good morning my name is vicki cannon i'm here on behalf of albert who and i would like to reserve two minutes just watch the clock counsel this case has some bad facts right up front mr who made many false representation documents provided to investors over the years about the identity of certain advisors and put employees and accountants however even though those statements were fal of themselves that is not a crime there is only a crime if he intended to make those statements for the purposes of taking the investors money and not giving him what he had promised to the investors i would like to focus on two main issues in that regard today the materiality instruction and the improper opinion evidence in this case as to the material ality instruction the supreme court in go dand required that for materiality these statements needed to be made it's capable of influencing the decision makers in the game is the word caper going ok oh sorry judge you can go ahead please there's no case saying that we have to use the exact know there is no case it says and the district judge here formulated some wording that would capture the theory of the case why why is that or who was the judge need to be reversed on that issue because i think the theory of the case is incredibly important in this situation the distinction between what i had a hedge fund manager and investors in a hedge fund and actual and normal investors in other kinds of investments by themselves and your answer my  question is what was the wording that was improper you concede that he doesn't have to give the actual wording he tried to give the wording of the supreme court case what was wrong with his word and what his wor wrong his word the precise wording that was wrong was he said capable of influencing a potential investor that is extremely broad a group of people and a potential investor someone like me a neophyte investor those kinds of things things would invent it would influence me are substantially different than what might influence and what ace would case to rely on that their wording is wrong it struck me that he was forming the case so the jury could understand what it meant they could understand what he said but you're indicating that he was committed reversible error in this in the circumstances of this case the gauguin case says that capable of influencing the decision making body and it was argued by the trial counsel that the decision making body in this case were hedge funds investors and what is material to a hedge fund investor is entirely different that what isn't is material to a common ordinary potential investor which is what the judge set and the distinction  critical because in order to invest in a hedge fund require specific sophisticated people invest in hedge funds these particular investors mr lynn and mr v l were extremely sophisticated they had just sold their business to intel for four hundred million dollars what is critical to a hedge fund investor as opposed to me or members of the jury is the hedge fund manager his credentials his track record and his strategies to avoid risk that's what's unfair it was material to these particular investors in this particular case not who the accountant was not who the bookkeeper was but these particular things in fact as to mr hu they were very impressed with his credentials d from mit he taught he lectured he wrote he was well regarded in the in the tech industry none of that is false none of that information is false as to his track record mr lin went and talked to other investors who had been investing with mr ho people that he respected people who had publicly traded companies that had invested with mr hu and finally his investment strategies mr deal was obsessed with the with the investment strategies in fact when mr verver deal was having some questions about the fund he didn't call up the accountant he didn't call up the c f o he didn't call up the attorneys he called mr ho and mr who gave him a presentation of what was in the investment portfolio that was shielding the risks so in this particular case no there's not a specific supreme court case that says you have to follow the exact precise wording of the godown case but in this particular case it made a huge difference as to whether or not these statements about who the employees and and accountants were in the case was important well what about the testimony which testimony the testimony  is was not one of the investors subject to the to the particular to the criminal charges in this particular case and her in her situation her testimony was more about what was misrepresented represented in these cases if anything mr owen who was not subject to the criminal charges would go more to the fact that maybe if anything mr hu was guilty of was maybe letting someone who was less sophisticated than required under the hedge fund rules to invest however misdoings husband worked for the fund he was employed and he worked for the fund the whole purpose of her testimony was really to add on the fact that these misrepresentations were made to her they were made to all the investors all the investors from two thousand on the investors who invested with mr hu from two thousand to two thousand and five when mr lynn and mr reed vergil invested so those representations were made to everyone i missed and was just to add to that the question in this case i so i looked through the indictment again and read through the indictment it's kind of thin it's hard to come up with what exactly the fraud was in this case and when i read the indictment again it came up to the fact that mr who did not give these investors what they were promised and that goes to the other the second issue in this case which is the improper opinion testimony of agent fine agent fine was allowed to testify as to whether or not the investors got what they were intended to receive agent's finds analysis based was based on the on the assumption that what mr for deal and mr lin gave their money to the hedge fund if they were they would put in their million dollars and then they would receive a million dollars worth of stock or bonds or something else much as if i was giving my money to a broker where you don't need an expert to trace the forbes do you need an x yes you do not well first of all when you put invest in a hedge fund you don't invest in things don't go directly into into a particular stock or bond or security yours are products what happens is they invest in a pool of assets that is owned by a limited partnership what they receive is not a stock or a bond they receive a share of a limited partnership asset and in this case that particular limited partner at surpassed seven according to the investment documents and according to all the accounting that goes along with hedge funds is contained in the books and records of the corporation agent find only looked at some checking accounts he did not look at the books and record just the that sound like cross examination what's that that sounds to me like cross examination he was cross examined but the court was also allowed to get into a pint on that the ultimate issue in the case he was posix emanation cross examined and that shows why he was not qualified to give the ultimate opinion in this particular case and what your objection was the objection raised to age and the objection raised was that he was not qualified to give the ultimate opinion in the case that he was not qualified to make the ultimate opinion as to the value of what mr has to look at what an expert has to look at in order to what a person has to look at in order to determine whether or not these people received what they were entitled to is the books and records and the master fund now agent find there were checks ins and cross examinations of this under the documents the master fund is the entity that makes the investments takes and makes the investments and holds the investments so he was asked to do is follow the dollars he doesn't have to be sophisticated case were made probably in two thousand and two well before mr fair deal in mr lynn ever invested in the stock in this entity the investments were already made by the master fund you can't just look at the feeder checking accounts and determine the worth of the club and he never looked at the master fund he didn't know that there was such a thing as a master fund the master fund was not in the evidence that the jury decided that he was right in what he said that he had sufficient evidence to be able to do that how can you just brush aside  saying you can't do it he did it in the jury believed him well he wasn't qualified as an expert he was a lay in fact he was a computer scientist he had no financial background he had no one ever he was not the forensic accountant the government had a forensic accountant but they didn't call him and probably they didn't call him because he was going to say that they did in fact receive what they were gentiles receive economic relations is the records show that statement you just made the reason why they did know now is jumping little of the record there are right within the right ok but that so in this particular case the feeder funds art there is no i do know that there is no evidence of a master fund that is not in the evidence what is in there is a checking account statements and if you read the documents and you read through the investment documents it says that the money will be invested through a master fund it also says that money that is put into these accounts like that once an agent find look through the money that's put in there can go to pay anything if you look through the documents if you read them private placement memorandum it says go to page mr hope it can go to by withdrawing partner share it can go to pay for business expenses it can go to pay for rent or advisors it does not have to go into the mr fund what is important is it has to go on the books and records and the checking accounts missed agent fired looked at are simply the books and records are simply several checking accounts the checking accounts and to which the money was initially deposited but that doesn't tell anything about the story about what they received for their particular money can it be harmless error in any event doesn't the record reflect that at the end of the day the value from the checking information was very low compared to what they invested because it's irrelevant to what is in the checking account is irrelevant to the value of what they receive they received a limited partnership interest in a pool of investments that had already been placed they received their fair share there were maybe fifty limited partnerships they received their share and that share is reflected on the books and records so the fact that they put money in and one for expenses is irrelevant as to whether they actually received the share of the hedge fund there is a problem in looking at this case like we w think about looking at a stock broker or an investment advisor hedge funds are complex and there purposely complex so that to keep other people out of them to keep things obscure if they're very complicated and hard to understand and it is taken me an entire year to try to even ravel what's in them so in terms of the hedge fund manager this is a very it's a very important distinction the fact that the money went into the checking account it was spent within a month means absolutely nothing in the big scheme of things but could you combine that evidence with the fact that that one investor tried to get his money out and couldn't get his money oh he couldn't get his money out because we were in a global financial meltdown the financial documents themselves say that that in such a meltdown the hedge fund manager does not have to give back the money right away he could suspend all operations so he  i'd like to know ok thank you thank you also we'll hear from the govern is my name is and i represent the government in this case this court should affirm defendants convictions and sentence i'd like to address that can i ask you to speak a little louder please certainly i apologize your honor better i'd like to address the two issues raised by defense counsel in this case first with respect to the issue of materiality the only difference that we are considering here is whether the district court abused its discretion in saying was it recently capable of influencing potential investors as opposed to potential investors in these types of fun whatever difference that makes it certainly does not amount to an abuse of discretion in this case the district court appropriately tailored the instruction to the facts of the case defense counsel was able to and in fact did argue that neither mr lynn nor mr deal relied on these statements or could have been influenced by them in a jury disbelieve that that verdict was supported by the evidence in this case in fact both mr lynn mr deal testified that these statements did influence and that they relied on the fact that purportedly an independent audit in agency had reviewed those financial results that a big law firm a repeatable one had provided legal advice to the f and that there was another individual a c f o who had also signed on to verify the results and that a hedge fund operating if you like globe ops the identity of which is likely to only be known to relatively sophisticated investors second if i could turn to the issue of agent finds testimony i would agree with judge wallace the only objection that came was on and i'm using your pages it was on our four eighty four with the objective of the basis of foundation and speculation there was no argument made that this was improper lay opinion testimony or that agent fine was incapable of doing what he did he simply went through the records that were in front of the jury all of the bank records and testified based on his review of them as to how the money was spent and it was clear based on that testimony and based on those records which the jury had access to that the defendant in this case did not in fact spend the money as he had promised in this case as pointed out to you can't the defendant had issues with this these are appropriately questions for cross examination not a reason to in fact exclude the agent's testimony as a whole finally i know that with respect to the difference comes refers to the books in the records in this case  supporting the existence of a master fund simply put those were the same books and records that were proportionally audited by an accounting agency that was created out of whole cloth by defendant there were numerous misrepresentations to which defense counsel  conceded in those statements and so to do as defense counsel as to his ask us to assume absent any evidence that there really was a master fund that existed that we must therefore assume that one did i think simply isn't supported by the record defense counsel was able to ask agent fin about whether he understood about master funs to test his answers on cross examination and on that basis the district court did not abuse its discretion let alone plainly error in admitting agent finds testimony if the court has any questions about the remaining issues i'm thank you your honors basically the trial counsel objected when mister fine was giving his testimony about the financial records that he reviewed indicated that mr lew and what page that is definitely a general objection however it's enough to subserve him i believe the issue in this case about age and fines qualifications and what in fact he did review when he was when he was making his opinion was i believe he is when i just say objection foundation speculation the trial judge should immediately say to himself oh this objection is whether or not he's qualified as an expert on under that you know i think that i'm i doubt if that was what went through the judge's mind at that particular point in time but i believe that under the case law it is sufficient to have preserve the evidence of the record and it certainly sufficient for the judge to have have to have sustain the objection at least as to the foundation s and as to what age and find reviewed that and we would test that by playing or abus