it please the court good morning your honors and flannery i represent defendant appellant kenneth miten and i would request five minutes to be reserved for rebuttal the i'll start with the prejudicial variance issue the scheme at the trial of this matter differed materially from the scheme that was in the indictment the shell accounts which were the main focus of the indictment were not shell accounts a huge aspect of the trial focused on the allegedly fraudulent use of company assets to pay the sellers which was not alleged at all in the indictment and another aspect that was focused on at trial which the government conceded at the end of the first trial day it had flushed out that day was that there was a misrepresentation made to the sellers that the defendant intended to grow the companies and this was not done putting mismanagement squarely an issue here when those issues had not been put forth in the indictment the defendant was prejudiced by this shift first of all because he had a grant a fifth amendment right to have the charges against him returned by the grand jury and i would direct your honor's attention to the camille case which i did not cite in my brief but i did give notice to the government u s versus camille c a a e l six eighty nine f second thirty one that's the third circuit case right on point where the indictment was dismissed and that was affirmed by the third circuit because the scheme at trial differed from the scheme that was charged a large aspect or a separate aspect of the prejudice to the defendant is what i will call the block and parry prejudice the government was allowed to parry if you will with allegations outside the indictment that the use of company funds to pay the sellers was fraudulent and the but when the government when the defendant attempted to respond by for example putting forth a business transactions expert that would explain that this is not and and that a depletion of assets after this is done is a normal consequence of using seller assets to pay and that this was allowed in the contract when the defendant attempted to put that evidence forward he was not express where was the art where was the proffer where was the offer of proof what this expert would have said is especially with respect to what the contract allowed contracts allowed this was a c j a case your honor and the bill in the business the court was controlling the funding over whether the expert could be retained we had a relatively bare bones proffer because we could not hire him but what we expected him to do was look at the contract and testify that it was not prohibited by the contract so what the district court did do is charge the jury with precisely what that expert would have said i disagree your honor the the court charged the jury that standing alone this is this would not be a badge of fraud but it could be considered with all the other evidence and that a failure to disclose could be considered if it was a contractual obligation of the problem as i have with your project approach variance argument is that at bottom it is if it's not specifically alleged in the indictment then it can't be proved a trial now you have an overarching  used false and fraudulent pretenses to obtain control of the business you have a number of other things that you can we can look at but it's not my understanding of the law  prejudicial variance to say if it's not explicit the the specific misrepresentation or act if it is not specifically explicitly named in the indictment you cannot use it you have to se client gotten wonderful representation from you thank you and i would this is comes out of left field first i'm not contending that the law is that that everything has to be laid out in  but the prejudice was is that the court ripped at the indictment and based on what was not in the indictment blocks the defendant from bringing in evidence to counter and let me direct your honor's attention to the supplemental appendix that twenty one eighteen and the appendix where they got where the defect where the court deny is the expert and states the primary reason why i think this is  admissible is that it does not relate to the charges in the indictment there's nothing in the manner or means or overt acts that in any way says that the use of the company's cash to fund the purchase was mentioned or with the manner and means or was illegal of the supplemental appendix you said you'd expect that mr purcell would testify that it is a natural consequence a normal consequence of leveraging or utilizing the assets to purchase the business and not in itself an industry of fraud and that's exactly what the judge charged well wasn't charged and what was not in the in the case was that the contracts allowed it and there was much testimony by the sellers that it was unfair so there was no testimony yeah i'm complaining about the fact that the government was allowed to put in a lot of evidence and argue about something that wasn't in the indictment who are the defendant was blocked from responding to it because of the limited language of one of the things you mention was the post closing fraudulent acts the the the continued fraud long enough to drain the company's assets and you specifically mentioned  right yes and the dividend was but that was that was explicitly you you received notice of that when the government moved under four hundred four b three months before trial correct  honor and our argument there are complaint there is not notice it's that there was no evidence that the litigation was part of the conspiracy and the judge continually through the trial put off ruling on that you know that you win that that was a prejudicial very i'm i going t the prejudicial brett various cases don't require surprise and prejudice they require surprise or another are you sure about belief so your honor it made the charges a moving target and i'll direct your attention to appendix at eight forty eight where i am absolutely puzzled after the testimony of the seller and engels attorney because there has been no testimony that would put litigation as part of the conspiracy and yet the government was still trying to hang the admission of the coke and of the deposition testimony on the theory that the litigation was part of the conspiracy i'd like to move if i may to the phone call issue i don't really still understand that answer because a page twenty forty five the government stated its theory that the defendants quote frequently use litigation threat of litigation to intimidate the board of this being that put on notice of this aspect of the government's case and there is no tissue on it but i would respectfully disagree that that is the only prejudice that would give rise to dismissal but you're not a lot you're not alleging that's prejudice because it was not in the no i'm alleging with respect to the litigation that the prejudice was it was it was a moving target the judge didn't rule on that and the judge admitted the coconspirators test are the deposition testimony which was a crawford violation i haven't been asked to address that but i would ask rest on the briefs right with respect to the phone calls the process it's undisputed that the prosecution team the case agents listen to phone calls of a pro se defendant discussing witnesses he may call and and other legal strategy the government's interpretation of the the protocol that it drafted as justifying the prosecution team in listening to these phone conversations is inconsistent with everything else in the record and that was happening at the time of that protocol and everything else that would happen with this subsequent mr might that led to the protective order which is found it after twenty seventy three clearly requests protection from the bureau of prisons disclosing to the u s attorney's office and the legal defense work product any contents of discussions e mails telephone conversations between mr mine and potential witnesses and any other material reasonably related to the defense of his case and he accompanied that with another mother his mother was a he called the phone calls your honor is right we're going to his mother's number his mother was a potential witness in the case and his his mother each time he called would hand the phone off to his brother keith who was also a petition potential witness he had been the attorney for the acquiring company and all these transactions  not that your honor that the government had some theory about obstruction of justice but it wasn't pat if he if peace was acting as one of his this pro se defendants many attorneys if he hadn't been suspended at the time why didn't he call them on the privileged phone line whereas i'm allowed on the non monitored phone line he wasn't allowed the only calls he could make on that one were to anyway turning to when tightening  yes so that's why he had a problem is he's seeking legal advice and doing gauging legal discussion keith was and his attorney there's th that the prison can monitor these calls they weren't confidential with respect to recording rival here and they weren't confidential so what do you really have left well i direct your honor to the court made findings that we believed were correct ken ken if i was unable to use i'm referring to the appendix at twenty two hundred nine in the court september twenty fifth order kenneth was unable to use the f t c is privileged telephone lines to make these calls nevertheless he is entitled to prepare his defense with communications with witnesses investigators and experts without knowledge of the prosecutors in this case he says in some submission i have probably have it here and in the rubble someplace that he had asked someone at the prison who to call his mother of something or  or make a call on the non monetary line and he was denied that and that was why he kept seeking these protective order but but then then why wasn't he in screaming that i'm trying to call keith my lawyer lawyer and they won't let me call him a ten year honor he did by filing those protective orders he fired when i commented to imus and by how couldn't have been his lawyer he was suspended on january ninth two thousand findings after listening this i think recordings the district court did make findings in the district one of the things the district court pointed out was that although he had no reason to expect privacy that did not equate to giving the agents and prosecutors consent to listen to his phone calls are confidential calls they were calls about defense strategy and the court found that the government's conduct was overreaching but where the  listens to them they are not confidential all that may be true your honor with in the absence of all the protective orders that the court imposed the court told them in the july twenty eight order you don't need  protective order the bureau of prisons will not give your phone calls to the prosecutor in the context of this case he believed and the court believed that he the court was granting confidential communications how and the court at the end of the house you prejudiced the prejudice should not have been the standard that's where the court erred under weatherford when the when the government intentionally intrudes into defense strategy and to defense communications in this was clearly intentional this they clearly knew that these were legal strategy discussions no prejudice is required and this court and levy has explained why it's because a court cannot determine how the not government's knowledge of any part of the defense strategy might benefit the government so if we decide to leave you and say that prejudice is required and you have that on able to articulate broaches would you you've made that quite clear in your papers or were unable to to know how this impacted if indeed it so you've not made you concede you've not made a showing of prejudice whether or not it's impossible to do so or not if i can speculate as to why there was prejudice but i can only because i don't know what was going in the mind of the government and that's why this court has found prejudice to be an inappropriate standard start with the variance there was no variances about the contrary to the representations that the appellant makes it is a breeze the government's theory of this case was clear and consistent throughout the pendency of the matter below the charge in the initial indictment charging the superseding indictment and it was consistent through the trial all the way to conviction that theory of the case was that the appellant mr miten and his coconspirators used false and fraudulent pretenses to gain control of these victim companies didn't pay the victims the full amount promised under the contracts go to the companies and left them in a state of economic ruin by the time that the victims attempted to retake control of the companies mr might it was clear as day throughout the pendency of this that now all of the evidence that the appellant characterizes as a chef characterizes a variance is really just what i described as it's evidence and i think judge barry's line of questioning the counsel for the appellant really gets to the heart of this issue this was a clearly articulated detailed scheme in the indictment and all of the evidence that was introduced at trial went directly to prove that scheme as charged and that alone your honour's is sufficient to end this in surprise a trial were clearly captured by the language of the superseding indictment the notion that there was going to be evidence of post closing conda was explicitly referenced in the superseding indictment litigation was explicitly reference superseding indictment and the notion of the source of funds in the promises to grow come grow the companies after closing was clearly captured in the language and superseding indictment referencing false and fraudulent pretenses so then if we take it a level lower we go and look at the specific language of the superseding indictment or again at a point where we can and this inquiry because the indictment superseding indictment explicitly referenced these types of evidence but if we want to take it yet another level down and go to the prejudiced question of your honor's ask the appellant about briefly i think judge various questions regarding the four a four b motion again get to the heart of the issue if we take a step down and we look at that for a four be motion which was litigation as part of the scheme to defraud explicit references to post closing condom explicit references to these aspects of evidence that were introduced at trial that the appellant now claims was a surprise and so even if we were to for the sake of argument assume that there was some sort of variance our inquiry ends on april the twenty eighth i believe of two thousand and nine when the four a four b motion was introduced because if that point was filed because of that point there could be no argument prejudice the appellant was on clear notice of all of this evidence and then even if we were to take a step beyond that and look at the specific areas of prejudice that the  briefs all of those fail on the merits when you look at this record and i'll just go through them very briefly want to touch on them with regard to the business transaction experts business transaction expert the proper for the business transaction expert suggested that the appellant wanted to have the business transaction expert testify as to matters that were not in dispute and not relevant before the jury the question regarding the source of funds issue could be used to pay the purchase price and why would that be relevant your honor the issue wasn't whether or not that was the issue wasn't the content of the contract the issue was whether or not allowed the victims to believe that they were going to be paid with funds other than those markets the contracts allowed it wouldn't that be the controlling consideration the controlling consideration your honour's whether or not there was a false and fraudulent pretense by at trial and the issue here is whether or not the victims were misled in some way to believe something about the source of funds that was untrue and to that extent and you're saying you would need an expert to say whether the contracts allowed for the use of the funds or you would need an expert and you searching as leverage buyout in your honor what i'm saying is what you really would need is an expert to get to the question of whether or not the victims were misled which you need to get to that issue is what the jury had in a sense and that is access to the extensive detail testimony of the victims and the day and a half of direct testimony of the appellant and self which in the instance of each victim were the two parties involved in the negotiation that's what the jury needed that's what the jury had there's no prejudice with regard to the business transaction still can't understand how that could not be bad five selling my business now i'm maze that i have to pay for it you know the nuts because i don't understand defendant through numerous false and fraudulent pretenses and the source of funds was just one of them the false name was another one of them the promise to do the promise to grow the companies was another one of your numerous false and fraudulent pretenses the  appellant deprived of the victims of their companies without making full payment as promised under the contract and then gutted them after he took control of them use them as a cash cow and then left them in a state of ruin when the victims attempted to take control  cash cow that's it that's questioning the source of money but you're saying that there were that representation of the source of money before the completion of the transaction the evidence that we introduced your funds was that several of the victims were surprised to learn and when they found out that they were being paid through funds that were taken from the company itself we also introduced the stock purchase agreements which we  submitted to the jury offered a clear inference to the victims that the source of funds was going to be coming from some third party at the williams on private equity group or in case of machine a brother's  let's go to the phone calls issue certainly are pretty clear the district court was surprised at least that you were in fact monitoring mining the phone calls that the prosecution team was monitoring phone calls yes your honor the district court  express that expressed surprise of this this and and i think it's important to put that surprise in the context of the district court's conduct and i think the government's conduct throughout the entire pendency of this very complicated matter from the minute this case came before the district court it took great pains it took extraordinary pains and i use the word herculean in our briefing and i think it's appropriate to protect the appellant's rights as incarcerated or say th government smits it and there's no there's no doubt it's clear on the record the district court i believe had a different view or different understanding of the first paragraph of the protocol and the government the government nonetheless  submitted throughout that that protocol makes it abundantly clear that the appellant was required to go through the established channels at the f t c if he wanted to have any confidential private communication with regard to his legal defense the disk could the defendant have gone to the bureau of prisons or the federal detention center and said add my mother's phone number to the privileged call i can make a phone call to her because i'm going to be discussing strategy your honor i would know that the appellant actually did do that after this issue came to light i don't know how that squares with bureau of prisons established procedures i'm not completely fluent in those he apparently did do that after this issue came to light but i also know that the district court in painting a steady hand on this very complicated issue throughout the pendency of the litigation instructed the appellant after he appointed  standby counsel instructed the appellant order the balance to make ample use of ms flannery and facilitating various aspects of preparing his defense so to the extent that he wanted to have a communication and he wanted to keep  confidential and he couldn't do it directly through the normal f t c phone lines he certainly had access to his standby counsel and he certainly had the opportunity to have a privilege an unmonitored phone call with his counsel and to proceed distinct from the situation in a couple of ways first of all and i need to emphasize this because it's very important they all all of this court's cases in that realm addressed communications that are clearly subject to attorney client privilege and that is simply not the case with any of the communications at issue here and so for that reason we're not in the realm of a stanza the other reason is if you look at the stands if you look at the fact barron's and his stands only you're looking at fact patterns where it's abundant y clear that the defendant in those cases has some reasonable cause to believe that his communications are so or are confidential are subject to some sort of privilege or protection and the government informers in those cases have some legitimate reason to think that they are not and it's the exact opposite situation here your honour's and this situation given the protocol given the context of the signed waiver at the f t c and given the fact i think it's important to make this point as well given the fact that the record below find the record below clearly shows that the appellant was aware that his paws were being monitored the district court made a finding in its ultimate ruling on this  recordings reviewed indicated on multiple occasions that the appellant was aware that if calls are being monitored and instructed his brother not to address certain matters on the phone because i don't want to talk about them given that context we're not in the land of the stands i see stanza where the government was secretly spying on on our conversations between the defendant and his lawyer we still found no sixth amendment no no intrusion into the defense good morning may please the court my name is assisting the united states attorney joseph conn and with our remaining time i would address the the argument regarding the sentencing guidelines to civically the issue of loss amount as calculated under section two b one point one b one j and we would ask this court not to disturb the finding of the district court because specifically mr miten has not met his burden which is required of showing his clearly erroneous the district court's factual findings specifically that mr miten is intent when he committed reasonable estimate of the intended loss in this case based on an abundant record which was obligated to go through and weigh propre lee moreover if there were any errors that were committed by the district court in this case we would maintain that those errors were harmless  for the reasons we outlined in our brief and the reasons i can go through for the court this morning to begin your honour's the court appropriately found that be the appropriate loss amount in this case to be used for purposes of the sentencing guidelines was five point seven million dollars and that was based on intended loss amount and obviously if the intended loss were to be higher than actual loss that would be the appropriate measure is the contract price exactly honor and what the court was faced with doing after having the benefit of a of an abundant record from  trial and sentencing and other proceedings in the case was to try and ascertain would be the best way to capture that greatest harm that the guidelines want to be recognized in the sentencing guidelines and so what the court was presented with were a number of options in making a decision about which option to choose from the first option was the option the governor that the court ultimately adopted which was using that sale price the price at the defendant himself mr miten himself articulated as what the worth of that company was when he sought to obtain it that was the first theory or or or possibility presented then the government presented two measures of actual loss that the court could also consider if the court did not agree with the government's reasoning because the government presented one calculation based on a number of records as well as estimates from from the victims which required the court to find those estimates to be credible and reasonable and s and another theory or another version in which the court rejected those estimates there were still hard  elves is the restitution amount the actual loss here under the government's theory that's correct you know what i don't think so the i thought the actual loss was four point one for purposes of the calculation but for purposes of restitution government's view was that as victims of the same fraud under the under the under title teen but the court order restitution for those other two victims the court disagreed and therefore the actual loss for restitution purposes was different your view of the court is correct  four of these alternatives were certainly in excess of two point five million dollars which was the threshold amount for the application to be one point one b one j the only other alternative that was presented to the district court in terms of from any of the ascertain actual loss and in fact was consistent with the strategy that was presented because while mr martin as was as was in is his right to do disputed his guilt maintained that he did not intend to defraud anyone of the jury rejected and certainly the dis court rejected that view and the district court made a specific factual finding that the defendant did obtain to obtain the full value of those companies so the only other alternative that was presented to the court was a figure that was less than a tenth of what the court going to look at the actual worth of the approximate or estimated worth a reasonably estimated worth of six companies that were doing business that were being bought in roughly two thousand and five two thousand and six that those six different companies that were doing business with various vendors were worth more than two point five million dollars there simply isn't anything to say yes that was unreasonable and what what what what cannot be ignored is the district more specific factual finding that mr miten intended  to cause the two to obtain the full value of the company now mr might and so to to to to point to some sort of error makes claims about the court making failures regarding certain offsets and i would note at the offset along with the other organs we made about harmless errors that as we've identified the the claims that been made in the briefings if you were add it to add up those offsets in terms of money that mr martin disputes as you know money that was really  i paid to the victim you can look at the estimates you provide for example benny's cheese where he claims that more money was given to any cheese then than they bargained for which again would be inconsistent with a finding that he defrauded that company that if right in saying that he has to receive credit for two point seven million dollars of payments and his different things and inventory for the eighteen level unhandsome and to drop to a sixteen to be under two million five and he only alleges and i think this is quite confusing from the appendix i know it's but the one simple exhibit won't go but it didn't seem simple to may he only alleges at best let everything everything look at the figures in the light most favorable hint two point zero four million dollars so that even under mr might  figures he's still not up to the two point seven he needs to drop the enhancement so we can get you know level a level thirty three and a sixteen and lower sentence that's exactly right his record is a well it was well established that if certainly argued against that interpretation of trial but there's no basis for find additional court's disagreement with his characterization his interpretation as clearly unreasonable i see my time is up and i thank the court thank you very much to start with lost the court's finding that the face value of the stock purchase agreements was the intended loss was clearly erroneous because first of all the sellers were paid almost a million dollars and that amount should be subtract from from the total the court also included seven hundred fifty thousand dollars which was a building purchase that was never consummated and it was collateralized so even if it had been consummated that seven hundred fifty thousand dollars shouldn't have been included under comment three to two to be one point one because it was fully collateralized and to address judge barry's point about harmless error the inclusion of the four a four b transactions which was procedurally not just unreasonable but outrageous that added two point seven million dollars the judge actually didn't even make a specific finding as to what the loss was on those companies the court couldn't of there wasn't enough evidence in the record to ascertain what if any loss there was but the judge just arbitrarily said that adds two point seven million so it certainly would have brought him down to two levels or even fo levels had the court not clearly erred in using the peer face value of the stock purchase agreement the actual loss that the government calculated and was and that was used in the restitution figure was very odd it was the amount diverted as well as the accounts payable at the end of the defendant's control and that was double counting what was diverted is equivalent to what wasn't paid out to the vendors and it also doesn't take into account that there were substantial accounts payable owed by these sellers at the time  the defendants took control of the company  to go back to the variance i would urged your honour's and respectfully request that you review look back at the standard because surprise i submit is not the test for prejudicial variance for example camille spillover effect was viewed as the prejudice judge perry's shock in response to the cell company quote that  why an expert would have been so important under seven o two it's very important in allowable for an expert to testify as to things that are not in a lay witnesses ordinary experience and it should not have been shocking to these witnesses and the to answer judgement eskies point no one could look at these contracts they were two inches thick and they were silent as to where the money was coming from so you needed an expert to interpret that you needed someone who could who could take that contract and explain to the jury why this wasn't shocking and why it was not a badge of pride with respect to the phone calls judge brinn esky asked why didn't the defendant go and try to keep  his is phone calls privileged well he was he tried and he could not use the the privilege line remember he's a pro se defendant and under the sixth amendment he has the same we're right i i'm not represented i want to call on the privilege line and he could have called you that takes away from his forever right here on or he has a constitutional right under forever to prepare his defense now that's right that's why you could have called counsel and i don't know the difference hybrid counsel stand by counsel you only functioned very much as his lawyer and he could have called you your honor no impediment your honor perhaps if you had been the district court that's what you would have told him but he was told by the district court in that july twenty eighth or they're not no no no when you read this whole record this was not the were on unknowing  you look at the court's orders the court understood and conveyed to him that his calls would be protected from the prosecution team the prosecution should have been using a taint agent they should have informed the court at least  parte that they were doing this and the interpretation of his phone calls as as conveying that he knew they were being listened to by the press accused in is it runs remember these phone calls were limited to ten minutes and they had to be paid for so for example in the expert i put in my brief he does say i don't want to talk about this on the phone i've written you a letter but then he goes on in the next sentence to talk about another witness that he wants kind of the ahead i would just suggest that the this is a situation where the government very much wanted to convict the court very much wanted to incapacitate but the ends don't justify the means and mr might ins rights were violated time and time again