occasion to to first get involved in construction financing with an individual by the name of robbins would come to him with an idea of financing robin's project called tanglewood and robin time delivery of inventory robyn's conceived the idea that rather than paying interest on a loan of five or six hundred thousand dollars he would from harming her five or six hundred thousand dollars but it would be fun incrementally as the money was needed so that he could avoid the rather rest onerous interest charges that construction financing through a mortgage broker would naturally incur what is that got to do with telling background i'm saying what does it have to do with that well what it what it has to do with it is that robbins was an independent individual who had an independent business and he developed problems with his construction loans you know i understand that i said what does that have to do with harmon telling investor i am going to give you if you'll give me money i will give you a first deal trust on a parcel of property when he had no intention of giving the person a person of trust and indeed gave him a provided documentation as to the nature of the loan the person lending the money would receive either a pulmonary title report astro instructions or title report all of which reality they were clear evidence of what it was the lender was receiving now when mr harmon when he was in your position then that the investors  i don't know a lot about a whole lot of stinking real property god humans which from prey most people behave that way i know if you ever try to read all the documents you get in an escrow in an ordinary is closed he's not indicted by the federal government until april of two thousand and one and the trial occurs in january in february of two thousand and three now drawing that period of time there is there is a lot of anger express mr harmon and a lot of a lot of that it's in the record that a state court judge decided that he was going to treat all the loans on the greenwood property as first now that there were a lot of complaints people were saying well i was promised the person i got a second people did say that mr harmon represented that mr harmon deny that he ever represented that anyone in and had the documentation to cooperate that but there was this confusion there is this confusion in the r harmon by his father mr indicated harmon had told him he was investing in a first harmon sentiment documentation showing that it was a highly to acknowledge yes i probably told him it was a first but that was because because the investors eventually get paperwork that tell them differently that you could never include a jury could never rationally conclude that somebody intended by state law he was required to have the investors complete a form title documents so these people had that opportunity he sent them out whether the client or not there the information concerning the position of the loan he knew that he wasn't intending to deceive anyone he told them what the loan position was by  now he denies and i can't i can't deny that there's isn't a conflict in the evidence there is some investor said yes he led me to believe that was the first one it was the second he acknowledges on something and some occasions he actually y but that was a mistake that's correct and no rational jury could feel otherwise well i mean if there's a conflict in the evidence but that same investor who was the subject of that transaction received the incidental the use of the mails is not sufficient here we have what mr harmon convicted of thirty seven counts five of those counts involve mr harman's having mailed to investors notices that extensions were going to be needed on the law because the bar needed additional time the government suggested those five instances were instances where mr harmon used the mails is his investors  n twenty nine instances i'm sorry twenty seven instances harman's is convicted of mail fraud because he mailed the investors their interest checks and in three in he is convicted because he mailed them notice of what it was in fact had given them with regard to the use of the mails for the mailing of interest checks mr harmon was contractually obliged to  send those interest checks he was compliant contractually environment that he was good actually vowed to do that he was morally bound to do that he was not in most of these instances the borrower he was the broker in two instances greenwood and late me he served in school capacities as both broker and bar or in every instance once that money was received from the bar whether it be from how do you receive those funds and not distributed them so to suggest that he mailed those checks is a means of lolling his investors are simply wrong with regard to the the instances where he made them notices of what it was they had received there was no intent of the fraud none of the mailings that he had involved himself and in any of these thirty seven instances involved any kind of this representation in every instance the money was already received  he mailings were not designed or intended to facilitate this fraud rather they were intended to give these investors what they were due their interest payments consul let me ask you  was questioned extensively in march of ninety seven in july of ninety seven by state investigators some of these periods of questioning where taken under oath in each instance there were two attorneys there representing the state of nevada before he's indicted mr armey said well look i have loaned i have put money from greenwood in late me into these projects into these other projects if i have to to save those projects i will move more of that money into that project now he said that in front of two regulators and two states attorney general no one said mr harmon you can't do that he believed that he had the authority in the discretion to do that as he testified as long as those monies came back and as long as the projects were built the investors that know he did not want isn't that the question well i don't know that it is the question when you look if you conviction isn't the herman had an ill heart or hope to deprive the investors of money the question is whether he accurately described to him what he actually did and and if he failed to tell them that their money wasn't going to go to project x when he thought he had the discretion to put it in project y and will require that that money be delivered to the borrower all right so it's the borrowers money it's not mr harmony it's no longer the investors it is the borrowers the documentation in each person executed show that they were investing in any trust deed of trust on a particular piece of property but nowhere does it specify where or how that money is to be utilized it does not spe will only be used for this piece of property what difference does that make you know nobody's right mind would believe him well is that a no i think there are hearst of i don't know that i don't know that he he said it will only be used  the money was solicited for i've pulled particular project but there were two two times types of things that happens we have that robert loans and the walker loans robbins develops a number of projects money to pay the interest on head of what investors so he takes the money from rosewood and tells harmon to pay the investors on heather what it's the same bar or fireman  to sign notes obligating himself to repay these monies loans from one one loan to the other he does the same thing with walker when when you have money going from money would be given to robinson robins would then execute a deed of trust in the name of that project from whom he was borrowing the money green point when the audience received there's no indication to the investor and nor whether ordinarily be what is going to be immediately done with the money you the investor doesn't understand that it's going to go the national title company if there interminably might not have mr harmon put in some other institution to draw better interest on behalf of the project before it is actually utilized mr harmon and seen to the idea of lending it to another project that long being documented as all this was with the understanding that the th about is intent criminal intent you've asked what's been obligated to tell these people that that was what he was going to do he did not believe that he was as long as the money was accounted for and he had it accounted for this was done openly it was done with the explicit knowledge and the documentation not of his staff but at the staff of the national title company who had his direction documented every one of these transfers what we're talking about here is the intent to deceive i understand that these people lost money i understand they may have been given given money to start with understand it was going to be used for one project and it turns out that a portion or all of it was used for another project but what was mr harman's intention it his intention to deceive these people when he's documenting intention to tell them what he was actually going to use the money for in advance without question is know which i think it is then i don't see what the what the arguments about well you please the court daniel she's appearing on behalf of the united states i wish to respond to the defendants arguments about sufficiency of the evidence and the mailings but if i'm preaching to the choir that we've already made our case and i'll be happy to sit down i very often in my position this feels like giving a closing argument all over again let me share it with you it's true that one of the theories is when you know you're ahead you might as well sit down and say anything but you have to know your h execution of the scheme because mr harmon had a contractual obligation to send the maliks the supreme court doesn't agree with his viewpoint in the decision of mr harmon admitted that he knew that if he did not send out those interest checks that investors would call him they would halland him they would pound him they would drive him nuts to find out where the money w you look at those other mailings that he sent out as well as the mailings that said here's your investment your investment is going to project a project we're project to see he sent those out as routine but he knew that that was part of the course of making this appear legitimate all along mr harman's intent was to take the money from one project diverted temporarily to the other project hoping that the and other project was facing financial distress would be healed and then he can bring the money back to the first project and develop it as promised given those facts he knew that if he continued the mailings along the interest checks the that have intensive acting in good faith cannot co exist with false and fraudulent statements that are made as part of the scheme you cannot have good faith on one hand and deceitful false statements on the other hand so the question that we have to look at which the jury looked at where they had more than ample evidence says did he intend to deceive the investors on the issue of that he was going to divert the money and on the issue of their investments being secured by trust mr harmon had dealt with investors for years these investors came to him and said we want to invest with you he led them down a primrose path he said to them here's the diagram here's the drawings here's the loan to value ratios here's the trustees that i'm securing it with go out and drive the project let me take you to the project here's construction control i'm proving to  your money is going to be used for that project is going to be dispersed because when we try to have the cycle take greenpoint and the the mortgage broker i won't use mr harman's name the mortgage broker requires money to invest in greenpoint but they don't need that money yet it's going to be there eight months before they actually need those funds does the broker have discretion to do anything with the funds in the meantime i mean the title company you are inherently greenpoint he cannot do anything with that money but use it for green point which means he needs to leave it with the title company and its escrow but we got put into a federally insured institution he'd still be guilty of  or that broker would be guilty of the same thing that mr harmon was convicted of if he's taking it to invest it somewhere else even in a federally insured yes because that was not his representations to the investors in this particular case it wasn't your investment as the hypothetical you're giving me and there's a reason for i mean it seems to me that it would be unlikely that you would be able to obtain a conviction if he in fact put the money in the first national bank of nevada where it was all found later and so forth because that wouldn't necessarily be inconsistent with the representation made to the investor or at least you might have difficulty proving that he intended to deceive as opposed to he made a representation which inherently included the understanding that the money would be kept safe in the meantime not now i understand the case here is somewhat different because the diversion to other projects involved a much greater degree  there's still some question as to at one point does there you tell the investors something constitute fraud when that's concealment when that's disclosed involves a material misrepresentation financial distress would it have been a material misrepresentation if he told them hey i'm just going to hold that money at the first bank of nevada that's secured by the federal government that's at the i c insured probably not because it won't satisfy that material materiality requirement here because of the nature of what he was going to do with the money because he knew of the so material intent to deceive c nature of vast statements and from what he knew the circumstances were indeed he had investors he had elderly people louise ellsworth and her husband her husband who was a carpenter all his life secure we're not going to invest with you any more than five thousand because we want to know that that investment secure he knew from those investors and he had a duty to disclose what he was going to do with money with respect to the trustees mr crimmins argument that they received the documentation that's a red herring that documentation if you look at it is so confusing even to the experts in the field that they constantly called the mortgage or the escrow officers and what does this mean mr blecher who had been in the business for twenty five years handling complex real estate transactions of a commercial nature said he was repeatedly contacted by realtors by other clients to clarify the meaning of those documents documentation has no effect for instance on the heather rich loan that involved six hundred fifty thousand dollars mr harman's defense was hey i intended that loan to be secured by firstly the trust it's my intention that that was the case well first of all the evidence presented to the jury overwhelmingly show that that was not his intention when he according to and this is what was presented to the jury from her notations on the records that she had the escrow company that he told her that that first the six hundred fifty thousand would remain a third you know what even if it was his intention read the transcript to the judge of exactly what the defendant said that was false so there be no mistake as to what i wanted him to find the falsity on the judge then said i find it live the jury verdict that you testified that you committed perjury i'm going to give you the enhancement i was concerned because i want to make sure the judge was making that finding has he himself was considering it and not because he was merely going along with the jury verdict and so i asked him that question judge is this your finding independent of it and he said yes if yes and he said throughout the course of this finding i had stopped i am going imposing castors for the reasons stated by the united states and for the reasons set forth in the previous sentence report and that report specifically stated that the defendant's testimony was willfully explain that the reason it says that is that the jury found against him read this entire portion of the sentencing transcript the judge probe is clearly saying you got on that witness stand you knew what you were doing given the nature of your statement that you represented to the investors that green point was secured by first trust deed and all of them sad it was secured by a sacking that you acted willfully in doing what you did and indeed it was written to judge the pros statement that as strongly as he felt about the jury verdict from the judge's ruling and that you know from the jury's ruling from the jury's ruling and then that you know and then judge interruption and says i do but the jury's ruling the finding the verdicts of the jury nonetheless do inform my decision as well but my question you know what the reality is and you clearly less to do some things when you stand on your feet your mind goes blank and you don't think of everything you need to say and sometimes of course when you push the judge enough you don't want  believe there was ample reason for from our discussion today and from my having participated in the trial this jury could have concluded mr harmon was guilty even though it may not have found that he lied i don't think the discourse has to point specifically obligation a real things that he didn't reveal and therefore he was guilty given the fact that he admitted so many other things about what had happened there was very little that he did not he denied misrepresenting the trustees the jury may well have found that he had misrepresented the deeds directly but that he had an obligation to tell these people directly what it was they were investing in but the court there is that confusion and the court did not find