good morning your honor jonathan schneller for defendant to receive demand i'd like to reserve two minutes of my argument for about in case after case this court has affirmed that to secure a conviction for recess the government has to prove the defendant acted willfully which is to say that she understood the pension transactions in question were wrongful it's hard to imagine a defendant for whom that principle was more relevant interview said the man who is unsophisticated inexperienced mourning the sudden death of her husband and suffering from cancer when she took over a company where you legal pension withdrawals had been going on for years so the defendant doesn't have to know does she that you said just know that it's wrongful she doesn't have to know that it's violates some particular federal statute she just needs to know that the source of the funds came from an employee pension plan i think it's i think that's more or less right i don't think she needs to know that there's a statute on the federal books that governs pension embezzlement but she needs to know that those funds are not hers to access she needs to know that it's wrong to go into those she should know she needs to know that the source of the funds is an employee their employee retirement funds that belong right and i think one component of knowing that it's wrong to access those kinds is knowing that it's a pension plan well but if someone told her that it's not wrong if we pay the money back or if we intend to pay the money back that would be no defense to  that right no i would not i think if she under if her and her standing is that what she's doing is ok she knew that the it was employee pension fund but somebody told her it's ok for us to take this money as long as we eventually intend to pay it back you think that would be a defense to this charge i think repayment is not a defense the fact that she intended to be paid on its own is not a defense but if she believed that the pension withdrawals were ok were permissible were not wrong for so long as  to even though she knew the funds were employed pension fund yes i think a lot of people i mean i think you know lawyers sophisticated people know that you can't touch pension funds but a lot of people might not grasp the significance of the pension i don't think are to support a position i think as long as the government prove that she knew these funds were employee pension funds it doesn't matter whether she knew that taking those would violate the law your honor i don't i respectfully disagree but i don't really want to go to war with you on that point since our whole position in this defense at trial yes was that she did not know that these funds were pension funds she said i was you know i had no idea how these accounts work i couldn't read the books i was traumatised i was sleeping two or three hours a night and i was writing relying on my subordinates and nobody ever said these were pension funds or that there's anything unusual about the transfers that we were undertaking she thought the funds i gather belong to the company she did and you know they had the company's name on the registration of the account and said you know i think de mint brother profit sharing plan there's no evidence in the record that she would have grasped what a profit sharing plan was i know that you know it's a technical term that a lot of people might not appreciate the significance of the term if anything the term suggests something other than pension funds to me it sounds like money that the company profits of the company that the company had set aside to share with its employees around until i actually practiced there is a law myself and until i did i did not know what a pension plan was i thought it was interesting michel yes or how we sh justify that she did testify yes you're well didn't she testify to her background business server lack of background business she was allowed to prepare present extremely limited testimony on that point she started to testify about her i real  rear end her struggles early on in her career with when the whole subject was placed off limits by the district court which said explicitly she's not charged with being sophisticated so none of this evidence about how and sify mean the rest of me inferring from that statement as senshi it how the subject off limits on the premise she was in charge of being sophisticated so she never got to talk about her early struggles in the field but she also never got to testify that in her entire career in real estate she was only able to then she would know it she didn't have to understand anything else so i'm not sure you're answering judge overmars question the fact that she was not sophisticated  law is that she didn't understand the mechanisms and so on what was her evidence that she didn't even know that they were a pension fund well how did that get blocked it was her testimony that basically said look there are all these different pots of money i was told to move money from one pot into another no you're not answer it because she shows her evidence that she did not know account was a pension i'm sorry hundreds she explicitly denied knowing that the account was a positive one and then the only testament the government had on the other side if we're looking for such direct evidence was a single line of testimony from a man who was himself implicated in these transactions saying yes we discussed that there were pension plans so it's very much a case he said she said where she was not allowed to provide any of the corroborating evidence that might suggest she was the kind of person who wouldn't appreciate where these funds came from i do think her sophistication is relevant to her testimony and if the jury knew that she was an especially unsophisticated defendant or i should say an especially unsophisticated person it would be more likely to believe that she wasn't playing paying close attention to the labels on these different accounts that she didn't understand the significance of those labels and that as she testified she was operating in a sort of haze where she was really relying on her subordinates to do these sorts of  question of the district courts exclusionary rulings yes that is that is our case but i think that's an easy burden for us to meet in this case because the district court explicitly got the law wrong about the men's read offense as your honor pointed statements from the district court that the mens rea standard is a knowledge standard when in fact it was a willfulness standards and i would argue that that's sufficient to establish an abuse of discretion at that point the only question is prejudice and here the district court's going wasn't just wrong they completely distorted the picture that the jury received you're just remind me because you have i think maybe four distinct arguments one is keeping out the rest of her testimony on her lack of sophistication and she was cut off on that one was not being allowed to bring in the rest of her statements to was it chandler was that the agent you interviewed right that was yeah that was one argument we made yes ok or confession the another is that the accounting clark was not permitted to give lay opinion testimony that's lay pinion testimony about her sophistication and what's the is there one more there or there are several more there's also the fact that the district court voluminous evidence about how she spent money that was unflattering and then there's the fact that the district court excluded evidence about that this money just went to ordinary business expense is rather than straight to her pocket and that the bulk of the money i should say went to ordinary business expenses and then finally there's also clarke's testimony that was excluded which that these illegal pension withdrawals had been going on in the company before she even got there but she didn't have any knowledge of that she did not but i think as the cohen case that we said in our brief points out when an employee of a company has previously participated in you legal transactions and then a new owner comes in that employee's prior participation in the illegal transactions is still relevant because it shows that they could have independently carried out the illegal action without the no your honor those are never actually admitted into evidence in the district court and so they're not part of the record on appeal ok but you're proffer is that i mean his testimony leaves one with the impression that your client admitted knowing at the time of the transfers that these were employed pension fund your proffer is that in actuality what she said during the interview was i know now that they were at the time of the interview i know but i didn't know at the time of the term exact that's exactly right your honor and i believe prove that she knew that the funds were employed pension funds right yes i mean we don't need to fiddle around with the mens rea because that ends up being the only issue that that's really relevant for our purposes right yes you're right so let me just ask you about the chandler testimony because that struck me as perhaps the most obvious of the errors here why was it first of all do you agree with with your opponent that at the time of the interview the defendant did not say anything about having known that these were employed pension funds when the transfer transfer no that's incorrect your honor and another point that's incorrect is well what she what's clear from the notes of the interview in the report is that she knew they were pension funds at the time but was she's claimed that at the time of the transfer ok but was told that as long as she repaid them within a year it would be ok but that it so in light of that the testimony that chandler gave at trial of her statements was not misleading and the government would no your honor that although it wasn't admitted into the record or into evidence the court district court chief judge phillips did have a copy of that report because it was mark by the defense because he attempted to use it to refresh the defendant's recollection when she testified but it was not admitted that's why i mean i saw references to it it would have been nice if we had had it but it's just simply not in the record but you're telling us that what's in the four corners of the report are statements from the defendant that she knew at the time of the answers that these were employed pension funds but she just was under the incorrect impression that if she paid it back it would be illegal yes your honor and there  evidence i disagree with counsel that she didn't know that they were pension funds it wasn't just the testimony of the company's controller mr pic shown it was also the testimony of rex rex ramsey who was the broker of record for the pension fund yeah but you know both of those witnesses really give no basis for their opinion that she knew they all they refer to as well the thing was called the profit sharing plan and that that term on its own does not signal that these were employee pension funds yes your honor but in addition to just what that fund was called mr pic shown testified that he had numerous conversations with the defendant daily weekly conversations about the financials of the company and in those meetings they talked about how they were going to pay the company bills and one of the strategy right but the transfers were coming from something all of you know from from their testimony was that the money was coming from the profit sharing plan which as i said to your comment to me on the face that doesn't say anything about that but the i'm sorry if you're having trouble hearing me well your honor and i would say there's more in the record than that first of all she was the only trustee of the pension the employee pension plan as though that were the name of the account the name of the account was the profit sharing plan yes your honor but in the documents of the plan which are in the record and particularly on page six forty six of the record it shows the plan benefits and it plainly uses the term retirement and it's clear from the documents that the defendant was the sole trustee for that this was a retirement plan and from the testimony from rex ramsey and mr pic shown it's clear that they had conversations with her where she knew that these were money set aside they weren't part of the general company operating accounts and that's why those securities had to be liquidated before they could be used to pay the bills so i submit that there's ample evidence in the record that she knew that there was a pension fund and even then with respect getting back to your honor's questions about mr chandler's investigator chandler's testimony she then testified was the very next witness and was allowed to give her version of what she told to investigator chandler so that was before the jury and she was given a sufficient opportunity to explain that well no i mean if if the statements to chandler were as the defense lawyer represented i don't think you could say that letting the defendant take the stand and give contrary testimony was an adequate substitute right i mean her credibility is in question the agent is not even try to say misleading saying that she admitted knowing at the time it would be an adequate substitute to have the defendant say well no actually i told him something different yes your honor but it was the defense's case at that time and they could have recalled investigator chandler to admit a prior consistent statement if that's what the true belief was what was in the report and what they could have elicited from investigator chandler but they did not do that they left it at the defendant's own version of how she recalled the congress her statement how about admission of the the uses to which she put the money unflattering uses obviously gambling in the like why why was any of that relevant beyond just the fact  limiting instruction i see relevant is what i'm saying to her whether she knew these were employed pension funds who cares if she use it for gambling to buy for coach to buy a jaguar who cares what you are once we get over the hurdle that she knows their pension funds the government had to prove that she  awfully and willfully obstructed or converted the funds of the plan to her own use and to the use of another and in this case it wasn't that we had checks directly from the company written to her so we could see a clear  just as guilty and from wrong she would have been just as guilty if she had used every penny of that money to pay business expenses right yes your honor but in this case it went to show her motive of why she was doing this in light of the financial difficulties that the company was going through that she had a motive to continue to find additional funds to keep the bills both the company bills and her personal bills being being covered through those so  to her primarily to show her motive for why she why she knew what was going on and why she continued to authorize those transfers conflates two types of evidence related to the actions of the past presidents so first the testimony was consistent through many witnesses that the defendant wasn't at the company before she was president so the actions of prior pension trance with pension withdrawals and to the extent that there were any were just not relevant and we would know that there really was no evidence that's not altogether clear if there was a  practice within the company doing this and she steps then and she's looking presided with a ongoing and ongoing and give some credibility to the notion that she didn't have the financial sophistication to realize that what she was presented with as company practice was illegal yes you are but in the record there was no evidence that there were unlawful withdrawals from the pension plan by prior presidents well we had was testimony from m request came from the controller of the company primarily and they were routine when someone left the company and was taking a small there was no evidence that there was any use of those monies to pay expenses or personal there was not not or from what came into the record and while the defense attempted and hoped to get that in through richard clarke even that charts that they wanted to introduce which  impression tell me if i've got this right or not it was not her contention that she was aware of some prior practices of thought because it had been done before she could continue doing it but rather she had no idea what was before and prior presidents made improper withdrawals she would not have known about that if she didn't know the was there any evidence on her part that she was relying on past practice is your own i believe her testimony on the evidence was that she relied on the company's controller who had been there before so through him if he followed the past practices that's what she would have relied on but she did not consult with mr clarke about running the company so any testimony he could have had about her sophistication there was just a lack of foundation she testified before clark and did not mention him at all rather she said when she took over the company she consulted with her brother in law and his father in law who advised her that they thought she could keep the company going that's the mens rea at issue here and the government cannot point to anything in between those two statements that suggest the district court appreciated willfulness mens rea applied in this case what exactly is the difference between those don't think it is your honor as as the example knowledge means but your honor and knowledge means you're aware of the act that you're committing it doesn't necessarily mean that you're aware of all the peripheral details that criminalize that act so fred they sample i gave y as i said at the beginning of my argument she needs to appreciate that this money is not the business is to spend that it belongs to someone else she needs to understand formulation yes your honor knowingly act wrongfully to deprive another property the government wise men and it's actually an elaboration on the willfulness standard so it's not a separate knowledge standard it's an elaboration of what it means to act willfully which is you have to know that what you're doing is ron i see i'm i'm way over time your honor i just and my memory is fuzzy but that's that sounds right to me but i if that was a second point i wanted to come to as you asked me at the beginning of argument whether she has to know whether it's enough for her to know it's pension funds and you said there's no authority in this court for the prop proposition i was sometimes it's confusing what you can do with pension funds i don't have the exact language and for anybody says this gets very complex and that's what the well from this requirement guards against i think that supports the point you're making that if she was told this is ok that's an example of how this can all be very confusing and that's exactly what the