salvage counts one in two convictions counts one and two the convictions of bankruptcy frauds i want to go right to the constructive amendment argument the government because to construct of amendment of counts one and two the indictment first by introducing evidence of other concealment of property that were not alleged in this very detailed highly specific indictment and then second in closing argument and in rebuttal hammering those items and blending them in with the concealments that were alleged in the indictment and then saying only one item of concealed property is necessary to convict and so one of the items that's kind of a case in point  that points to the lack of notice is this account that was discussed so many times in both in closing and then so much that the judge remembered it eight months later at sentencing if mr gentle had been on notice that that account if it had been listed in count two he would have introduced the statement to show it was about two hundred thirty five dollars i submitted the statements to this court my excerpt in that account but so the fifth amendment protects m right to be only convicted on charges that were brought by the grand jury the jury never saw the indictment they were not instructed as to what the items were and so six out of the seven circuits that do have a bankruptcy fraud model instruction which this court this circuit does not require listing them as in the law that we're not supposed to give the copy of the indictment to the ger well the jury was told in jury instructions the above are the alleged charges and so there are times where the the indictment is sometimes given to the jury but in this case i'm just pointing out that it wasn't that there was no way that the jurors would ever know which what was a universe of concealments of assets that they were allowed to consider and the prosecutor the prosecutor arguing hammered at in closing that they could consider assets that were specifically not mentioned in the indictment the indictment rich heard to among others several times i think  didn't yes thank you for that question or that's one of my big points here so the government argues that so among others appears in count one in the preamble where it talks about ways and means and the only case i could find on this kind of a novel idea  was a second circuit case from one thousand nine hundred eight the zinc are ok so that said that that type of language was not sufficient to cover other types of extortionate loans in that case the indictment also referred specifically to some of the assets that you're concerned with like the what was it the done deal or so couple of others can i first finish with the among others because among other on pyrrus and count two also but not appears with regard to false statements and so false statements is not an element of bankruptcy fraud so just mentioning the names of companies now goes to your honor's point mentioning the names of various assets and among other aspects of the indictment but not in the list where it says he concealed these items those were listed especially count two is highly specific it says the following property one two three or whatever it's in alphabetical i think and the other one it says in paragraph five for count one that the items that were mentioned in for a through and so the government also says that because it would have been allowed to use a general indictment that it's ok and shouldn't be held to the specific properties that were alleged in this indictment but the supreme court and this court in many cases following distance rhone case has rejected that argument and specifically says even though a general indictment would have been ok it wasn't for example in store own ok it wasn't he was a charged with interfering with the shipments of sand but at trial they also introduced evidence of shipments of steel that were interfered with that was a sec that set of facts a separate mental state or you know incidents of making a decision to do that and so it was because a jury was told that they could find the defendant guilty of either stand or steel that because of the was specific as to sand that they couldn't couldn't uphold those convictions and so they had to be reversed to have any other questions on that particular point ok all right i'm going to move on to the jury instructions so this court can reverse the bankruptcy fraud counts and then all the other counts have to fall also on the separate ground of the deficient jury instructions so the jury instructions as i said didn't specify the items that were included in the indictment the universe of properties and then they also very confusingly said the alleged i don't know to one and the above items of property as to count two there were no alleged items there were no above items except what was provided in closing argument by the government and so the government has a very high standard for jury instructions it's no reasonable possibility that the error materially affected the verdict and they can't to show that here and i want to just briefly go to the sentence in particular the number of victims the court was not allowed to estimate victims estimate the number of victims like they some times d for the loss amount and the court was not allowed to just accept blindly the p s r which polled a list of claimants from the reopened bankruptcy so not the people that were all listed originally but to reopen bankruptcy those dollar amounts those victims they were listed and the quart had to find individual victims that were had actual loss that was actually counted and countable correctly under to be one point one and so the list them all in my be on page fifty three fifty five but the low hanging fruit are stuart allen which by its own documents it didn't pay the three thousand or so dollars it never had to pay out any money so it was not a victim it was something that had been paid by travelers and we showed that first bank the prosecutor agreed in sentencing that secured names cannot be losses because they bought the property that was the security so first bank can't be a victim and then the two additional companies that were subsidiaries of safe co my client signed one indemnity agreement and so that one agreement he was you know he signed with one company and the fact that they had a parent company in two subsidiaries and they all submitted claims doesn't divide the claim up and make it that they were multiple victims so i'd like to pass reserve the rest was opposing counsel essentially the frank routes of it and but but what it turned out to be was this was a this is actually a sting there was no there was no actual negotiation going on it was wired this was a government set and so we first  did the government set this set this transaction up so the government as it had offered to buy out misters prior to the government's involvement well it's actually unclear when he when he became an informant for the government the record is unclear but even if it was a cooperate i'm just wondering why you're calling it a sting well well right because because of the time is meant as in was involved in it clearly the other two participants mr outs of it and mr mr walter who wasn't present but who who was involved were working for the government and as i said the ever the evidence is the record is somewhat unclear when mr wilbert became an informant whether it was before or after the four million dollar number was thrown out there but by the time she was in there negotiating this was the government trying just to you know working through its informant to try to get her to essentially incriminate herself on a money laundering portion of that six million flowing to mr zonal so there were no actual proceeds involved here so that's one of the issues and we've also discussed in the briefing that there was not any financial transactions with difficulty at issue on the government in my put evidence in that that would that would have actually a financial interest transaction involving in fact proceeds what it while the government can charge a staying on under nine hundred fifty six eighty three that was not the ch bankruptcy fraud and that is another place where the evidence is insufficient because there's just no evidence that she knew that she knew that these persons were the with the person it's a bankruptcy if bankruptcy  for these proceeds were the basis of his interest in which one was the number the name of the company system three system three he had he had it yet the stake in it is sort of an undisclosed tick right well i mean that's that's  there in the negotiations what becomes clear is message and was not focus on she had not been involved in the bankruptcy is consistent with the fact she was not convicted of any of the bankruptcy fried on charges she was not involved she in fact said she didn't know what he had put on his bankruptcy schedules so while she was familiar with this structure the way the parties had structured their transaction which were their dream and which was to do make distributions to this consulting agreement and not characterize it as an ownership interest she was she was she was not aware of the fact that that was concealed in the bankruptcy or that it necessarily would be in fact in the discussions they talked about you know that general could effectively remedy if there were had not been a disclosure he could change that by amending the bankruptcy schedules so even if there had been a non disclosure which would basically be brought to our attention by ransom it's working for the government during the se ssions that that wasn't her her intention she had no objection to the idea of him amending his bankruptcy schedule in fact she said it was a good idea so that was not her intent in this transaction her intent was simply to try to get you know get the parties to reach a resolution in terms of that one payment a payment from zentral to edson it did not have anything to do with concealing anything from the bankruptcy court and the final prong is the knowledge of the purpose of this transaction was to conceal the banks if i close the connected but still a separate element that this was the that was purpose of this transaction so even if you establish walt there was she had some knowledge probably if anything obtained only at this time that there might have been a failure to disclose assets that concealment is the bankruptcy for out of which she was acquitted and not have been convicted this transaction there was no intention on of this interaction this transaction that is the buyout or the terminations of the business relationship to conceal anything  was anything that it was to in fact her intention and this was you make clear was to keep the same relationship so in other words this is how they are set up their structure i think we should just you know we should keep it the same there's a way that distributions have been made it's gone through this certainly did not know or in ten that the transaction she was negotiating was intended to to conceal any other concealment that happened before so the bankruptcy fraud had its own concealing element she was not  good afternoon your honors matthew segal for the united states with audrey hemis i tried the case and at the sentencing what i intend to do is argue any trial issues and depending on kind of where things go  was no i meant it will divide our time depending on how things go your honor i apologize for the lack of clarity you have a sort of an estimate as to how you want to divide it but halfway ok what i'd like to do on the trial issues is start with the it's just go in the order that the defense just argued basically start with a variance and what defendant civil is now saying is that the crime was substantially altered a trial such that it's impossible to know whether the jury convicted of the same crime and they say that we we hammered these uncharged properties but that's just not consistent with my recollection of the trial and with the closing arguments that start at the excerpts of record ten forty three my partner began with the starbucks meeting between zero and wilbert and where is it all said i need some money i know this is between it looks like it's between done deal and and system three but this is really you and me and then we said played a recording of barry and that's in and you have to acquit and defendant since closing was essentially she never knew wilbur she never had state of mind you got to acquit her so then what happens in rebuttal and if this were a real variance you would think that the government stood up and said aha look we've got this personal checking account that is not what happened at all actually what we did was we held up the system three distribution list that is in a one wilbert kept the spread sheet that had and its columns the false in force whether it was tom wilbert or david similar stevens in receiving money and you know calling it distributions and i held it up and i said this in a bankruptcy schedules alone convict and then there was the e mail that he sent to two julia wilbert where he said i needed done i needed just done deal distribution you know here's the fake invoice and said you cannot write that e mail and walk out of this court not guilty so the complaint seems to be this personal checking account which i guess is not the done deal llama account but a different mom account that had a couple of hundred dollars in it rise that emphasized in any way you know and i think that's the source of the confusion is that both of those accounts middle and we spent just a ton of time with witness kimberly barr showing that the done deal account was in a less personal checking account that was his personal account and if you look at excerpts of record one one one six through seventeen i'm holding up the the bankruptcy schedule and saying personal account where it's done deal where is done deal look at all the money spent out of it this was his personal account it's not referring to this nothing you need to look at the exhibits that are actually being referred to during that closing all right so ed since efficiency now if the court has no questions about variance or a constructive amendment on the among others case from this court is dos so the next thing for edson on sufficiency this was not a sit frank radoslav it's testified at a our eight thirty nine that the government coaching about what to say and he didn't care if anybody got got prosecuted off of this thing according to a dos of it on the next page of transcript e rate forty this was a real discussion that could have led to a lawful way out by reopening the bankruptcy and  his accompanying testimony says that he didn't think that the f b i was pleased that he gave edson kind of a way of getting paid without getting indicted essentially she comes back and she and indeed that's and does say well i think that's a good idea that's at the february meeting and she comes back at the march meeting and says and we're docile that says well what about going back to the bankruptcy edson says i talk to steve so i've done that and we're not going to do that and this is a quote it would open a whole sure but it was after david's inal did his agreement with system three and got paid the very next day right so that exhibit where david's in all its getting cash out of his interest that was something that we were not around for right at the point at which wilbert says i'd like to buy you out how about four million was he a cooperate or at that point he claimed that he proposed a buyout agreement yeah wilbert was trying to get this in was out before he met the government but when the four but the reason i'm hesitating answer your question is i don't know when they arrived at exactly the four million dollar number when the document was written that said we proposed to buy out for four million dollars if that's important to the court i can i've heard people get the opportunity to send something i really don't know if it's in trial evidence and i don't want to make it up a l indeed but what radoslav edge does something that he thought that the government would not want he gives them a way out of it to hear a docile that is testimony he says look why do you guys want you know why do you guys want to do a money laundering transaction why  we just go back to the bankruptcy court and the response from from the defendants is no thanks so in that conversation the government was present monitoring but no having no more direction then we would have if it had been a t three or something like it just wasn't there was no script for that we were the camera man but not the the script writer or the director now as your honor said system three had the money david's inal got paid the next day really like if that agreement had been inked they could have been paid the next day that's it fourteen twenty three to four and then the question is well what is it proceeds under  his court's case latham that's the case where somebody concealed stores and real estate from bankruptcy estate it wasn't just the income stream from the stores it was the stores themselves that were proceeds you can have proceeds that isn't cash denies knowing about the bankruptcy and then according to or das of it's kind of x a prize when he confronts her with the fact that she was a creditor that's that supplemental excerpt at five thirty she describes the distribution system that they had between done deal in system three and you know her kind of response about radoslav as concerns about the non disclosure to the bankruptcy as well that steve's problem not not yours and the kind of most important evidence of her intent to conceal is the writing itself that they want to execute right i mean that that agreement doesn't say that it's for cashing out an ownership interest that is disguising and concealing finally for an interstate for the interstate nexus you know done deals got money in the bank i'm sorry system three has money in the bank there's no other plausible way that anybody has proposed that a four million dollar transaction would have been affected except to use some facility of interstate commerce the one that we proved to trial was look their history has been that they're writing checks to each other you can fairly infer under nevels that they would have written a check and even that and then the other thing is even nevels had this alternative theory that you know i was asleep with the gun but ed since theory is what you know they can't come up with an alternative theory because we just are additional questions about the sentencing arguments or is in the briefs i'll just respond to the two issues that came up in argument today the first one is the number of victims the court here did not make an estimate of the number of victims it made a specific finding that there were eleven victims that came from the p s r and the p s r got it from the bankruptcy claims register and from own admissions of his bankruptcy schedules in two thousand and eleven the bankruptcy here had been reopened coincident with the indictment in this case so the two thousand and eleven claims register is what the p s r drew that number from and didn't actually object to that paragraph of the p s r that talks about that reopen bankruptcy claims register the bankruptcy itself didn't actually close until two thousand and seventeen so at the time of sentencing in this case two thousand and fourteen the court had to look at available evidence which was what was happening in the bankruptcy at that time and that's where the eleven victims number came from the government did not come see it at sentencing that's a very the earlier bankruptcy report the xin all had filed was at least eleven also was it not correct right at least eleven in the claims register and  more importantly ins in his own admission on his bankruptcy schedules trying to say i'm broke this is a real debt that i have look here all these people to whom i owe money and secured creditors were in that list the what was discussed the sentencing was that there the court has a case of the poor which is under the old fraud guidelines that say actually that secured creditors can be victims in a bankruptcy fraud case the government didn't concede that the secured creditors in this case aren't victims they are there on that list of eleven and it wasn't clear at the time two thousand and fourteen when sentencing occurred whether any of those victims had been  actually repaid out of the bankruptcy there wasn't evidence that they had been so the fact that they're there in the bankruptcy and making a claim and also schedules that's plenty of evidence to support the district court specific finding eleven victims i do have questions and maybe i'll get to it later though about disparity and whether considering the guidelines is automatically checking the box of no disparity because the guidelines consider disparity if treadwell says that is tried well good law or if disparity isn't the right grounds then and substantive unreasonableness i mean these were long sentences and when i was looking at enron and other kinds of cases these are long sentences so my answer is yes to every question i just asked yes treadwell says well you just said yes treadmill is a good law no there is not a circuit split about treadwell the one case that i cited in the reply out of the third circuit is about out of guidelines and a variance downward without much explanation and the third circuit there found that that was problematic this isn't in guideline sentence and that's exactly what treadwell is about and  reason it's the supreme court case that says that the sentencing commission does this wholesale and the district courts do it retail and to have a district court try to recreate what the sentencing commission does in figuring out the guidelines it's not possible it's an impossible task to go through the different cases where the dischord doesn't have the p s r in those cases and doesn't have the facts in those cases versus in this trial the district court of course sat through the trial read the sentencing memos read the p s r and correctly calculated the guidelines the court is entitle to lie on that alone to find that there is no disparity running oh well i don't want to i don't want to miss the substantive reasonable so let me let me get to that because the district court did both steps here that the district court did correctly calculate the guidelines and then the court went through the thirty five fifty three factors fairly thoroughly and it focused on the factors of deterrence and protecting the public and cited all the facts that the court remembered from the trial facts that the court had learned subsequent to the trial  none of which said either defendant in a good light and found that this this was an appropriate sentence seventeen years for his and all in ten years for ends and incited the reasons for those the court did note that it considered factors perpetrate these lies for purely selfish purposes that this wasn't a crime of desperation that these were both defendants who were capable and with means and yet elected to pursue this court every conclusion that the district judge reached in finding this sentence is part of what the district as was required to do under thirty five fifty three learned those facts from this case from this record and then appropriately undertook the statutory obligation a tad under thirty five fifty three and the elocution so this was not a short or chilled elocution this was a lengthy elocution and limited no long and i'm going to put a three minute limit on it but he doesn't put a three minute limit on it at the second interruption he cautions and does it only get him and explains to him what mitigation is and says i need you to focus on this and i will permit you to continue if you focus on that i'm paraphrasing but that's that's the purpose of that interruption and then at the third warning and i think where i would like to direct the court's attention in the record is an e r twelve forty eight so mr reflects the defense counsel confers was and on the inference of the court can make is let's let's focus on mitigation here let's keep it topical and then finally as in all says and i'm ashamed and my kids basically and then the allocution concludes not with judge and on the cutting him off but with that is the natural wrap up of the allocution and then just don't acknowledge is that yes at the end you made points that were mitigating but the majority of all right so first i want to address the first argument that mr siegel made so it doesn't matter that the government spent most of his time introducing evidence about system three yes most of the trial was about system three but in closing argument the prosecutor argued i believe it was miss have with us at argued first that corporate control that a beneficial interest in done deal that was the first time anyone heard that phrase that they also mentioned first bank during the trial but they didn't argue that could be responsible for not revealing first bank the whole company and then so they argued two different properties that were not alleged as to count one and then as to count two and so i said which what to so corporate control and a beneficial interest in done deal so and then they also talked about the whole company of done deal but so there was really no confusion between the two bank accounts at over and over they called it steve's personal bank account or steve's personal account and then they called it the done deal account and that's throughout the throughout the transcripts the court can see that so at ten fifty three excerpts of record ten fifty four and then at one thousand one hundred sixteen again references to steve's in his personal bank account that's not being disclosed so those were told to the jury that they ought to rely on them  the number of victims the court ignored all the available evidence that we provided so the court just focused on the p s r the case law is clear that when we present the defense presents evidence the court has to evaluate it and consider and this judge gave a sentence before he heard from be in argument and before he heard from mr zinn on an allocution he said the sentence he was going to impose and that's the same exact sentence that he did impose well so i don't think he was as with fully waffly as a court is describing and he was pretty clear he used a very strong tone of voice and he sentence my client to twenty four months higher than the p s r which already recommended this as your honor noted a very high sentence and very high sentencing guidelines and those sentencing guidelines the last the fraud last table is not a product of the sentencing commission's normal function looking at data and considering cases it was a political change i just described at length the process of bringing down the number of dollars that is needed to get this massive high the new phrase you know use his comments well he wasn't instructed it was real in his mind his state of mind isn't what matters i mean that what matters is that the government was there they orchestrated it they were this transaction would not have  would have been these proceeds given to mr snow because the government was already investigating that would not have transpired and that that's our point as to the march meeting referenced by the government where they with and left it at that is what she said no i shared that information and left it at that when the president can do that right she says well it may open a big can of worms but it's unclear at that point and certainly in her mind and her intention whatever m may be her intent was not to further a concealment her intention was to resolve this matter in the way that made sense for these parties so and then just very very briefly  really did not discuss sentencing in my openings but to respond very quickly to the government's comments and the courts to some extent i would ask the court to look at the sentences look at and in particular i said from sentence  carefully and on the one issue touched on briefly on the calculation of the value of the flock funds laundered that there was no finding this woman dollar number is out there but there was no finding that that was the vote actually the value of the funds laundered the only finding that