information that the government had at the time of the warrant application that could have been used to tailor the warrants specifications the warrant here told the agents virtually nothing about the subject matter defraud pharmaceutical manufacturers and other customers but what are those schemes how were they perpetrated when by whom what's with the misrepresentations were made what what's an agent with that warrant in his or her hand supposed to look for the warrant doesn't answer any of those questions it doesn't give any guidance on any of those fundamental questions and it's completely on disputed  on by judicial officer but the bottom line is that the good faith exception as we see in the cases does not apply to general warrants a reason for that i said i believe it's pretty clear and that is that with the exception to apply the agent's reliance must be objectively reasonable and it's simply not reasonable for a well trained agent to rely on a warrant that as here does not weren't itself spells out thirteen different categories it deals with the i types of offenses the time frame that the defendants involved it seems to cover  at least the same grounds and use of so why why should we think of this truly as a general mearns as opposed to simply an overbroad weren't subject to the good faith exemption because those specific that in the affidavit were not set forth and this is a key quite we're not set forth in the warrant they could have been and they should have been in fact beyond failing to recite the particulars in the warrant to limit the search the government had a list of those very particulars right in front of them written out at the time they were drafting these documents and you could see same categories of crimes listed in the same order drafted at the same time with the same statutory preferences but in each instance the affidavits description on those two pages a description of the evidence is much more specific much narrower than what was given to the agents in the warrant and i think the details are important here and i would direct the court's attention to the last category of that took place over a short period of time paragraph four in the affidavit shows us that it was a crime that wasn't even committed by guaranteed returns it was a crime committed by a client of guaranteed returns called clinic where of it and all that the warrant calls for all that's left in the warrant is a reference to a completely under find scheme to defraud and identify pharmaceutical manufacturers and it even goes beyond that in the warrant the government extended warrant category beyond manufacturers to include an unidentified scheme to defraud and identified other customers  think importantly it doesn't god cabin or restrict in any way the discretion of the agents search and the reason for that is simply saying to continue with my example seize any evidence of a scheme to defraud a manufacturer doesn't describe for them the freud that they were hoping for or what it was that the underlying facts that led to the perpetration of the terms that we just are illustrations they were not my mutations in any way so if they still owe me an answer those thirteen categories don't answer the fundamental questions that the agents had before them which was override reference to their causes of action and the in the nd circuit even even language like including but not limited to generally those list of items even if you look at them as limitations are there are a looser either not really limitations it off for example the st two categories are correspondence internal and external correspondence and what it business they were in and there is nothing there that even if you take those as works of limitation that would limit the the agents into searching for the items that this supposed to search for by understanding what the fraud is and i'll ask my colleagues have other questions on the war itself and i'd also like to address with you  constructive amendment i just ships just went it's not and so i'm not on the constructive amendment issue you are arguing that there was a constructive amendment by way of the so called inactivity fees and extranet fee schemes or we have an indictment here that at on its face makes reference at least to the extreme two that were hidden or three are cut off scheme and manage client scheme those sorts of things then you get to the paragraph describing it in field schemes and then you get to the paragraphs detailing the  adjustment scheme so you have various different schemes laid out here none of which assert any sort of scientific and indeed the government itself agreed during the course of the trial that those counts forty one dollars of fifty two dollars do not charge and in date scheme even though again it's referenced in there so agreeing with our fundamental position that just because a scheme is mentioned in the introductory paragraph doesn't it's charged in the georgian one you get there is different schemes then when you get to the charging blank range the after a lengthy fairly lengthy description of the adjustment program scheme get to the charging language what they're talking about there with charging is the adjustment program scheme if you couple that with the very clear instruction given to the grand jury that these counts new counts in the superseding indictment lady to the adjustments period and i think you know us saying where the agent ever suggested let alone stated that those counts related to anything other than the adjustment program it was on that what i mean one level like it's strikes me that your your stronger of the two arguments is the one that basically says the superseding indictment doesn't match the evidence at trial and doesn't match the instructions not that the information provided that the grand jury or to the grand jury for the superseding indictment doesn't match the superseding right it seems that constructive amendment sense focuses on notice that would be given by the superseding indictment would start with the text of the superseding indictment and then measure that talks to against the evidence at trial and jurors well i wonder if that takes us closer to a variance where there's a difference between what's a in the indictment and what's proved a trial i'm trying to focus on what was it the charge that the grand jury authorized what did the government ask for and what did they get and then when we get to trial i'm looking at whether what the government asked for and what they got from the grand jury is that narrower than what was proven at trial and i think the answer to that is yes what the government clearly asked for was returning these based on a theory that there is an adjustment programs team only they got that a dime and then when they get to trial they say that it's broader than that that the grand jury was in presented with argument that it that it was brought to th we need to focus on the text of the indictment itself i believe that's correct and that's why i started with that part of the analysis and then could you clarify that the reference is to the fees on the extra it's the latter you're on so in that case it's really in terms of your arguments about constructive amendments your focus is on the inactivity fee is that right the evolution of the phone calls in arguments on the eliminate motion and in the like and there's there's discussion about the treatment of hidden fees as  as to the inactivity fees i don't believe so but i don't have specific recollection about that we're looking at particular counts and each one of those counts forty one dollars through fifty two dollars is identified by e mail and the the arguments checks issued from adjustment bachus with testimony they came from the adjustment program in view of that and the evidence before the jury linking those particular accounts the government was able to argue that the scheme had these other pieces to it that the hidden fees that we're talking about the fact that when you then and i think that creates a real issue because that was not the scheme that was asked to vote on when conspiracy where target is a single scheme with these mailings on one particular dates as i you know examples and speaking in one mention of the type of scheme since the government did break it down mailing by milling confusion because i think you could have you could have a particular male and of the type you're describing that was part of the just in programs what i mean by that  they could they were they had the liberty to make that find that particular check at issue related certainly to the adjustment program but could have related to money that the company had and they allocated so the company receives the money they then run b adjustment program on that corpus of money before the issuance of the check and the one percent that the company took the transfer to one of their own accounts all before the check was mailed so the companies receipt of the one percent did not depend on the  mailing at all it was already accomplished before the mail and the objective of the crime was accomplished before the mill i mean we had a hypothetical that may be appropriate in our one of our periods which was a teller theft at the individual deposits money in the bank and the teller takes out money and siphoned off some money for himself or herself that's the completion of the crime the crime doesn't continue until when the deposit or withdraws his i in fact within the scope of counts forty one dollars through fifty two dollars and so no instruction was necessary and the court said i'm going to admit it but it will determine whether or not an instruction is necessary and you did did you as submit a proposed for four b instruction as to the inactivity fees and i don't recall you grand jury minutes to interpret the text of the indictment and i i wonder if there's any other authority that you found beyond actually interpret the language is right now if i'm following you on this question i don't believe i've seen any cases dealing with is reasonableness is relevant to see enter because a person is more likely to believe something reasonable than to believe something unreasonable that's why the government was able to attack a good faith defense here i arguing to the jury that folks quote didn't really believe what he claimed to believe at the relevant i'm because as the government put it it doesn't make any sense the government introduced seven lay prosecution witnesses to opine on the interpretation of the contracts and the bosis obligations to its customers told jurors to consider the victim's opinions and the jurors own quote common sense the find that gene bokes subjective subjectively intended to defraud and other words the government used to suppose it and reasonableness of the defense's proper interpretation of the contracts to attack good baby but when the defense attempted to counter that with evidence supporting reasonable has the district reasonableness is not required for good faith but it is relevant that's cheek and now it's which confirms with this court's throw discussion of the relationship between turk and objective research that in fact it reasonable before and i'm reasonable can is relevant both to the question of fraud or falsity in the object sense and to the subjective question of what the defendant intended that wasn't what we were you precluded from from making the argument or eliciting testimony from from lay witnesses that particular knowledge of a legally expert definition consultation with a legal expert why would a legal expert necessary for you to make that case as as effectively as you that shows particularly good faith is concerned the fact that there is a lot of evidence on one side that the defense may have an opportunity to attack doesn't obviate defense at its scope and importantly what we were talking about here is what the court ended up describing in howrah as the relevant industry the court didn't use the term custom in practice but a similar sort of thing the court referred for example to the idea that the government in a future case would be permitted to put on an expert witness to talk about terminology and practice in the relevant industry if there were a foundation for doing so obviously the individual defendant wouldn't have knowledge of that expert's opinions to falsity in terms of objective reasonable s so the context your honour's is what the expert would have developed and would have done independently of the individual lay interpretations a just like the expert as to money that the core hypothesized inherit here there was a foundation the foundation was that mr hawks operated in this industry and so prosecution witnesses confirmed that when is the government suggest that this evidence would have been dispositive this is not a motion for judgment of acquittal but this was a jury question as judge fitz observed in our oral argument you know interpretations of contracts are quintessential jury questions view and that seems like what the good faith and defense here are really related to and that that that the jury was rejecting that is that his subjective belief not not that there was a possible alternative and reasonable reading of the contract your honor the reason that those two are connected is that the reasonable ness of the reading mr bokes offered was irrelevant to whether he believed it but again remember the government's argument you know he didn't really believe that at the time because it doesn't make any sense had mr polk's been permitted to introduce evidence to support the evidence was relevant but that there was no need for defense evidence on the topic but the reason judge cross was inquiring about earlier why isn't it good enough to just cross examine the prosecution witnesses it was a cumulative nest sort of analysis then and that's invalid of course because again the opportunity to cross examine prosecution witnesses doesn't obviate defense evidence but subsequently when the court was writing on a topic post trial and said that the evidence was not relevant the court simply misread the cheek opinion in a way that the government adopts and albert refutes and that is misreading cheek to say because objective reasonable is not required for good faith therefore it is not relevant the only opportunity the defense had to establish the industry context was through an expert obviously  you know the were understands that the defendant kept the required to testify and in this context all that was in the record was individual prosecution witnesses self identified as victims coming in to s thought i would get my indicates one of them on cross examination actually admitted oh yeah now that i look at that language i consider point but the truth is that what the defense needed to develop was the industry context and the only way to develop industry context under this court's case thought was through an expert once the court excluded the expert the defense proffered in the alternative a theory of the defense instruction and the court excluded that as well hammering on this idea that the contracts prohibited the conduct and ridiculing the defense interpretation as completely devoid of commons as yet by the defense been able to say in this commercial context you heard from an expert witness one might look at a contract in the red a then there may have been evidence actually to raise a reasonable doubt that's the reason given the government's emphasis and given the fact that the government had the burden of disproving that if that's the reason that this error often harmless similarly given the government's emphasis on the contracts in fact ironically the government below argued that contract law was the governing law of the case and that expert testimony should be excluded under leo the district court correctly rejected that it wasn't the governing was the case it was something that was relevant as you enter  singly the district court having noted the risk of jury confusion as to the role of contract ought in a criminal case then as a client to tell the jury the very fundamental point in an intentional breach of contract is not an intentional fraud that group in the pitch of contract is not now that instruction both would have shored any confusion that concern the court with respect to offer expert testimony and more importantly it would have articulated a theory of the defense that is absolutely key here by prohibiting conviction or breach of contract and that's something that was put into play because of the government's emphasis on the contract to seven different government witnesses the government's consistent argument about the contract has been misconduct and having put all of that into play because the government held at that time the defense department was  meaning in one is kind of what your classic custom and use this is what the industry uses this what we mean when we say unit we need you know unit of a one thousand or something like this you know it so so there's a custom and unit custom and usage angle but then this type of testimony as i understand what was proposed kind of went a little out of just custom and usage but deep into meaning in kind of the i don't know how to say it kind of fight or in the  i'm really getting into just the absolute current of what this contract means and i want an expert there and who it seems strange that the district court could say you know i've got laid this is on one side might use my discretion by don't allow this expert to go to the kernel of the meaning of a contract i could see him sing on it just that kind of gets a little closer to that area where we recognize i don't think it is in that area but it's a little closer to that area that we recognize just on good faith and the testimony was going to be to the effect for example that in the commercial context one is entitled to assume that a sophisticated counterparty might review the contract terms  and not required to warrant a counterparty these are concepts that were informing mr brooks this thinking when mr bokes was interpret his obligations to the customers and again there was a with certainty what she would have sent since she didn't get to say it but your honor sits in a fairly detailed disclosure that is ultimately does not opine on the legal obligation or lack of legal obligation but rather discuss es what the ordinary commercial party boy be expecting in this sort of a commercial context and yes the lens through which a commercial party would be examining the contract again as relevant to now of course have the district believe that it needed to do some mind drawing the line drawing would absolutely have been within the court's discretion the complete exclusion of the evidence however especially given its admission of repeatedly opinion on exactly the topic that concerns your honor those late witnesses testified to what the contract meant in their view that expert would have stopped short of that you say these are the principles that would be informing one's review of it and it really aligns perfectly with what your honour's preferred to inherit decision as something the government might use to attack a claim to good faith the government might show something is an reasonable by do with we're talking about proceeding in a criminal context and then we're about interpreting contract before the jury so maybe as with might have something to do with it but thank you i i think i did but i think your honor is pointing to exactly the government is really saying hey a bad purpose might a purpose to conceal is enough an agreement to conceal is enough an agreement to conceal is not enough an agreement to conceal a particular thing it is an attribute of proceeds in a particular way using a transaction and proceeds is the relevant money laundering conspiracy and when the government charged in the superseding indictment it identified the transactions that the  defendants claimed engaged and for the purpose of concealing an attribute of proceeds so it's not enough to say conspiracy is this bad purpose of concealment conspiracy is the agreement to engage in a transaction conspiracy charge from identifying some of the background that the nature of the fraud that led to the creation of proceeds and then be trading as the transactions that issue  is the various transfers that occurred after the funds came back into the general operating count here to show concealment or writing to the level of money laundering qualify as money laundering conspiracy transactions what we have is a company with legitimate and illegitimate operations receiving all income in one account pain business expenses and making distributions to its owner in a way that is completely transparent through accounts registered either to it a codefendant or to the defendant himself that isn't money laundering your honour's the heart of money laundering is that the predicate transactions do some work of concealment that's what the nd circuit said in garcia and it's consistent with this court's hurrying calmly and early decision that the company's records were precise to the penny not only about money coming in which was not a predicate transaction but about how the money through accounts and went to the government had absolutely no trouble tracing it again to that the only concealment the government ever has alleged is what the agent described at trial as the inability to match particular dollars to quote the specific products that generated the government says that inability to match dollars to products is money laundering and it says that it is the at the what the government calls coming but what it calls coming going here on ars is simply the fact that conducted with an attempt to conceal the nature and source of the proceeds and white ways that that evidence sufficient and particularly given our deferential review of those transactions was completely transparent this is not east like every other case the government sites were in those complex jumping around of accounts went through shell companies rd parties  transparent to who i understood who was limited to the people who had had access to these accounts but it wasn't something that everyone else in the in the business was where was was where it all received a request for a distribution to mr bokes he and the company's accountant would sit down and just figure out where the money was going to come from and yes the st and usual was to take it out of the operating a cow and he makes the completely on remarkable comment that when there wasn't enough money there and they needed to take money from somewhere else they did so so that decision about where the money was going to come from and any moment again it urge your honour's to review that testimony was a very practical decisions being made by people who weren't completely unaware of this so that is point number one in terms of both the decision making process but more importantly when your honour's asked about transparency it was known to the company is financial officer known to the company's accountants they were in fact the people making the decision about how money was going to move in and every single account there were two banks involved i think it was i have accounts for the company in two from mr folks all at the same bank using the same accounts and clearly the records reflected how the money was moving so again to contrast this with every case the other people's o t so well so let me just let me just is this question in this is really a question of degree right but could it be possible in this is maybe a theoretical question so i lead in with that but could it be possible for a completely transparent not if complex and not if if to a degree that makes tracing them really really really hard be evidence that conceals the nature and the source of the proceedings so could you have a knot of complex transparent transactions that would still through their volume through through their complexity i mean five accounts you can go a lot of different ways who part accounts could you say ok based on that volume based on that complexity that still somehow without even using a shell or anything else  enough act of concealment is not enough to permit an inference of a design to see the nd point that we need to take apart there is what is being concealed and what's doing the work of concealment you're on a report i think to a shell game and this is the government's theory right that we couldn't tell which particular dollar had originated with which particular product whether it started out as legitimate or illegitimate but that is not the concealment that the money laundering statue contemplates because that quote concealment was complete and a revocable the instant a customer a manufacturer issued one bundled legitimate and illegitimate refunds it was complete the instant the money was in the operating account because money is fungible and once it's there you cannot tell which individual dollar originated in which individual place and that's not the standard that's the whole point to cases like socolow and jacks and johnson that say the government doesn't need to trace the individual dollars it just needs to be able to trace th you know that money is quote commingled in his wallet right now let's set up a school student has a dress wallet that he's going to move the money into when he's going out to get on a date and maybe he's going to open a checking account to buy a car and maybe he has a savings account because he's going to save to go to college now he comingled that money in his wallet once it was in his wallet we had no way of telling what was drug money and what was lie my money and he spends that money later but that's not money on during that is simply  the more money the company had to spend on itself and the more money the company had to distribute to mr books the more it might be the inference of fraud because on the government's you what the company was supposed to be doing was sending most of count and ultimately some money coming out of some other count to pay the dealer couldn't someone look at that series of transactions and reasonably conclude that the intent was to put a lot of distance between the the comingled funds resulting from the fraud and and the ultimate payment to the dealer here to books there's no distance your honor if they're all his accounts now if he starts you know money it was mom or open you know it incorporates the lawn mowing doesn't s and puts all the drug proceeds into the lawn mowing business as a front to make it look like he is a whole lot of l that he's putting distance but this is what the the observation the th circuit made and far better and it's related to the nd circuit or see a decision this idea of spending the money or for just having money in mean the money in order to transport it versus transporting in order to hide it the idea is that the government would have to prove that the purpose of the movement of funds was to hide them not that there was secrecy in the whole course of the secrets and here in no again ironically the only thing that's concealed is exactly what the courts have said repeatedly doesn't matter which particular dollar came from which particular source spending of money and frankly if there's a due process problem if money laundering ultimately is upheld simply on apps that show an offense involving secrecy followed by the spending going to work with your your analogy because i really like the high schooler but let's just say that high schoolers mom decides to check his wallet just to see if he's up to no good or something like this and checks and says hey get that money if you get over five hundred dollars d in drug transactions or combined with drugs or he's got to get that money out of that wallet into some other wallet because he knows it is mon cher that was moving the money out of his really helpful to the defense by contrast all of them i mean one of them was somebody who literally said i've got to get this money to mexico or else offense are going to i'm ok you know that's pretty strong evidence of a design to conceal that's moving funds for the purpose of hiding them now if the high schooler had no reason to think that somebody was going to be checking or if his mom had access to his bank accounts as well and was going to spin the overage then you know perhaps the inference would be  think other important thing about your honour's extension of that hypothetical is the existence of too much money the fact that there's more money than you expect to see doesn't hi ed a product doesn't conceal the nature  doesn't conceal anything it's a red plaid and that's something the nd circuit observed in garcia as well you know if that if that mom sees too much money there more than one would expect mom says this is not from but when the line and here the government's hypothesis was they should have been spending a ton more sending a ton more money out of that customer account back to customs the fact that you guys had so much money to spend on itself and its owner that was a red flag that you know in the government's queue there was fraud going on because the money was not in it so this concept of concealment really reduces to the idea that using a single account and putting everything into it rather rigidly segregating illegal billings from legal billings is enough to permit an inference of money laundering and that raises an enormous to process problem because it simply then additional punishment for a fraud offense every fraud offenses conducted secretly and subsequent movement of the now best eyes to the instructional error as well because we're emphasizing here the transactions that were out of the account and the kraus about the government alleging apparatus acts out how proceeds were generated absolutely permissible and one hundred percent stink wishful but when your honour's review those pages your honour's will see that those pages express and deposit it into the account that's the problem that leads to the instructional hour there are three categories of transactions alleged minds sending out the refund request the other is bringing in the bundle refunds that transactions refunds coming in were not proceeds at the time that's contra what it said in the superseding indictment at either end three hundred and eighty six dollars but the district court thought that money coming in was rosy and so when it instructed the jury it told the jury that a financial transaction as a predicate for money laundering conspiracy does not include bundling those refunds making the request sending them out but it rejected a suggestion that would have prohibited conviction as well on transactions in funds that weren't proceeds coming into the account so when the court instructed on financial transactions it said you may not consider as a financial transaction the request the bundle write it committed the jury to consider the money coming in as a financial transaction the government says that other instructions toward this problem that they didn't the court to find proceeds as money that someone acquires as a result of criminal activity in the present tense confusion either ironically it actually leads the government backed into the confusion that the superseding indictment reflected in its jury argument reflected as well when the government's cutting about instruction on transactions in they only became proceeds once acquired that instruction simply means those to the point that cross was referring to earlier and goes to the point at rest of the sokolow and johnson cases but instruction just means that transactions that involve proceeds need not involve proceeds alone that's what helps the government on this whole tracing point they don't have to fax particular individual dollars or twelve particular transaction but that instruction does not address when money becomes proceeds it certainly doesn't mean that the illegitimate funds became proceeds at the time that they were combined in a refund that was later did and you know therefore even though the instructions correct it doesn't address this point and it certainly didn't dispel the jury's confusion it may have led the jury into the very confusion that the government and now this instruction and therefore the instructions as a whole committed the jury to convict on or an agreement to engage in a financial transaction that would not constitute a money laundering transaction that is in error in a jury instruction defining an element of beyond a reasonable doubt the government points out that it argued the valid theory to it also argued about the transactions leaving me a cow so absolutely true your honor but we cite to the court numerous instances and again including in its appell essentially what it was going to say was the only transactions this is a paraphrase but the transactions that make you out of the operating account now there could have been a number of different ways to solve this problem had the court defined proceeds for example in the past tense which it did not do then it would have communicated to the jury that funds are not proceeds until after they are wired it never told the jury that it just acquires in the present tense and then excluded only financial transactions which really weren't even financial transactions but even if you don't you should make a dozen wards the fundamental reason is the government never met the burden of proof sufficient to prove the elements and the statutes of like that the burden is on the government in that regard and i'm sorry say that if we were to agree with the money laundering arguments that both restitution and forfeiture have to be reversed i think they lose money laundering would go to the f every dollar that again he returns the kefir in dates essentially from the beginning of the seam going forward with the proceeds of a fraud on its customers and therefore it's both subject to restitution and forfeiture and the problem element of the crime no they weren't what the jury what the judge told the jury was that it was sufficient to find that there was at least one material misstatement made to at least one customer in the course of the scheme one customer and  flyers they were received statements from various salesman to the effect that they would get an indian returns and that they read they read the contract or understood the contract to put it  to entitle them to and that when they were asked about a contract said to me even have the word in there in them sometimes they pointed to the word overstocks sometimes they simply pointed to the general understanding sometimes they wanted to or all the evidence that came before  and that was the as of that was the nature of the testimony when they were asked about the specific language in the contractual documents to the effect that they were not entitled to any refund to the dates they would sometimes say that that that meant nothing to them one witness actually said gee that seems to be a problem with that was the nature of the testimony judge mostly focused on pretty good proximal what we would call the source i crawl evidence works if the conduct we're talking about has characteristics that were either invariable over the entire period and impacted the universe of customers in a centrally the same way so it will be sufficient  the number for i mean you aren't saying that because this is invariable sort of evidence that the only way the government could sustain a restitution or are forfeiture point would be to bring in representatives from our sixteen thousand customers are it seems that that saying that look nine is too little ringback but we also know sixteen k is too much and it seems that we i mean what's what so what's the principle where we find out what the judge it's not an issue that sort of new or just came up to it comes up in mass tort litigation it up in class actual litigation it comes up in trademark infringement litigation where people have to have to sample a huge universe and do it in a way that's persuasive and that's what didn't happen here you can create a representative sample but there are there are strict requirements to do that the government has picked nine i'm assuming they picked them because they thought these nine w favorable to them there so there's nothing to show that they were random in any relevant sense they did nothing really to show like in the in a in a typical class action that you have to show what the common fact is that we're knights them all entitled to treat them all as the ok the problem with that with that with the with that is there's nothing systematic here that was proven you have in terms of the flyers that the guy was talking about the various versions of that some of the versions of the government like to use said that indicates management was a covered service others the other the fly's said meant that in that management was an optional are available service others didn't mention it at all ok which customers showed which ones at what time with these fliers created who show what to whom there was nothing a human for what any of that some of the flyers actually suggest the opposite at the same time the return authorization from the only document the only document that is uniform and invariable throughout this case is the return authorization for and there's no dispute about that every customer who wanted to try to anything to guarantee turns had to use that form and that's the form it says here is about that the customer does not get anything for an end date return that's the only one there's nothing else like it at the same time the website and guaranteed return reflected the same language that one after about six years so when you look at this universe of the sixteen thousand how many of th how many of them read the real the are a form how many the look at the web web page how many and it is a combination of all this the government has the burden of proof i understand that it may be a difficult burden to bear but the statute says the government has to prove this or whether what the customers lost but here there's a twenty million dollars difference and it frankly doesn't make any sense but hank i would i would like to address very briefly that the causation issue because the government has to also show that the criminal conduct in in the course of the scheme was the direct cause of the loss direct because as we know is a form of proximate cause and i think the government's entire argument on this point is that there's a form of but for cause transaction causers loss cause it sometime is in other other contexts where the government basically the what their argument basically comes down to is that but for the false representation and made in the pre contact phase these customers would never have entered into these contracts in the st place we know if that were true it doesn't show that the cause of the loss was entering into the transaction something happened in between and that something is the entering into the contracts to prove cut proximate cause of what the statu criminal conduct in the course of the scheme that's the millions in the wires which nobody says have any relevance to the stuff they are they are as they usually are fiercely innocuous and it comes down to the false creek contractual statements the proper what we would call  all evidence that is not a proximate cause of anything because just getting the flyers a cause anything to happen you have to enter into the contract and then proceed accordingly internationally i think i think we and i think perhaps it would make the most sense cero the arguments and the manner order in which they were presented and so therefore to start with and go forward starting with the search warrant your honor your honor we do not agree of course that this was a general warrant but i think the courts point to that that really eliminates the entire issue is good faith this is a warrant where regardless of how anyone comes out it was approved with handwritten note by a neutral  magistrate judge who very clearly read it and made limiting notations on the warrant itself how would any law enforcement agent conclude that that is not a valid warrant with regard to the court pointed out in questioning mr cleary a district court judge has already made a determination that this was not a general w and for mr clary to then say well any reasonable law enforcement agent would think so no judge tucker an experienced judge with thirty years on the bench did not conclude that this was a general warrant you could not reasonably conclude then that this was so abhorrent that the exclusionary rule which is designed not to give a windfall to defendants but rather which is designed to deter misconduct by law enforcement you could not then conclude that somehow deterrence was necessary to deter an agent from relying on a warrant that had been presented by the us attorney's office signed off with limitations by a united states magistrate judge and then approved by a district court judge you cannot conclude  honor and you also said in tracy that a warrant that had difficulties with its particulars nation was still subject to the good faith clause and to the good faith exception here your honor i believe that when you look at you step and you compare this warrant to the warrant and use you conclude that this is in fact not a general war and that the court was correct i believe when you look at yourself let me bring you back to that there were six dictators seven deposits on three days and there was eighteen months of bank records that were looked at and based on that the court concluded that the government had shown that it was appropriate to search for ten years worth of records i think what the what the government did here in this warrant i believe that showing that there was a scheme to defraud its clients including the d o t and other pharmaceutical manufacturers  want just the seven checks that we know up now this agents are searching for that scheme that that's from the government and they're looking for all advocates related to that that often and that's going to include the correspondence that emails the computers all the things that generated that and it's going to include related that if they see them if they see other checks that went to defense medical services then so what what exactly been limits the discretion of the officers executing the woman your honor and certainly there was a lot of discretion a bailable to the officers but that discretion is discretion that the that this court has said is appropriate when investigating a complex financial scheme what they were to look for was evidence of these schemes to defraud and this that's of government bonds for a ten year period at guaranteed returns what they couldn't have gotten your honor they couldn't have gotten things related to some unrelated crime which had been the concerns with general warrants in fourteen paragraphs it was not a lengthy indictment as to that counts at issue in forty one dollars through fifty two dollars in those fourteen paragraphs the indictment specifically alleges that there were hidden fees drafted through comparable computer programs and that includes the inactivity the indictment alleged that there was an extra na one good starting a paragraph eight as an indictment on these counts goes into great detail only about the adjustment program and each one of the specific counts is  are a basis for conviction for were these particular counts your honor because this is a scheme and these are mailings in furtherance of a scheme and the scheme as the government alleged it was to to devise a scheme to obtain in money by means of false some fraudulent pretenses and that scheme was to have hidden fees despite the fact that they had always asserted that there were no hidden fees and among the various kinds of hidden fees were the extra net fee and the inactivity  baulks directed members of the information technology staff to write computer programs plural that would increase the revenue obtained by guaranteed returns and ultimately the out the income talks and when you looked to the exhibits that were introduced on the inactivity fee they inactivity fee was from two thousand that is included within the face of the indictment  know that it and it sounds like the government's argument is that as long as writing programs part of the fraud is is in the plural that that puts that encompasses any and every program that that was written and that the defense needs to be prepared to defend against any program on his being a basis for the fraud scheme your honor to the extent that were designed for the purpose of imposing hidden fees yes your honor i believe that at that point that is appropriate evidence of a hidden without identifying with which program or which particular fees scheme is is going to be proven by the government and trial yes your honor i believe that that's appropriate if there is a problem that there is the remedy of a bill of particulars right of some of this which programs for which this adjustment programs feet and you're so so so i mean it one level it seems that if you would have stopped earlier you've given all the notice you need because you're operating abroad level then you could  don't then let's talk focusing only on adjustment adjustment scheme feeds and so everyone says in law in advocacy use a funnel but it seems that the funnel is kind of generating maybe a little bit of the confusion here what do you think your honor i believe that yes our structure was to create a funnel and the purpose of the funnel here is to show the intent part of the purpose of the showing the other theists is to show the intent that you know at trial mr cleary very ably attempted to demonstrate through very effective cross examination that perhaps there was an inability for his client miss fallon to believe that this scheme for adjustment s sam how just an increase in an appropriate assessment for the inconvenience of having to write checks and the indictment and the scheme as it is written is all of these different is interact in order to show that's not true and that makes it appropriate evidence on the question of intent and that's why the scheme is just scribed in the certainly a legitimate argument to make but when when that was raised by the defense counsel that the government's position was it there's not even a need for if we're for be instruction that this is what was actually charged in the scope of these counts and it isn't that more than just outside evidence that supports intense then we would the charge scheme in counts forty one dollars through fifty two dollars because the charge scheme is to impose hidden features and the reason that they are all included together is to show the intent of the company to impose hidden fees through computer programs that extra now having these false speeds as well as the inactivity fee some of the other fees and finally  so the government's position on this seems seems to revolve over time with at the outset arguing that the in the scheme and the g thirteen schemes were during our arguments we ultimately concluded that from a notice perspective we did not include the end date scheme and the other schemes and that we treated those as appropriate background it w at length in counts one through forty and that scheme had been charged completely separately and we concluded we had not intended to charge donna fallon with that at that time and that the indictment would not put her on notice that we were now essentially including her in counts one through forty when she wasn't named there so for that reason we took it off the table and that's what you saw in the discussion with chuch tucker with regard to every thing from paragraph three of the superseding indictment counts forty one through fifty two forward all of those are as you would see in a normal indictment for just this and it says starting in paragraph three all inclusive is what's promised and then during this narrow time frame there were imposed additional hidden fees they were done through computer programs they were done through false statements on the extranet and one of those within that one of those additional three s was also done through the adjustment program and so i think the evidence that we put forward the extra now which was in approximately march of two thousand and twelve and the hidden fees that were specifically i'm sorry in activities that were specifically articulated in the specific government exhibits that  i alerted the court to previously and that are in the supplemental appendix are appropriate here additionally our honor to the extent that your honor is concerned about what the jury saw the jury did not have a copy of the indictment so the only question is whether defense counsel was properly on notice of what to defend against and i believe that paragraphs three through paragraph fourteen very much put the defendants on notice that they were to defend against hidden fees written through computer programs from the fall of two thousand and ten through two thousand and  what should we make of the fact that in the testimony before the grand jury the these counts were returned based on the agent's testimony that the additional mail fraud counts are for represent that that was the only testimony that was presented to the grand jury and in fact as we pointed out in our brief the grand jury heard testimony from mr gingrich whois the person who introduced the false information about the extranet or the information about the false extranet so to assert that you can go back and look to what an agent testified about in an indictment on just that day and that somehow tells you what the grand jury was thinking based on all of the testimony that they'd heard simply doesn't make sense that that's fair enough but where is there any grand jury testimony know activity if you scheme your honor we have not gone back and reviewed the grand jury records to determine how that was described or the documents provided to the grand jury that's not the question here kelli tells us don't go back to the grand jury and voted on a document the grand jury voted on an indictment well the keeley tells us not to go back to to re evaluate the grand jury's determination of  of those have anything to do it this in their servant case it was actually exactly the opposite the government had put in evidence of the breadth of the scheme and then had only presented the grand jury with a narrower indictment here what and and the government was trying to say look we put that to the grand jury well that's not what the grand jury voted on i understand is the invers that's that the appears as persuasive authority that the court can look to the grand jury testimony in what was actually untrue in the indictment your honor it's respectfully disagree what was charged in the indictment in the certainly case was the face of the indictment the government attempted to get the court to look and broaden it and the court said no we want to  so yes the evidence was produced to the court but the court refused to expand the indictment based on what was presented to the grand jury the question here is what does the base of the indictment say and that's also the question and miller your honor the question that the supreme court has addressed which is to say effective defense counsel can be expected we allege based on the paragraphs three through fourteen this very short multiple paragraph and i meant to say that if there are computer programs by their clients for the purpose of imposing hidden fees on the customers that they need to be prepared to defend against them not what those hidden fees are that the government is going to charge your this and concluded that it was appropriate and ed at various points to it appears that i am in december leading up to the trial that there were requests by defense counsel to identify the allegedly undisclosed and it it appears in please you correct me if there's another place to look in the record it appears that the st reference anywhere to the inactivity fee  is certainly appropriate for these items to be included the money laundering conspiracy your honor with regard to the money laundering conspiracy  again to the extent that the defendant alleges that the jury was confused by this because of the wording of the indictment the indictment itself was not presented to the jury so that is simply not a source of confusion for the jury the object of the indictment clearly according to the wording of the indictment the object of the conspiracy was money laundering and the steps that were set for in the indictment are the steps for the manner and means the and dykeman your honor was always clear that the money became proceeds when it was received by guaranteed returns that's when it becomes proceeds and that is that st deposit into the operating account there is certainly plenty of discussion both in testimony and in arguments from the government about the co mingling of funds and that is evidence of concealment both in the pharmaceuticals going out and  the payments could be into the general operating now if we focus on what happens from that point forward if we're really agreement that that's where we should look i you know once there proceeds then then we can have money laundering yes or no where or where do we see financial transactions that evinced an intent to conceal from the point that these funds  reach guaranteed returns your honor st with regard to the intent to conceal i believe that the court has been clear previously in richardson in posters and things morality that when you look at the defendants intent you are looking at the dependents intent to conceal the money and you can look at the entire scheme in order to determine the defendant's intent the financial transactions themselves must be financial transactions with proceeds but the nature of those proceeds and what those proceeds look like you can look at the entire scheme so the defendants are aware and us that when they are conducting transactions out of the operating account to all of these different places twenty million dollars worth of transactions back and forth among numerous accounts that guaranteed returns in order to finally send them down to dean vox sometimes through additional fraud as opposed to proceed due to the c e o of a legitimate business you can look at the whole nature of the scheme in order to determine whether  the defendants would need to know and that these were proceeds of a fraud scheme but again for money laundering to be added on to any fraud charge which by its nature is going to include  corporation like this where there's testimony that it's also normal business operations to move funds for example from general operating to payroll or from general operating to customer accounts and and to take from those accounts a different times to make payments to mr bowles where can you point to us as evidence of a financial transactions that were in post ringback post fraud proceeds that her intended to conceal the good support in money laundering conviction your honor i would point you to the analysis done by the district  court which notes that there are eight different bank accounts with hundreds of transactions going back and forth twenty transactions more than twenty million dollars going from the customer payment account to seventy dash twenty eight that appears at the appendix for awhile and simply note the volume of transactions all going back and forth among the various blue boxes which are all the various guaranteed returns accounts and donna fallon when she is agreeing that these transactions are going to occur is aware that the  citibank operating a cow is the one that house the fraud proceeds in it and each time she has money moved from that account into these other accounts and then moved back she is aware that that is going to conceal the nature of this as fraud proceeds and make it look more legitimate when we are there is there evidence  drug company transfer among these different business accounts was with an intent to conceal the fraudulent nature of the proceeds as opposed to simple that when instead of taking money directly from the citibank operating account and paying it to deem vox on a regular basis they sometimes diverted money from the customer payment account had an agreement to conduct financial transactions in a way that was going to disguise ultimately over one hundred million dollars in jean paul cases personal bank account as coming from legitimate business when instead it was really the proceeds of front that the government agrees that payments that come from oprah to count as a result of the fraud scheme and then are paid out for the profits of the defendant in the defendant's name whether it's buying a yacht or just going to the bank account that that disbursement is not is does not qualify as a transaction for money laundering purposes right your honor with regard to whether any single dispersant qualifies i think the court needs the st circuit case of paul as well as to this court's decision and morality and both of those cases stand for the proposition which defense counsel completely disagrees with and stated repeatedly during an argument that she disagreed with that every single movement of money helps to disguise the nature of that money and in defense counsel's brief she your honor we disagree morality and hall both say that a money launderer and that a fraudster can never be sure that they've moved the money and now and so each step beyond the initial fraud proceeds each step beyond the jury can conclude is with an intent to conceal the jury could have come out a different way but just in richardson and justice in posters and things and in morality and fraud i submit to you that the jury here saw that there were millions of dollars going into the operating a co that were then moving in a number of different ways where the more and they moved the last possible it was to determine whether that money was coming in from  operating account also could not constitute z and that that did not qualify as a financial transaction your honor the proposed instruction and i would ask the court to look unfortunately it is not in the appendix it is actually something that you have to go to the district court record to find but the proposed instruction wasn't on which financial transactions would constitute financial transactions for money laundering the proposal was to change the intent to conceal or describe the disk i aspect of the instructions and to say that you can't look in order to determine intent you can't look at anything before the transfer from guaranteed returns bank accounts and your honor we of course submit that yes you can that under richardson under morality under hall under all of this court's interpretations of the money laundering statue in order to determine intent you look at the entire scheme you'll remember in richardson the government actually lost that case because the individual transactions really looked like money and laundering but when you stepped back and looked at what ms richardson knew as to the entire scope of it yeah she knew that he was a drug dealer but she didn't know that some of these things had happened to put this requested was that whether a defendant knew that a purpose of the financial transaction was to conceal or disguise the nature and cetera and then went on from there and we believe and we argued to the court in order to look at the intent that you have to look at the entire thing for the definition of financial transaction we argued consistently and we've cited to the pages in our brief that the financial transactions that issue had to be the financial transactions that came after the initial deposit into the operating account but when looking to intent you look at the greater scheme unusual transaction whether that was requested as to the proceeds the middle proceeds that were coming back into the account and have so with the government's position was you're out of forgive me  i was attempting to answer it directly i am reading from the defendant's proposed instructions instead when you're assessing whether the government has proven beyond a reasonable  engage in financial transactions that were intended to conceal or to sky's the location source ownership or control of the proceeds of mail and wire fraud and any actual transactions you may consider in this and your honor we believe that for looking at whether there was an intent to conceal you could look at the entire transaction not simply the transactions that conveyed money from any of the bank accounts out of date guaranteed returns into the bank account  forgive me i'm i just need to move my holders that instruction was the appropriate instruction in this case with regard to the defendant's arguments that they were entitled to have a professor of law from the university of pennsylvania come in and explained contrast to richard that is simply completely inappropriate to have the imprimatur of the university of pennsylvania contracts professor  analyze these contracts in a way that there is no indication that the defendant was capable of doing or had done and simply to say her analysis about the contracts that just doesn't make any sense the court raised the issue of couldn't there have been an expert on custom and practice your honor the defendants proposed an expert on custom and practice and the court was prepared to allow that expert to testify and then the defendants withdrew that expert so the court was not refusing to allow the defendant to have an expert on custom practice they had an expert proposed for pharmaceutical returns and then because the court ruled that certain things in that person's background would be fair cross examination they withdrew her that's not what this testimony was about the testimony here the defendants had any number of ways to provide testimony about whether it's the custom and practice or whether it's the contract terms here they could have introduced any customers that they wanted to who believed consistent were numerous contracts where you chose in dates or didn't choose them they could have introduced such contracts there was no such thing ever introduced they ar and even argued that there were various things submitted to the jury showing that some people had to opt in there was no such testimony there were arguments but there was no such testimony there was no evidence of that if the evidence exists they absolutely had the right to put it in they didn't if customers existed who knew that they weren't getting indicates they absolutely had the right to put it in they didn't defendants assert multiple times that only nine customers testified your honor this was an eight week trial and we submitted the testimony of numerous customers including the department of defense which was by and by large scale the biggest customer of guaranteed returns but in addition we submitted the testimony of the minnesota group of purchasers that is referred to at the base of a tremendous volume of testimony regarding the contracts by the customers who entered into them and their testimony was appropriate here because they were explaining to the extent that defendant was arguing well the contracts didn't include this they were explaining why the they believed that it did when they entered into the contract that they believed that the promotional had seen showed that this is what they were going to get and that the wording of the contracts themselves in their view showed that this was winning so it's not that they were being sloppy or careless it's that they were has to the record has to be completely devoid of any credible basis and your honor in this case as i risk starting to assert in connection with the contract basis the evidence here was overwhelming because in addition to the program that caused them to have endangered pharmaceuticals sent back to the company you had to salesman testifying who started well before that and came through the period of the indictment and they all testified consistently overwhelmingly that what they were taught at guaranteed returns about the product that they were selling and therefore what they transmitted to all of their customers was that what we do within dates is we take them at our factory we put them on the shelf until they expire and then we send them back to the manufacturers on your b and when the returns come in they roll off of here non returnable report on to return of the report and you get the money and to a person they testified that that was what they were taught that was what was in the sales literature that was provided to them by guaranteed returns and that was what they in turn told their customers and so your honor there was overwhelming evidence to the district court judge to make a finding that this was the consistent statement by all of the salespeople for a twenty year of games that were in appropriately received by the defendant for restitution there was simply no way to pay that out to anyone and so we don't ask for it  restitution because we can't show who it should be paid to or with clinic care because that's paying somebody with unclean hands so i think that those are completely different million dollars judgment the district court then appeared to accept at sentencing an argument that certain dollars should be excluded from the restitution because they were related to interact pharmaceuticals and there was testimony submitted by a witness that she had then sought at the sentencing hearing which she had not seen prior to signing the forfeiture judgment and she saw his testimony and at that point she appears to have accepted that and allowed that money to be reduced off of the restitution judgment as being something that should be excluded and then she applied the sixty percent that she applied so what the government has said is looking at the forfeiture charge man of one hundred and fourteen million dollars it appears that judge tucker ultimately accepted that six million dollars should have been taken off of the restitution judgment that was also argued about in the forfeiture judgment we looked at that and we said we see that this is inconsistent we accept them but then the question is what to us that mean we had not cross appealed to the forfeiture judgment your honor because ultimately if this court excepts that the money laundering verdict stands we see is to money laundering accounts that were greater than this one hundred and forty two million dollars judgment and we are not asserting that we  keep both the fraud proceeds and the money laundering so assuming that the court of firms the money laundering judgment this is really a moot point so we had not thought about the individual dollars within the money judgment but to the extent that the court looks at the money judgment what we are saying is if you are looking at this you can affirm it on any ground we ask that you have firm the one hundred and honor with regard to would be could i look at my notes for just one moment and see if there's anything in particular i wanted to have of course your honor with regard to the money laundering i would simply go back to defendant has argued both that you can't look at anything and still money comes out of the guaranteed returns account and goes to team fox and that's just not appropriate you can look for the purposes of intent at the entire scheme and the government has argued that consistently al instructs the juries to do is to look at what the individual did what they said what they didn't do and the consistency of all of that and they don't ordinarily look to someone else's opinion after the fact about what a document did or didn't do for the contracts we ordinarily trust juries to look at contracts and determine what they mean and here with regard to mr vox his statements to anyone that were elicited and through the government's witnesses that he had told them that he could keep his clients indicates based on the language on the back of the forms that was allowed in any related statements that he made would have been allowed in faith exception does not apply and that is a it's a fundamental constitutional principle it's right in the the th amendment and when we're looking at the objective standard that should be applied in a assessing the good faith exception it's a well trained agent in a well trained you to be someone who has reasonable knowledge about what the law provides and leon teaches us that an important concept behind the exclusionary rule is the impetus it provides to police training programs to make officers more aware of the th amendment requirements and we all know that another purpose of the th amendment is to provide incentive to law enforcement to comply with th amendment requirements if these agents did not know the guard and this is the type of circumstance particularly when you have in their response to pick list of the five categories of crimes in the affidavit and that does not get incorporated into the warrant this is the point misrule argued that in executing the warrant the agents are searching for that scheme she said and she also said they are looking for evidence of these schemes t defraud that's but the problem is the warrant didn't tell them what that scheme was you could not tell them what these schemes to their fraud were they got to decide for themselves to quit and tell them that that's the problem with the warrant misrule also said that the agents cannot get evidence of unrelated crimes that underscores the problem also because under this warrant they could one simple example warrant specification d is a scheme to convert funds all the agents of thought we know from the affidavit that's a very very limited crime in its scheme convert for clinic care not for not to guarantee of returns for some client of guaranteed returns or clinic heir that's what that specification related and the agents were not told that they could get evidence of unrelated crimes moving on to constructive amendment the only point i would make is in response to the court started out saying that the defend it could have called a whole bunch of other individuals to ohio on how to interpret the contract and then ended by saying you can't look to someone else's opinion to figure out how it defends and her part of the contract the reality is she was closer to a nd time the reason that the individual opinions did not a looney the good faith question is that objectively reasonable has ties to see enter and it's a gave this court a lot of detail about how it could determine what the contracts spent the question for good faith was not at the end of the day whether the contracts allowed or didn't allow dubose to keep his refunds the question for good faith was again folks have reasonably believed that it did such that he was more likely to have subjectively believed that he that that's why we needed that instruction because the government was approaching it really more like a that an intentional breach of contract is not in our group intentional fraud ultimately the court articulated no ruling it simply did not give the instruction there is no exercise of discretion here for the court to affirm and he plus the transaction in proceeds is enough that is not true and that creates an enormous two process problem and it essentially creates a money laundering fiction and every single crime that's convicted that's committed in secret which is just about every single time the reason that instruction resides under the internet section and that's just how it's set up in the heart of the instructions in fact the defense proposal that's reproduced in the brief was a modification of the government's but whether they intended to use the transaction in proceeds here out of the operating the cow to conceal that's the question on which the proof fails and evidence of secrecy earlier in the offense when  front companies where there was an attempt to associate the fines with of legitimate business to pretend that the gym it business sensibly unconnected was the source of the funds that would be popping here if for example the transfers out of the customer disbursed macau went to a fake customer and from the fake customer to ever be a front company that would be a subterfuge that would be something that breaks the link between the car payments and then buys his mom he may be trying to hide the fact that he's getting rich because he's selling drugs and he's not trying to hide the proceeds and he's certainly not eyeing his mom carries it in attempt to conceal the nature because your honor it again it is st of all it's all an intro company transfer i believe there was testimony that it was not uniform that the transfers to clients team exclusively transfers to clients have come explicitly from that account but it wasn't the only time that money went into that account but the important question is that having gone into that account it then transparently went back out of that account again as your honor said in truck company transfer that was easily traced miss ruby st to the agent's testimony i refer to the agent's testimony too because it was utterly clear where every single dime was going the c f o knew it the c f o was was calling up the accountant and they were making decisions about where to move money around depending on which accounts were low bear in mind in this is a perhaps a little bit of it i question but in terms of the customer disbursement account of course part of the way that a company like this works is that it needs to make sure there's adequate money in the account to make the disbursements to customers and sometimes in any normal business situation there may be a cash flow shortfall in one account that requires moving money over from another we've got the c f o talking to the accountants out how to do that and you know whether that was the case if any for any given individual transaction the reality is that all of these things were on the books and the government's agent had no difficulty at all tracing memon in fact mr stiglitz was also able to trace the only way that there would have been a concealment would be if there had been a purported pigments to a customer that was not a real customer and then it accounts or the case of some portion of those funds into the g r x account well your honor my understanding is different but i don't want to misspeak and so i you know i can certainly view that if the court wants a supplemental submission but my understanding is that the money all came into general operating and then there'd be funds moved into the customer disbursement account but there were transfers among accounts depending on cash flow needs and where any given as typically payments would come out of customer dispersement account to customers but the reality is that moving money in there and then moving money back made no difference whatsoever and have been easily followed against as a matter of cash so as to where it can start coming out and money got out of those accounts again to if a customer you know then we'd be in the neighborhood of richardson and hall and all of those cases and the content that there are came as being made for legitimate purposes when in fact they were not the fact that there were so there was so much money that was being used for company expenses and fourteen bokes i mean again this is like the kid buying the mom earrings the fact that they had the money to spend was not concealing anything it wasn't making a book legitimate it was asked a hallmark of the fact that they were not getting the funds to customers and the problem with