Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-08-01171/USCOURTS-ca10-08-01171-0/pdf.json

Parties Involved:
Norman Schmidt
Appellant
United States of America
Appellee

Document Text:

FILED

United States Court of Appeals

Tenth Circuit

February 12, 2010

Elisabeth A. Shumaker

Clerk of Court

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v. No. 08-1170

CHARLES LEWIS,

Defendant - Appellant.

____________________

UNITED STATES OF AMERICA,

 Plaintiff - Appellee,

 v.

NORMAN SCHMIDT,

 Defendant - Appellant.

No. 08-1171

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

(D.C. NOS. 1:04-CR-00103-REB-4 and 1:04-CR-00103-REB-1)

Jonathan S. Willett, Denver, Colorado, for Defendant-Appellant Charles Lewis.

Peter R. Bornstein, Law Offices of Peter R. Bornstein, Denver, Colorado

(Keyonyu X O’Connell, Denver, Colorado, with him on the briefs), for 

Defendant - Appellant Norman Schmidt.

Matthew T. Kirsch and James C. Murphy, Assistant United States Attorneys,

(David M. Gaouette, United States Attorney, with them on the brief), Denver,

Colorado, for Plaintiffs - Appellees.

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Before HARTZ, BALDOCK, and TYMKOVICH, Circuit Judges.

HARTZ, Circuit Judge.

I. INTRODUCTION

Norman Schmidt and Charles Lewis conducted a Ponzi scheme through a

number of ostensible investment companies (the “scheme companies”). 

Prospective investors were told that they would be participating in an exclusive

program that purchased high-yield notes whose principal was guaranteed by

reputable insurers. But their money was never used to purchase such notes. 

Rather, funds from new clients were used to pay the operators of the scheme and

to pay off earlier investors. The scheme, which lasted from April 1999 until late

2004, resulted in estimated losses to investors of more than $40 million.

Schmidt, Lewis, and two codefendants were tried before a jury in the

United States District Court for the District of Colorado. Trial began on April 4,

2007. Evidence was presented over the course of six weeks, and jury

deliberations lasted two weeks. Schmidt was convicted on one count of

conspiracy, five counts of mail fraud, six counts of wire fraud, twelve counts of

securities fraud, and thirteen counts of money laundering (and acquitted on five

counts). He was sentenced to 330 years’ imprisonment. Lewis was convicted on

one count of conspiracy, two counts of mail fraud, one count of wire fraud, five

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counts of securities fraud, and one count of money laundering (and acquitted on

12 counts), and was sentenced to 360 months’ imprisonment. One codefendant

was convicted on three counts and acquitted on 27; the other was convicted on

three counts and acquitted on 14.

Schmidt and Lewis raise a number of issues on appeal. Schmidt contends

(1) that there was insufficient evidence to sustain his convictions on four counts

of wire fraud and one count of securities fraud; (2) that his sentence was

procedurally and substantively unreasonable; and (3) that he was deprived of a

fair trial by the district court’s rulings (a) refusing to require the government to

disclose matters necessary for the preparation and conduct of the defense

(including boxes of bank records to be offered at trial, witness and exhibit lists,

and a computer database used to prepare government exhibits), and (b) admitting

hearsay statements by alleged coconspirators. Lewis raises one issue also raised

by Schmidt: (4) that the district court improperly admitted coconspirator hearsay. 

He further argues (5) that the jury instructions on the conspiracy charge

constructively amended the indictment to state a charge of aiding and abetting a

conspiracy; (6) that the district court improperly denied his request for an

evidentiary hearing under Franks v. Delaware, 438 U.S. 154 (1978), to show that

the affidavit supporting a warrant to search an office contained false information;

and (7) that at sentencing, the district court (a) improperly calculated his offense

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level under the United States Sentencing Guidelines and (b) improperly imposed

consecutive sentences on several counts.

We reject all the contentions by Schmidt and Lewis, save one. (1) We

agree with Schmidt that there was insufficient evidence to sustain his convictions

on three counts of wire fraud and one count of securities fraud based on sales to

investors solicited by Rebecca Taylor, an agent of a scheme company. The

government concedes that it had no evidence that Taylor knew that her sales pitch

was fraudulent, and it has failed to point to any evidence supporting the theory

that Schmidt caused Taylor to make any of her false statements. We therefore

reverse those convictions and remand to the district court to vacate the

convictions and the sentences imposed on those counts. We affirm, however,

Schmidt’s conviction on the remaining challenged wire-fraud count; there was

sufficient evidence of guilt even though the victim did not testify. (2) The district

court properly calculated Schmidt’s guidelines sentencing range and he has not

overcome the presumption of reasonableness of his within-guidelines 330-year

sentence (which is reduced to 310 years by our setting aside his convictions on

four counts). (3) (a) Schmidt was not entitled to any of the disclosures he sought,

and he has not shown any prejudice from nondisclosure. (3)(b), (4) Neither

defendant has pointed to the admission at trial of any inadmissible hearsay. (5)

The aiding-and-abetting instruction of which Lewis complains did not

constructively amend the indictment because an indictment need not charge aiding

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and abetting in addition to the substantive offense. (6) Lewis was not entitled to

a Franks hearing because he did not allege that the affiant lied in the searchwarrant affidavit. And (7) Lewis has not demonstrated that his offense level was

improperly calculated or that consecutive sentences were improper.

II. DISCUSSION

A. Schmidt’s Issues

1. Insufficiency of the Evidence 

Schmidt challenges the sufficiency of the evidence with respect to three

counts of wire fraud (counts 12, 13, and 14) and two counts of securities fraud

(counts 18 and 20). Wire fraud requires (1) a scheme to defraud; (2) intent to

defraud; and (3) use of interstate wire or radio communications to execute the

scheme. See 18 U.S.C. § 1343; United States v. Welch, 327 F.3d 1081, 1104

(10th Cir. 2003). Securities fraud requires (1) fraudulent conduct (2) in

connection with the offer or sale of any security (3) by the use of any means or

instruments of transportation or communication in interstate commerce. See

15 U.S.C. § 77q(a)(1); C.E. Carlson, Inc. v. SEC, 859 F.2d 1429, 1433 (10th Cir.

1988). We review the sufficiency of the evidence de novo to assess whether a

reasonable jury, viewing the evidence in the light most favorable to the

government, could have found Schmidt guilty beyond a reasonable doubt. See

United States v. Baum, 555 F.3d 1129, 1131 (10th Cir. 2009). 

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We first address the three counts of wire fraud and one count of securities

fraud (count 18) based on transactions with two victims whose investments were

solicited by Rebecca Taylor, apparently an agent of Reserve Foundation Trust

(RFT), one of the scheme companies. Taylor gave false information to both

investors. The government does not contend, however, that Taylor knew that her

representations to the investors were false, or even that she has any criminal

culpability for her conduct. Because Taylor did not herself act with criminal

intent, Schmidt could not be liable as one who aided and abetted Taylor. See

United States v. Langston, 970 F.2d 692, 705 n.12 (10th Cir. 1992) (“[A]s a

prerequisite to aiding and abetting the government is required to prove that

someone has committed the underlying substantive offense.” (internal quotation

marks omitted)). And the government does not contend that Schmidt conspired

with her. Rather, its sole theory is that Schmidt is liable under 18 U.S.C. § 2(b),

which states: “Whoever willfully causes an act to be done which if directly

performed by him or another would be an offense against the United States, is

punishable as a principal.” In other words, the government contends that Schmidt

is liable because he caused Taylor to make her false statements, even though she

may not have known that they were false. See United States v. McGee, 291 F.3d

1224, 1226–27 (10th Cir. 2002) (discussing 18 U.S.C. § 2(b)).

The problem for the government is that it has failed to point to evidence of

such causation. Its appellate brief relies exclusively on the testimony of the two

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investors. They said that they had thought that Schmidt played an important

leadership role within RFT and that they attempted to contact Schmidt after they

became concerned about their investments. But the government does not cite any

evidence that Schmidt knew that Taylor was making false statements to investors,

much less that he caused her to make such statements. Although there may be

such evidence in the record (for example, evidence regarding how sales personnel

were trained), it is not this court’s duty to scour without guidance a voluminous

record for evidence supporting the government’s theory. Cf. Baum, 555 F.3d at

1132 (when an argument would require appellate court “to scan volumes

aimlessly in a search for what was established at trial, [i]t may well be within our

power as a court to refuse to consider [the] argument” (citation and internal

quotation marks omitted)). Accordingly, we reverse Mr. Schmidt’s convictions

on counts 12, 13, 14, and 18. 

Schmidt also contends that there was insufficient evidence to support his

conviction on count 20—a charge of securities fraud with respect to an investment

by Shirley Lehr. His opening brief on appeal devotes one sentence to his

substantive argument: “Because Lehr did not testify at trial, there was no evidence

presented that there was fraudulent conduct in connection with her investment.” 

Schmidt Br. at 60–61. But Lehr’s investment file was introduced as evidence at

trial. And it suffices to show that she was deceived regarding her investment. We

are aware of no doctrine requiring that fraud be proved by testimony of the victim. 

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We reject Schmidt’s argument that the evidence cannot sustain his conviction on

count 20. 

2. Schmidt’s 330-year Sentence

Schmidt received an unusually long sentence of 330 years’ imprisonment. 

He contends that his sentence is both procedurally and substantively

unreasonable. He argues that his sentence is procedurally unreasonable because

the district court (1) improperly translated the guidelines-recommended life

sentence into a 330-year sentence; (2) presumed that the guidelines sentence was

reasonable in rejecting his request for a 25-year sentence; (3) did not adequately

consider whether there would be an unwarranted disparity between his sentence

and the previously imposed sentences of similar defendants; and (4) failed to

consider his age and health at the time of sentencing. He argues that his sentence

is substantively unreasonable because it is longer than necessary to achieve the

purposes of sentencing. We reject his arguments. We note that because we have

set aside his convictions on four counts, his sentence will be reduced to 310

years. But this reduction does not affect our analysis. 

a. Procedural Error

We first address Schmidt’s argument that the guidelines sentence of life

imprisonment was improperly translated into a sentence of 330 years’

imprisonment. He does not dispute that a proper calculation under the guidelines

leads to an advisory sentence of life imprisonment. Assuming the propriety of

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that guidelines sentence, we fail to see how Schmidt can complain of being

sentenced to any term of years—after all, as a practical matter the longest that he

can be incarcerated is for the rest of his life. None of the offenses of which

Schmidt was convicted carries a life sentence, so he could not have been formally

sentenced to life. In that circumstance it was eminently reasonable for the district

court to impose a sentence functionally equivalent to life imprisonment by

imposing the maximum sentence for each crime of which Schmidt was convicted

and making the sentences consecutive. See United States v. Sarras, 575 F.3d

1191, 1208–09 (11th Cir. 2009) (“Because the statutory maximum [for the count

with the highest statutory maximum] was less than the total guidelines

punishment of life imprisonment, § 5G1.2(d) of the guidelines called for the

sentences for multiple counts to run consecutively as the advisory guidelines

sentence.”); United States v. Thompson, 523 F.3d 806, 814 (7th Cir. 2008) (“The

district court thought a life sentence was warranted, and it did not err when it

imposed consecutive maximum sentences on each count of conviction to reach an

equivalent sentence.”); USSG § 5G1.1(a) (“Where the statutorily authorized

maximum sentence is less than the minimum of the applicable guideline range,

the statutorily authorized maximum sentence shall be the guideline sentence.”);

id. § 5G1.2(d) (“If the sentence imposed on the count carrying the highest

statutory maximum is less than the total punishment, then the sentence imposed

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on one or more of the other counts shall run consecutively, but only to the extent

necessary to produce a combined sentence equal to the total punishment.”).

Schmidt also argues that the district court committed procedural error by

giving too much weight to the advisory guidelines range when it rejected his

request for a 25-year sentence. He bases this claim on the court’s response to his

request. The court stated that the requested sentence was a “major deviation and

variance” from the guidelines range and that Schmidt would therefore have to

support it with “significant justification.” Schmidt R. Vol. 58 (Schmidt

Sentencing Hr’g Tr.) at 51–52. Finding that justification lacking, the court denied

Schmidt’s request. On appeal he has not shown the denial to be error. The

Supreme Court has cautioned district courts “that a major departure should be

supported by a more significant justification than a minor one.” Gall v. United

States, 552 U.S. 38, 50 (2007). Yet Schmidt has not argued either that he gave a

significant justification for his requested variance or that his requested variance

was not major. To the extent that Schmidt is contending that the district court’s

statement indicated that it was presuming the reasonableness of a guidelines

sentence, he is mistaken. The court never said that it was applying such a

presumption, and its oral statements at sentencing reflected a careful

consideration of the sentencing factors set forth in 18 U.S.C. § 3553(a).

Schmidt next contends that the district court did not adequately consider

whether its sentence would create an “unwarranted sentence disparit[y] among

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defendants with similar records who have been found guilty of similar conduct.” 

18 U.S.C. § 3553(a)(6). He provided the court with a document describing the

sentences of 28 defendants convicted of financial crimes. The document provided

only the defendants’ names, their offenses, and their sentences. The court found

this “anecdotal evidence” too undeveloped to enable it to perform a fair

“comparative analysis” of the sentences. Schmidt Sentencing Hr’g Tr. at 49. We

agree. As we have stated, “§ 3553(a)(6) requires a judge to take into account

only disparities . . . among defendants with similar records and Guideline

calculations.” United States v. Verdin-Garcia, 516 F.3d 884, 899 (10th Cir.

2008) (emphasis added). Schmidt failed to provide information about the

comparison-defendants’ offense levels or criminal histories, not to mention

information about the specifics of their offenses, such as the number of victims,

whether the victims were particularly vulnerable, or the defendant’s role in the

criminal scheme. The district court could not have determined from Schmidt’s

evidence whether the comparison-defendants were similar or dissimilar to him. 

Finally, Schmidt argues that the district court did not “carefully consider”

his age (he was 72) and health at the time of sentencing. Schmidt Br. at 22. He

does not persuade us that there was any error. The court expressly declined to

vary from the advisory guidelines range based on Schmidt’s age and health,

correctly noting that the guidelines specifically discourage consideration of a

defendant’s age unless the defendant is infirm (which Schmidt was not), see

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USSG § 5H1.1 provides that age “is not ordinarily relevant in determining

whether a departure is warranted. Age may be a reason to depart downward in a

case in which the defendant is elderly and infirm and where a form of punishment

such as home confinement might be equally efficient as and less costly than

incarceration.”

2

USSG § 5H1.4 provides that physical condition “is not ordinarily relevant

in determining whether a departure is warranted. However, an extraordinary

physical impairment may be a reason to depart downward, e.g., in the case of a

seriously infirm defendant, home detention may be as efficient as, and less costly

than, imprisonment.”

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USSG § 5H1.1,1 or of a defendant’s physical condition unless the defendant has

an “extraordinary physical impairment” (which Schmidt did not), id. § 5H1.4.2

Although district courts “have broad discretion to consider individual

characteristics like age[,] . . . [t]hat such a ground for a variance is available

certainly does not . . . mean it is compelled.” United States v. Sells, 541 F.3d

1227, 1238 (10th Cir. 2008). 

b. Substantive Error

Schmidt contends that his sentence is substantively unreasonable because it

is longer than necessary to achieve the purposes of sentencing. We review a

claim of substantive unreasonableness for abuse of discretion. See id. at 1237. 

“A district court abuses its discretion when it renders a judgment that is arbitrary,

capricious, whimsical, or manifestly unreasonable.” United States v. MunozNava, 524 F.3d 1137, 1146 (10th Cir. 2008) (internal quotation marks omitted). 

Because Schmidt’s sentence was within the properly calculated guidelines range,

it is presumed reasonable. See United States v. Kristl, 437 F.3d 1050, 1054 (10th

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Cir. 2006). The defendant may rebut the presumption, however, “by

demonstrating that the sentence is unreasonable when viewed against the other

factors delineated in § 3553(a).” Id. 

Schmidt argues that his sentence is substantively unreasonable because it is

longer than necessary to effectuate the purposes of sentencing. Those purposes

are set forth in § 3553(a), which lists the factors a sentencing court must consider

when imposing sentence. Schmidt points only to some of the factors enumerated

in § 3553(a)(2): “the need for the sentence imposed . . . to reflect the seriousness

of the offense, to promote respect for the law, and to provide just punishment for

the offense; . . . to afford adequate deterrence to criminal conduct; . . . [and] to

protect the public from further crimes of the defendant.” He argues that his

requested 25-year sentence would have been appropriate under these factors. But

a reasonable sentencing judge need not give equal weight to all factors. The

heinous nature of the offense in itself can justify a harsh sentence. That was the

situation here. The substantive reasonableness of the sentence is fully explained

by the following excerpt from the district court’s comments at sentencing:

This defendant did not simply steal money from the rich in Robin

Hood like fashion, he stole money from the elderly, the infirm and

the disabled. The victim letters attached to the pre-sentence report

indicate clearly that he ruined many people’s lives by defrauding

them of their life savings. Tellingly, he and his wife went so far as

to drive a victim with multiple sclerosis to the bank to get a second

check from him. 

. . . .

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These are serious offenses that, when considered with relevant

conduct, have had adverse, long-lasting and life changing, ruinous

consequences on hundreds of victims and the defendant [sic]. 

Innocent people have been traumatized. Lives have been ruined. 

Life savings of hard-working, decent men and women have been lost. 

The victims of this defendant’s criminal conduct are numerous and

include the elderly, the infirm, and even the disabled. 

[T]he losses are staggering, amounting to more than

$43,000,000. Deterrence, especially of those similarly situated or

inclined, can only be effected through lengthy incarceration,

protection of the public through life-long incapacitation, through

incarceration for life, is necessary.

Schmidt Sentencing Hr’g Tr. at 51, 54. We hold that Schmidt’s sentence was

substantively reasonable. 

3. Alleged Denial of Fair Trial/Failure to Order Disclosures

and Admission of Alleged Hearsay

Schmidt claims that several of the district court’s rulings deprived him of

his right to a fair trial. We first discuss his complaints of failures by the court to

order disclosures by the government. We then address his hearsay claim.

a. Failure to Order Disclosures

The indictment concerned the activities of seven coconspirators spanning

five years. The documentation of their activities included more than two million

pages. The time for trial preparation and for the trial itself were likewise

extensive. Schmidt was indicted on March 10, 2004, and a superseding

indictment was filed in September 2005. The trial began on Wednesday, April 4,

2007, and proceeded at a four-day-a-week pace (except for one day because of a

juror injury) until the close of evidence on May 9. Sixty-three witnesses testified

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Fed. R. Evid. 902 states:

Extrinsic evidence of authenticity as a condition precedent to

admissibility is not required with respect to the following:

 . . . 

(11) Certified Domestic Records of Regularly Conducted Activity. The

(continued...)

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for the government and 14 for the defendants (although neither Schmidt nor

Lewis called any witnesses). Schmidt contends that in a case of this magnitude,

fairness required the district court to assist his trial preparation by ordering early

disclosure of boxes of bank records, witness lists, exhibit lists, and a government

database used to organize financial information in the case.

(i) Boxes of Bank Records

On the first day of trial, April 4, 2007, the government brought into the

courtroom 16 boxes of bank records documenting the transactions and accounts

on which it planned to build its case. Twelve days before trial the government

had notified the defendants that it intended to authenticate the records by using

the certification process under Fed. R. Evid. 902(11). Rule 902(11) permits a

party to establish the authenticity of documents as domestic business records

through a declaration from the records’ custodian. The party must, however,

“make the record and declaration available for inspection sufficiently in advance

of their offer into evidence to provide an adverse party with a fair opportunity to

challenge them.” Fed. R. Evid. 902(11).3 Attached to the government’s notice

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(...continued)

original or duplicate of a domestic record of regularly conducted activity

that would be admissible under Rule 803(6) if accompanied by a written

declaration of its custodian or other qualified person, in a manner

complying with any Act of Congress or rule prescribed by the Supreme

Court pursuant to statutory authority, certifying that the record—

(A) was made at or near the time of the occurrence of the

matters set forth by, or from information transmitted by, a

person with knowledge of those matters;

(B) was kept in the course of the regularly conducted activity;

and

(C) was made by the regularly conducted activity as a regular

practice.

A party intending to offer a record into evidence under this

paragraph must provide written notice of that intention to all

adverse parties, and must make the record and declaration

available for inspection sufficiently in advance of their offer

into evidence to provide an adverse party with a fair

opportunity to challenge them.

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was a list of the exhibits it intended to introduce and declarations from the

records’ custodians certifying the records. 

Schmidt responded to the notice with a number of challenges. A few days

into trial, on April 9, he filed an objection arguing, among other things, that the

government did not provide enough time to inspect the records, or to locate and

interview the declarants. The government responded that it had made the

originals of the records available to Schmidt since 2004, and that on one occasion

before September 2005 an investigator working for Schmidt had reviewed the

records. The government further noted that the actual records had also been

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available to Schmidt in the courtroom since trial began, but that he had never

requested to review them. Finally, the government argued that Schmidt had been

provided sufficient time to locate and contact the declarants because it had given

him their addresses on March 2, 2007, more than a month before Schmidt filed his

objection. Schmidt has not disputed the government’s factual assertions. On

April 16 the court overruled Schmidt’s objections, deciding that the government

had complied with Rule 902(11).

On April 20 Schmidt filed an objection to the court’s April 16 order. He

argued that although he had taken two hours since trial began to review some of

the records, it would take “at least 20 hours of counsel time” to review them all,

and that “fairness should have required that these exhibits be made available

substantially before the eve of trial.” Schmidt R. Vol. VII, Doc. 1134 at 2.

Finally, when the government moved to admit some of the boxed records

on April 30, Schmidt orally repeated this objection and requested a two-day

continuance or exclusion of the records. The government responded that (1) it

had provided electronic copies of the records to Schmidt in June 2004; (2) the

original records had been available for inspection in the U.S. Attorney’s Office

since 2004; and (3) the original records were available for inspection when it filed

its Rule 902(11) notice on March 22, 2007. The court overruled Schmidt’s

objections and admitted the records.

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On appeal Schmidt contends that the district court abused its discretion in

admitting the bank records and in denying his request for a continuance because he

had not been afforded adequate time to examine the records. We review for an

abuse of discretion both the district court’s decision to admit evidence and its

denial of a continuance. See United States v. Gwathney, 465 F.3d 1133, 1140

(10th Cir. 2006) (admission of evidence); United States v. Pursley, 577 F.3d 1204,

1227 (10th Cir. 2009) (denial of continuance). 

We see no abuse of discretion here. Although Schmidt contends that he

had only “the weekend before trial” to examine the boxed records, Schmidt Br. at

34, the records themselves had been available to him since 2004. His investigator

had even examined the records by September 2005, more than 18 months before

trial, and Schmidt had obtained electronic copies of the records long before trial. 

Although the records may not have been organized as they were when introduced

at trial, he could not have been surprised by their contents. And Schmidt had 39

days (from the time of the government’s Rule 902(11) notice until its introduction

of the records at trial) to inspect them precisely as they would be introduced, but

he devoted only two hours to that task. The district court acted well within its

discretion in admitting the records and denying a continuance.

(ii) Witness List

On April 26, 2006, the government offered to exchange nonbinding witness

lists with Schmidt in December 2006—four months before trial. A week later

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Schmidt requested that the government provide its list before December and

objected to providing a witness list himself, but said that he would abide by an

order from the court. On May 11, 2006, the court rejected Schmidt’s objections

and ordered the parties to disclose a list of witnesses (identified as “will-call”

witnesses whom the party would be calling to testify and “may-call” witnesses

whom the party may call) by the first trial-preparation conference, which was

scheduled for March 2, 2007. At the March 2 conference the parties exchanged

witness lists and the court ordered the parties to file updated lists by March 30,

five days before trial. 

Schmidt complains that delayed disclosure of the witness lists prejudiced

his preparation for trial. As he concedes, however, there is no constitutional or

statutory right to pretrial disclosure of witness lists in noncapital criminal cases. 

See Weatherford v. Bursey, 429 U.S. 545, 559 (1977); United States v. Metro.

Enters., Inc., 728 F.2d 444, 451 (10th Cir. 1984). Moreover, he has failed to

explain how he was prejudiced. The government witnesses were easily

predictable—investors, government agents to summarize financial transactions,

representatives of the insurance companies that were purportedly insuring the

investments, etc. Schmidt has not pointed to a single witness as having been a

surprise at trial, nor has he shown why he could not have sought a continuance

had he been confronted with an unexpected witness. 

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Fed. R. Crim. P. 16(b)(1)(A) provides: 

If a defendant requests disclosure under Rule 16(a)(1)(E) [of records

controlled by the government that it intends to use at trial, that were

obtained from the defendant, or that are material to the preparation of

the defense] and the government complies, then the defendant must

permit the government, upon request, to inspect and to copy or

photograph books, papers, documents, data, photographs, tangible

objects, buildings or places, or copies or portions of any of these

items if:

(i) the item is within the defendant’s possession, custody,

or control; and

(ii) the defendant intends to use the item in the defendant’s

case-in-chief at trial.

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(iii) Exhibit List

In October 2004, about two-and-a-half years before trial, Schmidt asked the

district court to order the government to designate the documentary evidence that

it would be using at trial. He contended that he could not fulfill his duty under

Fed. R. Crim. P. 16(b)(1)(A)4

 to disclose the documents that he intended to use at

trial unless he first knew what documents the government intended to use. The

government opposed this request, arguing that it had already provided Schmidt

with access to every item in its possession and that it was not sure which items it

would be using at trial. Sixteen months later the court ordered the parties to have

a set of exhibits available by the first day of trial. 

Schmidt challenges the court’s failure to order earlier disclosure of an

exhibit list. But, as with the witness list, he concedes on appeal that no statute or

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rule of criminal procedure entitled him to such a list before trial. And despite his

assertion to the contrary, we see no evidence of prejudice. What is most

important to trial preparation is not a list of documents but the availability of the

documents themselves. And Schmidt has not suggested that the government used

at trial any documents that had not been disclosed to him well before trial. He

has utterly failed to explain how the absence of an exhibit list prejudiced him. 

(iv) The Government’s Financial Database

Using the bank records, the government created a computer database

detailing the activity in some 170 accounts. The database of checks, wire

transfers, deposits, and the like contained over 15,500 items. By making queries

of the database, government agents were able to prepare summary exhibits for

presentation to the jury. These exhibits were made available to Schmidt 10 days

before trial. On April 20, 16 days after trial began and 10 days before the

exhibits were to be shown to the jury, Schmidt filed a motion seeking access to

the database and the queries made of it. He argued that he could not “adequately

review the summary exhibits to determine their accuracy, completeness and

fairness without access to the underlying source material.” Schmidt R. Vol. VII,

Doc. 1135 at 2. The district court denied his motion. It explained that the

“underlying source material” was the bank records themselves, which had been

available to Schmidt since June 2004, and that the database was undiscoverable

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because it was government work-product under Fed. R. Crim. P. 16(a)(2), the first

sentence of which states: 

Except as Rule 16(a)(1) [relating to oral statements by the defendant

to government agents] provides otherwise, this rule does not

authorize the discovery or inspection of reports, memoranda, or other

internal government documents made by an attorney for the

government or other government agent in connection with

investigating or prosecuting the case.

The summary exhibits were presented through the testimony of IRS Agent

Wayne Stockley. After cross-examining Stockley, Schmidt again requested

access to the database. The district court denied the request. 

On appeal Schmidt argues that the district court should have ordered

disclosure of the government’s database. He concedes that Rule 16(a) did not

require pretrial disclosure. See United States v. Maranzino, 860 F.2d 981, 985–86

(10th Cir. 1988) (“[I]nternal government documents made in connection with a

prosecution are exempt from discovery.”); United States v. Robinson, 439 F.3d

777, 779–80 (8th Cir. 2006) (defendant in tax-evasion prosecution could not

discover “internal documents used by the government to calculate gross receipts,

business expenses and taxes owed,” even though the defendant’s lack of those

documents may have “made trial preparation extremely difficult.” (internal

quotation marks omitted)). But he argues that once the government presented the

summary charts, disclosure of the database was mandated by Fed. R. Evid. 1006,

which requires a party offering a summary exhibit to make available to the

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5

Fed. R. Evid. 1006 states in full:

The contents of voluminous writings, recordings, or photographs

which cannot conveniently be examined in court may be presented in

the form of a chart, summary, or calculation. The originals, or

duplicates, shall be made available for examination or copying, or

both, by other parties at reasonable time and place. The court may

order that they be produced in court.

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opposing party the underlying records summarized in the exhibit.5 This mandate,

he contends, overrides the work-product privilege under Rule 16(a)(2) because

presentation of the summary exhibits constituted a waiver of the privilege.

We disagree. Rule 1006 did not require disclosure of the government’s

database. Although that rule entitles the defendant to review the documents

summarized in an exhibit, the database served only as an aid in preparing the

summary—allowing the government to perform calculations from the bank

records. The underlying documents in this case are not the database but the bank

records themselves. The purpose of requiring the party offering a summary to

make the underlying documents available to the opposing party is to enable the

opposing party to check the accuracy of the summary. Access to the offering

party’s worksheets or database may make it easier for the opposing party to

perform that check; but so long as the opposing party is given sufficient time to

inspect the underlying documents, there is no reason to give the opposing party

the benefit of the offering party’s labor in preparing such worksheets or database. 

Here, Schmidt had ample time to inspect and review the bank records so that he

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could challenge any inaccuracy in the summaries. As stated above, the

government made these bank records available for examination well before trial;

and all the records used to construct the summary exhibits had been admitted into

evidence. Rule 1006 therefore had been satisfied. Because the database was not

subject to disclosure under Rule 1006, there is no need to determine whether

disclosure would otherwise be barred by the Rule 16(a)(2) work-product

privilege. 

b. Alleged Coconspirator Hearsay

Fed. R. Evid. 801(d)(2)(E) provides that “a statement by a coconspirator of

a party during the course and in furtherance of the conspiracy” is not hearsay. 

Schmidt contends that the district court improperly admitted hearsay testimony

under this provision without first conducting an evidentiary hearing at which the

court would have to find the necessary factual predicates. He also complains that

the court admitted testimony about many statements by alleged coconspirators to

victims on the ground that they were offered for the nonhearsay purpose of

showing the effect on the listener; he argues that the statements were improperly

used as substantive proof of the scheme to defraud. We reject Schmidt’s

contentions. Apparently misunderstanding what hearsay is, he fails to point to

any hearsay that was admitted by the court. Absent a showing that the court

admitted hearsay evidence, there was no need for any finding (after an evidentiary

hearing or otherwise) that the requirements of Rule 801(d)(2)(E) had been

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satisfied. See United States v. Cesareo-Ayala, 576 F.3d 1120, 1128 (10th Cir.

2009).

We begin by briefly explaining what hearsay is and what it is not. 

“‘Hearsay’ is a statement, other than one made by the declarant while testifying at

the trial or hearing, offered in evidence to prove the truth of the matter asserted.”

Fed. R. Evid. 801(c). It is essential to understand that “the matter asserted” is the

fact being asserted by the declarant in uttering the statement. That is not

necessarily the matter that the party offering the statement into evidence is trying

to prove with the statement. For example, a party may offer a statement by A that

the Yankees won the pennant in 1999. The matter asserted by A is that the

Yankees were American League champions in 1999. But if the party offering A’s

statement is merely trying to prove that A was capable of speech, then A’s

statement is not offered into evidence for the truth of the matter asserted, and the

statement is not hearsay. 

In general, hearsay is inadmissible. See id. R. 802. But not always. There

are a number of exceptions to the hearsay rule. See id. R. 803, 804. In addition,

the Rules of Evidence label as nonhearsay some statements offered for the truth

of the matter asserted; for example, Rule 801(d)(2) treats as nonhearsay certain

statements that can be legally ascribed to the party against whom they are offered. 

Among such statements are those by a coconspirator “of a party [made] during the

course and in furtherance of the conspiracy.” Id. R. 801(d)(2)(E). 

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With this background, we turn to Schmidt’s argument. Before trial the

government submitted a proffer that certain statements satisfied Rule

801(d)(2)(E). The district court, without holding a hearing, but after examining

lengthy pleadings by the parties, determined that the proffer satisfied the

government’s burden by a preponderance of the evidence, and it ruled that the

statements, other than some listed exceptions, were “ostensibly admissible.” 

Suppl. Schmidt R., Doc. 441 at 10. Schmidt asserts that the district court should

not have ruled on admissibility without conducting an evidentiary hearing and

that in any event the ruling did not address all the statements ultimately admitted

at trial as coconspirator hearsay. 

Schmidt is not entitled to relief, however, unless he can point to hearsay

evidence improperly admitted at trial. This he has failed to do. His first example

of allegedly improper testimony is that of a potential investor, Linden Markham. 

Although his brief discusses that testimony only in general terms, quoting just one

sentence, we provide all her relevant testimony, italicizing the portion quoted:

Q And what do you recall about that discussion?

A [Lewis] made some allusions in conversations to having been

part of an investment program that had very handsome returns. 

Q And did he describe those returns to you in any specifics

during this conversation?

A Well, they sort of ranged in value. He was talking about, you

know, ten percent. I originally thought ten percent per year

but he meant ten percent per month to 1600 percent per month.

. . . .

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Q At some point or another, did Mr. Lewis become more specific

with you about this investment?

A He did. . . . . He was talking about an investment that was a

private program that traded medium-term notes. That it was —

an[] international program. That some it — that it had been in

existence for a while, different variations on this program. 

That it had been sponsored by the Reserve Foundation Trust,

and that one of the directors had been a former director of the

World Bank.

Q Did he mention a name? 

A Peter Moss.

Q Let me back up a second. With respect to this investment, did

he mention any other persons who were in fact managing this

investment opportunity?

A That’s when he mentioned Norman Schmidt to me.

Q And what did he say about Mr. Schmidt?

[Schmidt’s attorney]: Your Honor, I am going to make that

standard objection that this is hearsay, and I will just leave it

at that.

The Court: Very well. Overruled on the basis of 801(d)(2)(E). 

[Prosecutor then modifies question to Markham, but Markham’s

answer is stricken as improper opinion testimony.]

Q Ms. Markham, do you remember any specific statements

Mr. Lewis made to you concerning Mr. Schmidt’s relationship

to this investment?

A Mr. Lewis told me that Mr. Schmidt had been involved in

several investments of this nature over a period of time.

Q And did he make reference to how successful those

investments had been?

A He said that they had been very successful, and that’s why it

was an ongoing thing.

Schmidt R. Vol. XXVII, Trial Tr. at 1321–25.

Schmidt may be correct that the district court never made findings

necessary to admit under the coconspirator rule these statements by Lewis about

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Schmidt. But the evidence would be admissible anyway if it was not offered for

the truth of the matters asserted by Lewis. See Cesareo-Ayala, 576 F.3d at 1128

(declining to address defendant’s argument that coconspirator statements were

improperly admitted under Rule 801(d)(2)(E) because they were admissible as

nonhearsay statements not offered for the truth of the matters asserted). That is

the situation here. Markham’s testimony about what Lewis told her was not

offered for the truth of the matters asserted by Lewis. Indeed, the government’s

theory in offering the testimony was that Lewis’s statements were in fact untrue. 

The government was trying to prove that Lewis made false statements to

prospective investors. And most of the matters asserted by Lewis were false: for

example, Markham testified that Lewis had told her that the investment program

traded in medium-term notes (it did not) and that one of the program’s directors

had been a former director of the World Bank (he had not). It is irrelevant that

Lewis’s statements to Markham were used substantively—as evidence that

Markham was defrauded. The hearsay rule does not preclude an out-of-court

statement from being used substantively so long as it is not being used to prove

the truth of the matter asserted by the declarant. 

We recognize that in district court the government did not argue that the

testimony challenged on appeal was not hearsay. Although on a number of

occasions during trial the government argued that statements by coconspirators

were not being offered for the truth of the matter asserted, on this occasion the

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court ruled before the government could have spoken. In any event, we may still

affirm on this ground because it is established by the record and doing so is fair

to Schmidt. See id. at 1128 n.2. The testimony is clearly not hearsay and

Schmidt cannot present facts that would change our analysis. Moreover,

Schmidt’s reply brief does not challenge the government’s right to make this

argument. See id. (“Given the absence of any possible factual dispute, the clarity

of the issue, and the failure of Mr. Cesareo-Ayala to argue that the delay in

raising the issue has prejudiced him in responding on appeal, we see no unfairness

in affirming on this ground.”).

Schmidt also argues that other hearsay statements were improperly

admitted under the coconspirator rule. But he does not adequately present this

argument. Determining whether a coconspirator’s statement is being offered for

the truth of the matter asserted often requires careful consideration of both the

context of the statement in the coconspirator’s conversation and the relevance of

the statement to the trial. Schmidt’s opening brief, however, does not even hint at

these matters. For most of his claims he merely notes the names of witnesses who

allegedly testified to inadmissible statements and provides page citations to the

record tied to each witness. He apparently invites us to examine each statement

on the cited pages to determine whether it was in fact hearsay and, if so, whether

its admission was prejudicial. We decline his invitation. We will save our

resources for properly framed arguments. See United States v. LaHue, 261 F.3d

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993, 1009 (10th Cir. 2001). And for those hearsay claims for which he provides

slightly more information, he still neglects to point to a single statement as having

been offered for the truth of the matter asserted by the declarant. He seems to

think that it was enough to refer to a statement by an out-of-court declarant that

was used to establish his guilt. As we have already explained, however, that is

not enough to show that the statement was hearsay.

We note that Schmidt’s reply brief appears to argue in addition that even if

statements by alleged coconspirators were not offered for the truth of the matter

asserted, they were still not admissible absent a court finding that the speaker was

a coconspirator. But this is a relevance issue, and Schmidt fails to point to any

objection by him at trial that challenged relevance. In any event, we generally do

not address issues raised for the first time in a reply brief. See United States v.

Redcorn, 528 F.3d 727, 738 n.4 (10th Cir. 2008). 

c. Due Process

Finally, Schmidt argues that even if the district court’s rulings on

government disclosure and hearsay may have been correct when viewed in

isolation, their combined effect in “a case as large and complicated as the one at

issue,” Schmidt Br. at 27, was to deny him the fair trial guaranteed by the right to

due process. He complains of “[h]olistic fundamental unfairness” at trial, id.,

relying on our statement in United States v. Rivera, 900 F.2d 1462, 1477–78 (10th

Cir. 1990) (en banc), that “prejudicial circumstances, which do not individually

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constitute error, might contribute to or cause a finding of fundamental

unfairness.” But Rivera further said that “[c]ourts should tread gingerly when

faced with arguments concerning the ‘fundamental fairness’ component of the

Fifth Amendment’s Due Process Clause, which should be reserved for the most

serious cases, which truly shock the conscience as well as the mind.” Id. at 1477

(internal quotation marks omitted). Because we have rejected each of Schmidt’s

objections individually and none of the challenged rulings improperly prejudiced

him, the conscience of the court is at peace, and we deny his due-process claim. 

B. Lewis’s Issues

1. Hearsay

Like Schmidt, Lewis complains of the improper admission of evidence

under the coconspirator exception to the hearsay rule. We reject his complaint

because he has not properly presented the issue on appeal.

Lewis failed to identify in his opening brief any specific statements that

were allegedly admitted improperly. He provided only an unadorned paragraph of

citations to the record. This is inadequate because he does not “connect any of

these cites to specific evidence he claims was prejudicial.” United States v.

Rodriguez-Aguirre, 108 F.3d 1228, 1237 n.8 (10th Cir. 1997). Although he

attempts to do better in his reply brief, arguments made for the first time in the

reply brief are untimely. See Redcorn, 528 F.3d at 738 n.4. An appellant cannot

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hold his specific complaint in reserve until it is too late for the appellee to

respond.

2. Alleged Amendment of the Indictment

Lewis contends that a jury instruction improperly amended the indictment

by permitting the jury to convict him of aiding and abetting the alleged

conspiracy. He has not argued that there is no such offense as aiding and abetting

a conspiracy, and we do not address the issue. See United States v. Willis, 890

F.2d 1099, 1104 (10th Cir. 1989) (upholding a jury instruction charging defendant

with aiding and abetting a conspiracy); United States v. Oreto, 37 F.3d 739, 751

(1st Cir. 1994) (“[I]t appears that most if not all courts to consider the issue have

held that a defendant may be convicted of aiding and abetting a conspiracy.”). 

Rather, he is asserting that the challenged instruction was improper because the

offense is not charged in the indictment. He bases this assertion on the absence in

the conspiracy count of any aiding-and-abetting language or even a citation to

18 U.S.C. § 2, the aiding-and-abetting statute. 

Lewis’s argument fails. This circuit’s law is settled that the trial court can

give an aiding-and-abetting instruction, and the jury can convict on that theory,

even if the indictment does not allege aiding and abetting. See United States v.

Alexander, 447 F.3d 1290, 1298 (10th Cir. 2006). As we stated in United States

v. Cooper, 375 F.3d 1041, 1049 (10th Cir. 2004), 

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[I]t is well established that aiding and abetting is not an independent

crime under 18 U.S.C. § 2; it simply abolishes the common-law

distinction between principal and accessory. Consequently, a

defendant can be convicted as an aider and abettor even though he

was indicted as a principal for commission of the underlying offense

and not as an aider and abettor, providing that the commission of the

underlying offense is also proven.

(brackets, citations, and internal quotation marks omitted). As an aside, we note

that reading the jury instructions as a whole, we think it highly unlikely that the

jury understood the aiding-and-abetting instruction as relating to count 1 (the

conspiracy count) and convicted him under that theory. See Jury Instructions,

Doc. 1219, No. 36A (“the government has advanced three theories [the second of

which was aiding and abetting] of prosecution concerning Counts 2-10 and

12-29.”). 

3. Franks Hearing

An affidavit does not provide probable cause to support a search warrant if

the affiant intentionally or recklessly asserted material falsehoods. See Franks v.

Delaware, 438 U.S. 154, 164–65, 168 (1978). Under Franks a district court must

hold a hearing to explore the sufficiency of the affidavit if the defendant makes a

“substantial preliminary showing that a false statement knowingly and

intentionally, or with reckless disregard for the truth, was included by the affiant”

and that “the allegedly false statement [was] necessary to the finding of probable

cause.” Id. at 155–56. 

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Lewis complains that the district court refused to conduct a Franks hearing

in connection with his motion to suppress evidence obtained by executing a

search warrant for a business office. He contends that the affiant failed to

“disclose that she had little direct basis for the claim [in the affidavit] that the

internal workings of the . . . office . . . was understood by” a confidential

informant. Lewis Br. at 26.

But Lewis has never asserted, before this court or in the district court, that

the affiant intentionally or recklessly made false statements. Thus, a Franks

hearing would have been improper. 

Lewis argues to us that he could not have filed an affidavit alleging that the

affiant lied because doing so would have prejudiced his “rights against selfincrimination.” Id. at 26–27. But he never raised this argument in the district

court; and even in this court he does not say what he could have sworn to in such

an affidavit. Moreover, we question whether an affidavit submitted in support of

a motion to suppress could be used against a defendant at trial. See Simmons v.

United States, 390 U.S. 377, 389–94 (1968) (defendant’s testimony at suppression

hearing to establish standing to object to a search cannot be used against him at

trial to establish guilt because defendant need not choose between his Fourth and

Fifth Amendment rights). Accordingly, we are unpersuaded that he should be

excused from making the necessary showing in district court.

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6

The summary of the district-court proceedings in Lewis’s opening brief

(continued...)

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4. Sentencing 

Lewis’s offense level was calculated as follows: His base offense level was

7 under the guideline for fraud offenses. See USSG § 2B1.1(a)(1). That level

was increased to 40 because of the following enhancements: (1) 22 levels based

on an actual loss of $24,709,954, see id. § 2B1.1(b)(1)(L); (2) 6 levels based on

the number of victims (1,169), see id. § 2B1.1(b)(2)(C); (3) 2 levels based on a

violation of a prior Nebraska cease-and-desist order, see id. § 2B1.1(b)(8)(C); (4)

2 levels because the offense involved sophisticated means, see id.

§ 2B1.1(b)(9)(C); and (5) 1 level because he was convicted of money laundering

under 18 U.S.C. § 1957, see id. § 2S1.1(b)(2)(A). His six criminal-history points

placed him in criminal-history category III, resulting in an advisory guidelines

range of 360 months to life. See id. Ch. 5, Pt. A. The court sentenced him to 360

months’ imprisonment. Because none of his convictions carried a maximum

sentence as long as 360 months, the court ran his sentence on the moneylaundering count consecutively to his concurrent sentences on the other counts. 

See id. § 5G1.2(d).

Lewis contests (1) the two-level enhancement based on a violation of the

Nebraska cease-and-desist order; (2) the court’s loss calculation; and (3) the

imposition of consecutive sentences.6

 

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6

(...continued)

could be read as stating that the court improperly assumed the reasonableness of

the guidelines when it imposed sentence. But the matter is not discussed in the

portion of the brief entitled “Legal Discussion,” and the brief does not include a

sufficiently developed argument to require our attention. In any event, it appears

to us that the court’s reference to the guidelines was appropriate. 

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a. Nebraska Cease-and-Desist Order

Under USSG § 2B1.1(b)(8)(C) the offense level for a fraud offense must be

increased by two if the offense involved “a violation of any prior, specific judicial

or administrative order.” The district court imposed this enhancement because

some transactions in the Ponzi scheme violated a cease-and-desist order issued by

the Nebraska Department of Banking and Finance. The order was issued on

March 12, 2002, after Lewis and Jannice McLain, Schmidt’s then-girlfriend and

later wife, solicited an investment from a Nebraska resident, Warren Peterson, in

Smitty’s, one of the scheme companies. No Smitty’s security was registered in

Nebraska, and Smitty’s itself was not registered with Nebraska as a securities

dealer. The order prohibited “Smitty’s . . . , its affiliates, controlling persons,

officers, directors, agents, employees and successors, and any person or entity

directly or indirectly controlled or organized by or on their behalf” from soliciting

any investments in “securities until the securities have been registered with the

[Nebraska Department of Banking and Finance],” and further prohibited those

individuals and entities from “offer[ing] and s[elling] . . . securities until they

have been registered as broker-dealers or agents with the [Nebraska Department

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of Banking and Finance].” Schmidt R. Vol. V, Doc. 621, Attach. 20. Despite the

order, McLain and others—but not Lewis—continued to solicit investments in

Nebraska.

In the district court Lewis opposed the two-level enhancement on the

ground that the violation of the order was not foreseeable. His argument on

appeal is different. He now argues that the enhancement should not apply

because he did not have knowledge of the order. Because Lewis did not raise this

issue below, we review only for plain error. See United States v. Burke, 571 F.3d

1048, 1057 (10th Cir. 2009) (“[W]hen a defendant pursues a particular theory or

objection, but fails to raise another closely related argument, he has forfeited the

argument and we review only for plain error.”). On plain-error review we will

reverse the district-court judgment “only if [(1)] there is . . . error, (2) [the error]

is plain, . . . (3) [the error] affects substantial rights, and . . . (4) [the error]

seriously affects the fairness, integrity, or public reputation of judicial

proceedings.” Id. 

We will assume, without deciding, that the enhancement under

§ 2B1.1(b)(8)(C) cannot be imposed unless the defendant knew that the order had

been issued. Based on that assumption, it is possible that the district court erred

in imposing the enhancement because it never explicitly found that Lewis knew

that the order existed. But we can reverse under plain-error review only if it is

clear that imposition of the enhancement was error. It is not enough that a

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hearing on remand may show that the enhancement was improper. If that were all

that is required, we could reverse and remand because of “plain error” even

though it may ultimately be resolved that there was no error at all. Such a

fruitless, wasteful procedure is not the office of plain-error review. Recognizing

this, we have stated that “factual disputes [regarding sentencing] not brought to

the attention of the [district] court do not rise to the level of plain error.” United

States v. Svacina, 137 F.3d 1179, 1187 (10th Cir. 1998). At most, we could

recognize an exception to this general rule when the appellant can establish the

certainty of a favorable finding on remand. Perhaps Lewis might then prevail on

this issue if he could establish that the government would be unable to prove that

he knew of the order. It would be remarkable if Lewis could meet that burden,

and he has not done so.

We need point to only a few items of evidence suggesting that he would

have been informed of the order. First, Lewis was one of those whose actions

precipitated the cease-and-desist order. He and McLain personally solicited

Peterson, the Nebraska investor who alerted the Nebraska Department of Banking

and Finance to potential irregularities with Smitty’s. Second, although he claims

that his role was limited to that of manager of Capital Holdings’s office in

Denver, he took part in the activities of the other scheme companies (such as by

soliciting Smitty’s investments) and apparently had a special role in dealing with

government investigations. A Capital Holdings employee testified that when

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Lewis was told that an investor in the Northwest Group (one of the scheme

companies) had caused the Securities and Exchange Commission (SEC) to

investigate Northwest, Lewis responded that the investigation “would ruin

everything,” Lewis R. Vol. XVII at 2688, and he ordered that the investor and

anyone whom he had brought into the scheme be reimbursed for their

investments. Thus, there is good reason to believe that Lewis knew of the

Nebraska order. In any event, he has hardly satisfied his burden of establishing

that the government would be unable to prove on remand that he knew of it.

b. Loss Calculation and Attribution

Lewis’s offense level was increased by 22 levels based on the district

court’s finding that the losses from his offenses were $24,709,954.02. He

challenges the district court’s loss calculation on five grounds. One can be

disposed of summarily. He argues that the court could not consider evidence of

losses caused by conduct of which he had been acquitted. But binding precedent

holds otherwise. See United States v. Watts, 519 U.S. 148, 154 (1997) (“[W]e are

convinced that a sentencing court may consider conduct of which a defendant has

been acquitted.”); United States v. Todd, 515 F.3d 1128, 1137–38 (10th Cir. 2008)

(following Watts).

Lewis also argues that the district court was required to find that the loss

was established by clear and convincing evidence. At sentencing, however,

Lewis’s counsel stated that the government had to prove losses by only a

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preponderance of the evidence. Because Lewis did not raise this issue below, we

review only for plain error. See United States v. Brooks, 569 F.3d 1284, 1289

(10th Cir. 2009). Lewis has not shown that the district court plainly erred. For

error to be plain, the error “must be clear or obvious under well-settled law.” 

United States v. Trujillio-Terrazas, 405 F.3d 814, 818 (10th Cir. 2005) (internal

quotation marks omitted). But we have repeatedly held that the sentencing court

need find facts only by a preponderance of the evidence, see, e.g., United States

v. Hinson, 585 F.3d 1328, 1341 n.6 (10th Cir. 2009); United States v. Tindall, 519

F.3d 1057, 1063 n.2 (10th Cir. 2008), and no Supreme Court or Tenth Circuit

decision says that clear-and-convincing evidence is required. 

The remaining three grounds on which Lewis challenges the district court’s

loss calculation relate to the reliability and sufficiency of the evidence with

respect to several components of the calculation. “We review the district court’s

calculation of loss for clear error. To reverse under this standard requires that,

based on the entire evidence, we have a definite and firm conviction that a

mistake has been committed.” United States v. Hahn, 551 F.3d 977, 979 (10th

Cir. 2008) (citation and internal quotation marks omitted). 

Lewis’s first evidentiary challenge concerns the government’s reliance on

information obtained from the trustee in a civil-forfeiture proceeding initiated to

reimburse investors from the assets of some of the defendants and their

businesses. He complains that the government witness who testified about

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investor losses at the sentencing hearing had never spoken with the trustee and the

trustee obtained her information only through “mass mailings and ‘hot lines.’” 

Lewis Br. at 36. But the purpose of the trustee’s inquiries was to obtain

documentation to corroborate claims of losses, and Lewis has not challenged the

reliability of any documentation received by the trustee. Moreover, information

from the trustee merely supplemented the principal means used by the government

to determine losses—the evidence acquired in the criminal investigation. In our

view, Lewis has provided no substantial ground for rejecting the district court’s

determination that the evidence used by the government was reliable.

Second, Lewis asserts that the loss amount is unreliable because it includes

losses suffered by unindicted coconspirators. This assertion is unfounded. The

amount of loss was calculated as the sum of investor deposits to accounts of

scheme companies less the sum of payments to investors from those companies.

Lewis has not identified any improper inclusion in the loss calculation of

coconspirator deposits to accounts of scheme companies. Relying on the

government’s loss-calculation exhibits, he asserts that the government included

deposits by Terry Lorenzen, an investor who actively solicited investments from

others. But Lewis misunderstands the exhibits. They do not show that

Lorenzen’s deposits were included in the loss calculation; rather, payments to

Lorenzen were included. Those payments were treated as funds returned to

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investors and actually aided Lewis by lowering the net-loss amount. Lewis has

no valid complaint on this score.

Finally, Lewis complains that the loss calculation included losses caused by

Schmidt’s conduct. He acknowledges that the sentencing court can take into

account “all reasonably foreseeable acts and omissions of others in furtherance of

the jointly undertaken criminal activity.” USSG § 1B1.3(a)(1)(B). He contends,

however, that he could not have reasonably foreseen the scope of Schmidt’s

misconduct. The crux of Lewis’s argument is that he only “help[ed] manage the

executive office suite in Denver” and so could not have known of the extent of

Schmidt’s fraud. Lewis Br. at 39. But the record before the district court showed

that Lewis played a more extensive role than just managing an office. He

solicited investments on behalf of several scheme companies, repeatedly telling

potential investors that their investments would be insured against losses and that

they would receive enormous gains. Although Lewis claims to have had only

little power in the enterprise, he had the authority to determine the ostensible

rates of return that investors could receive on their investments and the

commissions that investors could receive for referring new investors. An

employee of Capital Holdings testified that before any Capital Holdings

disbursement to an investor, both Lewis and Schmidt had to sign off on it. And,

as discussed above, when Lewis became aware that an investor in one of the other

scheme companies had generated an investigation by the SEC, he said that the

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investigation “would ruin everything,” Lewis R. Vol. XVII at 2688, and arranged

to remove that investor (and those associated with him) from the program. Other

investors who asked Lewis too many questions were similarly kicked out of the

scheme. The district court did not clearly err in finding Schmidt’s conduct

reasonably foreseeable to Lewis.

c. Concurrent Sentences

Lewis contends that the district court should have sentenced him to

concurrent sentences. His sole argument in support of this contention is that the

“sentences should have been grouped to be served concurrently as recommended

by the probation department.” Id. at 41. But he is confusing (1) grouping

offenses for the purpose of calculating an offense level and (2) imposing

concurrent sentences for those offenses. The court, as recommended by the

probation department in its PSR, did group Lewis’s offenses in calculating his

offense level. But then, to achieve a sentence suitable for his offense level and

criminal history, it imposed some sentences consecutively, again as recommended

by the PSR. Lewis provides nary a hint of error. Accordingly, we affirm the

imposition of consecutive sentences. 

5. Lewis’s Pro Se Brief

Finally, we note the arguments raised by Mr. Lewis in a supplemental pro

se brief permitted by this court. He argues that his sentence was too long and

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(supported by a posttrial affidavit of Schmidt) that the evidence of guilt was

insufficient. We are unpersuaded by either argument. 

III. CONCLUSION

We AFFIRM Schmidt’s convictions and sentences except that we

REVERSE his convictions and sentences on counts 12, 13, 14, and 18 and remand

for imposition of a corrected sentence. We AFFIRM Lewis’s convictions and

sentence. We DENY all pending motions.

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