Free Proposed Jury Instructions - District Court of Colorado - Colorado

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

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INSTRUCTION NO. G-25

The following defendants are charged with securities fraud in violation of 15 U.S.C. Section 77q(a) and 77x as described in the chart below: Count 18 Date April 4, 2000 Defendants NORMAN SCHMIDT; GEORGE ALAN WEED Use of interstate commerce/mails $557,100 wire transfer from Goldcoast Enterprises, Inc. account at Bank of Nevis to Reserve Foundation, LLC account at Bank One $10,000 deposit from Gary and Jacqueline Rademacher account at Wells Fargo into Smitty's Investments, LLC account at Bank One $20,000 deposit from Shirley Lehr account into Smitty's account at Wells Fargo $25,000 wire transfer from Linden Lee Markham account to Smitty's account at Wells Fargo $50,000 deposit from Greg Hector account at Wells Fargo to Smitty's account at Wells Fargo $28,000 deposit from William and Brenda DellaPenna account at Bank of America into Capital Holdings, LLC account at Wells Fargo $350,000 deposit from Main Street Mortgage of Colorado, LLC account at First Bank of Boulder into Capital Holdings, LLC account at Wells Fargo

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November 13, 2000

NORMAN SCHMIDT; GEORGE ALAN WEED

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August 7, 2001

NORMAN SCHMIDT; GEORGE ALAN WEED; CHARLES LEWIS NORMAN SCHMIDT; GEORGE ALAN WEED; CHARLES LEWIS NORMAN SCHMIDT; GEORGE ALAN WEED; CHARLES LEWIS NORMAN SCHMIDT; GEORGE ALAN WEED; CHARLES LEWIS; MICHAEL SMITH NORMAN SCHMIDT; GEORGE ALAN WEED; CHARLES LEWIS; MICHAEL SMITH

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February 25, 2002

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May 9, 2002

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September 18, 2002

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October 7, 2002

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

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October 21, 2002

NORMAN SCHMIDT; GEORGE ALAN WEED; CHARLES LEWIS; MICHAEL SMITH NORMAN SCHMIDT; GEORGE ALAN WEED; CHARLES LEWIS; MICHAEL SMITH NORMAN SCHMIDT; GEORGE ALAN WEED; CHARLES LEWIS; MICHAEL SMITH NORMAN SCHMIDT; GEORGE ALAN WEED; CHARLES LEWIS; MICHAEL SMITH NORMAN SCHMIDT; GEORGE ALAN WEED; CHARLES LEWIS; MICHAEL SMITH

$5,000 deposit from Lambros Gianos account at Bellco Credit Union into Capital Holdings, LLC account at Wells Fargo $15,000 deposit from Carol and Clarence Hendrikson account at Farmers & Merchants Bank into Capital Holdings, LLC account at Wells Fargo $35,000 deposit from Carol and Clarence Hendrikson account at Farmers & Merchants Bank into Capital Holdings, LLC account at Wells Fargo Interstate travel by NORMAN SCHMIDT and CHARLES LEWIS from Denver, CO to Chicago, IL

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October 31, 2002

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November 4, 2002

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February 19, 2003

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May 20, 2003

Deposit of $25,000 cashier's check from Cliff Seigneur into Rocky Mountain Sports Promotions, LLC account at Commercial Federal Bank

This law makes it a crime to for anyone to 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 as to each defendant, or that the defendant intentionally aided and abetted the commission of the crime as defined in instruction ____, beyond a reasonable doubt:

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

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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: 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, 3

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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; 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. 4

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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 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, 5

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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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