court this case concerns of trustees effort to recover millions of dollars that are the undisputed proceeds of a massive ponzi scheme targeting elderly retirees as this court has held repeatedly once circumstances put a party on the inquiry notice the failure to inquire is inconsistent with good faith when it comes to those circumstances psionic is able to explain a lot in its brief but it does not explain and indeed curiously never really attempts to explain transactions where one of multiple ponzi schemes around the country run by joe lynn line convicted felon and they were fairly simple in their operation i think it's worth taking ninety seconds at the outset this morning for me just to describe one of those transactions to the court the one  that was providence set eight hundred dollars an acre price but the deed showed a purchase price of one hundred and four thousand dollars so right out of the chute there's a forty thousand dollars difference between the actual purchase price and what the public records show the purchase price to be see on of them flipped the property to ruth and for ninety one thousand dollars a twenty seven thousand dollars profit that is shielded from public view by the wrongful claim of a doc stamp exemption they claim to be affiliated entities and that they were exempt from the dogs things and one can see that rifkin then flips the property to providence for one hundred and twenty six thousand dollars again a thirty five thousand dollars profit in the flip that is at least in the majority of the transactions shielded from public view so in simultaneous transactions this property goes from sixty four thousand dollars to one hundred and twenty six thousand dollars product then and this is the part i think that's important that's not really in the brief is to work the money backwards provident would wire one hundred and twenty six thousand dollars to risk the bets province purchase price from them risk been then wires one hundred and four thousand dollars the deed price to see young in doing so been pockets twenty two thousand dollars and what originally was a sixty four thousand dollars purchase psionic pays the owners of their sixty four thousand dollars siana pockets forty thousand dollars on what originally was a sixty four thousand dollar them when wind gets his money because he's now got on providence and book a mineral interest that he paid one hundred and twenty six thousand dollars for and he lowers victims victims to the scheme by showing them this valuable property that he's acquired it's worth one hundred and twenty six thousand dollars according to one of the exhibits of trial bloodlines also getting kickbacks from earth and throughout this process more importantly from the s e c received anything from siana at the also at the time when you used the word kickback there is no evidence in this record of kickbacks from sea on of the ground and i have a question is the transaction you just described is that the same scheme as you describe it for all of the transactions that you wanted to present a trial it is essentially all one hundred and ninety seven acquisition that i don't deviate in terms of any intent maybe the dollar amounts and certainly the properties are different but they don't deviate in any there there's no significant difference in terms of what the jury's appreciation of the transactions are whatsoever in fact the only the only distinction i can think of meaningful or otherwise other than amount would be that in some transactions in kiowa county the flip from ruben to providence is the doc stand ins paid on some of those states ok but really i'm asking obviously is because one of the issues i believe that is briefed on appeal is that the district judge did not include on the verdict form a space to answer for every single one of the transactions  issue what would be the benefit of having the jury undergo that exercise so the distinction and the reason that mattered had nothing to do with the structure of the transactions and everything to do with c on its growing knowledge of the structure of the transactions in other words for example the things progressed they knew enough to ask questions and it's interesting because this is not something that's in the briefs but i think it's very important if you lived if you look at the joint pretrial order in this case this is see honest dispute the fact is you see on a submitted to the  whether siana took such funds in good faith and if not the date on which siana no longer acted in good faith so everybody in this case knew it was possible there might come a bit that was the reason that they had to be charged transfer by transfer because otherwise there was no way for the jury to make that conclusion it was just all or nothing so what do you consider to have been the order of proof to offer and in support of that proposition that that to answer that question favorably to your client where you did you believe that it was it was appropriate to introduce evidence for each and every transaction it was there a timeline where you prearrange i'm going to do tell your district judge your honor i'm going to do the following eight transactions and here the dates on all of them in my argument is that certainly by the rd one of the th one the gig is up he should know that things are not on the up and up so that argument was made to the discussed at length and and i think to question your honor it's very important understand the trial judge the answer is i think going to see the question you're saying did you ever essentially propose a charge that group transactions in the answer to that is no for example we did not ask for a question that was pre ball post and there are a couple of reasons for that the st is that it would have required i think the trial court to comment on the weight of the other things i mean for the trial court to asked a question specific to red flags would sort of been an endorsement by the trial court that question other than what she she very clearly says on the record because there was some discussion about do we really want to give the jury one hundred and ninety seven questions and the judge said i'm not making this decision on that basis i don't find that the jar charge would be unduly burdensome i'm making this decision because i think all the facts of all the transactions are the same that's what she said on the on how many how many talk about the facts regarding the transactions how many transactions were presented in detail with witness testimony as needed to the  for eight months so what we're going to do is we're going to show for we're going to show three and then we're going to argue to the jury that you know what not only did they do it in those three but they did it in the other one hundred and ninety four as well so i'm trying to understand your are you trying to understand why the district judge would have said no i don't i don't want to include any more questions other than one what was the explanation and what was the unfolding of the evidence  trial that caused that to be the wrong decision in so the response in this absolutely was argued to this record judge was our belief showed a growing number of cumulative red flags over time and the two most obvious well actually that's what part of the like i'm at but i'm not interrupt you know this i'm asking about specifically what was the evidence that was presented to the jury for the judge to say oh i see you're showing them a earlier transaction mid term transaction and one's towards the end now i understand what the jury has seen and now i think i see the wisdom of including more than one question on the verdict form or giving a charge little bit say this is the date of the ball letter you jury need to go back in the jury room with exhibit ninety three you need to circle the date of the ball letter and every transaction that came after that letter at a minimum at a minimum every transaction after that letter you have to find was not in good faith and that was the argument we made to the trial judge was that the jury needs the capability to do that because that was thirteen million dollars after the bullet that still i'm sorry i couldn't you do that still you don't have to put on the evidence of th transactions in order to say that well except to say here's the letter and we know that there's one hundred and ninety seven dollars of them and fifty two dollars of them totaling x amount more after this ball letter which any reasonable person would say would show you can't be in good faith that that mean that's your argument i'm not agreeing with that why can't you do that with or without the transactions well because there was only one question was c on in good faith i mean there is no way and that you got it not i don't see the process that you go through when you're trying to get something in the charge that you think is worth so many millions of dollars that you would submit it is a proposed bill where you would argue you make your offer prove you would do a whole series of song and dance at the charge conference it was not done here well candidly i disagree with you your honor we feel we did and here's what we feel that ways there were there were a bunch of red i mean i'm citing the most obvious but there were like a view red flags and there would have been no way to submit that charge other than transaction by transaction there just wasn't any way to group them and certainly wasn't a way to group them without sort of inherently commenting on you know if you had cited particular dates or red flags and you were sort of highlighting those red flags to the jury i mean that i think would have been an arguably prejudicial to see ya know i mean the only two are charge in our view and maybe this is the simpler way to answer the question which i really am trying to answer our church was proper i mean transferred by transfer might have been more cumbersome but it was a problem and the way it went to the jury was not proper because the the central question in the case which is when did s stop acting in good faith to this day i as i stand before you i have no idea what the jury's opinion on that was because they never got asked but did you submit that is a particular question i think what was what were the ones that you offered that you did get you got denied i thought you just got off denied transfer by transfer that is the one you want to submit one that says on what date do you find the thing was no longer in good faith did you submit that question if you find that do you find that they were continuously in good faith throughout the entire time period if not then and what date did you find that they ceased what you know do you do you do you know i'm saying if they do and we did not and we didn't do any of those  view that was exactly what the transfer but then again that put that question was prompted in the trial judge never once stated a belief that it was too cumbersome for that because practically think about this for him and i think i assume that's we're going to come in from this idea of the jury having to answer  hundred and ninety seven questions but practically speaking that wasn't going to add much to the endeavor because the jury was either going to go all this way all that way or pick a date and every transaction afterward was a no so as a practical matter as a trial lawyer you're probably getting forty five minutes to the jury's deliberations by giving one hundred and ninety seven questions as opposed to yeah but there's not any way you're going to sell that judge in a one hundred and ninety seven transactions questions been going after that's you know that's just reality spill and there's i can think of five off the top of my head different ways you could get to the point by asking sustained one or two questions if five different ways just off the top of my head i do so i don't it would be two questions each that would get to the same point we certainly could have asked the question that's the one that i think would concede we could have asked it that way again in our view this was the best way to ask it was that the code says the transfer and we thought transfer by transfer was a proper question and again like that you know it's to me it's a little bit of an academic discussion in the sense that the trial judge was real clear in saying on the record i'm doing this because i don't think there's any basis to depart differentiated at all and any of them she said those words on the record i think you're in a difficult spot because this was your th issue and we've taken all of your time on it so you can each side can have two more minutes and you can go back to whatever you wanted to talk about i appreciate that very much ron that is is what happened let me just very briefly i'm going to spend one minute on red flags in one minute on good  red flags that in ray harbor cases the one we would like the court to focus on that's a th circuit case that involves busy a very strangely structured set of transfers where they're paying the money a company is paying a rd party but they're running it through the owner's mother they pay the mom and mom pays that their party in the th circuit looks at that and says there is no legitimate business explanation you know even if the transfers themselves were kosher there's no legitimate business reason to structure them in this bizarre way and so we think the mom you know when she gets to trial and says i don't know why and i never ask questions we think she was aggressively ignoring red flags that to us is the situation we have here why would anyone use a double double bump to acquire property just doesn't make sense ok get like anyone would ok so totally different from these transactions so that that's our our good faith argument where we we believe the great weight there should be a neutral with respect to good faith we believe the court should render on the good faith issue and very similar to  court did didn't philadelphia gear in a different context looking at louisiana state law we don't think that the court needs to draw any broader rules or enunciate any grand principles we think the court can look at this and say in the context of these transactions the doc  judgment not just in the verdict on good faith as a matter of law what what do you think went wrong at the trial well that's you think the evidence is so clear that it was required to be as a matter of law been hounding not get there that's probably an answer i cannot give in less than five minutes you're out and but i think you're very experienced lawyer and i think part of it had to do with the jury charge whoever's responsibility or culpability that was for the charge going the way it went to the jury i have thought since i became involved in the case that there's a very reasonable possibility this jury may not have thought siana acted in good faith on all of these transactions but was sort of left with an all or nothing question i think the other thing to happen on good faith in particular was there was all sorts of testimony about whether people routinely violated that doc stand and i'm not sure that a c c receiver ever really explained to the jury in a way they understood why it was so if central to concealing the scheme which it is i understood his testimony when i read it but i could also understand why a jury might not have understood  testimony very much like that arbitration was that judge taken by them was talking about in jan be where this was really important just airing the scheme to the public one time in a in a lawsuit in jan b could have caused it to be uncovered the same thing was true with the doc stamp on the best evidence of that there one time william ball just happened to know his price one dollar time and he saw a lamp drop i think just right away immediately and so in our view that's i think that's part of it though is that the jury may just not have understood the central role the duck  the reason for whining the judge determined that the evidence wasn't put on in a way that would allow the jury to differentiate between early transfers and mid transfers and late transfers was because that evidence wasn't all that the judge the judge made that comment on the record during the charge conference after the evidence and come in after four separate pretrial offices after five days of trial hearing all of the cross examinations of siennas witnesses hearing all of the examinations of the trustees witnesses that's when the judge made that comment and the reason that the trustee presented its case in that manner was because it made great efforts throughout this trial to avoid a compromised verdict the trustees counsel had expressed some concern early on during the pretrial conferences that c n n would try to revisit the mere conduit issue by trying to sneak in the back door with the jury and try to get a compromise verdict from the jury and have the jury determine that with respect to the amounts that went through seen it all the way to the mineral waters c n n acted in good faith we're only going to look at the commission component the trustee make great efforts to ensure that that compromise verdicts would not occur there were many conversations about it and many many times the judge stated on the record that she was not going to allow any possible evidence or argument from either side that would allow that type of compromise to verdict it was only after the trustees lost entirely that it began making this new argument that its intent all a compromised verdict that's a theory of the case that over time you are more information and you should be on notice that's a legitimate theory of the case i agree are in it and had that been the legitimate sciri of the case from the outset and had that been how the evidence was presented to the jury then the district court may have made a different conclusion and the jury charge may have been fashion and if it made it right to argue that the jury absolutely absolutely they did why weren't they deprived of arguing that they were not deprived of argument the suggestion that they modified their closing argument at the th hour because the judge's ruling on the jury charge is just it's not supported by the way that they easily could have gotten up in closing compromise verdict being that some would be and some would not be right that's not what the court said no that's not compromise that's that's a different time period it was a court i think the exact words of the court used convey is a judgment in the trustees favor but for some amount less than the full another transfer size and that totally legitimate it would be legitimate but the district court was concerned about the mere conduit issue there are two issues  wanted to suggest that the time period would allow some differentiation the issue there is that's not how the evidence is presented that's not how the theory of the case was presented if you go back to the opening statement you'll see the arguments were always that these red flags applied to all one hundred and ninety seven transactions so they know where even in the closing argument your opponent did not ever suggest to the jury that well you know you may find that he even if you find he started out in good faith or without any suspicion at some point his antenna should have gone up in the this is too good to be true is that is that that argument was never made in closing argument that all not not the way i understood the district court discuss this you said you were going to tell us about three times the district court was discussing what did the district court say she would or would not allow up not sure what you're requesting of the three times what i was referring to were there were two different issues that led to many discussions throughout the pretrial conference and during the trial about the trustees concerned that c n n was going to ask the court or ask the jury excuse me in closing to reduce the amount of any judgment based on the fact that with respect to the funds that were paid in their own or seen acted in good faith or with respect to the other taxes that pay it or some other argument we never attempted to make th argument or present evidence about a reduced part of it the trustee was concerned about it and the judge addressed and said no this is an all or nothing thing either the transfers are going to be covered by the trustee in their entirety or the no but with  t to the nd issue the timeliness issue when the judge was addressing the jury charge the reason that the judge determined that at all or nothing conclusion was required there was because the evidence as it was presented to the jury was not on a transaction by transaction basis the judge st of all just did not say i don't think that the jury charge or proposing which i was five hundred and ninety one dollars session or auditory is not burdensome she didn't say that she said that something basis her ruling the basis of her ruling was that at this late hour based on the evidence as i have heard it as the judges heard it coming it would be very confusing to the jury now to suggest that they can differentiate between transaction a and b and why couldn't it be postponed letter prebuttal letter or just a question on did their not good faith change as a result of the ball letter it doesn't even have the transaction by transaction it could have been done that way that the trustees council in the house were to be done that we all know as well that we had proposed when during the charge conference when this issue was raised other alternatives including the th question after going through the three elements a th question which is if you find no to any of these elements identify the amount of the transactions for which santa did or did not act in good faith and again the reason that the trustee was so adamant on its form of the proposed jury charge with the thirty pages and five hundred and ninety one questions as opposed to some more simple way of getting there was because they were looking for a a a decision where there was a differentiation between early and late that's not that really wasn't the intent that's what they're saying that it was now but instead it really was to attempt to confuse the jury and to have all of these transactions listed out and make it look like this number was just so huge and went on for so long that's what they want to talk about the fact that it's a huge number of transactions and went on a long period of time gives rise to the idea bit they should get a clue at some point that's very relevant to the good faith of your client of evidence that at that point there could be no good thing why isn't it true as a matter of law absolutely the a question was asked to pose a counsel as well what was there any difference in the structure of these transactions and he conceded that no there was no point but events occurred that made sienna be more knowledgeable about the events well the ball after all it does is identify the structure of the the county records are being bought yes or on once your client knows the county records are false how can it be in good faith but the question of good faith is determined by whether or not see in a new or was on inquiry notice of the fraudulent intent of the transaction so there has to be some connection between the document stands and how these were reported and some fraud in the transaction that's what the good faith element goes to knowledge of fraudulent intent behind the transactions the fraudulent intent behind these transactions the reason that the transfers were of voided was because provident was run as a po that was the fraud that led to this avoidance action and the fact that the documentary stamps were recorded as they were has absolutely no connection with the profit ponzi scheme there's nothing about that fact that would c inquiry notice of how prominent is raising money from its investors what it's telling its investors and whether or not it's using new investor funds to repay over the of wouldn't tell ordinary person that there's something sketchy going on here if the documents are there are filed in the county are all in this case the evidence was that the documents were filed in the county exactly the way that c n n has always files documents in the county there's always a price discrepancy and there's a lot made i mean did they know about cns practice well before it ever was hired a prominent well before any of these transfers was to file deeds was in the counties that included both the amount different from the way c n n had been reporting these for twenty five years amount is exactly the commission plus the real price every single time it's not some intermediary amount in this in that the other there were across the one hundred and ninety seven dollars transactions i think there was one or two that were off by fifty dollars or so on a per acre basis but the vast majority ninety nine percent of them were were the amount was paid in their honor plus c s commission that mr shut is not the only one that does that that other brokers an honorable disneyland then did the same thing and with that in mind again the question is mr shut state of mind if there's nothing about the way these deeds were recorded that would cause him to believe these transfers were unique some than there is no reason to conclude that he knew there were some fraudulent intent behind the transactions if you didn't know that being a q you would assume that there's something that there were some wrongdoing there there is no wrongdoing because what the trust is trying to imply is that the reason that these were reported incorrectly was that we could hide certain amounts of opponents of this transaction so that we could kick money back up to bl you know siphoning off of funds that's not what happened so there was no fraud in connection with the transactions there's no reason for c n n to believe that the fact that it retained a commission agreed to b was evidence of some type of fraud there's just no connection between the two let me ask you about something that your opponent maybe didn't have time to raise but it wasn't covered on the initial oral argument with regard to the request for admission is there any dispute i know it was not disputed with a response but was there any dispute even as we sit here today with those matters that were requested to be admitted no your honor that the the that was that this rudimentary information about a transaction that happened on this day in the document reflects this number  and that type of information yes your honor opposing counsel referred to this trial exhibit that was a master chart of all of the transactions that identified the dates the deeds were filed the amounts that paid the amounts of commission that were retained that cetera et position at the information on the chart was distilled entirely or at least in large part from the request for admissions that had been sent in not been responded to during the pendency of the litigation yesterday and one of the issues that came up when the motion for a protective order was filed was there were two options of ways to go about this either answer place or admissions and stipulate to the basic facts at the time no stipulation was aired incident but the chart came in as a pre admitted exhibit without objection and the da underlined documents that were used both for the bus with mission and for the chart you know filled six or seven large notebooks and using the chart of allowed to try out some move more expeditiously without having to go through each of the documents  each of the transactions that's what the requests from mission were for that's what the trustees counsel said they were for and that's how the basic facts were used and we have no dispute with that issue right yes and the evidence itself one back as well but the chart went back as an independent individual would like to spend most of this time talking about the red flags in good faith since i spent most of my initial time on the jury charge very briefly from the big picture on the red flags it's important to note i have not attempted to argue any of the things that psionic explains in its brief today i am focusing on the one thing siana never explains which is the double flip double book why would anyone ever use a double flip double bump council today for the st time is said well that was the same as every transaction siana had ever done there is zero evidence in the record to support that statement literally none shut never testified about a single other transaction in his entire career that involved a double flip and a double he talked about other aspects of the transactions that were similar but not that and why is that important because it is our view that you can toss all of the ten other red flags out the rear window and the double flip double bump on its face was sufficient at least for him to be asking questions why would anyone do it this way now you stack on top of the top on whether they knew about the double bump they had said in their in iraq reports they did in a trial they said they didn't well ball told them about the double bumpy said hey either way it's not just the discrepancies in the dock stamp on your sail to ruth and i went and told probable cause i wanted to see what happened on my property and guess what ruth and flipped it on the provident for an even bigger profit so now once they have the ball letter they knew not only had it been double flipped but it had been double booked you know anyone who was around back in the late eighty's in texas and oklahoma in the s and l crisis has seen this before and ball head to we used to call this a daisy chain when you are flipping and bumping and flipping and bumping and anyone like kyle shot an oil and gas life or at least would have known enough to pick up the phone and say hey there may be a perfectly logical explanation for this but why are we doing it this way i don't understand why we're double flipping it double pumping so that's red lines with respect to good faith the argument now and i think this is really what it boils down to to to go back to your question your honor was everybody does everybody does except that's not really what the testimony was if the court will go back and look at the experts testimony b what barnhill said was he had heard of other people doing it that's what he actually said and then he used the word where he said it it recurse i don't know what that means but there was no testimony in the record that this was the industry norm or the industry standard or that it was objective lee reasonable or ever nothing like that ok just yes ian is not the only person ever to do this i've heard of other people doing it it recurs in our industry our view is that good faith in almost any context in the law requires two things subjective honesty and objective reasonability shut it minute he was dishonest on the docks and he flat out i mean he was asked so you lied on the dock stamp and he said yes he was asked another point so you broke the law on the dock stamp the he was he admitted he was being dishonest he just said well i was just trying to mislead all the competitors that is not honest it is dishonest more importantly the fact that everyone does something illegal does not make that an object of the reasonable business practice you know it was not objective lee reasonable for savings and loans to be flipping properties with ever inflated fraudulent appraisals even though as we ultimately found out almost all of them were doing it those were not objective we reasonable business practices no matter how many of us and we're doing it in the same thing is true here it was critical to the scheme as the a c c receiver testified in the easiest way to say that as we were preparing for oral argument that a secret c receiver said something to me that really made this sort of clear he said you know imagine if providence investment materials that said this hey potential investment we're going to take your money money and we're going to bump it twice so that your one hundred and twenty six thousand dollars ends up buying only sixty four thousand dollars of material interests would anyone in the world have ever put a penny into providence and the answer is of course what did the docs didn't do it prevented anyone from knowing that what i have just described was the actual way provident did business it was central to use judge thinking about those words it took the docs stamp fraud to the heart of the criminal enterprise in this case enabled four hundred and eighty five