you're the next case on the calendar united states versus fran scheme to obtain one hundred twenty six million dollars loan from citi group to purchase a portfolio of shopping centers and when that loan went bed left ephram franco liable for seventy million dollars  no he did not he has corporation this is public because other cases had to do with these various corruption cases against new york elected officials which is all well and good and certainly he's entitled to whatever benefit he got in terms of sentencing but your guy is left holding the bag for this particular fraud exactly and we don't know to this day if he paid a penny of the paid seventy million dollars you make this restitution good and my whether it was his purpose to defraud citi group out of one hundred twenty six million dollars that was the issue of some one of the elements of the crime that citigroup's alleged  did not affect city groups decision in terms of issuing this loan the loan was issued on other bases particularly the the loan to value ratio and and more significantly the participation of this businessman named joshua safran who turned out to be not to be participating in a signature doesn't go to the negligence does that that goes to whether the standard that the jury was advised about how to decide materiality toward to the loan itself at the seventy million the upside one hundred twenty six million dollars loan and that was what we were arguing at the trial that this that the statements having to do with the amount of deposit while f were not material to the issuance of the loan and that was what we were attempting to get through no i know the argument that was made by trial counsel was in the concept of negligence but in fact it was broader than that in terms of what he asked for the jury and structurally saying they were negligent they just didn't actually care exactly went to the materiality of and lawsuits pending against the law firms you are apparently the status of those is not clear i know that there were lawsuits that weren't pending for a while and some of them have been have been resolved with some summary judgement orders weeks the exact amount that was be cooped from that is unclear and whether citi group made concessions in terms of what their actual loss was one of the interesting things about this case is the city group never came forward to talk about its loss citi group never provided a victim impact statement that i've seen in the was at the time i was indicated by the government that there would be something provided in the order which would provide a mechanism for reducing the loss of the restitution order by the loss amount by the amount we covered but that was never doubt the mr franco as a middle aged man with a criminal conviction having lost his attorneys license you know where's he going to get seventy million dollars from i think there's other people who and and institutions and and firms that are involved in this lawsuit that may in fact be able to come up with seventy million dollars other individuals who participated in the in the transaction and may have some liability doesn't it suggest that citi group isn't entitle to recover from your client where it has recovered from already from others or certainly would be and we've cited the case was clear when and the government's conceded that they're not entitled to get to recovery we're concerned about in the practical effect in real world of this is m sterling when he if we're not successful in terms of the conviction when he when we're eat when he's released from prison in two thousand and nineteen and he attempts to start his own life is he going to be saddled with a restitution or a seventy million dollars which will affect me that he will be able to start his life i have been scorched well aware of of the impact that that has i would certainly i fully appreciate the difficulty that people labor under when they have these essentially meaningless restitution orders meaningless in the sense that nobody's ever going to get that money but still it's a judgment against him and it will impair his ability to get credit and so on so that's a serious problem but if other people do pay the money isn't there a mechanism by which he can go to court and get credit for if he's notified of it what obligation the city group have to notify him what there is no there is no obligation he'd say they have an obligation to notify him i don't see how in hell what i mean do i think ethically they do and do i think if mr denver was to find out i'm sure he would tell somebody but you know how there is no mechanism beyond that for an assurance and the fact that still like the participation of citi group in this case is there so what would really put i understand your arguments going to the conviction that's a separate issue yes you want  l but on this front what relief are you actually asking us to provide if we send this back and tell the district judge you should do something else about restitution because i take it you don't really contest the unfortunate as it may be unfair in some ways as it may be mr frankel is on the hook for the full amount of the restitution or could be any way the judge thinks he should be you're really asking us to provide something i'm not sure what and as relief to make sure he gets credit if there are other people who have paid i'm not asking the court to tell to send this back within site instructions to judge i think that the practical way of doing it would be to be manned it for recent to see on the issue of the order of restitution then to have the government at that point i would assume the district judge and if i was counsel i would ask the district judge to have the government come and indeed we may find out and i'm speculating but i'd want to find out did citi group in fact make concessions in the settlement did they in fact say well we really you know can't prove we lost seventy million dollars we really now pursue the fabric of hearing but there was discussion where was left and said we're going to have this on the order entered informal on the understanding that there will be some sort of a mechanism that mechanism doesn't exist in the order the order simply mechanism because there's no mechanism that what one looks at section thirty six sixty four the receipts use and restoration statute in the other is to see statutes there's nothing there congress hasn't given us any guidance or any mechanism for  for this for reducing restitution when a codefendant pays off for us to share in the case here where there is certainly some indication in the record of that law firms representing mr stern and his companies had been s a surprise release and the probation department which among other responsibilities with respect to mr frankel will monitor his restitution payments and they certainly they will be in the position they were in almost a court  mr franco is going to be paying a portion of whatever income he can make for ever can we agree on that sound that may very well be the case sure yes and as judge lynch pointed out it will limit his  and he was convicted i've embezzling this amount of stealing this amount from citibank essentially the same charges that mr frankel was charged with he reaches charged with as well an been convicted of similar type crimes your honor crimes of fraud i don't have the full list your honor but he's been he's engaged on the fraudulent conduct in the past and he gave the government government evidence in this case against mr frankel's behavior he after all was a licensed attorney at the time he prepared false documents he looks like someone who is left holding the back well your honor when aig defendant participates in a major fraud scheme that results in the kind of loss that citi group suffered in this case yes he's responsible for paid fifty thousand dollars for all the for the bad paper well he's he's got if there's a forfeiture order against mr frank was the i wouldn't say he was the most active participant in deceiving sea group into loaning mr stern and his company's one hundred twenty six million dollars yes absolutely his about fraudulent closing costs his lies about holding twenty six million dollars in escrow his lawyer paying the phony closing costs which were over fifteen million dollars that's coming directly from mr  himself now obviously he was doing it on behalf of mr stern by himself you mean he wasn't told by mr stern a what to do and how to do it well i think he wasn't told he was he clearly knew the  representations he was directly making to you he executed these false statements and as the as gru age and his participation in this scheme was a requisite of course somebody else could have been enlisted for that role as opposed there were other corrupt people up there who might have done it but he was the guy who had to make these representations wouldn't have gone actually or that you know in a lot of there are a lot of cases where restitution obligations on evenly where there is a crook who orchestrates a scheme because he's a crook he's never going to have any money that is visible and some other person who's a cob may have assets or may someday have a real job winds up holding some part of that then egg but that's one problem that exists with restitution pervasively in this case there's another problem that i've not necessarily seen before because in a lot of those cases there isn't anybody out there who is really going to be pain and eye except perhaps somebody who will have to pay off a few dollars for the rest of their life but here there's a separate problem which is this lack of a mechanism for keeping track of parent only of what the loss actually is a and maybe that's the answer i don't know but you're saying the only mechanism you've been able come up with is at some point when he gets on probation the probation department will check to see what what he really still  i think you're right that the burden falls on mr frankel and with the aid of the probation department they can do certainly determined as long as he's in prison whatever meager prisoner earnings he have these he has he's not real by a bar of soap in the commissary because it's all go confiscated even if hypothetically at least it's possible that some combination of the law firms and mr stern have reimbursed citibank fully your honor i don't believe anybody believes there's any evidence that even those law firms will have probation people will be checking is there some sort of procedure something written down or are you talking about what you would do if you were and i'm not aware of any such procedures the probation department has to deal with this kind of situation in i saw the gap in what is because i had this in another my one of my own cases payments were made to the district court for example by a codefendant then that would be trent correct but if restitution if something like an analogous to institutions thing that happens in this independent civil litigation nobody is interested in watching for that correct right so there are two possibilities i take it temporarily one is there was already some settlement and there was some allusion by defense counsel to that possibility that maybe should have reduced this liability and your position on that is that mr frankel's problem he should have pursued that at the hearing and he abandoned that issue and then secondly there's a possibility that even if there were no such settlements there might be in the future but there's no mechanism for figuring that out unless mr frankel somehow finds out on his own and proceeds through the procedure in the  ira to come back and ask the district court to credit him for that if he doesn't find out it's nobody's keeping track as far as i know you are there is no mechanism mechanism to keep track of that  award make the government look foolish seventy million dollars against a single person not a business a fraudster no doubt convicted of fraud he'll never pay it off what does the government does the government look foolish no your honor the rest of that restitution the judge turned restitution based on the facts before the judge there was one hundred twenty six million dollars in loans what was resulting it what was left was the seventy million dollars unless the citi group suffered because franco could someday hit the powerball at that that that can happen yes thank you the court has the inherent district court has the inherent worth already to structured restitution or they can make a joint and several they can make all these provisions and in fact i've litigated that just recently which are jazz reckon she issue just they discussed with the judge at the sentencing and they said look there's going to be a means to making this order make sense and that wasn't done now did good counsel and if i was you know what what is that mechanism maybe the district court could go back and redo what the district court wasn't asked to do before and find out what amounts have been paid but suppose these cases are pending what kind of what for vision should there be in the district court's order to require to figure out whether citibank is winning cases against various people i think you as citi group is being the beneficiary audit could have an obligation to come forward and disclose this to the clerk's office well they might if they were in of it but they're not a party to the criminal case they might if they sought to register this judgment against mr frankel which i take it is their right and try to enforce it against him then there would be litigation in which mr frankel could say wait a minute my understand they've already been paid all this money by somebody else and that would work itself out and discover it if that's the other geisha why would they ever if they got paid off what incentive would they ever have to register just this judge when they would and he left the seven but what i'm saying is they're not a party to the criminal case so what right to impose obligations on citibank to make periodic reports they're not even represented here well you know i think the court would have in terms of its inherent authority could bring citibank in for that purpose because they are the beneficiary of the order the order provides that the clerk shall collect and pay over the city group seventy million dollars this so they do have a role in this now if then if if they're in a position where they want to disavow this for whatever internal reasons they may have then s all good and then there shouldn't be a restitution or what good they could the government is collecting this money the court system is collecting this money on behalf of citi group that on behalf of the public interest says mr stern hasn't been sentenced yet as we are informed there might be arrested touche an order against him as well and he might have the funds to pay some of that i think at a minimum you already in the order want to indicate that the government has an obligation to come docket number pending but that docket number is if you put it into pacer you can report there's no such docket there's no information on it this is a very pernicious thing that's going on and this is not a danger to there's no danger to mr stern's life that's been discussed they just didn't want to come out because it was a highly political situation you know this is the certainly there could be some for that matter the new york times if they were interested could file an application in the district court to  what happens is the probation officer is making sure that mr frankel is paying whatever he can afford to pay towards the restitution order but they're just going to look in the clerk's order to see what's filed what he can afford to pay for the rest of his that i think it would be very simple world with a straightforward matter if this case was remanded to the judge for instructions to make make it clear how other contributions ought to be taking to be accounted for in a restitution order i can imagine a very you know if the government isn't prepared to come forward with it a very simple application that can be made to the district court to obtain this information and i think it's within the inherent power of the court to make it a condition to the entry of the sort of for the benefit of citi group the citi group agree simply to report if it collects any money in connection with this with this debt i don't see this as a very complicated or burden some on any of the players and the opposite is if you leave this in place misters franco is going to be saddled with a seventy million dollar judgment for the rest of his wife because unless we know he's never going to pay it off and unless it's paid off by some other means and the unusual thing in this case is that all's going to happen is he's going to wind up with something like a twenty million dollar restitution or that for the rest of his life but at least hypothetically i think you're right it's all together it's remain and i'd want to find out you know if citi group did collect forty million dollars i want terms that they collected did they make a concession that they can see that in fact i take it there but it may it may be that there's nothing in there but who knows i think we need to take it and i what you would expect would happen is that the probation department went monitor and report so it seems that you're actually quite close in terms of how you think whether whether there is because there's there's a gap you're obviously in a situation like this where you have civil litigation it's related to a criminal case you if you've proposed a way to remedy that gap well i'm just suggesting i'm not for supervising his restitution payments these are suggestions i don't think it would be appropriate for this court to then direct every turn this case the district court to institute a mechanism that doesn't exist in the war  size the legal issue of what authority we might have and we might be we get over that there's a factual issue also isn't there that this is all speculation you know the words there's no evidence in the record before the district court that citibank was paid a penny there is a reasonable speculation i suppose that some day they're going to be paid a penny and that gives us by somebody or somebody else and that was us an interesting question about how mr frank would ever find out about that or what make innocence there are etc but at this moment we're just speculating about this as one could in any case speculate about the possibility that some third party might be in a position or might be required someday to pay some money that you get for it that's actually clear your honor because you know at the sentencing proceeding frankel represented to two judge for a month that he and this is the word he used i think there has been a settlement and he threw out a forty million dollar figure and they make that may actually be true may not be true but it was justice for what she offered absolutely no evidence of it and even if convert from the sale of the properties that the hundred twenty six million was used to purchase it was reached but that's not a settlement that no no that's completely different your honor they may also be a settlement we don't know there's nothing properties therefore the restitution amount was reduced according to the way restitution is credited by to reduce it to seventy million that's where we're at to seventy now if there's actual evidence is there actual  record even though it may be exists somewhere in the world is there any evidence in this record that citibank is actually sued these law firms or is that also just the lawyers saying i think this is what happened there's nothing in this trial record of this case at that actually happened not that i'm aware of your honor there's nothing in the record that out actually happened and i think in all fairness when looks at one looks at the sentencing transcript and representations by my part my trial partner it's i think we were under the impression there may have been such a settlement but there's actually no evidence of it and again no evidence that actual payments were ever made under that sort of so called or suppose it settlement thank you thank you both  yes go ahead to abuse you and just in terms of an error i think that there is an error in the order the order says joint and several without indicating who is joint and several with mechanism in the order and that wasn't affected effectively done and you know it's one of these kind of big things in the federal rules of criminal procedure is there really a provision for going back and once the judge announces the sentence and then he puts it into writing there's no formal mechanism for going back and saying judge would we do this to document other than to argue that strong appeal this