Free Proposed Jury Instructions - District Court of Colorado - Colorado

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

Document 1097-12

Filed 03/30/2007

Page 1 of 3

INSTRUCTION NO. SMITH 31B The Theory of the Defense -- Explained Defendant Michael Smith has pleaded "Not Guilty" to the charges contained in the indictment. This plea of not guilty puts in issue each of the essential elements of the offense as described in these instructions and imposes on the government the burden of establishing each of these elements by proof beyond reasonable doubt. Defendant Michael Smith, moreover, contends that he is not guilty of the crimes charged because he had no knowledge of the illegality or fraudulent nature of the Capital Holdings investment scheme. He specifically claims he had no knowledge that the operators of the scheme were not making foreign bank note trades and that he had no knowledge that the money coming into Capital Holdings was being taken out by the operators of the scheme for their own personal use, and for making payments to earlier investors in Capital Holdings to make it appear that the investment was real and profitable. He further contends that he took all available steps to perform his own "due diligence" on the operators of Capital Holdings and the investment plan itself, and found no unfavorable information of any kind, either because it did not exist or was withheld from him or was made unavailable to him. He also contends that he should have been informed by the government early in 2002 that Capital Holdings was under investigation, and that he would then have never become involved, either as an investor himself or in getting others to invest. He also contends that he had no knowledge, and could not have known, that the money received by him in bank accounts in Spokane, Washington, from Capital

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

Document 1097-12

Filed 03/30/2007

Page 2 of 3

Holdings was not from foreign trading as described by the operators of Capital Holdings. He maintains that he never knew and could not have known that the money for payments to present and past investors came from more recent or new investors. He contends that he and others working with him maintained extensive and accurate accounting records for all investors who came through the Spokane office. He contends that nothing in the evidence shows that he could have gained any knowledge that Codefendants Schmidt, Lewis, Beros, and Weed were acting in a false and fraudulent manner and were not making the foreign trades or did not have complete insurance on the accounts or that the accounts were not "non-depleting custodial trust accounts" as the co-defendants had described. He contends finally that when he made presentations to would-be investors or present investors, that he only gave information which had been given him by codefendants. He in effect claims that he was a total victim of the actions of the codefendants, and not a member of any conspiracy or fraudulent investment scheme with them. He finally claims that the government should have recognized these facts and have allowed him to become a witness and claimant against the co-defendants, and that the government should never have charged him in this case because he was totally innocent.

O'Malley, Grenig & Lee, Federal Jury Practice & Instructions, § 19.01 (5th ed. 2000)

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

Document 1097-12

Filed 03/30/2007

Page 3 of 3

United States v. Scafe, 822 F.2d 928, 932 (10th Cir. 1987) (criminal defendant is entitled to theory of defense instruction if there is a foundation in the evidence for the instruction) 2 Wright, Federal Practice and Procedure: Criminal 2d § 482, pp. 689-91 (1982) (a defendant is entitled to a specific instruction on his theory of the case if there is evidence to support it and a proper request is made)