Free Response in Opposition - District Court of Colorado - Colorado

Case 1:04-cr-00103-REB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Criminal Case. No 04-cr-00103-REB-01 UNITED STATES OF AMERICA Plaintiff, v. 1. NORMAN SCHMIDT, Defendant. _____________________________________________________________________ GOVERNMENT'S RESPONSE TO DEFENDANT SCHMIDT'S MOTION FOR LIMITED DISCOVERY RELATING TO SENTENCING HEARING _____________________________________________________________________ The United States ("the government"), by Wyatt Angelo and Matthew T. Kirsch, the undersigned Assistant United States Attorneys, hereby requests that defendant Schmidt's MOTION FOR LIMITED DISCOVERY RELATED TO SENTENCING HEARING [#1396] be denied for the reasons set forth below: 1. The government has provided counsel for defendant Schmidt with three sets of spreadsheets related to sentencing. On June 22, 2007, the government provided counsel with a set of spreadsheets (Bates numbered 80000018000043) which form the basis for the loss number that the government contends is applicable to defendant Schmidt for the purpose of the Sentencing Guidelines calculation ("the Loss Spreadsheets"). On August 16, 2007, the government provided counsel with a second spreadsheet (Bates numbered 8000473-8000570) detailing potential victims of defendant Schmidt's conduct for

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the purpose of determining restitution owed by him ("the Restitution Spreadsheet"). The third set of spreadsheets ("the Forfeiture Spreadsheets") concern the government's request for an order of forfeiture. On October 5, 2007, after acknowledging defendant Schmidt's argument that any forfeiture order should account for the value of his property already forfeited, the government provided the Forfeiture Spreadsheets (Bates numbered 8000724-8000726), which support its calculation of the gross proceeds of the offenses of conviction attributable to defendant Schmidt minus the value of his property which has already been forfeited. (The government's gross proceeds calculation, for forfeiture purposes, was contained with the Loss Spreadsheets previously provided on June 22, 2007.) 2. Defendant Schmidt's motion seeks access to the work product related to the creation of some or all of these spreadsheets, although the exact spreadsheets to which his request pertains is unclear. The letter attached to defendant Schmidt's motion requested access to the work product related to the Loss Spreadsheets and the Restitution Spreadsheets, and it identified these spreadsheets by Bates number. (Def.'s Mot., Ex. A.) Defendant Schmidt's motion, however, refers to spreadsheets concerning loss calculations and spreadsheets concerning forfeiture calculations without identifying them by number, but it does not refer to spreadsheets concerning restitution calculations. (Id. ¶2.) For the purposes of this response, the government assumes that defendant Schmidt is requesting access to government work product related to all three sets of spreadsheets. 2

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3.

Copies of the vast majority of the bank records used to create the Loss Spreadsheets and the Forfeiture Spreadsheets were made available to counsel for defendant Schmidt on June 29, 2004. The small number of additional bank records received by the government after that date were provided to counsel as soon as practicable. The government believes that its final substantive production of bank records was 122 pages of additional records received from National Commercial Bank (SVG) Limited, located in St. Vincent and the Grenadines, produced on April 19, 2006.

4.

As a part of the government investigation, a company which contracts with the FBI was provided with originals or copies of all of the bank records obtained during the investigation. That company entered the information from those records into a database, which the government then used during its analysis of financial aspects of the case. Defendant Schmidt previously requested access to this database during trial. See MOTION FOR ACCESS TO GOVERNMENT FINANCIAL DATABASE [#1135]. The Court denied his previous request, for reasons that apply with equal force to his current request. See ORDER DENYING MOTION FOR ACCESS TO GOVERNMENT FINANCIAL DATABASE [#1148].

5.

The FBI also created a separate database, based on information received through interviews of witnesses, documents obtained during the various search warrants executed in connection with the case, and contact information provided by victims who called into the FBI's victim hotline. With the exception of the

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victim contact information, all of this information was provided to defendant Schmidt well in advance of trial. The vast majority of this information was provided in 2004. IRS Special Agent James Marcy created the Loss Spreadsheets and the Forfeiture Spreadsheets using a combination of the financial database and the FBI database. He also cross-checked the identities of possible victims against information contained in the Restitution Spreadsheet. 6. The Restitution Spreadsheet is based on information gathered and collected by Marika Tolz, the trustee hired to manage the remission claims process in connection with the related civil forfeiture cases, case numbers 03cv00385-REBCBS, 03cv00403-REB-CBS, 03cv00749-REB-CBS, and 03cv00799-REB-CBS. Although some members of the Asset Forfeiture Section of the United States Attorney's Office (USAO) assisted Ms. Tolz in the process of verifying claims made during that process, the USAO does not have Ms. Tolz's work product in its possession. Special Agent Marcy created the Restitution Spreadsheets by resorting data about remission claimants provided by Ms. Tolz into alphabetical order and by removing from the list of potential victims those entities, such as Land Management, which the evidence at trial and the jury's verdicts established were not victims of the fraud. 7. The government expects Special Agent Marcy to testify at the evidentiary hearing on February 1, 2008, concerning all three sets of spreadsheets. This testimony will obviously be subject to cross-examination by counsel for defendant Schmidt, during which counsel will be able to ask questions concerning the reliability of, accuracy of, or other topics related to the 4

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spreadsheets and the underlying databases. 8. Defendant Schmidt's motion, like his initial, unsuccessful request for government work product, ignores the authority most relevant to his request, Rule 16(a)(2) of the Federal Rules of Criminal Procedure. Rule 16(a)(2) excepts from the government's required discovery "reports, memoranda, or other internal government documents made by an attorney for the government or other government agent in connection with investigating or prosecuting the case." Courts have routinely relied on this provision (or its predecessor) to reject defense requests for materials similar to those requested by defendant Schmidt. See, e.g., United States v. Robinson, 439 F.3d 777, 779-80 (8th Cir. 2006) (rejecting defense request for production of "internal documents used by the government to calculate gross receipts, business expenses, and taxes owed by" the defendant); United States v. Koskerides, 877 F.2d 1129, 1133-34 (2d Cir. 1989) (rejecting defense request for materials relating to tax computations); United States v. Shoher, 555 F. Supp. 346, 357 (S.D.N.Y. 1983) (rejecting defense request for production of "the outcome of [the government's] investigatory efforts to trace funds allegedly diverted by the defendants" when the government had already provided all relevant bank records); United States v. Wahlin, 384 F. Supp. 43, 48 (W.D. Wis. 1974) (rejecting defense request for production of IRS work papers and audits performed on defendant); United States v. Abrams, 29 F.R.D. 178, 183 (S.D.N.Y. 1961) (rejecting defense request for schedules "compiled from original documents for the Government

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investigators' own purposes"). 9. The only authorities defendant Schmidt cites as supports for his request for the disclosure of what he admits constitutes government work product are two civil cases, Grace United Methodist v. City of Cheyenne, 451 F.3d 643, 668 (10th Cir. 2006), and Frontier Refining, Inc. v. Gorman-Rupp Co., Inc., 136 F.3d 695, 704 (10th Cir. 1998). Neither is apposite. Grace United Methodist held only that a party could not claim that statements contained in a document it produced in discovery were work product, 451 F.3d at 668, a claim not made by the government here. Frontier Refining's dictum that the work product doctrine cannot be used as both a sword and a shield, 136 F.3d at 704, is similarly inapplicable. The government is not claiming that the spreadsheets in question are covered by work product, nor does it seek to prevent counsel from exploring with the relevant witness, during cross-examination, the methods or manner of their creation. Finally, as the Court noted in its previous Order denying defendant Schmidt's previous similar request, even assuming that work product loses its protection when a witness relies on it as part of his testimony, Special Agent Marcy's testimony will not focus on the databases themselves, but on the spreadsheets he created from them. See ORDER [#1148] at 3, n.2. 10. Defendant Schmidt has had access for years to the materials used to prepare the financial database and the FBI database, but he has apparently chosen not to undertake an independent analysis of those materials. To the extent that he can demonstrate a need for access to the materials used by Ms. Tolz to prepare

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her database, he has the ability to subpoena those materials from her. See Fed. R. Crim. P. 17(c). 11. Finally, defendant Schmidt's motion is untimely. His counsel received the first set of spreadsheets at issue on approximately June 22nd and the last set on approximately October 5th, yet his motion was not filed until October 16, 2007, three days before the originally scheduled date of the hearing at which the spreadsheets will be presented. Furthermore, now that the evidentiary hearing has been continued to February 1, 2008, counsel for defendant Schmidt has more than enough time to create his own spreadsheets from the same raw data used by the government to create its spreadsheets. THEREFORE, for the reasons above, the government respectfully requests that defendant Schmidt MOTION FOR LIMITED DISCOVERY RELATED TO SENTENCING HEARING [#1396] be denied. Respectfully submitted this 29th day of October, 2007. 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 29th day of October, 2007, I electronically filed the foregoing GOVERNMENT'S RESPONSE TO DEFENDANT SCHMIDT'S MOTION FOR LIMITED DISCOVERY RELATED TO SENTENCING HEARING 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] Paula Ray, Esq. [email protected]

Richard N. Stuckey, Esq. [email protected] Thomas Goodreid, Esq. [email protected] Ronald Gainor, 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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