Unexpected Endings: The Impact of Mistrials in Fraud Prosecutions

Fraud examinations frequently culminate in legal proceedings. While the vast majority of both civil and criminal cases never see the inside of a courtroom due to settlements or plea agreements, inevitably a fraud examiner will see a case find itself in front of a judge and jury. The Association of Certified Fraud Examiners (ACFE) provides a host of resources for Certified Fraud Examiners (CFE) to prepare themselves for such a conclusion, covering the entire fraud trial experience, testifying as an expert witness and working to recover the proceeds of fraud after a successful judgment.

What happens when things in the courtroom do not go to plan? Outside of simply losing the case through a judgment for the defense or an outright acquittal, when substantial errors occur during a legal proceeding the judge presiding over the case has the option to declare a mistrial.  

This article will discuss what exactly a mistrial is, what happens when one occurs and how a CFE can help to avoid them.

Game Over

A mistrial is a ruling from the presiding judge declaring that the current proceedings are over. Mistrials result in the case being concluded before and without a judgment or verdict returned. 

Mistrials can occur in both civil and criminal proceedings. While civil mistrials are devastating for the parties involved with the potential of incurring additional time and expense, criminal mistrials can effectively end a prosecution.

Mistrials can result from a number of different situations. The most well-known type of mistrial is from a hung jury in a criminal case. In most U.S. jurisdictions, a guilty verdict requires unanimous agreement by the empaneled jurors who sat through the trial and heard the evidence. Where a jury cannot reach a unanimous verdict after significant deliberation, the jury is considered “hung” and a mistrial is declared. When a jury is initially unable to agree, judges in federal criminal courts and some other jurisdictions are empowered to extend the jury deliberations and provide additional instructions to the jury in the form of an Allen charge. Such charges attempt to urge jurors to reconsider their positions and only change their opinion if they are persuaded by the evidence. While the charge usually includes statements specifically stating that the court is not attempting to rush, pressure or coerce the jurors, many states disallow the use of Allen charges because of the potential to pressure jurors to cave to peer pressure. 

Other reasons for a mistrial include the death or serious illness of a juror or party, the introduction of inappropriate evidence or juror misconduct, among others.

While the rules of evidence are a bit beyond the scope of this article, it is important to remember that despite a piece of evidence being relevant to a charge or plea, it can still be ruled inadmissible by the presiding judge for being overly prejudicial or in violation of a specific rule, such as evidence of bad character. The judge’s rulings on evidence – whether during pre-trial motions and hearings or during the trial itself through objections during testimony or the introduction of exhibits into evidence – must be followed by lawyers and witnesses to avoid introducing evidence unintentionally (or in bad faith) that could be overly prejudicial. If such evidence is seen or heard by the jury, the judge could find that the entire jury panel is no longer able to render a verdict without undue bias. If the judge believes that the harm is incurable with specific instructions from the bench to disregard the prejudicial evidence, the judge can declare a mistrial.

Juror misconduct can result in a mistrial without any direct involvement of the parties, witnesses or court staff. Jurors are given a whole host of instructions when they are brought into the courthouse and again when they are empaneled for a case. Many of these instructions seek to prevent jurors from doing their own investigations or consuming information about the case while outside of the courthouse. Remaining impartial and listening to only the evidence in the courtroom is vital to a jury being able to render sound, unbiased judgment. If it is discovered that a juror or jurors have disregarded these instructions, a mistrial might result. 

How to

Mistrials are the result of a motion from a party or a sua sponte order from the judge. Either party can move for a mistrial when they believe one of the appropriate reasons has developed. It is important for the parties to make timely objections to the introduction of evidence or testimony to preserve the error for appeals, regardless of the success of a motion.

Judges rarely want to declare a mistrial of their own accord. Mistrials are essentially an acknowledgement that all the time and effort that went into scheduling, preparing and trying the case have been wasted. The court values its time rather highly and judges will do the utmost to let the trial proceed and for a jury to return a verdict or judgment. If a mistrial is declared, the parties can appeal the decision and appeals courts have been, at times, unkind to judges whom they believe have rushed to judgment on ending courtroom proceedings.

Try Again?

A mistrial in civil court generally allows for the case to be retried. While there are no significant legal barriers to retrying a matter, mistrials can often result in the unofficial end of formal legal proceedings. The cost appetite of at least one party to pay through the entire song and dance of another trial is often significantly reduced. While discovery and other pretrial matters do not necessarily have to be done again, the parties face all the many legal fees for however long it takes to reschedule the case, get another jury selected and make it through another trial. Settlement negotiations are also heavily affected by what each party was able to see or hear from their opposition during however much of the trial occurred before the mistrial was declared. A new understanding of the potential results of a trial can help the parties reach an agreement.

On the criminal side, mistrials can and frequently do result in the end of a prosecution. Regardless of whether a case can legally be retried, in some jurisdictions prosecutors will drop the charges against a defendant after a hung jury. For minor cases such as misdemeanors, prosecutors might determine it is not worth the public’s resources to pursue the case further. For more serious cases, prosecutors might drop charges depending on how many jurors voted not guilty versus guilty. Even if the defendant was not formally acquitted, if the jury leaned substantially towards acquittal and the prosecutor believed they had presented the case as effectively as possible, retrying the case would be unlikely to convict and would again be against the best interests of the office.

Whether a mistrial does or does not legally prevent another trial can be fact specific. By definition, a mistrial is declared while the trial is still ongoing, so the defendant has not been acquitted or convicted of the crimes charged. Double jeopardy, enshrined in the Fifth Amendment to the Constitution of the United States to prevent citizens from being tried twice for substantially the same crime, “attaches” when the jury is first seated and sworn in. Mistrials are generally treated as exceptions to the double jeopardy rule, allowing prosecutors to retry the case without running afoul of the Fifth Amendment. However, there are instances where a mistrial was ordered by the presiding judge, but the necessity of the mistrial was called into question and appellate courts agreed that jeopardy had successfully attached, an exception was not warranted and the defendant could not be tried again. Where mistrials have manifest necessity (such as serious procedural errors, due to juror misconduct, etc.), defendants are eligible to be retried. 

What Should CFEs Do?

First and foremost, a CFE anticipating or participating in a trial should direct all questions to the attorney representing them or hiring them. Follow the advice of legal counsel and the orders of any judges involved.

Fraud examiners are, to no one’s surprise, usually involved in investigating fraud, but they also can eventually take the stand as a fact (or lay) witness or as an expert witness. 

In their role as an investigator, examiners should follow best practices relating to the collection and preservation of evidence, maintain chains of custody, understand and abide by all the relevant rules concerning interviews and the taking of statements and admissions. The ACFE provides myriad resources for better understanding all of these rules and techniques to prevent examiners from running afoul of evidentiary based issues once trial comes around.

As a witness, fraud examiners will receive instructions for attending the trial from the attorney calling them to the stand. Fraud examiners should appear at the courthouse when they are directed to do so by their attorney. Depending on the jurisdiction and whether they are accepted by the court as an expert, witnesses might or might not be allowed to sit in the courtroom and observe the proceedings and the testimony of other witnesses. Additionally, fraud examiners should avoid talking to anyone else in the courthouse besides their directing attorney. While speaking to opposing counsel is allowed but usually not the best idea, speaking to a juror is both a bad idea and creates the possibility of misconduct necessitating a mistrial. 

While on the stand, examiners should listen to questions asked of them by their counsel, opposing counsel and, at times, the judge. Give yourself time to digest and understand the question and to allow time for objections to be made and heard. Do not interrupt or speak over other parties, especially if an objection is made. Let legal counsel make their argumentation and let the judge decide whether you can say whatever it was that prompted the objection. 

It is of utmost importance that fraud examiners avoid offering information beyond what was asked, especially if they believe it is particularly damaging to the defense or defendant. Such evidence is especially subject to rules of evidence and could be the kind of prejudicial material that both, (a) highly suggests to you that the right person is on trial, and (b) was covered specifically by a pretrial motion and was declared inadmissible by the judge. Trying to make your case instead of letting an attorney draw out the information they need can sabotage a prosecution.