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Seventh Circuit Affirms Order Granting New Trial Due to Newly Discovered Evidence

by Christopher Zoukis

The United States Court of Appeals for the Seventh Circuit affirmed a district court’s ruling that a criminal defendant should get a new trial because an audio recording that was favorable and material to the defense was discovered after trial.

Daniel Ballard took out a $280,000 construction loan from State Bank of Herscher (“SBH”) in order to build a house at 3013 Stone Fence Drive in Kankakee, Illinois (the “Stone Fence property”). Ballard soon realized that he needed more money for the project and requested an additional $90,000 from SBH. Due to insufficient equity, the bank would only lend him another $20,000.

Ballard then sought construction loans on two other properties in Bradley, Illinois (the “North Center properties”) in order to cover the difference. In order to obtain the loans, he signed sworn contractor’s statements. In total, Ballard obtained $188,000 in loans for the North Center properties, all of which was used to finish the Stone Fence property.

When a bank employee discovered that Ballard was using the North Center money to complete Stone Fence, the authorities were notified. Ballard admitted to the president of SBH that he misrepresented his work on the North Center properties. The federal government then charged Ballard with three counts of bank fraud.

Ballard presented two defenses. First, he said the loan officer for all of the loans, Joseph Grant, knew and authorized his actions. Second, he said he did not read or sign any of the supposedly fraudulent loan documents.

Grant testified that he did not tell Ballard to use the North Center loan to complete Stone Fence and that he did not know he was doing so. Ballard was convicted on all three counts.

Following trial, an audio recording materialized. It seems that Grant was under a criminal investigation of his own. A cooperating witness had worn a wire to a meeting with Grant, and during the meeting, he discussed having accepted signed, blank loan applications in the past and that he believed he was under criminal investigation.

Ballard moved for a new trial based on the recording. The trial court granted the motion and ordered a new trial. The United States appealed.

In affirming the lower court’s decision, the Ninth Circuit agreed that the Grant recording provided “ample fodder for impeaching Grant’s credibility.” The fact that he had previously accepted signed, blank loan applications could be used to attack his character. Additionally, Grant may have had a bias in favor of the government—he was under criminal investigation, but was never prosecuted. Because Grant’s testimony directly contradicted Ballard’s contention that the bank knew about and sanctioned the loans, the recording was highly favorable to Ballard.

It also was material. According to the court, a statement is material if “there is a reasonable probability that, had the evidence been disclosed, the result of the proceeding would have been different.” The lower court found that had the jury found Grant not credible, “it is not a stretch to see the verdict could have been different.” The appellate court agreed.

Accordingly, the Seventh Circuit affirmed the judgment of the district court. See: United States v. Ballard, 885 F.3d 500 (7th Cir. 2018). 

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Related legal case

United States v. Ballard



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