the court's failure to take some remedial action after the government witness katherine fung broke down in front of the jury and the government argued that there was not an adequate objection i can say that the court should have not allowed miss fun to testify period if you recall the defense did at the outset make a motion in limine day and expressed concern and one of the basis for the most eliminated was because the evidence of the ponzi scheme was irrelevant and i think there was at least a tacit admission admission acknowledgement that the evidence was highly prejudicial and would require a mini trial on whether or not she was involved there was no request for a cure and of instruction was there there was not your honor and in fact there was no point when someone actually said objection it was just i think the if the closest we got to that was this is what i was afraid of or something along those lines that's correct your honor however the court specifically referred back to it's that defense counsel specifically referred back to his motion in limine and he had specifically said he was concerned about ponzi scheme victims testifying and the court has a duty under federal rule of evidence for a three to make an assessment as to whether evidence is and truly prejudicial and the probative value and i think the pope would evaluate her emotional outburst was no there was no probably devalue as your position whatever the quality of the specific objection that the district court  was very much aware of the issue yes and i think that it was clear that the court was aware that the defense was objecting to the outbreak and was concerned that the outbreak would prejudice the jury and i think that was a fair concern interject could you please put your position in terms of the standard for playing here or if you so that we would have to say that but the failure to su do something about was was there that it was plame there was substantial and that it affected the fairness and integrity or reputation of the court if it's not correct yes i don't quite see how i don't quite see on this record you meet that last element so i do think that there was an abuse of discretion and there was an adequate objection and i think the court made it very clear that it did not believe that her crying had anything to do with the ponzi scheme or that it was evident so that an objection would have been futile and the failure to object should not have waived this error but i do think the was plain and it was very prejudicial it should have been evident to the court that breaking out she was talking about e mail communications between her and this whole about purchasing the c d s and about how ms hogle encouraged her or persuaded her to purchase the c and then after she came back after a break down she talks about how she invested one hundred sixty thousand or one hundred eighty thousand dollars how there was an f c c investigation and i don't i think the jury was aware and the objection to that later testimony no your honor but there are already been in the objection what i'm saying is at that point it's prejudicial because there had already been an objection and said i'm concerned about this emotional outburst and i think that was sufficient to put the court on notice that this was a concern of unfair prejudice the court should have just done a simple curative instruction and said it's irrelevant disregard emotional outburst and i think that it was prejudicial because i think it was not lost upon this jury that  they later when there was an i c c investigation and this whole goal was involved in persuading her device c d s and how to eight point five percent interest rate and it was unnecessary even if we were to say that it i want to move on to the next issue if you're if that's ok so to you ok the next issue is this court the district court giving the defense's choice of either forego putting on any evidence relevant to a mental state and striking previous evidence of a mental state or the court was going to allow the government to put on evidence of the ponzi scheme and i the thing i want to address at the outset is i don't see how the defense opened the door simply by presenting evidence of missiles mental state and that she was having a nervous breakdown it would have been more appropriate if the defense  to some reason other than the ponzi scheme but the defense didn't open the door merely by providing evidence relevant to a mental state the sense i have from this record is that the district court  was not concerned that the door had been opened at that point but that the door had been opened repeatedly throughout the process of the trial what's your sense of that your honor i really actually disagree i think the court commented and noted the court said it the defense got close to it and the government argued to the defense or got close to it but the court never specifically holt of the fence had already opened the door that's why the court specifically said well i think i'm going to say that i'm going to strike all the testimony of the mental state that she had a nervous breakdown that she just could not function that she was crying twenty four seven which preclude the defense from putting on any other evidence about that otherwise the government would be able to bring in highly prejudicial irrelevant as the government acknowledged irrelevant evidence of the ponzi scheme and the government already hot evidence that there was an f c c investigation was that the only method of the defendant the mother's testimony i don't think that record gives any indication of what other evidence might have been available but it was the strongest it appeared to me from removing the record there was no other evidence really that was her only evidence that she had a nervous breakdown and couldn't function and was crying twenty four seven she wasn't allowed to present evidence and i don't see how it opened the door to evidence of the ponzi scheme it might have been ok for the court to say well defined so you can't argue that her having a nervous breakdown was because of some other reason that might have opened the door but this precluded from bringing in any evidence to show a nervous breakdown which is probably the only defense she had to the please a court ben kingsley for the united states of america i want to address the i'm nervous breakdown issue first just really quick quickly to clear up a couple of things that counsel said first it was never the government's position that the fact that the defendant was under investigation for her role in a ponzi scheme it was never our position that that was irrelevant it was relevant it was just something that we knew that if we wanted to evidence on this is all in at the motion in limine a hearing where this was  result in a much longer trial and would result in the defendant being able to put in a bunch of evidence or having to put into a bunch of evidence regarding her role in the ponzi scheme at its core the government's theory was that the defendant lied on her tax returns for two related reasons one of them was to minimize her role in this organization that was being investigated by the f c c and that she herself was being investigated for and the other was because she didn't want to pay her taxes and the government put into evidence evidence of the c investigation but agreed at the outset not to identify the fact that she herself was under investigation and the the impact that that had on her and her mental state that was the decision that the government made and the district court approved that decision and that's how the the case was tried and i think the court is right that throughout the trial the defense made various suggestions or opened the door in various ways to the to the inference that she herself was the one who was under investigation for the ponzi scheme the nervous breakdown was the point at which the government couldn't and the district court rightly ruled that this couldn't continue that we could continue to make a misleading record in front of the jury about what had really happened in the summer of two thousand and nine and specifically the nervous breakdown which was testimony from a mother who as defense counsel admitted below was not a doctor it wasn't a medical diagnosis it was just a description of her state of mind that she was essentially an emotional emotional wreck at that time was well wasn't that far fair testimony that she was distraught that that period of time you certainly could cross examine the fact that the mother is no expert in the there are all kinds of reasons why her observation may not be accurate and may be overstated but is it an overreaction to just say you can't have that testimony without also going into the ponzi scheme no your honor and i think there's two answers to that the first is that it was prejudicial the testimony was prejudicial in that it followed a long line of attempts by the defense to paint mishandle as a victim without actually explaining what was going on at that time and the district court found that and said that this is prejudicial under rule four three but the district court's core ruling was that this was misleading and need to be put into context because the cause but just help me because it seems like this whole is main defense was lack of willfulness and so it's important to allow the theory of defense to come through in any trial and it seems like based on her view of the record any time evidence regarding her state of mind came you or your the government's lawyer argued that this whole goal opened up the door to the ponzi scheme and so i'm just trying to figure out how was this whole goal able to present a complete defense  including her theory of the case when every time she went in that direction there was objection posits that there was there was a lot of other evidence of willfulness that she put in her one of her primary defenses was that she was attempting to seek something called currently non collectable status from the i r s and there were a number of witnesses that went to this the idea being that she thought that she wasn't going to have to pay any money to the i r s and so what did she care her son testified about her state of mind and her grandma seizures that she was suffering during that time  her mother testified about for a long time about the various things that were going on in her life it was just the point at which she says she has a nervous breakdown she's a rack she can't function and i want to be clear what the government proffered it would get into evidence wasn't we're going to prove that she's it's we're going to prove that the thing that was driving her mental state at that time was the same thing that caused her to misreport her income on her tax returns in other words she she gets sued by the f c c the receiver takes all of her assets and  and to the extent it's true that she was that her state was as her mother described it was being driven by the very conduct that then drove her to falsely file her tax returns and i think it's helpful to imagine a different testimony about mental state for example let's say her mother had testified i saw her the day that she walked her into a tax repair and she was really drunk and there's no way she could have known what she was doing at the time the government's response wouldn't have been that opens the door to the ponzi scheme evidence the government's response would have had to deal with that w examine it in various ways but it's not the same thing as saying she was an emotional wreck she was an emotional wreck because the f c c had sued her for her role in a ponzi scheme where the government is being the doctor at this point and that the source of her emotional through trial is of the fact that she used to involved in this investigation in the ponzi scheme as opposed to something else that was the government's theory and in fact defense counsel essentially conceded that below during the recess in which this was discussed the record on the record he said i stated in my opening that she was that her world caved in when the f c c and the receiver came and i agree that she was a mess the defense counsel then went on to say this isn't a medical diagnosis i'm just saying that she was a mess at the time i don't think there was any dispute that what was going on in her life at that time was that her employer that she worked for for ten years had been sued as a ponzi scheme that a receiver had taken all of her assets personally evidence that the government didn't get into when the defense did actually through several witnesses raising the fact that the defense's own assets were  seized it was her world caved in because she was suspected in a ponzi scheme and she was being investigated there's a lot of evidence the government would have tried to get in at that point but it wouldn't have been about her being responsible it would have been about what was going on in her life at that time and how it affected her mental state and that's why i started by saying it was all relevant in the first place and i think it would have passed a fourth rebalancing originally but we didn't want to go there because we didn't want to have a whole separate many trial and i think the defense would have fairly been able to rebut  another point on the district court and this goes to the court's question about precluding sense the defendant could have chosen to not strike this testimony i think the defense got something of a windfall to be permitted to rewind the trial a few minutes and allow that last bit of evidence to be taken off the record and keep the government from what i think at that point it could have fairly done in any event the going to tell me what the government would have done the government would have probably put in evidence in the proffer below is that we would have put in evidence that she herself was sued by the f c c and was being investigated for this ponzi scheme that her clients were calling her and i think government counsel proffered this below asking for where their money where their money was that the witness katherine fung for example who broke down there were lots of people who bought c d s from the defendant who now were calling her and asking for their money back and that's it that's in the record there's also in the record which we put in at sentencing which the district court ended up not considering as part of it sentencing was evidence that she had obstructed the s e c investigation and told her daughter not to talk to the s e c investigators and then we would be here arguing over whether the district heard committed error by putting in entirely for all three evidence would we not would not be the question before the court now and that's what the district court said below is that by by doing by the defense trying to have it both ways and put in evidence of all this stress that she was under during this time but not let the government put in the explanation for why she was under th stress was going to cause it was going to be mission on appeal either way think the district court rightly said this is what you're going to complain about but i think the district court would have been right in either direction given the testimony one other thing that i want to respond that the counsel said is the cross examination of her mother i don't think fairly could have avoided getting into this at the point in time when she says there was a nervous breakdown i don't see how you cross examine that witness without testing that statement by asking what was going on in her life that caused this particular mental state it's it was completely out of context and needed to be put in context for a felt fair record to be given to the jury to me about the sentencing enhancement or your time goes  e she had a two level bump because it was determined that ten at least ten thousand dollars came from criminal activity that's correct  and what's the guidelines say in terms of what do you have to prove in terms of the extent of the criminal activity it sounds like you didn't pursue that with respect to the ponzi scheme i'm just trying to figure out what was the dischord adequately able to make that determination so that it was not contested at sentencing that the income was derived from criminal activity it's paragraph four of the p s r says the money came from a ponzi scheme and the defense in fact in their sentencing filing below agreed with that and made argue made the arguments essentially that while she didn't know at the time she was earning the income and or that she had to have been involved in the criminal activity herself  argument now is the guidelines don't require that the guidelines on their face just say that the income was derived from criminal activity and they don't require any mens read the guidelines don't have a general mens rea requirement this court in a number of opinions has said it doesn't read mens rea requirements into guidelines that don't have them and there's a lot of guidelines that do have requirements and i cited to some in the briefs one that i didn't cite in the briefs that i think is really directly on point is the structuring and handsome and which is to as one point three and inclu the district court found that it would have to find that she was involved in the criminal activity as i think it was fair for the chicago to say she had to you would have to have an a guideline that she do the sentencing commission must have meant that she was involved in a criminal activity and therefor necessarily knew and even the guidelines the government talked about to us one point one regarding money laundering at least requires a knowledge on and i think principles of notice and fairness require a knowledge element i think the evidence doesn't support a finding that she was involved in any criminal activity and i want to address a couple of other things the government said the government said that they wanted to preside provide evidence of the ponzi scheme and i didn't see anything we were talking about excluding the defense witness and by the way the court struck all the mother's testimony so none of that testimony came in the government said it wanted to enter duce evidence that the reason for the nervous breakdown was because of the ponzi scheme they didn't say it was going to limit it and not talk about the ponzi scheme and the government and the acknowledge it's not relevant and that's an e r volume two sixty five and i would urge the court to look back at the son's testimony and i can provide that in full in the record i don't believe he said gave any basis for mental state and the other thing i want to point out is why is it relevant why she had a nervous breakdown it doesn't that is the court pointed out the beginning it doesn't matter what the reason is what was her mental state she should have been allowed to provide that evidence and i asked the court to reverse her convictions on these grounds thank you very much appreciate your presentations here today both coun the case of united states versus hulk will be submitted thank you very much