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United States v. DeGeorge | 380 F.3d 1203 (2004)
Under Rule 404(b) of the Federal Rules of Evidence, evidence of a defendant’s prior crimes or other acts is inadmissible if it’s offered to show that the defendant has a bad character and a propensity to commit crimes. The rule reflects the concern that a jury might give too much weight to a defendant’s history as a bad actor. But the rule doesn’t apply when the prosecution offers evidence of prior acts for a different reason, as the Court of Appeals for the Ninth Circuit explains in United States versus DeGeorge.
Rex DeGeorge commissioned a $2 million yacht in June of 1992. DeGeorge then drove up the yacht’s value through a series of sham purchases by corporations he created. Using the name of one of these corporations, DeGeorge insured the yacht for $3.5 million. Having previously collected insurance on three boat losses, including one alleged theft and two alleged sinkings, DeGeorge was concerned that he wouldn’t be able to insure his new yacht in his own name. When the yacht was completed, DeGeorge and two confederates sailed it out to sea and tried to scuttle it. After the yacht failed to sink, DeGeorge and his friends were picked up by the authorities and made up a story for investigators. Later, DeGeorge attempted to collect the insurance proceeds, but the insurance company successfully sued for rescission of the policy.
In 1999, DeGeorge was indicted on charges including mail and wire fraud. At his trial, the prosecution sought to introduce evidence of DeGeorge’s extensive history of boat losses. Over DeGeorge’s objection, the trial court ultimately allowed evidence that DeGeorge had owned three prior vessels that were insured, that he claimed these vessels were lost at sea, and that none were ever recovered. The court didn’t allow the prosecution to show that DeGeorge had collected insurance proceeds on each loss. DeGeorge was convicted, and he appealed to the Court of Appeals for the Ninth Circuit.
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