Free Response - District Court of Colorado - Colorado

Case 1:04-cr-00103-REB

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Filed 12/20/2006

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Criminal Action No 04-cr-00103-REB-02 UNITED STATES OF AMERICA Plaintiff, v. 2. GEORGE ALAN WEED, Defendant. _____________________________________________________________________ GOVERNMENT'S RESPONSE AND OBJECTION TO DEFENDANT WEED'S PROFFER OF EXPERT WITNESS TESTIMONY _____________________________________________________________________ The Government, by Wyatt Angelo and Matthew T. Kirsch, the undersigned Assistant United States Attorneys, objects to the admission of the expert witness testimony outlined in DEFENDANT WEED'S PROFFER OF EXPERT WITNESS TESTIMONY [Doc. # 876] on the grounds set forth below: 1. The government objects to Darrell Dunham's qualifications as an expert on insurance law, the subject of Mr. Dunham's proposed testimony. Although Mr. Dunham has practiced and taught law for a significant period of time, none of his jobs in private practice or as an instructor have concerned insurance law, except to the extent that he has been involved generally with "commercial law." Similarly, Mr. Dunham's publications have been primarily in the area of bankruptcy law. Not one of his publications relates to any of the issues addressed in his proffered opinion. As far as the government can determine, Mr.

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Dunham's only experience with this type of insurance coverage at issue here is as a purchaser, apparently on behalf of an investment trust. (See Exhibit A.) For these reasons, defendant Weed has failed to establish that Mr. Dunham is qualified "by knowledge, skill, experience, training, or education" to offer an expert opinion pursuant to Rule 702 of the Rules of Evidence. 2. The government also objects to the admission of Mr. Dunham's proposed expert opinion that the "Reserve Foundation Trust Certificate" does not contain material mis-representations of fact or law because it does not address the question propounded and fails to comport with the requirements of Rules 401, 403, 702(1) and (2). 3. Mr. Dunham's letter of October 19, 2006 specifically states that he had "been asked to address the question of whether the certificates entitled `The Reserve Foundation Trust Certificate' contain material misrepresentations of fact or law," presumably in reference to paragraph 4 of the Second Superseding Indictment. Instead of addressing this question, however, Mr. Dunham merely opines that the investors would have had a remedy to their lack of individual rights to enforce the bond and commercial crime policies issued by St. Paul Insurance by seeking the appointment of a substitute trustee to enforce the provisions of these policies. Ignoring for a moment the glaring omissions and unsupported assumptions supporting this statement (see ¶¶ 4-6 below), the purported existence of a legal remedy to cure the effect of the misrepresentations does not answer the question propounded nor otherwise relate to materiality. Mr.

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Dunham's proposed testimony therefore does not meet the test for relevance under Rule 401 and must be excluded under Rule 403 as potentially confusing and misleading to a jury. Evidence which is not relevant, by its very nature, is also incapable of assisting a jury with understanding the evidence or determining a fact in issue, as is further required for admissibility pursuant to Rule 702. 4. The government further objects to this testimony pursuant to Rule 702(1) because it is not based upon sufficient facts or data in at least two respects. First, Mr. Dunham's opinion is based on several erroneous assumptions, including "that the investment soured and the funds disappeared under conditions such that St. Paul's would be liable on its policy if The Reserve Foundation Trust were to bring suit." This assumption is simply false. Neither of the St. Paul insurance policies in place provided the Reserve Foundation Trust with any protection from the conduct of Mssrs. Harte, Schmidt, and the other conspirators. The depository bond insured loss of funds in the account maintained in the Reserve Foundation Trust account at the CIBC Carribean bank only as against failure of the bank and loss of depositor monies as a result. (See Sole Obligor Depository Bond, attached as Exhibit B). The losses in this case were not due to bank failure, so St. Paul was not liable to pay on this bond. Similarly, the commercial crime policy insures loss caused by "employee dishonesty." (See Commercial Crime Policy, Bates number 0531480, attached as Exhibit C.) The only person named as an employee of the insured trust in the application for insurance was the trustee, Clifford Pitt. (See Application, attached

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as Exhibit D.) The commercial crime policy therefore did not make St. Paul liable for the depletion of the accounts by Leon Harte and Norman Schmidt, who were not listed as employees but controlled the bank account holding investors' money. (A summary of the non-applicability of the coverage in these two policies is contained in the letter from a St. Paul representative attached as Exhibit E.) Because Mr. Dunham's opinion is based on incorrect assumptions concerning these salient facts, it should be inadmissible pursuant to Rule 702(1). 5. Second, Mr. Dunham's opinion also violates Rule 702(1) because it is based in large part on information about the law of St. Vincent and the Grenadines which he received from Mr. Samuel E. Commissiong, Esq. Although the opinion also contains Mr. Commissiong's address, it provides no information that allows any evaluation of the reliability or accuracy of Mr. Commissiong's information concerning the law of that jurisdiction. It is impossible to determine whether Mr. Commissiong's information can properly serve as one of the factual bases for Mr. Dunham's opinion. 6. The government also objects to Mr. Dunham's opinion pursuant to Rule 702(2) because it provides no way to determine whether it is the product of reliable methods. Mr. Dunham's opinion is based on the assumption, albeit unstated, that the Restatement of Trusts 2d provides guidance in the interpretation of insurance law in St. Vincent and the Grenadines. The opinion cites no authority of any kind for this proposition, not even the bare say-so of the lawyer from that jurisdiction, Mr. Commissiong. Upon this untestable assumption, Mr. Dunham piggybacks the untestable "fact" that "the investors had the power to protect their 4

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interest by naming a trustee who had standing to bring suit." As the proponent of this opinion, defendant Weed bears the burden on demonstrating its admissibility. Ralston v. Smith & Nephew Richards, Inc., 275 F.3d 965, 970 n.4 (10th Cir. 2001). His proffer fails to meet this burden because it does not contain sufficient information to allow a determination of whether Mr. Dunham's testimony would be product of reliable legal analysis. THEREFORE, based on the arguments set forth above, the government requests that defendant Weed be prohibited from offering the testimony described in his PROFFER OF EXPERT WITNESS TESTIMONY [Doc. # 876] and from offering any other expert testimony or expert opinion evidence at trial. Respectfully submitted this 20th day of December, 2006, TROY A. EID United States Attorney

s/Matthew T. Kirsch Matthew T. Kirsch Wyatt B. Angelo Assistant United States Attorneys 1225 17th Street, Suite 700 Denver, CO 80202 Phone: (303) 454-0100 Fax: (303) 454-0402 email: [email protected] [email protected]

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Case 1:04-cr-00103-REB

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CERTIFICATE OF SERVICE (CM/ECF) I hereby certify on this 20th day of December, 2006, I electronically filed the foregoing GOVERNMENT'S RESPONSE AND OBJECTION TO DEFENDANT WEED'S PROFFER OF EXPERT WITNESS TESTIMONY with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses:

Peter Bornstein, Esq. [email protected] Thomas Hammond, Esq. [email protected] Declan J. O'Donnell, Esq. [email protected] Ronald Gainor, Esq. [email protected]

Richard N. Stuckey, Esq. [email protected] Thomas Goodreid, Esq. [email protected] Mitchell Baker, Esq. [email protected] Richard K. Kornfeld, Esq. [email protected]

s/Matthew T. Kirsch Matthew T. Kirsch Assistant United States Attorney 1225 17th Street, Suite 700 Denver, CO 80202 Phone: (303) 454-0100 Fax: (303) 454-0402 email: [email protected]

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