the judge failed to conduct a proper Rule 403 analysis. For
all we can tell, the judge did everything necessary—except
put his thinking in the record.
Nor can Lawson protest the judge’s failure to give a lim-­‐‑
iting instruction crafted to help the jury understand what
sorts of inferences were appropriate and what inferences
were forbidden. Although Gomez discusses the importance
of situation-­‐‑specific, non-­‐‑boilerplate instructions—see 763
F.3d at 860–61; see also id. at 865 (opinion dissenting in
part)—it also concludes that the choice whether to give a
limiting instruction rests with the defense, which may de-­‐‑
cide that the less said about the evidence the better. See
Gomez, 763 F.3d at 860; see also Fed. R. Evid. 105 (providing
that the court must explain the use and limits of the evidence
“on timely request”). Lawson did not ask the district court to
give a better limiting instruction and therefore has not pre-­‐‑
served this subject for appeal.
Still, the performance of the district judge is disappoint-­‐‑
ing. We would have expected him to ensure that the record
reflects his thinking and to suggest a useful instruction even
if the parties failed to prompt him. The prosecutor’s perfor-­‐‑
mance also is disappointing. Introducing evidence that
stretches or exceeds the limits of admissibility in a bullet-­‐‑
proof prosecution has nothing to recommend it, whether or
not the harmless error doctrine will save the conviction; dis-­‐‑
trict judges can and should protect defendants and the pub-­‐‑
lic interest from excessive zeal by excluding such evidence.

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6 No. 14-­‐‑1233
The prosecutor’s oral argument in this court was disap-­‐‑
pointing for a different reason: counsel for the United States
insisted that Gomez is irrelevant because it concerns only
Rule 404(b), while this appeal concerns Rule 403. That isn’t
remotely correct. Gomez covers the entire process of using
other-­‐‑act evidence, and that process has four components:
whether the evidence is relevant (Rules 401 and 402); wheth-­‐‑
er it is categorically inadmissible under Rule 404(b); whether
if not foreclosed by Rule 404(b) it should be excluded under
Rule 403; and finally, if the evidence is admissible, how the
judge informs the jury about permissible and forbidden in-­‐‑
ferences. These are linked subjects. Prosecutors who do not
understand and apply the full scope of the Gomez decision
will find their convictions hard to sustain on appeal.
As for this appeal, however: We’ve already stressed that
Lawson’s best potential arguments are not presented for de-­‐‑
cision, and now we add that any error was harmless. The tax
evidence could not have affected a rational jury’s verdict,
given the undisputed proof that Lawson converted the fees
to his personal use and did not spend the money for the
purposes he told clients it was needed. His lawyer’s argu-­‐‑
ment that hard times upset well-­‐‑intentioned plans was em-­‐‑
barrassed by the fact that Lawson lied when telling clients
that he already had funding in hand. That he also lied about
the firm’s past success in securing financing, and reneged on
his promises to return fees if loans did not close, cemented
the prosecution’s case.
AFFIRMED

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