address the claim that we raise second in the open line your jury instruction claims i didn't see any objection to him but they're all here on plain or right well i think one of them is playing or the other one we contend are preserved the well but did you object yes there was an objection there was an objection which struck the two instruction number fifteen that was the first jury instruction claim and he said we had a judge carney  or negligence right and there was an objection to that instruction and i did want to start with the second instructional or first and then pivot back to that one in that one there was no objection correct she'll tell that in this context the it's error not to give a duty just close instruction and under the henderson framework for plain error you take the law at the time of the public consideration so we have plain  preserved the prejudice standard should be harmless beyond a reasonable doubt however we think we can make out plans three and four of the plane or a test just on the shields are along this case is much more like this court's that respect in this case the government the indictment itself all the witness examinations and the closing argument heavily relied on omissions theory are fraught i mean that was the first thing they argued in closing was an omissions theory of fraud that was where they were really emphasizing their kids here there is certainly a debate as to whether the jury would have found a trust relationship in fact that we think that  the evidence overwhelmingly shows that there was no trust relationship if you look at the language in the p p m which was the private placement memorandum that set forth the terms of the investment there is warning after warning after warning in capital letters in bold letters saying there are conflicts of interest here consult with your own advisers consult with your own attorneys your own financial investment advisers your tax people there was a warning after you back up on the shields question for a minute because in shields the panels that the era with not plain because it was based on model jury instructions a wire fraud that's eight point one twenty four that did not include duty to disclose instruction and there was no objection below that would have alerted the district court to the potential analysis wasn't exactly the sort of situation i mean although shields was still came out after th trial and the district court here like the district court and shields didn't have the benefit of anything other than the model license either the thing is that how do we distinguish this factual situation from shields that led to the conclusion that shields that there was no plane air ok because and i guess a little confusing but what the supreme court said in henderson and that's actually what this court's case law has been for a long time is that for plain error review the plainness of the  is evaluated at the time of appellate consideration now unfortunately for mr shields when he came up to this court there was no nine circuit precedent that said that this was plainer that this was our this there was no precedent to said that this was air shields binding case law and you take the law as it stands today frankly you take the case law even if it were to come out after the we had oral argument you would still if the case had not been decided you would still take the case law at the time if i file the twenty  same listeners and you case you look at the case law right now and right now under henderson the error is plain so that's why we clearly get through problems one and two and it just becomes a for a third and fourth gong analysis but mr coleman the second reason for the affirmation as opposed to neutral and shiels is as follows it says it is also unlikely that the error affected the outcome of the proceedings because a jury convicting based on defendant's material emissions would most likely have concluded that the relationships existed among the defendants and the investors who were in the defendants purportedly acted for the benefit of investors in induced and vector investors to relax their ordinary care and vigilance i agree but we don't what shiels doesn't have is a p p m that time after time after time says there are conflicts of interest between us there is no trust relationship between us you need to rely on your own advisors that there is no t that mean they can say anything they want they can't make flat out i can make false statements but you can't rely on emissions theory if that's that's the distinction here you can't make false statements whether you have a trust relationship or not absolutely you're right your honor but if they want to rely on omissions theory that you didn't say x you didn't say why then they need to show a trust relationship and we have a p p m that on its face there are cases that say based on this language as a matter of law there was no trust or a home of the got millions of dollars from  investors there was clearly a trust relationship there's i mean that we've cited cases where this happens all the time people give out their number randoms that set forth the terms of an investment offering and if there is cautionary language in the in the terms of the offering that says there is no trust relationship there are conflicts of interest that that you don't at this point the court does have to find as a matter of law there was no trust relationship at all so they're very wasn't just  missions mr stewart crafted false documents and made false representations to investors about financial condition and stability well again we submit that he did not and that was that the opportunity fund was in escrow on a property and it absolutely did not say that at all there was that's the critical thing here is that yes they did rely on a false statement theory but that was heavily contested  undermined the false statement theory and that's why they had to heavily reliant on omissions theory as well and in that situation under this court's case law particularly greedo when they heavily rely on the potentially invalid theory of liability that during the first six months of two thousand and eight or received their for fifty million dollars and refinance financing proceeds quote unquote yes and then that was what the fuck defined as the proceeds from institutional private financing of real property occurre itself the p p m says this is not according to gap if you were if you were to take away these are things there would be nothing though the lead investor in the opportunity fund testified he testified that he knew exactly what they were doing he was not deceived by that he knew that they were including the private investor money in that figure he specifically testified to that he wasn't deceived by it and this was what i'm saying is the amounts in the evidence was insufficient but what i'm saying is this was it a hard fought case where these issues were debated vigorously and i urge you to read the closing arguments there was a vigorous closing argument responding to their false statement theory in what we have here is an invalid theory of liability and omissions theory which without a trust relationship they heavily relied on that theory in their closing arguments threw out the case in their witness examinations in the indictment and when you have a potentially invalid theory and you have a hard fought case like this and there  debatable question as to whether there was a trust relationship your honour's may look at it and think well we think maybe there was a trust relationship but the point is that there was a valid defense that there was no trust relationship based on that language in the i could go back to your shields claim for just a minute the way i get your shills claims it's plain error because the court did not instruct on the duty to disclose the fiduciary relationship is that it yes the court of appeals held that the error did not affect mr shields substantial rights because the jury concluded it would could conclude that there was a trust relationship it's not good and i  and in this case it's our position that there is such a reasonable possibility we there is a certainly a possibility that a jury based on that p p m and those in that language that p p m could find that there was no trust relationship maybe they could think maybe they could find there was a trust relationship but he just as easily could have found no trust relationship based on that language and then the second question becomes could the jury have relied on omissions to convict as opposed to false statements and it's our position is yes they could have given the heavy reliance on the omissions and given that p p m there it was a strong defense case that there were no false statements  against your client that he was not going anywhere anyhow then it's not plain air if the case is so overwhelming if this court can find now remember overwhelming on a false statements theory if the court were to find the evidence was so overwhelming on a false names theory that we don't think this jury would have possibly possibly could have convicted on or omissions theory yes you could go down that road ok but i think you want to reserve time i don't want to use i'll give you three minutes even though i  good morning me please the corporate say on behalf of the united states i'll focus on it i'll start with the jury instruction model during instruction that was submitted in this case it's in every case what is and what is not evidence and what is not evidence is arguments of lawyers and when you strip away what is thank heavens because we've all heard a lot of arguments of lawyers and we still decide the cases so when i say this every time in this record i still wind up talking even though nothing i say is evidence  when you look at what this case actually is and you take away what it's trying to be defined as by a lawyer this was and is a false statements case well let's talk about that because i think that counsel for the appellate and  argument with the notion that well if the panel finds that the evidence is overwhelming on the false statement case then it can affirm and go down that path and not really have to deal with the mission  part of it but you know that much more problematic in light of shields can you summarize the strength of the evidence on the on the false statements absolutely the trial counsel below i was i was one of the two trial counsels yes there are you going to do you have some with you e going to do all the argument here i am your own ok thanks let me start with what you don't see in any of the briefs or any of the arguments the testimony of when chow the controller of the company who testified that all of the balance sheets and income statements in the p p m itself were false the fifteen million for example that counsel just spoke of that said it mentions that it's from private money first of all that the language in it says from institutional and private money and in every p p m before that talked about there refinances from banks never was private and it's in use of it's in the proceeds section the investors weren't giving them proceeds investors were investing in a note in the company that wasn't an income to the company to get private investors but even if you want to use the throwaway word private along with institutional is still half truth because there were zero institutional loans and they knew it so if the and they knew it for a year and a half at that point so if the point was to be honest and truthful there it's clearly no reason the word institutional was there other than to make people believe they were still getting refinancing which is what they talked about time and time again in the p m you had when chow who gave daily updates of the p p m financial situation to mr stewart including cash on hand and the rest and they were losing over two million dollars a month that p p m income statements are making it look like firsts for the first six months of two thousand and eight they had made seven million dollars when in actuality they had already lost seven million dollars you can also look at all of the language of the p p m about what the money was going to be used for every single line in that p b m says your money your private investor money will be used to acquire renovate and rehabilitate properties what mr stewart and his codefendant mr packard had already agreed was they couldn't keep operations going they couldn't pay old investors they couldn't pay their banknotes they couldn't pay anything without infusion of private investor money and they took that money and used it to pay all their old bills that's why it was a ponzi scheme from the minute they started doing that and for the m when they say you can't find a false statement in it that wasn't the entire p b m was a false statement no matter how many times they said you should check with someone else the entire p p m was a false statement because every single thing in it said you will be relying upon the management to invest your money in these properties and apartment buildings and rehabilitating the properties and none of the money went for that it said that we are a separate entity from anything p p a had ever done before your money is being used for this purpose in this purpose only how much of the government's case and closing arguments focus on the emission theory versus affirmative false statement good question your honor and i would say basically none and i say that with of we don't agree in the terminology of how the government's case was as a concealment case and i say that in the sense of as opposed to shields which would go to want to judge pratt's question before i'm not even sure we get to the plane  of the air because and shields the omission for example primarily related to they talked about their successes as investors but never disclose something material separate which was the bankruptcy in our case the concealment or the omissions that we're speaking of are all part of the false statements in our case they didn't conceal the true financial situation of p p a well what they were saying was we are financially strong we're making seven million dollars a year the questions that were being posed to the witnesses and the parts where you're talking about the concealment were actually questions that fleshed out the false statements of what mr stewart was saying directly to the investors so if i understand your argument you're saying that they were false because they didn't put certain things and them not not to hold them responsible for a missions but they're saying this is why that was part of your evidence as to why they were false they didn't include certain  but to to flesh out for example if mr stewart's looking at a at an investor as he did many times as the investors testified at trial he said we're financially strong we're the only people who can basically buy a property when this bad market don't worry about the market because we have financial strength to buy all these properties up and we can do this and so when the questions then were asked of the witness did he tell you that p p a was losing two million dollars a month no he did not tell you that did he tell you that he was using your when they testified that they were being pulled their money would be used to buy property it was the emissions that essential primarily serve to demonstrate the farm to false statements and not an emission theory per se exactly and i think in omissions theory per se would be the situation where someone that someone like mr stewart has prior fraud convictions and he doesn't disclose out when he's talking about his successes as an investor or using the shield situation he has a prior bankruptcy on his record and even in shields the argument was just by filing bankruptcy it's not per se bad but that's something an investor probably would want to know  saying this is an omission case if that were true just have i'm not saying it is or it isn't but just hypothetically if this were an omission case and we all agree about that then do his arguments have traction if this was purely an omission this case as it relates to the shields matter of the duty to disclose and the trust relationship they can only get to the first two parts and for the very first two prongs of the test  air based on shields will concede that the plane air part that's where i would disagree that to define this as an emissions case but assuming it is you're there the outcome of the case is exactly as judge pratt read from the shields case basically mirrors that here and to say that there was no fiduciary duty or trust relationship not only the outcome based on the number of people the mill the thousands of people relied and lost millions of dollars but you also have the very language of the defendant himself in his piece in his private placement memorandum saying you will be relying on me to invest your money wisely all these people are letting down their guard and trusting him to do it and for the very reasons this court talked about and shields about what they tout to make the investor lay down their guard to trust them even more is exactly what mr stewart did in this case he talked about his decades of success that he's a lawyer he's a real estate broker he's never missed a payment never been late on a payment despite the millions of dollars he's given to people and the fifty thousand checks he's cut over the two decade experience that p p a everything was meant in that p p m to make the investors feel to let their guard down to trust him and also throw up and i understand they kind of are in different parts but the defendant in this case as we got to sentencing submitted and stipulated to an abuse of trust not not about the lawyer part but at sentencing and you can look at their sentencing position which is in the g r they conceded a two point enhancement for abus trust now again i understand that there are slightly different circumstances but even the defendant realize he abused trust in this case and so i don't think there's any way you can get past in this circumstance saying if this was purely an admissions case which again we will say it's not that they could say that this affected the outcome especially in light of this court's analysis and shields where you're not going to be able to talk about that you don't get rebuttal that  to the banks and they didn't probably get all their money but the people here that private investor didn't get any money right the private investors into a money the banks didn't either pretty much the only people got money at the end of it was mr stewart's lawyers in the bankruptcy and then there's no money well there's no money or assets left in the ok so in the disparity mr stewart had a one hundred and is it sixty eight months he did and the other mr packard got got the same base offense level seventy both defendants got plus twenty for loss so they both were starting there they both got four levels for a substantial hardship the victim so both of them got to thirty one together th mr stewart got abusive position of trust and or use of a special skill for being a lawyer and broker to a for that one that one has to so it was thirty three versus thirty one then mr packard got three levels because he accepted responsibility and pled guilty and then judge carney at the recommendation of the government gave another six levels for his cooperation not just cooperate and but testifying at trial against mr stewart so that put you at thirty three versus twenty two at the get go so obviously very different circumstance not similarly situated just from that alone then judge carney and the government please rightfully so looked at the mitigating an aggravating factors of both defendants at the time as related to mr stewart he was the one who wrote the p p m admitted by himself he admitted that he wrote the p p s in the language and he was the only one or between those two defendants who had direct contacts and made the false statements to the victims mr packard was in a totally different office dealing with banks and property management and so those were some of the mitigate some of the aggravating factors with mr stewart with mr packard judge carney found there was obviously exceptional acceptance of responsibility his age his his personal circumstances and mostly one of the things that the court emphasized was mr packard was the sole custody and parental unit for his minor daughter at that point so that was something on top of that was a mitigating search situation so the starting points one even some more and then the facts of the case differentiated them and when you look at the arguments both sentencings first of all i don't i think the government's position was consistent in both of them one the question was about role and that neither one did we asked for a role in the hands meant for either and we just argued what it was what each defendant did in their circumstances and what it led to and then when you look at the case off from this court they're not similarly situated first and foremost and more importantly they were on warranted even if you were to determine their liking there might be a claim or an amplification that the court didn't consider their relative positions did the court do that i believe absolutely and actually on the record discussed what each of them did i think their claim is that it was the government was taking a position about role and being inconsistent about their positions but that's exactly where the discussion came up of judge carr not just about mr packard being more behind the scenes guy mr stewart the one who's basically dealing directly with money exactly your honor and i think that was the court's focus and that came up at trial and it actually came up most of the victims would say that even though packard was a couple of them said they met him at a at a party but didn't even know who he was all the victims didn't know who mr stewart was and he did he was the face of the company as it related to seeking out investment money so mr siegel simply put it was a warranted disparity in sentence and to the mr stewart was a lawyer in abuse trust yes and i would throw in that they weren't similarly situated i think in the defend in the appellants brief he cites to what the but mr stewart is the question was is the guidelines doesn't take into account the role in the offense and what the government was saying was i understand your honour's position however role in the offense requires managing someone else supervising other criminally culpable per people and that doesn't apply here and the position of the government which was me mr packard sentencing was saying was as the question came up under thirty five fifty three a six unwarranted discrepancy why the different sentence and we're saying if you look at them individually one dealt with investors one did not one is the primary caregiver of their daughter and all the other circumstances and well that role i don't think played  major part in the reduction i mean the bulk of the reduction because they started off a similar point the bulk of the reaction was an acceptance of responsibility and the government's five one one recommendation right that brought him down seven kharab the only the only thing that you could say was the difference was mr packard is guideline range what the low end of his range was forty one months that judge carney did depart and had to depart to get to thirty months there mr stewart got a within guideline range so it wouldn't really be that eleven month departure under three five five three and as judge carney put on the record the numerous reasons and the numerous mitigating objection to special skill and it's these twisting things that are going on that it's the same thing that they're doing with the p p m as well i encourage the court read the p p m he comes up here and says all the said the position there are financial position was strong in this was to buy properties the p p m is clear you're investing in p p a the company we're going to look for properties but we haven't have any property yet we don't have a firm purchase price on any property that's what we're going to do but we don't know if we're going to be able to do it the banks are are cutting down on financing you can't get thing financing it's that the market is going to preserve we don't know what we're going to be able to do it's a loan to the bank but they come up here and they say very sincerely these generalized terms these dollars should not have been put in that category but rahm well all right but the but the it's not it wasn't false it's not according to gap and that's what the p p m said this injury is not according to gap and if you take out that they're not there's nothing there and the the lead investor in the opportunity fund said he knew that he had spoken to mr stewart about it he looked at the p p m in the note and he knew that's exactly what they were doing and he was ok with it end they just come up here in the make these statements and then they said there was no omissions we barely talked about omissions well then why was the very first thing in closing argument the very first thing they argued was omissions if it wasn't all missions case if they want to rely on emissions why was it the very first thing they aren't i mean it's just there to they're two completely different versions of this case which is why it was a debatable case and they can come up here and sincerely be in the government get up here and say this is what the case was about but the case was fought it was disputed on every level and if they didn't documents charges omissions and false statements both the indictment itself has a section four omissions it they and this is just like a radio they argued both and there's a very good chance that the jury returned a verdict because  the did not know that they had to find a trust relationship and those documents themselves over and over again say we have a conflict of interest with you do not rely on us to get your own advisors because there's a conflict of interest in bold letters in capital letters over and over again so the jury could have found that this there was no trust relationship and then they could have convicted based on the omissions theory which the asked every witness about which the indictment alleged and which which with the lead in their closing argument on an all missions theory and i urge you to read