good morning your honors may please the court my name is beth farber and i am here representing the appellant in this case harvey newkirk we raised two issues on this appeal in which we briefed i would like to take my limited time this morning to address only the second issue regarding whether the district court abused its discretion in excluding the defense's expert testimony i want to start by saying that the government's case against mr new kirk was weak he was acquitted of the conspiracy and of the identity theft which signaled that the jury had rejected the testimony of the government's two major witnesses the cooperator and his father who was the primary victim of the fraud we believe that the jury convicted you think it signals a rejection of their testimony on a wholesale  basis i believe so your honor because if they had believed junior darden darden jr's testimony they would have believed that mr knew kirk had agreed with him in a knowing involuntary way in a complete way to commit the fraud and understand why they couldn't have rejected the testimony about an agreement but nonetheless found that mr knew kirk was aware of some of the elements of falsity that were never part of the narrative going forward in terms of the wire fraud well if you look at all the evidence and we don't know exactly what the jury did but if you look at all the evidence what makes the most sense and of course a split verdict is in and of itself not a problem but the evidence that we believe was relied upon the that the jury relied upon was the evidence that came from the victim witnesses who testified that they received from mr new kirk that he passed on false information that he didn't authenticate the information that he made statements to them about the collateral this was what their testimony was and about the restricted stocks and that it at certain points he well and also that he continued to stay in the deal after the spoof email and after the two bank of america statements were pointed out to be identical senior testified that he did not authorize mr ngukurr to represent him and if the jury had believed that they would have we convicted him of the identity theft we don't we don't get  speculation juries can acquit or convict for all kinds of reasons our focus is on this conviction and since you're not challenging sufficiency we're going to look at the evidence in the light most favorable to the government in considering your two challenges that's a great writers and i so we would consider assume that the jury believed seniors testimony and now you can make your argument as to why an exclusion of the defense expert because he was guilty but because the jury lacked the necessary information to evaluate his defense the the the expert would have offered testimony regarding the duties and obligations of attorneys in a deal such as maxim the duty of loyalty to his client the duty to represent his client and this was outside the common knowledge of while there was a transactional attorney who testified he could have been asked about a duty yes your honor i would like to address the lay witness issue and i would like to us is specifically in the context of a lip buck case because i believe that this case is directly controlled by this court's decision united states v let fuck first of all the idea that these were lay witnesses is an misnomer they were hostile government witnesses and the question is now is  by the the defendant should not be put in a position where he has to rely on hostile of posing witnesses to provide the information to the jury that they need to evaluate his defense and let fuck as in this case mr newkirk should not have been put in a position where it was a hostile witness that was testifying as to what was material to his decision and what he relied a problem for you here is that it's an evidentiary ruling the judge has enormous discretion and we were not going to reverse unless you can show prejudice and it's in that context that the question is whether when there's a witness on the stand with a financial background that makes them competent to explain the transactions and the terminology presented by that case you can claim you're prejudiced when you know you didn't avail yourself of the opportunity to have them tell the jury what you say is the common practice in the industry the victims represented for example that they were relying on what mr ngukurr provided to them and that many but the question is whether you had witnesses with sufficient financial background to testify to the matters you say you wanted to put witness on the stand to and we're suggesting that you would piers that you did and so we not sense how can you show that you were prejudiced we were prejudiced your honor because we were entitled to have our own expert to explain objective lee and not as part of the government's case what the duties were what materiality was in that industry what what a restricted stock was and whether it had value as collateral and whether the the practice of shopping collateral was part of the industry practice these were all things that the government used to suggest to the jury that mr knew kirk done had purposely done things wrong that we're not suppose that would have been part of the evidence of the expert for example the government repeatedly told the jury that restricted stock is worthless restricted stock is not worthless it is it can be used for collateral if a lender wants to accept it as collateral the government told the jury that shopping collateral to more than one person at a time showed an evidence of fraud that is not correct that the expert would have said that was industry practice the government inferred and so did the witnesses that they were relying on what mr ngukurr presented to them to be accurate where is the industry practice is that everyone does their own due diligence and i would say that the victims in this case that were highly sophisticated people who had their own agendas they had their own team of lawyers and actually consciously avoided knowing was false it's not obvious to me how your expert would have been how that testimony would have had any bearing on those two factors because i didn't understand him to be suggesting that anyone acting in either of those circumstances would have been acting consistent with industry practices which what's your argument with respect to that well in terms of actual  knowledge the the expert would have said that it was not mr new kirk's duty to investigate his own client not to investigate not to convey information he actually knew well but if that was one theory that the jury was told they could convict on the other it was conveying information that he consciously of we didn't know what was false well your honor i think those two things are related particularly in this idea that mr knew kirk which was either had a duty to investigate authenticate which he did not or that he had some kind of fiduciary duty to the victims to make sure that what he conveyed was correct and here you do you can't be conveying false information to induce conduct that's true you cannot but if if the jury believed that he had a duty to verify his client's information then they may have felt that he ury on which the judge told them they could convict i understand but the there was a there were there was a there were suggestions in the record that the victims expected that what mr newkirk was conveying had been vetted and that they were relying on it and in turn no my time is up in terms of the conscious avoidance use your two minutes now if you want to can  use one minute if the and there were the two pieces of evidence which mostly supported the conscious avoidance verdict was the continuing to represent the gardens after the spoof email was happened and because of the when they discovered the two bank of america statements were identical and in in that case that the  expert would have testified about the duty of attorney to continue to represent his clients and to represent their interests and it was not just mr newkirk that continued to represent the darden's but the entire law firm of bryan cave in or just like to say as in little fuck mr newkirk should not have been put in the untenable position where it was only the victims and only the hostile witnesses who were allowed to convey the concepts and the market the concepts of his duties and his role in the event and the industry practice and the duties he owed to the victims and that is why just as in the new kirk case this courtroom reversed mr newkirk's excuse me led by case reversed mr new car kirk's conviction thank you thank you may please the court my name is sarah paul and i'm representing the government on appeal i also represent the government in the district court below the judgment of conviction in this case should be affirmed first the evidence in the case fully supported a jury instruction on conscious avoidance and second the district court did not abuse its discretion and excluding the defense's proposed expert witness in this case the argument was never that the defendant was guilty because he was a transactional attorney or that he had he was guilty because he had as an attorney he had heightened obligations to ferret out the fraud of his client rather the government argued and the evidence fully supported a finding by the jury that the defendant was guilty because he was a participant in the fraud that was being committed that's what the evidence supported in this case and the issue of conscious avoidance there was more than sufficient evidence to support a conscious avoidance instruction there was overwhelming evidence that the defendant had actual knowledge of the fraud and there was also ample evidence that he consciously avoided knowing about it there was evidence that the defendant was confronted with sign after sign that junior was attempting to purchase maxim magazine through fraud and that he consciously avoid it confirming that fact and any one of those signs and the defendant's response to being confronted with them was enough by itself to support the conscious avoidance charge so what in your view is the strongest evidence if the jury the other verdict suggests the jury may have had some doubts about some of the evidence the government presented and a lot of the evidence seemed to go to actual knowledge i would be concerned maybe that the jury might have thought well i'm not sure he really actual knowledge but something short of that was ok so what would you say that is the strongest evidence that he looked the other way rather than finding out the truth about the transactions that he was participating in yes your honor so i think that the strongest piece evidence that he looked the other way was the testimony of brant watson the broker at merrill lynch who testified that he spoke with the defendant and he first told them that the bank statements that were being shopped around were fake and then he also testified that he told the defendant that internal investigators at bank of america had learned that the account had been closed and didn't belong to the father and if the jury edited watson's testimony as they were certainly entitled to do that was enough standing alone because in the face of being confronted with that from mr watson the defendant kept right on shopping the deal he didn't take any steps to verify or dispell the information he learned from mr watson he didn't tell his law firm about it instead he kept on shopping the deal and shopping around the think the fake bank statements so that enough that was enough by itself to support the conscious avoidance charge there were other facts as well presented in evidence that supported the conscious avoidance charge the spoofed email for instance there were the defendant was confronted with multiple red flags suggesting that that e mail wasn't real nevertheless when he got it instead of doing anything to investigate or taking even the minimal step of confirming orally with mark weinberg that the release of the funds had actually been authorized he released the money to the sellers of maxim and there was ample evidence for the jury to find that that was enough as well to support the conscious avoidance charge on the issue of the the defense's proposed expert witness the concepts that the defenses proposed expert would have testified about were really not contested in the case  the meaning of the concepts the meaning of restricted stock the meaning of pledging collateral that wasn't contested what was in dispute was whether the defendant committed fraud by lying about these uncontested concepts what about the use of restricted stock as collateral or offerings that same collateral to several different potential investors at the same time they argue that that would have benefited from some neutral explanation do you disagree we do disagree on the issue of restricted stock and the testimony was that the defendant lied about the restricted stock by describing it to lenders as freely tradeable and freely marketable when in truth it was not not there wasn't a dispute about what restricted stock was there was a dispute about how the defendant had described it and then on the issue of due diligence when when the lenders did conduct due diligence and everyone agreed that the lenders had an obligation to conduct a diligence and there was plenty of testimony about that when the lenders conduct due diligence and confronted the defendant with the fact that these stocks are actually restricted and not freely tradeable the defendant then lied again and he said well they have value because seniors are going to retire from these boards and so they will they will be tradable but that wasn't true either and there was testimony on that on that point as well and so and then on the on the issue of shopping collateral to multiple different lenders it wasn't everyone agreed that promise that shopping a deal to multiple prospective lenders simultaneously wasn't standing alone problematic the problem here was what the defendant was doing he was promising investors a first priority and a sole interest in the same collateral which is bogus collateral that had already been guaranteed to other investors and he wasn't disclosing to the investors that it was already pledged to other p so he pledged the same platter all to open gate which he then promised to  contest that they could have a first priority and sole interest in that same collateral and he didn't disclose that the collateral was already promised to others so that was the dispute not that the general concept of what it means to shop collateral but what the defendant did with the collateral that was an issue in this case firm that wasn't a reason to exclude a conscious avoidance instruction what's important to remember here is that the defendant had many aspects of the deal from his law firm he knew a lot more than his for about his law firm did even after the e mail was discovered there were things he did not tell the law firm about his conversations with brant watson he didn't tell his law firm that open gate had filed a lawsuit against sr in relation to the deal he didn't tell his law firm that senior had fully withdrawn from any participation in the deal and so to the extent the defense's argument is that the fact that the law firm continued with the deal that has some significance with respect to the defendant the government disagrees because the defendant was differently situated and knew much more than his law firm  the concept of conscious avoidance cannot be fairly applied without understanding the context of the situation in which the defendant was acting and that is the information which we submit our expert would have supplied and which was lacking in the record i want to just address a few of the specific things that the government argued first of all  testimony was a disputed by mr knew kirk there actually was no record that he had ever spoken to a compliance officer at merrill lynch which you might have expected there would have been had he and in addition to that there was no record that he had called and left a voicemail for mr new kirk which mr ngukurr which he had testified i would also point out that during a lot of this period of time mr new kirk's wife was in the hospital gravely ill and he had a newborn baby who was in intensive care for thirty what what's the point here the point is that  the conscious choice yes the guy the government has misrepresented in its argument here that it it its position at the trial which was constantly telling the jury for example that the the restricted stock was worthless which was incorrect and also in terms of the pledging there was thirty million dollars worth of stock something like that so pledging the same collateral when open gate only had a three point one million dollar in security interest i would just like to end by saying that as in live fuck mr new kirk was intitled to have expert testimony to set forth the objective the objective industry practiced the fiduciary duties and to address the issue on the  question to provide information on the question of materiality this was not harmless error it was an abuse of discretion the sick aces cited in the briefs support the admission of expert testimony and in light of the weakness of the government's case and the very real chance that mr new kirk has been wrongly convicted we would ask this court to grant him a new trial thank you very much thanks to both sides will take the case