states versus foster will be pleased to hear from mr howard first here on a good morning made please the court my name is david howard and i represent the appellant mr lawrence foster to foster stands convicted of one count of conspiracy to commit mail fraud and seven substantive counts of wire fraud convictions result from a jury to the second of two jury trials he was convicted in the first as well but was granted a new trial by the district court  is to foster owned in operated a company by the name of paradise as mine the primary mission of which was to sell lots of land and rumpy bahamas undeveloped land the secondary mission was market to use lots of that land from which he was selling as collateral to secure a loans to fund the marketing operation the theory of the prosecution was that mr foster was deceptive in his marketing practices and three primary ways that he claimed ownership of the land or that he claimed his company paradises mine on the land that he claimed celebrities had acquired land  from the track from which he was selling and also that the press releases that he used in his marketing effort were deceptively doctored to appear as though the were news articles we contend that none of the representations made by mr foster were materially deceptive for three reasons as to the ownership of land mr foster was in contract with the owner of the land the contract is exhibit eight zero zero one which i commend to the court exhibit c two which states as follows and i quote the company has been the company referring to paradise as mine mr foster's company the company has been provided full and complete ownership interests equity interests and all legally permissible rights of tamed from each vendor through this agreement accordingly this agreement provides paradises mine l l c the ability to exclusively market and represent itself as to having true and complete ownership rights and claims without limitation whatsoever for all real property owned by and in conjunction with the vendors in excess of sixteen thousand five hundred acres within the commonwealth of the bahamas they didn't actually own it it sunward properties owned well to the extent that he had a contract with son would properties that gave him an ownership joint ownership interest then he did on it whether or not title had passed from one to the other i think was immaterial he had a contract to all ownership right which was not contested by some third but the but the whether sunward really own the land was being contested right with the was testified to by mr ken thompson who's who was a lawyer there and is the executive director of sun with holdings mind you he was a suspended lawyer at the time for unrelated matters but he indicated that essentially in the bahamas if you don't have absolute title ever all title is relative and they're always from time to time disputes that arise that was also testified to by a miami attorney mr jose diaz kwaito who acquired some of the land from the same tract from some word and has since sold lots of people to whom he sold have built on it and they're living there now without any problem so the question of whether or not it's contested there might be contested there has been no holding or ruling that son where  did not own it and so on which is operating as though it owns it without incident tell me that any of these investors did anybody end up acquiring title they did not and the reason they did not is because the what they were purchasing and they knew and testify they were purchasing were options to purchase land and they would only be able to receive title once they paid a ten percent stamp tax they didn't pay the stamp tax and so therefore they did not receive the title but they have the right to and their option contracts no to put in the world on notice that they are the ones with the right to pay the stamp tax on acquired title is registered with the repository in the bahamas that announces and such ownership interests what percentage commission did mr foster pay for the salesman for these lots it varied but there was one i think the one that seemed to be  greatest or arguably excessive was fifty percent to one of his salespeople at least one that he paid fifty percent i suspect that it would have been difficult to get somebody as a sales person to engage and the pursuit of selling undeveloped land in the bahamas and so he offered them these high commissions however if the land is sold the person who owns it and sells it i would assume is entitled to do what he will with the money that he receives from the sale of the record show that mr foster spent a penny in actually developing the land that he got from these about the money from these investors i think the record indicates there may have been something in the neighborhood of pennies spent in that regard so i would concede that however mr foster had a website he never at any time advertiser suggested that he would be developing the land it said we're market makers and we're selling you undeveloped land and so therefore he never had an obligation to develop the land and he did joe montana one of the celebrity people who advertised a purchase like yes he was in montana actually ever purchased the land or he does and yet it is for his indorsement what he got it for his endorsement and we would contend that a celebrity's the very viable and valuable asset of a celebrity's celebrity does have purchasing power so to the extent that he gets it by barter in exchange for his celebrity attaching his name to it that is in essence a purchase and as mr montana never got it according to the testimony at trial either according to the testament trial he didn't get it and he did not get it but what he what did transpire with regard to mr montana is after securing his after signing his service agreement he sent correspondence to mr foster or to paradise his mind indicating he wanted to  exercise his option and receive title they sent him back documentation documenting that they had knowledge that he wanted to make that choice and that steps were taken and his option was registered accordingly then also sent him a package which he had to complete and fill out for the foreign investment board there is a minor very cursory background check that's done to make sure that if you're going to build in the bahamas you're not an axe murderer and they never sent it back so i don't think paradise is mine was in a position to know that they abandoned the contract the last they knew was they  their position was they didn't abandon it that they demanded clear title before mr montana could be used as a spokesperson and then the problematic part for me is not so much that he didn't get it because as you say there might have been reasons why he didn't get it but paradise began using in many ways despite the fact that he said don't use my likeness or my promotion until i received clear title he didn't get it for whatever reason and yet they started using him and calling him an owner of land there that which which i which is an understandable concern except mr cook mr montana's contract did not just say that it has two provisions regarding what paradises mine would be allowed to do the first does as a court indicated it indicated that once there has been a successful and complete fee simple transfer to lot nineteen pursuant to the terms here of the professional will use his best efforts to provide the services identified within sixty days thereafter or unless otherwise specified there is another provision that provision says and i quote and it's an attachment want to miss de mint montana's agreement the company may upon the execution of this agreement market and release information pertaining to the professionals acquisition of land specify their it but there is no acquisition of land there is acquisition of an option contract which give has not what the contract says while his has an option contract gives him the right to the land i don't i don't dispute that but that the provision you read doesn't say the execution or the transfer of the option it says the acquisition of land well my our contention is that the option mr montana could have taken that option and sold it it's his it didn't say the acquisition of title which is what the other provisions says it says the actual acquisition of land once he has an option contract is that he  a reflection of what a value of that option would be well it's land so it's not like that's an option is there any testimony as to what the value of that option there was testimony by mr toppan who indicated that that option transfers an ownership interest in the land and that ownership interest can be sold and it can be used as an art since you mention mr top and he was a director  that's what he's testified to correct that is what he said all right so your client did not own a lion and in a legal sense they had a right to a contract to buy it and to sell it just read it continues as i continue to inquire of him and confronted with the actual language of the contract which says you have an absolute ownership interest in conjunction with some you admit sunbird held the title i'm sure some had the type of even sun would have the title there isn't a title in the bahamas as a stablished by title opinions and there were several title opinions which did establish ownership them are correct the website of paradises ma never  rea whether or not if he has a contract which says from the owner you own it with me jointly whether or not he has an obligation to disclose all the partners that he owns the land with would i have one other question about the last before you set and i think interest payments before the it all fell apart and there was no evidence that any other payment had come due at the time that i understand that i just time out the bottom line numbers took an eight point three and they returned two hundred eighty thousand that is correct i have two questions mr howard there was according to the briefing having gone into the record to check this there was approximately a million dollars in paradise's bank account at the time it got shut was taken into it was returned to investors separately and then it was taken into account you think i don't know whether was returned to investors but i believe it was taken into account in the computation of loss of what happened to the million dollars in the account at the time the government seized the assets did the government get it the government seized it what they did with it i do know the last question mr howard is tell me so that we can have the government address it when they get up why you think given that no one actually got land got the actual land you think that the value of the runk a property should be credited against any loss amount because there are two sets of alleged victims those who purchased and those who received lots of land as collateral follows both of them have their interest currently as we stand registered volume and page in the bahamas registry the purchasers in order to acquire title would need to pay a stamp tax however the options which they own today they can sell they have not taken any action on it one one of the purchases said that he abandoned his effort because he got a call from the case agent telling him his investment was no good but as we stand here today they own it as per the a registry all of the collateral interests are registered in the bahamas all of the purchasing interests are registered that they don't go in but monetize their investment is not an issue that should go to whether or not mr foster should be credited in addition to exercising the option how much more would he have had to pay to acquire the land exercising the option by paying the stamp taxes stamp taxes ten percent of the purchase amount right but how much more would they have to pay it depends on the lot it would be penned on whatever the lot what mean the payment of the stamp taxes and get you the land right you need you need to pay for the land you know you had to exercise your option once they pay the stamp tax they get the title the land is the here for the option payment they made was for the value of the land yes these options have an expiration date they have an expiration date and the expiration date has since expired because i think they were five years each son word the executive director testified they're willing to honor them into perpetuity and as far as the collateral is concerned which is the lion's share of the eight million that was received those had no expiration date and they currently sit as collateral in the bahamian registry as we stand may please the court good morning ron davidson on behalf of the united states with me at counsel table as in the cold mary on who authored the briefs if i can begin with this efficiency argument the elderly investors who took money from their retirement accounts believe that the investment in paradise's mind was something like a diamond they believed a u s company owned the land they believed that that u s company was developing the land that it owned it believe that celebrities were think we know what they believe tell us how what the defendant represent it was false certainly ruckus on the defendant's conduct yes your honor so the i have no doubt these investors thought this was they had title to the land it was right there collateral and this was beyond fabulous real estate investment certainly around about that part what did the defendant do and his conduct what did he misrepresent certainly honor so he withheld from from the investors the fact that a felon really wayne davis was the purported owner of the land they withheld the fact that this what do you mean by purported owner who actually own this land well that's the million dollar question your honor because mr davis says he owns the land but he swore that he never paid for the land so here you have mr davis claiming that or claiming he owns the land that he never paid for and there's a competing group that's out there in the bahamas that claims that they own the land and who is that i think it was the mcdonald's or i forgot the exact name of that other parties so there is litigation there are two opposing factions claiming the land mr davis who swore that he never executor testify that they did not own the land there was no evidence of any title transferring to paradise is mine and no one received title from paradise as mine there is the absence of any record evidence showing paradises mine had title to the land negates or undermines mr foster's claim on the web page and to the investors that his company own the land there's no wording to sunward who owned the land well somewhere holdings believe they own the land this is the third  group somewhere holdings is correct there's paradises mine somewhere holdings and then the people who were in the litigation with sun were holdings so you said there were two sets of people in litigation with sunward oh no i meant the mcdonald's the competing claim sunward yes your honor he is related to some work holdings they entered into i believe it's called the hypothecation agreement with paradises mine where they say paradise is mine please sell our land but that didn't transfer the land the paradise is mine it was a way to deceive the investors by sort of creating this cover so tell the investors paradises mine owns the land so that no one will find out that sunward holdings own the land and you'll recall in the trial testimony one of the investors said he was irate he was very upset when he found out that sun work holdings on the option agreement was the company that owned the land because he thought mr foster and paradises mine own the land but when he got his option agreement it was an entirely different company which upon further investigation revealed was related to this felon who said he never bought the land so that's the first area of the misrepresentation the true ownership the nature of billy wayne davis interest the litigation there was no money going to development right so the investors were led to believe that there was this growth in specifically in the paradise as mine land but i think it's like zero point three percent of the money is actually going to the bahamas house how much did the investor pay i know they have a loan they were given a loan purportedly to entice them to do it you get you pay a little bit we'll give you this great loan how much did they pay per investor words how much to the investors get back or how much did they promise for them how much did they actually pay to paradise and so it within the breakdown of the eight million dollars your honor it was sort of complicated to figure out who were the investors and who were the purchasers we didn't have the books of paradises mine and so it's very difficult for us to say this particular investor of i think there were seventy invested and loaned the money versus this individual who in fact purchased the land because remember from the government side all we see is a bank account and if we see one hundred thousand dollars coming from a victim to paradises mind we don't know of every single person whether that was a loan or that was a purchase of the land we were relying on mr howard's representations to the court that certain people had loan agreements versus were purchases of the land only certain individuals receive some money back and turning to the million dollars that the government sees the government sees that money it is it's currently being held by the u s marshals pending the outcome of this litigation and there was no credit in the guideline calculations for that million dollars because there was no evidence that mr foster intended to return it to the victims here recall the trial testimony for restitution purposes that would matter correct your honor they should he should get credit for the million dollars if the u s marshals distributes it to the victims that million dollars will go back to satisfy the eight million dollar restitution many investors do we have roughly i thought it was about seventy your honor and so that million dollars would go back but for purposes we have any idea what what they invested approximately what they invested i know you can't tell investors versus purchasers correct the total amount in was about eight point three million don know that but what does an investor put in in he's got a nine point nine percent return correct the investors and i think your honor maybe i should clarify many of the purchasers also consider themselves investors because they intended to sell their options are like i don't care if there's a purchaser or an investor i'm just curious how much money people would give on average it's got to be a little over one hundred thousand per person if you'll read i'd seventy i mean the eight million by seventy that is a exactly correct your honor so they varied some invested more than one hundred thousand dollars some invested less there is a government exhibit that lists all the individuals he was the financial analyst it was one of the exhibits that we introduced through him he went through the bank accounts found the seventy or so investors found how much money they put in and how much money they returned we were operating under the assumption that any victim who got money back was probably a investor who was expecting a rate of return is to howard focuses on the mentor mr foster and he says if you look at the contract trial provisions there was a reasonable basis for mr foster if you look at this this will explain that for example he talked about the hypothecation agreement where paradise is mine entered in an agreement with some work holdings he talked about joe montana's contract in a separate provision in the contract he spoke about in the briefing briones agreement or buried in the agreement itself is language that paradises mind could use the money however they see fit now the jury was free to look at all the evidence at the trial and to listen to these very arguments f mr howard and i think what the jury did was look at this and say wait a minute why are you hiding this hypothecation agreement why are you hiding somewhere holdings from your web page why are you bearing this language about the use of the funds in the collateral provision why are you saying joe montana purchased land in the bahamas where the best you were giving him land in the bahamas and the jury was free to reach inferences based on the record evidence and say we think this is fraud we think mr foster designed all of this for the purposes of misleading people like miss bray along of deceiving her of cheating her out of the money because what they present her was very different from what actually was going on so the fact that mr howard can point to a contract provision which says look there's a way of reading that contract doesn't prevent the jury from reading it differently and seeing the  evidence quite differently and i think that's what the jury did they saw mr howard's arguments they saw the record evidence and they said i don't think that's what's going on and that was a they were free to infer from the record evidence about the usa today and wall street journal articles were the real article well as to usa today it could not have been an article right usa today a did not publish that article b does not even put press releases on their web page so that was absolutely a lie it could never have been on u today at best what happened with the wall street journal was that it appeared on this the feed where they put press releases but there's a huge difference between your company's press release appearing on the wall street journal press release section verses actually being a wall street article journal article and saying it's a wall street journal article mr foster used the word article and mrs harper said and heard cross examination that she would never say a press release is an article and it's extremely important because land in the bahamas is not something that you have credit agencies going around and saying this is aaa or this is triple c you have the wall street journal saying this land is undergoing development and one of the investors or one of the purchasers testified that's what i look at i look at the wall street journal that one of the most respected newspapers in this country and i rely on that and it was not a wall street journal article so the jury can look at that and say the fact that mr foster is referring to quote articles from the wall street journal that are best press releases from mr foster's own company was designed to steal money from that particular investor mr davidson if at the time of trial and sentencing had the options expired some might have by now they all have but ok let me ask you a hypothetical question if for those options that had not expired if there was testimony that those options despite everything else that happened had economic value should that economic value have been credited against the loss amount or at least against restitution so your honor that we were sort of following your ruling in one of your cases involving loss from the perspective of the victim in an esoteric sense yes there might be a hedge fund in new york that would sweep in and buy all of these option agreements and bundle them and find some financial dealing and way to sell that but mr i think it's donnelly testified to this was one of the last questions on redirect he does during trial in the sense of hearing your honor centering his sentencing hearing he said i do not a fix and the value to this option agreement and that's important because it's the defendant's burden of showing that he gave something of value to the victims are victims here were elderly predominantly elderly individuals who took money from their retirement account and their risk portfolio somebody investing from their retirement account is very different from a hedge fund manager or the real estate investor that mr howard mentioned those risk portfolios are different and the question is when you give something to a victim you have to look at it from the victim's perspective because there could be as your honor pointed out some esoteric value there could be somebody out there who was willing to buy that but when it comes to the victims balance sheet they assign either zero or negative value because they don't even know what to do with this this is a piece of paper that they would have to go to the bahamas pay more money for and if they tr a title dispute going on exactly your honor i think that's what the district court was looking at and saying none of our victims here value this option agreement and as evidence as i think your honor suggested like none of them try to exercise that option mr montana of asked for a while and then just gave up realizing that this is not going anywhere and i think that's one of the things that came up in the newton case any w t a land where a hedge fund was given i think was a pension fund was given penny stock and the district court in this court affirmed said wait a minute there's no value to a pension fund in highly volatile risky stock and that's the same thing here when you're looking at are victims they don't assign any value to an option agreement to buy land owned by a convicted felon who's tied up in litigation where there is no development where celebrities didn't buy the land there were no newspaper articles from their perspective this is a liability and the question posed to the district court was what value does do these victims assign to the land the analogy would be giving a hamburger to a vegetarian a hamburger has value to some people it doesn't have value to the vegetarian these victims are the vegetarian for this option has value to anybody well i think a good tile yes your honor i think i don't know that it has to be all about the victim and that circumstance is the victim but i don't know why this option has didn't your experts say it had no value are one of the experts did assign general value to the land there was another expert we submitted his paperwork to the court who said when there's evidence of fraud the value is diminished so i don't want to suggest that no one in the world might assign some value to these options agreements i think there are sophisticated people out there real estate developers who might come in and buy pennies on the dollar but that's not the question the defendant has to show he has signed something of value to the victims from the victim's perspective and and this is just too much of a liability too toxic for any of the victims really to come forward and say i want this i assign value to this and so i for that reason remember it's clearer and i don't think the district court looking at mr mccarty's testimony for example where half of the money was going to pay for restitution while the six months to a year from now if the conviction and sentence are affirmed well i think the question your honor is slightly different if i'm understanding your question is if this court says look you needed to assign the value of the option agreements or whatever other land they come up no no no i'm not talking about that i mean obviously have part of the sentence gets vacated then you've got jurisdiction because you've got to go back and re sentence mr foster i was talking about the one million dollars in the bank the roughly one million dollars in the bank account oh i see that money gets distributed to the investors right correct they recruit some of their losses yes what jurisdiction does the district court have to go back and revisit restitution and give mr foster a credit for that you're right i have to double check to see whether the money is with the clerk of the court or with the marshals but my it doesn't matter i mean he has a he never got credit for it so far right on the restitution order correct because it hasn't been disbursed try to make them understand if there's this person that now post judgment yes assuming for purposes of my question that mr foster's conviction and sentence are affirmed yes what jurisdiction does a district court have to go back and revisit the restitution order oh i see your honor i think the restitution order is the eight point three million dollars bring is whatever was sent a question is now we have this money that will get dispersed and the court will just credit that as more of the restitution payment but i think it's a matter of probation and handles the rest too should i think probation would give him credit on that correct but let's cover this to the government agree that honor ok right so that would just be a normal payment for example if mr foster is able to sell the land is no different than if somebody converted real property and then it comes into the registry of the court and get if you were holding real property for example correct a mr foster sells land in the bahamas and then deposited with the registry of the court i don't know you go back to the court every time the payments are made on restitution but the important thing is the government stipulates that if the money is disburse to  i think we have the case thank you thank your honor mr howard thank your honor briefly there is a concern that your honor has expressed about the legitimacy of title the only evidence in this record regarding the ownership of that land beyond the contract which says it's jointly own with paradises mine there i believe three or four title opinions which all establish ownership in s contract you think anybody investing with paradises reasonably they had title they had the property right there nothing more had to be can you really argue that a reasonable avesta wouldn't think that i would argue that a reasonabl investor doesn't mind who owns the property if they get what they personally think i want when i'm buying from somebody i think i'm buying from that person and they have the property sunward was not mentioned anywhere on the website correct ok and they're not mentioned anywhere in the document right not until after the documents were executed yeah however that the notion of attaching some nefarious we're trying to hide their ownership as opposed to me put it in your anything no no he wasn't charged so he's not a government codefendant coconspirator who's has a deal for his testimony or he was called by the defense ok but i think i would i would commend the court to that section of his testimony where he there after acknowledges that the contract says he has an ownership interest that he owns it he had knowledge is that his first statement was he has a propriety interest the examination continued we pointed out the specific language he did acknowledge that ownership but i did want to point out the fact that this notion that we're not even sure if somewhere owns that particular this goes to collateral the mcdonnell's to whom the government referred sued in case number zero three one four four one a to see a zero three in miami dade county that sued newport holdings which is an also a billy davis own company and the subsequent supreme court decision in the bahamas resulted in the transfer of newport's holdings to some word but in the miami dade county there was a voluntary county case it was a voluntary dismissal durin which the mcdonald's acknowledged that's newport owned it so and then they went after that and filed a nother lawsuit in the bahamas and never served and it's sitting there filed in unserved and till this day so there isn't this fight for title beyond them agreeing that they don't only do is newport newport holdings is also held by billy wayne davis is another company and the land pursuant to a supreme court decision in the bahamas was transferred from newport to summered and newport is who was sued here and the people who are claiming ownership of that land have conceded in a miami dade county court that they don't own it where does own it the title does show in the behind the bummers registry as having been transferred to the purchasers and the lenders and i don't think that the court what they contracted for was land in the bahamas for which they had to pay a stamp tax in order to get title to come back and say well now they have to pay it stamp tax and therefore we shouldn't credit them that's the bargain they made they intended to if they needed to take title to pay a stamp tax they can now come and say well i have to pay it stamp tax and therefore it should be credit and as far as the collateral is concerned for those who lent do you think a reasonable investor would think they were buying property that was being developed from all the representation going on in their area that was development occurring from some of the money the website never mentioned development anywhere the contracts never mention development anywhere they were being sold undeveloped land there is nothing like a look at all the advertisements all the claims there's nothing in there about development of that not a single one so whether or not they develop that impression based on no evidence is a non issue the question is what did mr maybe mr do maybe on the fake news articles but then none of them was that from the fake news articles well and as far as it being called an article mr foster referred to it to to those press releases as an article once eight email to mr bennett after he had already made his purchase so his reference to it as an article could not have induced his purchase since it came after the fact otherwise it said paris is mine has been featured in these various publications it did not say there were articles it says they were featured and we would contend that that is the type of puffery that is not actionable and and the mere fact that it said three hundred seventy seven also gives an indication that they weren't all written by the publications that i said your time has expired thank you but it's not a problem and we know that your court appointed mr howard thank you for your representation