Free Proposed Jury Instructions - District Court of Colorado - Colorado

Case 1:04-cr-00103-REB-MEH

Document 1097-7

Filed 03/30/2007

Page 1 of 4

INSTRUCTION NO. SMITH 25 SECURITIES FRAUD The Defendants Norman Schmidt and George Alan Weed are charged in Counts 18-29 with Securities Fraud; the Defendant Charles Lewis is charged in Counts 20-29 with Securities Fraud; and, the Defendants Michael Smith and George Beros are charged in Counts 23-29 with Securities Fraud, all in violation of 15 U.S.C. Section 77q(a). This law makes it a crime to for anyone to knowingly offer or sell a security by the use of any means or instruments of interstate commerce or the mails as part of a scheme to defraud. To find a defendant whose case you are considering guilty of this crime you must be convinced that the government has proved each of the following elements as to each defendant, or that the defendant knowingly and intentionally aided and abetted, as defined in instruction 28, the commission of the crime beyond a reasonable doubt: First: the defendant charged in each count offered or sold the security described in the indictment, that is investment contracts described as Cooperative Private Placement Agreements, High Yield Private Placements, Medium Term Note Private Placements, and Private Contract Agreements, Second: in the offer or sale of the security, the defendant charged in each count made use of any means or instruments of transportation or communication in interstate commerce or made use of the United States mails; and, Three: in the offer or sale of the security, the defendant charged knowingly and deliberately employed a scheme to defraud, that is the scheme described in paragraphs 2-5 of instruction number 20, plus the following allegations:

Case 1:04-cr-00103-REB-MEH

Document 1097-7

Filed 03/30/2007

Page 2 of 4

1.

It was a further part of the scheme for the defendants, Norman Schmidt, George Alan Weed, Charles Lewis, Michael Smith, and George Beros, to conceal from and omit to state to current and prospective investors material facts, including but not limited to the following: a. That Norman Schmidt had previously been convicted of a felony, Mail Fraud, in violation of Title 18, United States Code, Section 1341, and Wire Fraud, in violation of Title 18, United States Code, Section 1343, in the United States District Court for the District of Wyoming; b. That Charles Lewis had previously been convicted of a felony, theft, in violation of Colorado Revised Statute 18-4-401, in the District Court for the 18th Judicial District of Colorado, and during times relevant to this indictment was on probation for that offense; c. That, between March of 2000 and March of 2002, the states of Illinois, Nebraska, and Iowa had ordered some or all of the following defendants or entities to cease and desist the same or similar investment promotion activities as described in paragraphs 2-4 of instruction number 20: namely, Norman Schmidt; George Alan Weed; the Reserve Foundation Trust, and; Smitty's Investments; d. That investor funds were moved at the defendants' will from the banks into which investors were told their funds would be deposited and would remain; e. That investor funds were being used for purposes unrelated to the highyield investment program; 2

Case 1:04-cr-00103-REB-MEH

Document 1097-7

Filed 03/30/2007

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f.

That many investors associated with the Reserve Foundation Trust and the Reserve Foundation, LLC, were unable to recover their monies invested or their purported earnings; and

g.

That investor funds had not been used or traded in the manner represented to current and prospective investors;

2.

It was a further part of the scheme for the defendants, Norman Schmidt, George Alan Weed, Charles Lewis, Michael Smith, and George Beros, to use and cause others to use the United States Mails, commercial interstate carriers, interstate wire and communication facilities, the interstate banking system, and interstate transportation facilities in connection with the purchase and sale of the securities they offered. The term "scheme to defraud" as used in this instruction is a design or plan to

trick or to deceive in order to obtain money or something of value. The term "interstate commerce" means "trade or commerce in securities or any transportation or communication relating to such trade or commerce among the several states . . ." This element of the crime charged may be established if the government proves beyond a reasonable doubt that any means or instruments of interstate transportation or communication, or the mails, were, in fact, used in the scheme or that such use was reasonably foreseeable. In this regard, however, it is not necessary for the government to prove that the defendant whose case you are considering personally carried out the use of interstate commerce or the mails. It is not necessary to prove that such use was contemplated or 3

Case 1:04-cr-00103-REB-MEH

Document 1097-7

Filed 03/30/2007

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intended by anyone involved in any scheme. It is sufficient for the government to prove beyond a reasonable doubt the defendant set forces in motion which foreseeably resulted in such use. The matter, material, or information mailed, transported, or communicated need not itself contain a fraudulent representation or request money, but must be a part of the overall scheme. The term "security" as used in this instruction means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

O'Malley, Grenig, & Lee, Federal Jury Practice and Instructions, §§62.03, 62.04, 62.12, 62.13, and 62.14 (5th ed. 2005) (modified).

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