clue we get to hear from you again it's a busy morning for you witness from that organization came and testified for him a trial that they continue to have full faith in him he has always been honest so we start out with a person that is in the business the law business has his own office and has for him other clients that produce much more income to him then this account which in which he occupies a trustee role a narrower role in other words he doesn't have to do litigation he doesn't have to as an as an independent trustee and his primary responsibility is and this is an independent trustee in this business and that i don't know that sometimes when you give a name to something it actually that's less clarity to it than not giving a name to it but this business was basically reselling insurance policies people will be able to get the value of their insurance policy by selling it to accompany you to all benefits and mutual benefit was they got the value of their insurance policy and another person th could buy the policy and get the benefit when that when the policy original policy holder died mr logies obligation his chief fundamental obligation was to make sure  that those policies stayed in effect and b when the the policy original policy holder died the payment when out to the owner of the policy that's why the that's why they had a trust in there they didn't want and he fulfilled that function is or is the record shows perfectly there if his job is to make sure the payments get made when you have somebody who lives longer than expected then the way i understand these policies normally to work the person is told you want to keep this policy you have to now make some additional payments but that kind of thing didn't happen here you just paid it was no again there were no additional payments made the investors put up the premium amounts upright and there were never any additional premiums collected for the policies where the person lived longer than expected is that correct exactly and that's why one of the first steps toward understanding that the whole prosecution of this case under the lab is completely wrong this is not a plan i just said that his responsibility was making sure the premiums were paid and they were all right they were paid by the holders of the policies they were never intended to be paid by the holders of balls so what happened here was premiums that came in for new policies were paid out on old policies how else  him if the beneficiaries not coughing up new many and seventy to eighty percent of these things are are where you had an estimate of death that was incorrect this i'm just trying to figure out what you meant by his responsibility was paying the premiums on these policies right he's been his responsibility was making sure the policies on the premiums were paid and his responsibility was when the when the when the when the policies became do we can pay the bill to make sure the payments went out so this is what he did what the court your your own are saying is that at a certain point the company started to it started to be a bad business investment for the company and at a certain point he there is some evidence to the defendant understands that at least as to some of the older policies they're not paying out the people are living sure to what extent the testimony of what solomon is saying could be a crime or not came in for that purpose or were submitted for that purpose to the extent that exist but if it is not a crime it was not this is this is the problem with when you impose a superstructure of ponzi on top of a business it doesn't turn the business into a ponzi this was more like this is a people buying insurance policy everybody knew that as to any given policy somebody might outlive it everybody knew that this that although we thought their odds were low that everybody could start living to be one hundred fifty years old and these policies would become very problematic the company's obligation it was the company that was at risk and the company had to had to deal with it that way but the notion that there was as in fraud cases some statement to a to an investor that says you have your own account and your account is separate and i will make sure make sure that your money stays in trust and that none of no money other than the money that you paid initially for this policy will go into the payment premiums that never occurred because that would have been an impossible business and everybody knew that happened mr solomon told them there was a problem i thought he continued to tell investors that there was enough that they had plenty of money in this engine in this fund and whatever call it to cover the premiums and they had never ever failed to make information this is not that's what i'm saying that this is this is business this is not fraud this is business let me ask another way mr clue so you said he had a limited role as a trustee but his role is trustee was defined by a written trust agreement right yes and the trust agreement requires that future premiums on a policy will be paid by the trustee from funds designated for the particular policy right that's what it says he didn't do that didn't keep the such fun separate so that future premiums could be paid for the particular policy diddy no but that had that policy had that terminology has to be read within the context gets paid in the fraud is not that that is not a fraud the fraud in this case is that they lied about the joe's diner lied about the life expectancies and so it wasn't just oh my god it was a surprise and unexpected business development that we have to accommodate brash and early which is what is operating under but it was it was this massive fraud in towards getting people to invest in something that was missed described people think they're buying into a horse horse race and they're buying into any a greyhound race so that's a good thing what was the what was the evidence about what he knew regarding how many policy people were living too long and how many policies the evidence was in regard to it comes back to the other question you are asked which is at a certain point it the it there became an expectation a concern that the pool and there was never a separate pool there was never separate policy by policy pool and nobody ever said that there was the all that they had originally accommodated for the older policies that they should separated out into a second pool because they were doing better life expectancy up estimations for the second pool and that would protect them better but at some point he knew that there were a significant number of policies for which the person had lived longer than expected what was the specific evidence about that there wasn't a lot of specific evidence other than the balance sheet is just the balance sheet it wasn't specific to specific policy i mean it wasn't like i don't think the evidence was if he had specific information that showed him anything about the underlying problem and the problem was our stations  conversations with solomon conversations with none of this told them there was a problem there was a business problem stole it none of this told him there was a fraud problem and that's the whole point when been bombarded even gets up on the stand when it's not sure exactly what what he was told in the problem again with this evidence of the conclusory nature of the testimony is that it's backed up by this bolstering in many many different ways that the problem is that he then is not acting as a neutral trustee when he promotes the product and says that there's plenty of money to pay the premiums when he knows darn good well there's not and and then you have these these policies for that are no they have no value restrictions he participates and fraudulent conduct to get around you know those restrictions there's a lot more here than just a business problem isn't there i don't see the no value problem i  think was the addressed directly with the insurance companies and they backed down so he actually did a service to everybody in that context on with regard to the knowledge of what how the business beckoned that was you're putting something in his column they said it's late you're you're listing yourself as the friend of these people so that contrary to the policies that it can be transferred no value policy can be transferred and so he's called on it in the scares them in the back and down that's a plus in his column and you're not i and again whether he's guilty or not he's not a bad man and w does not really bad thing i hope the court understand these are people mostly starts out aids people they need the money they're dying ok they need a company to buy the policy that he was listed as a friend when the policy was transferred as in order to get the policies to overcome that that limitation and the sign ability of those policies as to at least some of them there was but again that's not the fraud that's charged in this case that's that's dealing with the insurance company and how you're getting the value from the insurance company that's not the fraud in your answer is that there's nothing to show that he knew anything was going you're dark knowing that this is just purely business and there's no fraud if you start having evidence of lying misstatements than at some point it's not purely business if if the the the friend issue was was resolved it was resolved as as an appropriate way of dealing with it it was not again that would be an issue as of somebody who does not think that there is fraud going on in other words when the insurance company calls they don't answer oh this is mr le bodies house you know he's not in he's in the restroom or whatever   overhead out of what he's getting he's got to pay for overhead for these people so they're contributing some overhead by letting a line commend him what is the line for it's to let the insurance company know he's a lawyer ok mr clegg we've let you go four minutes over  you'll say your five minutes for about almost cannon good morning and may it please the court eileen can on behalf of the united states and seated with me at counsel table is karen rockland who served as one of the principle trial attorneys in the district court mr played a key role in a massive investment fraud that caused over eight hundred million dollars in losses and harmed approximately twenty thousand investors this court to firm his convictions and reject his claims on appeal if i could turn first to the sufficiency issue there is ample proof in the trial record of mr knowing participation in a massive fraud and his fraudulent actions spanned various categories starting first with his facilitation of the ponzi scheme he was informed with within a very short period of time into the conspiracy that the chronic problem of premium reserves was getting worse and worse he had direct conversations with mr peel and bharti who was one of the principals of m d c he also was informed by mr khan who was the president of the the company that served the post closing services for the policy he also was told by mr fearn storm who worked at m p s i as well he then as the years progress continued to be told by other individuals of the chronic problem i think quite palpably he was told by mr solomon in the two thousand and one period that he had to cease making representations to investors regarding the status of his premium accounts until he got  full handle of the financial situation and nevertheless he continued to submit these kinds of bank statements to investors representing that he had large sums of money in his premium accounts and that of course was highly misleading because it gave the impression that the sufficiency of the reserves were sound and that the investments were safe and he continued to do this as late as october of two thousand and three he continued to request bank statements  and we have an e mail exchange making that request so at this point he has been informed by multiple individuals i must multiple occasions and yet he continues to violate his obligation as premium trustee and his fiduciary to these investors this goes to work investor buys the policy basically and pays all the premiums upfront based on the life expectancy i take it that's the way it works so that if somebody dies early there are premiums in our the reserve fund that can be used to take care of the normal expectation that somebody may live longer is that how it's supposed to work yes yes correct so what happened in this case is that for the first couple of years no premiums were escrowed at all and mr low vote he served as escrow trustee during that period so by the time he  inherits the policy so to speak as premium trustee he's already massively in the red and people are aware of this problem and talking to him about it then when n b c decides to increase its life expectancy life expectancy excuse me to one and a half times life expectancy still there are never enough funds to cover the premium and the problem is that because of violators are not quote unquote dying on time in the category of individuals that dying part of that life expectancy is so small that there is no general reserve fund and so this is what prompts him to continuously transfer money from the escrows for a new investors to pay for premiums on policies who reserves have expired and this happens throughout the course of the conspiracy conspiracy and it becomes all too which is what was described as a properties yes and that is charged in the indictment and i think proven quite substantially a trial obviously this trial with lengthy over approximately eleven weeks long and there were multiple testimony multiple witnesses who testified about this both government witnesses and defense witnesses going under stand there were never any separate escrow accounts that's correct there were about four escrow accounts but they were treated and mr openly admits this in his deposition taken in the s e c s s e c action that he was treating this as quote one pot of money and he was  sentially just cutting checks from that large fund indiscriminately without knowing what was actually tied to any particular policy and there were no such accountings for any of the particular policy so he acted quite blatantly in his in his in his actions and never once disclosed to investors that the premium reserves were to wind laying out were non existent basically and he never disclosed to investors a very  series of other material risks that accompanied the policy such as what your honour's were discussed describing in the gift assignments after two thousand and one what exactly was his relationship to the investors how did  investors we know at a minimum for example he's requesting bank statements to submit to agents and brokers we know this as late as october two thousand and three when he's requesting bank statements to then disseminate to those brokers and agents we also know mr limbaugh already testified about a sale seminar in approximately two thousand and three or two thousand and four during which mr will vote he showed investors a copy of the bank statements again misleading with what appeared to be a large sum of money when in reality it massed the premium obligations that were coming due so his role remained the same and the lies only became worse and worse because the situation was dire what evidence do we  mister arty testimony i guess this is that page thirty of the government's brief lombardi stated that around two thousand and three in two thousand and four during one of n b c s monthly sales on in ours in which live o t and n b c the other principals participated live only showed investors a bank statement for his premium account showing something in the order of twenty million dollars this is that docket entry ten ninety one pages one needed a one eighty one and lombardi testified that this quote surprised him because he knew and knew that there was quote always questions if there was enough money in the premium account and there were serious deficit the premium balances at that time and this is after he had had a series of conversations about the problem in the premium accounts so this is a fraud this is not just simple business dealings and he did not serve as a quote ethically fine lawyer he lied to investors repeatedly with a series of material  misrepresentations i don't missions and that is why the jury over a lengthy trial properly convicted him on the four counts of conviction if your honour's have no further questions regarding this case we respectfully ask that you  are should be convicted of this conspiracy is novel it may sound good to the government but it's novel he's making truthful statements to the investors lombardi comes back and says well he should have told them he should have told them that we think even though that's a lot of money we don't think it's going to be enough because we think things are going to be worse why is he supposed to say that because one party says so five years later somebody says you know why that's that what he says is this is i'm not in the business part of it what do i handle i handle money this is how much money we have and the notion that pooling of assets again pooling of assets is supposed to be criminal harris solomon the witness that they come in is the post to be the golden witness he says yes you poor assets but have two pools instead of one it cannot be the pooling of assets it cannot be that this is not that type of case it's not a trustee who takes money from from from one people to give to another people know it that's not it the pooling of assets is not the problem the problem is that the life expectancies were not right the business model was not working and while some businesses have problems and get over them some business have problems and don't get over them and that's this is a business that we don't know whether i was going to get over or not the state came in and they found extraneous fraud and stopped the business had it not been for the extraneous fraud but he would have been right there would have been enough money would be no problem but these people were siphoning off extra money completely unknown to him not a single suggestion to him that he's supposed to be paying ing he starts this thing up with nothing they have a reserve fund to pay the premiums for the expected extended life the he he has now filed but your honor respectfully when he started the government's not saying it was messed up then they're saying that he never came back it was messed up that when he when he when he came in that was messed up the only way it was messed up then is that is that nobody knew or some people knew he did not know the just think it was falsifying the life expectancy he knows there's no reserve fund there was no there was not a part the problem developed over time it did not there was not a problem in year one it was not a problem in your two if he did not there was nothing facially wrong not a single witness said at the time he came in looking at the at the at the accounts that he had the money that he was dealing with that he should have known something was wrong nobody said that lombardi didn't say that marty's comment comes years later when barr is coming because things aren't working out but the notion people were buying policies they weren't prepaying premiums they were buying policies it was an investment you buy a policy we take the risk and pay the premiums that's it if the premiums go beyond what you contributed that's too bad it's our problem if they go below what you paid we make money that's it it wasn't the same as this other model the monies were pooled who said years later well into this thing harris solomon their big expert says yeah pull pulling is good pulling is great you can't make it it's like parimutuel betting you can't treat every bet on a simple simple thing like this some people are going to longer some people are going to have shorter obviously some policies are going to pay for other policies that's the nature of the game it's how justify paid of seventy eighty at the kentucky derby that's that's not as i understand what the argument is the argument is he's told that there's a premium deficiency going that everything's fine that he's got plenty to pay the premiums and they should invest and us and he's doing it to get new money to pay the old investors premiums that that's what i understand the argument again but he's they blow it way out but he is not out there selling these policies not out there because the sales to date and the sales seminars he did in the project promotional videos he shows people bank accounts were involved in promoting his and he is not touting he's not guaranteeing any returns he's saying we have money now we're solvent basically saying resolve and it's true and it's just not the fraud that it was charged in this case if that's fraud and i don't think it is it's not what was charged much less does it prove the other counts much less to prove money laundering much less does it prove count four and count seven which i've heard nothing about through this entire appeal not a word about count four count seven one word about money laundering it's a ponzi scheme i've never seen a ponzi scheme like this where there are no returns and yet it's still money order when he pays out those buy ackles that's not money laundering ok we have your case mr coote we appreciate your argument w be in recess until tomorrow morning