eleventh eleventh hour perhaps giving us a bit more time than the twenty that are allotted given the number of issues and so forth to the extent that the court is inclined to give us an extra five or six minutes that would be wonderful well let's get to that  division of the time would be in the absence of any extension of ten minutes for me six minutes for mr coe pending on his opening remarks and both of us would reserve two minutes each then a very good life thank you at your lines is serving  fifteen year sentence for on a based on a trial which in our judgment was fraught with error including significant error of constitutional dimension he was a fundraiser he represented small charities pursuant to which  resort to contracts which provided for contingent compensation of upwards of eighty or ninety percent of the monies that were collected and most of that eighty or ninety percent was interned paid to second third party subcontractors who performed a great deal th telemarketing which was the basis for the fund raiser at trial by our count the government and ninety two separate occasions referenced either in opening or closing arguments or an examination of witnesses the fact that mr lyons companies telemarketers did not voluntarily disclose the percentage which the telemarketing company was going to retain of the gathered funds and additionally and as part of those ninety two references constantly focused on the fact that the telemarketing companies were going to retain ninety percent of the collected funds over and over again now we're standing the fact that these two statements these two acts of conduct the non disclosure non voluntary disclosure of the fund raising arrangements and the high fundraising arrangements themselves have been over and over held by the supreme court not to be any necessary evidence of fraud and themselves to be constitutionally protected decisions when made by for example charities and their fundraisers and most importantly where the evidence of these relationships the ninety percent retention of collected funds and the non disclosure of those relationships except when asked by the donors the evidence your honor was not offered in any sense to establish the falsity of any representations made in connection with fundraising drive it was simply offered as gratuitous evidence of general fraud and this was particularly poignant in this case because the evidence against lyons who was only a fundraiser here were circumstantial at best and this constant mantra this repetition of this very very factually gave the stating in its impact on the trier of fact evidence came in over and over again and we ask you you know kind of boils down on this issue to how we read in that one case and one of the things the supreme court said in that case was so long as the emphasis is on what the fundraisers misleadingly convey and not on percentage limitations and fees say such actions need not been permitted lead shield protected speech so  take you at your word that there's ninety two separate occasions i went through the record i didn't count them quite severe cyclic but did you do a corollary analysis of how many times they talked about other misrepresentation patients that occurred we didn't with respect to that specific issue but the primary allegations in the case involved alleged misconduct on the part of the charities in other words that the charities didn't spend the money that they received in ways that were proclaimed that they were going to be spent in the scripts and in the brochures which had been essentially prepared by the charities and presented to the fundraisers that was the primary thrust the secondary thrust of it was that there were statements in the brochures and in the telemarketing scripts with respect to statements about the tax exempt status of the underlying charities so those were the two statements of adventure admissions and the relationship between an actual factual predicate and evidence that was going to come in this unlike this particular case but more importantly in madigan the allegations which were present before the court were all based on the notion that there had been specific and deliberate misrepresentations as part of the telemarketing to the donors about what percentage of the funds that were given by the donors were going to go directly to the charities itself had alleged fraud generally and then the manifestations of fraud were the misrepresentations about what the percentages were going to be the representations for example that ninety percent of all donations were going to go directly to the charities it was the series of representations that all of the labor was volunteer so essentially everything was going to go to the charities supreme court summarized by saying that substantial portion that was a specific representation substantial portions of the collected fees were going to go directly to the charities and that there were going to be certain things done with the money but that was the implication in a sense the court was saying there was going to be this much money going to the charities and the charities were then going to be doing those particular things and in the context of the necessity of disproving the false statements the court said it would be permissible to allow evidence to come in of the high fund raising costs and the non voluntary disclosures of those costs to the donors by the fundraisers but the court reiterated at the end of the opinion again using the language that you're on his reference that so long as the emphasis is on what the fundraisers misleading convey and not on percentage limitations on solicitors fees such actions need not in permissibly chill the protective speech the point being that the evidence of the high fundraising costs and the non voluntarily voluntary disclosure  come in but to refute specific statements which the government alleged were misrepresentations and not simply to come in in any case where there were some allegations of either misrepresentation or fraud drew the line so that it could only come in to refute specific misrepresentations now why does that make sense well it makes sense because at first blush the notion of high percentages being retained by fundraisers hiking expenses being paid by charities is kind of unsettling i mean it's a kind of an unseemly things we sort of think about it in the first instance not and it's disturbing but not terribly different in the sense from many other things which the first amendment protects but we have to recognize on further reflection that those high fundraising costs are an economic reality because without them many small charities and organizations simply would not have the ability to generate the funds which allow them either to get started or to continue to stay in the to continue to stay and do the work that they're doing or to perform the service here it had kind of a dual situation where that may be the backdrop but these brochures and these funds were misrepresented in terms of what was happening i mean that seems quite clear well the government has certainly alleged that and there's other evidence to the contrary well i mean one person got something and but as a general this isn't the red cross or maybe i should use that as an example these days but you know these where i knew charities would put it that well there certainly was the other to that effect but we have to remember that the term wind was the fund raiser here he wasn't the charity and to the extent that there were allegations that the charity had misspent monies which the charity received those allegations were not going to be disproven by pointing out that the cost of fundraising was ninety percent of the funds gathered there was no linkage there was no there was no joining of swords in the sense it wasn't either necessary and frankly it wasn't even terribly relevant to it and with respect to the other allegation of misstatements the five zero one c three  misrepresentations as to government alleged the high cost of fundraising had nothing whatsoever to do with either disproving whether those statements were made number one and number two whether those statements were correct which i aftra absolutely inflammatory and for the purpose particularly with respect to lie and given the circumstantial nature of the evidence against him with respect to his knowledge and so forth about what the charities were doing it became devastatingly powerful and almost overwhelming impossible to overcome situation at trial and again i think the suppose we have to go back to what the supreme court's thinking was both in the premeditation cases and in madigan because the supreme court recognized because of this sort of unsettling sense the high percentages and so forth were going to be retained as in the city for the fundraising efforts that the court indicated that eight those percentages were entirely to be within the decision making power of the charities on the one hand and the fundraisers with which they contracted and the court noted there's no indication here that the charities are being brow beaten into doing this there's no suggestion that the charities don't know what does that they're doing or that in some sense they're being coerced here and secondly from the perspective of the donors even justice scalia noted repeatedly that the donors are in today's day and age certainly understand that they're going to be cost associated with fund raising and that if a dollar is given that doesn't mean the dollars in any sense going to go directly to the charity and if they have questions they'll ask and so the court recognized that in order to protect the first amendment rights the speech rights of both the charities and the associated fundraisers it was necessary to draw these protective curtains around those inquiries and the court was very very careful with respect to those particular issues making clear  that fraud actions could be brought of course and be the states could require certain kinds of disclosures that would provide the information but not in a way that would interfere with the specific individual expressive right both of the charities and their fundraisers and a stifling and chilling effect on the fun raising process itself and one thing that we haven't talked about and really hasn't been addressed previously here is that in connection with these first amendment issues the hallmark the overarching theme of spreen court jurisprudence with respect to expressive matters has always been that sensitive tools must be utilized to separate the protected from the unprotected and that further suggests the fact that in that again the court did not intend to declare open season on the ability of government to utilize the high fund raising costs or the non disclosure of these of the facts of those costs in connection with any allegation of potential misconduct in connection with fundraising because what that would have done is exactly what the magic in court said could not be done and that is to allow the government on a case by case basis to retake ground which the supreme court has previously declared off limits and that's exactly what seems to us occurred here in this trial the allegations of misconduct that were unique to this case were misrepresentations so the government alleged of two particular approaches which were set forth in the brochures and in the script one is of indicated before was the assertion of the tax deductible status of the charities and secondly was what the charities were going to be doing with the funds that were received and as to neither of those allegations the facts of the high fundraising costs or the volunteer or the non voluntary disclosure of those costs was remotely relevant that shouldn't have been admissible they shouldn't have been utilized and certainly the fact that the government used over and over and over again as we point out in our briefs was inappropriate in  created these constitutionally impermissible circumstances a trial when coupled with the joy instructions that allowed the trier of fact to utilize the high cost of fundraising a case which stood for the proposition that the only thing that it did was to permit a complaint to go forward which on the face of it alleged misconduct fraud which included misrepresentations as to the very thomas he said well the instruction was right out of madigan in a reply brief we pointed out that the government seems to be saying that that in in some ways expanded their ability to prosecute for fraud in their area that might previously have been protected by the government tends to argue that the reason the pope liability instructions were proper in this case and i've covered a lot of the government sub issues in my brief and i'm aware of the small amount of time i have here is that the case law proven beyond a reasonable doubt to the guilty telemarketers that the jury must be instructed that their criminal acts were foreseeable by the charge defendants the government site several cases saying foreseeability is equivalent to in the course of the scheme and that this jury was told that the acts of the other people for which the defendants are going to be held liable have to be found to be in the course of that present scheme i would point out is is there stapleton says that the jury must be instructed that the acts in the course of the scheme are that the defense can be held liable for them so long as they are foreseeable by the defendant jury instruction because it might very well be that when the issue is sufficiency of the evidence that a court can find that the defendant can be legally held responsible for the conduct of a codefendant or  that's not to say that it's a proper jury instruction to tell the jury that they may convict in the absence of a requirement that they find that forsee ability element which is there if we agreed with you because you are now quoting stapleton i think i'm isn't anywhere nearly as clear as your honour's question suggests that the government made a strong showing even that the monies that were collected were not used for charity what the government did and i've covered this somewhat in my brief is put in at double evidence from people who were workers at the charity for various times which did not cover even the entire period saying when i was there i didn't see a lot of charity ask the government didn't prove what wasn't done here the government simply put on a summary expert to say very little money was spent on charity but if we look at the numbers here we're talking about seven million dollars roughly ninety percent of that went to telemarketing the other ten percent would be seven hundred and some thousand dollars the government concede conceded to the jury and must concede on this that six hundred thousand dollars that was collected is totally unaccounted for because the bank lost the records there in addition there was one hundred thirty seven thousand dollars left by my client in the bank account when it was passed on to prove that when this charity was taken over by another  person it's over seven hundred thousand dollars for the government to say or for your honor to conclude that on this record the party with the burden of proof prove that the money that didn't go to the fundraising cost of telemarketing was in and we know that ninety percent of this money went to telemarketing if that's constitutionally allowed then we're talking about accounting for seven hundred thousand dollars over the spirit of time and six hundred thousand dollars was utterly unaccounted for this summary witness said he didn't see evidence of a lot of money spent on charity but there's no evidence about how that six hundred thousand dollars was spent because there were there were no records for so i think that that is the government a lot of it in the in the argument but didn't really prove that the i r s gives them notice that they determine that it's not a church or not entitle to tax exempt status the government told the jury in this case that that's not the case that if if you conclude that this is not a sincere church under some standard of what areas criteria that the ira's published later after this these events occurred and based on those criteria it's my opinion that this is not a church and therefore it should have been tax exempt but for the government to say that it that it proved in any meaningful way that it even offered substantial evidence or sufficient evidence to survive to support of various finding that it was a wide to say that these contributions were tax exempt i think is a misrepresentation of the record and that's why we brit's the argument about the jury being instructed on what there is they were allowed to base a conviction on we have the first amendment issue which i'm not address addressing just because we've divided the time that way we have this question of whether it was a lie to say these contributions were tax exempt when we are understanding of the ignorance you know that these these guys just said well until they tell us we're doing some wrong we're not i'm telling you that we've cited the statutes that say if you want if you incorporate as a church you're entitled to this exempt status unless you get notice so what church that was really a soliciting and then we have this question of how much money was spent on charity where the government's evidence really fails in terms of proof because the government admits that ninety percent of this money went to telemarketing and i take it that the first amendment cases say that's not illegal and that that leaves about seven hundred and some thousand dollars that was fair game for the government to prove was not spent on surety but we know what one hundred thirty seven thousand of it is and the other six hundred is absolutely unaccounted for so the burden of proof i find it difficult for the government to defend aig theory of fraud which is based on just sort of pick a theory to the jury which is what the government told the jury you can just find a scheme to defraud you don't have to find any particular type of statement to be false and to agree on it and then use the kind of argument that was used in this case which was basically an appeal to passion and pressure and the emotions of the jury about what kind of a person my client was assistant united states attorney in los angeles and i was trial counsel on this matter your honors i think it is very clear that in this case this case really reflects exactly the type of action that was contemplated by the supreme court in all of the predecessor cases demand again and mad again the case was based on three very specific types of misrepresentations the first type of misrepresentations is really an echo judgment human stated of one of the allegations from the madigan case and that is that the telemarketers  donors that their money would be spent on charity when in fact the only charity was very incidental to the for profit activities of everyone involved the second of course is the brochures themselves a specific brochures that make promises to donors of the specific ways in which the money would be spent and reading the defendant's briefs and hearing mr weston argue i just wonder if it's even a reflection of the same trial that i was at because really the very strong emphasis and most of what was discussed during the trial were the specific brochures in scripts that were written by the to descendants together and given out and the fact that this is what donors were told and really ad nauseum and i think to some boredom by the jury going through each brochure with the witnesses with kate flanagan and with camera bell let  fundraisers or because the money that was left over after the fundraising cost wasn't actually spent well it's actually that the whole panoply i think you have to show what is done with all of the money really it's not the very allegation of fundraisers fees it's the fact as you state that of the money that went to the charity virtually nothing was spent and in some instances actually nothing was spent for him and that's quite a different thing from saying if you're a solicitor calling and say you know i'd like you to donate to this and you say ok i'll send in my money and it turns out as many of these professional fundraisers do take large car so they think that ninety percent crime and then ten percent goes to the charity it's one thing to say well it's a misrepresentation because so much of it goes to the fees as opposed to the money that does go to charity actually doesn't end up with charities which of those what was the theory well your honor it was it was the latter and and i think you need the fund raising costs well i think it's very interesting that that mr cope and he argues that he doesn't his brief also that it's not sufficient for the government to put on three employee witnesses and and lay their testimony of the fact that no charity was done the only thing that's going to do it is the cold hard bank records in any fraud case the question is always how do you prove the misread of how the money was spent you show how the money was actually spent there is simply no way to show how the money was actually spent without showing the whole way that the money was spent and then includes this much went to this this much went to this so you have to show in order to prove the mystery in order to show where the money went you must show that some of it went to fund raising some of it went to mr sanchez's rant some to his medical expenses on to his phone bills some to his scooters that he worked on but none of it went to the actual charitable activity and i think it is important and i hope i am to size it in my brief that when i addressed the issue of how the money was spent with the jury it wasn't just say ninety percent was spent on fundraising period but to say this is how all of the money that came in was spent and you can't discuss that without saying how much went to fundraising but as you state your honor then what makes it t v what makes an important and what brings it within madigan is the fact that beyond that virtually nothing was spent on the actual charitable activities and i guess the question is it's one thing to say ok here's the money everybody agrees that certain amount was spent on fundraisers there's nothing illegal about that and so what we have to do is figure out whether the remaining money went to the charity whether there were misrepresentations but their argument is that there was so much emphasis on what would be shocking to most people about how much goes to fundraising which might be shocking that is not illegal and what is your response to that my response to that is that you can you can you can take each instance as  especially mr lyons brief is simply there is not really a recitation of facts it's picking each instance in which that's mentioned out of the record and whining that up is is that's what the government's case was that was not the is it's frustrating to see the records so distorted and it really is so distorted by that the main focus of the testimony was about these brochures and about what was specifically said and then was in fact that money spent that way no it wasn't did you plan outings to take candy cap children to amusement parks now we did and did you help provide money for the families of slain police officers no we didn't did you support aids research no we didn't that was ad nauseum the testimony and if you're talking about judge carter runs a very long day so although it was two weeks of trial we went eight hours of testimony each of those trial days and to pick ninety and taking their their word to pick ninety instances out of eight hours of trial day for two solid weeks that's not a constant emphasis and it just wasn't that way and if your honour's read the record you'll see that that is a distortion of the record and the only way that they can make their argument is to distort the record in that way your honor when i when i when i put the government's first misrepresentation when i worded it the way i did i was kind of quoting right out of madigan where one of the representations in madigan is funds donated would go to further charitable purposes when in fact the amount paid over to charity was merely incidental to the fundraising effort conducted primarily for the private b q nearly benefit of the fundraisers the government's theory goes beyond that because we talked not only about the amount going to charity but then what was done once it went to charity so that misrepresentation as long as it's coupled with other affirmative misrepresentations was approved of and mad again over and over what madigan requires is specific affirmative misrepresentations a bit about the way the money was spent and that was the main emphasis of the government's prosecution the brochures and the promises that were made to donors about the way money was would be spent that in fact it was not speaking about the tax exempt status of the charities judge carter mentioned over and over to the defendant i know you're going to want to jury instruction about this issue draft me a jury instruction they never did they specifically stated that they were not going to do that so they failed to ask the court to give some legal guidance to the jury on this issue what the government what the government's expert said and what the government emphasized was not  whether we like mr sanchez or his religious ideals but the fact that yes a church is in fact tax exempt on its face however and this is what the expert testified to it is improper for the church to represent to donors that their donations will absolutely and in fact be tax exempt when you haven't gotten the actual formal exemption from the i r s so it was not a touchy feely church question really it was a specific  you didn't seek specific exemption and therefore it is not appropriate to guarantee to the donors that you are in fact actually examined this taking in light of the fact and viewing the government's evidence the evidence in the light most favorable to the government as diana mecurio make sure you know testified that the defendants got together and very specifically called a church to avoid the tax issues and then there's evidence in the record and i think i've pointed it that out to your honor's that that both lions and sanchez would try to use the church as its shield against any kind of law enforcement scrutiny you can't touch us because we're church if i were you i'd be worried about challenging the church because we're sacrosanct just because we say we are so they were very aware of the fact that they were using this as a shield one thing that the defendants talk about is that that yes madigan clearly allows for evidence of the percentages and evidence of the omission they claim that the only context in which you can use that evidence is if the telemarketers specifically make representations about how much money is going to the donors i don't think man again can be read that way in reading now and again percentage of money but madigan nowhere makes data requirement what navigon requires is that the prosecution not be based solely on only on the percentages or the emissions to say that we are retaking ground that this supreme court has established is completely untrue every single one of the cases wryly months and all of them specifically reserve the possibility of of individual fraud actions and what is extremely important to the madigan core is that the bird that the government has the burden of proof beyond a reasonable doubt and that there are various elements of fraud that must be met it's not a broad prophylactic remedy was the jury told that simply having high fundraising cost was not illegal yes your honor well it wasn't put that way wasn't in a jury or what it was or jury instruction that would approximate something along those lines it was a direct quote from me out again and what it says is and i can find it here if you like  it is high fundraising costs without more do not establish fraud and here failure to volunteer the fundraisers feet when contacting a potential dony without more is insufficient to establish fraud so the jury was instructed that it could not convict solely on that and i was i believe i was careful in my closing argument as well your honor to point out to the jury that they could not convict based on that i wanted to make clear that i was not basing my argument on that  i want to just talk about an evidentiary matter and that's mr cope and he brought up and that's this issue of this six hundred thousand dollars nobody know where that nobody knew where that six hundred thousand went  himself conceded that obviously that money would have been spent consistently with the rest of the money so that you can't say that all six hundred thousand of them went to charity clearly  conceded and then the light most favorable to the government that six hundred thousand was spent the way the vast majority of the rest of it was spent that we were able to analyze so in other words ninety percent of it was not available at all to the charities and of the remaining ten percent virtually none of it was spent on charitable activities to say that there's i just want to address again in case i haven't to say that there's no nexus between the amount of money going to fund raising costs and the specific misrepresentations made in the brochures is completely incorrect as i said in any fraud case you really have to trace the money otherwise you get an argument like the one that's being made in this case that the eyewitness testimony of the people that were right there is simply insufficient to establish the fraud we had to show where the money went there's no way to do a fraud case without money tracing so there was an absolute nexus and that's why it was done did definitely the instruction in that case which is now a pretty much a standard ninth circuit jury instruction it mentions the foreseeability element however the cases that discuss the law foreseeability or excuse me the law of coast scheme or liability do not require first the ability what they require is that the defendant be unknowing participant in a scheme to defraud with the intent to defraud and that the act be committed in furtherance of the scheme so that judge carter's instruction did include the necessary elements  trollope they could not have been the only way they could have been found guilty was coast scheme or liability and no instruction had been given in that case at all another thing to recall is that the instructions must be taken as a whole and the mail fraud instruction itself requires first the ability it's in the actual may offer an instruction and i'm not sure that i have it directly in what i would really like to emphasize is that the evidence in this case was simply overwhelming these two people got together and they plotted a scam in the name of charity in the name of children and veterans and deceased police officers it was very clear it was very calculating and all of the evidence at trial demonstrated that these two defendants you criticise lee what they were doing used these telemarketers know and knew the riley line of cases they all knew about it and they knew about the tax exempt status of churches and they were trying to use these to get around any kind of lawful practice and to simply take as much money from donors as they possibly could while not performing any kind of charitable activity the evidence was absolutely overwhelming from the employees who work there from the then i guess defended the argument in this case that that was a lie because in the government's opinion for a church to be able to tell people that their contributions are tax exempt in other words to inform the people that because we are incorporate church and under federal law we're entitled to pass the exam status unless the i r s tells us otherwise and they haven't told us that before you can tell people that you have to formally apply for a formal determination of the i r s of social status authority whatsoever has been cited by the government for that proposition and for the government to make the argument in a criminal case where the government is asking this court to say that one of the theories on which a criminal fraud conviction could be upheld is on the government's opinion which is not supported by any authority in law that that's what a church should do before it can make a representation to a donor that their donation is tax exempt i believe is incorrect it might be fine to say that if later it turns out that the i r s determines that there's a not exempt status that there might have to be some determination of what taxes are owed but how one power in the world can the government defend an argument that it is a crime to tell someone that under the law were tax exempt organization when that is the law and the government concedes the second thing that i would like to say is that the courts should distinguish between that argument and the other argument that the government told you was ma closing arguments of the jury which is that there is anecdotal evidence that these defendants hid behind the church status that's clearly fair game that's a perfectly appropriate argument for the government to make in terms of asking the jury to draw an inference that these defendants were doing something improper or thought they were but note that every church organization could be accused hide behind its church stacks we've seen in the history of religious freedom in this country over and over again accusations that one church or another or one religious organization or another is throwing up its first amendment status in order to prevent inquiry by the public or the government and i take it that the balance that the last phrase there is in favor of providing that protection so fund raising is not sufficient the prosecutors response was very telling i think the instruction was read by the united states attorney and what the jury was told was without more high fund raising costs are not sufficient to establish  and without more failure to disclose higher fundraising costs are not sufficient but in this case the argument was both the president and therefore the jury was never told that the two of them can't combine to make a in madigan and beginning of the pinion right after the announcement who's delivering the opinion of the court judge ginsburg writes the state funded at the attorney general's complaint alleges that the fundraisers defrauded members of the public by falsely representing that a significant amount of each dollar donated would be paid over to the charities right in the allegations that was the primary purpose thrust of what madigan was all about in that the fundraisers pitch brochures  specifically told there don't need to know the perspective donors that significant amounts of the money that they gave would go to the charities and on that basis it was appropriate to say to show that in fact ninety percent of the money went to the telemarketers in that case because it made a lie out of what had been specifically said to the donors in the same way that the supreme court has made clear that if donors ask questions to the telemarketers how much of my money is going to the charity what the first amendment protects that is after there's no obligation for the check telemarketers to be compelled to tell how much they are doing and in fact the percentages need not be disclosed to the donors obviously they have to be  with the government and the court notes that if the complaint in madigan had alleged nothing more then that high fundraising costs were retained by the high fundraising percentages were retained by the telemarketers or that they failed to voluntarily disclose that fact the complaint would have to be swiftly dismissed as your honor's question at least was inquiring about that's insulated from constant from a prosecution or a condemnation i would note and i know i have negative seconds last left that i count five times towards the end of miss lindsay's closing argument in which she notes about the ninety percent being taken by the telemarketers well we know right off the top that ninety percent of it went to mr lyons organization and the last point that i would make with respect to this is the the areas to which we have called the court's attention areas of constitutional significance the government was obligated to show under chapman that those were harmless beyond reasonable doubt we respectfully submit that they haven't the matter must be remanded for a new trial not inconsistent with that and for purposes and on the basis of proper evidence without reference to the fundraising or the failure to not disclose thank you can thank you and i thank all the three areas for presentation it's an interesting case