Opinions of the United
2000 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-14-2000

United States v Universal Rehab
Precedential or Non-Precedential:

Docket 97-1412 and 97-1414




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Recommended Citation
"United States v Universal Rehab" (2000). 2000 Decisions. Paper 56.
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Filed March 14, 2000

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Nos. 97-1412 and 97-1414

UNITED STATES OF AMERICA

v.

UNIVERSAL REHABILITATION SERVICES
(PA), INC.,

       Appellant in No. 97-1412

UNITED STATES OF AMERICA

v.

ATTILA HORVATH,

       Appellant in No. 97-1413
       Cross-Appellee in No. 97-1467
       Not a party to the En Banc
       Proceeding

UNITED STATES OF AMERICA

v.

RICHARD J. LUKESH

       Appellant in No. 97-1414

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Nos. 94-cr-00147-1, 94-cr-00147-2
and 94-cr-00147-3)
District Judge: Honorable Robert F. Kelly




Argued: Friday, May 22, 1998

BEFORE: ROTH, McKEE and
GARTH, Circuit Judges

Argued En Banc: Monday, November 8, 1999

BEFORE: BECKER, Chief Judge,
SLOVITER, MANSMANN, GREENBERG,
SCIRICA, NYGAARD, ALITO, ROTH,
McKEE, RENDELL, BARRY and
GARTH, Circuit Judges

(Filed: March 14, 2000)

       Thomas C. Carroll (Argued)
       Carroll & Cedrone
       6th & Chestnut Street
       Public Ledger Building
       Suite 940
       Philadelphia, PA 19106

       Attorney for Appellants
       Universal Rehabilitation Services (PA),
       Inc. and Richard J. Lukesh

       Michael R. Stiles
       United States Attorney
       Walter S. Batty, Jr.
       Assistant United States Attorney
       Chief of Appeals
       Valli F. Baldassano
       Suzanne B. Ercole
       Robert A. Zaumzer (Argued)
       Assistant United States Attorney
       Office of the United States Attorney
       615 Chestnut Street
       Philadelphia, PA 19106

       Attorneys for Appellee

                                2


OPINION OF THE COURT

GARTH, Circuit Judge:

We have granted en banc review to resolve a conflict in
our court's jurisprudence that has surfaced following the
publication of United States v. Cohen, 

(3d Cir.
1999), United States v. Gaev, 

(3d Cir. 1994),
and United States v. Gambino, 

(3d Cir.
1991), on the one hand, and United States v. Thomas, 

(3d Cir. 1993), on the other.1 In the instant
matter, the District Court permitted the government,
pursuant to Federal Rule of Evidence ("Federal Rule") 403,
to introduce both the plea agreements and guilty pleas of
two witnesses notwithstanding a representation by defense
counsel that they would not challenge the credibility of
such witnesses. The jury convicted all three defendants on
a sole count of mail fraud. The panel majority reversed. We
granted the government's petition for rehearing and vacated
the panel decision.2
We will now affirm the convictions entered against
defendants Universal Rehabilitation Services (PA), Inc., and
Richard Lukesh.

I

Universal Rehabilitation Services (PA), Inc. ("Universal") is
engaged in the business of providing various rehabilitative
services, especially speech therapy, to elderly Medicare
patients living in nursing homes. Universal would enter into
_________________________________________________________________

1. Other cases addressing the admission of a testifying co-conspirator's
guilty plea and/or plea agreement include the following: Government of
the Virgin Islands v. Mujahid, 

(3d Cir. 1993); United States
v. Werme, 

(3d Cir. 1991); United States v. Inadi, 

(3d Cir. 1986); Bisaccia v. Attorney General , 

(3d Cir.
1980); United States v. Gullo, 

(3d Cir. 1974); United States
v. Toner, 

(3d Cir. 1949).

2. The government did not petition for rehearing with respect to the
original panel's disposition of Attila Horvath's appeal. See infra n.8.

                                3


contracts with several local nursing homes, and would
thereafter send its speech therapists to treat patients on
site. Rather than submit its bills directly to Medicare,
Universal employed Independence Blue Cross ("IBC") as an
intermediary processor. Under this arrangement, Universal
would submit its claims to IBC, which would process and
organize such claims before sending them to Medicare.

Both federal law and the regulations promulgated by the
Secretary of Health & Human Services authorize the
Medicare program to pay only those claims that are deemed
to be medically reasonable and necessary. In determining
whether this criteria have been met with specific reference
to speech therapy services, the Medicare program generally
looks to four separate criteria: (1) the therapy must be safe
and effective for treating the patient's condition; (2) the
services provided must be sufficiently complex insofar as
only a certified speech pathologist can provide such
services; (3) if restorative treatment were ordered, the
pathologist must expect that the services would improve
the patient's condition significantly in a reasonable amount
of time; and (4) the frequency and duration of the services
must bear a reasonable and necessary relation to the
patient's condition. In this criminal matter, the government
contends that both Universal and its representatives
intentionally altered the claims it submitted to IBC in order
to meet these criteria.
Pursuant to a physician's orders, a Universal therapist
would evaluate a patient's needs in order to determine
initially whether treatment was necessary, and if so,
propose a program of treatment. Once a physician approved
the evaluation, this evaluation became a vitally important
document for Medicare purposes insofar as it provided an
assessment that the treatment was medically necessary for
the patient. Indeed, Medicare reviewers specifically
considered the evaluation in rendering reimbursement
decisions.

Once treatment of a particular patient commences,
Medicare requires that a physician certify each thirty days
that continued treatment was medically necessary. Further,
Medicare will only pay for such continued treatment so long
as the patient is progressing towards the goals referenced

                                4


in the initial evaluation, and as such, Universal therapists
would write notes concerning the patient's progress.
Universal would meet the thirty-day recertification

requirement by having a physician sign a Medical
Information Form ("MIF ") that contained a summary of the
previous thirty days of treatment and the prescribed course
of treatment for the thirty days to come.

Universal would submit its Medicare claims to IBC
electronically for IBC's review. According to Universal, IBC's
requirements for the proper processing of its claims were
elaborate, detailed, and extremely difficult with which to
comply. For this reason, Universal and IBC often differed as
to the proper interpretation of the Medicare regulations,
and, indeed, the ultimate decision as to whether Medicare
would reimburse a particular claim. Pursuant to a random
auditing system, IBC ultimately requested Universal to
provide documentation in support of certain claims that
Universal had submitted. Irregularities in this
documentation led IBC to investigate further, an
investigation that uncovered the very "rewriting" scheme
that is at issue in this criminal matter.

The government alleges that between the summer of
1988 and September 21, 1991, Universal and its
representatives altered and rewrote certain Medicare claims
in order to ensure that the Medicare program would
reimburse such claims. Universal admits that this
occurred, but claims that such rewriting had two forms: (1)
honestly inserting omitted information so as to comply with
Medicare regulations; and (2) altering initial evaluations,
medical information forms, and progress certifications so as
to reflect either the need for medical treatment or to certify
that the patient was progressing because of treatment
already provided.

As for this latter form of rewriting, the government
contends that initial evaluations were altered so as to
provide the "appearance" that speech therapy was medically
necessary for the patient, medical information forms were
made to appear as if a physician actually had reviewed the
patient's progress and recommended that the speech
therapy continue, and finally, the therapists' personal
progress notes concerning the patient were modified to

                                5


provide the appearance that the patient was improving. In
order to obtain the required physician's signature,
Universal and its representatives would photocopy the
physician's signature on the initial form and paste this
photocopy on the altered form. Only after the rewriting
occurred would the claims be submitted to IBC for review.
All of these efforts, of course, were intended to increase the
likelihood that Medicare would reimburse Universal for the
speech therapy services Universal claimed to have rendered.3

On March 31, 1995, a federal grand jury indicted
appellants Universal, Universal's Vice-President and
Director of Finance, Attila Horvath ("Horvath"), Universal's
Director of Operations, Richard Lukesh ("Lukesh"), and
three other defendants4 on seventeen counts of mail fraud,
in violation of 18 U.S.C. S 1341, and twenty-one counts of
false claims, in violation of 18 U.S.C. S 287. Prior to trial,
Julia Blum Bonjo ("Bonjo") and Penny Martin ("Martin")
pled guilty to a sole count of mail fraud in connection with
the scheme described above.5 Universal, Horvath, and
Lukesh, also prior to trial, filed motions in limine with the
District Court, attempting to prevent the government,
pursuant to Federal Rule 403, from introducing such guilty
pleas and plea agreements into evidence. At the same time,
Universal, Horvath, and Lukesh each represented that they
would not affirmatively challenge the credibility of either
Bonjo or Martin during cross-examination.6 The District
_________________________________________________________________

3. Fraud has been pervasive in connection with Medicare
reimbursement. See Georgia Court, Keeping an Eye on Medicare Fraud,
Cincinnati Post, Dec. 16, 1999, at 4C ("The Office of the Inspector
General at Health and Human Services estimated that $12.6 billion [of
$176.1 billion in Medicare payments were] improper."); Medicare
Contractors Aren't Pursuing Fraud, Audit Shows, USA Today, Dec. 2,
1998, at A1.

4. The other defendants were Vicki Meitus, Mary Mongoven Conroy, and
Julia Blum Bonjo.

5. As stated above, Bonjo had been indicted with Universal, Horvath, and
Lukesh -- the appellants in this appeal. Martin, however, pled guilty to
a separate information filed by the government.
6. Specifically, Lukesh's Motion in Limine stated, in pertinent part, that
"Defendant asserts that at the trial of this action he will not raise the
guilty pleas/plea agreements on cross-examination nor seek to raise any
inference on which the accomplices [sic] pleas of guilty would be
admissible to rebut." App. at 79.

                               6


Court held extensive oral argument on this issue, and
reserved its ruling until after the trial had commenced and
the government was prepared to call Bonjo as a witness.
Citing to our opinion in United States v. Gaev , 

(3d Cir. 1994), the District Court then denied the motions
in limine and permitted the government to introduce both
Bonjo and Martin's guilty pleas and plea agreements as
part of its principal case. In particular, the District Court
stated that

       if [Bonjo and Martin] testify the jury is going to
       certainly wonder whether or not they have been
       charged. It's going to wonder perhaps what they have
       been promised by the prosecutor if anything and what
       they may be getting in return for their testimony.

       I think in weighing all of those factors with the possible
       prejudice that I am going to allow the Government to
       bring out the fact of the guilty plea and the fact of the
       guilty plea agreement.

App. at 1768.

After the government had introduced the evidence of
Bonjo's plea and concomitant plea agreement, the District
Court immediately instructed the jury as follows:

       Members of the jury, you've just heard .   . . evidence
       that this witness has plead [sic] guilty   to a charge of
       mail fraud and which involved matters of   some of the
       things that she has testified to here in   this trial.

       I caution you that although you may consider this
       evidence, that is the evidence that she has entered a
       plea of guilty in assessing the credibility and the
       testimony of this witness, you should give it such
       weight as you feel it deserves.

       You may not consider the evidence that she has entered
       a plea of guilty against any defendant, any in this case,
       nor may any inference be drawn against any defendant
       on trial by reason of this witness's plea of guilty.

App. at 1966-67 (emphasis added). The District Court
provided a similarly detailed instruction after the
government elicited testimony concerning Martin's plea

                                7


agreement. App. at 2863-64. Finally, during its charge to
the jury after the trial, the District Court instructed as
follows:

       Julia Blum Bonjo and Penny Martin entered into plea
       agreements with the Government. Such plea

       agreements are expressly approved as lawful and
       proper by the United States Supreme Court and are
       appropriate, are proper. Each witness' decision to plead
       guilty is a personal decision about her own guilt. You
       may not consider this evidence against the defendant
       on trial nor may you draw any conclusions or
       inferences of any kind about the guilt of the defendants
       on trial from the fact that a prosecution witness pled
       guilty to similar charges.

       The testimony of such witnesses, as I indicated, should
       be scrutinized with caution and give it the weight that
       you think it should be given under all of the
       circumstances.

       And I indicated to you during the trial that the fact
       that they entered pleas of guilty could not be
       considered by you in determining the guilt or
       innocence of any of the people on trial here. The only
       reason the plea and the plea agreement were brought
       out was so that you would know all of the
       circumstances surrounding the entry of the plea, you'd
       know the terms under which the plea was entered and
       you could judge for yourselves whether the witness in
       the trial is testifying truthfully or whether the witness
       has a motive to embellish testimony or vary from the
       truth.

       That is the only basis or the only reason why the plea
       and the plea agreement were admitted.

App. at 4829-30.

After deliberation, the jury found Universal, Horvath, and
Lukesh guilty on count one of the indictment, which
specifically alleged that Universal had engaged in mail
fraud when IBC mailed a check to Universal representing a
claim for treatment provided to one of its patients, Mildred
Hynes, between February 15, 1989, and February 28,

                               8


1989. The jury, however, also found Universal, Horvath,
and Lukesh not guilty on the remaining thirty-eight counts
of the indictment. All three defendants then moved for a
judgment of acquittal pursuant to Federal Rule of Criminal
Procedure 29, arguing that the government had introduced
insufficient evidence to support the jury's verdict. On May
31, 1996, the District Court denied this motion and
proceeded to sentencing.7 On May 19, 1997, the District
Court sentenced Universal to a fine of $25,000, Horvath to
a period of three years probation, a fine of $10,000, and
$705.20 in restitution, and Lukesh to three years of
probation, a fine of $15,000, and $705.20 in restitution.

Universal, Horvath, and Lukesh appealed the judgment of
conviction and sentence to this Court, arguing that the
District Court abused its discretion in admitting the guilty
pleas of Bonjo and Martin, and in denying their post-trial
motions for judgments of acquittal on sufficiency of
evidence grounds. In particular, the defendants argued that
the fact that the jury had convicted them of the same count
to which Bonjo and Martin had pled guilty -- and had then
acquitted them of the remaining thirty-eight counts of the
indictment -- proved that the admission of Bonjo and
Martin's plea agreements and guilty pleas had a clear
prejudicial effect.

The government cross-appealed, arguing that the District
Court erred in sentencing Horvath and Lukesh by failing to
consider the loss stemming from the fraud alleged in the
other thirty-eight counts of the indictment on which the
jury acquitted Universal, Horvath, and Lukesh --"relevant
conduct" pursuant to sections 1B1.3 and 2F1.1 of the
United States Sentencing Guidelines -- and in failing to
provide required findings of fact with regard to the
sentences the District Court imposed. The government also
answered the defendants' argument concerning the guilty
_________________________________________________________________

7. The District Court's May 31, 1996 opinion also revisited the issue
presently before the en banc court; namely, whether it was an abuse of
discretion to allow the introduction of Bonjo and Martin's guilty pleas.
The court concluded that it had not erred, reiterating its concern over
selective prosecution and that the witnesses' testimony would assist the
jury in assessing credibility.

                               9
plea issue by arguing that a party cannot attack a District
Court's evidentiary ruling made prior to or during a trial by
referencing a jury's ultimate verdict. The government
claimed that such hindsight could not be used to measure
the District Court's exercise of discretion.

In an opinion filed on February 11, 1999, the panel, one
judge dissenting, reversed. More specifically, the panel held
that there was insufficient evidence to convict Horvath of
mail fraud, but that the government had introduced
sufficient evidence to support the convictions of both
Universal and Lukesh. As such, the panel majority
remanded to the District Court to enter a judgment of
acquittal for Horvath.

The panel majority also held that the District Court had
abused its discretion in allowing the government to
introduce evidence of Bonjo and Martin's guilty pleas, and
as a result, ordered the District Court to hold a new trial
concerning the charges levied against Universal and
Lukesh. Because of this, the panel majority did not reach
the sentencing issues presented in the government's cross-
appeal.

On April 15, 1999, the full court granted the
government's petition for rehearing en banc, and vacated
the panel's opinion and judgment.8 See United States v.
Universal Rehabilitation Servs. (PA), Inc., Nos. 97-1412, 97-
1414, 97-1468, 

, at *1 (3d Cir. Apr. 15,
1999). Our order focused rehearing on the District Court's
denial of the defendants' motions in limine, which sought to
prevent the government from introducing Bonjo and
Martin's guilty pleas. See id.; see also United States v.
Universal Rehabilitation Servs. (PA), Inc., 

, 915
(3d Cir. 1999) (directing parties to "file supplemental
_________________________________________________________________

8. Our en banc order only vacated the panel opinion and judgment
insofar as it concerned Universal and Lukesh. As such, the panel's
holding that the government failed to present sufficient evidence to
justify the jury's conviction of Horvath, and that the District Court
therefore erred in failing to order a judgment of acquittal on Horvath's
behalf remains unaffected. Because our holding today revives the need
to address the government's cross-appeal as to the sentence the District
Court imposed against Lukesh, we discuss that issue in text infra.

                               10


memoranda . . . set[ting] forth what factors should be
considered by the District Court in ruling on the
admissibility of a testifying co-conspirator's guilty plea"). We
now affirm the convictions of Universal and Lukesh entered
by the District Court.
II

The District Court exercised subject matter jurisdiction
pursuant to 18 U.S.C. S 3231. We possess appellate
jurisdiction over Universal and Lukesh's arguments of error
pursuant to the final order doctrine of 28 U.S.C.S 1291.

III

A

We have previously held that the admission of a witness's
guilty plea and/or plea agreement9 is governed by Federal
Rule 403, see, e.g., United States v. Gaev, 

, 478
(3d Cir. 1994), and as such, the rule itself provides an
appropriate starting point for our analysis. Federal Rule
403 provides:
_________________________________________________________________

9. Universal and Lukesh claim that the terms"plea" and "plea
agreement" should not be utilized interchangeably and that the District
Court's admission of Bonjo and Martin's plea agreements was an
especially grave abuse of discretion. Although we agree that the terms
are not synonymous, we believe that the distinction that Universal and
Lukesh attempt to draw is one without a difference as it relates to the
Federal Rule 403 analysis. Once one accepts the premise that a
witness's guilty plea has probative value, see text infra, especially with
respect to the witness's credibility, the introduction of the terms of the
plea agreement becomes a necessary complement to disclose to the jury
that the witness has not been promised a "sweetheart deal" in exchange
for the testimony. See United States v. Pierce , 

, 1304 (5th
Cir. 1992). Further, Universal and Lukesh have failed to identify any
prejudicial effect that could flow from the introduction of the terms of
the
witnesses' plea agreements once the pleas themselves are accepted into
evidence. As such, for purposes of our analysis, the District Court's
admission of Bonjo and Martin's pleas and plea agreements are treated
equally.

                               11


       Although relevant, evidence may be excluded if its
       probative value is substantially outweighed by the
       danger of unfair prejudice, confusion of the issues, or
       misleading the jury, or by considerations of undue
       delay, waste of time, or needless presentation of
       cumulative evidence.

FED. R. EVID. 403. As the text of the rule indicates, evidence
that is otherwise relevant and admissible may only be
excluded if the probative value of the evidence is
substantially outweighed by its prejudicial effect. For this
reason, a number of courts have held that Federal Rule 403
creates a presumption of admissibility, and that district
courts may utilize the rule only rarely to cause the
exclusion of evidence. See, e.g., United States v. Morris, 

, 412 (5th Cir. 1996); Hendrix v. Raybestos-
Manhattan, Inc., 

, 1502 (11th Cir. 1985). As
one leading treatise states, "[i]f there is doubt about the
existence of unfair prejudice . . . it is generally better
practice to admit the evidence, taking necessary
precautions by way of contemporaneous instructions to the
jury followed by additional admonitions in the charge." 2
Weinstein's Federal Evidence, S 403.02[2][c], at 403-16
(Joseph M. McLaughlin ed., 1999); see also Glen
Weissenberger, Federal Evidence, S 403.2, at 87 (3d ed.
1998) ("Rule 403 favors a presumption of admissibility.").

We have also held that because the trial judge is present
in the courtroom as the challenged evidence is offered, and
is therefore "in the best position to assess the extent of the
prejudice caused a party," the trial judge must"be given a
very substantial discretion in `balancing' probative value on
the one hand and `unfair prejudice' on the other." United
States v. Long, 

, 767 (3d Cir. 1978) (emphasis
added); cf. General Electric Co. v. Joiner, 

, 143
(1997) (holding, in the context of expert testimony, that
"deference . . . is the hallmark of abuse of discretion
review"). For this reason, we review a district court's
balancing analysis pursuant to Federal Rule 403 for an
abuse of discretion, see In re Paoli R.R. Yard PCB Litig., 

, 453 (3d Cir. 1997), and accord great deference to
the District Court's ultimate decision.

                               12


A district court's decision, therefore, cannot be reversed
merely because we, as members of a reviewing court,
possess a different view concerning the probative value or
prejudicial effect of the challenged evidence. See 

. In order to justify reversal, a district court's
analysis and resulting conclusion must be "arbitrary or
irrational."10 

. Indeed, "[i]f judicial
self-restraint is ever desirable, it is when a [Federal] Rule
403 analysis of a trial court is reviewed by an appellate
tribunal." 

. With this in mind, we
turn now to the application of these principles to the
District Court's admission of both Bonjo and Martin's guilty
pleas and the plea agreements that they executed with the
government.

B

Any analysis pursuant to Federal Rule 403 must begin
with a determination as to whether the evidence has
probative value. It is well-settled that evidence of a
testifying witness's guilty plea or plea agreement may be
introduced for probative, and therefore permissible,
purposes. As this Court has identified on numerous
occasions, such purposes include: (1) to allow the jury
accurately to assess the credibility of the witness; (2) to
eliminate any concern that the jury may harbor concerning
whether the government has selectively prosecuted the
defendant; and (3) to explain how the witness hasfirst-
hand knowledge concerning the events about which he/she
is testifying. See 

; United States v.
Gambino, 

, 1363 (3d Cir. 1991); United
States v. Werme, 

, 113 (3d Cir. 1991); United
States v. Inadi, 

, 384 n.2 (3d Cir. 1986); see
_________________________________________________________________

10. As with other instances in which a district court exercises its
discretion, we also have held that when a district court issues a ruling
pursuant to Federal Rule 403, it must specifically indicate its rationale.
See 

(quoting United States v. Murray, 

, 318 (3d Cir. 1997)). In the present matter, there is no dispute that
the District Court more than satisfied this requirement, as it expressly
stated at the time of its ruling that it believed Bonjo and Martin's
guilty

pleas would assist the jury in assessing credibility and alleviate any
concern the jury held over selective prosecution. App. at 1768.

                                13


also United States v. Thomas, 

, 1208 (3d Cir.
1993) (Rosenn, J., dissenting).

As we held in Werme, "[t]he most frequent purpose for
introducing such evidence is to bring to the jury's attention
facts bearing upon a witness's credibility." 

(citing 

). Universal and
Lukesh, however, argue that witness credibility ceased to
be a proper purpose for the admission of Bonjo and
Martin's guilty pleas once they promised, through their
motions in limine, not to attack Bonjo and Martin's
credibility. Jurors are instructed, however, in almost all
cases, that they are to determine the credibility of all
witnesses who testify. Indeed, they are so instructed even
in the absence of an affirmative challenge to witness
credibility. See 1A Kevin F. O'Malley et al., Federal Jury
Practice & Instructions (Criminal), S 15.01, at 350 (5th ed.
2000) ("You, as jurors, are the sole and exclusive judges of
the credibility of each of the witnesses called to testify in
this case and only you determine the importance or the
weight that their testimony deserves.").11 We addressed this
argument in Gaev:
       When a co-conspirator testifies he took part in the
       crime with which the defendant is charged, his
       credibility will automatically be implicated. Questions
       will arise in the minds of the jurors whether the co-
       conspirator is being prosecuted, why he is testifying,
       and what he may be getting in return. If jurors know
       the terms of the plea agreement, these questions will
       be set to rest and they will be able to evaluate the
       declarant's motives and credibility. . . . [A]n attack is
       not always necessary.

. Our sister circuits concur. See, e.g.,
United States v. Pennington, 

, 1067 (8th Cir.
1999); United States v. Maliszewski, 

, 1003-04
(6th Cir. 1998); United States v. Sanders, 

, 454
(6th Cir. 1996). As such, we are satisfied that the
_________________________________________________________________

11. The   District Court similarly charged the jury in the present matter.
App. at   4825 ("[Y]ou are the judges of the facts and therefore in the
process   you are also the sole judges of the credibility of the witnesses
and the   weight their testimony deserves.").

                                 14


government may seek to introduce a witness's guilty plea
and/or plea agreement even in the absence of a challenge
to the witness's credibility.

Universal and Lukesh argue, however, that the Supreme
Court's recent opinion in Old Chief v. United States, 

(1997), provides support for their argument. In
Old Chief, the defendant was charged with violating a
federal law, 18 U.S.C. S 922(g)(1), which prohibits an
individual previously convicted of a felony from possessing
a firearm. See 

Because the government was
required, as a part of its prima facie case, to prove that the
defendant had previously been convicted of a felony, it
sought to present evidence of such a conviction. See 

Concerned that evidence of the previous crime would
adversely influence the jury towards his defense, the
defendant sought to prevent the government from
introducing such evidence by stipulating that he had
previously been convicted of a felony. See 

Court refused to compel the government to stipulate, and
allowed the government to introduce evidence of the prior
crime. See 

of Appeals affirmed the conviction,
finding that regardless of the defendant's offer to stipulate,
the government was entitled to prove the prior crime
through the introduction of probative evidence. See 

The Supreme Court reversed, holding that the District
Court had abused the discretion with which it was vested
under Federal Rule 403. See 

Although the Court
reaffirmed the general principle that the government "is
entitled to prove its case by evidence of its own choice," it
held that a defendant may avoid the introduction of
potentially prejudicial evidence by presenting the
government with an equally probative evidentiary
alternative. 

Finally, the Court held that a
stipulation that the defendant had been convicted of a
crime within the purview of the federal firearms law was of
equal probative value to the government's proffered
evidence, and as such, the District Court had abused its
discretion. See 

Lukesh argue that they, similar to the
defendant in Old Chief, presented the District Court with an

                               15


alternative that lacked the prejudicial effect of the
government's proffered evidence -- a representation that
they would refrain from any affirmative challenge to the
credibility of either Bonjo or Martin. This alternative,
however, presented the District Court with a much different
scenario than that which faced the district court in Old
Chief.12 First, the defendant in Old Chief offered to stipulate
to an element of the offense, whereas Universal and Lukesh
simply offered not to render any affirmative challenge to
Bonjo or Martin's credibility. Second, and of greater
importance, the Court's holding in Old Chief was expressly
premised on the Court's belief that the defense's offer to
stipulate to the prior conviction and the government's offer
to introduce evidence of the same were equally probative.
See 

In this appeal, however, Universal and
Lukesh's offer to refrain from affirmatively challenging
Bonjo or Martin's credibility did not, and could not, carry
the same probative value on the issue of witness credibility
as the introduction of Bonjo and Martin's guilty pleas.

Even if we were inclined to accept Universal and Lukesh's
arguments concerning credibility, however, we have
identified other purposes for which the government sought
to introduce Bonjo and Martin's pleas and/or plea
agreements. In particular, the pleas were admissible to
counteract the possibility that the jury might believe that
Universal and Lukesh were being selectively prosecuted.
See, e.g., 

. In other words, once Bonjo
and Martin testified concerning their participation in the
events for which Universal and Lukesh had been indicted,
the jury reasonably might conclude that the government
was attempting to single out Universal and Lukesh for
prosecution.
Finally, courts have also held that a witness's guilty plea
is admissible to explain why the witness possesses
firsthand knowledge concerning the events to which he or
she is testifying. See, e.g., United States v. Halbert, 

, 1005 (9th Cir. 1981). Although one might view
this as a corollary to the credibility rationale, members of
_________________________________________________________________

12. Universal and Lukesh concede that their analogy to Old Chief is not
perfect. See Appellants' Supplemental Memorandum, at 19.

                               16


the jury may still question whether the witness's testimony
is worthy of belief. The fact that the witness has pled guilty
to an offense concerning the very events that required his
or her testimony makes it that much more likely that the
testimony is truthful and reliable, as an individual typically
does not plead guilty to an offense in the absence of
culpability. As such, the government was entitled to
introduce Bonjo and Martin's pleas in order to answer any
question the jury might have concerning how Bonjo and
Martin possessed knowledge of the events and actions
about which they testified.

As a result, we hold that evidence of Bonjo and Martin's
guilty pleas and their concomitant plea agreements were
probative in terms of Federal Rule 403, despite Universal
and Lukesh's representation not to challenge Bonjo and
Martin's credibility.13
_________________________________________________________________

13. Section IV of Judge Roth's dissent advances an argument that not
even Universal and Lukesh have asserted. Her dissent charges that we
have offended both subsections (a) and (b) of Federal Rule 608 by
holding that the District Court properly admitted the guilty pleas of
Bonjo and Martin.

Federal Rule 608 prohibits the introduction of either "character
evidence" or "specific instances of conduct" proved by extrinsic evidence
in order to support a witness's credibility. The dissent claims that Bonjo
and Martin's guilty pleas could be considered both "character evidence"
and "specific conduct," and because the government introduced the
pleas -- at least in part -- to support Bonjo and Martin's credibility,
Federal Rule 608 bars their admission.

The short answer to these arguments is that at no time did Universal
or Lukesh ever raise Federal Rule 608 as a bar to the admission of Bonjo
and Martin's pleas. Universal and Lukesh did not lodge an objection on
this basis at any point during the District Court proceedings, and did
not raise the issue before either the panel reviewing the District Court's
ruling or this en banc court. As a result, not only was this theory
deemed irrelevant by Universal and Lukesh, but by not raising it, they
have waived any benefit they may have derived from such an argument.
See FED. R. EVID. 103(a)(1); United States v. Gibbs, 

, 849 (3d
Cir. 1984) (en banc). Moreover, Federal Rule 608(a) applies only to
opinion and reputation evidence that is probative of one's character, and
it is beyond dispute that the guilty pleas do not fall into either of
these

narrow categories. Finally, courts have interpreted Federal Rule 608(b)'s

                               17


C

We have repeatedly held that the government may
introduce neither a witness's guilty plea nor his or her
concomitant plea agreement as substantive evidence of a
defendant's guilt. See, e.g., 

; 

. We discussed the rationale for this rule
at length in United States v. Toner, 

(3d Cir.
1949):

       The foundation of the countervailing policy is the right
       of every defendant to stand or fall with the proof of the
       charge made against him, not against somebody else.
       The defendant had a right to have his guilt or
       innocence determined by the evidence presented
       against him, not by what has happened with regard to
       a criminal prosecution against someone else.

quoted in Bisaccia v. Attorney General, 

, 312 (3d Cir. 1980). As such, the bald introduction of
a witness's guilty plea concerning facts or events similar to
that for which the defendant is on trial could have the
prejudicial effect of suggesting to the trier of fact that the
defendant should be found guilty merely because of the
witness's guilty plea.

Nonetheless, we have also consistently held that this
prejudicial effect is typically cured through a curative
instruction to the jury. See, e.g., 

;

.14 Our sister circuits, once again,
_________________________________________________________________

bar on "specific instances of conduct" to prohibit the introduction of
conduct only if it is being used to either attack or bolster the witness's
character (i.e., one's general disposition, see United States v. Doe, 

(7th Cir. 1998)) for truthfulness. See, e.g., United States v.
Pope, 

, 688 (11th Cir. 1998). Because the government did
not introduce Bonjo and Martin's guilty pleas to prove that Bonjo and
Martin generally spoke and/or acted truthfully, Federal Rule 608(b) is
inapposite.

14. Universal and Lukesh argue that we should revisit our rule that any
prejudicial effect inherent in the introduction of a witness's guilty plea
and/or plea agreement can be ameliorated through the use of a limiting
instruction, arguing, inter alia, that juries cannot comprehend such

                               18


concur in this understanding. See, e.g., United States v.
Prawl, 

(2d Cir. 1999); United States v. Tse,

, 207 (1st Cir. 1998); 

;
see also 

. The jury in such cases
should be instructed that it may not consider the guilty
plea and/or plea agreement as evidence that the defendant
is guilty of the offenses with which he/she is charged, but
rather that such evidence is offered only to allow the jury
to assess the witness's credibility, to eliminate any concern
that the defendant has been singled out for prosecution, or
to explain how the witness possessed detailed first-hand
knowledge regarding the events about which he or she
testifies.

As recounted above, the District Court provided such an
instruction at three separate occasions during the trial:
after Bonjo testified, after Martin testified, and at the end of
the trial when the District Court charged the jury. See 

at pp. 7-8. The District Court's instructions,
therefore, served to cure any prejudicial effect that might
flow from the introduction of the guilty plea and/or plea
agreement of a witness such as Bonjo or Martin.

Universal and Lukesh, however, argue that our previous
jurisprudence in this area suggests that limiting
instructions are not sufficient to neutralize such prejudicial
effect in situations where the defendant is charged with
conspiracy and the witness whose guilty plea and/or plea
agreement the government introduces is the individual with
whom the defendant has been alleged to conspire. The
genesis of this concern emanates from United States v.
Gullo, 

(3d Cir. 1974), in which we stated:
_________________________________________________________________

limiting instructions. We are not persuaded by their arguments. See FED.
R. EVID. 105 ("When evidence which is admissible as to one party or for
one purpose but not admissible as to another party or for another
purpose is admitted, the court, upon request, shall restrict the evidence
to its proper scope and instruct the jury accordingly."); Spencer v.
Texas,

, 562-63 (1967) ("[T]his type of prejudicial effect is
acknowledged to inhere in criminal practice, but it is justified on the
grounds that . . . the jury is expected to follow instructions in limiting
this evidence to its proper function.").

                               19
       The guilty plea to a conspiracy charge carries with it
       more potential harm to the defendant on trial because
       the crime by definition requires the participation of
       another. The jury could not fail to appreciate the
       significance of this and would realize . . . that"it takes
       two to tango." A plea by a co-conspirator thus presents
       a unique situation which may require the courts to
       scrutinize more closely the purported remedial effect of
       instructions.

(footnote omitted). The Gullo panel stopped short
of recognizing, however, any "distinction between cases
where the plea is to a substantive, rather than to a
conspiracy count." 

instant matter, it is significant
that both Bonjo and Martin did not plead guilty to
conspiracy charges, but rather pled guilty to substantive
counts of mail fraud. App. at 1966, 2863. In any event, we
held in Gaev that the fact that the witness had pled guilty
to a conspiracy charge was merely another factor that a
district court must weigh in engaging in the Federal Rule
403 analysis. See 

.

Accordingly, we hold that the detailed limiting
instructions provided by the District Court cured the
prejudicial effect, if any, flowing from the introduction of
Bonjo and Martin's guilty pleas and plea agreements.

D

As we stated above, we cannot reverse a District Court's
conclusion under Federal Rule 403 unless such a
conclusion is held to be an abuse of discretion, which we
have defined as "arbitrary or irrational." 

. The District Court heard argument on the defendant's
motion in limine and accompanying arguments concerning
Bonjo and Martin plea agreements and guilty pleas at three
separate instances during this criminal proceeding: (1) on
May 3, 1995, prior to the testimony of FBI Agent Cook
(App. at 806); (2) on May 9, 1995, prior to the testimony of
Dr. Paul C. Moock, Jr. (App. at 1768); and (3) subsequent
to trial in ruling upon the defendants' post-trial motions. At
each instance, the District Court carefully and meticulously
weighed the above-mentioned factors of credibility,

                               20


selectivity, and witness knowledge that inform the probative
value versus prejudicial effect standard required by Federal
Rule 403. At each instance, the District Court's balancing
was careful and comprehensive in concluding that the
probative value of Bonjo and Martin's plea agreements and
guilty pleas outweighed any prejudicial effect. Recognizing
our limited role as an appellate court, therefore, we cannot,
and do not, hold that the District Court acted either
arbitrarily or irrationally -- and therefore did not abuse its
discretion -- in admitting Bonjo and Martin's guilty pleas
and plea agreements over Universal and Lukesh's objection.

IV

Having held that the District Court properly exercised its
discretion in admitting Bonjo and Martin's pleas after
consideration of the factors relevant to such a decision, it
is evident that the opinions of United States v. Cohen, 

(3d Cir. 1999), United States v. Gaev , 

(3d Cir. 1994), United States v. Gambino, 

(3d
Cir. 1991), and the cases that they followed, as well as
Judge Rosenn's dissent in United States v. Thomas, 

(3d Cir. 1993), reflect the correct jurisprudence
in this Circuit in connection with the admission of a
witness's guilty plea and plea agreement. To the extent,
therefore, that other decisions of this Court do not comport
with the analysis or conclusion announced today, they are
overruled.

V

One procedural issue remains to be resolved. It will be
recalled that the original panel majority had vacated the
District Court's judgment of conviction and sentence
pertaining to Universal and Lukesh. Accordingly, the panel
majority had not found it necessary to address the
government's cross-appeal that argued that the District
Court erred in sentencing Lukesh.

We have held here that the District   Court properly
admitted the testimony of Bonjo and   Martin as to their plea
agreements and guilty pleas, and as   a result, the new trial
that the panel majority directed is   not warranted. Rather,

                                21


our decision today affirms the convictions of both Universal
and Lukesh.

Because the panel majority did not find it necessary to
consider the government's cross-appeal, this Court has
never rendered a decision as to whether the District Court
erred in the sentence that it imposed upon Lukesh.
Moreover, because as earlier noted, this Court -- sitting en
banc -- did not consider the sentencing issue that the
government initially raised, that issue is presently still open
and undecided as a result of our decision to affirm
Universal and Lukesh's convictions.
Rather than decide this issue without briefing or
argument, we will refer the government's issue on
sentencing to the original panel to determine whether
resentencing should be ordered to include the relevant
conduct of acquitted activity pursuant to sections 1B1.3
and 2F1.1 of the United States Sentencing Guidelines. See
generally United States v. Watts, 

(1997);
United States v. Baird, 

(3d Cir. 1997). In
addition, the original panel should dispose of the
government's argument that the District Court should have
made findings of fact concerning why it declined to consider
the particular conduct in calculating Universal and
Lukesh's sentences. See, e.g., E.C. Ernst, Inc. v. Koppers
Co., 

(3d Cir. 1980).

                               22


ROTH, Circuit Judge, dissenting, with whom Judges
Sloviter, McKee and Rendell join and with whom Chief
Judge Becker joins except for footnote 12.

I respectfully dissent from the result reached by the
majority. The majority has affirmed the District Court's
admission into evidence of Bonjo and Martin's guilty pleas,1
over the defendants' objection, despite the defendants'
agreement not to mention the guilty pleas on cross-
examination or to raise any inference which these guilty
pleas might rebut. I believe that in doing so the majority
deviates from the result mandated by Federal Rules of
Evidence 403 and 608. Moreover, the majority's holding
would now make it possible for the government in a
criminal case to introduce the guilty plea of a defendant's
accomplice simply by claiming that this evidence must be
admitted for the jury to properly assess the testifying
accomplice's credibility. Because I conclude that the
District Court abused its discretion by admitting the guilty
pleas into evidence, I would reverse the convictions of
Lukesh and Universal and remand this case to the District
Court for a new trial.

I. A.

To demonstrate how the majority's opinion deviates from
our existing precedent, I will first place this case in a
historical context. In 1949, in United States v. Toner, we
first considered whether the guilty plea of a conspirator was
admissible as evidence in the criminal trial of an alleged co-
conspirator. See United States v. Toner, 

(3d
Cir. 1949). In Toner, we ultimately held that the trial court's
admission of an alleged co-conspirator's guilty plea,
combined with a defective limiting instruction, required
reversal of the defendant's conviction. See 

The
Toner Court's reasoning, articulated by Judge Goodrich,
_________________________________________________________________

1. Like the majority, I believe that the distinction between guilty pleas
and plea agreements is, in the context of this case, a distinction without
a difference. 

Majority Opinion at 3. As such, I use the term
"guilty plea(s)" to refer to guilty plea(s) and/or the corresponding plea
agreement(s).

                               1


forms the foundation upon which the present case must be
decided:

       From the common sense point of view[,] a plea of guilty
       by an alleged fellow conspirator is highly relevant upon
       the question of the guilt of another alleged conspirator.
       If A's admission that he conspired with B is believed, it
       is pretty hard to avoid the conclusion that B must have
       conspired with A. This is one of the cases, therefore,
       where evidence logically probative is to be excluded
       because of some countervailing policy. There are many
       such instances in the law.

       The foundation of the countervailing policy is the right
       of every defendant to stand or fall with the proof of the
       charge made against him, not against somebody else.
       Acquittal of an alleged fellow conspirator is not
       evidence for a man being tried for conspiracy. So,
       likewise, conviction of an alleged fellow conspirator
       after a trial is not admissible as against one now being
       charged. The defendant had a right to have his guilt or
       innocence determined by the evidence presented
       against him, not by what has happened with regard to
       a criminal prosecution against someone else. We think
       that the charge given upon this point was contrary to
       that rule and inadvertently, of course, deprived the
       defendant of a very substantial protection to which he
       was entitled.

See 

As Toner highlighted, the danger
of unfair prejudice when admitting the guilty plea of a co-
defendant is more acute if the charge in question is
conspiracy because a conspiracy requires an agreement
between two or more individuals. See, e.g., United States v.
Davis, 

, 244 (3d Cir. 1999) ("A conspiracy
requires agreement between at least two people to the
illegal object of the conspiracy, though other participants
need not be indicted.") (citing United States v. Delpit, 

, 1150 (8th Cir. 1996); United States v. Krasovich,

, 255 (9th Cir. 1987)). If two defendants
allegedly conspired, and one defendant has been convicted
or has pleaded guilty, the clear implication is that the other
defendant is also guilty. This point has been re-emphasized
in subsequent Third Circuit case law:

                               2


       The guilty plea to a conspiracy charge carries with it
       more potential harm to the defendant on trial because
       the crime by definition requires the participation of
       another. The jury could not fail to appreciate the
       significance of this and would realize, as the court said
       in a similar case, United States v. Harrell, 

, 614 (5th Cir. 1970), that "it takes two to tango."

United States v. Gullo, 

, 761 (3d Cir. 1974).
Consistent with our holding in Toner, we have subsequently
held on many occasions that a witness's guilty plea cannot
be admitted for the purpose of proving a defendant's guilt.
See United States v. Cohen, 

, 801 (3d Cir.
1999) ("[T]he plea agreements of co-conspirators are not
admissible to prove the defendant's guilt."); United States v.
Gaev, 

, 476 (3d Cir. 1994) ("It is well
established that the plea agreements of co-conspirators
cannot be used as evidence of a defendant's guilt.");
Government of the Virgin Islands v. Mujahid, 

,
115 (3d Cir. 1993) ("It is well-established that a co-
defendant's guilty plea is not admissible to prove the
defendant's guilt."); United States v. Werme , 

,
113 (3d Cir. 1991) ("We have long recognized that evidence
of another party's guilty plea is not admissible to prove the
defendant's guilt.").2

Implicit in, and necessary to, the reasoning of Toner and
subsequent cases is the principle that if a witness's guilty
plea is to be admissible at all, it must be admissible for
some purpose other than proving the defendant's guilt. See

(holding that an alleged co-
conspirator's plea agreement is admissible for "some
purposes"); 

(holding that an alleged
co-conspirator's guilty plea is admissible for "some valid
purpose[s]"); United States v. Thomas, 

, 1205
(3d Cir. 1993) (holding that an alleged co-conspirator's
guilty plea is admissible for "limited purposes"); 

(holding that an alleged co-conspirator's
guilty plea is admissible for "other[ ] permissible purposes");
_________________________________________________________________

2. These cases alone refute the majority's claim that an accomplice's
guilty plea is presumptively admissible. 

Majority Opinion at
12.

                               3


(holding that another party's guilty
plea is admissible for "other[ ] permissible purposes");
United States v. Gambino, 

, 1363 (3d Cir.
1991) (holding that an alleged co-conspirator's guilty plea is
admissible for "some valid purpose[s]"). Thus, the guilty
plea is inadmissible, as a matter of law, unless presented
for a valid or permissible evidentiary purpose. See, e.g.,

.

We have then, despite this general rule against the
introduction of a witness's guilty plea, recognized three
valid, permissible purposes for which a guilty plea can be
admitted into evidence. First, it may be admitted"in order
to rebut defense counsel's persistent attempts on cross-
examination to raise an inference that the co-conspirators
had not been prosecuted and that [the defendant] was
being single out for prosecution." United States v. Inadi,

, 384 n.2 (3d Cir. 1986).

Second, a guilty plea may be admitted "on direct
examination" in order "to dampen subsequent attacks on
credibility, and to foreclose any suggestion that the party
producing the witness was concealing evidence." 

. This situation arises most often when
the defense plans to attack an accomplice's testimony as
being fabricated so that he might receive a less severe
punishment in return for testifying.

Finally, although not relevant to this case, a guilty plea
may be admitted "to rebut the defense assertion that [the
witness] was acting as a government agent when he
engaged in the activities that formed the basis for[his
guilty] plea." 

.

In addition, some Third Circuit cases have suggested (in
dicta) a fourth permissible or valid purpose. For example, in
Gaev we suggested that, "[i]t may also be proper to
introduce a witness's guilty plea to explain hisfirsthand
knowledge of the defendants' misdeeds." Gaev , 24 F.3d at
476 (emphasis added) (citing United States v. Halbert, 

, 1005 (9th Cir. 1981)). I am left wondering,
however, how the introduction of a witness's guilty plea into
evidence establishes the basis for his or her firsthand
knowledge of the crime. Presumably, all that the

                               4


introduction of the guilty plea establishes is that the
witness pleaded guilty. It is the witness's testimony itself
that establishes the basis for his or her firsthand
knowledge of the crime--the witness has firsthand

knowledge because s/he was present during or participated
in the crime, not because s/he pleaded guilty to the crime.

B.

In the present case, because the defendants agreed not to
challenge the witnesses' credibility based on their plea
agreements, we are presented with a more focused question
than we met in Toner: Whether and under what
circumstances a trial court can admit into evidence the
guilty plea of an alleged accomplice, over the defendant's
objection, when the defendant agrees not to mention the
guilty plea on cross-examination and not "to raise any
inference on which the accomplices' pleas of guilty would
be admissible to rebut."3

In United States v. Thomas, 

(3d Cir.
1993), we first considered this more restricted issue. The
District Court in Thomas had admitted two co-conspirators'
guilty pleas into evidence, concluding that admission was
proper for the limited purposes of "aid[ing] the jury in
assessing [the witnesses'] credibility,""establish[ing] the
[witnesses'] acknowledgment of their participation in the
offense," and "counter[ing] the inference that [the witnesses]
had not been prosecuted." 

. In
reviewing the trial court's decision to admit the guilty pleas
into evidence, we noted that the Third Circuit had
recognized two relevant, valid or permissible purposes for
which an alleged co-conspirator's guilty plea could be
introduced into evidence, "to blunt the impact on a
government witness's credibility of having evidence of a
_________________________________________________________________

3. Both defendants joined the motion in limine to exclude the guilty pleas
of the two alleged accomplices. The motion stated in relevant part,
"Defendant asserts that at trial of this action he will not raise the
guilty
plea/plea agreements on cross examination nor seek to raise any
inference on which the accomplices' pleas of guilty would be admissible
to rebut." Supplemental Brief for the Appellants at 23; 

Majority Opinion at 6, note 6.

                                5


guilty plea brought out on cross examination by the
defense," and "to prevent any improper inference by the
jury that the defendant has been singled out for
prosecution while the co-conspirators have not been

prosecuted." 

We reasoned, however, that
neither purpose justified admitting the guilty pleas into
evidence, because the defendant had agreed not to
challenge the witnesses' credibility based on their guilty
pleas, and because the defendant had not suggested he was
being selectively prosecuted. See id.4 We rejected the
District Court's claim that the alleged co-conspirators'
guilty pleas were admitted into evidence in order to
establish their acknowledgment of their participation in the
crime, pointing out that defense counsel did not challenge
the witnesses' assertion that they participated in the crime.
See 

danger of unfair prejudice associated with
the admission of the guilty pleas against their probative
value pursuant to Federal Rule of Evidence 403, we
ultimately held in Thomas that, "[i]n the absence of a
proper purpose for the admission of the guilty pleas, the
curative instructions of the district court were not sufficient
to remove the prejudice to Thomas presented by the
evidence of his co-conspirators's [sic] guilty pleas." 

We concluded that we were "not left with the
requisite `sure conviction that the error did not prejudice
the defendant' " and thus concluded that "the introduction
at trial of evidence of Thomas's co-conspirators's[sic] guilty
_________________________________________________________________

4. In Thomas, we concluded that the case at hand differed from United
States v. Inadi where the alleged co-conspirator's guilty plea was
admitted only "to rebut defense counsel's persistent attempts on cross-
examination to raise an inference that the co-conspirator's had not been
prosecuted and [that] the defendant was being singled out for
prosecution." 

(citing United States v. Inadi,

, 384 n.2. (3d Cir. 1986)). We noted that if the defendant
violated the agreement and "attempted to raise an inference on cross-
examination that [the defendant] was being unfairly singled out for
prosecution, additional remedial steps could [then] have been taken." 

n.1. Presumably, "additional remedial steps" would have
included introducing the alleged co-conspirator's guilty plea into
evidence on rebuttal.

                               6


pleas was reversible error." 

(quoting United
States v. Jannotti, 

, 219-20 (3d Cir. 1984)).

Judge Rosenn filed a vigorous dissent in Thomas, arguing
that the alleged co-conspirators' guilty pleas were properly
admitted "(1) to bolster the credibility of the co-conspirators
as prosecution witnesses; (2) to quell the inference that the
co-conspirators were not prosecuted and that Thomas was
thus `singled out' for punishment; and (3) to establish the
basis for the co-conspirators' firsthand knowledge of the
crime about which they testified." 

(Rosenn, J.,
dissenting). Contending that the alleged co-conspirators'
credibility would be at issue regardless of the defense's
assurance that it would not attack the witnesses' credibility
with respect to their guilty pleas, Judge Rosenn
acknowledged that his dissent was at odds with the Third
Circuit's holding in Toner: "One could argue that credibility
is always at issue and that my position thus effectively
overrules Toner." 

However, Judge Rosenn
argued that his position was in fact consistent with the
holding in Toner:

       [A] witness's credibility is only at issue when he or she
       testifies about a relevant and disputed fact. Moreover,
       Toner merely states that a guilty plea of a witness
       cannot be used to establish the guilt of the defendant.
       Thus, even if the guilty plea is always admissible for
       the purpose of establishing the credibility of the
       witness, that does not overrule Toner: Toner would still
       require a limiting instruction, similar to the ones given
       by the trial judge in the present case, to insure that
       the jury understands that the guilty plea cannot be
       used to establish the guilt of the defendant.

however, accept the implications of this
explanation, just as I cannot accept the majority's position,
unless there has been a meaningful weighing of the
probative value of the guilty pleas against the danger of
unfair prejudice, as required by Federal Rule of Evidence
403.

                               7


C.

Subsequent to our decision in Thomas, we again
addressed whether the trial court erred by admitting into
evidence the guilty plea of an alleged co-conspirator, even
though the defendant agreed not to challenge the alleged
co-conspirator's credibility nor to raise any inference that
would make the guilty plea admissible. See United States v.
Gaev, 

, 474-79 (3d Cir. 1994). On facts nearly
identical to those in Thomas, we held in Gaev that the
alleged co-conspirators' guilty pleas had been properly
admitted into evidence. See 

In conducting the
requisite Rule 403 balancing, we concluded, consistent with
Judge Rosenn's dissent in Thomas, that "[w]hen a co-
conspirator testifies that he took part in the crime with
which the defendant is charged, his credibility will
automatically be implicated." 

(emphasis added). Ultimately, in Gaev we went beyond the
confines of Judge Rosenn's dissent in Thomas , holding that
a witness's credibility in a case like Thomas will
"automatically" be at issue. Prior to Gaev , this proposition,
that "[w]hen a co-conspirator testifies that he took part in
the crime with which the defendant is charged, his
credibility will automatically be implicated," had not arisen
in Third Circuit jurisprudence. The consequences of the
extension of such an expansive interpretation of our prior
case law are illustrated by the majority's opinion in this
case.

II. A.

Federal Rule of Evidence 403 states that:

         Although relevant, evidence may be excluded if its
         probative value is substantially outweighed by the
         danger of unfair prejudice, confusion of the issues, or
         misleading the jury, or by considerations of undue
         delay, waste of time, or needless presentation of
         cumulative evidence.

Thus, evidence that is otherwise admissible and probative
of guilt must sometimes be excluded because of the danger
of unfair prejudice to the defendant. See, e.g. , United States
v. Sriyuth, 

, 746 (3d Cir. 1996).

                                 8


The District Court, in balancing the danger of unfair
prejudice associated with Bonjo and Martin's guilty pleas
against their probative value, concluded that the probative
value was not substantially outweighed by the danger of
unfair prejudice. The majority, endorsing this conclusion,
states:

         The District Court heard argument on the defendant's
         [sic] motion in limine and accompanying arguments
         concerning Bonjo and Martin plea agreements and
         guilty pleas at three separate instances during this
         criminal proceeding: (1) on May 3, 1995, prior to the
         testimony of FBI Agent Cook (App. at 806); (2) on May
         9, 1995, prior to the testimony of Dr. Paul C. Moock,
         Jr. (App. at 1768); and (3) subsequent to trial in ruling
         upon the defendants' post-trial motions. At each
         instance, the District Court carefully and meticulously
         weighed the . . . factors of credibility, selectivity, and
         witness knowledge that inform the probative value
         versus prejudicial effect standard required by Federal
         Rule 403. At each instance, the District Court's
         balancing was careful and comprehensive in
         concluding that the probative value of Bonjo and
         Martin's plea agreements and guilty pleas outweighed
         any prejudicial effect.

Majority Opinion at 20-21. The record, however, belies this
contention.
On May 3, 1995, prior to the testimony of FBI Agent
Cook, the District Court first heard argument on the
defendants' motion in limine. See App. at 806-17.5 After
_________________________________________________________________

5. The record suggests that May 3, 1995, was actually the last time that
the District Court heard arguments on the defendants' motion in limine.
The District Court stated:

       All right, I asked you to come at this point so that we could have
a

       last opportunity to argue the motion in limine   and I addressed
your

       attention to the Gave [sic] case. Anyone wish to make any
additional

       arguments, you may do so.

App. at 806. Regardless, this exchange on May 3, 1995, is the first point
in the record at which the District Court heard arguments on the
defendants' motion in limine.

                               9


hearing argument on the motion, the District Court did not
"carefully and meticulously weigh[ ] the. . . factors of
credibility, selectivity, and witness knowledge that inform
the probative value versus prejudicial effect standard
required by Federal Rule 403," nor did the District Court
"careful[ly] and comprehensive[ly]" conclude "that the
probative value of Bonjo and Martin's plea agreements and
guilty pleas outweighed any prejudicial effect." Rather, the
District Court simply stated: "I'll take all the time I have
available to think about this." App. at 816.

On May 9, 1995, prior to Dr. Paul C. Moock's testimony,
the District Court ruled on the defendants' motion in limine.
The District Court did not hear further argument on the
motion, nor did the District Court "carefully and
meticulously weigh[ ] the . . . factors of credibility,
selectivity, and witness knowledge that inform the probative
value versus prejudicial effect standard required by Federal
Rule 403." The District Court simply made the following
statement:

       All right, I have weighed all of the factors and I think
       in the context of this case we have had and from what
       I know of or have heard by way of reference to Julia
       Blum [Bonjo] and Penny Martin, I think it sounds to
       me as if they are somewhat higher up in the structure.
       And if they testify the jury is going to certainly wonder
       whether or not they have been charged. It's going to
       wonder perhaps what they have been promised by the
       prosecutor if anything and what they may be getting in
       return for their testimony.

       I think in weighing all those factors with the possible
       prejudice that I am going to allow the Government to
       bring out the fact of the guilty plea and the fact of the
       guilty plea agreement. . . .

       I think this is exactly like the Gave [sic] case, only
       there are more reasons here, because there are so
       many people who have testified and in their testimony
       have indicated a certain amount of wrong doing. And
       they--it's pretty obvious haven't been charged and I
       think it raises a very serious question in the minds of
       the jury, especially as to people who are as I said

                               10


       before, higher up in the structure. What are they
       getting for their testimony, how is it that these people
       haven't been charged and it's better in my opinion that
       the jury know it all. That's the basis of the reason.

App. at 1768, 1771-72. The language quoted above clearly
indicates that the District Court did little if any balancing
but instead simply concluded that Bonjo and Martin's
guilty pleas were admissible. In fact, the District Court
mentioned only two of the factors that the majority
highlights, glossing over them in cursory form:first,
credibility, "what are they getting for their testimony," and,
second, selective prosecution, "how is it that these people
haven't been charged." Moreover, no mention is made by
the District Court of the defendants' commitment not to
raise these issues or of the possibility of admitting the pleas
on rebuttal if the defendants reneged on their commitment.
The majority's characterization of the District Court's Rule
403 analysis as "careful," "meticulous" and
"comprehensive" is undermined by this cursory Rule 403
analysis.

B.

As set forth in Federal Rule of Evidence 403, and as the
majority acknowledges, this case turns on whether the
District Court properly weighed the probative value of Bonjo
and Martin's guilty pleas against the danger of unfair
prejudice to the defendants. Because a proper Rule 403
analysis must consider both the probative value of the
guilty pleas, as well as the danger of unfair prejudice
associated with the pleas, I will first assess their probative
value.
The District Court concluded that the probative value of
Bonjo and Martin's guilty pleas was limited to eliminating
the appearance of selective prosecution and to informing
the jury what the witnesses were receiving in exchange for
their testimony. It is beyond question, however, that the
probative value of this type of information would have been
minimized by the defendants' commitment not to "raise the
guilty plea/plea agreements on cross examination nor[ ] to
raise any inference on which the accomplices' pleas of

                               11


guilty would be admissible to rebut." The credibility attack,
based on any quid pro quo that the witnesses derived from
the plea agreements, would not take place if the defendants
refrained from employing this line of attack in their cross-
examination.

I am firmly convinced, moreover, that the evaluation of
probative value cannot be made without a consideration of
the defendants' commitment. The majority disregards the
commitment, however, and focuses on the probative value
associated with assisting the jury in assessing the
credibility of the accomplices in response to jury
speculation or in response to the defense's cross-
examination attacking a witness's credibility -- a stage of
the trial which need not occur if the defendants lived up to
their commitment.

In adopting this focus, the majority skirts the line
between pointing out that these guilty pleas may have
probative value and declaring that the guilty pleas
themselves constitute substantive evidence of the
defendants' guilt. It is black letter law, as the majority
acknowledges, that a witness's guilty plea cannot be
admitted as substantive evidence of a defendant's guilt. See

("[T]he plea agreements of co-
conspirators are not admissible to prove the defendant's
guilt."); 

("It is well established that
the plea agreements of co-conspirators cannot be used as
evidence of a defendant's guilt."); Mujahid , 990 F.2d at 115
("It is well-established that a co-defendant's guilty plea is
not admissible to prove the defendant's guilt."); 

("We have long recognized that evidence of
another party's guilty plea is not admissible to prove the
defendant's guilt."). Nevertheless, by ignoring the
defendants' agreement not to "raise the guilty plea/plea
agreements on cross examination nor [ ] to raise any
inference on which the accomplices' pleas of guilty would
be admissible to rebut" the majority fails to appreciate that,
in light of defendants' commitment not to raise the issue of
the pleas, the probative value of Bonjo and Martin's guilty
pleas is negligible. Moreover, the jury will then be presented
with evidence that has minimal probative value but which

                               12


may improperly imply that because Bonjo and Martin pled
guilty, Lukesh and Universal are also guilty.6

C.

Having considered the probative value of Bonjo and
Martin's guilty pleas, we must next assess the danger of
unfair prejudice associated with admitting their guilty pleas
into evidence. As the majority acknowledges, and as we
have previously noted, "[t]he guilty plea to a conspiracy
charge carries with it more potential harm to the defendant
on trial because the crime by definition requires the
participation of another." United States v. Gullo, 

, 761 (3d Cir. 1974). It is true that the defendants were
convicted of mail fraud and not of conspiracy. Nevertheless,
the offense of conviction, as it was presented at trial, in
many respects was similar to a conspiracy. In order to
obtain a mail fraud conviction under 18 U.S.C. S 1341, the
government must prove that the defendant devised a
scheme to defraud, that the defendant participated in the
scheme with the specific intent to defraud and that the
defendant could reasonably foresee use of the mails. See
United States v. Feola, 

, 693 (1975); Pereira v.
United States, 

, 8 (1954); United States v.
Pflaumer, 

, 1233 (3d Cir. 1985). As the
scheme to defraud was described in the indictment and
presented at trial, defendants, including Lukesh, Universal,
and Bonjo, participated together in the scheme to defraud
and obtain money from the Medicare program. Indeed, it
would appear that the government could have elected to
indict the defendants on a conspiracy count as well as on
the substantive mail fraud counts.

I find, however, that the majority trivializes the
heightened danger of unfair prejudice presented by this
type of situation, a situation that requires closer scrutiny of
the Rule 403 balance. See Majority Opinion at 20. In the
context of this case, the majority's characterization of the
offense to which Bonjo and Martin pleaded guilty as a
_________________________________________________________________

6. will deal further with two other aspects of the probative value of the
guilty pleas in my discussion of Rule 608 in Section IV and of limiting
instructions in Section V.

                               13
"substantive count[ ]" while legally accurate, is also
misleading. In the case of Universal and Lukesh, section
1341 criminalized what was essentially a successful
conspiracy to commit Medicare fraud. In fact, the jury
found that Lukesh and Universal had devised a scheme to
defraud Medicare by fraudulently re-writing and altering
patient evaluations to increase the likelihood that Medicare
would reimburse Universal for medical services that were
not otherwise reimbursable. Bonjo and Martin pled guilty to
participating in this scheme. Ultimately, on the facts before
us, the distinction that the majority attempts to draw,
between the "substantive" count of mail fraud under section
1341 and the "non-substantive" count of conspiracy to
commit mail fraud under section 371, is a distinction
without a difference. Thus, the danger of unfair prejudice
associated with the District Court's decision to admit Bonjo
and Martin's guilty pleas into evidence is not only
significant but also virtually identical to the danger of
unfair prejudice associated with admitting into evidence the
guilty pleas of two alleged co-conspirators.

D.

Having considered both the probative value of and the
danger of unfair prejudice associated with Bonjo and
Martin's guilty pleas, we must next determine whether the
probative value of these guilty pleas is substantially
outweighed by the danger of unfair prejudice to the
defendants. The probative value of Bonjo and Martin's
guilty pleas is negligible--the defendants agreed not to
"raise the guilty plea/plea agreements on cross examination
nor [ ] to raise any inference on which the accomplices'
pleas of guilty would be admissible to rebut." The principal
effect of this agreement is a reduction in the probative value
of this evidence. On the flip side, the danger of unfair
prejudice associated with Bonjo and Martin's guilty pleas is
significant--mail fraud, as a matter of law, involves a
scheme or artifice to defraud, and Bonjo and Martin
allegedly participated in this scheme with and under the
direction of Universal and Lukesh. Thus, if Bonjo and
Martin's admission that they committed mail fraud is
believed, it is difficult not to conclude that Universal and

                               14


Lukesh committed mail fraud as well. As we noted in Toner,
"[a] defendant ha[s] a right to have his guilt or innocence
determined by the evidence presented against him, not by
what has happened with regard to a criminal prosecution
against someone else." 

. Clearly,
Bonjo and Martin's guilty pleas create a significant danger
of unfair prejudice. This significant danger of unfair
prejudice substantially outweighs the minimal probative
value of Bonjo and Martin's guilty pleas. For that reason,
Federal Rule of Evidence 403 mandates that their guilty
pleas be excluded. Thus, the District Court's decision to
admit Bonjo and Martin's guilty pleas into evidence was an
abuse of discretion.

III.

By concluding that Bonjo and Martin's guilty pleas were
properly admitted into evidence, and by endorsing the
holding in Gaev, the majority ignores the fact that, over
time, Toner and its progeny have come to stand for the
proposition that guilty pleas of co-conspirators are not
admissible to establish the guilt of the defendant and can
only be introduced into evidence for a proper evidentiary
purpose. See, e.g., United States v. Gambino, 

, 1363 (3d Cir. 1991); 

-14;

. Following the majority's
reasoning, unless a defendant is willing to refrain from
cross-examining a witness entirely, the witness's credibility
will always be at issue, and his or her guilty plea will
always be admissible. While this may be the rule of law in
other circuits, it is definitely not the rule of law in the Third
Circuit. Compare, e.g., United States v. Mealy, 

, 899 (7th Cir. 1988) ("The well established rule in this
circuit is that, on direct examination, the prosecutor may
elicit direct testimony regarding the witness's plea
agreement and actually introduce the plea agreement into
evidence.") with 

(holding that
an alleged co-conspirator's guilty plea can be admitted into
evidence only for a proper evidentiary purpose). The
majority's holding effectively overrules Toner and its

                                15


progeny without acknowledging this fact or providing a
reason for doing so.7

The majority apparently concludes that Toner stands for
the proposition that an alleged co-conspirator's guilty plea
cannot be offered as proof of the defendant's guilt;
therefore, when an alleged co-conspirator's guilty plea is
admitted into evidence, the jury must be instructed that the
guilty plea cannot be used to establish the guilt of the
defendant. While this may be a proper interpretation of
Toner read alone, subsequent cases in the Third Circuit
have recognized that, absent a proper purpose, guilty pleas
of an alleged co-conspirator are inadmissible. Framed in
terms of the balancing approach required by Federal Rule
of Evidence 403, absent a proper purpose, the probative
value of an alleged co-conspirator's guilty plea is
substantially outweighed by the danger of unfair prejudice
to the defendants.
In light of our established precedent, I believe that the
trial court in Universal erred by admitting into evidence the
guilty pleas of two alleged co-schemers in face of the
defendants' commitment that they would not, on cross-
examination, challenge the credibility of the government's
witnesses or raise any inferences that would make the
guilty pleas admissible. Absent a proper evidentiary
purpose, a trial court's decision to admit an alleged co-
conspirator's guilty plea is improper and an abuse of
_________________________________________________________________

7. The majority is quick to focus on the following statement in Gaev:
"While plea agreements have often been admitted in response to actual
or anticipated attacks on a witness's credibility, an attack is not always
necessary to justify their introduction," 

-78. To
support this proposition, the Gaev Court cites the following passage in
Gambino: "In this case, the defendants began their attack on the
credibility of the government's witnesses in their opening statement. Yet,
even in the absence of this attack, the [introduction of the witnesses'
guilty pleas] was proper here." Gambino , 926 F.2d at 1363. This
statement, which is clearly dictum, is made without any supporting cite
to case law in the Third Circuit or any other circuit. Such a statement
is without support or foundation in Third Circuit jurisprudence, and
since it is merely dictum, it alone should not provide the basis for
affirming the District Court's decision to admit Bonjo and Martin's guilty
pleas into evidence.

                               16


discretion. An alleged co-conspirator's guilty plea cannot be
admitted for the purpose of proving a defendant's guilt. See

("[T]he plea agreements of co-
conspirators are not admissible to prove the defendant's
guilt."); 

("It is well established that
the plea agreements of co-conspirators cannot be used as
evidence of a defendant's guilt."); Mujahid , 990 F.2d at 115
("It is well-established that a co-defendant's guilty plea is
not admissible to prove the defendant's guilt."); 

("We have long recognized that evidence of
another party's guilty plea is not admissible to prove the
defendant's guilt."). Contrary to the majority's claim that
"Federal Rule of Evidence 403 creates a presumption of
admissibility," an alleged co-conspirator's guilty plea is only
admissible for a limited number of valid, permissible
purposes. See United States v. Inadi, 

, 384 n.2
(3d Cir. 1986) ("[A co-conspirator's guilty plea may be
admitted] in order to rebut defense counsel's persistent
attempts on cross-examination to raise an inference that
the co-conspirators had not been prosecuted and that[the
defendant] was being singled out for prosecution.");

("[A co-conspirator's guilty plea
may be admitted] on direct examination [in order] to
dampen subsequent attacks on credibility, and to foreclose
any suggestion that the party producing the witness was
concealing evidence."); 

("[A
witness's guilty plea may be admitted] to rebut the defense
assertion that [the witness] was acting as a government
agent when he engaged in the activities that formed the
basis for [his guilty] plea.").

As our analysis above demonstrates, when a defendant
agrees not to "raise the guilty plea/plea agreements on
cross examination nor to raise any inference on which the
accomplices' pleas of guilty would be admissible to rebut,"
the Rule 403 balance clearly tips in favor of excluding the
evidence.8 If an alleged co-conspirator's guilty plea is to be
_________________________________________________________________

8. As discussed below, the jury's verdict confirms that the defendants
were in fact prejudiced by the District Court's erroneous evidentiary
ruling. See infra Section VI. I note moreover that if a defendant reneges
on a commitment not to impeach a witness's credibility on the basis of
the guilty plea, the government will have the opportunity to introduce
the guilty plea on rebuttal.

                               17


admissible at all, it must be admissible for some purpose
other than proving the defendant's guilt. See 

(holding that an alleged co-conspirator's plea
agreement is admissible for "some purposes"); 

(holding that an alleged co-conspirator's guilty
plea is admissible for "some valid purpose[s]"); United
States v. Thomas, 

, 1205 (3d Cir. 1993)
(holding that an alleged co-conspirator's guilty plea is
admissible for "limited purposes"); 

(holding that an alleged co-conspirator's guilty plea is
admissible for "other[ ] permissible purposes"); 

(holding that another party's guilty plea is
admissible for "other[ ] permissible purposes"); United
States v. Gambino, 

, 1363 (3d Cir. 1991)
(holding that an alleged co-conspirator's guilty plea is
admissible for "some valid purpose[s]"). Allowing the
government, when prosecuting a criminal case, to introduce
the guilty plea of a defendant's alleged co-conspirator
simply by claiming that the guilty plea must be admitted
into evidence so that the jury can assess the witness's
credibility creates an exception that swallows the rule. The
government will always be able to claim that a witness's
guilty plea must be admitted into evidence so that the jury
can assess the witness's credibility, and thus the guilty plea
will always be admissible. It is impossible to reconcile this
result with our prior jurisprudence or with the result
mandated by Rule 403.
IV.

Focusing primarily on the jury's need to assess the
credibility of Bonjo and Martin, and relying on a statement
in Gaev and cases in other circuits, the majority concludes
that the government may seek to introduce a witness's
guilty plea even in the absence of a challenge to the
witness's credibility. The majority's holding deviates not
only from the outcome mandated by Rule 403, its holding
is at odds with Federal Rule of Evidence 608(a) and (b).
Rule 608(a) states:

       The credibility of a witness may be attacked or
       supported by evidence in the form of opinion or
       reputation, but subject to these limitations: (1) the

                               18


       evidence may refer only to character for truthfulness or
       untruthfulness, and (2) evidence of truthful character
       is admissible only after the character of the witness for
       truthfulness has been attacked by opinion or
       reputation evidence or otherwise.

Arguably, under Rule 608(a), absent an attack on Bonjo
and Martin's credibility, their guilty pleas are inadmissible.
The Advisory Committee Notes to Rule 608(a), which
summarize the policy behind the rule, indicate:

       Character evidence in support of credibility is
       admissible under the rule only after the witness'
       character has first been attacked, as has been the case
       at common law. Maguire, Weinstein, et al., Cases on
       Evidence 295 (5th ed. 1965); McCormick S 49, p. 105;
       4 Wigmore S 1104. The enormous needless
       consumption of time which a contrary practice would
       entail justifies the limitation.

Thus, even prior to the enactment of Rule 608(a), as a
matter of common law, evidence was admissible to bolster
a witness's credibility only after the witness's credibility had
been attacked. See, e.g., Perkins v. United States, 

, 123 (9th Cir. 1963) (highlighting "the general rule that
until the credibility of a witness has been attacked by
evidence pertaining to credibility, evidence tending to
establish credibility is inadmissible") (citing Homan v.
United States, 

, 772 (8th Cir. 1960)).

Not only is the majority's holding contrary to Rule 608(a),
its holding is also at odds with Rule 608(b). Rule 608(b)
states:

       Specific instances of the conduct of a witness, for the
       purpose of attacking or supporting the witness'
       credibility, other than conviction of crime as provided
       in Rule 609, may not be proved by extrinsic evidence.
       They may, however, in the discretion of the court, if
       probative of truthfulness or untruthfulness, be
       inquired into on cross-examination of the witness (1)
       concerning the witness' character for truthfulness or
       untruthfulness, or (2) concerning the character for
       truthfulness or untruthfulness of another witness as to

                               19


       which character the witness being cross-examined has
       testified.
       Because Bonjo and Martin's guilty pleas (or more

specifically their decision to plead guilty) could be
considered conduct under Rule 608(b), to the extent that
the government introduced Bonjo and Martin's guilty pleas
to support their credibility, their admission is barred, as a
matter of law, by Rule 608(b). See Fed. R. Evid. 608(b); cf.,
e.g., United States v. Anderson, 

, 1178 (3d
Cir. 1988) ("To the extent that [the probation officer's]
testimony was an attempt to attack [the witness's]
credibility by extrinsic evidence, it is strictly prohibited by
Federal Rule of Evidence 608(b).").9 Indeed, the government
argued in its briefs and during oral argument that Bonjo
and Martin's guilty pleas should be admitted into evidence
in order better to allow the jury to assess their credibility.
Certainly, since Bonjo and Martin were government
witnesses, their guilty pleas were not being introduced into
evidence to attack their credibility but rather to bolster it.

Consequently, the majority's conclusion that Bonjo and
Martin's guilty pleas were properly admitted into evidence is
not only contrary to the result mandated under Federal
Rule of Evidence 403 but also is at odds with the Federal
Rule of Evidence 608.10
_________________________________________________________________

9. Extrinsic evidence under Rule 608(b) is admissible for purposes other
than supporting or attacking a witness's credibility. See, e.g., Lamborn
v.

Dittmer, 

, 528 (2d Cir. 1989) ("[Rule 608] is inapplicable in
determining the admissibility of evidence introduced to impeach a
witness's testimony as to a material issue."). While the majority
concludes that Bonjo and Martin's guilty pleas are admissible for
purposes other than evaluating their credibility, i.e., avoiding the
appearance of selective prosecution and establishing a basis for the
witness's knowledge of the crime, that the guilty pleas were admitted to
allow the jury to evaluate the witnesses' credibility is the cornerstone
of
the majority's holding.

10. As the majority points out, it is arguable whether Federal Rule of
Evidence 608 governs the admission of Bonjo and Martin's guilty pleas.

Majority Opinion at 17-18, note 13. However, even if one were
to conclude that Rule 608 does not govern the admission of Bonjo and
Martin's guilty pleas, it is clear that Rule 608 provides insight into the
appropriate balancing required under Rule 403. Specifically, Rule 608

                               20


V.

While the majority's conclusion, that the District Court
did not abuse its discretion by admitting into evidence
Bonjo and Martin's guilty pleas, is disturbing, equally
disturbing is the majority's conclusion that "the detailed
limiting instructions provided by the District Court cured
the prejudicial effect, if any, flowing from the introduction
of Bonjo and Martin's guilty pleas and plea agreements."
Majority Opinion at 20.
_________________________________________________________________

allows a party to introduce "evidence in the form of opinion or
reputation" to attack or support the credibility of a witness only after
the
credibility of the witness has been attacked. The majority contends that
Bonjo and Martin's guilty pleas are admissible to bolster their
credibility

despite the defendants' agreement not to attack Bonjo and Martin's
credibility. This contention is at odds with the framework set forth in
Rule 608. To admit Bonjo and Martin's guilty pleas, absent a prior attack
on their credibility, when similar evidence would, as a matter of law, be
admissible under Rule 608 only after a testifying witness's credibility
had

been attacked, undermines the majority's entire Rule 403 analysis.

Moreover, the majority's analysis of United States v. Old Chief is also
at odds with the framework set forth in Rule 608. In arguing that the
introduction of Bonjo and Martin's guilty pleas has less probative value
than the defendants' agreement not to mention the guilty pleas on cross-
examination or to raise any inference which these guilty pleas might
rebut, the majority overlooks the fact that "evidence in the form of
opinion or reputation" is admissible only after the credibility of a
witness
has been attacked. See Majority Opinion at 16. Thus, under Rule 608,
the comparison of probative value required under Old Chief and alluded
to by the majority would be purely hypothetical and unnecessary; absent
a prior attack on credibility, "evidence in the form of opinion or
reputation" is, as a matter of law, inadmissible.
Finally, contrary to the majority's suggestion, the potential
applicability of Rule 608 was not only discussed at the en banc oral
argument, the government filed a supplemental brief after oral argument
to address the issue. See Supplemental Brief of Appellee United States
of America, Filed November 22, 1999 ("At oral argument before the en
banc Court on November 8, 1999, the Court raised two issues which had
not previously been addressed in this appeal: (1) The relevance of Rule
608 of the Federal Rules of Evidence; and (2) the applicability of Luce v.
United States, 

(1984).").

                               21


It is beyond dispute that when an alleged co-conspirator's
guilty plea is admitted into evidence, even if the trial court
has given a proper cautionary instruction to the jury, the
prejudice to the defendant may be serious enough to
constitute reversible error. See, e.g., 

("In the absence of a proper purpose for the
admission of the guilty pleas, the curative instructions of
the district court were not sufficient to remove the prejudice
to Thomas presented by the evidence of his co-conspirators'
guilty pleas."); 

("There may also be
cases where the inference of guilt from the co-conspirator's
plea agreement is sufficiently strong that even limiting
instructions will not effectively contain it."). The majority
not only concludes that this prejudicial effect is typically
cured by a limiting instruction to the jury but also
dismisses the defendants' contention that juries cannot
comprehend or follow such limiting instructions.

Moreover, the majority's analysis obscures what I
consider to be the key issue: The District Court abused its
discretion by admitting into evidence Martin and Bonjo's
guilty pleas, over the defendants' objection, despite the fact
the defendants agreed not to "raise the guilty plea/plea
agreements on cross examination nor [ ] to raise any
inference on which the accomplices' pleas of guilty would
be admissible to rebut." While a limiting instruction given
by a District Court may render an otherwise erroneous
evidentiary ruling harmless, a limiting instruction cannot
transform an otherwise erroneous evidentiary ruling into a
legally proper evidentiary ruling. Ultimately, we must decide
whether, the District Court, at the time it ruled on the
defendants' motion in limine, abused its discretion by
admitting Bonjo and Martin's guilty pleas into evidence. To
do so, we must focus on the probative value and danger of
unfair prejudice associated with Bonjo and Martin's guilty
pleas and not on whether the District Court's limiting
instructions cured any resulting, unfair prejudice.

Moreover, the danger of unfair prejudice highlighted
above renders both baffling and confounding the District
Court's decision to instruct the jury "that it may not
consider the guilty plea and/or plea agreement as evidence
that the defendant is guilty of the offenses with which he is

                               22


charged," rather than to instruct the jury that it need not
concern itself with the possibility of selective prosecution or
what the witnesses have be promised in return for their
testimony. See, e.g., 

. If, as the
majority contends, juries comprehend and follow limiting
instructions such as those given by the District Court in
this case, surely the better approach, and the one most
consistent with Third Circuit jurisprudence, is to exclude
Bonjo and Martin's guilty pleas and to instruct the jury
members that they should concern themselves only with
the guilt or innocence of defendants and not with the
possibility of selective prosecution or the involvement of any
other persons in any alleged scheme. 

, Majority
Opinion at 17-18, note 13; 

; cf.
Spencer v. Texas, 

, 562-63 (1967) ("[T]his type
of prejudicial effect is acknowledged to inhere in criminal
practice, but it is justified on the grounds that . . . the jury
is expected to follow instructions in limiting this evidence to
its proper function."). Instead of following our holding in
Thomas, the majority relies on precedent in other circuits,
citing one case from the Fifth Circuit and one case from the
Eleventh Circuit, to support its conclusion that Bonjo and
Martin's guilty pleas are presumptively admissible. See
Majority Opinion at 12.11 Ultimately, the majority's
conclusion that Federal Rule of Evidence 403 "creates a
presumption of admissibility" with respect to an alleged
accomplice's guilty plea, a conclusion that is crucial to the
majority's holding, is unsupported by Third Circuit
precedent.12
_________________________________________________________________

11. The Eleventh Circuit case that the majority cites, Hendrix v.
Raybestos-Manhattan, Inc., 

(11th Cir. 1985), is a civil tort
case. Arguably, there exists a heightened concern associated with the
"danger of unfair prejudice" in the context of a criminal case.

12. The majority attempts to draw support for its holding from a recent
Supreme Court case, United States v. Old Chief , 

(1997). In
Old Chief, the Supreme Court held that a trial court abuses its discretion
when, in a prosecution pursuant to 18 U.S.C. S 922(g)(1) for possession
of a handgun by a convicted felon, it admits into evidence the name or
nature of the defendant's prior conviction despite the defendant's offer
to

stipulate to his status as a felon under section 922(g)(1). See 

91. While the issue addressed in Old Chief is not entirely unrelated to
the issue presented in this case, a careful reading of Old Chief confirms
that it provides no support to either the majority or the dissent in this
case.

                               23


VI.

Although the District Court abused its discretion by
admitting into evidence Bonjo and Martin's guilty pleas, I
must also consider whether its evidentiary ruling amounts
to harmless error. See, e.g., United States v. 

("We also conclude that it was harmless error
to introduce the [witnesses'] guilty pleas."). An error at trial
is harmless if an appellate court concludes that there is a
"high probability" that the error did not affect the
defendant's substantial rights. 

Phrased
differently, an appellate court must have "a sure conviction
that the error did not prejudice the defendant, but need not
disprove every reasonably possibility of prejudice" to
conclude that the error was harmless. United States v.
Jannotti, 

, 219-20 (3d Cir. 1984).

Reviewing the record, it is clear that the District Court's
erroneous evidentiary ruling was not harmless error. Of the
thirty-nine counts that the defendants were charged with,
they were acquitted on thirty-eight counts and were
convicted on only one count, the count to which
government witness Judy Blum Bonjo pleaded guilty.
Further suggesting the likelihood of prejudice, the count on
which the defendants were convicted involved a patient
named Mildred Hynes, but Mildred Hynes was involved in
four other counts on which the defendants were acquitted.
Lastly, and perhaps most importantly, discarding Bonjo's
and Martin's guilty pleas, the evidence against the
defendants on Counts Two through Thirty-Nine was
virtually identical to the evidence presented on the single
count which the defendants were convicted. In light of
these facts, I believe that the error here could not be
harmless.

VII.

For the above reasons, I would reverse the defendants'
convictions and remand the case to the District Court for a
new trial.

                               24


BECKER, Chief Judge, dissenting:
I am in full agreement with the reasoning and conclusion
expressed by the principal dissent in this case--which
would hold that the District Court erred in admitting
evidence that the defendants' co-conspirators had entered
guilty pleas for their respective roles in the underlying
health-care fraud conspiracy--except insofar as that
opinion disclaims reliance on Old Chief v. United States,

(1997). See Dissent at 29 n.12 (Roth, J.). I am
of the opinion that Old Chief strongly supports the
defendants' position, and write separately to explain that
view.

I read Old Chief as standing for three important
propositions: First, it makes clear that defense stipulations,
such as the assurances offered by the defendants in this
case, are acceptable, if not favored or required, in certain
limited circumstances. See Old 

.
Second, it holds that the government's general prerogative
to prosecute its case as it sees fit must necessarily yield to
the dictates of the Federal Rules of Evidence. See 

Third, it tracks the advisory committee notes to the
Federal Rules of Evidence, and confirms that proffered
evidence must not be analyzed as an island to itself (as the
majority seems to do, here), but rather, compared to the
availability of other means of proof on the same point. See

Against this background, I believe that the case
for allowing a stipulation in this case is even stronger than
it was in Old Chief.

In Old Chief, the defendant, charged with being a felon in
possession of a firearm, had offered to stipulate to an
element of the offense with which he was charged: having
a prior felony conviction. The government refused to accept
the offer, and over the defendant's objection, it introduced
evidence regarding the name and nature of the defendant's
underlying felony conviction. The Supreme Court held that
the district court had abused its discretion in admitting the
evidence of the underlying conviction. The Court held that
the defendant's stipulation should have been received and
that the government's introduction of evidence should have
been limited, notwithstanding the government's general
prerogative to choose its own evidence. 

190. The Court reasoned that it was proper to allow such
a stipulation because the evidence regarding the name and
nature of the prior felony conviction (assault causing
serious bodily injury) failed the Rule 403 balancing test.

Although the name and nature of the offense were
certainly relevant to prove that the defendant had been
convicted of a felony, see 

the defendant's
offered stipulation was more probative evidence--in fact, it
was conclusive evidence--that the element was established.
See 

190. The evidence regarding the name of the
offense and the nature of the crime was therefore rendered
surplusage, as it was less conclusive proof of the element,
see 

and as it was neither necessary to help the
government create a cohesive narrative about the crime
charged, see 

"proper nourishment for the
jurors' sense of obligation to vindicate the public interest,"

The evidence regarding the name of the offense and the
nature of the crime was also problematic because it posed
a greater risk of undue prejudice than did the stipulation
and an accompanying jury instruction. See 

Evidence of the prior conviction could be used by the jury
to draw an improper character inference or could lead the
jury to believe that the defendant was a bad person,
deserving of punishment whether he was guilty or not. See

Therefore, the Court held that the defendant's
offered stipulation should have been admitted, and the jury
appropriately instructed on this issue. See 

Here, the defendants offered to stipulate to a collateral
matter--the content of their cross-examination--rather
than an element of the offense that the government had the
burden to prove beyond a reasonable doubt. The
defendants promised that they would not assert a selective
prosecution defense, and that they would not impeach the
co-conspirators on the ground that they were biased
because they had entered guilty pleas. The government has
argued that it had the right to introduce evidence of the
guilty pleas, even though the defendants promised not to
pursue these lines of cross-examination, because jurors
might independently reach the conclusion that the
government had engaged in selective prosecution or that

                                2


the co-conspirators were biased and were unduly shifting
blame to the defendants.

The evidence that the government proffered--the co-
conspirators' guilty pleas--was surely relevant as tending to
allay these juror concerns. See Old 

-
89. But, given the context of the case, and when compared
to alternative means of addressing those concerns, the
government's introduction of the guilty pleas, as with the
government proffer in Old Chief, fails the Rule 403
balancing test. Once the defendants offered their
stipulation, the probative value of the guilty pleas was
greatly reduced: They no longer affirmatively rebutted a
selective prosecution defense, and they no longer could be
used to dampen subsequent attacks on credibility, as those
attacks were no longer coming.

Moreover, the guilty pleas were not a necessary part of
the "coherent narrative" of the case, a factor that would
normally militate in favor of the government's position. Old

. United States v. Toner's general rule
makes clear that co-conspirators' guilty pleas are normally
inadmissible, see 

, 142 (3d Cir. 1949); hence
it follows that such evidence need not necessarily be part of
the government's case in chief. Given the defendants'
stipulation, the guilty pleas' only probative force was their
tendency to allay hypothesized suspicions in the minds of
the jurors about why the government had chosen to
prosecute the defendants, and about the credibility of
witnesses who had participated in criminal activity with the
defendants, but were not facing prosecution.

As Judge Roth ably demonstrates, the danger of unfair
prejudice inherent in this evidence is great. The jurors
could infer from the co-conspirators' guilty pleas that the
defendants must also be guilty if their co-conspirators were
willing to plead guilty to such crimes. As in Old Chief,
where the fear was that the name and nature of the
defendant's underlying felony conviction could mislead or
over-persuade jurors by "lur[ing]" them to engage in a
"sequence of bad character reasoning," Old 

, the evidence of the co-conspirators' guilty pleas
carried with it the potential to deprive the defendants of

                                3


their right to "stand or fall with the proof of the charge
made against him," 

.

When compared to the alternative way in which the
jurors' suspicions about co-conspirators' guilty pleas could
have been allayed, it is clear that, as in Old Chief, the
defendants' stipulation should have been accepted. As
Judge Roth points out, the District Court could have
instructed the jury that it should not concern itself with
selective prosecution or what the co-conspirators were
promised in return for their testimony. Instead, the District
Court allowed the pleas to come into evidence and then
gave a "Toner instruction" admonishing the jurors that they
could not infer from the co-conspirators' guilty pleas that
the defendants were also guilty.

When one compares the probative value and danger of
unfair prejudice inherent in these two scenarios, the former
far better comports with the dictates of Rule 403 and the
Court's admonitions in Old Chief. Judge Roth's suggested
mode of presentation takes less time and is more direct. In
her suggested mode of presentation, the judge makes
definitively clear to the jury that selective prosecution and
claims of bias are not at issue. Under Judge Roth's theory,
the danger of the impermissible Toner inference is avoided
because the guilty pleas are not introduced. Lastly, and
perhaps most importantly, this mode of presentation does
not interfere with the government's ability to present a
"coherent narrative" regarding its case. Old 

. If anything, it forecloses the possibility that the jury
will focus on a tangential and unimportant parts of the
criminal "plot," and it does so without depriving the jury of
facts crucial to its understanding of the defendants'
criminal conspiracy. The defendants' co-conspirators
testified at length regarding the defendants' myriad acts of
health care fraud; understanding the means by which the
defendants' allegedly defrauded the government was in no
way contingent upon the knowledge that the defendants'
co-conspirators pled guilty--they testified that they had
witnessed these crimes first hand.

In contrast, the mode of presentation endorsed by the
majority is far more circuitous and confusing because it
addresses only a potential concern the jurors may have. The

                               4


fact that the government elicits testimony regarding the
guilty pleas does not mean that the jury will not conclude
that selective prosecution or blame shifting were at issue.
Additionally, the impermissible Toner inference could still
be made, notwithstanding the instruction that jurors must
not draw the inference.

The majority attempts to bolster its position by stating
that the defendants' offer "to refrain from affirmatively
challenging [their co-conspirators'] credibility did not, and
could not, carry the same probative value on the issue of
witness credibility as the introduction of [their] pleas."
Majority at 16. To me, at least, this argument makes no
sense. If, complying with their offered stipulation, the
defendants do not challenge their co-conspirators'
credibility and the District Court instructs the jury not to
infer that the co-conspirators are biased, their credibility on
this point is unimpeached. There is no need for evidence,
probative or not, on this point. The majority, instead, would
have the government bolster the co-conspirators' credibility
before it is challenged with probative evidence--in
contradiction to the admonitions in Rule 608, as Judge
Roth points out--and then invite the defendants to attack
the witnesses' credibility on this issue. This takes far more
time, is more likely to confuse the jury, and puts at issue
a point, tangential to the trial, when it clearly need not be,
especially when it carries with it the twin dangers of unfair
prejudice. The Federal Rules of Evidence are grounded in
truth, economy, and fairness, see Fed. R. Evid. 102; the
majority's approach seems to ignore these aspirations.

As in Old Chief, rather than present the jury with
potentially unfairly prejudicial evidence and then instruct
against an improper inference, the correct thing to do in
this case was to accept the defendants' stipulation and then
to instruct the jury as to how to deal with the stipulation
properly. In Old Chief, that meant making sure that the
jury understood what the stipulation meant: that the
government had definitively satisfied the felony status
element in its felon-in-possession-of-a-firearm prosecution.
Here, it should have meant instructing the jury that the
defendants would not be asserting a selective prosecution
defense or that the co-conspirator witnesses were

                                5


attempting to receive a sweetheart deal by shifting blame to
the defendants. In not proceeding in this manner, I agree
with my fellow dissenters' conclusion that the District
Court, as did the district court in Old Chief , abused its
discretion.

                                6


SLOVITER, Circuit Judge, dissenting.

I join Judge Roth's persuasive dissent. I write separately
because I joined the opinion in United States v. Gaev, 

(3d Cir. 1994), an opinion on which the majority
relies and with which Judge Roth takes issue.

As the majority correctly notes, our precedent on the
issue of the admissibility of a witnesses's guilty plea does
not always follow a consistent line. The en banc procedure
provides us with a valuable opportunity to reconsider our
positions on important issues such as that presented here.

I begin with the proposition that the Federal Rules of
Evidence do not provide a hard and fast rule covering the
situation before us today. Instead, the question of whether
to admit evidence of a co-conspirator witness's guilty plea
in the trial of his or her alleged confederate must be
subjected to the balancing required by Fed. R. Evid. 403. In
Gaev, we emphasized that the "standard remains that of
Federal Rule of Evidence Procedure 403" and recognized
that "[t]here may . . . be cases where the inference of guilt
from the co-conspirator's plea agreement is sufficiently
strong that even limiting instructions will not effectively
contain it." 

.
I dissent from the majority's position because I view its
analysis as permitting the government to introduce
evidence of a co-conspirator witness's guilty plea in all
cases, as long as the district court provides a curative
instruction to the jury. This is inconsistent with the
principle established in this circuit that a witness's guilty
plea cannot be used as evidence of the defendant's guilt.
See United States v. Cohen, 

, 801 (3d Cir.
1999); United States v. Gaev, 

, 476 (3d Cir.
1994); United States v. Thomas, 

, 1206 (3d
Cir. 1993); Government of the Virgin Islands v. Mujahid, 

, 115 (3d Cir. 1993); United States v. Werme, 

, 113 (3d Cir. 1991); United States v. Toner, 

, 142 (3d Cir. 1949). The majority's holding that a
guilty plea is admissible to permit the jury to assess the
credibility of the witness, even in the absence of an attack
on the witness's credibility, or to dispel jury concern about
selective prosecution, even if the defendant has not so

                               1


contended, transmutes a case-by-case analysis under Fed.
R. Evid. 403 into a general rule of admissibility. I see no
justification for such a rule.1

_________________________________________________________________

1. It is significant that defendants here did not contest the acts on
which

the prosecution is based, whereas in Gaev the defendant "challenged
critical aspects of Gaev's participation in the activities that formed the
basis of Gaev's conviction." 

.
                                2


RENDELL, Circuit Judge, dissenting:

I am pleased to join in my colleague's excellent dissenting
opinion, and I write separately only to go one step further
than she did with respect to the application of the Rule 403
balancing test. I submit that the probative value of a guilty
plea is not just negligible, but nil. At the same time, given
the unique setting of this case, there is not merely a danger
of prejudice, but the prejudice is obvious and real.

The majority seems to be saying that relevance is equated
to whatever the jury might like to know, which I believe is
precisely how the District Court viewed the issue. How is
our ruling any different from letting the prosecution
introduce a witness's Boy Scout badges and lie detector
results on direct examination because a jury may wonder if
the witness is telling the truth? Why should we concern
ourselves that the jury may wonder about credibility and
selective prosecution? What relevance do they have to the
government's case? I submit that they have absolutely
none.

Even if credibility and selective prosecution were
somehow relevant to the government's case, the
prosecution could satisfy the jury's curiosity as to these
issues just as easily by engaging in the following exchange
with the witness:

       Question: Are you being prosecuted by the
       government?

       (Response: Yes.)

       Question: Have you admitted that you were involved
       in the events about which you are
       testifying?

       (Response: Yes.)

This line of questioning addresses credibility and
selective prosecution while it leaves open the crucial
question of guilt of the offense charged, which is the most
dangerous aspect of the admissibility of a guilty plea in this
unique setting. Under the facts of this case, the defendants
do not deny that they participated in the same conduct as
the witness. They contend, however, that this conduct was

                               1


not a crime. When another participant testifies that she
admitted her guilt of the offense, she not only tells the jury
that "what we did is a crime," but she also says "I owned
up to it; why won't the defendants? Why are they putting
you through a trial when we are guilty?" The probable
prejudice in a case such as this is immense and far
outweighs the relevance, especially because the relevance,
I submit, is illusory.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

                               2