Free Transcript - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Criminal Action No. 04-cr-103-REB UNITED STATES OF AMERICA, Plaintiff,

NORMAN SCHMIDT, GEORGE ALAN WEED, CHARLES LEWIS, MICHAEL D. SMITH, Defendants. _______________________________________________________________ REPORTER'S TRANSCRIPT TRIAL TO JURY - VOLUME XXVI _______________________________________________________________ Proceedings before the HONORABLE ROBERT E. BLACKBURN, Judge, United States District Court for the District of Colorado, commencing at 8:25 a.m., on the 14th day of May, 2007, in Courtroom A701, Alfred A. Arraj United States Courthouse, 901 19th Street, Denver, Colorado. APPEARANCES WYATT B. ANGELO, MATTHEW KIRSCH, Assistant United States Attorneys, 1225 Seventeenth Street, #700, Denver, Colorado, appearing for the Government. Suzanne M. Claar, Official Reporter 901 19th St. Denver, Colorado, 80294-3589 (303)825-8874 PROCEEDINGS REPORTED BY MECHANICAL STENOGRAPHY TRANSCRIPTION PRODUCED BY COMPUTER

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APPEARANCES (Continued) PETER R. BORNSTEIN, 1600 Broadway, #2350, Denver, Colorado, THOMAS J. HAMMOND, 1544 Race Street, Denver, Colorado, appearing with Defendant Schmidt. THOMAS E. GOODREID, 1801 Broadway, #1100, Denver, Colorado, appearing with Defendant Weed. RONALD GAINOR, 6414 Fairways Drive, Longmont, Colorado, appearing with Defendant Lewis. DECLAN J. O'DONNELL, 777 Fifth Street, Castle Rock, Colorado, RICHARD N. STUCKEY, 2150 West 29th Avenue, #500, Denver, Colorado, appearing with Defendant Smith.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 morning. morning. MR. ANGELO: are.

P R O C E E D I N G S (Proceedings resumed at 8:25 a.m.) THE COURT: Thank you and please be seated. Indeed we

Mr. Schmidt, good morning. MR. SCHMIDT: THE COURT: MR. WEED: THE COURT: MR. LEWIS: THE COURT: MR. SMITH: THE COURT: Good morning.

Mr. Weed, good morning. Good morning, your Honor. Mr. Lewis, good morning. Good morning your Honor. And Mr. Smith, good morning. Good morning, your Honor. Counsel, those of you present, good

Good morning. Good morning.

MR. BORNSTEIN: THE COURT:

And Deputy United States Marshals, good

We convene again on the record, again deliberately

outside the presence and hearing of the jury, to conclude and consummate the jury instruction and charging conference began Friday afternoon last. With Mrs. Kramer's assistance I have provided you with the court's final instructions general and Special Verdict Forms. There are 45 instructions, a general verdict form for

each of the four defendants, and a Special Verdict Form focusing

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on Count 1, conspiracy, overt acts. Since Friday afternoon, we have hopefully corrected all of the formatting, typographical, grammatical, and syntactical errors that either we discovered or that you discovered and brought to our attention. Additionally, hopefully, we have revised, modified, amended, and adapted those instructions for which such modifications were approved after colloquy among the court and counsel. Now, there are things that are new, which are really now the subject of this final charging conference. In reverse

order, I draw your attention to the court's proposed form of Special Verdict Form, Count 1, conspiracy, overt facts. With objections already made of record, any further objections? By the government? No, your Honor. By any one or more of the defendants?

MR. KIRSCH: THE COURT:

Hearing none, Special Verdict Form, Count 1, conspiracy, overt acts is approved. Directing your attention next to Instruction No. 35, which was presented as a putatively stipulated instruction, at least by the government and defendant Schmidt. Any objection by the government? MR. KIRSCH: THE COURT: No, your Honor. Or any one or more of the defendants?

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Hearing none, Instruction No. 35 is approved. Lastly, directing your attention to Instruction No. 27, at mid-page the paragraph -- it's the third paragraph that begins, in addition. The court has attempted to craft a

unanimity of theory or legal basis instruction. Any objection by the government? MR. KIRSCH: Your Honor, the government does not object

to the manner in which the court has crafted that instruction. However, the government believes that this instruction should, rather than referring to Count 1 of the indictment, that it should refer to the substantive counts of the indictment. It is those counts that the -- for which the government believes it has charged and has the ability to prove liability by the defendants in one of three ways. The government's suggestion, therefore, would be to replace the references to Count 1 with references to Counts 2 through 10 and 12 through 29, to replace the reference to Instruction No. 20 with the reference to Instruction Nos. 30, 31, and/or 32, and the government's final suggestion then would be to deliver this -- that portion of what is now Instruction No. 27 in between what are currently Instructions No. 36 and 37. THE COURT: Very well. Objections, responses or

comments by the individual defendants. Mr. Bornstein on behalf of Mr. Schmidt. MR. BORNSTEIN: Yes, your Honor. I want the record to

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reflect that this instruction is not -- does not create a waiver of our prior arguments about the issues which this instruction intends to deal with, and, um, that we agree with the government in terms of the substance of the -- what is really the substantive counts that are the third theory of offense. And by dealing with this instruction, we don't believe this cures not only a waiver issue but somehow it cures the problems that we raised during the charging conference. THE COURT: Thank you. Objections, responses or

comments by any of the other defendants? Hearing none, I am going to take a minute or two and discuss this matter in chambers, after which we will either have Instruction 27 as originally proposed by the court without the additional language, or we'll have an instruction that, subject to all objections of record, embodies the substance proposed by the government and joined, again subject to all objections of record joined by Mr. Schmidt. Now Mr. Stuckey, do you know the current whereabouts or circumstances of Mr. O'Donnell? MR. STUCKEY: I know nothing other than what your

secretary told me just a few moments ago. THE COURT: Mrs. Kramer, do you have an update? Yes, your Honor. Mr. O'Donnell

THE COURTROOM DEPUTY:

is on his way in, but we don't know how long he will be. THE COURT: He is en route.

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MR. STUCKEY:

He usually calls my office on his cell

phone if he is delayed for any reason, traffic or whatever. Before your Honor takes this break, I will run downstairs and call and see if I have a message. THE COURT: two reasons. Very well. I am going to recess now for

One, to reexamine Instruction No. 27 in view of

the revisions proposed by the government joined by Mr. Schmidt, and to allow Mr. O'Donnell a reasonable opportunity to appear and continue to represent Mr. Smith. We are in recess. (Recess at 8:32 a.m., until 8:45 a.m.) THE COURT: Very well. Over the recess we have

returned Instruction 27 to its original form, and we have crafted court's proposed Instruction 36A. Subject to objections of record, any objection to 27 as returned to its original state by the government? MR. KIRSCH: THE COURT: No, your Honor. Or any one or more of the defendants?

Hearing none, Instruction No. 27 in its current condition is approved. Directing your attention to court's proposed Instruction 36A, subject to objections of record, any further objection by the government? MR. KIRSCH: THE COURT: No, your Honor. Thank you.

By any one or more of the defendants?

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Hearing none, court's proposed Instruction 36A approved, but again subject to objections and related objections of record. Very well. The further report on the whereabouts and Mr. Stuckey.

circumstances of Mr. O'Donnell. MR. STUCKEY: indicated.

Just what the courtroom deputy has

I had a message at seven o'clock when he said the He had symptoms they say

paramedics had just come to his house. asymptomatic of a heart attack. hospital.

He was on his way to the

But apparently at 8:25 he called chambers and said he

left the hospital. He told me in the message that he had made it, that he had totally and completely prepared the closing argument he wanted to give, and he would be here to give it. I would suggest that -- he's been going over the instructions all week. He doesn't need to be here. I am here

for the defendant Smith during the reading of the instructions. If he is to go first, he should be here by then. of course the government goes first. But

If he is not here any

points that need to be made in response to government arguments, I can jot them down and make them and confer with him and incorporate them into his closing argument, and that would be satisfactory, assuming we are getting a little late start. If your Honor reads the instructions and the government argues, it will take us through the noon hour, so we will have

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the noon hour to confer. THE COURT: I suspect all of those things are true.

Bottom line, may we now proceed in Mr. O'Donnell's absence? MR. STUCKEY: We may, your Honor, and Mr. Smith I think

is in agreement with that. THE COURT: All right. Thank you. We had redacted

MR. STUCKEY:

One other small thing.

Smith Exhibits 14 and 15 to the satisfaction of all parties, I understand, and we need to formally move their admission at this point. THE COURT: Any objection to Smith Exhibits 14 and 15

as redacted by the government? MR. KIRSCH: THE COURT: No, your Honor. Or any one or more of the defendants? Mr. Schmidt doesn't object as redacted to

MR. HAMMOND:

the extent that he can simply stand silent about it. Generally, he objects to the admission of the exhibit, as the court already knows. of that objection. THE COURT: And again, if you will remind the court of We didn't want to lose preservation

those extant objections? MR. HAMMOND: it's almost all gone. I believe that there is a -- no, I think If it's all gone, then I am not sure it's It's redundant of the evidence

even relevant at this point.

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that's already been adduced from the witnesses. THE COURT: That's a 403 objection. The court notes

that probativity of this evidence is not yet substantially outweighed by any of the dangers or any of the considerations including but not limited to the consideration of the needless presentation of cumulative evidence. respectfully overruled. Smith Exhibits 14 and 15 as redacted are admitted in evidence, with leave to publish at the propitious time, perhaps during counsel's closing argument, if Mr. Smith cares to do it then. MR. STUCKEY: THE COURT: Thank you, your Honor. As you fly Therefore the objection is

Back to jury instructions.

speck them further, if you find any other type of typographical, grammatical, or syntactical errors that should and must be amended or corrected now. Any such matter by the government? MR. KIRSCH: THE COURT: defendants. No, your Honor. Any such matter by any of the other Hearing none, thank you.

Very well.

During the charging conferences last Friday and this morning, I approved certain instructions to which the parties stipulated or about which there was no objection. I approved also corrections and revisions occasioned by formattings, typographical, grammatical, and syntactical errors.

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I considered and either sustained or overruled most of the parties' objections to proposed instructions and verdict forms. I took some objections under advisement or deferred

ruling on them. I have considered carefully all other instructions and verdict forms proposed and tendered by the government and defendants. I have carefully considered all objections to those

instructions and verdict forms and those prepared and proposed by the court. I have considered carefully all reasons stated, arguments advanced, and authorities cited by the parties in their papers and during these charging conferences in support of or in opposition to all proposed instructions and verdict forms. I have considered whether the proposed and tendered instructions and verdict forms were filed in the time and manner required by REB criminal practice standard IV.C.5., and whether untimely instructions and verdict forms should be considered under REB criminal practice standard IV.C.5.d. Having engaged now in that comprehensive analysis, I find and conclude as follows: One, that in their present and

now final form, the court's proposed instructions, general verdict forms, and Special Verdict Form as a whole are supported by the evidence, and that they properly, plainly, completely, and accurately instruct the jury on every issue presented. Two, that in their present and final form, the court's

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proposed instructions, general verdict forms, and Special Verdict Form are not unreasonably or unnecessarily repetitive, redundant, or superfluous, and do not unduly emphasize any single issue or evidentiary excerpt, and do not contain improper or incomplete statements of the law. Three, that in their present and final form, the court's proposed instructions, general verdict forms, and Special Verdict Form are not likely to confuse or distract the jury, nor are they likely to unreasonably or unnecessarily extenuate or vitiate a required statement of the law. Four, that in their present and final form, the court's instructions, general verdict forms, and Special Verdict Form are designed and organized to provide the jurors with a complete and coherent method by which to discharge their solemn duties in this case. Five, that all objections to the court's instructions, general verdict forms, and Special Verdict Forms in their present and final form, which were taken under advisement or deferred, should be overruled. And six, that concerning the parties' objections and proposed and tendered instructions and verdict forms, that I have considered and respectfully rejected, I now approve, adopt, and incorporate the reasons stated, arguments advanced, and authorities cited by any party opposing the instruction or verdict form that I rejected.

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Therefore, it is ordered as follows:

That all

objections to the final Instructions 1 through 45, including 36A, and/or the general and Special Verdict Forms are overruled. Next, that those same instructions and those same general and Special Verdict Forms are approved and shall be included in the court's charge to the jury, and finally, that all other proposed and tendered jury instructions and Special Verdict Forms are rejected, including but not limited to Smith's tendered Instruction No. 1. forthwith. Counsel, please be advised that I do not require the court reporter to make a record as the court reads the instructions and reviews the verdict forms with the jury. Any objections by the government? MR. KIRSCH: THE COURT: No, your Honor. Or by any one or more of the defendants? Done in open court

Hearing none, the court shall proceed in that fashion. Copies of the jury instructions and general and Special Verdict Forms will be provided by the court to each juror. Is the court authorized, as it reads the jury instructions and verdict forms, to make those amendments which may be necessary as a result of typographical, clerical, or syntactical error? Thereafter, may the court sua sponte authorize and direct the Clerk of the Court to amend any such affected

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instruction or verdict form to coincide with their reading by the court? Any objection to the use of that protocol by the government? MR. KIRSCH: THE COURT: No, your Honor. Or any one or more of the defendants?

Mr. Bornstein. MR. BORNSTEIN: Your Honor, probably not. But in the

event that the court makes a sua sponte change from the bench, for which I do wish to make a record, I would ask for some time at some point before -- I think the rule is that before the -maybe before the jury leaves or starts their deliberations or something, that I get a chance to say something if I feel like it's important. THE COURT: circumstances. Now, again, please be reminded that I have approved your stipulation, and therefore that final argument is limited to three hours total for the government, including opening and rebuttal, and one hour for each of the defendants. Please keep your own time, but don't worry. Mrs. Kramer and I will be assisting you. If at some point you Leave is granted to all parties in those

lose track, and need to know where you are, please feel free to interrupt your presentation and ask, and we will as quickly, as quietly, and as discreet any as we can, communicate what our own

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calculations show. Now, with respect to the retention or discharge of the three remaining alternate jurors. The position, motion,

request, or recommendation of the parties, commencing with the government, Mr. Kirsch. MR. KIRSCH: Your Honor, the government requests that

all three of the alternate jurors be directed that they remain subject to the rules that currently govern their conduct concerning deliberation once the deliberations begin. The government would further suggest that the first remaining alternate, that the court request that the first remaining alternate remain not at the courthouse, but within the Denver metro area in the event that deliberations did need to begin again due to the loss of one juror. That that might be

able to happen within perhaps an hour as opposed to within an extra day. THE COURT: Very well. Response or discrete request, Any

motion, or recommendation by the individual defendants. position? Very well. Then the court shall exercise its

discretion in the manner proposed, recommended, and requested by the government. Therefore, all three remaining alternate jurors

shall be retained. Provided furthermore, that they shall not be sequestered in the courthouse proper. However, they shall

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continue to be subject to the rules, admonitions, and prohibitions that now govern their conduct, communication, and deportment as jurors in the trial of this case. Provided furthermore, that the first alternate juror, who I show to be Ms. Bonnie Kipple, shall be further required to remain within 30 minutes of this courthouse to facilitate her inclusion as a regular juror if a regular trial juror during deliberations is incapacitated or otherwise unable to perform his or her duties. Done in open court effective forthwith. Now, Mrs. Kramer advises me that all jurors are present and presumably prepared to proceed. We shall be in recess long

enough to make those necessary arrangements. We are in recess. (Recess at 9:00 a.m., until 9:05 a.m.) THE COURT: are. Well, I have already bid everybody else in the courtroom a good morning. Last but certainly not least, ladies Thank you, and please be seated. Indeed we

and gentlemen of the jury, good morning. THE JURY: THE COURT: Good morning. Again, we thank you for your patience and I can assure you that while you have I am happy to report

indulgence this morning.

been waiting, we indeed have been working. that we are again prepared to proceed.

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Madam clerk, I am going to ask that you distribute to each of our jurors the court's jury instructions, general and Special Verdict Forms for use in this case. When you receive

your copy, I recommend that you place your name on it to distinguish it carefully from those of your colleagues. Now, ladies and gentlemen, I will first re-read to you the indictment in this case, followed by which I will read you the court's instructions on the law and review with you the general verdict forms, one for each of the four men now on trial, and a Special Verdict Form that relates to Count 1, which charges conspiracy, and specifically this will relate to overt acts that you will hear described, defined, and discussed in my jury instructions. Now, after I have re-read the indictment, after I have read the instructions to you, after I have reviewed the verdict forms with you, we will recess. After our midmorning recess, we shall then receive the parties' closing arguments, commencing with the government's opening portion of its closing argument, followed by the closing arguments of each of the defendants, Mr. Smith, Mr. Lewis, Mr. Weed, and Mr. Schmidt, in that order, and then concluding with the government's rebuttal closing argument. Now, each of you now have a copy of the jury instructions and verdict forms, and although each of you have a copy of those instructions and verdict forms, and although you

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will take the original jury instructions and verdict forms with you to your jury deliberation suite for use during your solemn deliberations, please listen carefully as I read those matters to you. I would encourage you to follow along as I read the instructions and review the verdict forms with you using your own copies. Now, please note that although I am re-reading the indictment to you, you will not have a copy of the indictment, and the indictment is not included as a separate instruction or appendix to the jury instructions, so please listen carefully, and to the extent that you need to or feel inclined to take notes, this is your propitious opportunity to do that. Very well. Ladies and gentlemen of the jury, I now Count 1, conspiracy, 18

will re-read this indictment to you. U.S.C. Section 371.

One, beginning in or about April 1999, and

continuing thereafter until in or about October 2004, in the State and District of Colorado and elsewhere, the defendants Norman Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Jannice McLain Schmidt, Michael Smith, and George Beros, combined, conspired, confederated, and agreed together and with others known and unknown to the grand jury to commit mail fraud in violation of 18 U.S.C. Section 1341, wire fraud in violation of Title 18 United States Code, Section 1343, and securities fraud, in violation of Title 15 United States Code, Sections

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77(q)(A)(1) and 77(x). Manner and means of the conspiracy. Two, the

defendants made and caused to be made false statements and representations about the nature of a fraudulent high-yield investment program and the high returns associated with it, including but not limited to the following: A, the defendants

falsely promised to use current and prospective investors' money to trade medium-term notes, bank debentures, and government instruments through mechanisms frequently referred to as, quote, high-yield investment programs, end quote. The defendants also falsely promised, suggested, or caused to be promised or suggested rates of return ranging from two percent to 400 percent per month. And B, the defendants sent and caused to be sent to investors monthly statements which falsely reflected the growth of and earnings on their invested funds. These monthly end

statements reassured the investors of the program's success and encouraged them to make additional investments and defer disbursements from their accounts for the supposed purpose of compounding earnings. Three, the defendants made and caused to be made false statements and representations about the lack of risk involved with investing money in the fraudulent high-yield investment program, including but not limited to the following: A, the

defendants falsely represented or caused to be represented the

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current and prospective investors that their investments were safe because invested funds were deposited in a non-depleting account or trust account and could not be moved; and B, the defendants falsely represented or caused to be represented to current and prospective investors that their investments were insured from loss by various insurance companies or programs, including St. Paul Insurance, Lloyd's of London, and Securities Investors Protection Corporation, or SIPC. The defendants provided and caused to be provided to current and prospective investors copies of insurance certificates, policies, and bonds. The defendants falsely represented that such documents or programs ensured the safety of the investments and granted current and prospective investments rights in the insurance policies and bonds. Four, the defendants used a variety of tactics to lend an appearance of legitimacy to the fraudulent high-yield investment program including but not limited to the following: A, the defendants obtained, created, used, and distributed, or caused to be distributed, to current and prospective investors documents containing legal terms, including but not limited to Cooperative Private Placement Agreements, high-yield private placements, medium-term note private placements, and private contract agreements. B, the defendants used various entities through which

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the fraudulent high-yield investment program was offered, including the Reserve Foundation Trust, Reserve Foundation, LLC, Smitty's Investments, LLC, Capital Holdings, LLC, Capital Holdings International, LLC, Monarch Capital Holdings, LLC, FastTrack LLC, Rocky Mountain Sports Promotions, LLC, and High Track Team, LLC. C, the defendants distributed and caused to be distributed to current and prospective investors promotional materials, treatises, and other apparently authoritative publications. D, the defendants made and caused to be made communications to current and prospective investors that contained false, fraudulent, and misleading statements of fact, including but not limited to the following: I, that Norman

Schmidt had a special relationship with the Federal Reserve which permitted him access to and allowed him to successfully trade financial instruments; lower case ii, that Norman Schmidt and George Beros had a history of successfully trading in financial instruments and were currently engaged in such trading, and lower case iii, that George Alan Weed was an authorized representative for St. Paul Insurance and administered insurance coverage for Superior Guaranty Insurance of Vermont, and Lloyd's of London; and five, the defendants used investor funds for purposes other than those represented to current and prospective investors, including but not limited to

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the following:

A, payments to the defendants; B, personal

expenses of the defendants; C, acquisition of unrelated businesses and assets; D, payments to other investors, and E, payments of monthly commissions or overrides to members of a network of individuals, acquaintances, and insurance agents recruited by the defendants to obtain new investors in the fraudulent high-yield investment program. Overt acts in furtherance of the conspiracy. Six, in

furtherance of the conspiracy, the defendants and other coconspirators committed overt acts including but not limited to the following: A, on or about September 10, 1999, George Alan

Weed sent an application for a commercial crime policy to St. Paul Fire & Marine Insurance Company; B, on or about February 14, 2000, Norman Schmidt executed a check in the amount of $50,000 payable to investor Orvalee Farris on the closed account of the Reserve Foundation Trust at New Frontier Bank of Greeley, Colorado; C, on or about April 1, 2000, Norman Schmidt and an unindicted coconspirator executed a contract in the name of the Reserve Foundation Trust to purchase America West Plastics and its associated real estate for $1,650,000; D, on or about May 16, 2000, Norman Schmidt and an unindicted coconspirator purchased real estate in Pitkin County, Colorado, known as the Redstone Castle properties in the names of Peaceful Options, LLC, Tranquil Options, LLC, and Serenity Options, LLC, using $6,500,000 in funds obtained from investors in the

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fraudulent high-yield investment program. (Mr. O'Donnell entered the courtroom.) THE COURT: E, on or about July 25, 2002, an unindicted

coconspirator executed a lease for office space in Denver, Colorado, under the name Northwest Group, LLC, which was used for operating the fraudulent high-yield investment program, and F, on or about February 5, 2003, Norman Schmidt transferred $2,500,000 from the Capital Holdings, LLC, account at Wells Fargo Bank to the Monarch Capital Holdings, LLC, account at Bank One controlled by him and George Beros. All in violation of

Title 18 United States Code, Section 371. Counts 2 through 9, mail fraud, 18 U.S.C. Sections 1341 and 2. Seven. At various times beginning in or about

April 1999, and continuing thereafter until in or about October 2004, in the State and District of Colorado and elsewhere, Norman Schmidt, George Alan Weed, Charles Lewis, and Michael Smith devised, intended to devise, and participated in a scheme to defraud and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises, all designed to induce current and prospective investors to invest in the fraudulent high-yield investment program they promoted, and they aided, abetted, counseled, commanded, induced, procured, and caused the commission of acts in furtherance of the scheme. Eight. It was a part of the scheme for the defendants

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Norman Schmidt, George Alan Weed, Charles Lewis, Michael Smith and George Beros to make and cause others to make false statements and representations about the nature of the fraudulent high-yield investment program and the high returns associated with it as alleged in paragraph 2 above, which is realleged and reincorporated herein to encourage investors to invest in the high-yield program. Nine. It was a further part of the scheme for

defendants Norman Schmidt, George Alan Weed, Charles Lewis, Michael Smith and George Beros to make and cause to be made false statements and representations about the lack of risk involved with investing money in the fraudulent high-yield investment program as alleged in paragraph 3 above, which is realleged and incorporated herein. Ten. 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 a variety of tactics to lend an appearance of legitimacy to the fraudulent high-yield investment program as alleged in paragraph 4 above, which is realleged and incorporated herein. Paragraph 11, it was a further part of the scheme for the defendants, and I digress to note that I have not read, as I should have read, all defendants named, and will do that in connection with paragraph 11. I am not going to digress to

re-read the names of all defendants in paragraphs 7, 8, 9, and

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10, but all of those names that I now read should have been included in the reading of the indictment by the court. Paragraph 11. It was a further part of the scheme for

the defendants, Norman Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Jannice McLain Schmidt, Michael Smith and George Beros to use investor funds for purposes other than those represented to current and prospective investors as alleged in paragraph 5 above, which is realleged and incorporated herein. Twelve. On or about the date specified below for each

count in the State and District of Colorado and elsewhere, the defendants named in each count for the purpose of executing the scheme described in paragraphs 7 through 11 above, and attempting to do so, knowingly caused the matter described below for each count to be delivered by the mail and private and commercial interstate carrier, according to the direction thereon. I am going to read to you now from a table or a chart, and it has four columns. First count, next date, next defendant

or defendants, and next mail matter. Count 2. February 1, 2000. Defendants Norman Schmidt,

George Alan Weed, mail matter, U.S. mail letter from Reserve Foundation Trust to Gordon Hulbert. Count 3. Date, January 2, 2002. Defendants Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, mail matter. U.S. mail investment packet from Smitty's Investments,

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LLC, to Warren Peterson. Count 4. Date, February 23, 2002. Defendants Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, mail matter. Federal Express letter from Norman Schmidt to Thomas

Sindelar. Count 5. Date, August 24, 2002. Defendants Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros, mail matter. George Alan Weed to Greg Hector. Count 6. Date, February 24, 2002. Defendants, Norman U.S. mail letter from

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros, mail matter. Norman Schmidt to Wendy Delaney. Count 7. Date, April 3, 2004. Defendants Norman U.S. mail letter from

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros, mail matter. U.S. mail, four money

orders from Jannice McLain Schmidt to Cliff Seigneur. Count 8. Date, May 8, 2004. Defendants Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros, mail matter. U.S. mail, monthly

statement from Jannice McLain Schmidt to Carol Hall. And Count 9. Date, May 8, 2004. Defendants Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros, mail matter. U.S. mail, monthly All in

statement from Jannice McLain Schmidt to Darren McGee.

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violation of Title 18 United States Code, Sections 1341 and 2. Counts 10 and Counts 12 through 17. U.S.C. Sections 1343 and 2. Thirteen. Paragraphs 2 through 5 and 7 through 11 are Wire fraud. 18

realleged and incorporated herein by reference. Fourteen. On or about the date specified below for

each count, in the State and District of Colorado and elsewhere, the defendants named in each count for the purpose of executing the scheme described in paragraphs 7 through 11, transmitted and caused to be transmitted by means of wire communication in interstate and foreign commerce writings, signs, signals, pictures, and sounds as described below for each count. And again I will be reading from a table or a chart. The columns of which read count, date, defendants, writings, signs, signals, pictures, and sounds. Count 10. There are four columns. Defendants Norman

Date November 18, 1999.

Schmidt, George Alan Weed, writings, signs, et cetera. Telephone conference call among Norman Schmidt, Leon Harte, Boyd Brown and Kelly Schnorenberg. There is no Count 11. Count 12. February 17, 2000. Defendants Norman $100,000

Schmidt, George Alan Weed, writings, signs, et cetera.

wire transfer from Gary Bell, agent for Developp Aldear account at Commercial Federal Bank to Reserve Foundation, LLC, account at Bank One.

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Count 13.

Date, April 7, 2000.

Defendants Norman

Schmidt, George Alan Weed, Peter A.W. Moss, writings, signs, et cetera. $109,770 wire transfer from Gold Coast Enterprises

account at Bank of Nevis to Reserve Foundation, LLC, account at Bank One. Count 14. Date, May 12, 2000. Defendants Norman

Schmidt, George Alan Weed, Peter A.W. Moss, writings, signs, et cetera. $126,000 wire transfer from Gary Bell, agent for

Developp Aldear account at Commercial Federal Bank to Reserve Foundation, LLC, account at Bank One. Count 15. August 1, 2000. Defendants Norman Schmidt,

George Alan Weed, Peter A.W. Moss, writings, signs et cetera. $50,000 wire transfer from Cynthia Lange account at US Bank to Reserve Foundation, LLC, account at Bank One. Count 16. Date, February 21, 2003. Defendants Norman

Schmidt, George Alan Weed, Charles Lewis, Peter A.W. Moss, Michael Smith, George Beros, writings, signs, et cetera. $30,000 wire transfer from Gregory Scott Hector account at Wells Fargo to FastTrack, LLC, d/b/a Capital Holdings International account at Key Bank. Count 17. April 30, 2003. Defendants Norman Schmidt,

George Alan Weed, Charles Lewis, Peter A.W. Moss, Michael Smith, George Beros, writings, sign, et cetera. $45,000 wire transfer

from Carol J. Hall account at Wells Fargo to Rocky Mountain Sports Promotions, LLC, account at Commercial Federal Bank, all

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in violation of Title 18 United States Code, Sections 1343 and 2. Counts 18 through 29. Securities fraud. 15 U.S.C.

Sections 77(q)(A) and 77(x) and 18 U.S.C. Section 2. Paragraph 15. Paragraphs 2 through 5 and 7 through 11

are realleged and incorporated herein by reference. Sixteen. It was a further part of the scheme for the

defendants, Norman Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Jannice McLain Schmidt, Michael Smith and George Beros to conceal from and omit to state to current or 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 in the same or similar investment promotion activities as described in paragraphs 2 through 4 above, namely Norman

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Schmidt, George Alan Weed, the Reserve Foundation Trust and Smitty's Investments; B, that investor funds were moved at the defendants' will from the banks into which investors were told that their funds would be deposited and would remain; E, that investor funds were being used for purposes unrelated to the high-yield 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 a manner represented to current and prospective investors. Seventeen. It was a further part of the scheme for the

defendants Norman Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Jannice McLain Schmidt, Michael Smith, and George Beros to offer and to sell and to aid, abet, counsel, command, induce, procure, and cause the offer and sale of securities, including but not limited to the investment contracts previously described as Cooperative Private Placement Agreements, high-yield private placements, medium-term note private placements and private contract agreements. Eighteen. It was a further part of the scheme for the

defendants Norman Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Jannice McLain Schmidt, Michael Smith, and George Beros to use and cause others to use the United States mails, commercial interstate carriers, interstate wire and

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communication facilities, the interstate banking system, and interstate transportation facilities in connection with the purchase and sale of the securities they offered. Nineteen. On or about the dates specified below for

each count, in the State and District of Colorado and elsewhere, the defendants named in each count in the offer and sale of a security willfully employed the scheme described in paragraphs 2 through 5, 7 through 11, and 16 through 18 above, by the use of the means and instrumentalities of interstate commerce and of the mails described in each count. And again I will be reading to you from a table or chart. It has four columns, count, date, defendants, use of

interstate commercial/mails. Count 18. Date, April 4, 2000. Defendants, Norman

Schmidt, George Alan Weed, Peter A.W. Moss, use of interstate commerce/mails. $557,100 wire transfer from Gold Coast

Enterprises, Inc. account at Bank of Nevis to Reserve Foundation, LLC, account at Bank One. Count 19. Date, November 13, 2000. Defendants, Norman

Schmidt, George Alan Weed, Peter A.W. Moss, use of interstate commerce/mails. $10,000 deposit from Gary and Jacqueline

Rademacher account at Wells Fargo into Smitty's Investments, LLC, account at Bank One. Count 20. Date, August 7, 2001. Defendants, Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, use

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of interstate commerce/mails.

$20,000 deposit from Shirley

Lehr, L-E-H-R, account into Smitty's account at Wells Fargo. Count 21. Date, February 25, 2002. Defendants, Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, use of interstate commerce/mails. $25,000 wire transfer from Linden

Lee Markham account to Smitty's account at Wells Fargo. Count 22. Date, May 9, 2002. Defendants, Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, use of interstate commerce/mails. $50,000 deposit from Greg Hector

account at Wells Fargo to Smitty's account at Wells Fargo. Count 23. Date, September 18, 2002. Defendants,

Norman Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros, use of interstate commerce/mails. $28,000 deposit from William and Brenda

Dellapenna account at Bank of America into Capital Holdings, LLC, account at Wells Fargo. Count 24. Date, October 7, 2002. Defendants, Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros. Use of interstate commerce/mails.

$350,000 deposit from Main Street Mortgage of Colorado, LLC, account at First Bank of Boulder into Capital Holdings, LLC, account at Wells Fargo. Count 25. Date, October 21, 2002. Defendants, Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros, use of interstate commerce/mails.

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$5,000 deposit from Lambros Gianos account at Bellco Credit Union into Capital Holdings, LLC, account at Wells Fargo. Count 26. Date, October 31, 2002. Defendants, Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros, use of interstate commerce/mails. $15,000 deposit from Carol and Clarence Hendrikson account at Farmers and Merchants Bank into Capital Holdings, LLC, account at Wells Fargo. Count 27. Date, November 4, 2002. Defendants Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros, use of interstate commerce/mails. $35,000 deposit from Carol and Clarence Hendrikson account at Farmers and Merchants Bank into Capital Holdings, LLC, account at Wells Fargo. Count 28. February 19, 2003. Defendants, Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros, use of interstate commerce/mails. Interstate travel by Norman Schmidt and Charles Lewis from Denver, Colorado, to Chicago, Illinois. Count 29. Date, May 30, 2003. Defendants, Norman

Schmidt, George Alan Weed, Peter A.W. Moss, Charles Lewis, Michael Smith, George Beros, use of interstate commerce/mails. Deposit of $25,000 cashier's check from Cliff Seigneur into Rocky Mountain Sports Promotions, LLC, account at Commercial Federal Bank, all in violation of Title 15 United States Code,

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Sections 77(q)(A)(1) and 77(x), and Title 18 United States Code, Section 2. Counts 30 and 31, money laundering. 1956(a)(1)(B)(i) and (ii). Paragraph 20. Paragraphs 2 through 5 and 7 through 19 18 U.S.C. Sections

are realleged and incorporated herein by reference. Twenty-one. On or about the date specified below for

each count in the State and District of Colorado and elsewhere, the defendants named in each count did conduct and aided, abetted, counseled, induced, procured, and caused another to conduct a financial transaction affecting interstate and foreign commerce as described in each count which involved the proceeds of a specified unlawful activity, namely mail fraud, in violation of Title 18 United States Code, Section 1341; wire fraud, in violation of Title 18 United States Code, Section 1343; and securities fraud, in violation of Title 15 United States Code Sections 77(q)(A)(1) and 77(x), knowing that the transaction was designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds of the specified unlawful activity, and while conducting such transaction knew that the property involved in the financial transaction represented the proceeds of some form of unlawful activity. I am going to be reading albeit briefly from a table. There are four columns. A column for count and date and

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defendant and financial transaction. Count 30. Date, May 15, 2000. Defendant, Norman

Schmidt, financial transaction.

$2,164,737.03 wire transfer

from Reserve Foundation, LLC, account at Bank One to Aspen Title Corporation escrow account at Wells Fargo Bank. Count 31. Date May 16, 2000. Defendants, Norman $3,500,000

Schmidt, Peter A.W. Moss, financial transaction.

wire transfer from SunState FX, Inc. account at First Union of Florida to Aspen Title Corporation escrow account at Wells Fargo Bank. All in violation of Title 18 United States Code, Sections

1956(a)(1)(B)(i) and (ii). There is no Count 32. Counts 33 through 46. Sections 1957 and 2. Paragraph 22. Paragraphs 2 through 5 and 7 through 19 Money laundering. 18 U.S.C.

are realleged and incorporated herein by reference. Twenty-three. On or about the date specified below for

each count, in the State and District of Colorado and elsewhere, the defendants named in each count did knowingly engage and knowingly aided and abetted, counseled, induced, procured, and caused another to engage in the monetary transactions described below by, through, and to a financial institution affecting interstate and foreign commerce involving criminally-derived property of a value greater than $10,000 as described below for each count, such property having been derived from a specified

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unlawful activity, namely mail fraud, in violation of Title 18 United States Code, Section 1341; wire fraud, in violation of 18 United States Code, Section 1343; and securities fraud, in violation of Title 15 United States Code Sections 77(q)(A)(1) and 77(x). Count 33. Let me digress. Again, I will now be

reading from a table or chart.

There are four columns, the Count, date, defendants,

headings of which read as follows: monetary transaction. Count 33.

Date, March 23, 2000. The clearing

Defendant, Norman Schmidt, monetary transaction.

of check No. 1012 in the amount of $20,000 on Reserve Foundation LLC, account at Bank One, payable to America West Packaging. There is no Count 34. Count 35. Date, June 18, 2002. Defendants, Norman $24,273.75 wire

Schmidt, Michael Smith, monetary transaction.

transfer from Smitty's account at Wells Fargo Bank account to Asset Holdings account at US Bank. Count 36. Date, July 23, 2002. Defendants, Norman Clearing of check

Schmidt, Charles Lewis, monetary transaction.

No. 1412 in the amount of $20,000 on Smitty's account at Wells Fargo Bank payable to Miloka Holdings. Count 37. Date, August 5, 2002. Defendant, Norman

Schmidt, monetary transaction.

Clearing of check No. 1428 in

the amount of $35,000 on Smitty's account at Wells Fargo Bank, payable to Team Walker Motor Sports.

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Count No. 38.

Date, August 7, 2002.

Defendant, Norman

Schmidt, monetary transaction.

Clearing of check No. 1460, in

the amount of $50,000 on Smitty's account at Wells Fargo Bank, payable to Jannice McLain. Count 39. Date, August 15, 2002. Defendants, Norman $219,703.41 wire

Schmidt, Michael Smith, monetary transaction.

transfer from Capital Holdings, LLC, account at Wells Fargo bank to Northwest Group, LLC, account at US Bank. Count 40. Date, August 15, 2002. Defendants, Norman Clearing of check

Schmidt, Charles Lewis, monetary transaction.

No. 1031 in the amount of $55,000 from Capital Holdings, LLC, account at Wells Fargo Bank, payable to Charles Lewis. Count 41. Date, October 1, 2002. Defendant, Norman

Schmidt, monetary transaction.

$25,000 wire transfer from

Smitty's account at Wells Fargo Bank to Federal Recovery Group account at North Fork Bank. Count 42. Date, November 18, 2002. Defendant, Norman

Schmidt, monetary transaction.

Clearing of check No. 1621 in

the amount of $130,000 on Smitty's account at Wells Fargo Bank, payable to Compliance Holding Company. Count 43. Date, December 12, 2002. Defendants, Norman $7,500,000 wire

Schmidt, George Beros, monetary transaction.

transfer from Capital Holdings, LLC, account at Wells Fargo Bank to First Clearing Corporation account at First Union Bank. Count 44. Date, December 30, 2002. Defendants, Norman

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Schmidt, George Beros, monetary transaction.

Clearing of check

No. 1735 in the amount of $65,000 on Smitty's account at Wells Fargo Bank, payable to Concrete Building Systems. There is no Count 45. Count 46. Date, May 2, 2003. Defendants, Norman

Schmidt, monetary transaction.

Withdrawal of $13,516.41 from

Rocky Mountain Sports Promotions, LLC, account at Commercial Federal Bank. All in violation of Title 18 United States Code,

Sections 1957 and 2. Ladies and gentlemen of the jury, that completes the court's re-reading of the indictment and counts in this case. I again remind and instruct you that neither the indictment nor the counts nor allegations contained in it constitute evidence of anything in this case. Now, after taking a drink of water, I will read to you the jury instructions, general and Special Verdict Forms approved by the court for use in the trial of this case. Again, I encourage you to listen carefully and to follow along using your own set of instructions and verdict forms. Again, if I find any clerical errors, I will call those to your attention for tentative correction, after which I will provide you with a corrected or amended copy as soon as practicable. Madam clerk, I note that there is only water in this

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cup. THE COURTROOM DEPUTY: THE COURT: Thank you. Yes, your Honor.

(The jury instructions were read to the jury by the court, but were not reported herein pursuant to order of the court.) THE COURT: Ladies and gentlemen, we will now take our

midmorning recess of fifteen minutes, after which I shall conclude my reading of the jury instructions, and my review of the verdict forms, and we shall commence closing arguments. But for now we are in recess for fifteen minutes. (Recess at 10:40 a.m., until 11:00 a.m.) THE COURT: Thank you, and again please be seated, In aid of my voice, I made sure that I

ladies and gentlemen.

not only had some coffee but some chocolate. THE JURY: THE COURT: Instruction No. 31. (The jury instructions were read to the jury by the court, but were not reported herein pursuant to order of the court.) THE COURT: For madam reporter and ladies and gentlemen Share? Thank you. I believe that we are now at

of the jury, I will not read you the information that is in the chart. I have essentially done that in the re-reading of my

indictment this morning. You, of course, are exhorted to read each and every count carefully, including all relevant information pertaining

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to each specific count. (The jury instructions were read to the jury by the court, but were not reported herein pursuant to order of the court.) THE COURT: And again, madam reporter and ladies and

gentlemen of the jury, I am not going to essentially re-read the information in the tables that appear on pages 1 and 2 for Instruction No. 32. But you, of course, must read them most

carefully as to each individual count. (The jury instructions were read to the jury by the court, but were not reported herein pursuant to order of the court.) THE COURT: Madam reporter, ladies and gentlemen of the

jury, I am not going to read you information in the table concerning Counts 30 and 31, but I am going to require that you do that and do that carefully and completely, please. (The jury instructions were read to the jury by the court, but were not reported herein pursuant to order of the court.) THE COURT: Again, madam reporter and ladies and

gentlemen of the jury, I am not going to read you the information in the charts or tables appearing on both pages 1 and 2 of Instruction No. 34. I do require that each of you read

all of the information for each of these Counts 33 through 46. (The jury instructions were read to the jury by the court, but were not reported herein pursuant to order of the court.) THE COURT: And it appears to me there is a mistake in And there is not. I made it

the syntax in Instruction No. 39.

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appear as if there was a mistake in the unartful and clumsy way in which I read that which was otherwise correct. forgive me. correctly. (The jury instructions were read to the jury by the court, but were not reported herein pursuant to order of the court.) THE COURT: Ladies and gentlemen, you now have the Please

In fact, I order you to read Instruction No. 39

instructions, general verdict forms and Special Verdict Form applicable to the trial of this case. Now, rather than require the government to commence and then almost immediately interrupt the opening portion of its closing argument as we approach the traditional noon hour, I will not do that. Instead, I will declare a noon recess now, somewhat early, after which you will receive the benefit of the closing arguments, again, of the government and the defendants. Now, ladies and gentlemen, in anticipation and preparation of and for this noon recess, you still know the drill which still applies to you. That is, please store and

leave behind in your jury deliberation suite, not only now your notes, but your copies of the jury instructions, general verdict forms and Special Verdict Form, and of course, be ever mindful of and sensitive to the important rules that especially now that govern your conduct, communication, and deportment as jurors in the trial of this case.

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With those important matters again in place and in mind, we are in recess as concerns this case and trial until this afternoon at one o'clock p.m. (Lunch recess at 11:45 a.m., until 1:05 p.m.) THE COURT: gentlemen. Good afternoon. And thank you, ladies and

As I survey the courtroom, all who should and must

be present are in fact present and presumably prepared to proceed. Very well. We will now have the benefit of closing

arguments from the respective parties, commencing with the government, followed by each of the defendants, and concluding ultimately with the government by way of rebuttal. I instruct and remind you, ladies and gentlemen, that like closing -- like opening statements, excuse me, closing arguments by counsel are not evidence and may not be used or considered by you as such. Very well. Thank you.

If the government is prepared to make its Mr. Angelo.

opening portion of its closing argument, it may. MR. ANGELO: Thank you, your Honor. CLOSING ARGUMENT MR. ANGELO: THE COURT: MR. ANGELO: gentlemen. May it please the court. Thank you. Counsel.

Good afternoon, ladies and

Our presentation this afternoon is structured to take

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you through the instructions that you just got, and point out to you those relative -- relevant items of evidence that are associated with those particular allegations contained in the instructions and in the indictment. The defendants are charged here with mail fraud, wire fraud, and securities fraud, and conspiracy to commit those particular offenses. The framework and focus of the conspiracy and the schemes that are alleged with respect to the mail fraud, wire fraud, and conspiracy is the fraudulent high-yield investment program that we addressed to you on or about April 3rd of this year, and we talked a little bit about the facets of that particular fraudulent high-yield investment program. it's not being displayed. of you? Apparently

Do you all have your stuff in front

It is comic relief. The facets of those schemes and the conspiracy itself

is the false statements of extraordinary returns, the false statements concerning lack of risk, which include insurance on the investment and the fact that funds would be placed in a non-depleting custodial trust account, or representations to that effect. There were false trappings of legitimacy that you recall we talked about, investment contracts with lots of legal language in them, some of which means nothing. We are talking about these investments being offered

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through corporations with sometimes high-faluting sounding names like Capital Holdings, LLC, or Monarch Capital Holdings, LLC, or the Reserve Foundation, LLC. And we also told you that we would prove to you that investment funds were never used for medium-term note trading or for the purposes represented during the course of that particular or this particular conspiracy. At the heart of conspiracy is an agreement between two or more people to violate the law. And rarely, if ever, do two

people who intend to break the law sign a written agreement to that effect. Historically, and what you have seen in this

particular case, is that there is evidence that the conspirators had a mutual understanding to try to accomplish an unlawful plan, and that is in fact sufficient to prove to you a conspiracy. As you will see later on in the instructions that you heard this morning and that you will read in the jury room, the date the specific defendant begins to participate in the conspiracy will dictate their liability for acts committed by other coconspirators, and I want to go through that with you for a second and talk a little bit about the evidence concerning when each particular person joined this conspiracy. Let's start with Norman Schmidt, and you recall that this conspiracy is alleged to have taken place from April of 1999 into 2004.

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You may recall that Roy Christian, who testified in the early portions of this trial, had gone to Kansas City on behalf of a friend who was investigating a particular investment, an investment that was essentially being touted by Leon Harte. And at that time, in April of 1999, he was picked up at the airport by Leon Harte and Norman Schmidt, taken to a hotel where essentially the solicitation for the investment was given to Mr. Christian to take back to his principal. During the courts of that particular conversation, Mr. Schmidt was represented to be a person who was already successfully invested in that particular investment. Alan Weed then joins the conspiracy in the summer and early fall of 1999. He obtains the insurance policies and the

bond that were used so successfully in convincing investors of the safety of their investment through the subtle representations and misrepresentations and half-truths about how that insurance coverage protected their investment. Charles Lewis first appears when he discusses with Warren Peterson, the man from Nebraska, approximately a year prior to Mr. Peterson's investment, a new investment opportunity that he was going to be checking out, and that he would report then to Mr. Peterson about that investment opportunity. And lo and behold in December of the year 2000, Mr. Peterson is approached then by Jannice McLain Schmidt and associates of Mr. Lewis, and in fact then which results in his

Case 1:04-cr-00103-REB

Document 1601

Filed 06/17/2008

Page 46 of 194

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investment in the high-yield investment program. These three then are joined shortly after the first of the year of 2002 by the defendant Michael