morning there please the court my name is gordon ray and i represent the wayne crisfield mr fall guy to represent steven donaldson and we would ask if we could have ten minutes for our opening argument my taking five and him taking five got it and five for rebuttal myself taking two of those and him taking three you've got thank you sir the just to cut right to the big issue in this case i view it as whether or not the government  efficient evidence to prove beyond a reasonable doubt first that the business protection plan and insurance product ran afoul of the tax laws and secondly if it did whether it had proven beyond a reasonable doubt that m business protection plan was reviewed over the years by three of the country's top tax firms except that when it was reviewed by those tax firms they were not given complete incorrect information more than that i believe that they were your honor well  firm was unfamiliar with the nature of accounting that was done for this this tax structure and the entities that own the structure were actually not in the us but were in the caribbean and used a different method of accounting implemented and things continue from there and so i believe as far as the record shows it again we have the direct strikes in our in our brief the three different firms approve the structure one of them has some questions but those were cleaned up with third it took a close look at something like a hundred let me ask you something because my understanding is that that opinion relied c's representations and on the assumption that f i see in the guarantee company would be adequate capitalized to maintain adequate reserves and have sufficient economic substance and financial resources to perform their obligations do disagree that that those were representations on which that opinion or i'd agree with that yes and also the opinion related that the risks that will be insured under the policy are solely risks of the company and are not risks of the grantor do you agree with that as well well didn't the evidence prove exactly the contrary i mean that's what the problem is here that the opinions relied on and had within them statements that were not consistent with what the facts of the b p piece were respectfully the again and we have a decided poll in our brief the reviewing companies and firms and the testifiers for the federal government agree that there was a real risk that these policies covered things such as you know disappearance of the main supplier it said that they found there was no transfer of risk well they all of the all of the companies or i'm sorry the three ruling firm said there was a transfer because risk was transferred from they didn't know the three reviewing firms did not see there was a transfer of risk in fact that's the very reason why one of the firms pulled out when it discovered there was no transfer of risk respectfully i believe it wasn't because there was no transfer because clearly the company that was purchasing the insurance transfer at their risk to their fidelity insurance  five claims were made and there were about five policy years that these were new policies one of those claims was not paid because it was below that it ought to go the other four were paid and again we cited that our brief as well as the risks were transferred and they were covered they only discrepancy between the way the plan was administered and the legal opinion was an accounting and accounting difference in which the fidelity insurance company would remit to the reinsure the amount that it was due at the end of the policy period rather than earlier but even the government's witnesses the experts agreed that in the end all of the money went to where it was supposed to go so the risks were all covered the big the big issue again mr crisfield has been charged with intentionally trying to defraud the u s government here is a situation where there's no evidence that he understood the tax law that he was into the details of how any of this work he was seeing these three major opinions more than one hundred sophisticated purchasers bought these policies two hundred thirty odd policies were sold tax advisors c p a s none of them complained there was anything wrong with this bench trial those findings of fact they were particularly fatal to mr donaldson was a finding that he had lied to the lawyers there was absolutely no evidence to even talk to the attorneys or relatives opinions let alone that he lied to them so  you know that was a shocking finding of fact to see in the opinion the harm from that error was twofold and it went to the heart of both of our key defenses which was the advice of counsel which all due respect the trial court forgot that we've raised and  the other course was the parker defense that this court of course has addressed the verdict specifically said the defendant such thing as a parker defense i'm sorry there's no such thing as a parker defense i mean isn't that the notion that just because you're a salesman that that's a defense not a defense that's not a defense i mean that the question is whether the evidence supports the charge or not that's what that's all particle is really about well maybe i misread parker not apologize if i'm were looking for a gentleman who told them that there were x number of bonds back in the vault as i recall and they went out and marketed more bonds and were really back in that vault and so they were misrepresented and the court your court concluded that they could not possibly form a criminal intent to defraud if they didn't know the underlying basis of the fraud that's precisely were going on with here except with even stronger grounds because in this case parker the parker folks heard verbal e from their boss that there were a sufficient bonds there here mr donaldson had an eight page written opinion it's a typically authorized every word that he ever said add a presentation it came from a reputable law firm and it's an opinion that the government does not challenge judge's statements in the verdict which really emphasize what what i have called this i guess i'll call the salesman if and so i don't i'm in the court and on that point the judge concluded that he could not see the crime if one were to assume valid insurance policy as mr donaldson most certainly was entitled to do based on his legal opinion and more to the point the verdict said assuming the bona fides of the insurance program again which mr donaldson was entitled to do because he had no involvement with the implementation or operation of the insurance companies the government's one point five million dollar expert testified that done so had no involvement with the implementation operation and the balance of the judges finding it lawyers from  discuss their concerns about their earlier letter which donaldson very briefly and of course the concern plane while they were withdrawing their opinion they they explained that they had a new senior attorney that come in want to review it they were unhappy with some attacks accounting issues brook explained to donaldson and crit though feel the problems with their earlier letter the misrepresentations that it was based on true that letter and then it went out and got a new letter from a new firm based on the same misrepresentations and if the evidence supports that it seems to me your client doesn't have a defense the evidence is not support that and any discussion with donaldson was very cryptic about how he was implementing in the sales a program he didn't record companies all representations didn't last testify that your client acknowledged that the business protection plans would be quote an insurance the not to file because the plan the lord bizzle had approved in every one of the three law firms approved is that if they didn't follow a claim eighty five percent of the policy premium would come back to them so the business person had to analyze what the particular claim was and joe the numbers to determine whether it was in their best interest like a lot of us you may not follow homeowners claim because you have paid a very out and are deductible and and so there are business purposes for why people might not  this case in the light most favorable to the united states the trial court's verdict is overwhelmingly supported including its finding that the defendants reliance on these law firm opinions did not give them a shield from their knowing commission of this often ends advice of counsel is only available as a defense if you actually follow what counsel says if you actually rely and do what they say they didn't they implemented a scheme that was entirely different from the one that the l b p opinion contemplated because the insurance companies were not independent because they were not capitalized because these business premiums were not calculated at arm's length in an actual market walsh and babel and dubinsky all calculated out for the court in a mathematical proof how there was no transfer of risk walsh told us that there was a third risk when you actually looked at the size of the premium which they had not done in that first opinion that started at morris manning and went to el b b they didn't know what the size of the premium was and the size of the premium was critical because it was one third the amount of the actual business business risk policy and that meant that when fidelity stayed back five percent of the risk and transferred to the rest of this a loser a company called fed ray five percent was a whole lot they saved just as much in premium as they supposedly transferred so the mathematics did not work if these policies of actually been calculated at arm's length they wouldn't be a thirty three percent premium to risk covered they would have been something like one percent which is what was testified to and what battle testified to but the fact of the size of the premiums which by the way was determined by the taxpayer based on the amount of money they wanted to shelter because of that critical fact there was no transfer of risk anywhere and all three of those testimony that donaldson told him of course not it would be an insurance scam if the business owners had an incentive not to file a claim  critical counsel told you that there were five claims filed our brief addresses in a statement of fact the exact number of claims that were filed some of them were filed by the salty brine folks after the search warrant was executed so everyone knew that the game was up at that point there was one claim filed by florida radiologists that was paid for out of the businesses own assets so when a claim was filed it worked exactly as we told the district court at trial that it worked the business men covered the claim and so it was self insurance and because it was self insurance because the defendants knew it was self insurance this was a tax fraud  and talks about his roseman defense and his lack of involvement in the company but if you listen to the transcripts which are seventy seventy one in t two he starts right off the bat saying this is a family business  donaldson was involved although i agree that they're very very complex and hard to follow and that was intentional all in all the evidence fully supports the district court's finding that this was a scam and they knew it and when it comes to the parker defense whatever they want to call it it's all about knowledge and there's abundant proof of that that's just a case where we said there was insufficient  insufficient evidence that the salesman knew that the the fraud was going on so just begs the question well is there sufficient evidence here of knowledge here and the court in its this isn't sort of an odd posture because you have this extr nary long verdict with specific findings of fact and it's an advantage to us an advantage to the court knowing exactly what the district court was thinking but everything that the district court thought in that order is amply supported by the facts and he even two minute thank you sir your honor just briefly again i'd like to focus back on mr quinn field my client and his involvement as you're aware he was a stockholder in these various companies and also at various times he was an officer in some of the companies but there is absolutely no evidence anywhere in the record concerning what degree of detail he was familiar with how any of these programs worked the representations made to the various insurance  s law firms were made by when you look at the record they're made by keith lake who was an attorney that was affiliated with the insurance and some of the other companies they were not made directly by mr crisfield and i fact there is no evidence whatsoever that mr grant field made any false representation to any of the law firms although not copied on e mails and did not participate in phone calls concerning the tax opinions and i'm sorry was he asked not to wasn't he copied e mails and didn't he participate in phone calls concerning the tax opinions he had he participated in two phone calls and those involved i believe mr wallace with vessel book and mr walsh these testimonies are a call that was that  critz field was asked to get certain information which he did that had to do with with some fairly minor issues he well well actually didn't mr walsh testify that in one of those calls he expressed his concerns about how fidelity or one of those communications i should say he expressed concerns about how fidelity did not maintain reserves for insurance losses and charge premiums of one third of the coverage amount as a rule which seemed high considering th that those issues would would basically make the this structure noncompliant with the tax law there's no evidence that he knew that what he was with that was being marketed by companies that he had an interest in was said there's no claim form no one has ever filed a claim the whole idea is not to file a claim what did he mean by that well first of all that's not true that i think you're referencing a similar the testimony of dr christian barry who  as free to credit that testimony was and now not of us not supported by substantial evidence and it was not christian i was one of a hundred taxpayers dollars sent told everyone to fall claim to send all of his power points all at all of his conferences christmas day claim ever file for five claims were filed and it's not mr donaldson sponsibility filed as the tax payers responsibility here's why the testimony was not credible that exact same question was asked to dr christian very at a deposition four years earlier the question was did someone tell you the whole idea was not to file claims no absolutely not you never had a claim within the time pretty busy insurance policy he we called our attorney attorney who we also threw under the bus on that he said that's that's nonsense he was never told that the market materials are we said the file claims several people did and i say mr christian rose one of a hundred clients so even if that was said to one client it would apply to the in the case and even if even if you think he was lying why was the district court not able to find him credible and rely on his testimony you said there wasn't substantial evidence that's not really the standard though i mean what is there that makes it clear error for the district court to have relied on his testimony and found it to be credible because of the half a dozen different factors that demonstrated he had a motive to fabricate and did including direct testimony that he gave in a deposition four years earlier  y opposite of what he said at the hearing is attorney testified and confirmed that that was a false point that he was making and again it's only one of the and the other sort of fundamental thing that feeds into all this is you know we've been convicted of tax fraud if there's a defect in the insurance issue that doesn't actually mean that you're trying to defraud i r s so and we go back to the question the judge private you asked about the lord bizzle and mr johnson it was not involved in any