good morning your honour's joanna schiavone on behalf of the appellant robert ferrante may it please the court i'm going to try to reserve three minutes for a bottle and i'll keep my eye on the clock so i subject to the court's other questions i plan to focus my time today on the jury instruction issue  but obviously i'm happy to answer questions on any of the other issues we've raised a number of complex sentencing issues as well in addition to evidentiary challenges so i think with respect to the jury instruction issue a key frame here and it's understandable how the district court came to its conclusion that we contend is incorrect because of the timeline of how th circuit law evolved in this case and what the law was at the time that the case was charged and then the subsequent evolution of the law which gets us to the point here today that the right jury instructions were not given in this case so i'll spend just a moment going through that timeline and then expand on on our contentions so the and i think we i i'm just not sure how you get past the idea that the half truths here were actually misstatements so i maybe we can just jump to the chase on that or because i think you're going to lead up to that right so then that really gets to the point then about that the just report was looking to the scenario which is whether half truths are from misstatements versus the spin your context where it's charge and then at trial a context of a a mixed case where you have half truths that actually really are omissions and that is the nature of the crux of our argument that it's not half truths as an misstatement but it's half truths that the government's theory and and they refer to this throughout even though they tried to escape it on appeal because of spanier that really it it half truths were  charged here and then proven at trial and then argued fervently in closing argument as not enough information being provided that not enough was disclosed so the disclosure was deceitful and misleading because it didn't provide enough a half truth is by nature an omission but so i thought the government's theory and you can point me to where in the record this isn't right but i thought the government's theory was that your client had made it seem like he had no relationship with this company and in fact it was really him and that it wasn't really an omission it was that the way he's wrote the letters and things it made it sound like you know relationship and in fact he did have a relationship well the government now argues that that that was it that he had a relationship in the past with dignitas the l l c that purchased the rosewood property and that he may have a future relationship and and so the government's theory at trial and as it asked questions of witnesses and then made its closing argument was that that he made it seem like there was one scenario but he didn't tell them enough to ask more and so the theory really was that it failed to disclose it failed to disclose information that mr for rashi's theory at trial was that was the whole truth he told them because he was under no duty and his expert testified at trial there was no legal duty to say more absent an inquiry from the lenders and so his history at trial was the email was the whole truth and had the lenders wanted to know more they could have asked and he opened the door by saying if you have any further questions let me know but but their theory and i'll point you to because that's real and you asked where in the record  to a number of places where that theory is eviden and we really summarized i think in i mean i'm looking for rochus scheme to defraud the lenders by tricking them into thinking that someone else was buying the properties i mean i thought they were arguing that he just really essentially why not that he sort of half told the truth well that's so even if that's the attempt to present the case now that's not how it came in as the evidence came in and how it was argued that was closing argument i was just talking about saying that i it identifies a statement quote i'm willing to proceed with the escrow and that is the claim that they that they say the e mail is deceitful in rebuttal at nine hundred and eighty four dollars of the government argues that quote that's a very small piece of what the truth is his statements about dignitas further in rebuttal and this is the last thing then the jury gets to hear further in rebuttal the government says quote here are all the things that we talked about before in terms of his control of dignitas that he chooses he chooses not to put in this disclosure to the bank right there are many many things in here the defendant leaves out and he selects different words to give to continue giving the bank the wrong impression so the theory really is he didn't say enough that when he started to speak he had to say more it's not that the words in the disclosure were themselves to see full it's that he had to thing so is so here's where i think it differs in this case and how the evidence came in there were three different witnesses that testified these were government witnesses all three of whom testified that the e mail that's really at issue here actually did put the lenders on notice to ask more that that this was mr erickson who was the st sort of line of defense over doesn't act it to the negligence i mean we've held that the negligence of the particular bank is inadmissible absolutely and that's not the argument your honor what i'm trying to connect the dots and as you point out from escobar that i'm trying to get to what the theory was and how the of it came in because keep in mind that we did not have spanier at the time and so the government i think because the case had been you would have to get the the shield's instructions you would have to have a duty disclosing future duty and so the government then tried to cabin its case into this affirmative misrepresentation with the real evidence as it really came in and those statements then that they i read in rebuttal argument i think really demonstrate that it was a he did not disclose disclose enough in that half truth and that's where i think the witness testimony is important so it's not that the lender had a duty to investigate we're not we're not challenging that what i'm trying to get at is the way the evidence came in three different fact witnesses from the government all looked at the e mail and said are bad it does actually the words in there do would would put a reasonable person on notice so that doesn't excuse conduct underwire fraud but the point is that the jury that never had the benefit of instructions a legal frame that would of would have given them the benefit to weigh that evidence to say to be of a duty to say more and his experts said that in the industry this was very common behavior and that there was an absence and what we were it was common behavior i mean it's not common behavior to say you're doing a short sale to someone you're not related to but you are related to actually that's true what the what the experts said was common was that banks often in gauged in short sales because they can be in their own interest even if they're not arm's length the e also testified that that that app that there was sufficient disclosure in that e mail to put a bank on on notice to inquire further and that that mr prachi didn't hot did not absent an inquiry have a duty to say more but what was absent then here was the jury having the frame of the instruction to say to evaluate the evidence and think were they in a special relationship did he have a duty to say more this i think is the point of what the th circuit has held in shields and then building on that and getting to spanier is that when you have these overlapping charges that and when it where there is in essence here the a material omission being the heart of the deceit and we say it is a material omission you can you can go back to again ninety four where the last thing the government says is he chooses not to put in this disclosure to the bank there are many many things in here the defendant leaves out this was the crux of the theory even if now creatively the theory is being reframed to say no it's an affirmative misrepresentation and so the factual interpretation by those three fact witnesses at trial that the e mail said something that should have put them on notice to ask more even if they didn't i think that is very important i think it's important that his expert said he had no further duty but what is missing here is the jury not having the legal frame to weigh that and frankly what have you asked are there is the example of the house being built or something and there the statement is there are two roads coming to this house and really there are three and then the supreme court says when you only mention two roads and there are really three even though it's an omission it's really a false statement and i just i'm still even though you've been arguing very articulately having trouble understanding how that this isn't an example of that if you give the impression that he didn't have a relationship with this company and he did well but your honor again i think that this is the issue that a jury needs to weigh in with respect to the proper instructions and and again i would say going back to the colonel him and he says view of an omission a half truth being a type of omission that really is what the proper framus here and frankly all of this could be resolved i think if applying spanier and this case really is highly analogous to stand your in terms of the way it was charged and then the way it was presented at trial it's not analogous to a to the scenario where the escobar scenario where it is merely a false false statements in the in the statement itself the versus the one false i mean there are two roads there just happens to be a rd of the example and so it's not false so then but it's but here again i mean our position is that the that the way the case was presented to the jury the way the witnesses were examined by the government in its own case and the way that they argued it while attempting now creatively to reframe it it wasn't omissions case it was a it was a scenario where they said he spoke some but he didn't speak enough and that is a classic case where if he didn't speak enough there had to be a duty to speak more it's it's it's not because his contention that the jury didn't get to properly way with the instructional frame was it was the whole truth he said i had a relationship in the past i may have a relationship in the future and that was his defense at trial but the jury never had the benefit of weighing the facts against whether or not there was a relationship that would have given a rise to a duty to speak more your client testified yes jury didn't believe the judge didn't believe the judge said at sentencing you know you were a fraudster here and your arguments are ridiculous is there any doubt that the jury knew exactly what they needed to do under these instructions and they did what the evidence supported well your honor if they stand then the question and correct me if i'm wrong but you're getting really the if if this if there's an error is that harmless here was there no evidence and not even saying that i'm saying everyone understood that these were real misrepresentations and half truths not omissions  a more than if i say i'm a lawyer when i'm not a lawyer i omitted saying i'm not a lawyer no i want a service center i'm not sure your honor that i would completely agree with that i think this is a complex case and sitting if i'm putting this yes they convicted so they obviously lacked doubt with respect to the instructions in the legal frame they they had but given the experts testimony that the had no other duty and given what some of the fact witnesses said and then the fact that the jury had no this this is the language that the jury should have in our view had that they did not have the language is to convict a defendant of wire fraud based on omissions of material fact you must find that defendant had a duty to disclose the omitted facts arising out of a relationship of trust that duty can arise either out of a formal fiduciary relationship or an informal trusting relationship in which one party acts for the benefit of another and induces the trusting party to relax the care and vigilance which you would ordinarily exercise so if i was a juror sitting in that room looking at that language and had that instruction telling me well this is a lender and this is a seller was there a trusting relationship there i don't know that i would have gotten there i don't know that we can say that twelve people would have gotten there absent that the government made a compelling case the jury can victim my client no one  that but they made a compelling case that there was that there was a scheme here right but the the jury lacked this foundational element of for it to be wire fraud there there had to be a duty to do something more than my client did and so i really think we can't back into that and clearly judge o'neil was frustrated and but then at sentencing he acknowledged i mean this the world sort of turned upside down the market turned upside down and so the losses here were not caused by my clients conduct right so so it was he was still i think judging neil was even balancing multiple factors there but i but i'm not convinced that had the jury had that instruction which is really critical and i think this court said and shields how important it is and in spanier they were reversals because the error in the the instructional error was not harmless and i think that is the exact scenario here so i realize i'm in the red zone already i'll give you two minutes or about a thank you members of the cord good morning my name is michael tierney and i represent the united states the case presented to the jury that the jury convicted on was that for achi made statements and those statements  misleading he mixed in a little bit of truth and held back far more important details to give a misleading impression to the lenders that misleading impression was i who own two houses and going to sell my houses to dignitas which is an independent company managed by jim hurley when in fact jim hurley was a straw man and dignitas was for achi all along that was the government's theory from beginning to end big governments opening statement began and i was on a gave the opening statement so i remember what i said this case involves the defendant tricking a bank into thinking that he was selling two somebody else when he was really trying to sell them to himself that's at e r two hundred and seventy three we quoted on page twenty six of our answering brief and a couple pages later i said so in multiple communications with the bank and in paperwork that he put into the bank he made dignitas look like an independent entity so that's what it was all about creating a misleading impression and as opposing counsel stated that july two thousand and ten e mail was one of the it was perhaps the key piece of evidence in the case that was a statement again not a silence by mr for achi a statement that he made to the bank by e mail and it mixed in a little bit of truth but the point was what and how the government argued that was that those pieces of truth and the things that he left out were to serve the goal of being misleading so the way that was argued at closing statement or one of the places that was argu closing was that the july two thousand and ten e mail was deceitful because for raj is showing something that he wants the bank to believe that's a very small piece of what the truth is it is not just that he is concealing some part of it it is that he is twisting it and making it look like something that really isn't true and that's an e r ninety four quoted on pages twenty seven and twenty eight of our answering brief could i move you to a different issue that i struggled with more for your position and yes the sentencing and the intended loss issue yes it seems like the loss had happened because of the market and at least on some view mr for actually understood this market and so knew that there wasn't going to be a  loss and i'm just having trouble understanding how he intended a loss under those circumstances yes of course your own so the district court's last finding was based on intended loss not actual loss the district court found that there was no actual loss unintended loss what the district court did was it went back to the summer of two one thousand and ten dollars and during that time for achi was communicating with the banks about the deficiency so he owed one hundred and twenty eight thousand dollars in unpaid principal on the roseburg loan and so that amount that one hundred and twenty eight thousand was the deficiency the amount that he owed to them and at the same time he's trying to negotiate this short sale well where he is saying i'm going to sell my property to dignitas for about sixty thousand dollars during the course of that negotiation he asks them to essentially waive the deficiency and so there's communications back and forth and then they don't want to and yet he does it anyway so it's a little hard to see how that request matters very much well because the point is that that negotiation could mean a couple of things know what fraud she said it meant what he said at trial while attempt say a trial but what he actually personally told the district judge at sentencing he talked to the district judge and this is what he said he said well that's just confirmatory i knew they didn't have any right to it i knew they were going to ever recover it i just wanted to make sure what but that's not that's not what they said you know they said well we won't go after you for it and the point is that that was this july two thousand and ten e mail it does two things it st spoke to this point the deficiency and then it made those misleading disclosure about his relationship with dignitas so as to the deficiency so i mean in the forfeiture part of this case you're now admitting that there really isn't a loss of then it in the last part if they had foreclosed on the house they're going to lose at least most of the deficiency so they did the short sale instead now they lost that this is the end he knew that that was the trade off and so they were losing anything i just have i'm just still having trouble understanding it sure what we sometimes have at sentencing there was no way the person could have committed the fraud because the government set the whole thing up as a sting but the plane the defendant didn't know that and his intended loss is what he thought he was going to get out of the fraud and so it doesn't have to be an actual loss you know i understand that but i understood i guess my question is i think he understood what was going on in the market so did understand that it wasn't like a hidden sting he knew that if they foreclose on his house that doesn't have much value that was his position your honor and the district judge made a credibility determination otherwise again so the district judge had heard all the evidence the trial had heard testimony at trial had heard him speak at sentencing and what the and what the district judge said is no it's not that you knew they couldn't recover you actually thought they they could recover and that's what i saw is the idea that even if i guess like if there was a foreclosure and and then sell sale on an auction and it was only for sixty thousand dollars that the question is could they still go after him later in that scenario in writing that they couldn't in this one right that's the that's the whole difference here and so again where were the two sides line up then at sentencing for the district court to make a fact determination is actually really think that there was no way the bank could get that money back or did he think there is a way they can get that money back but not if i proceed with this case through fraud if i do and they do the short sale and they told me they're not going to go after it afterwards then i'm good so let me go ahead with my misleading disclosure and make this sale happen so that was that well it's difficult because the court ultimately found no actual loss just last night is is exactly correct to be one dollar directs unintended loss that that includes loss that he sought that the defendant sought to inflict and includes harm impossible or unlikely to occur back in time going going back into that time machine in the summer of two thousand and ten the district court had to make a credibility determination about what's in mr for watches mind weighing all the facts it knew and it did and found that there was one hundred and twenty eight thousand dollars in standby that there was no we we a knowledge error in the forfeiture portion of the judge me yes subject to any other questions that the court might have i will sit down thank you very much  so i will briefly touch on a couple of things opposing counsel said with respect to the jury instruction issue and then turn to the intended last issue i think it's even key and revealing one he says that that the theory is he gave quote unquote a little information but held back far more information and that the e mail in question was a statement and not a silence this court held in spanier that it doesn't have to be a pure omissions case it doesn't require only not speaking and that was the theory from the government the outset even though they bobbed and weaved when the law changed and i and i would just ask the court to review both spanier which which specifically holds that shield is not limited to quote unquote cure omissions cases and it applies to mixed cases where it's omissions half truths and misrepresentations at issue and then again the croman case this i think is illuminated omissions or failures to speak have truth in which the speaker makes truthful assertion assertions but conceals unfavorable facts amount to one type of omission that's exactly i think the scenario here which is why we would fall under the rubric of spanier all we're asking for is that a jury fairly get instructed with respect to the law it's not asking you to say that there's no potential liability here but merely to reverse the judgment so we can have a properly instructed jury and then with respect to the independent last issue mr tierney points to a factual finding but i think the far more complex issue and i think judge friedman you are getting to this is the legal question and whether or not gain is even an a if in the alternative universe there had been a foreclosure or an auction could they have gone after the deficiency in a way that wouldn't normally happen on a short sale and that he was trying to make sure that they wouldn't come after him on a short form of from bank of america was a national form and he was trying to pin down there is california law he knew california law the judge said he understood and he actually correctly understood california law and so i think that's really falls more in in the initial part of your question about whether or not intended loss is even supported in this scenario here because the bank didn't confirm it and yet he went ahead anyway and so that is not getting to intent but but but i really would continue to advocate that again really was what the government argued and what the court actually did hold on to and the reason for that and then i'll close because i see i'm out of time is that that is the only way we get to a loss here because actually i pointed out in the reply brief multiple places throughout the case where the government frames it as again in its sentencing memo more than once with respect to game he gained a benefit by not having any of my ability for a potential deficiency and the miller case specifically says i need to cut you off sorry because you're over your time we are to give you extra we read your brief on that it's ok all right thank you so much both sides for the helpful arguments