it has been the law of this circuit that an issue tax credits in the hands of the state are not property under the mail and wire fraud statute which means this case never should have gone to trial it also means that there was no fair warning to the defendants in this case the central holding of cleveland is both straightforward and unmistakable the thing obtained has to be property in the hands of the victim the things obtained here were an issue of tax credit and the second superseding indictment the scheme to defraud is specifically defined in paragraph two of counts two through twenty as a scheme for quote the purpose of obtaining film infrastructure tax credits and quote you said an issue tax credits at least a million was approved and then it was sold and i assume that those were credited against louisiana tax obligations yes that's correct so why do you say on issued because the scheme is for the purpose of obtaining the tax credits that's how they define it they don't define it as a scheme for defrauding anybody after the tax credits are issue they defined the scheme as for the purpose of obtaining the tax credit and since what we are looking for under cleveland is what is the status of the thing the object in the hands of the victim let me give you a hypothetical let's say instead of tax credits for film infrastructure projects the state of louisiana says we're going to give you grants you know apply show us you're doing these infrastructure projects and we'll just give you you know  do three million dollars in projects will give you a grant of a million dollars to help with that that would not be property that could be property but that's not what happened in this case it isn't any economist will tell you that a tax credit or a tax deduction is exactly the same thing from an economic standpoint as the government just giving someone a grant well if ect on the state's bottom line is exactly the same the the effect on the state's bottom line could be the same but what we are dealing with is the mail fraud statute and how that specific statute under cleveland defines property and how it looks to what has historically been the definition of property and if you go to the core holding of cleveland and if you look at the three cleveland factors cleveland is very very careful to distinguish between taxes due and owing and an issue tax credit what cleveland specifically looks for on this one what is the nature of those states core concern regarding the object and two is the state's interest as a sovereign or as a property holder there's not some inventory of tax credits that the state can suddenly go to and say ok here we'll take one out of the closet and issue it to you because it's property this state is creating these tax credits when it issues them and the third issue in cleveland on the third factor is whether this constitutes would constitute treating it as property would constitute a sweeping approval of a huge expansion of federal jurisdiction if this court recognizes these tax credits as property the zone issue tax credits as property it will have approved the right of the federal government to prosecute every false statement on a state tax return in texas louisiana and us we have to look to is what is this status all of this object in the hands of the victim we don't look to what the status of these it is later there's no question but that after these credits are issued and they are out in the open market that's property that's the equivalent of the grant that your honor pointed to but until they are issued they don't exist recently in the b p exploration case this court described these tax credits by saying they're not merchandise they're nothing more than financial abstractions and that's the problem with this case  in the other circuits on tax credits the the fountain decide well this court in griffin said flat out these are not property under cleveland in fountain the court was very careful to distinguish between an issue of tax credits and taxes assessed due on owing and it recognized a property right in the latter but not in the former and so all the no other prosecutor office has brought a case that i am aware of anywhere on an issue tax credit it is only this office that has taken the you very aggressive posture of saying no this is property it's not cleveland tells us over and over this is just not property and let's assume for a second that even if it is property where's the fair warning to the defendants in this case because if you go back to this court's decision and banks n which is actually the the name that this court gave to the cleveland decision before it was reversed by the supreme court in bankston this court said that the only reason it can be said that the defendants had fair warning in the case is because there were other circuit courts of appeal opinions saying well these things might be treated as property there is no decision that the defendants could have relied on in this case that said oh these  issue tax credits were property in fact just to the contrary this court had said in brief and now they're not property so what were the defendants to rely on in this case they certainly couldn't rely on the state probation sentence your client received his guidelines were one hundred sixty eight to two hundred ten months can you cite to any comparable probation case with that big a guideline range that has been reviewed on appeal in our circuit i cannot your honor but i think that given all of the concerns that judge feldman had regarding this case concerns you can't just i saw those and he says there was no loss because the state actually got this bill this house go event i've seen at the one of those concerns he cited in one of the factors he cited there's a lot of i've read it he says your clients are good people they've done a lot of community service but the reality is the criminal justice system is filled with good  people i have no reason to doubt what judge feldman's that in your show your clients are good folks who've done a lot of good for their families in the community but that is not that anomalous in the criminal justice system the most common type of crime charge in our circuit is illegal reentry a of those are folks coming from mexico and central america who are good people just trying to make more money for their families but when they get convicted of that crime as the last you know says that they often go to prison more and so was is that factor something that can be considered isn't reliance on the community service service and these other factors the kinds of considerations that the guidelines were created to prevent in white collar cases from getting lenient sentences there is father out there i see a lot of time your honor what the guidelines are designed to do is to take into consideration all of these factors and different cases will weight the factors differently if you look at this case as  case the guidelines would call for a probationary sentence that would put you at a probationary sentence level so it is only our arcane or the guidelines complex a view of what constitutes a loss and they score intended losses because the guidelines look at intended loss but that assumes that they intended to impose a loss on the state a louisiana and if they wanted you're going to guidelines are wrong i mean if if if you're saying the loss and first of all like to fight the court's attention the fact that is the district judge all pointedly observes susan hoffman was barely mentioned during the two week trial she there was no evidence that she was involved in any substantive financial aspects of this tax credit project and in fact even the documents that the government offered the agent had who is testifying for the government had to acknowledge that he was in error and that was not her signature on the documents so what does the government do they if unable to prove an intent to defraud which is what they had to do in the absence of a loss under cases such as u d'amato bug second circuit they default to a conspiracy client they contend that there was some form of conspiracy under section three seventy one and i submit to your authors that two falls flat and so i plea what is what did the government suggest well they suggested that because she had almost daily conversations which was not proven bob bonafide evidence but she had telephone conferences with peter hoffman that that is somehow part of a conspiracy a lot suggest to your honor as frankly if if we're going to curtail telephone conversations between spouses and children and loved ones and that's going to be conspiracy nobody will be talking on the phone nobody will be picking up a receiver or a cell phone but let me get past that absence of evidence which just and the government suggestion which just defies common sense in the law what the government now suggest to your honor's is based upon conjecture and speculation there is just an abject absence of evidence and judge cost that you have to look at the evidence to nova and that's what those cases say and if you look at the evidence to know both citizen hoffman did not participate in a conspiracy and there was no fraudulent intent and i'd ask you to to consider those issues now recognizing that it's lack of proof what does the government do they fall back on even yet another contention pliant they say well they almost create a new legal standard and they say she was not oblivious of efforts to seek legitimate tax credits well respectfully to the government that that double negative is not proof of criminal conduct it's just not not oblivious is not part of a criminal scheme or a basis for finding her culpable no there was just no evidence to show that susan often deliberately gauged despite oh about thirty four years on the bench is a district judge the government assails the tailored sentences meted out by judge film and among the peculiar arguments that the government makes is that he did recite the term sentencing guidelines frequently enough to suit the government well beyond that they say they sort of jumped from that position to say wait a minute he didn't even mention section thirty five fifty three both of those contentions are wrong the record shows clearly that he referred to the god lines in deciding the tailored sentences he mentioned section thirty five fifty three and it's purpose he will he went over the p s r s because as your honour's know there were a number of objections to the p s r s and so he was mindful of the sentencing guidelines i would suggest to your honor's that i will say in a rare moment of common agreement between the government and the defendants that we both preferred your hon gall versus united states but in the end go all the supreme court said you have to have individually centered sentences and that's what judge feldman did he did he individual tailored the sentences consistent with the supreme court's pronouncement and proper consistent with the supreme court's announcement and kimber oh and judge cost i'd like to specifically address your question which is wall how do you have this disparity because i know the government not as great for your client not nearly as significant no no your honor of but i'm here to try to speak for all three and i know the government tried to make hay out of that and as mr lawson said if you take the the last factor and of course you judge film and took out this sophisticated enhancement for susan hoffman you are delman to the seven to eleven ratio under the guidelines which would not be an uncontroversial departure and certainly within the wide discretion afforded a district judge that's given to him by this court repeatedly repeatedly when the government comes here now ask you not to disturb the sentence they say don't disturb the discretion of the district judge that's exactly what we're saying the they gain well you know they gain close to a million dollars they sold him for what nine hundred thirty thousand are sentences every day given out in this district you know for people who make five thousand dollars if that bringing people across the border they're getting prison time so there does seem to be a significant disparity in a case where there is a sizable amount of money that the defendants received costa i don't disagree that there is a disparity from say a drug dealer to these individuals but that's the big zach purpose of the supreme court ruling in booker and its progeny that's the exact purpose of its statements in golf were the exact purposes of the sentencing guidelines was to prevent judges who can understandably identify with white collar defendants more than they came with street criminals from giving them far more lenient sentences than those the street criminal well i daresay that if you look actually probation sentences in white collar if you look i'm just a and i know you know you know about if you look at the three decades of judge questioned the appropriateness of forfeiture and we submit that there was no nexus between the property in the defendant's hands and the offense and that requirement is essential whether they use good morning nic please the court my name is billy gibbons and i'm here for michael rada i'm here to talk about the rule twenty nine issues but judge kos in response to your question about other cases where there have been six substantial departures  although the cases that we cited a few tomko in rowing are fist circuit cases that more substantial departments from hot departures from high guideline sentences to probation in the fifth circuit and also a judge i would law say the greater the departure the more need for justification and maybe that justification severe but it does increase the need for justifications does your honor and what i would say is that that judge judge fellman justification in this case although he did say he didn't talk about good deeds and these are good people but his real justification which he did incorporate into his sensing decision was a hundred twenty four page order and reasons on the rule twenty nine motions in which he expressed great discomfort with this case with the government's prosecution and with the outcome and i'd like to say your honour's that there's two main reasons for that the first is his commonsense approach to what he saw in this case which is that the defendants spent five million dollars to develop a a film studio that they said they were going to develop it went into commerce it produced it made productions and it was actually touted by the state as one of the great successes of the infrastructure program the second thing is that the court found in the government's own witnesses testified that a post mortem audit that was done by a forensic accountant hired by they actually found that they earned the one point one million dollars in tax credits that they received and then finally they actually spent based on the five million dollars that the that the defendant spent on of the program which would give you forty percent of every dollar that you spend they were entitled to more than the one point one million dollars and so just from his common sense that that was one reason that the judge was uncalled for with the case and noted that that it was an it was not the ordinary fraud case and i think that was one of the the big reasons for the result that he reached here the second the second reason was that the judge was very uncomfortable with the government's allegations of concealment in this case and  particular the main example that i want to bring up now since we with the limited time we have is on for mr rogers mr rogers was convicted charging convicted of making a false statement when he said i thought i disclosed to the officers both sides of these circular transactions and the judge threw that out because there was documented evidence that actually was disclosed and and i want to talk for a second about circular transactions because that was a very large part of the government's case and it's something that no one has it would ever have heard of outside of this it's a bit was a very unusual thing that developed in the film credit industry in louisiana and it goes back to what we have are we have an exhibit going on this erotic exhibit two thirty one is a unanimous resolution passed by the louisiana legislature in two thousand and eight and this is a number of years after the program came into existence and what it said is that we acknowledge the legislature is acknowledging that we have a wild tax credit expenditures for need for expenditures by means of cash bonds exchange loans made for a lender regardless of who holds the promissory note even the property owner if so what that is is recognizing what that led to is a very unusual  transaction that was that was allowed in this program where you could loan money or quitman or property to yourself to pay yourself back and that was considered a tax credit expenditure by the state of auditors who were actually on the audit that was submitted to the state to return to get the one point one million dollars in tax credits in this case both testified that yes circular transactions are used in this in this tax credit program and and judge feldman found in his order and reasons at in that's a page thirty six eighty three of the record that it was undisputed that tax credit that circular transactions are not unlawful so long as they're properly client why didn't you ask for a jury instruction on withdrawal of conspiracy that said that usually arises it is it is judge and i and i really think that i think that this issue is kind of a red herring on appeal because at trial we were after he left the after he left the project and the testimony of the government's lead case agent at trial was that the concern the government's concern was that after he left judge because the only really the only acquittal that had to do with the with anything after the fact by mr rod it was the it had to do with the appeal i mean i'm sorry with the with the it done the inclusion of the attorney's fees in the second i think that's already we have this covered like to reserve four minutes for rebuttal contrary to what the defense has suggested here to your honor's this really was a textbook fraud case to emphasize this i would like to respond to some of the issues just la and as i believe it was mr rosenberg mentioned this idea if they are warning the blatant fraudulent conduct presented at the trial stands in stark contrast to these defense attempts to make its case about it which was not with the the government's theory of the prosecution was at the outset it should be noted that the defendants were put on notice by the state with a priest certification agreement that certain expenditures had to actually been made by december thirty first of two thousand and eight this is a signed a pre certified cation agreement that michael rada signed on behalf of the of the defendants a promise to pay was not sufficient that future payment was not enough that would have been the government's first exhibit g x one indeed the head of the infrastructure program before they even the first application was filed warned a rot of that expenditures had to be final and quote in the vendor's pocket and not controlled by you and a rada shared this conversation with peter hoffman as you can see in government exhibit two eighty three it's an e mail from a rather to to peter off so they were on notice to emphasize the disparity and would mention this goes into the idea of circular transactions that mr givens just said was commonplace amongst these programs well lots of things can be commonplace but it depends on how you use them did you use them to intentionally defraud somebody and i'd like to go through briefly there's many examples that we put on trial of the different types of expenditures that that took place but it's important for me to emphasize what the activities that occurred here are and how they stand in stark contrast to what the defendants claim to have been confused going to address whether this these tax credits are property for purposes of ma i'll jump to that right now judge and i'm going to come back to the uk and come back to this other part the cleveland griffin issue the move course the judge district court pointed out of pages two fifty nine to two sixty of the record that this case was as we s a regulatory decision by the state to be able to deal future work to develop low income housing records that housing that if at some point that was cut that was finished they could then get tax credits the fraud was not as the defendants claimed for on the issue tax credits it was for the issuance of active tax credits that's what the fraud was it was and that after the pre certified cation agreement had entered and that would be the grand jury exhibit one i mentioned earlier importantly the defendants important the sentence position on this would ignore well settled law first of all the state's right taxes for the purposes of wire fraud statutes see but that they ignore the fact that the victim who loses money need not be the same as that one that was that did the deception was and to this court ruled on that in the mcmillan case that was the convergence argument that was rejected and that was in two thousand and ten also the defendants rely on the district court largely rely found no laws however they ignore that actual loss not be proven also the this is about the sufficiency of the indictment this argument not the defendant's disagreement with the facts of the case and also they mentioned issues with federalism problems with this case and i'd like to point out that this case presents no such problems this case was that but federalism principles and also what also gets glossed over here and has been argued by the defense several times was this is the government stepping on and doing something you know that it was not agreeing with what the does what it's glossed over here is that the state found this fraud and asked us to come in and help them they found out what was going on through their internal forensic audit of monocle daigle and they requested our help to come into briefly to this idea because i do think it is very important with the types of acts actions and activities that we're talking about in this case and there's one there's many different fraudulent expenditures that were submitted but one in particular i'd like to emphasize to you that goes to this idea of circular transactions and it's the part that the defense claim that they purchased over a million dollars in equipment from a supposed louisiana equipment vendor named damon martin to make it appear as if that and we had just talked about that the state required that this be a final payment in the vendor's pocket not controlled by you to get around that showing that they well knew what the state required and sought to deceive it to make it appears that the quit was purchased by an independent louisiana vendor before that december thirty first two thousand and eight deadline michael rada a practicing attorney a notary in louisiana registered a louisiana company in martin's name at an address and telephone numbers controlled by the defendants he forged martin signature on the application he forged the signatures of two witnesses to that secretary of state filing and then he personally it and filed it with the state next a local bank account was opened up in martin's company's name but they account was controlled by the defendants not martin and this is important when we talk about related parties and whether this was truly an independent vendor as they were representing this to the state the address on the bank account was michael arad us and the lead signatory of that account was peter hoffman mr martin receive no bank statements no checks no money no nothing through this account because seven arch louisiana which we call saplings for short the the company that the descendants of that was related to this bank account money and then as judge king pointed out circulated around between bank accounts within one day something the bank employee said she had never seen before michael rada told her oh it's just for accounting purposes after that they did that money by the way with borrowed money it wasn't even their own money they borrowed the money circled it around and paid off the loan the very next day it was a zero sum transaction which every competent professional that testified in that case says economic substance is paramount in these types of things that's what the state is looking for is economic stops and hitting the state the seven are to turn accounting records were then falsely altered to make it appear that the money coming back into the sap look count was really a capital infusion from the parent company owned by susan impact and mike and peter hosking so what i did was it took as if that were not enough when it came time to meet mr givens was talking about how much they disclosed about the circular transactions hey you will notice that neither the district court or the defense has addressed that capital in what we call the capital infusion or they have stayed away from it in their briefs and it has not been addressed as one of the key pieces of evidence that the government put on in this case which i'll talk about momentarily and how the judge really weighed the evidence in favor of the defendants and against and against the government but before presentation to the auditors or rotten rot it intentionally removed all of the legible clearly stated documents that showed that the money was coming right back into the sap looking out and presented to the the auditor just the outgoing legit ones so those carbon copy ones that we were not even allowed to put up on the on the on the stand because for district court said it was too illegible they left those and so that they could later claim they disposed things but there's never been an explanation why they would purposely with move all the ones you could read when you put that on top of the capitol theatre infusion it shows precisely what they were trying to make the statement acknowledge that there were circular transactions with other applications when iran has said he looked historically at what had been approved there are some instances but it has to have the economics of what would be an own film comp film camera equipment or sub company and then that film company puts money into that to pay them but it's all owned by the same corporation and that money might eventually make it back into the main corporation and the reasoning behind that was if we have a smaller company that doesn't own its own camera equipment company you might be able to take that money and that that company would pay this independent camera kompany and then they would be able to get tax credits for that and it's a way of when there's real economic substance in something real happening that they can use that through that financing term but in this case what i'm talking about with the film equipment here at the would i would like to i'd like to address them so that so it will end with the film equipment that he never got paid them that the the mr martin setting never got any money he said that he never was asked to provide equipment and there was no equipment even to this day martin has provided no quite the topic but with regard to your question judge dennis the issue there is that that was one of the things that the court and defense has looked at that we actually have a random renovated five million dollar building sitting over there the tax credits they received a million dollars we prove that trial were wholly for fraudulent expenses when we talk about the five million dollar building and the emphasis put on this building that's been renovated over there what is being ignored completely is one of the issues that judge cost abroad brought up that there was that for that five million dollars building there were thirteen million dollars worth of expenditures submitted for that building what if there might have been some in there that you know the construction costs it true where somebody said they were just they were tired of this money or are intended moisture certainly could be illegal yes or but with so if we move away from the intended laws which was three point seven million dollars and we go to just what was done did they get it earlier than what they were supposed to this court has ruled in the d case that you are not that does not exonerate somebody in a fraud you are not entitled to defraud somebody that case i believe was upset that i remember correctly some type of a public employee with regard to benefits that he may have been able untied to receive but he defrauded to get them early and this court held in the datsun case this does not happen in that case actually came out of judge feldman's court to this court but anyway it is the dats case you are not entitled to defraud somebody to get money that you think or say that you're entitled to later and at this point i still don't know that they are entitled to these tax credits that was a hypothetical representation by the state forensic auditor and the put in the defendant's pockets for film equipment that does not exist that's not there if they maybe built some you know put some chandelier in the old place or something that would entitle them to money for that not possibl if an audit is ever submitted and that's ever been approved which has not happened that's all speculation to this point but with regard to what they have in their pocket right now at least that four hundred thousand dollars the other portion of that million dollars we're looking for was for construction phase that lease with that four hundred thousand dollars it's for equipment that never happened it was a complete sham your honor i'd also like to point out while we're kind of talking about that on the intended loss that you brought up here the intended loss here we have a five million dollars building with thirteen million dollars worth of expenditure submitted for leaving a big room for those types of issues we all know that we don't have to prove that they actually receive the money and just because some money gets caught before money comes out should not it should not be deterred from what their sentence should be because we have to look at the intended laws but for example on the probation sentences i'd like to get into is that the intended law school start with peter hoffman the intended loss no matter what the possibly receivable tax credits were which three point seven million dollars was completely ignored mr hoffman was found to be ill and one of these enhanced mints was found to be a leader organizer he was found to have committed to see if this is a crime of sophisticated ways and means he was a found to have abused a position of trust he was found to have committed perjury at trial he was then and even when we look at the judge's forfeiture order which were asking for the entire amount but even the judge found that a million the district court found that a million dollars was criminal proceeds it called for a sentence of a hundred  sixty eight to two hundred ten months with little or no attention to the guidelines that the court vastly deviated to probation in this case and notably if michael arad was found not to have been withdrawn and the conspiracy and false statements reinstated his guidelines would be the same even if we if the guidelines stay as they are for michael arad of his intended losses one point nine million he was a leader counts five thirteen twenty one twenty two and twenty three are recent given that there was no jury instruction which the defense usually asked for they think there's a withdrawal issue how what's the standard if the jury never actually  implicitly the jury found he continued as a member of the conspiracy given their convictions defined by preponderance of the evidence that the that he withdrew that's what judge feldman right but that be the barn that did what the jury would be asked if you're dividing by a preponderance that the defendant withdrew so big what are we supposed to review that based on and that's one of the arguments we made our brief judge which is that they withdraw by a preponderance of the evidence that the judge found and not i forget the page on his it was in the rule twenty nine order but his finding there he's still reviewing this under rule twenty nine which means that although it may be a preponderance of the evidence for withdraw he still has to view all the evidence in a white most favorable to the verdict and i'd like to show you a couple things right there that is specially when it comes to withdraw that would be the lucio case that controls that and that's this this circuit in two thousand and nine withdraw so as of two august claims to have withdrawn as of august of two thousand and nine what the court didn't consider in making that and totally weighing in accepting michael arad his testimony which your honour's both michael arad and peter hoffman testified extensively at this trial all their arguments about state law all their arguments about what they thought it was their good faith arguments were put directly before this juror got to weigh it against in the false statements counts they got to weigh michael arad his testimony against peshawar agent bobby plights testimony who testified at the trial as well and they were entitled to make these findings but with  after that october of two thousand and nine a groat a right a breed to continue insisting on the profit of the project and to maximize its value that's a right exhibit one thirteen he then taught hoffman's in house accountant how to kentucky circular banking transactions that were used in the subsequent fraudulent extra expenditures that were submitted in the subsequent things that set the record on appeal six twelve through thirteen and who also took an extraordinary things that she was not getting the information especially on this popular capital contributions ruse she wasn't getting the information she wanted so she terminated representation malcolm dana's reader withdrew both of their their audit reports they then hired the still the firm that withdrew his report at least noted it's under suspicion because of this investigation he later dead did withdraw that report also you have to look at besides them you have anybody that can be claimed to be somebody that knows what caused them and practices look at the testimony of michael begged on that in that trial he called almost every single one of these expenditures cemented totally fabricated the jury heard that the jury was entitle to weigh that also point out besides those authors judge king that there are up three of their own in house auditors testified in testified one of the asked peter often is this fraud then the second one came up and testified that she refused to do some of these transactions because she felt uncomfortable doing it she didn't think it was right and then you have marcy  the person who came in that michael arad a top after he allegedly withdrew from this this thing how to do the circular transactions she also testified at the back dating invoices redacting bank statements all of peter hoffman's the destruction so that's a lot of professionals in this case are a lot of that testified completely contrary in the facts that what's important here is the facts that they're talking about a hundred no circumstances it however if you want this is a federal case federal law applies as our argument but even if you look at the state law where would it ever be that you can make fraudulent invoices where would it be that you can lie about related party where would it be that you could submit false payment receipts falsely signed payment receipt saying that you none of the if they were not dealing in this world of technical regulations the government's case was a classic fraud case of absolutely under should have just there would have been don't just have somewhere in this record where there's an email saying hey we think we're allowed to do this more so if you're just winding down this or i understand it mr rod you've explained why if you're able to show the district court improperly granted rule twenty nine acquittals that could changes his guidelines and want to reach sentencing yes and take peter hoffman for example you also charged challenge a number of the acquittals but what would that have any effect given what his guidelines were with that practically false statements a bunch of different types of things had to do with michael rather peter hoffman was acquitted on his counts just on the ones that he was also shared with michael a product the rest of the the the convictions  the judge had no problem with them and they all stood there but there's enough there that i believe it's not going to change what his guidelines would be i don't see them going up and but with particular with mr r was was held to have committed perjury because he testified differently than what he was convicted of well respectfully michael rada get to and he didn't get a perjury and a handsome and and if he and it was mainly based on the fact that all the false statements counts were thrown out so if those are put back in yes i believe he would get that enhanced meant and it would extend him to the end of the conspiracy which we say he did not withdraw which we did with of course a finding that probation sentences are only reasonable and that that has been in the several district court opinions that we've been i'm sorry appellate court decisions that we have cited to you circuit importantly the eleventh circuit has pretty strong cases were much less time and suggested that went to probation that they specifically found that substantively on reasonable that would've been more than a mob setting and then the first circuit in the muslim and  would have to be able to see that they're under no circumstances where the probation be appropriate yes and i mean i would suggest that it's not in this type of situation with the amount of money what this case suggests is is that defendants that you know wealthy financial criminals who do complicated schemes like this are going to get treated differently than the other blue collar people that go over into that district court every day and go to jail for far less money and for far less complicated crimes and i think that's what these cases stand for but yes it would be need to be sent back for a reset and saying and but we would the government referred to this case as a case of textbook fraud my question would be what textbook the jury in this case was specifically instructed at the request of the government that it was not to consider state laws rules  regulations in it with it need not be shown that the defendants violated any of those so once again were put into this standardless void of mail fraud and the government now says well this case was about money or property ok yes but was this property the government attempts to distinguish griffith in this case by pointing to a series of factors that are flatly irrelevant cleveland tells us what factors we have to consider what factors are are important none of those were mentioned by the government none of those were mentioned by the district court this court i fear that this court is about to return to a cre cleveland view of what is property under the mail fraud statute the most extensive discussion of what is property under the mail fraud statute from this court is united states versus salvatore that was the case that was  relied on in toto by united states versus bankston which is the case that was reversed by the supreme court in cleveland i'm familiar with salvatore i was his attorney at trial and in is does involve property and judge feldman says tax credits are just the flip side of of tax revenues that he responds feldman's analogy absolutely they are not justice thomas went to great lengths and passed one t are traded on exchanges they can be purchased from state entities or city into these tax credits are not the same thing until they are issues and we come back to just judge dennis's concerns in this case until we get past the property issue we can't get to any of the other questions i understand that the government would like to talk about proof at trial but we first have to talk about are we in the realm of mail for and w there are federalism concerns in this case they are everywhere they are can the federal government step in to what is essentially a state regulatory scheme dealing with state tax credits dealing with the state promotion of a state industry leading to acknowledge they can if it's a state grant or if it's just avoidance of state taxes or really why are the federalism concerns different just when you're talking about this little area of credits because what you have to have your honor is a scheme to defraud that is built around property and and once things become property there may be federalism concerns of schemes to defraud rely on the mail and wire fraud mail or wire to create a scheme to defraud but once we get into the rooms of state sovereignty where it is the federal government the u s attorney's office attempting to basically lease what is a state taxation program for the promotion of a particular industry it's entirely different that's where you get into the concerns of what why is the u s attorney's office seeing what should be exclusively almost exclusively a state concern thank you sir here three minutes only but sir your own is both with the the sentences in this case and with the rule twenty nine verdicts judge helmond stated at trial that in his thirty two years on the bench he's only disagreed with two verdicts a one criminal and then he did what he did in this case and it's because it was an extraordinary case and he went to great lengths there was it's intensely factual and i would say almost every fact that the government raised up hazy and it was unclear and maybe some other folks were doing similar stuff how do you respond to their argument that if if your clients thought they were following the procedures and rules of the state program why would they have created fake documents and these false an agreement that damon martin of departure studios would contribute about two million dollars worth of equipment in return for twenty five percent equity in the company that was his testimony there the that were submitted to the auditor's were that was the actual equipment that he had proposed to contribute to the company in return for that twenty five percent vestment now it dead it fell apart it fell apart after that the tax credit submission had been sent to the state in february of two thousand and nine he actually lost the company and that didn't happen but at the time it was submitted that was the agreement and that was that that was our understanding and mr martin who testified that was his understanding as well in the second underlying transaction was on the construction costs in there leo du vernay was the contractor he was paid two million dollars went into  escrow account that was to be used for construction he was paid the entire two million dollars alternately he was paid three point eight million dollars to do the to do the work and he did the work and joe read the documents that hoffman created some of the documents that looked like they came from the outside vendors your honor that the i believe that the on the construction contract the construction costs came from a contract that was submitted by leo doolan it may have been adapted and may have been created by a judge but everybody knew what was got what was going on leo leo du vernay knew what was going on damon martin for departure was gone and as far as the construction costs before the tax credit submission was provided to the state the auditor and the director of the state program were brought on a tour of the project so they knew exactly what was going on they knew that two million dollars of work had not already be done been done on that on the project thank you have for me first of all judges this isn't a case about state law in the first place this is a scheme about getting something of value cleveland was about poker licenses getting a poker license griffin was about getting the ability to build a possibly build a low income housing where this was always about cash and it was the cash that was the revenue of the state of louisiana in the cash f the investors in this case they would be taking cleveland so far beyond what it intended to do when we're talking about the end result of the of the the fraud here was money out of the pocket of the state and i think so i do not agree that just because they say the word tax credit in grafton it doesn't mean all tax credits are the same they're not the same they weren't transferable they weren't sellable in graph and they are here next mr givens just said that yes this is of our heavenly factual argument and i'd like to point out here this is the reason we're here especially on the government side of this is because it was a factual argument that the jury heard the jury heard all of this he heard their explanations and in the rare circumstance heard extensive testimony from both of the experts self proclaimed experts peter hoffman and michael rodd and they rejected it which they had every right to do the judge's neck and the district court does not get to second guess that at this point evidence in the the evidence in light of the verdicts when you look at our evidence and it's very well detailed and very well in our in they could create that he didn't agree with with them but with regard to that they he signed to that susan hoffman talked him into signing two payment receipts and he got on that stand and he said he didn't agree with it he didn't feel comfortable  that these credits were not property weren't they designed by the state to be property so that people who could people could actually get some benefit from them even though they didn't have louisiana income i mean the whole idea here were pleasant that they would be saleable the ordinary tax credit might not be might not be property but here it was designed to be property so that it could