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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 X _______________________________________________________________ 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 16th day of April, 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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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.

Mr. Schmidt, good morning. Mr. Weed, good morning. MR. WEED: THE COURT: MR. LEWIS: THE COURT: MR. SMITH: THE COURT: Good morning, your Honor. Mr. Lewis, good morning. Good morning. And Mr. Smith, good morning. Good morning. Counsel, good morning. Good morning, your Honor.

MR. BORNSTEIN: THE COURT:

We proceed outside the presence and hearing

of the jury at the insistence of the court, who has a couple of things on its mind. First, I would announce that hopefully by

midmorning I will be e-filing my order re government's notice of intent to offer evidence pursuant to Rules 803(6) and 902(11) of the Federal Rules of Evidence. Next, I direct your attention to defendant Norman Schmidt's Motion for Mistrial, docket No. 1121, filed April 15, 2007. I inquire of counsel for the government, how quickly can the government bring and file its anticipated response? MR. KIRSCH: evening already. Your Honor, we had planned a fairly busy

Based on that, we would request to file a

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written response by Wednesday morning, if that's soon enough for the court. THE COURT: It is. And leave is granted and the

government shall proceed accordingly. And gentlemen, that's all I had on my mind for this brief pretrial hearing this morning. Madam clerk, I believe we were awaiting one juror. THE COURTROOM DEPUTY: THE COURT: Yes, your Honor.

So we shall be in recess pending the And we are in recess. Thank you.

arrival of all jurors.

(Recess at 8:30 a.m., until 8:37 a.m.) THE COURT: I have already bid everyone else in the

courtroom a good morning, so ladies and gentlemen of the jury, last but certainly not least, good morning. THE JURY: THE COURT: Good morning. Again, as I survey our courtroom, all who

should and must be present are in fact present and presumably prepared to proceed. Let's find out. If the government is prepared,

Mr. Kirsch, it may call its next witness. MR. KIRSCH: We are prepared. Before we do that,

however, I would like to first move into evidence and/or publish a number of other documents pursuant to Rule 902(4). THE COURT: MR. KIRSCH: Very well. The first two I am not certain whether we

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have offered yet, your Honor, but I am fairly certain they haven't been published. THE COURT: Those are Exhibits 12001 and 12005.

One moment, please.

I show both of those exhibits having been admitted on Tuesday, April 10, and leave to publish is therefore granted. MR. KIRSCH: I would also, your Honor, at this time

move into evidence or offer into evidence Government's Exhibit 12006 through 12008. THE COURT: defendants? MR. GAINOR: THE COURT: May I have one moment, your Honor? You may. Thank you, counsel. Any objection by any one or more of the

And I say again, any objection by any one or more of the defendants? Hearing none, Government's Exhibits 12006, 12007, and 12008 are admitted in evidence, with leave to publish. MR. KIRSCH: THE COURT: MR. KIRSCH: Thank you, your Honor. You are welcome. I would like to begin by publishing If we could publish the second page of

Exhibit 12001, please. that document, please. MR. GOODREID:

Excuse me, your Honor.

We seem to be

having some technical difficulties. properly. THE COURT:

Our monitor is not working

Madam clerk, your aid and assistance,

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please.

Thank you. MR. GOODREID: THE COURT: MR. KIRSCH: Thank you.

You are welcome. If we could now publish the first page of And if we could go to the

Government's Exhibit 12005, please.

second page of that document, please. If we could now publish Government's Exhibit No. 12006 beginning at page 5, please. Let's try page 6. If we could then publish page 7 of that document, please. If we could then go to page 9 of that document, please. If we could publish Exhibit 12007 now, please. first page. Perhaps we can look at the top half of that The Perhaps I counted the pages wrong.

document and then the bottom half. And if we could look at page 2 now, the lower half on that page. And then finally if we could publish Government's

Exhibit No. 12008, please. If we could go to page 2 of that document, please. Thank you. Your Honor, at this time the government is prepared to call its next witness Don Hoener. THE COURT: Very well. And if you would, please.

Sir, if you will please come forward please and stand in this open area in front of my bench. the oath. I will be administering

If you will raise your right hand to be sworn, and

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thank you. May I have your attention in the courtroom. you. (Donald Hoener was sworn.) THE WITNESS: THE COURT: witness stand. I do. Please be seated in that And thank

Thank you.

And sir, again good morning. Good morning.

THE WITNESS: THE COURT:

Always you testify, please use the And by its peculiar design, a Thank

microphone in front of you.

speaking distance of some six to eight inches works best. you. Mr. Kirsch. MR. KIRSCH: THE COURT: Thank you, your Honor. You are welcome. DIRECT EXAMINATION BY MR. KIRSCH: Q Good morning, sir.

Could you state and also spell your name

for us, please? A My name is Donald Gene Hoener. D-O-N-A-L-D, G-E-N-E,

H-O-E-N-E-R. Q A Q A Q And in what city and state do you live, Mr. Hoener? Chattaroy, Washington. And do you work there? Yes, I do. What do you do for a living?

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A Q A Q

Donald Hoener - Direct I am a teacher. What sort of subject or age levels do you teach? I teach fifth grade at Riverside elementary. At some point did you meet a person by the name of Michael

Smith? A Q A Yes. How is it that you came to meet Mr. Smith? I came to meet Mr. Smith when I had been introduced to him

to make an investment. Q A Q A Who was the person you made that introduction for you? David Dodd. And approximately when was this? That was in spring, early summer of -- what year was it?

'02. Q A Q Was it -- ultimately did you decide to make an investment? We did. Did you meet Mr. Smith in the same year that you actually

made your investment? A Q Yes, I did. All right. And at some point, did you have a meeting with

Mr. Smith to discuss this investment? A Q A Yes. Where did that occur? That occurred at Mr. Smith's house or office on -- I believe

it was Hatch Road.

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Q

Donald Hoener - Direct Was there some confusion between his house and office for

you? A I believe he lived upstairs and his office was in the

basement. Q I see. And during the course of this meeting, did Mr. Smith

provide you with a name for this investment or investment program? A Q Capital Holdings, LLC. And did Mr. Smith give you an explanation as to how the

Capital Holdings investment program worked? A Q Yes, he did. Did he explain to you what would happen to your money if you

had decided to invest? A Q Yes, he did. What did he tell you about that? MR. BORNSTEIN: THE COURT: Objection. Hearsay.

Well, there is no indication that this will

be the reiteration of an out-of-court statement offered for its truth, but response by the government. MR. KIRSCH: I agree with the court, your Honor. The

government is not intending to offer the next series of statements describing the investment program for their truth. THE COURT: Again, these are what are known as verbal

acts or verbal conduct, and as such they are not considered hearsay, and again I cite to Section 249 of McCormick on

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Donald Hoener - Direct 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 Evidence. MR. BORNSTEIN: In which case, your Honor, we would ask

that there be a limiting instruction that they are not evidence as to Mr. Norman Schmidt. THE COURT: MR. KIRSCH: Response. Your Honor, the evidence in the record

establishes that Mr. Smith is acting as an agent with respect to Mr. Schmidt, as well as the Capital Holdings investment program. The government believes that these statements should be admitted into evidence against all of the defendants here. THE COURT: I concur. The jury will be instructed, as

it has, that as concerns each defendant, and each count or crime charged, the jury must consider each count separately as to each defendant charged. And its decision and determination on any

count as to any defendant does not automatically resolve its decision on another count as to that same defendant or any other defendant. Now, you have been instructed in this fashion twice, and I will reiterate that in my final charge to you at the conclusion of the trial. Please have those important principles

in mind throughout the course of this trial. Now I am not sure where you were in the exchange. had propounded a question. overruled. There was a objection which I You

In the interests of efficiency, could you please

reiterate your last question.

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Donald Hoener - Direct MR. KIRSCH: Yes, your Honor. BY MR. KIRSCH: Q Mr. Hoener, what did Mr. Smith tell you about what would

happen to your money if you invested in Capital Holdings? A He told me that my money was completely safe. It was going

to be held in a non-depleting custodial trust account. Q And did you have an understanding about how long your money

needed to be there? A The money needed to be held in that account for a minimum of

13 months before we could withdraw. Q Did Mr. Smith explain -- tell you about profits that your

money would make as a result of this investment? A Yes. He explained that Rule of 72 at six percent every

month over the course of a year, it would double, and with the profits going back in, it would continue to exponentially compound. Q You spoke with Mr. Smith about the possibility of leaving

profits in as opposed to withdrawing them? A Q Yes. Did you have an understanding about what was done in order

to generate the profits that were going to be returned to you by six percent interest per month? A Q A Yes. What was that? The way that it was explained was that it was banks lended

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Donald Hoener - Direct money, and they never hold their own -- the loans they make, they sell, and people can lower their percentage, their interest rate by buying points, and it was through those points, the interest rates, that were being bought and sold, that the money was generated. Q Did you have any discussion with Mr. Smith about the

availability of this program for investors with relatively small amounts of money? A Yes. On one of the papers it had mentioned that it was --

what the securities exchange an investor needed to be like 250,000 or more. Obviously we didn't have that much. And by

pooling small investors together, he could make that possible for us. Q During your conversations with Mr. Smith, was he referring

to this investment as a security? MR. BORNSTEIN: MR. STUCKEY: THE COURT: MR. KIRSCH: answer, your Honor. THE COURT: It does not. The objection is overruled. Objection, your Honor. Leading.

Same objection, your Honor.

Response. I don't believe that question suggested an

You may respond to counsel's last question on two conditions, the first of which is, do you recall his question? THE WITNESS: THE COURT: Yes. I do recall his question.

Can you answer it?

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Donald Hoener - Direct THE WITNESS: Yes. THE COURT: Please. He did not refer to it as securities

THE WITNESS:

itself, but rather -- it came under the umbrella of the Securities and Exchange Commission. BY MR. KIRSCH: Q Did you have -- did Mr. Smith tell you about any additional

forms of protection for your money in addition to its deposit in any non-depleting custodial trust account? A He had just mentioned that it was nothing that anybody could

touch other than myself, and it was guaranteed through Wells Fargo. Q Did you have any discussion with him about insurance that

applied to the money? A That insurance would be provided as part of the account, but

we did not discuss purchasing insurance for that money. Q Okay. Was it your understanding, based on your conversation

with Mr. Smith, that the insurance that related to the account protected your money once it went in there? A Yes. MR. STUCKEY: THE COURT: is sustained. Your rephrased question, if any. MR. KIRSCH: Thank you. Objection to leading. The objection to that question

Response.

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Donald Hoener - Direct 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 BY MR. KIRSCH: Q Did you talk specifically with Mr. Smith about the

applicability of any insurance policies to your investment? A Only as much as when it was discussed that our money The only

couldn't be touched by anybody other than ourselves.

way we would lose it is through bank failure, but it was our policy was insured. Q Did you receive, at any point -- well, let me ask you a How many conversations did you have with Before you decided to

different question.

Mr. Smith concerning this investment? invest? A Q

I had -- I would say at least three. At any point during those meetings or conversations, did

Mr. Smith provide you with any written materials concerning the investment? A He did have a letter that -- it was a table that showed How it would -- how the money accrues.

profit at six percent.

And he did -- there was that table and there was -Q Mr. Hoener, I don't mean to interrupt you but I may be able I will ask the clerk to

to make it a little easier for you.

hand you a notebook that has what is marked as Government's Exhibit 330 for identification. And when you get that, I will

ask you to take it out of the sleeve and take a look at it, please. I may have misspoken. THE COURT: And it is. 330 may be in evidence? It was admitted April 12th.

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Donald Hoener - Direct MR. KIRSCH: In that case I would ask to go ahead and publish it, please. THE COURT: BY MR. KIRSCH: Q Are you able to see that on your screen in front of you Leave is granted as requested.

there, Mr. Hoener? A Q A Q Yes. Are you able to recognize that? Yes. Let's go ahead and look at the next page of that document, No. This is a different document. What number again? It's 330, page 2.

please.

THE COURT: MR. KIRSCH:

I am sorry. I am just

It's Government's Exhibit 330.

asking for page 2 to be published, your Honor.

The document

that was on the screen was one we had admitted earlier this morning, your Honor. BY MR. KIRSCH: Q Do you recognize this document as we are looking at the

different pages, Mr. Hoener? A Q A Q Yes, I do. How do you recognize it? It is one of the pages that Mr. Smith had had available. And did you receive this document in connection with your

investment -- before you made your investment? A Yes.

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Q

Donald Hoener - Direct And what did Mr. Smith tell you about what this document had

to do with the Capital Holdings investment program? A That was an explanation of how the monies were generated and It wasn't to It was to be

that our money would remain in the United States. leave. It wasn't to be taken out of that account.

used as they needed money to have in reserve for -- similar to a line of credit, that it would be backed. Q Let me ask you to take a look now at what I believe to be That one

marked for identification as Government's Exhibit 331. if you can look at in the notebook, please.

And I would ask you

to take that one out of its sleeve so you can look at all of the pages, please, Mr. Hoener. A Q A Yes, I do recognize this. How do you recognize that one? This is also when we had spoken with Mr. Smith to help us

understand how the money was generated because it was really unbelievable that you could make that much money on so little. MR. KIRSCH: THE COURT: defendants? Hearing none, Government's Exhibit 331 for identification admitted in evidence, with leave to publish. MR. KIRSCH: THE COURT: BY MR. KIRSCH: Thank you, your Honor. You are welcome. I move to admit Government's Exhibit 331. Any objection by any one or more of the

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Q

Donald Hoener - Direct Let's start with the first page of that.

Is this the first

page of that document on the screen now, Mr. Hoener? A Q Yes. And if we could jump to maybe page 7 of that document, And how was -- there is a lot of information in this How was it presented to you?

please.

material, Mr. Hoener. A

This information, he had gone over it briefly with us to

explain that I mentioned earlier the fractional banking, and so it was a brief presentation of it. Q All right. Now, before you made your decision to invest,

did you talk with Mr. Smith about any research that he had done on this program and its validity? A We did. And he had assured us that this program had been And he checked into it to

going on for ten or fifteen years. make sure that it was will legit. Q A

Did he tell you what he had done to check into it? At one point he did say that he was going to Europe -- I It may have been Paris. But he was going

think it was London.

to watch the money change hands for himself because he had mentioned that he, you know, had done time before for indiscretions, and he wanted to make sure this was on the up-and-up, and so he was able to assure us that he had seen the money transfer, and he was confident that it was a safe investment. And there are other big names. The former

President Bush was one of the investors.

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Q

Donald Hoener - Direct Did Mr. Smith say to you that he had actually seen trading

occur with his own eyes? A Yes. MR. STUCKEY: THE COURT: BY MR. KIRSCH: Q Did -MR. STUCKEY: answer to that. I am sorry, your Honor. I didn't hear an Objection. Leading.

Overruled.

Maybe it was during my objection. It was contemporaneous. If you could

THE COURT:

reiterate your question so that we may have the benefit of the witness's last answer, please. BY MR. KIRSCH: Q I will, your Honor. Mr. Hoener, did Mr. Smith indicate to

you he had actually observed the trading with his own eyes? A Q Yes. Was there anything -- did you make any other observations

during your meetings with Mr. Smith that led you to believe that this was a successful investment program? A Yes. MR. BORNSTEIN: meeting. Objection, your Honor. We had had one And we don't

And now we have had meetings plural.

have a time frame for any meetings other than the meeting in the spring/summer of the basement. THE COURT: Are you inclined to be more specific with

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Donald Hoener - Direct respect to this question? MR. KIRSCH: THE COURT: BY MR. KIRSCH: Q Mr. Hoener, how many times did you go to Mr. Smith's Certainly, your Honor. Please.

home/office? A Q I would say three prior to the actual investment. And during those approximately three meetings, did you make

any other observations that led you to believe that the Capital Holdings investment program was a successful one? A Yes. His office décor, he had an office staff. Flat-screen monitors. He had a

well-appointed office.

Statuary, quite a

bit of very nice art work.

It led us to believe that it was a

successful, legitimate operation. He did have a -- one of his plaques on the wall it was -- I want to say millionaires club for insurance sales. It

just had all of the -- he had a small library in there that had IRS code, and all the trappings of a very successful legitimate -- along with the stationery, for example. Q Now at this point, as you already said, you did decide to

invest? A Q Yes. Did you do that with yourself or did you do that with

someone else? A I did that with my wife.

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Q A Q A Q A

Donald Hoener - Direct And what is her name? Caron Christianson. And how much money did you decide to invest? My wife and I decided to invest $20,000. And how did you get that money? We went to the bank. And we had a home equity line of

credit and borrowed against it. Q And did you complete a written agreement in connection with

your decision to invest? A Q Yes, we did. Let me ask you to take a look now at what's marked for And again I

identification as Government's Exhibit No. 332.

will ask you to remove that from the sleeve so you can look at each of the pages. Do you have that, sir? A Q Yes, I do. Do you recognize -- let's start with the first seven pages.

Do you recognize those pages? A Q A Q Yes, I do. What are they? They are contract agreement. Do you recognize the signatures in the -- well, first of

all, do you recognize the initials in the party A initials section? A Yes.

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Q A Q A Q A Q A Q A Q

Donald Hoener - Direct Whose are those? Those are mine and my wife's. What about the signatures for the first party on page 7? No. After trust company? That is not my wife's nor my handwriting. What about the signatures? The signatures are. Do you know whose handwriting it is? That handwriting was Mr. Smith. Okay. Do you also recognize the remaining three pages of

that document? A Q A Yes, I do. How do you recognize that document? That was -- when we had gone and gotten our loan for this

money, it was -- it provided a routing number, and it was a picture of our canceled check or our check. Q A Q it? A This was given to Mr. Smith so that he could transfer the Do you recognize the signatures on page 10 of the document? Yes. Those are mine and my wife's.

And what did you do with this document after you completed

money to Mr. Schmidt to get our account started. MR. BORNSTEIN: to Mr. Schmidt. Objection, your Honor, to the reference

That's hearsay representation.

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Donald Hoener - Direct THE COURT: Again, it's not the reiteration of an out-of-court statement offered for the truth of the assertion. And therefore, it flunks the definition of hearsay at Rule 801(c). The objection is noted but respectfully overruled. BY MR. KIRSCH: Q Mr. Hoener, when you first signed the document, was there a It says

signature on it on behalf of Capital Holdings? International there at the bottom? A Q A Q A When we first -- and on page 10? Page 7. Page 7. Yes. I am sorry.

When we first signed it, there was not the signature of

Mr. Schmidt on the bottom of the page. Q At some point did you receive a copy of the signature on the

bottom of the page? A Q A Yes, we did. How did you receive that? We received that -- I believe we received that in the mail.

I can't remember if we received it in the mail or my wife had picked it up. Q Let me ask you to take a look, please, at what's been marked That's a

for identification as Government's Exhibit 334.

one-page document, so you shouldn't need to take it out.

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Donald Hoener - Direct 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 BY MR. BORNSTEIN: Q Sir, would you look on page 7 of the contract. I believe A Q A Q A Okay. Do you recognize that document? Yes, I do. How do you recognize it? That is a letter that we received from Capital Holdings

verifying that our -- they received our funds and it was going to be held in account, and we would be receiving our insurance on that account as well. Q And does it have a reference to an executed contract as In the second paragraph?

well? A

Yes, it does. MR. KIRSCH: At this time the government would offer as

evidence Government's Exhibit 332 and 334. THE COURT: Any objection by any of the defendants? Voir dire examination before I make my

MR. BORNSTEIN: objection? THE COURT:

Briefly.

Leave granted.

EXAMINATION

that's Exhibit 332. A Q Okay. Do you recognize that as a signature stamp rather than an

original signature? A Yes.

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Q

Donald Hoener - Direct And is that the -- do you also recognize on Exhibit 334 that

you received a signature stamp of Norm Schmidt and not an original signature? A Q Correct. Do you know -- do you know of your knowledge who or where I mean who did

that signature stamp was put on those documents? it and where it was done? A I can honestly say I don't. MR. BORNSTEIN:

On that basis, your Honor, we object to

the document as to Mr. Schmidt. THE COURT: MR. KIRSCH: Response. Your Honor, I am not certain if the

objection is authentication or relevance. THE COURT: MR. KIRSCH: THE COURT: Well, it would be both. With respect to -It's relevant if it's authenticated as

required under Article 9 of the Federal Rules of Evidence. MR. KIRSCH: In that case, your Honor, I believe we are

in the same position as we have been with a number of previous documents about which Mr. Bornstein has asked similar questions. I believe there is sufficient evidence before the court to conclude that these documents are in fact what the government indicates that they are, and that the jury can assess the question about the -- how the signature was affixed to them. THE COURT: I agree. Authentication is normally the

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Donald Hoener - Direct subject of Chapter 9 of the Federal Rules of Evidence, in particular Rule 901(a), and I find on this evidence, and the totality of the evidence already presented, that it is sufficient to support a finding that this putative contract, the one now in question, is what it purports to be; a contract between the stated parties, signed by or on behalf of Mr. Schmidt. Beyond that, all else is for your determination, and the objection is duly noted but respectfully overruled. Therefore, Government's Exhibits 332 and 334 for identification are admitted in evidence, with leave to publish. MR. KIRSCH: Thank you, your Honor. I would ask to

publish Government's Exhibit 332, starting with the first page, please. BY MR. KIRSCH: Q Can you see that on the screen in front of you now,

Mr. Hoener? A Q A Q Yes. Whose writing is that at the top of the page, do you know? The writing at the top of the page is Mr. Smith's. And towards the bottom of the screen, there is a reference Is that the term that you were

to an accredited investor.

referring to earlier in your discussions with Mr. Smith? A Q That is. Let's look, if we could, at page 3 of this document, please.

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Donald Hoener - Direct At the top of this document there appear to be options for where your money could go. Mr. Smith? A Q Did you discuss those options with

Do you recall?

I don't recall. All right. The option that appears to have been selected in Was

this contract is deposit directly into the LLC's account.

it your understanding that that was the insured -- the fully insured non-depleting custodial trust account that's referenced in paragraph 3? A Q Yes. If we could look briefly at page 4 of that document.

Paragraph 7 -- well, paragraph 6, is that the rate of interest that you were expecting to receive? A Q Yes, it is. And paragraph 7, does that paragraph reflect your

discussions with Mr. Smith about your ability to leave profits in as opposed to withdrawing them? A Yes. And those profits would then become part of the

principal. Q If we could look at page 5, paragraph 12, there is a section It should be on the screen in Did you discuss with

about confidential information.

front of you there, too, Mr. Hoener.

Mr. Smith the need for confidentiality with respect to the Capital Holdings investment program? A Yes.

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Q A

Donald Hoener - Direct What did he tell you about that? In our dealings with, you know, since it was people's money,

people preferred to keep things private, not to discuss -- it wasn't any of our business what other people were doing, and it was none of their business what we were doing. Q All right. Can I ask you to take a look at Government's

Exhibit -- what's marked for identification now as Government's Exhibit 333. I don't believe you have looked at that. It

should still be in the book and you can also see it on the screen in front of you. A Q A Q A Yes. Do you recognize that? Yes. What is that? That's the check that my wife and I had written for Capital

Holdings. Q A Q A A photocopy of that check? Yes. As far as you know, did that check clear your bank account? It did. MR. KIRSCH: THE COURT: defendants? Hearing none, Government's Exhibit 333 for identification admitted in evidence, with leave to publish. Move to admit Government's Exhibit 333. Any objection by any one or more of the

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Donald Hoener - Direct MR. KIRSCH: Thank you, your Honor. THE COURT: MR. KIRSCH: BY MR. KIRSCH: Q I know that copy is a little bit hard to read, Mr. Hoener. You are welcome. We will do that briefly, please.

Can you tell who the check was made out to? A Q A Q It was made out to Capital Holdings, LLC. And who signed the check? My wife, Caron Christenson. If we could publish briefly now please Government's Exhibit And the date on this, Mr. Hoener, how does that

No. 334.

coincide with the time that you received this letter? A Q That was about a week before we received this letter. Okay. Did anyone else in your family decide to make an

investment with Capital Holdings? A Q A Q A Q Our two daughters, along with my wife. Their names? Ronda Carol Christenson and Brenda Jean Christenson. And how old were they in 2002? About fourteen and twelve. Did you have a discussion with Mr. Smith about the

possibility of them investing before they did so? A Q Yes, we did. And what, if anything, did Mr. Smith tell you about their

potential investments?

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A

Donald Hoener - Direct That focused on their, you know, security money for college,

you know, and after earning so much money, they probably wouldn't need to go to college, but it would certainly take that load off, you know, for obtaining college loans, and it would earn a much greater percentage because -- and he used Mr. Schmidt's name, you know, that he really liked kids. MR. BORNSTEIN: I will object to the reference to

Mr. Smith talking about Mr. Schmidt is hearsay as to Mr. Schmidt. THE COURT: MR. KIRSCH: the truth. THE COURT: The court agrees. Again, the objection is Response. 801(c), your Honor. It's not offered for

duly noted but I find that this is not hearsay based on the evidential hypotheses of the government at this point. The objection is noted but respectfully overruled. I am not sure the answer had been given, and if so, I am not sure it had been completed. BY MR. KIRSCH: Q Mr. Hoener, what did Mr. Smith tell you about Mr. Schmidt's

position on kids investing with Capital Holdings? A He really liked kids. And he wanted to see kids be

successful.

So he, you know, out of the kindness of his heart

he was going to give a greater percentage than our six percent. I believe it was -- he threw up one kid's name. I can't

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Donald Hoener - Direct remember the name of the child. But he was going to be earning 12 percent on his money. The money that when our daughters did

it was -- that was a lower percentage. Q A Q A Q A Q A Q A Lower than 12? Yes. Was it higher than yours? Yes. Where did the money come from? They did. How much? $400 each. Where did that money came from? One daughter had the cash so that came from her own cash, Did your daughters invest?

and the other daughter, my wife and I put that in for her. Q After you made -- you and your daughters made investments,

did you receive documents -- did you receive a monthly statement documents? A Q For a short while, we did. Let me ask you to look, please, at what's marked for And I will ask Do

identification as Government's Exhibit No. 336.

you to take that document out of the sleeve as well, please. you recognize the pages contained within that exhibit, Mr. Hoener? A Q Yes, I do. And how do you recognize those?

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A

Donald Hoener - Direct They are the documentation that shows our interest earnings

and therefore our new principal balance. Q And do these documents refer both to you and your wife as

well as your daughters? A Q Yes, they do. Do you recognize the signatures in the client's signature

portion of those? A Q A Q Yes, I do. Whose signatures are those? They are mine, my wife's, and my daughters'. And do you recall how it is that you received these

documents? A Q These documents we received in the mail. And did you do anything with the documents after receiving

them? A We were to either send them back or fax them back or we

could return them to Mr. Smith's office. Q The last page of the exhibit, can I ask you to take a look Is that a document you received in connection with

at that.

these statements? A Yes, it is. MR. KIRSCH: 336. THE COURT: defendants? Objection by any one or more of the I would move to admit Government's Exhibit

Mr. Bornstein.

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Donald Hoener - Direct MR. BORNSTEIN: Your Honor, if I may voir dire before I make my objection. THE COURT: You may. Thank you.

EXAMINATION BY MR. BORNSTEIN: Q Sir, would you look at pages 7, 8, 9, 10, 11, and 12 of this

document. A Q A Q Okay. Do you see those? Yes, I do. Do you see that they all -- first of all, I would ask you,

did you fax all of those documents to the 519 area code in Washington state? A Q A Q Some were faxed, some were delivered. But all in Washington state? Yes. Um, and do you recognize those all as having signature

stamps rather than original signatures of Mr. Norm Schmidt? A Yes. MR. BORNSTEIN: Thank you. On that basis, your Honor,

I would object to those pages, 7 through 12. THE COURT: MR. KIRSCH: Response. Same response as before, your Honor. To

this -- to the similar objection with respect to the letter. THE COURT: Again, I find by a preponderance of the

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Donald Hoener - Direct evidence, and my finding is not ultimately binding on you, ladies and gentlemen, because your duty requires proof beyond a reasonable doubt, that the foundational predicate for authentication based on all of the evidence received, including the evidence presented by this witness, satisfies the requirements of Rule 901(a). The objection is duly noted but respectfully overruled. Government's Exhibit 336 for identification admitted in evidence, with leave to publish. MR. KIRSCH: Thank you, your Honor. If we could start

by publishing the first page of that document, please. THE WITNESS: posed to me last? MR. KIRSCH: No, you cannot, Mr. Hoener. You can only May I make a note regarding the question

respond to questions that are directly posed to you. THE WITNESS: BY MR. KIRSCH: Q Mr. Hoener, is this the statement that you received for the Okay.

month of February? A Q It is. Is this the final statement that you received in connection

with your investment? A Q Yes. And does it indicate that you -- your investment had grown

by $5,982.60 since October?

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Donald Hoener - Direct 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 A Q It does. You indicated a zero desired disbursement on that statement.

Did you ever request any disbursements back? A Q No. And if we could look at page 2 of that document. Would that

have been the final statement sent to your daughter Ronda Christenson? A Q Yes. I ask you to take a look, please, now at what's marked as I will ask you again to take that

Government's Exhibit No. 335.

out of the sleeve so you can look at all three pages of that exhibit. A Q There is only one page in my notebook. There is only one page. MR. KIRSCH: Okay.

Your Honor, could I ask for leave to

examine the exhibit book and see if I can figure out the discrepancy there? THE COURT: requested. MR. KIRSCH: THE COURT: MR. KIRSCH: Thank you, your Honor. You are welcome. Your Honor, it appears that what I had You may. And leave is granted as

expected to be the second two pages of Government's Exhibit 335 in the exhibit book before the witness are in fact attached to Government's Exhibit 334 in that book. It wasn't my intent to

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Donald Hoener - Direct admit 334 as a three-page document. But I believe I can -- may I ask the witness some questions about those additional pages and see if we can get that straightened out? THE COURT: You may, because this matter needs to be

resolved for not only clarity and completeness of the record, but for the clear understanding of the ladies and gentlemen of the jury. So you may. Thank you, your Honor. You are welcome.

MR. KIRSCH: THE COURT: BY MR. KIRSCH: Q

Mr. Hoener, do you have -- I need you to look at the letter

that's marked as Government's Exhibit 335, and then what before you are pages 2 and 3 of what's marked as Government's Exhibit 334. A Q Do you have those three pages in front of you now?

Yes. Okay. Let's start with the letter that's marked as Do you recognize that?

Government's Exhibit 335. A Q A Q Yes, I do.

Did you receive that document before? We did in the mail. All right. And when you received that document, did it have

enclosures? A Q I believe it did with the actual insurance. Let me now ask you to look at what are currently the pages 2

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Donald Hoener - Direct and 3 of Government's Exhibit 334. Do you recognize those documents? A Q A Q Yes, I do. Did you receive those documents? Yes. Did they have any relationship to the letter that's marked

for identification as Government's Exhibit 335? A Q Yes. These are the certificate of insurance for our money.

And at the time that you received those three pages, were

they received together or were they received separately? A Q Together. Looking at the signature line on the first page of

Government's Exhibit 335, do you recognize the signature there? A Q I do. Was that signature consistent with the signature on other

documents you had received from Capital Holdings? A It is. MR. KIRSCH: Your Honor, at this time I would offer

Government's Exhibit 335, consisting of the first page being the letter, and the next two pages being the certificates of insurance about which Mr. Hoener has just testified. And I

would further ask that for permission to modify Government's Exhibit 334 to remove what are now pages 2 and 3 from it. THE COURT: defendants? Any objections by any one or more of the

Mr. Bornstein.

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Donald Hoener - Direct MR. BORNSTEIN: My usual, your Honor, if I could ask that voir dire question or two and then make the objection. THE COURT: Counsel, you may. EXAMINATION BY MR. BORNSTEIN: Q Mr. Hoener, on the signature that you said that it's similar By that do

to the other signatures that you have identified.

you mean that once again it's a signature stamp for Mr. Norm Schmidt rather than a real signature? A Q I do. And again, you would concur that you don't know who put the

signature stamp on or where it was put on? A Aside from the address on the bottom indicating Denver,

Colorado, I would not know who or what particulars are in there. Q Relative to that, do you remember if the envelope in which

it came from was post marked from Washington state, Spokane area, or from Denver, Colorado postmark? A Q I don't generally look at postmarks on envelopes. So the answer is no, you don't remember where it was mailed

from? A I do not remember the mailing label. MR. BORNSTEIN: Your Honor, with that I make my

objection that this document is not admissible as a Norm Schmidt-authored document. THE COURT: Response.

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Donald Hoener - Direct MR. KIRSCH: The government contends there is sufficient evidence in the record to conclude that this document was signed by Mr. Schmidt or on his behalf of Capital Holdings. THE COURT: Doing my job under Rule 104(a), that is

determining the admissibility of evidence without reference to other Rules of Evidence, again I find and conclude that there is at least a preponderance of the evidence, listen carefully, ladies and gentlemen, that it is more likely than not, that this exhibit is what the government purports it to be. That

satisfies the evidentiary requirements of authenticity. Now, I am going to remind you of something very important. I have been asked to make any number of rulings on Some in

the authenticity of various documents and exhibits. evidence, some not in evidence.

And again I remind you that I

am doing my job on a standard of proof that's much less than proof beyond a reasonable doubt. You, ladies and gentlemen, ultimately will determine what the facts are in this case, that is who did what to whom when and where. And therefore please be instructed accordingly.

Now, there may be other objections on behalf of Mr. Weed by Mr. Goodreid. MR. GOODREID: Your Honor, mine is not so much an Because my 335

objection as a clarification of our position. also has the one page.

May I inquire of government's counsel where the other

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Donald Hoener - Direct two pages are again? THE COURT: You may. Your Honor, may I have a moment after

MR. GOODREID: that explanation? THE COURT:

You may. Thank you.

MR. GOODREID:

Your Honor, in light of that explanation, I have no objection. THE COURT: Now, first we are going to reconstitute It consists of a one-page letter,

Government's Exhibit 335.

followed by two pages of what appear and purport to be certificates of insurance. That three-page document is now

Government's Exhibit 335, which is admitted in evidence, with leave to publish. MR. KIRSCH: Thank you, your Honor. And, your Honor,

just so I think this might help clarify the record a little further. The second two pages carry Bates numbers on the bottom

right-hand corner of 0307072 and 0307073. THE COURT: BY MR. KIRSCH: Q All right. Mr. Hoener, we are looking at the first page now They do, and thank you.

of Exhibit 335, and I believe you said this was the cover letter that you received? A Q Yes. If we can now go to the next page of that document. And

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Donald Hoener - Direct maybe we can look at the top half of that first. understanding about this document, Mr. Hoener? A

What was your

It was our understanding that this was our insurance that

provided that if the bank had failed, which was the only way we could lose our money, our money would still be covered through Lloyd's of London. Q Okay. Mr. Hoener, is the person, the Michael Smith that you

dealt with in connection with these investments, do you see him in the courtroom today? A Q Yes, I do. Would you point him out and describe what he is wearing,

please? A Q A He is wearing the gray blazer. The person who just stood up? My wife would testify that my fashion sense is pretty poor

but I believe it's gray with a white shirt. MR. KIRSCH: I ask that the record reflect the

identification of Mr. Smith, your Honor. THE COURT: BY MR. KIRSCH: Q Mr. Hoener, at any point during the course of your The request is granted.

investment, did you ever authorize -- give authority to Mr. Smith or to anyone else for your money to be used for any purposes other than those set out in your agreement? A None at all.

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Q

Donald Hoener - Direct At any point prior to you making the decision to invest,

were you informed about any criminal convictions of anyone else connected with the investment program? MR. STUCKEY: Objection, your Honor. The implication But the

is -- if he would be more specific I have no objection.

implication is there might be convictions across the board. THE COURT: as propounded. Well, there is no objection to the question

Counsel's concern will be fodder for

cross-examination, I suspect. The objection for now is overruled. stands. Sir, you may answer counsel's last question on my continuing two pre-conditions. recall the question? THE WITNESS: THE COURT: Yes, I do. The first, again, is, do you The question

Can you answer it? Yes, I can.

THE WITNESS: THE COURT:

Please. To my knowledge, the only person who had

THE WITNESS:

had a prior conviction was Mr. Smith. BY MR. KIRSCH: Q A And if you had been -- what was the basis for that belief? It had -- I had been told that, and when he was presenting

it -Q Who told you that?

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Donald Hoener - Direct MR. STUCKEY: Objection to this hearsay. THE COURT: MR. KIRSCH: Response. Your Honor, I expect based on the

witness's prior testimony that it is going to be admissible pursuant to 801(d)(2)(A). I would also point out, your Honor, that it is not being offered for its truth either. THE COURT: Well, if it is offered under 801(d)(2)(A),

of course the objection as to hearsay would evanesce, would dissipate. It may also be offered to show the effect of the

utterance on this hearer, in which case it is not hearsay. Again, McCormick on Evidence, that same Section 249, with which you ladies and gentlemen are now somewhat familiar. For now the objection is overruled, and again, sir, you may respond to counsel's last question if you recall it and can answer it. Do you recall the question? Yes, I do.

THE WITNESS: THE COURT:

Can you answer it? Yes, I can. Mr. Dodd had mentioned to me

THE WITNESS:

that he was a friend of Mr. Smith and Mr. Smith -BY MR. KIRSCH: Q Let me stop you for just a minute. I do not intend to ask

you about any information that you got from Mr. Dodd, okay? A Q Correct. All right. Did you have a conversation with Mr. Smith

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Donald Hoener - Direct concerning a previous conviction? A Q A That I did. What did Mr. Smith tell you? He told me that he had done some prison time for -- I

want -- I am not clear here -- for insurance fraud, and he was not about to do time again. He wanted to make sure that the previous acquittal -or not acquittal but the previous -- he sounded like he was misled in that previous business dealing that he had that led to the conviction, and he was determined that that would not happen again, and that was part of the selling point was that, you know, being an honest man, he did not want to go to jail for a bad investment scheme on this time. and checked it out himself. legitimate operation. MR. KIRSCH: Those are all the questions I have for Thank you. Before I entertain So that is why he had gone

And he was certain that it was a

Mr. Hoener, your Honor. THE COURT:

Very well.

cross-examination by the defendants, I note that Mr. Angelo is present in the courtroom. Good morning, sir. You may come

forward and join co-counsel. MR. ANGELO: THE COURT: Thank you, your Honor. It's my understanding counsel, that

Mr. Angelo was involved in other business before another court in this building. Is that correct?

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Donald Hoener - Direct MR. ANGELO: That is correct, your Honor. concluded. THE COURT: Thank you.

We just

Now, cross-examination on behalf of Mr. Smith by Mr. Stuckey. MR. STUCKEY: THE COURT: Thank you, your Honor.

You are welcome. CROSS-EXAMINATION

BY MR. STUCKEY: Q Your Honor, my name is Richard Stuckey. Let's go to this last point. I am attorney for Michael Smith He told you he had Isn't that the

Michael Smith.

never told you he was convicted of anything. been accused and then charges were dismissed. proper account of what he told you? A Q

I believe it was that he had actually done time. Well, did he say maybe he had been accused and arrested?

But he didn't tell you that he had been convicted and went to prison because that had not happened, correct? unsure? THE COURT: for this witness. Mr. Stuckey, there are now four questions Or are you just

Let's digress and ask a single question. Thank you, your Honor. I apologize.

MR. STUCKEY: THE COURT: BY MR. STUCKEY: Q

You are welcome.

Are you really unsure about exactly what he told you?

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A

Donald Hoener - Cross I would -- there is a level of uncertainty, but he had -- I

am certain that he had done time for this. Q That's what you remember but there is a level of uncertainty

about what you remember? A Q About the conversation, yes. All right. There is a certain level of uncertainty. After

all, it's been, what, five years?

About all of this, right?

When you are asked specific questions about specific dates? A No. There are many things where there is -- it's very

certain, very clear. Q All right. I am not quite clear on some of the procedure --

oh, let me finish up on what I was just asking, the four questions. You did say that whatever the accusations or

problems had been with Mr. Smith in the past, that he said he was bound and determined to never let that happen again, so that he would make sure he conducted a proper due diligence into an investment program like this, right? A Q Correct. And you said, I believe, to make sure that it was

legitimate? A Q Yes. So that showed in your mind that he really believed in this

and believed in the truth of it, right? A Q Provided he was honest, yes. And you also said that he talked about the research he had

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Donald Hoener - Cross done himself or gone into. Some of that was off the Internet, or did you know that? A He had -- the research that I recall was his going to watch

the money change hands, and in meeting with Mr. Schmidt personally in Las Vegas. Q All right. And he also talked about -- or you testified he

talked about he looked into it and checked into it, and that he was hoping to be able to go to Europe with Mr. Schmidt to actually watch these trades, right? A He had told us that he had gone to watch the money switch

hands, and he had done that. Q But you said on direct examination that he hoped to be able

to go with Norman Schmidt to Europe to watch this; is that correct? MR. BORNSTEIN: that was the testimony. any trip to Europe. THE COURT: This is cross-examination. Let's find out. Objection, your Honor. I don't believe

Mr. Schmidt's name was not mentioned in

The objection for now is overruled. Sir, you may answer counsel's last question, again on my continuing two pre-conditions, the first of which again is, do you recall his question? THE WITNESS: THE COURT: Yes, I do.

Can you answer it? Yes, I can.

THE WITNESS:

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Donald Hoener - Cross THE COURT: Please. THE WITNESS: He just had mentioned that he went to He did not use I had been lead to

Europe to watch the money change hands.

Mr. Schmidt's name in going to watch that.

believe that he would be there, but no name was mentioned. BY MR. STUCKEY: Q A No name was mentioned, is that what you said? Mr. Schmidt's name was not -- he didn't say, I am going to The

Europe with Mr. Schmidt to watch the money change hands. concern was the money. name by name on that. Q All right.

And he did not mention Mr. Schmidt's

And he said, you testified on direct, that he

wanted to make sure that this was on the up-and-up, a legitimate program, correct? A Q Yes. The procedure I was a little unclear on, too, but let me ask

if I can have Government's Exhibit 332, which is in evidence, your Honor, put up. A private contract agreement. The first page, as you Do you have

testified, Michael Smith filled out -- I am sorry. it there? A Q Do you see it?

Yes, I do. Michael Smith filled out that information, and you gave him

that information, right? A Yes.

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Q

Donald Hoener - Cross So he filled that out and then the last page, you testified

that Mr. Smith wrote your names in, and then later on it was signed by yourself and your wife. Was it your understanding or

did you know that the procedure was you fill it out and then it was sent to Denver for Mr. Schmidt's signature and then sent back? A It was our understanding that that would be faxed down and

faxed back. Q A Q Okay. Yes. And then were you called into Mr. Smith's office to sign or And that did happen, right?

did they just mail it to you or -A Q That is exhibit which one? 332. The one where Mr. Schmidt wrote your names in. I am

not sure how important this is.

What I am trying to establish

is that it did go to Denver and it came back and then you signed it. There wasn't anything wrong with Mr. Smith writing your

names in as the persons who wanted to be the investors, right? MR. BORNSTEIN: than one question. MR. STUCKEY: way at once. THE COURT: Let's again slow down and digress and I am trying to get them all out of the Objection, your Honor. That's more

propound a single question. BY MR. STUCKEY:

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Q

Donald Hoener - Cross There wasn't anything wrong with the document being sent and

then coming back and then having you sign it? A Q Can you clarify that? Let me change it. There was nothing wrong with that?

There wasn't anything wrong in your mind

with Mr. Smith writing your names in there and then saying, I have to send it to Denver? A Q Correct. And then when it came back, you signed it as accepting it or

at least you signed it after Mr. Schmidt had signed it? A Q A After Mr. Schmidt, yes. Go ahead. After Mr. Smith had filled in our names, that is when we had

signed it. Q A Q Oh, okay. Yes. Then it came back. And was it mailed to you or delivered to Then it went to Denver?

you by a Paula Galley? A Q I believe so. And was not Ms. Galley a secretary or employee for

Mr. Smith? A Q Yes. And while we are on that, you mentioned a Mr. Dodd earlier.

Was Mr. Dodd a friend of yours? A Q Yes. David Dodd?

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Donald Hoener - Cross 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 A Q Yes. And he and Ms. Galley were significant others, lived

together? A Q A Q A Q Yes. Were they married? I don't know. It doesn't make any difference, right? Correct. But they did live together. Whether they are married or

not? A Q A Q Correct. You don't know if they were married or not? I assume not. Okay. Still, it would have been Paula Galley that would

say, okay, here is your copy of your file, giving it back to you after it came back from Denver with Mr. Schmidt's signature? A Q Correct. Okay. Then as to Exhibit 336, on these monthly statements, We could

similarly I would like to ask about the procedure.

start with the page 12, the first statement you got in October of '02. And by the way, you said that you first met with Mr. Smith in spring or early summer of '02 but you didn't make the investment until October? A Correct.

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Q A

Donald Hoener - Cross So you thought about it for a while? We thought about it for a while, and it took our bank

forever to get things rolling. Q A Q When you say "we" you mean you and your wife? Yes. Okay. This document went how? It was sent to you with

those bottom lines and signature lines all blank, correct? A Q A Q A All of them blank, yes. And did that come from Denver or from Spokane? I don't know the origin of the particular letter. Did it come in the mail? Yes. Now, occasionally we -- I believe my wife at one point

had picked one up at his office. Q You said they came in the mail or you picked them up. In any event, you get it and you understood what you

Whatever.

were to do, and that is to put down how much desired disbursement you wanted for that monthly statement. wanted any. If you

And then did you put the total number down there,

or just the zero with the slash through it? A Q I put the total number in. Adding the currently monthly earnings to the $20,000,

obviously? A Q A Correct. And you dated it and signed it? Yep.

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Q

Donald Hoener - Cross And then returned it by fax to the instructions on page 13

to the (509)465-5282 number, right? A Q Either faxed it or hand delivered. And to your knowledge, that went from Michael Smith's office

to Denver to Capital Holdings? A Q That was what we had understood. Go to page 11. Similarly, the next month this came to you I

starting with -- I am sorry -- that's your daughter Brenda's. want to go to page 10.

You and your wife's November statement.

Similarly, this came to you showing the total that you had listed on the previous one, $20,580 and some cents, with the total monthly earnings for -- I guess November, right? A Q A Q Correct. And that would come to you what? Assuming they were on time. Okay. First week of December?

They were not always on time.

Where it says signature on file, is that already

stamped on when you got it, or did you just give it back to them forgetting to sign it? A in. We had -- I believe we had just told them to leave things You know, just add the current month's interest to the last

month's principal. Q A Q All right. A verbal direction. Now, going to the first meeting you had at Mike Smith's You said it was on Hatch Road. Could that have

house/office.

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Donald Hoener - Cross been Gem Lane, right close there to Hatch Road in Colbert? A Q A Yes. In Colbert, Washington, right? I believe it's still considered Colbert over on that side of

the highway. Q A Q A Q A Q Okay. Where do you all live? What's the town, Chattaroy?

Chattaroy, yes. Where is that from Colbert? It's about ten miles north. So they are all kind of north of greater Spokane area? Yes. And you talked before about your friend Mr. Dodd. It's a

fact, is it not, that Mr. Dodd, your friend, told you about this program, Capital Holdings, and suggested that you meet with Mike Smith about it, right? A Q Yes. And I don't know how the arrangements were made, but

sometime in the spring or early summer, as you said, you went to -- you and your wife went to Mr. Smith's house. is, did Mr. Dodd and Ms. Galley go with you? A Q A Q A Mr. Dodd had on at least one occasion, yes. How about Ms. Galley? They introduced -- I don't recall her being present. Okay. Nope. You hadn't met Mr. Smith before? My question

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Q A Q A Q A Q

Donald Hoener - Cross But Mr. Dodd was a friend of his? Yes. Did Mr. Dodd say he had invested? No. He didn't have the wherewithal, right? I believe that was the case. And did he say or did you know that Ms. Galley -- I guess I Ms. Galley was a secretary/employee for

asked you this. Mr. Smith? A Q A Q A Q A Q Yes.

Did you say she was present at the meetings? N