19 20 Court Reporters: HARRY RAPAPORT OWEN M. WICKER 21 United States District Court Two Uniondale Avenue 22 Uniondale, New York 11553 (516) 485-6558 23 24 Proceedings recorded by mechanical stenography, transcript produced by Computer-Assisted Transcription 25
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8648 1 (Case called.) 2 THE COURT: Please be seated.
3 MR. DUNN: Your Honor, I have a single request,
4 if I may hand it up to you.
5 MR. TRABULUS: Your Honor, I also have some
6 further questions, relating to the tax count and the
7 lesser included.
8 Thank you. I've given copies to all counsel.
9 THE COURT: Is everybody here? 10 MR. GEDULDIG: Sorry, Judge? 11 THE COURT: Is everybody here? 12
MR. GEDULDIG: Ms. Haley appears to be among the 13 missing. I think I might have indicated before. She is 14 perfectly agreeable to proceeding without her. I don't 15 know the reason for the delay. We don't have a jury today 16 and I don't think that would be any kind of prejudice to 17 her for not appearing here during the course of the 18 conversations we'll have and she told me she would waive 19 her appearance. So I would ask the Court to proceed 20 without her. I'm sure she'll arrive shortly. 21 THE COURT: What difference -- why is this new 22 request to charge made, Mr. Trabulus, in addition to your 23 other requests? 24 MR. TRABULUS: Your Honor, one, part of it is in 25 response to or suggested by Mr. Reffsin's request to
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8649 1 charge on good faith reliance. He turned around the good 2
faith reliance on the accountant's advice to the good
3 faith reliance on the client's advice and I have here that
4 relates to good faith reliance on the accountant's advice.
5 In addition, I requested a lesser included charge
6 originally.
7 THE COURT: So it clarifies the lesser included?
8 MR. TRABULUS: Yes, it does, Your Honor.
9 THE COURT: We'll get to that. 10 MR. TRABULUS: Sure. 11 THE COURT: And I just wanted to know what the 12 additional request was for. 13 All right. Let's proceed. 14 First with regard to the boilerplate portions in 15 which I said the defendants are being charged only with 16 the crimes set forth in the indictment and no others. In 17 the event that I charge lesser included crimes, and I'm 18 considering seriously doing that, I would add crimes set 19 forth in the indictment or lesser included crimes. We'll 20 see when w
e get to that. 21 Also open was the expert testimony. Was the 22 defendant Martin Reffsin an expert? Did we resolve that? 23 I think you were to tell me. 24 MR. WALLENSTEIN: I don't know if we resolved 25 that but I would withdraw that request.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8650 1 THE COURT: Okay. 2 With regard to accomplices who pled guilty, I'm
3 not quite sure what we meant by that. Let me just see
4 here. I gave a charge on witnesses who pled guilty. I
5 added to that "government witnesses and so-called
6 accomplices" to that who pled guilty. So that covers
7 that.
8 Now, as far as the character evidence, this is
9 what I'm going to say. 10 You have heard testimony that the defendant 11 Martin Reffsin has a good reputation for honesty and 12 truthfulness in the community where he lives and works.
13 Along with all the other evidence you have heard, you may 14 take into consideration what you believe about the 15 defendant Martin Reffsin's reputation for truthfulness and 16 honesty when you determine whether or not the government 17 has proven beyond a reasonable doubt that the defendant 18 Martin Reffsin committed the crimes charged against him. 19 You will note that I omitted some portion of your 20 request to charge because looking at the cases I don't 21 find that that -- I find that that is not only not 22 required but very confusing to the jury and I don't 23 believe it is the law either. So that's what I'm going to 24 charge. 25 With respect to the request, we started on
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8651 1 conspiracy and we talked about the first count, the first 2 element of the first conspiracy to commit mail fr
aud and
3 the government asked me to add some portion with regard to
4 conspiracy involving secrecy, direct. "Direct proof may
5 not be available, etcetera," and I'm going to add that
6 after looking at the law as follows.
7 "In this regard you may infer its existence from
8 the circumstances in the case and the conduct of the
9 parties involved. However, since a conspiracy may be by 10 its very nature, made by its very nature be characterized 11 by secrecy, direct proof may not be available. In the 12 context of conspiracy cases actions may speak louder than 13 words." That's my amendment of what the government has 14 requested me to do. 15 All right. Now, let's get to the second element 16 in the conspiracy. That's where we left off. 17 "Membership of the conspiracy." And this of 18 course is the first Count 1, the first conspiracy to 19 commit mail fraud.
20 "In connection with the second element in the 21 conspiracy count the government must prove beyond a 22 reasonable doubt that the defendant you are considering 23 knowingly and willfully became a member of the 24 conspiracy. If you find that the government established 25 beyond a reasonable doubt that the conspiracy charged in
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8652 1 the indictment existed, you must next determine whether 2 the government proved that the defendant you are
3 considering was a member of the conspiracy. In deciding
4 whether the defendant you are considering was a member of
5 the conspiracy, you should consider whether the defendant
6 knowingly and willfully joined the conspiracy. To act
7 knowingly means to do something voluntarily and
8 deliberately and not because of mistake, negligence,
9 inadvertence or so
me other innocent reason." And you will 10 see that I define knowingly a number of times in this 11 charge. 12 An act is done willfully if done voluntarily and 13 intentionally and with the intent to do something that the 14 law forbids, that is to say with a bad purpose either to 15 disobey or disregard the law. 16 Intent may be inferred from conduct, the 17 surrounding circumstances and from all the evidence in the 18 case. 19 As I said, in deciding whether the defendant you 20 are considering was in fact a member of the conspiracy, 21 you should consider whether the defendant knowingly and 22 willfully joined the conspiracy. 23 Did he or she participate in it with knowledge of 24 its lawful -- unlawful -- with its knowledge of unlawful 25 purpose and with the specific intention of furthering its
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER
8653 1 business or objectives. While proof of a financial 2 interest in the outcome of the scheme is not essential, if
3 you find that the defendant had such an interest, that is
4 a factor which you may properly consider in determining
5 whether or not the defendant was a member of the
6 conspiracy charged in the indictment.
7 As I mentioned a moment ago before the defendant
8 you are considering can be found to have been a
9 conspirator, you must first find that he or she knowingly 10 and willfully joined in the unlawful agreement or plan. 11 The key question therefore is whether the 12 defendant joined the conspiracy with an awareness of at 13 least some of the basic aims and purposes of the unlawful 14 agreement. 15 It is for you to note that the defendant's 16 participation in the conspiracy must be established by 17 independent evidence of
his or her own acts or statements 18 as well as those of the other alleged co-conspirators and 19 the reasonable inferences which may be drawn from them. 20 A defendant's knowledge may be a matter of 21 inference from the facts proved. In that connection I 22 instruct you that to become a member of the conspiracy the 23 defendant need not have known the identity of all the 24 members, nor need he or she have been fully informed as to 25 all of the details, or the scope of the conspiracy in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8654 1 order to justify an inference of knowledge on his or her 2 part.
3 Furthermore, the defendant need not have joined
4 in all of the conspiracy's unlawful objectives and
5 activities. The extent of a defendant's participation has
6 no bearing on the issue of a defendant's guilt. A
7 conspirator'
s guilt is not measured by the extent or
8 duration of his or her participation. Indeed, each member
9 may perform separate and distinct acts and may perform 10 them at different times. Some conspirators play major 11 roles, while others play minor parts in the scheme. The 12 law does not require an equal role. Even a single act may 13 be sufficient to draw the defendant within the ambit of 14 the conspiracy. 15 A person need not have been a member of the 16 conspiracy from its very start to be a co-conspirator. 17 The defendant may have joined at any point during its 18 progress. 19 I want to caution you, however, that a 20 defendant's mere presence at the scene of the alleged 21 criminal activity does not by itself make him or her a 22 member of the conspiracy. Similarly, mere association 23 with one or more members of the conspiracy does not 24 automatical
ly make a defendant a member. A person may 25 know, be related to, or befriending with, or work with a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8655 1 criminal without being a criminal himself or herself. The 2 fact that they may have been together and discussed common
3 aims and interests does not necessarily establish proof of
4 the existence of a conspiracy or knowing membership in the
5 conspiracy.
6 I also want to caution you that mere knowledge or
7 acquiescence -- what is happening now?
8 MS. SCOTT: Your Honor, I just handed out an
9 additional instruction we will request. We will get to 10 it. 11 THE COURT: Why don't you put it down for the 12 time being. I want your undivided attention on this. 13 This is very important and I don't want it interrupted by 14 anything. 15 I want to caution you that mere knowled
ge or 16 acquiescence without participation in the unlawful plans 17 is not sufficient. Moreover, the acts of a defendant 18 without knowledge merely happen to further the purposes or 19 objectives of the conspiracy does not make the defendant a 20 member. More is required under the law. 21 What is necessary is that the defendant must have 22 participated with knowledge of at least some of the 23 purposes or objectives of the conspiracy, and with the 24 intention of aiding in the accomplishment of those lawful 25 objectives.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8656 1 In sum, a defendant with an understanding -- let 2 the record indicate that Ms. Haley has advised at 9:17
3 a.m.
4 Do you want to ask Ms. Haley if it is all right
5 to have proceeded in her absence?
6 MR. GEDULDIG: You want me to ask her?
7
THE COURT: Yes.
8 MR. GEDULDIG: I told the Court that you
9 previously had told me you had no objection to proceeding 10 in court with respect to the charge conference. 11 THE DEFENDANT HALEY: Yes, it is all right. 12 MR. NELSON: Your Honor could you possibly read 13 back to the last three lines, you indicate the lawful 14 purpose, and I believe you may have misspoke. 15 THE COURT: What is necessary is that the 16 defendant may have anticipated with knowledge of at least 17 some of the purposes or objectives of the conspiracy and 18 with the intention of aiding with respect to the 19 accomplishment of those unlawful objectives. 20 MR. NELSON: Thank you. 21 THE COURT: In sum, a defendant with the 22 understanding of the unlawful character of the conspiracy 23 must have occasionally engaged, advised, or assisted in it 24 for the purpose of furthering the illega
l undertaking. He 25 or she thereby becomes a knowing participant in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8657 1 unlawful agreement. That is to say, a conspirator. 2 The third element that the government must prove
3 beyond a reasonable doubt to establish the crime of
4 conspiracy is that at least one of the overt acts charged
5 in the indictment was knowingly committed by at least one
6 of the conspirators -- at least one of the conspirators
7 at or about the time and place alleged.
8 Count 1 of the indictment charges that the
9 following overt acts were committed in the Eastern 10 District of New York and elsewhere. And then I will read 11 that paragraph with the overt acts. 12 Have you got the amended indictment? 13 MS. SCOTT: I am doing it, your Honor. 14 THE COURT: I would like to have it today 15 sometim
e. 16 MS. SCOTT: You will, your Honor. 17 THE COURT: In order for the government to 18 satisfy this element, it is not required that all of the 19 overt acts alleged in the indictment be proven. Rather, 20 the government is only required to prove the commission of 21 at least one overt act as alleged in count one of the 22 indictment in furtherance of the conspiracy. 23 Similarly, you need not find that the defendant 24 you are considering committed the overt act. It is 25 sufficient for the government to prove that one of the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8658 1 conspirators knowingly committed a single overt act in 2 furtherance of the conspiracy, since such an act becomes
3 in the eyes of the law the act of all the members of the
4 conspiracy.
5 You are further instructed that the overt act
6 need not ha
ve been committed at precisely the date alleged
7 in the indictment. It is sufficient if you are convinced
8 beyond a reasonable doubt that it occurred at or about the
9 date and place stated. You must also find that the overt 10 act occurred during the course of the conspiracy. 11 Finally, you must find that at least one of the 12 overt acts was committed in the Eastern District of New 13 York, which includes, Staten Island, Brooklyn, Queens, 14 Nassau and Suffolk Counties. 15 The fourth and final element which the government 16 must prove beyond a reasonable doubt with regard to the 17 conspiracy charged in Count 1 is that the overt act was 18 committed for the purpose of carrying out the unlawful 19 agreement alleged in Count 1 of the indictment. 20 In order for the government to satisfy this 21 element, it must prove beyond a reasonable doubt that at 22 least one
overt act was knowingly and willfully done by at 23 least one conspirator in furtherance of at least one of 24 the objects or purposes of the conspiracy as charged in 25 the indictment.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8659 1 In this regard you should bear in mind that the 2 overt act standing alone may be an innocent lawful act.
3 Frequently, however, an apparently innocent act sheds its
4 harmless character if it is a step in carrying out,
5 promoting, aiding, or assisting the conspiratorial
6 scheme.
7 You are, therefore, instructed that the overt act
8 does not have to be an act which in and of itself is
9 criminal, or constitutes an objective of the conspiracy. 10 However, it must be an act which follows and tends toward 11 accomplishment of the plan or scheme and must be knowingly 12 done in furtherance of some o
bject or purpose of the 13 conspiracy charged. 14 Now, there is a request for me to charge on 15 multiple conspiracies, and I am going to charge that as 16 follows: 17 I will now address the issue of whether the 18 government has proved a single conspiracy in Count 1, or 19 two or more separate and independent conspiracies. 20 Whether there existed a single conspiracy or two or more 21 separate and independent conspiracies is a question of 22 fact for you, the jury, to determine in accordance with 23 the instructions I am about to give you. 24 The defendants contend that the evidence 25 establishes two separate conspiracies.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8660 1 Instead of "establishes" let's say that the 2 evidence -- that's what I was requested to charge,
3 establishes.
4 The defendants contend th
at the evidence
5 demonstrates --
6 MR. TRABULUS: May I suggest that the defendants
7 contend that if the evidence demonstrates a conspiracy at
8 all, it demonstrates the existence of two or more
9 conspiracies, something along those lines. Not that we 10 concede there is a conspiracy. 11 THE COURT: I am following the charge given to me 12 by the defendant Reffsin, I believe. 13 MR. WALLENSTEIN: That must be Norman's. 14 MR. NELSON: I asked for that in the second page 15 of the charge where I actually state that the defendants 16 contend if the evidence is accredited, credited, such 17 evidence establishes two separate conspiracies. 18 THE COURT: Then I took it from somewhere else. 19 Let me see where you say it? 20 MR. NELSON: The next to the last paragraph in 21 request 4 on the second page of that request, Judge. 22 See if this is all right.
23 The defendants contend if the -- I don't like 24 that other. 25 What do you say, Mr. Trabulus?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8661 1 MR. TRABULUS: I was saying off the top of my 2 head --
3 THE COURT: But it sounded good.
4 MR. TRABULUS: I am not so sure as I think about
5 it.
6 THE COURT: How about this: The defendants
7 contend that if the government establishes beyond a
8 reasonable doubt that a conspiracy existed.
9 MR. TRABULUS: It was two or more conspiracies 10 rather than a single conspiracy. 11 THE COURT: Right. 12 How about -- are you saying it is two or more? 13 MR. TRABULUS: The multitude conspiracy is 14 applicable without the defendants contention. And I would 15 like to rather have it without our contentions. 16 THE COURT: I think you are right. 17 Let's take
that out. 18 I am just going to say that if the government 19 establishes beyond a reasonable doubt that a conspiracy 20 existed -- 21 MR. TRABULUS: Your Honor, may I suggest that 22 perhaps -- 23 THE COURT: Just one minute now. 24 MR. TRABULUS: I am sorry. 25 (Whereupon, at this time there was a pause in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8662 1 proceedings.) 2 THE COURT: How about this: If the government
3 establishes beyond a reasonable doubt -- think about this
4 and then I have to take a call.
5 If the government establishes beyond a reasonable
6 doubt that a conspiracy existed, that the government must
7 prove that it was the single conspiracy alleged in the
8 indictment, rather than two separate conspiracies. How
9 about that? 10 MR. TRABULUS: Sounds good to me. 11 THE COURT
: I like it. 12 MR. NELSON: Sounds good to me. 13 THE COURT: I will be right back. 14 15 (Whereupon, a recess is taken.) 16 17 THE COURT: That was the American Bar Association 18 judiciary chairman, to talk about a judicial candidate. I 19 didn't know they were putting through judicial 20 candidates. I thought they stopped doing that about two 21 years ago. 22 If the government establishes beyond a reasonable 23 doubt that a conspiracy existed, the government must prove 24 that it is the single conspiracy alleged in the indictment 25 rather than two separate conspiracies.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8663 1 Now, what I intend to say, namely, Who's Who 2 Worldwide and Sterling Who's Who, because I think those
3 are the two separate conspiracies that are possible.
4 Proof of two or more sep
arate and independent
5 conspiracies is not proof of the single overall conspiracy
6 charged in the indictment. Unless, of course, one of the
7 conspiracies proved happens to be the single conspiracy
8 described in the indictment, where persons joined together
9 to further one common unlawful design or purpose, a single 10 conspiracy existed. By way of contrast, multiple 11 conspiracies exist when there are separate unlawful 12 agreements to achieve distinct purposes. 13 As to count one, the government must prove to you 14 beyond a reasonable doubt that in the period of time 15 between approximately 1990 through March 1995, there was 16 an agreement between the defendant you are considering and 17 one or more other defendants or other persons to commit 18 one of the charged objectives of the conspiracy as I have 19 just described. 20 In deciding whether such single co
nspiracy has 21 been proved, you should be aware that a single conspiracy 22 can experience a change in personnel. Certain individuals 23 can withdraw from a conspiracy after having participated 24 in it for some time. Others may join a conspiracy after 25 it has been in existence for a period of time. The fact
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8664 1 that the parties to a criminal conspiracy are not always 2 the same does not necessarily imply that separate
3 conspiracies existed. You must, however, be persuaded
4 beyond a reasonable doubt that there were in fact two or
5 more persons in agreement to engage in the criminal
6 conduct that was at the heart of the conspiracy charged in
7 count one.
8 On the other hand, if you find that the
9 conspiracy charged in the indictment did not exist at any 10 time within the date
specified, then you must find all of 11 the defendants not guilty of the conspiracy charged. This 12 is so, even if you find that some other conspiracy 13 existed, or that some agreement to violate if law had been 14 reached other than the one charged in the indictment. 15 Thus, even if you find that the defendant you are 16 considering was the member of a conspiracy, but not the 17 one charged in the indictment, you must find the defendant 18 not guilty of the conspiracy charged in count one. 19 The government charges the defendants under count 20 one of the indictment with participating in the one 21 conspiracy charged in that count. Therefore, the 22 government is required to prove the one conspiracy charged 23 in the indictment, and the defendant you are considering 24 was a member of that conspiracy. 25 If you find that the government has proven two
HA
RRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8665 1 separate conspiracies, and the defendant you are 2 considering was not a member of the conspiracy charged in
3 the indictment, the government has not sustained its
4 burden of proof and you must acquit the defendant on the
5 conspiracy count.
6 In sum, if the government failed to prove the
7 conspiracy charged in the indictment, you must acquit all
8 the defendants.
9 If you find that the defendant you are 10 considering was a member of another conspiracy, not the 11 one charged in the indictment, then you must acquit that 12 defendant. 13 In other words, to find a defendant guilty you 14 must find that he or she was a member of the conspiracy 15 charged in the indictment and not some other conspiracy. 16 In your consideration of the evidence in the case 17 you should first determin
e whether the government proved 18 beyond a reasonable doubt that the conspiracy existed as 19 alleged in the indictment. 20 If you conclude that the conspiracy did exist, 21 you should next separately determine whether the 22 government proved that the defendant you are considering 23 knowingly and willfully became a member of that 24 conspiracy. 25 If you determine that the government has proved
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8666 1 beyond a reasonable doubt from the evidence in the case 2 that the conspiracy alleged in the indictment was
3 willfully formed, and that the defendant you are
4 considering knowingly and willfully became a member of
5 that conspiracy, and that thereafter one or more of the
6 conspirators knowingly committed one or more of the overt
7 acts charged in furtherance of some object or purpose
of
8 that conspiracy, then there may be a conviction even
9 though the conspirators may not have succeeded in 10 accomplishing their common object or purpose, and in fact, 11 may have failed to accomplish such objects or purpose. 12 However, if you determine that the government 13 failed to prove any of these elements beyond a reasonable 14 doubt, you must acquit the defendant you are considering 15 as to count one. 16 MR. WHITE: Your Honor, can we go back to the 17 multiple conspiracy for just one moment? 18 THE COURT: Yes. 19 MR. WHITE: The third paragraph, at least of 20 Mr. Nelson's requests. And I guess it corresponds to the 21 charge -- 22 THE COURT: Not entirely. 23 MR. WHITE: I mean in terms of the paragraph. 24 THE COURT: Yes. 25 MR. WHITE: At one point it restates basically
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPO
RTER 8667 1 that the personnel can change in a conspiracy. 2 It seems to me that it is not so much that the
3 personnel are changing, but there are two separate
4 companies, so I think it would clarify it more if we
5 repeated the sentence or two that you previously said you
6 would give with respect to membership, namely, that a
7 defendant need not have known the identities of every
8 other member or have been told about all their
9 activities. That's the main point of the germane theory 10 as to conspiracy. 11 THE COURT: No. I think it would complicate or 12 confuse it. You have an exception. 13 Anything else? 14 MR. TRABULUS: Before we move to the second or 15 following counts, I think there were certain overt acts 16 set forth in the indictment for count one which the 17 government did not prove and, therefore, it should not be
18 submitted to the jury. Does your Honor want to consider 19 that at this point? 20 THE COURT: Yes. What are those? 21 MR. TRABULUS: I am on the indictment, page 10, 22 overt act C. 23 THE COURT: Mr. White, do you want to respond to 24 each one of these things? I would not rely on my memory 25 at that time all.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8668 1 MR. TRABULUS: It is in fact C, D, E and F on 2 that page.
3 Shall I proceed to the next page?
4 THE COURT: No. Let them take a look at that.
5 (Whereupon, at this time there was a pause in the
6 proceedings.)
7 MR. WHITE: Your Honor, Mr. Trabulus is correct.
8 THE COURT: We are deleting, C, D, E and F on
9 page 10. Ms. Scott, you will amend the indictment 10 accordingly, correct? 11 MR. WHITE: Yes. 12 THE COURT: Correct, Ms. Scott?
13 MS. SCOTT: Yes, your Honor. 14 MR. TRABULUS: Page 11, K, M, as in Michael, N as 15 in Nathan, O as in Oscar. 16 MR. JENKS: O was dismissed. 17 MR. TRABULUS: Yes, so they are not in here. 18 THE COURT: So O is out; is that right? 19 MR. JENKS: Yes, that was dismissed. 20 MR. TRABULUS: K, L and M also. 21 THE COURT: I am waiting to hear from the 22 government on that. 23 MR. WHITE: I need to look at the exhibits, your 24 Honor. 25 (Whereupon, at this time there was a pause in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8669 1 proceedings.) 2 MR. WHITE: Your Honor, here Mr. Trabulus is
3 incorrect.
4 THE COURT: Which one?
5 MR. WHITE: All of them, your Honor.
6 THE COURT: You say O is in?
7 MR. WHITE: I believe so. Let me explain.
8 With respect to K, Government's Exhibit
21-C is
9 an order form that bears that date. And Annette Haley's 10 name and the name of the customer, William Sadler. The 11 testimony at the trial is that that order form was 12 prepared by the salesperson who spoke on the phone with 13 the customer. 14 THE COURT: Did somebody testify that Annette 15 Haley had a telephone conversation with William Sadler? 16 MR. WHITE: No. It is reflected on an order 17 form, a document, which is Exhibit 21-C. 18 THE COURT: What does the order form say? 19 MR. WHITE: The order form has Annette Haley 20 listed as the salesperson. It bears that date. It bears 21 Mr. Sadler and his address in St. Louis. 22 THE COURT: You say that that is circumstantial 23 evidence that she made the telephone call? 24 MR. WHITE: Yes, your Honor. The description of 25 how those forms were prepared was that the salesperson
HAR
RY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8670 1 would speak on the telephone with the customer, and either 2 at that time or shortly thereafter prepare the order form.
3 THE COURT: All right.
4 And what about M for Mike?
5 MR. GEDULDIG: I would like to be heard on that,
6 your Honor.
7 There is contrary testimony also from government
8 witnesses that it was not necessarily so that the order
9 form reflected the person who spoke on the telephone with 10 the prospective listee, that there could be 11 circumstances -- I think in Mr. Saffer's case, he talked 12 about borrowing, where one salesperson would make the call 13 and give the call to another salesperson to fill out the 14 form although they never made the call, and they would 15 borrow sales, one to the other. 16 There was no testimony that Annette Haley had a 17 conversation
with Mr. Sadler. The only evidence before 18 the jury with regard to that paragraph is that Ms. Haley 19 is getting a percentage or commission on that sale. There 20 was no evidence, circumstantial or otherwise, in my view, 21 that would show that Ms. Haley actually had the 22 conversation with Mr. Sadler. 23 THE COURT: Then the jury will not find beyond a 24 reasonable doubt that the overt act existed, this overt 25 act existed. But there is circumstantial evidence that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8671 1 the person's name on the order form was the person who 2 made the call. There is also evidence that that didn't
3 occur. Let the jury determine that. I will overrule you
4 on K.
5 What is the next one?
6 MR. WHITE: Next is overt act M like in Mary,
7 that invoice referred to in that overt act is Exhibit
8 28-C, like in Charley. It bears the same date. It bears
9 the name of Mr. Sainte, S A I N T E. And, again, the 10 testimony was that, and we have been over this before, 11 that these invoices would be sent out through the U.S. 12 mails as a regular course of business. 13 THE COURT: There is such an invoice in 14 evidence? 15 MR. WHITE: Yes, 28-C. 16 THE COURT: That's overruled. 17 What about N for Negative? Is that the same as 18 K? 19 MR. WHITE: I didn't copy down N as one they 20 mentioned. 21 MR. TRABULUS: I did. I assume the arguments 22 there is the same with respect to K. If there is an 23 invoice or order form comparable to the one in K I will 24 withdraw the objection. 25 MR. WHITE: I skipped that one, and I will have
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8672 1 to look it up.
2 (Whereupon, at this time there was a pause in the
3 proceedings.)
4 MR. WHITE: That's the same situation.
5 THE COURT: The exception is denied as to N for
6 Negative.
7 What about O?
8 MR. WHITE: With respect to O, it indicates that
9 a solicitation letter was sent on or about that date. If 10 that solicitation letter is not in evidence -- well, if 11 you look at 40-D, like in Dog, there is a lead card that 12 was returned by Mr. Puller. 13 The evidence was that the lead card was included 14 with the solicitation letter, your Honor. And 15 Mr. Puller's card, in turn, from Hicksville to Who's Who 16 Worldwide, so there is certainly enough evidence to 17 conclude that they sent the solicitation letter and the 18 card. 19 THE COURT: I agree. And we will leave overt act 20 O for Oboe in. 21 Anything else with respect to that? 22 MR. T
RABULUS: Yes, page 12. 23 I assume with regard to S there is an order form 24 to support that. Because Mr. Searle, S E A R L E, didn't 25 testify.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8673 1 THE COURT: Let's find out. 2 MR. WHITE: I will have to look that one up.
3 THE COURT: Go ahead.
4 MR. WHITE: It looks like there are no documents
5 from Mr. Searle. So that one is out.
6 THE COURT: We will delete S.
7 MR. TRABULUS: Your Honor, with regard to T,
8 there is a tape recording in evidence. It doesn't support
9 what is in T. In the tape recording, the person speaking 10 doesn't say to the person who is listening that he 11 shouldn't use his real name in telephone conversations 12 with potential customers. What he says is don't sign your 13 real name on some kind of form which is not really 14 specified. We
don't know what the form is. So he does 15 say, so you can't be identified in a court of law. So, it 16 is different than that. And on that basis it is not 17 supported. 18 MR. WHITE: Your Honor, the recording I 19 believe -- I believe the testimony was that the reference 20 was to the order form, or some other document, and the 21 question that was put to the supervisor was, do I put the 22 name, the phone name you gave me, or do I put my real 23 name. There was no dispute that he was given that phony 24 name to use on the phone with customers. So this is 25 substantially correct, even if the meaning is slightly
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8674 1 different. 2 THE COURT: Is there proof that the conversation
3 that was recorded in that conversation, a sales manager
4 advised a salesperson not to use his real name i
n
5 telephone conversations with potential customers? Does it
6 say that? Did he say that? If he didn't say it I will
7 strike it out.
8 MR. WHITE: Not the tape, your Honor. But there
9 is testimony that the witness was told that. Then the 10 tape says, don't put your name -- put that phony name, not 11 your real name on this document. 12 THE COURT: Well, if the tape said it, the 13 testimony would not be accurate. It is the tape that 14 would govern. 15 MR. WHITE: I am talking about two separate 16 conversations. 17 THE COURT: You are saying there is other 18 evidence in that a sales manager advised a Sterling Who's 19 Who salesperson not to use his real name in telephone 20 conversations in order to avoid later being identified in 21 a court of law? Did he say that in this other 22 conversation? 23 MR. TRABULUS: No. 24 MR. WHITE:
No. Let me be clear. 25 Mr. Ihlenfeldt testified when he worked at
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8675 1 Sterling, a supervisor instructed him to use a different 2 name, not his real name on the phone.
3 THE COURT: But never to avoid later being
4 identified in a court of law?
5 MR. WHITE: The second part is that
6 Mr. Ihlenfeldt later asked the supervisor about some form,
7 do I put my real name on it or the phony name you gave
8 me? With respect to that he is told don't put the real
9 name. 10 THE COURT: I am striking it. There is no 11 testimony that says exactly that. You are putting 12 together several conversations. I am striking it. 13 What else? 14 MR. TRABULUS: On page 13, both W and X pertain 15 to members who did not testify. And I guess the question 16 is: Is there documentary evidence t
o establish those 17 things circumstantially. I frankly don't know the 18 exhibits, if there are any. 19 MR. WHITE: The same as before with respect to 20 these. With respect to W, there is a lead card returned 21 by Mr. Olsen in evidence, which is 54-D, like in Dog. 22 With respect to overt act X, there is an order 23 form indicating that Mr. Rubin was the salesman with that 24 date and that customer, and that's Rule 55-C, like in 25 Charley.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8676 1 THE COURT: I am denying the request. You have 2 an exception.
3 Counts two through --
4 MS. SCOTT: Your Honor, before we move on, I have
5 an additional submission, which is the request that your
6 Honor provide a Pinkerton charge. And I am handing up a
7 copy to your Honor right now.
8 Basically, your Honor, what the Pinke
rton charge
9 allows is to tell the jury if a defendant was found to be 10 a member of the mail fraud conspiracy, the jury can, but 11 they are not required to, find the defendant guilty of the 12 substantive crimes charged against that defendant, in 13 whatever counts they are. We have a lot of counts here. 14 And provided that the person who actually committed the 15 fraud, who was a member of the conspiracy, the crime is 16 committed in furtherance of the conspiracy, and that this 17 mail fraud count could be foreseen as a consequence of the 18 conspiracy. 19 I have support here from the Second Circuit for 20 such a charge. 21 THE COURT: What is the support? 22 MS. SCOTT: United States against Blackmon, 23 B L A C K M O N, the cite is 839 F.2d 900. The page cite 24 is 909. 25 In that case the Court does discuss the charge as
HARRY RAPAPO
RT, CSR, CP, CM OFFICIAL COURT REPORTER 8677 1 I just described it to you and emphasized that it was 2 important that the judge inform the jury that they could
3 but did not have to find the defendant guilty of the
4 subsequent counts that resulted in the conspiracy.
5 THE COURT: I will have to take a look at that.
6 MS. SCOTT: Okay.
7 I have another cite to support that, United
8 States against Gallerani, G A L L E R A N I. The cite is
9 68 F.3d 611. And the page cite is 620. 10 THE COURT: This is with regard to the mail 11 fraud? 12 MS. SCOTT: Yes. 13 THE COURT: Substantive mail fraud? 14 MS. SCOTT: Yes. 15 THE COURT: I will take a look at it and let you 16 know. 17 Now, counts 2 through 52, mail fraud. If I get 18 the numbers wrong, let me know. 19 These counts charge the defendant Bruce Gordon, 20 Who's Who
Worldwide, Sterling Who's Who, Tara Garboski, 21 Oral Frank Osman, Laura Weitz, Annette Haley, Scott 22 Michaelson and MrShortcut, with knowingly and willfully 23 engaging in a scheme to defraud and to obtain money 24 property from potential customers of Who's Who and 25 Sterling Who's Who by means of false and fraudulent
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8678 1 pretenses, representations and promises. 2 By the way, is Sterling involved in this?
3 MR. JENKS: Mail fraud counts?
4 THE COURT: Yes.
5 MR. JENKS: Yes, your Honor.
6 THE COURT: Do these -- here the defendants are
7 charged with placing and causing to be placed in
8 authorized depositories for mail, matter to be delivered
9 by the United States Postal Service as more particularly 10 identified in the indictment. 11 I will now read counts two through 52.
12 If relevant statute on this subject is Title 18, 13 United States Code, Section 1341. That statute provides 14 in pertinent part that, quote, whoever having devised or 15 intending to devise any scheme or artifice to defraud, or 16 for obtaining money or property by means of false or 17 fraudulent pretenses, representations or promises . . . 18 and for the purpose of executing such scheme or artifice, 19 or attempting so to do, places in any post office or 20 authorize depository for mail matter, any matter or thing 21 whatever, and for purposes of executing such scheme or 22 artifice or attempting so to do, places in any post office 23 or authorize depository for mail, any matter or thing, 24 whatever, to be sent or delivered by the Postal Service 25 . . . or knowingly causes to be delivered by mail
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8679 1 according to the directions thereof . . . any such matter 2 or thing, shall be guilty of a crime.
3 MR. WHITE: Your Honor, I don't think we included
4 it in our charge, but I think in quoting the statute and
5 describing it, we should include the part about taking or
6 receiving from the mail certain items, since a number of
7 the mailings were mailings sent by customers to Who's Who.
8 THE COURT: Do you have a copy of the statute
9 with you? 10 MR. WHITE: I do. 11 THE COURT: Can I see it? 12 (Handed to the Court.) 13 THE COURT: Mean or takes or receives therefrom? 14 MR. WHITE: Yes. And that language is in the 15 charging language in the count, too. 16 THE COURT: You have it there? 17 MR. WHITE: Yes. 18 THE COURT: I didn't see it there. 19 Now I want to caution you that this is not a 20 civil proceeding. The defend
ants cannot be convicted of a 21 crime as to mail fraud merely because their conduct was 22 sales puffery. The government must prove that the 23 defendants knowingly, intentionally and willfully 24 committed the crimes involving mail fraud, the elements of 25 which crimes I am now going to instruct you.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8680 1 In order to sustain this mail fraud charge, the 2 government must prove each of the following elements
3 beyond a reasonable doubt:
4 First, that there was a scheme or artifice to
5 defraud and to obtain money or property by false and
6 fraudulent pretenses, representations or promises as
7 alleges in the indictment.
8 Second, that the defendant you are considering
9 knowingly or willfully devised or participated in the 10 scheme or artifice to defraud with knowledge of its
11 fraudulent nature and with specific intent to defraud. 12 Third, in execution of that scheme the defendant 13 used or caused the use of the mails as specified in the 14 indictment. 15 First element, existence of scheme or artifice. 16 The first element that the government must prove 17 beyond a reasonable doubt is that there was a scheme or 18 artifice to defraud potential customers of Who's Who and 19 Sterling Who's Who, by means of false or fraudulent 20 pretenses, representations and promises. 21 A scheme or artifice is merely a plan for the 22 accomplishment of an objective. 23 A scheme to defraud is any plan, device, or 24 course of action to obtain money or property by means of 25 false or fraudulent pretenses, representations or promises
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8681 1 reasonably calculated to dece
ive persons of average 2 prudence.
3 Fraud is a general term which embraces all the
4 various means in which human ingenuity can devise and
5 which is reported to by an individual to again advantage
6 over another by false representations, suggestions or
7 suppression of the truth, or by a deliberate disregard of
8 the truth.
9 Thus, a scheme to defraud is a plan to obtain 10 something of value, or to assist someone else to obtain 11 something of value by trick, deceit, deception or swindle. 12 A statement or representation is false if it is 13 untrue when made, and was then known to be untrue by the 14 person making it, or causing it to be made. 15 A representation or statement is fraudulent if it 16 was falsely made with the intent to deceive. Deceitful 17 statements, half truths, or the concealment of material 18 facts may also constitute fraud under this
statute. 19 The deception need not be premised upon 20 verbalized words alone. The arrangement of the words, or 21 the circumstances in which they are used may convey the 22 false and deceptive appearance. 23 If there is deception, the manner in which it is 24 accomplished is immaterial. The fraudulent representation 25 or statement must relate to a material fact or matter. A
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8682 1 material fact is one which is reasonably expected to be of 2 concern to a reasonable or prudent potential Who's Who or
3 Sterling, in relying on the misrepresentation or statement
4 in making the decisions.
5 This means that if you find a particular
6 statement of fact to have been false, you must determine
7 whether that statement was one that a reasonable potential
8 customer would have considered importan
t in making
9 decisions. 10 The same principle applies to fraudulent half 11 truths, or omissions of material facts. 12 Further, it is not necessary that the defendant 13 you are considering actually realized any gain from the 14 scheme, or the intended victim actually suffered any 15 loss. 16 In this case it so happens that the government 17 does contend that the proof establish, that the potential 18 customers were defrauded and did lose money. Although 19 whether or not the scheme actually succeeded is really not 20 the question. You may consider whether it did succeed in 21 determining whether a scheme existed. 22 A scheme to defraud need not be shown by direct 23 evidence, but may be established by all the circumstances 24 and facts in the case. 25 The representations which the government charges
HARRY RAPAPORT, CSR, CP, CM OFFICIAL CO
URT REPORTER 8683 1 were made as part of the scheme to defraud are set forth 2 in the indictment.
3 In this regard I instruct you that the
4 prosecution must prove beyond a reasonable doubt that one
5 or more false, material misrepresentations, fraudulent
6 half truths, or fraudulent omissions of material fact were
7 made by each defendant you are considering and that they
8 were made in furtherance of the alleged scheme to defraud.
9 Also, in this regard I instruct you that if the 10 government fails to prove beyond a reasonable doubt that 11 each defendant you are considering made one or more 12 material misrepresentations to a potential customer, you 13 must acquit that defendant. 14 In order to find a defendant guilty of mail 15 fraud, you must find beyond a reasonable doubt that the 16 defendant intended to defraud the potential customer.
17 In addition, to be guilty of participating in a 18 fraudulent scheme, the defendant you are considering must 19 have contemplated that the potential customer would lose 20 money. It is not enough that the defendant intended to 21 receive a financial gain or advantage from the alleged 22 scheme, or even that he or she succeeded in obtaining such 23 a benefit unless he or she intended that the potential 24 customer sustain a corresponding loss. There must be a 25 direct relationship between the defendant's
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8684 1 misrepresentations and the intended deprivation of money. 2 In order to be guilty of fraud, the
3 representations made by the defendant to potential
4 customers must be of such a nature that if they were
5 successful, it is reasonably probable that the victim,
6 namely, the poten
tial customer, would have suffered a
7 financial loss.
8 If you find that the government failed to sustain
9 its burden of proof that a scheme to defraud existed as 10 alleged in counts 2 through 52, then you must acquit all 11 the defendants as to those counts, if you find that the 12 government has sustained its purpose, and a scheme to 13 defraud existed as charged, you should next consider the 14 second element, participation in the scheme with intent to 15 defraud. 16 The second element that the government must prove 17 beyond a reasonable doubt is that the defendant you are 18 considering participated in the scheme to defraud 19 knowingly, willfully and with the specific intent to 20 defraud. 21 Knowingly means to act voluntarily and 22 deliberately; rather than mistakenly or inadvertently. 23 Willfully means to act knowingly and purposely, with an
24 intent to do something the law forbids. That is to say 25 with a bad purpose or to disobey or to disregard the law.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8685 1 Intent to defraud means to act knowingly and with 2 the specific intent to deceive for the purpose of causing
3 some financial loss to another.
4 The question of whether a person acted knowingly,
5 willfully and with intent to defraud is a question of fact
6 for you to determine like any other fact question. The
7 question involves one's state of mind. Essential to a
8 conviction for a scheme to defraud under Section 1341, is
9 proof beyond a reasonable doubt of the defendant's 10 fraudulent intent. Namely, the defendant's intent to 11 deceive causing an actual financial loss. The significant 12 fact is the defendant's intent and purpose. Although the 13 government n
eed not prove that the scheme to defraud was 14 successful or complete, the government must prove beyond a 15 reasonable doubt that the defendant contemplated some 16 actual financial loss to the purported victim, namely, the 17 potential customers. Misrepresentations amounting only to 18 a deceit is insufficient to convict under Section 1331. 19 The deceit must be contemplated with a financial loss to 20 the victim. 21 Direct proof of knowledge and fraudulent intent 22 is almost never available. It would be a rare case where 23 it could be shown that a person wrote or stated that as of 24 a given time in the past he or she committed an act with 25 fraudulent intent. Such direct proof is not required.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8686 1 The ultimate facts of knowledge and criminal 2 intent, though subjective may be establis
hed by
3 circumstantial evidence based upon a person's outward
4 manifestations, his or her words, conduct, acts, and all
5 the surrounding circumstances disclosed by the evidence
6 and the rational and logical inferences that may be drawn
7 from them.
8 As I advised you, circumstantial evidence, if
9 believed, is of no less value than direct evidence. In 10 either case the essential elements of the crime charged 11 must be established beyond a reasonable doubt. 12 Since an essential element of the crime charged 13 is intent to defraud, it follows that good faith on the 14 part of a defendant is a complete defense to a charge of 15 mail fraud. 16 I instruct you, however, that a defendant has no 17 burden to establish a defense of good faith. The burden 18 is on the government to prove fraudulent intent and 19 consequent lack of good faith beyond a reasonable
doubt. 20 Under the mail fraud statute even false 21 representations, or statements, or omissions of material 22 facts, do not amount to a fraud unless done with 23 fraudulent intent. However misleading or deceptive a plan 24 may be, it is not fraudulent if it was devised or carried 25 out in good faith. An honest belief in the truth of the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8687 1 representations made by a defendant is a good defense, 2 however inaccurate the statements may turn out to be.
3 Moreover, not every untrue statement designed to
4 gain the sympathetic ear of a potential customer is
5 forbidden by the mail fraud statute.
6 This I am adding what you asked, Mr. Trabulus.
7 In fact, I find that your requests to charge were very
8 helpful. So were the government's, of course, but yours
9 was very helpful in that t
hey were fair. Which I paid 10 more attention than usual. I do pay attention of course, 11 but I thought they were very fair. 12 I don't accept everything you gave me, so don't 13 get excited or carried away now. 14 Moreover, not every untrue statement designed to 15 gain the sympathetic ear of a potential customer is 16 forbidden by the mail fraud statute. 17 To constitute either a scheme to defraud, or the 18 making of false or fraudulent pretenses, representations 19 or promises under the mail fraud statute, the false 20 representations must be directed to the quality, adequacy 21 or price of what is to be sold. 22 Furthermore, if a defendant makes what he or she 23 knows to be false representations with the intent that 24 those false representations induce a purchaser to make a 25 purchase, but the defendant believes in good faith that
HARRY RAP
APORT, CSR, CP, CM OFFICIAL COURT REPORTER 8688 1 those false representations are not directed to the 2 quality, adequacy of what is to be sold, that defendant
3 then lacks specific intent to defraud and cannot be guilty
4 of mail fraud through such false representations. This is
5 so even if to a buyer's mind those false representations
6 actually do concern the quality, adequacy or price of what
7 is to be sold, or the nature of the agreement between
8 buyer and seller.
9 What is determinative is the defendant's own 10 personal belief as to whether they do. 11 Accordingly, I instruct you that even if you find 12 that a defendant made or was responsible for the making of 13 false representations to customers, and even if you find 14 that those false representations did in fact concern the 15 quality, adequacy or price of what was to be sold, or to
16 the nature of the agreement between buyer and seller, you 17 must find the defendant not guilty, unless you find beyond 18 a reasonable doubt that the defendant believed that they 19 did concern the quality, adequacy or price of what was to 20 be sold. 21 As a practical matter then, in order to sustain 22 this mail fraud charge against the defendant you are 23 considering, the government must establish beyond a 24 reasonable doubt that he or she knew that his or her 25 conduct as a participant in the scheme was calculated to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8689 1 deceive the potential customers, and nevertheless he or 2 she join the defendant's fraudulent scheme for the purpose
3 of causing some financial loss to another.
4 To conclude on this element, if you find that the
5 government failed to establish beyond a reasona
ble doubt
6 that the defendant you are considering was a participant
7 in the scheme to defraud, and had the specific intent to
8 deceive, you must acquit the defendant. On the other
9 hand, if you find that the government has established 10 beyond a reasonable doubt not only the first element, 11 namely, the existence of a scheme to defraud, but also 12 this second element, that the defendant you are 13 considering was a knowing participant and acted with 14 specific intent to defraud, and if the government also 15 establishes the third element which I am about to instruct 16 you of, then you have a sufficient basis upon which to 17 convict the defendant. 18 Third element, use of the United States mail. 19 The third and final element that the government 20 must establish is that the United States mail service was 21 used in furtherance of the scheme to defraud.
22 It is not necessary for the defendant you are 23 considering to be directly or personally involved in 24 sending the mailings, as long as the sending of the 25 mailings was reasonably -- in the execution of the fraud
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8690 1 in which the defendant is accused to have been 2 participating.
3 In this regard it is sufficient to establish this
4 element of the crime, if the evidence justifies a finding
5 that the defendant caused the Postal Service to be used by
6 someone else. And this does not mean that the defendant
7 himself or herself must have the specifically authorized
8 others to send the mailings. When one does an act with
9 knowledge that the use of the mails will follow in the 10 ordinary course of business, or where such use of the 11 mails can reasonably be foreseen, although not
actually 12 intended, then he or she causes the Postal Service to be 13 used as intended by the statute. 14 Further, the mail matter need not disclose on its 15 face a fraudulent representation or purpose or request for 16 money, but need only be intended to further or assist in 17 carrying out the scheme to defraud. 18 With respect to the use of the mails, the 19 government must establish beyond a reasonable doubt that 20 the particular mailings charged in the indictment, namely, 21 the lead cards, invoices and solicitation letters were in 22 furtherance of the scheme to defraud. 23 Aiding and abetting. 24 With regard to Count 2, the government has 25 charged the defendants with aiding and abetting the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8691 1 commission of the crime of mail fraud. 2 The aiding and abetting sta
tute, Title 18 of the
3 United States Code, Section 2 provides that, quote,
4 whoever commits an offense against the United States, or
5 aids, abets, or counsels, commands, induces or procures
6 its commission is punishable as a principal.
7 Whoever willfully causes an act to be done, which
8 if directly performed by him or another would be an
9 offense against the United States, is punishable as a 10 principal. 11 Under the federal aiding and abetting statute it 12 is not necessary for the government to show that the 13 defendant himself or herself physically committed the 14 crime with which he or she is charged in order for you to 15 find the defendant guilty of the crime charged in counts 2 16 through 52. 17 A person who aids and abets another to commit an 18 offense is just as guilty of that offense as if he or she 19 committed it himself or herself.
20 Accordingly, you may find the defendant guilty of 21 the offense charged in counts 2 through 52, if you find 22 that the government proved beyond a reasonable doubt that 23 another person actually committed the offense with which 24 the defendant is charged, and that the defendant aided or 25 abetted that person in the commission of the offense. As
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8692 1 you can see, the first requirement is that you find that 2 another person has committed the crime charge in counts 2
3 through 52.
4 Obviously no one can be convicted of aiding or
5 abetting the criminal acts of another if no crime was
6 committed by the other person in the first place. But if
7 you do find that a crime was committed, then you must
8 consider whether the defendant you are considering aided
9 or abetted the commission o
f the crime. 10 In order to aid or abet another to commit a 11 crime, it is necessary that the defendant willfully and 12 knowingly associate himself or herself in some way with 13 the crime, and that he or she willfully or knowingly seeks 14 by some act to help make the crime succeed. 15 Participation in a crime is willful if action is 16 taken voluntarily and intentionally, or in a case of a 17 failure to act, with the specific intent to fail to do 18 something the law requires to be done, that is to say with 19 a bad purpose either to disobey or to disregard the law. 20 The mere presence of a defendant where a crime is 21 being committed, even coupled with knowledge by the 22 defendant that a crime is being committed, or the mere 23 acquiescence by a defendant in the criminal conduct of 24 others, even with guilty knowledge is not sufficient to 25 establish aiding
and abetting.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8693 1 An aider or abettor must have some interest in 2 the criminal venture.
3 To determine whether the defendant aided or abets
4 the commission of the crime with which he or she is
5 charged in counts 2 through 52, ask yourselves these
6 questions: Did the defendant participate in the crime
7 charged as something he or she wished to bring about? Did
8 the defendant associate himself or herself with the
9 criminal venture, knowingly and willfully? Did the 10 defendant seek by his or her actions to make the criminal 11 venture succeed? 12 If the government proves beyond a reasonable 13 doubt that the defendant did all these things, then the 14 defendant is an aider and abettor, and, therefore, guilty 15 of the offense. 16 If on the other hand, your answers to thi
s series 17 of questions are no, then the defendant is not an aider 18 and abettor and you must find him or her not guilty as to 19 counts 2 through 52. 20 In sum, if you find that the defendant you are 21 considering committed the crimes charged in counts 2 22 through 52, or aided and abetted in the commission of 23 those crimes, then you should find that defendant guilty 24 of the crime charged -- the crimes charged in those 25 counts.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8694 1 On the other hand, if the government has not 2 satisfied you beyond a reasonable doubt that the defendant
3 either knowingly and willfully committed the crimes
4 charged in Counts 2 through 52, or aided and abetted in
5 the commission of those crimes, then you must find him or
6 her not guilty of the crimes charged in those counts.
7 Cou
nt 53 --
8 MR. TRABULUS: Your Honor, can we take a break at
9 this point? 10 THE COURT: We will take a ten-minute recess. 11 Did you want to say something before? 12 MR. WHITE: I will do it during -- after the 13 break. 14 THE COURT: Do it now so I can look it up and 15 appear to know what I am doing. 16 MR. WHITE: Your Honor, I wanted to make two 17 comments about the first element of the mail fraud scheme. 18 First, I think your Honor said that they must 19 find that each defendant made a statement to a customer 20 containing one of the misrepresentations. I think that 21 should be amended to say made or caused to be made, 22 because Mr. Gordon and some others were not actually on 23 the phone with customers. 24 THE COURT: Count 1, you say? 25 MR. WHITE: Element 1, your Honor.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8695 1 THE COURT: I am sorry, element one, yes. 2 MR. WHITE: I may have misheard it.
3 THE COURT: You are right, were made and caused
4 to be made is correct.
5 MR. WHITE: The other comments, your Honor, the
6 government requested you also instruct the jury in line
7 with United States against Schwartz, that it is not
8 necessary that the harm contemplated be monetary in
9 nature. It is sufficient if it goes to some essential 10 element of the bargain, and that you can find the 11 defendants -- that that requirement is satisfied if the 12 defendants intended by fraud to obtain from customers 13 money that they would not have given to the defendants 14 were it not for the fraudulent misrepresentation. That 15 instruction was specifically approved by the Second 16 Circuit. I believe it is relevant here. 17 THE COURT: I don't get it. What did
I not do? 18 MR. WHITE: In other words, the jury should be 19 instructed that the contemplated harm need not necessarily 20 be monetary. 21 THE COURT: In this case it is though. 22 MR. WHITE: Correct. Then it should be explained 23 in this fashion: That it could constitute a fraud if they 24 would not have engaged in the transaction, but for the 25 fraudulent misrepresentations, namely, that the fraud is
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8696 1 obtaining their purchase by false representations, 2 regardless of what they got, as opposed to what they got
3 was worth less than what they were promised.
4 THE COURT: No. I decline to charge it. I think
5 it is confusing. I know what you are talking about. They
6 were deprived of their money, which the statute says is
7 because of this. The reason they were deprived of their
8 money is because they didn't get to be the elitist or ego
9 person they were supposed to be. 10 I mentioned the quality and the price, that is in 11 there. But I decline to confuse the jury. 12 Anything else, Mr. White? 13 MR. WHITE: Your Honor, I am not sure how this 14 would confuse them. One sentence that says, you can find 15 the defendants inflicted such harm if you believe in 16 substance that the customers would not have engaged in 17 this transaction but for the fraudulent statement. 18 THE COURT: I decline to charge that. 19 Anything else? 20 MR. WHITE: No. 21 THE COURT: We will take a ten-minute recess. 22 23 (Whereupon, a recess is taken.) 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8697 1 THE COURT: Count 53, perjury. 2 The indictment charges the defendant Bruce Gor
don
3 with making false declarations before a federal court at
4 the trial of the lawsuit that Reed Elsevir brought against
5 Who's Who Worldwide.
6 The indictment reads as follows.
7 The indictment charges the defendant Bruce Gordon
8 with violating Section 1623 of Title 18 of the United
9 States code which provides in part, quote, whoever under 10 oath . . . in any proceeding before . . . any court 11 . . . of the United States knowingly makes any false 12 material declaration is guilty of a crime. 13 Stated simply perjury is the willful giving of 14 false testimony before a competent tribunal while under 15 oath knowing the testimony is false as to a material 16 matter. 17 The indictment charges that the defendant made 18 such false declarations as set forth in the indictment in 19 his testimony in a civil trial in the federal court of the 20 East
ern District of New York. 21 In order to prove the perjury charge against the 22 defendant Bruce Gordon as charged in Count 53, the 23 government must establish each of the following four 24 elements beyond a reasonable doubt: 25 First, that the testimony was given before a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8698 1 federal court while the defendant Bruce Gordon was under 2 oath;
3 Second, that such testimony was false as set
4 forth in the indictment;
5 Third, that such false testimony was willfully
6 and knowingly given in that the defendant Bruce Gordon
7 knew that the testimony was false; and
8 Fourth, as to the matters as to which it is
9 charged that the defendant Bruce Gordon gave false 10 testimony were material to the issues under inquiry in the 11 civil case then being tried. 12 There is no iss
ue as to the first element. With 13 respect to the first element, that the defendant Bruce 14 Gordon took an oath to testify truly, the evidence shows, 15 and there appears to be no dispute that the defendant 16 appeared before the federal court on or about February 17 12th, 1994 and February 22nd, 1994 and took an oath to 18 testify truthfully. 19 The second element, falsity -- 20 MR. WHITE: Your Honor, the dates are the 17th 21 and the 22nd. 22 THE COURT: February 17th and 22nd? 23 MR. WHITE: Yes. 24 THE COURT: Okay. 25 Your concern are with the second, third and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8699 1 fourth elements of perjury. The second element is 2 falsity. You must determine whether any part of the
3 testimony given by the defendant Bruce Gordon as set forth
4 in the indictment was false.
5 An answer to a question is false when it is
6 contrary to the fact, that is when it is not true.
7 The truth or falsity of an answer must be
8 determined by the facts existing at the time the answer
9 was made. 10 In reviewing testimony which is alleged to have 11 been false, you should consider such testimony in the 12 context of the sequence of questions asked and answers 13 given. 14 The words used should be given their common and 15 ordinary meaning, unless the context clearly shows that a 16 different meaning was understood by both the questioner 17 and the witness. 18 The burden is upon the government to establish 19 beyond a reasonable doubt that the answers made by the 20 defendant Bruce Gordon in the federal civil trial were in 21 fact false. 22 Count 53 contains answers given by the defendant 23 Bruce Gordon reciting more than one fa
ct. It is not 24 necessary that the government prove that each of these 25 factual statements is false. The government satisfies its
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8700 1 burden of proving falsity if it proves beyond a reasonable 2 doubt that any of the factual statements recited in Count
3 53 is false. However, and this is important, you may not
4 find the defendant guilty unless you all agree unanimously
5 that one particular answer is false. It is not enough
6 that you all believe that some answer given by the
7 defendant is false. That is, you cannot find the
8 defendant guilty if some of you think that only answer A
9 is false, and the rest of you think that answer B is 10 false. There must be one specific answer that all of you 11 believe is false in order to convict the defendant on this 12 count. If you should find th
at a particular question was 13 ambiguous, that is, subject to more than one 14 interpretation, and that the defendant Bruce Gordon 15 truthfully answered one reasonable interpretation of the 16 question under the circumstances presented, then such 17 answer would not be false. 18 Similarly, if you should find that the question 19 is clear, but the answer was ambiguous, and one reasonable 20 interpretation of such answer would be truthful, then such 21 answer would not be false. 22 In deciding whether the defendant's answers are 23 false, the answers must be given the natural meaning in 24 the context in which the words were used. If you find an 25 answer given by the defendant was literally true but
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8701 1 unresponsive to the question asked, you may not find that 2 answer false or conv
ict the defendant because of it. As
3 long as a statement or a reasonable interpretation of a
4 statement is narrowly or literally true, there can be no
5 conviction for perjury. This is so even if you find that
6 the answer was intentionally misleading.
7 Third element, willfully and knowingly given.
8 If you decide that any of the answers the
9 defendant Bruce Gordon gave were false, then you must 10 decide whether the defendant gave those answers knowingly 11 and willfully. That is, at the time the answers were 12 given did the defendant know and believe that the answers 13 were false. And if so, did the defendant give the answers 14 consciously and in the exercise of his free will. Unless 15 the government proves beyond a reasonable doubt that the 16 defendant both knew his answers were false and that he 17 purposely or intentionally gave the false answers, you may
18 not find the defendant guilty. 19 The requirement that you find the defendant Bruce 20 Gordon acted knowingly and willfully means that you may 21 not find the defendant guilty of perjury simply because 22 the defendant gave testimony which is factually 23 incorrect. The defendant may have given incorrect 24 testimony because of an honest mistake of facts, 25 confusion, haste, oversight or carelessness.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8702 1 If the defendant Bruce Gordon made an erroneous 2 incorrect statement due to a slip of the tongue or bad
3 memory, or through misunderstanding, the defendant would
4 not be guilty of making the false statement knowingly and
5 willfully. Your decision whether the defendant acted
6 knowingly and willfully in making any statements you find
7 to be false involves a decision about the defen
dant's
8 state of mind at the time the statements were made.
9 It is obviously impossible to ascertain or prove 10 directly what the operation of the defendant's mind was. 11 You cannot look into a person's mind to see what the state 12 of mind is or was. But a wise or intelligent 13 consideration of all the facts and circumstances shown by 14 the evidence and the exhibits in the case may enable you 15 to infer with a reasonable degree of accuracy what the 16 defendant's state of mind was. 17 In our every day affairs we are continuously 18 called upon to decide from the actions of others what 19 their state of mind is. Experience has taught us that 20 frequently actions speak louder, more clearly than spoken 21 or written words. Therefore, you may well rely in part on 22 circumstantial evidence in determining the defendant's 23 state of mind. 24 Proof of the
circumstances surrounding the 25 defendant's actions can supply an adequate basis for a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8703 1 finding that the defendant acted knowingly and willfully. 2 The actions of an individual must be set in their time and
3 place. The meaning of a particular act may depend on the
4 circumstances surrounding it. Thus, you may consider
5 evidence which you recall and believe about the
6 defendant's actual knowledge of certain facts and
7 occurrences, as compared to the testimony he gave about
8 these facts and circumstances the extent to which
9 statements were made to conceal facts or events, if any, 10 and in general the manner in which certain actions were 11 undertaken by the defendant and by others with his 12 knowledge. You may consider whether the defendant had a 13 motive to lie and conceal the fa
cts. 14 The government is not required to prove the 15 existence of such a motive, let alone exactly what the 16 motive was. The government's failure to prove a motive 17 does not establish lack of guilt. But if you do find 18 evidence of a motive, that may help you decide what the 19 defendant's state of mind was. 20 Therefore, you should ask yourself whether the 21 defendant stood to gain any personal benefit from 22 concealing the truth, or whether he stood to avoid any 23 personal liability. 24 The fourth element that the government must prove 25 beyond a reasonable doubt is that the matter or matters as
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8704 1 to which it is charged that the defendant Gordon gave 2 false testimony were material to the issues under inquiry
3 in the civil case being tried in the federal court.
4 I instruct you that a statement is, quote,
5 material, end quote, if it has a natural tendency to
6 influence or be capable of influencing the decision of the
7 decision making body to which it was addressed -- in this
8 case, to the federal judge trying the civil case. That
9 is, it must relate to an important fact that would have a 10 natural tendency to influence his decisions as 11 distinguished from some unimportant or trivial detail. It 12 must establish this element by evidence that is clear, 13 unequivocal and convincing. 14 Count 54, obstruction of justice. 15 The defendants Gordon and Reffsin have been 16 charged in count 54 of the indictment with endeavoring to 17 obstruct the due administration of justice with regard to 18 proceedings in the bankruptcy court. 19 The indictment reads: The relevant statute is 18 20 United States Code Section 1503. It pr
ovides in part: 21 Whoever corruptly . . . endeavors to influence . . . or 22 impede . . . any court of the United States . . . or 23 corruptly . . . influences, obstructs, indeed, or 24 endeavors to influence, obstruct or impede the due 25 administration of justice shall be guilty of a crime.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8705 1 This law is designed to prevent a miscarriage of justice 2 resulting from corrupt methods. It is aimed at a variety
3 of means by which the orderly and due process of the
4 administration of justice may be impeded, thwarted, or
5 corrupted.
6 The due administration of justice refers to the
7 fair, impartial, uncorrupted and unimpeded investigation,
8 disposition or trial of any matter, civil or criminal, in
9 the courts of the United States. It includes every step 10 in a matter or proceedi
ng in the federal courts to ensure 11 the just consideration and determination of the rights of 12 the parties, whether government or individual. Thus, due 13 administration of justice includes, but is not limited to 14 a federal civil or bankruptcy proceeding. 15 The sweep of the statute extends to any corrupt 16 endeavor or effort to interfere with a federal judge's 17 function in the discharge of his or her duties. 18 The key word in the statute is "endeavor." As 19 used in this statute "endeavor" means to knowingly and 20 deliberately make any effort or any act, however contrived 21 to obstruct, impede or interfere with the Court 22 proceeding. It is the endeavor which is the gist of the 23 crime. Success of the endeavor is not an element of the 24 crime. Any effort, whether successful or not, that is 25 made for the purpose of corrupting, obstructing or
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8706 1 impeding the proceeding is condemned. To act "corruptly" 2 as that word is used in these instructions, means to act
3 voluntarily and deliberately, and for the purpose of
4 improperly influencing or obstructing or interfering with
5 the administration of justice.
6 In order to sustain its burden of proof for the
7 crime of corruptly endeavoring to obstruct or impede the
8 due administration of justice as charged in count 54, the
9 government must prove the following three essential 10 elements beyond a reasonable doubt. 11 First, the judicial proceeding in the federal 12 bankruptcy court identified in the indictment was pending 13 at the time alleged in the indictment; 14 Second, the defendant you are considering knew 15 that this bankruptcy proceeding was pending; 16 And, third, the defe
ndant you are considering 17 then corruptly endeavored to influence, obstruct or impede 18 the due administration of justice in the proceeding as 19 detailed in the indictment, namely by advising, directing, 20 participating in and assisting in the creation, 21 preparation and submission of false usage logs relating to 22 the Manhasset condominium and the Manhattan penthouse and 23 giving false, evasive and misleading testimony under oath 24 with regard to the intended and actual use of the 25 Manhasset condominium and the Manhattan penthouse for
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8707 1 corporate or business purposes. 2 First element, pending judicial proceeding.
3 The first element the government must prove
4 beyond a reasonable doubt is that a judicial proceeding in
5 the federal bankruptcy court was pending at the time
6 alleged in the indictment, namely between March 1994 and
7 September 23rd, 1994.
8 In this case it is agreed by all parties that the
9 federal bankruptcy proceeding was pending at the time set 10 forth in the indictment. 11 It is no less a violation of this proceeding 12 because the proceeding involved a civil bankruptcy 13 proceeding between two private litigants to which the 14 United States was not a party. In order to satisfy this 15 element it is sufficient if you find that the civil 16 bankruptcy proceeding was pending in a federal court. 17 Second element, knowledge. 18 The second element the government must prove 19 beyond a reasonable doubt is that the defendant you are 20 considering knew that this bankruptcy proceeding was in 21 progress. In order to satisfy this element you need only 22 to determine that the defendant knew on or about the dates
23 charged that the bankruptcy proceeding was in progress. 24 In this regard there is evidence that the defendants Bruce 25 Gordon and Martin Reffsin appeared at hearings before the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8708 1 bankruptcy court -- and this I am not sure about -- were 2 duly sworn and also testified at depositions in this
3 proceeding. Is there proof of that?
4 MR. WHITE: Yes, your Honor. Those transcripts
5 are both with respect to Mr. Gordon and Mr. Reffsin, and
6 in evidence.
7 MR. TRABULUS: Your Honor, with regard to this
8 particular element, I think Mr. Gordon would not object to
9 an instruction that it is not disputed that he knew the 10 proceeding was pending. 11 THE COURT: Okay. 12 MR. WALLENSTEIN: Mr. Reffsin would not object to 13 that either. He did testify here that he knew about it.
14 THE COURT: All right. 15 MR. WALLENSTEIN: I have another problem with 16 this charge though. 17 THE COURT: Just one minute now. 18 Both defendants concede that they knew the 19 bankruptcy proceeding was in progress? 20 MR. TRABULUS: Yes. 21 MR. WALLENSTEIN: Yes. 22 THE COURT: Yes. 23 MR. WALLENSTEIN: I don't know if you wish to 24 wait to finish -- 25 THE COURT: Having to do with the second element,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8709 1 knowledge? 2 MR. WALLENSTEIN: No. Actually in the second
3 count of the instructions here.
4 THE COURT: I am not -- you mean the second
5 obstruction counts?
6 MR. WALLENSTEIN: Right.
7 THE COURT: I am on the first obstruction count.
8 MR. WALLENSTEIN: I know that. But there was
9 some indication in the charge you just gave that one of
10 the elements for the first obstruction count was giving 11 false and evasive testimony with respect to the usage of 12 the premises. And I don't believe that's what Mr. Reffsin 13 is charged with, unless I am reading something wrong. 14 THE COURT: Okay. 15 This is the first obstruction charge, having to 16 do with the false usage logs? 17 MR. WALLENSTEIN: Yes. Mr. Reffsin is charged 18 with using a log, submitting a log, but not with respect 19 to giving testimony with respect to it, Mr. Gordon is 20 charged with that. 21 THE COURT: Is that so? 22 MR. WHITE: No, your Honor, if you look at page 23 23 and 22 of the indictment, the charge is that they both 24 obstructed justice by, A, submitting the logs, and, B, 25 giving false testimony regarding the two apartments. The
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8710
1 second obstruction charge charges Mr. Gordon with giving 2 false testimony about the ownership of the company.
3 THE COURT: Mr. Wallenstein, I say further on
4 that there has to be unanimity with regard to a particular
5 charge. I think that may cover it.
6 MR. WALLENSTEIN: It may.
7 THE COURT: Wait until you hear it. But they
8 allege that he did do this.
9 MR. WALLENSTEIN: I don't think there was any 10 evidence as to that, but, okay. 11 THE COURT: That's another matter. 12 Getting into the third element, corruptly 13 endeavoring to impede. 14 The final element the government must prove 15 beyond a reasonable doubt is that the defendant you are 16 considering did corruptly obstruct or impede or did 17 endeavor to obstruct or impede the bankruptcy proceeding. 18 As I explained previously the word "corruptly" 19 means to have the improper
motive or purpose of 20 obstructing justice. As I also told you success of the 21 endeavor is not an element of the crime. The term 22 "endeavor" is designed to reach all conduct which is 23 aimed at influencing, intimidating and impeding a 24 bankruptcy court. Thus, it is sufficient to satisfy this 25 element if you find that the defendant acted in a way
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8711 1 which produced or was capable of producing an effect that 2 prevented justice from duly -- from being duly
3 administered or obstructed or impeded the proceeding.
4 The defendants are accused of two acts which
5 allegedly obstructed or impeded the administration of
6 justice in the bankruptcy proceeding. A, advising
7 directly -- advising, directing and participating in the
8 creation of and submitting of false usage logs; and, B,
9 giving false, evasive and misleading testimony under oath 10 with regard to the intended and actual use of the 11 Manhasset condominium and Manhattan penthouse for 12 corporate or business purposes. 13 However, and this is important, you may not find 14 a defendant guilty unless you all agree unanimously that 15 one particular act obstructs justice. It is not enough 16 that you all believe that one of the two acts was 17 obstructive. That is, you cannot find a defendant guilty 18 if some of you think that only act A is obstructive, and 19 the rest of you think that only act B is obstructive. 20 There must be one of the acts that all of you believed is 21 an obstruction of justice in order to convict a defendant 22 on this count. 23 I then go into aiding and abetting which is 24 charged also. You don't want to hear this over again, do 25 you?
HA
RRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8712 1 MR. WALLENSTEIN: You are not going to make any 2 changes, are you?
3 THE COURT: It will have the same look,
4 Mr. Wallenstein.
5 MR. WALLENSTEIN: Okay.
6 THE COURT: Counts 55, obstruction of justice, I
7 believe the defendant Bruce Gordon was the only one
8 charged.
9 The defendant Bruce Gordon is charged in Count 55 10 of the indictment with endeavoring to obstruct the due 11 administration of justice with regard to proceedings in 12 the bankruptcy court. 13 Counts 55 reads as follows: The same statute is 14 involved, I don't have to repeat it. Section 1503. 15 The same prelude, explanation of "endeavor" and 16 "corrupt." 17 In order to sustain its burden of proof for the 18 crime of corruptly endeavoring to influence, obstruct or 19 impede the due administration
of justice as charged in 20 count 55 of the indictment, the government must prove the 21 following three essential elements beyond a reasonable 22 doubt. 23 First, the judicial proceeding in the federal 24 bankruptcy court identified in the indictment was pending 25 at the time alleged in the indictment;
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8713 1 Second, the defendant Bruce Gordon knew that this 2 bankruptcy proceeding was pending; and;
3 Third, the defendant Bruce Gordon then corruptly
4 endeavored to influence, obstruct or impede the due
5 administration of justice in the proceeding as detailed in
6 the indictment, namely, by submitting a bankruptcy
7 petition containing false information and giving false,
8 evasive and misleading testimony under oath with regard to
9 the ownership of Who's Who Worldwide and other
10 corporations controlled by the defendant Bruce Gordon. 11 First element, there you concede? 12 MR. TRABULUS: Same with the second. 13 THE COURT: First and second. 14 Third element, corruptly endeavored to obstruct 15 or impede. 16 The final element the government must prove 17 beyond a reasonable doubt is that the defendant Bruce 18 Gordon did corruptly obstruct, impede, or endeavor to 19 obstruct and to impede the bankruptcy proceeding. 20 As I explained earlier, the word "corruptly" 21 means to have the improper motive or purpose of 22 obstructing justice. 23 As I also told you, success of the endeavor is 24 not an element of the crime. The term "endeavor" is 25 designed to reach all conduct which is aimed at
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8714 1 influencing, intimidating or impeding a bankruptcy co
urt. 2 Thus, it is sufficient to satisfy this element if
3 you find that the defendant acted in a way which produced
4 or was capable of producing an effect that prevented
5 justice from being duly administered or obstructed or
6 impeded the proceeding.
7 Under this element it is essential that the
8 government prove beyond a reasonable doubt that the
9 defendant Bruce Gordon -- pardon me, willfully and 10 knowingly submitted a bankruptcy petition containing false 11 information under oath with regard to the ownership of 12 Who's Who Worldwide and other corporations controlled by 13 the defendant Bruce Gordon, and/or gave false, evasive and 14 misleading answers in his testimony under oath in the 15 bankruptcy court proceeding with regard to the ownership 16 of Who's Who Worldwide and other corporations controlled 17 by the defendant Bruce Gordon, and that he did so i
n a 18 corrupt endeavor to obstruct the bankruptcy court 19 proceeding by giving such false information and/or 20 testimony. 21 The defendant Bruce Gordon is accused of two acts 22 which allegedly obstructed or impeded the administration 23 of justice in the bankruptcy proceeding. 24 A, submitting a bankruptcy petition containing 25 false information with regard to the ownership of Who's
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8715 1 Who Worldwide; and, B, giving false, evasive and 2 misleading testimony under oath with regard to the
3 ownership of Who's Who Worldwide and other corporations
4 controlled by the defendant Bruce Gordon.
5 However, and this is important, you may not find
6 the defendant guilty unless you all agree unanimously that
7 one particular act has obstructed justice. It is not
8 enough that you a
ll believe that one of the two acts was
9 obstructive. That is, you cannot find the defendant Bruce 10 Gordon guilty if some of you think that only one act is 11 obstructive and the rest of you think that only the other 12 act is obstructive. The government must prove that one 13 specific -- withdrawn. The government must prove one 14 specific act that all of you believe is obstructive of 15 justice in order to convict the defendant on this count. 16 Now to get into the tax counts. 17 With respect to all -- withdrawn. 18 With respect to the tax counts I instruct you as 19 follows -- this is where I picked up some of the things 20 again that you had given me, Mr. Trabulus, I believe it is 21 page 15, 16 and 17 of your request to charge. 22 The government contends that the payments made by 23 various corporations on American Express charges and other 24 expenses incurre
d by Bruce Gordon were not loans to him, 25 but was income to him.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8716 1 I instruct you that a payment to a person or to 2 benefit a person by paying his obligation to a third party
3 is a loan, and that income, if at the time that the
4 payment is made, the person to whom it is made, or for
5 whose benefit it is made, intends to repay it. It is the
6 government's burden to prove beyond a reasonable doubt
7 that Bruce Gordon did not intend to repay them at the time
8 a corporation made any of the payments to or for him.
9 Unless the government has so proven, you may not consider 10 any of his tax returns or collection information 11 statements to have been false or not true and correct on 12 the basis that they failed to declare those payments as 13 income. 14 By the same token, unless
the government has 15 proven beyond a reasonable doubt that Bruce Gordon did not 16 intend to repay, you may not find that he evaded the 17 payment of any tax simply on the basis that he caused a 18 corporation to make a loan to him, rather than to pay him 19 wages. 20 Instead of "wages" I will put "a salary." 21 Any attempt to avoid, minimize or alleviate taxes 22 due by legitimate means is permissible. So is any 23 legitimate attempt to avoid, reduce, minimize or alleviate 24 the amount of payment to be made under a collateral 25 agreement which sets the amount of past years taxes to be
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8717 1 paid by reference to the size of present income. 2 Such legitimate means may include choosing to
3 borrow money rather than to receive salary, so long as
4 there is a true borrowing. That is to
say, so long as the
5 borrower truly intends at the time the borrowing occurs to
6 repay it later. For this reason you may not find that a
7 choice that Bruce Gordon borrow money rather than receive
8 salary was part of an attempt to evade the payment of past
9 taxes due, unless the government has established beyond a 10 reasonable doubt that Bruce Gordon did not intend to repay 11 the monies. 12 With regard to Martin Reffsin, however, that 13 would not be sufficient. The government bears the 14 additional burden of establishing beyond a reasonable 15 doubt that Martin Reffsin knew that Bruce Gordon did not 16 intend to repay the money later. 17 Count 56, conspiracy to impair, impede and 18 obstruct the Internal Revenue Service. 19 Count 56 charges the defendants Gordon and 20 Reffsin with conspiracy to defraud the United States by 21 impeding, impairing, ob
structing and defeating the lawful 22 functions of the United States Department of the Treasury, 23 Internal Revenue Service, in the ascertainment, 24 computation, assessment and collection of revenue; namely, 25 the federal income taxes of the defendant Bruce Gordon.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8718 1 Count 56 reads, the relevant statute, namely 2 conspiracy, 18 United States Code, Section 371 provides,
3 quote, if two or more persons conspire to defraud the
4 United States or any agency thereof in any manner or for
5 any purpose, and one or more of such persons do any act to
6 affect the object of the conspiracy, each is guilty of an
7 offense against the United States.
8 Then I go into a similar statement on
9 conspiracy. Do you want to hear it again? It is a 10 separate crime, the elements are the same, elements we
11 went into before, which is that there is a -- I better 12 give you this: 13 The government must prove each of the following 14 four elements beyond a reasonable doubt: 15 First, that the defendants Bruce Gordon and 16 Martin Reffsin entered into an agreement to defraud the 17 United States by impeding, impairing, obstructing and 18 defeating the lawful governmental functions of the 19 Internal Revenue Service in the ascertainment, 20 computation, assessment and collection of revenues, to 21 wit, the federal income taxes due by Bruce Gordon at or 22 about the time alleged in the indictment, by deceit or 23 trickery, or by means that are dishonest; 24 Second, that the defendant you are considering, 25 knowingly and willfully became a member of the conspiracy;
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8719 1 Third, that o
ne of the members of the conspiracy, 2 not necessarily the defendant whose case you are
3 considering, knowingly and willfully committed at least
4 one of the overt acts charged in the indictment; and,
5 fourth, that the overt act or acts which you find to have
6 been committed were knowingly committed to further some
7 object or purpose of the conspiracy.
8 Now I will give you some definitions and discuss
9 each of these elements. I will now give you the 10 definitions of the term -- the terms, impede, impair, 11 obstruct and defeat. 12 The word "impede" means stopping progress or 13 hindering. 14 To "impair" means to lessen, diminish or 15 otherwise affect in an injurious manner. 16 To "obstruct" means to hinder or progress from, 17 check, stop or place obstacles in the way, to retard the 18 progress of or make accomplishment of the due 19 administ
ration of the Internal Revenue Service laws 20 difficult and slow. 21 To "defeat" means to prevent. 22 The first element that the government must prove 23 beyond a reasonable doubt to establish the offense of 24 conspiracy is that the defendants Gordon and Reffsin25 entered into the unlawful agreement charged in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8720 1 indictment. 2 As I stated before, the unlawful agreement
3 charged by the government in this count is a conspiracy to
4 defraud the United States. Specifically, the government
5 charges that the two defendants, Gordon and Reffsin,
6 conspired to defraud the United States by impeding,
7 impairing, obstructing and defeating the lawful
8 governmental functions of the IRS in the ascertainment,
9 computation, assessment and collection of Bruce Gordon's 10 federal
income taxes by deceit or trickery or by means 11 that were dishonest. 12 It is not necessary that the government lose 13 money from the fraud, but only that its legitimate, 14 official action and purpose, be defeated by the trickery 15 or deceit. 16 Since by its nature a conspiracy must have a 17 minimum of two participants, if you find that the 18 government failed to prove beyond a reasonable doubt that 19 there was this unlawful agreement between Gordon and 20 Reffsin, there is no conspiracy, and you must acquit both 21 defendants on this count. An agreement between Bruce 22 Gordon and someone other than Martin Reffsin will not 23 suffice. 24 Then I go into, you need not have direct proof. 25 You need circumstantial evidence -- I better give you
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8721 1 this. 2 It
is not necessary that such an understanding be
3 established by direct proof of oral or written
4 agreements. It may be proven by inferences drawn from
5 circumstantial evidence, including the acts and conducts
6 of the alleged conspirators.
7 However, a mere showing of close relations, such
8 as the fact that the defendants are accountant and client,
9 or frequent contact between the alleged conspirators, will 10 not satisfy the government's burden absent evidence which 11 would permit the inference that an illegal agreement was 12 made. 13 I go into the same part there, like you need not 14 have a formal or express agreement, etcetera. 15 Do you want to hear the rest of that part of it? 16 MR. TRABULUS: No. 17 MR. WALLENSTEIN: No. 18 THE COURT: Okay. 19 Let me give you this, however, which is unique to 20 this conspiracy. 21 In this regard
I instruct you that not every 22 action undertaken by private parties to make the 23 government's job harder is criminal, and not every 24 agreement to obstruct the governmental function 25 constitutes an unlawful conspiracy to defraud.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8722 1 Individuals are not required to conduct their affairs in a 2 manner that will make it easy for the IRS to collect
3 taxes. Thus the defendants cannot be found guilty for
4 having participated in a conspiracy to impede, impair, or
5 obstruct the IRS in the ascertainment of taxes due and
6 owing by Bruce Gordon, unless the government has proven
7 beyond a reasonable doubt that they agreed to use
8 deceitful or dishonest means to accomplish this goal.
9 If the government proves beyond a reasonable 10 doubt that the defendants Gordon and Reffsin were involved
11 in a criminal conspiracy, then you must further find that 12 the conspiracy is the one charged in the indictment and 13 not some other. 14 The second element is knowing membership in the 15 conspiracy. That is essentially the same as the first 16 knowing membership, second element. 17 Do you want me to repeat that? 18 MR. TRABULUS: No. 19 MR. WALLENSTEIN: No. 20 THE COURT: I go into mere association is not 21 enough, etcetera. 22 Also, I say in this one, not only is mere 23 association not enough, but, further, the 24 accountant/client relationship between the defendants 25 alone does not give rise to a conspiracy. That fact that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8723 1 they may have been together and discussed common aims and 2 interests does not necessarily establish proof of the
3 exist
ence of a conspiracy, or knowing membership in the
4 conspiracy.
5 The third element is with respect to the
6 commission of overt acts. Are we set on these overt
7 acts?
8 MR. TRABULUS: No, your Honor. I believe there
9 is an issue as to whether some of the overt acts were 10 really made out. And in one instance as to whether it was 11 made out with respect to the conspiracy alleged. 12 THE COURT: Which ones are you talking about? 13 MR. TRABULUS: I know Mr. Wallenstein also has 14 some thoughts on this. 15 MR. WALLENSTEIN: My concern here, Judge, is with 16 respect to the overt acts which relate to the submission 17 of the log there is the bankruptcy proceeding, that they 18 don't belong in this conspiracy. That if in fact those 19 acts are proven they establish perhaps the obstruction of 20 justice count, which is 54, now, I believe, but they have
21 no relation to the conspiracy to impede the Internal 22 Revenue Service. Specifically, I am talking about the 23 overt acts designated Q, R, V and W; and that's on page 31 24 and 32 of the indictment. 25 THE COURT: Just a minute now.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8724 1 MR. TRABULUS: I join in that. 2 THE COURT: You are talking about page 29?
3 MR. WALLENSTEIN: The overt acts begin on page
4 29.
5 THE COURT: Which overt acts are you talking
6 about?
7 MR. WALLENSTEIN: Page 31 beginning, Q and R, and
8 V and W on page 32. Those four overt acts relate to the
9 submission of the logs in the bankruptcy proceeding, 10 which, while the subject of the obstruction count, have 11 nothing at all to do with the conspiracy counts to impede 12 the IRS. I don't see how the bankruptcy is at all related 13 to t
he alleged conspiracy of preventing the IRS from 14 collecting money. 15 THE COURT: However, it is alleged in the 16 indictment in that count, isn't it? 17 MR. TRABULUS: It is in paragraph 54, your 18 Honor. But the proof at the trial failed to support the 19 allegation in the indictment. 20 In other words, there has been proof at the trial 21 concerning the false usage logs, and I guess Gaspar 22 testified, but there was nothing to link it to the tax 23 aspects of the case. There was nothing to suggest it was 24 intended to or was submitted to the IRS or for purposes of 25 affecting the IRS' actions or collection or ascertainment
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8725 1 of taxes. The evidence is there perhaps but not expressly 2 linked to the tax aspects.
3 MR. WALLENSTEIN: None of the tax experts,
4 Peters, o
r Gagliardi, testified with respect to the usage
5 of the condominiums, or specifically, the log with respect
6 to the usage of the condo or the penthouse having any
7 bearing whatsoever on the issue of Mr. Gordon's tax
8 liability. If there is evidence at all in the case with
9 respect to that, it would tend to obstruct -- support the 10 obstruction count and nothing at all to do with the tax 11 conspiracy. I believe it would be confusing to the jury 12 to have those allegations or overt acts as part of the 13 conspiracy. 14 THE COURT: Mr. White. 15 Do you agree? 16 MR. WHITE: No. I disagree. 17 We touched on this when we had the Rule 29 18 argument. There are a number of ways that the logs and 19 the bankruptcy petition are related to the tax conspiracy. 20 The evidence is that Mr. Gordon and Mr. Reffsin 21 structured Mr. Gordon's financial affairs in such
a way 22 that his companies paid for everything. They furnished 23 him with a car, these apartments, paid his personal 24 expenses. The reason that the bankruptcy proceedings are 25 relevant is because at the time the bankruptcy comes along
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8726 1 it threatens to throw this in chaos, upsets the apple 2 cart. Reed wants a trustee appointed replacing
3 Mr. Gordon. If that happens the gravy train is over,
4 Mr. Gordon can't continue to have the company furnish his
5 personal expenses and furnish the condo and penthouse.
6 It is with regard to Reed's appointment as a
7 trustee that the phony logs are submitted. It is
8 constructed, the phony set up for that purpose.
9 Number two, they have to be consistent with what 10 they are telling the IRS. They didn't disclose to the IRS 11 that Mr. Go
rdon had the use of this condominium and that 12 other companies were providing to him, or the penthouse or 13 these other things. 14 Now that they have to file a phony document and 15 make disclosures to the bankruptcy court, they have to be 16 consistent. If they are hiding it from the IRS they can't 17 go over all over town saying that's where he lived. 18 In addition, the use of the condominium and the 19 penthouse should have been on Mr. Gordon's tax returns. 20 Among Agent Rosenblatt's calculation is that that was 21 income he failed to declare. 22 Conceding -- concealing that fact when asked even 23 about it from third parties is relevant to the tax 24 conspiracy. 25 As your Honor pointed out, all of this is part of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8727 1 the conspiracy alleged in this indictment. So, they can
2 argue whatever they want to the jury. But it is not as a
3 matter of law unconnected to the tax conspiracy.
4 THE COURT: I agree with the government and I
5 deny the request. You have an exception, both of you.
6 With regard to the commission of overt acts, I
7 will read what the overt acts are, do you want to hear
8 that again, the overt act portion?
9 MR. WALLENSTEIN: No, not necessary. 10 MR. TRABULUS: No. 11 THE COURT: Do you want to hear the commission of 12 the overt act in furtherance of the conspiracy which is 13 almost exactly the same as it was before? 14 MR. TRABULUS: No. 15 MR. WALLENSTEIN: Not necessary. 16 THE COURT: Okay. 17 Then I say finally with regard to the conspiracy 18 charge, which is an alleged agreement between two people, 19 namely, Bruce Gordon and Martin Reffsin, I instruct you 20 that if the government fails to
establish the guilt of 21 either defendant beyond a reasonable doubt, you must 22 acquit both defendants on the conspiracy charge. 23 Count 57, tax evasion. 24 Count 57 of the indictment charges the defendant 25 Gordon and Reffsin with attempting to evade the payment of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8728 1 federal income taxes owed by the defendant Gordon for the 2 calendar years, 1981 through 1990. I will read count 57.
3 The indictment alleges in count 57 that the
4 defendants violated Section 7201 which provides, quote,
5 any person who willfully attempts in any manner to evade
6 or defeat any tax imposed by this title, or the payment
7 thereof, shall be guilty of the offense of tax evasion.
8 In order for the crime of attempting to evade the
9 payment of income tax -- in order to prove the crime of 10 attempting
to evade income tax, the government must 11 establish the following three elements beyond a reasonable 12 doubt: 13 First, that the defendant Gordon owed federal 14 income taxes for the calendar years 1981 through 1990; 15 Second, that the defendant you are considering 16 knew that the defendant Gordon owed such federal income 17 taxes for the year 1981 through 1990; 18 Third, that the defendant you are considering 19 willfully concealed and attempted to conceal from the 20 Internal Revenue Service the nature and extent of the 21 income and assets of the defendant Bruce Gordon, with the 22 intent to evade the payment of the taxes owed. 23 First element, tax due. 24 The first element that the government must prove 25 beyond a reasonable doubt is that the defendant Gordon
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8729 1
owed federal income taxes for the calendar years 1981 2 through 19.
3 Is it 1990?
4 MR. WHITE: Yes.
5 THE COURT: However the government doesn't have
6 to prove the exact amount that the defendant Bruce Gordon
7 owed. Nor does the government have to prove that the
8 payment of all the tax charged in count 57 was evaded.
9 The prosecution must prove beyond a reasonable 10 doubt that there is a substantial amount of taxes due and 11 owing from the defendant Gordon for the calendar years, 12 1981 through 1990. 13 A relatively small or insignificant deficiency in 14 taxes is not enough to make a defendant guilty of the 15 crime of tax evasion. 16 There is no mathematical formula for determining 17 what is a substantial amount of tax deficiency. It is not 18 measured in relation to the defendant's income, nor by any 19 particular percentage of tax proven
to be due. The amount 20 varies from case to case, and is for you, the jury to 21 determine. 22 MR. WALLENSTEIN: Judge, I think we can concede 23 the first two elements. 24 THE COURT: All right. 25 MR. TRABULUS: Right, the language your Honor
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8730 1 read is more appropriate to not an evasion of payment, or 2 an evasion of the computation of the amount of tax.
3 THE COURT: You will concede the first two
4 elements?
5 MR. TRABULUS: That it was substantial, yes.
6 THE COURT: Wait a minute now.
7 MR. WALLENSTEIN: Yes.
8 My client testified to that. It can't easily be
9 contested. 10 THE COURT: Both defendants concede the first two 11 elements, namely that the defendant Gordon owed the taxes, 12 and they knew that he owed the taxes? 13 MR. TRABULUS: Yes.
14 MR. WALLENSTEIN: Yes. 15 THE COURT: All right. 16 Third element, willful evasion of payment. 17 The third element which the government must prove 18 beyond a reasonable doubt is that the defendant you are 19 considering willfully evaded or attempted to evade the 20 payment of the income taxes payable by the defendant 21 Gordon with the intention of defrauding the government of 22 such taxes owed. 23 The Internal Revenue Code makes it a crime to 24 willfully attempt in any manner to evade or defeat the 25 payment of any income tax imposed by law. There are many
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8731 1 different ways in which a tax may be evaded or an attempt 2 may be made to evade payment of such tax.
3 In this case the indictment alleges that the
4 defendant concealed and attempted to conceal from the IRS
5 the nature and extent of the income and assets of the
6 defendant Bruce Gordon in order to avoid the payment of
7 Gordon's federal income tax liability for the years 1981
8 through 1990.
9 MR. TRABULUS: Your Honor, in that sentence at 10 one point your Honor said there are many ways in which a 11 tax may be evaded. Can it be changed to say that there 12 are many ways in which a payment of a tax may be evaded? 13 THE COURT: Yes. 14 However, the attempt to evade or defeat the 15 payment of a tax must be a willful attempt. In other 16 words, in order for the government to prove the crime 17 charged, it must establish beyond a reasonable doubt that 18 the defendant you are considering acted voluntarily and 19 intentionally, and with the specific intent to keep from 20 the government information concerning Gordon's income and 21 assets which it was the legal duty o
f the defendant to set 22 forth and declare, and which the defendant you are 23 considering knew that it was Gordon's legal duty to 24 disclose. 25 I will say this again.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8732 1 In other words, in order for the government to 2 prove the crime charged, it must establish beyond a
3 reasonable doubt that the defendant you are considering
4 acted voluntarily and intentionally, and with the specific
5 intent to keep from the government information concerning
6 Gordon's income and assets which it was the legal duty of
7 the defendant Gordon to set forth and declare, and which
8 the defendants you are considering knew that it was
9 Gordon's legal duty to disclose. 10 The defendants raise the defense of good faith. 11 I will now instruct you on the defense of good faith.
12 Good faith is an absolute defense to the charge 13 in Count 57. The grounds on which the defendants Gordon 14 and Reffsin base their claims of good faith in a belief 15 that their conduct was lawful, may be considered in 16 deciding whether they in fact acted in good faith, and 17 whether they intended and willfully attempted to evade the 18 payment of Gordon's income tax. 19 The issue of intent as to whether the defendant 20 you are considering willfully attempted to evade the 21 payment of Gordon's income tax is one that you must 22 determine from a consideration of all the evidence in the 23 case, bearing on the defendant's state of mind. In 24 deciding whether the government has proved that the 25 defendant you are considering attempted to evade the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8733 1 payment of Gordon's income tax, that is to say
whether he 2 acted willfully, voluntarily and intentionally, you may
3 consider all of his knowledge and any advice which was
4 given to him.
5 The views of the defendant you are considering
6 need not be legally correct or objectively reasonable.
7 Just as long as he honestly and in good faith believed
8 them to be true.
9 In considering the defendant's claim that he 10 acted in good faith, the question is whether or not he 11 truly held such a belief. The question you should focus 12 on is, quote, what did the defendant actually believe, end 13 quote, regardless of whether the belief was correct or 14 objectively reasonable. Cheek against the United States. 15 I will not tell that to the jury though. They may know 16 what Cheek is. Do you think, Mr. White, they know that? 17 MR. WHITE: Probably not, but I know, your Honor. 18 THE COURT: All right.
19 If you find that the defendant truly believed in 20 good faith that he did not attempt to evade the income 21 taxes due by Gordon, then such defendant did not have the 22 requisite intent to be convicted of the tax offense 23 charged, and you must find the defendant not guilty. 24 The burden of establishing lack of good faith and 25 criminal intent rests upon the prosecution. A defendant
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8734 1 is under no burden to prove his good faith. Rather, the 2 prosecution must prove lack of good faith beyond a
3 reasonable doubt.
4 I am also charging aiding and abetting.
5 MR. WHITE: Before you move to that, your Honor?
6 THE COURT: Yes.
7 MR. WHITE: I may have missed it, I am sorry.
8 But there was a sentence even in Mr. Reffsin's request to
9 charge on that Cheek issue, where he says, howe
ver, you 10 may consider whether the defendant's belief was actually 11 reasonable as a factor in deciding whether he held that 12 belief in good faith. 13 THE COURT: Absolutely not. I don't care if 14 Mr. Reffsin wants me to charge it. It is confusing. The 15 United States Supreme Court said, if you have a dream at 16 night that you don't have to pay taxes, a voice told me, I 17 don't have to pay tax -- by the way, I had three or four 18 cases just like that. 19 MR. WHITE: I know. 20 THE COURT: Just like that. 21 They said they were exempt from tax because they 22 gave money to the church, and the church exempted them 23 from paying any taxes. I never heard of this particular 24 church. But I told the jury that if those defendants 25 really believed that they don't have to pay taxes because
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8735 1 this church, whatever it is, told them not to, acquit 2 them. I don't care how unreasonably it was; Church of
3 St. Matthews.
4 MR. WALLENSTEIN: Do you mind using that tone?
5 MR. TRABULUS: I had the case before Judge
6 Mishler. I represented one of those defendants.
7 THE COURT: All convicted by the jury and all
8 confirmed.
9 MR. TRABULUS: True. 10 MR. WHITE: I don't understand why it is 11 confusing to say to the jury, yes, if you believe he 12 honestly believe that, acquit them. But if you think it 13 is so unreasonable that nobody would really believe it, 14 then you should consider that. 15 THE COURT: No. You have an exception. 16 MR. WHITE: An exception doesn't do me any good. 17 THE COURT: All right, you don't want me to give 18 you an exception, I will withdraw it then. 19 I will charge aiding and abetting, whi
ch I don't 20 have to go through, and I will not go through it again, 21 even with the jury. 22 Now, let's talk about the lesser included 23 offenses. 24 MR. TRABULUS: Your Honor, the request that I 25 handed up this morning has a lead in to the lesser
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8736 1 included, which distinguishes evasion of tax payment from 2 simply failing to pay a tax that is due. And it points
3 out that the tax evasion, evasion of payment requires an
4 affirmative act of evasion, and a failure to pay tax when
5 due does not in and of itself constitute tax evasion, even
6 if the person who doesn't pay the tax has the ability to
7 pay it and deliberately chooses not to pay it.
8 THE COURT: You lost me.
9 MR. TRABULUS: All I am saying is if it is not 10 inconvenient, this may be a good time to conside
r the 11 supplemental request I handed up. 12 THE COURT: I will consider it. Let me take a 13 look now. 14 MS. SCOTT: I would ask for one concession, your 15 Honor. We received this submission from Mr. Trabulus this 16 morning. I have not had a chance to look at the 17 additional cases cited in the submission here. I would 18 need to do that before being able to make an informed 19 argument to your Honor. 20 THE COURT: You have until this afternoon to look 21 at them. 22 MS. SCOTT: Okay. 23 THE COURT: I want to take a look and see here. 24 What page did you start your lesser included in 25 your original request?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8737 1 MR. TRABULUS: Page 15. I didn't lay out any 2 specific language there.
3 THE COURT: Tell me the difference between your
4 original req
uest to charge -- here is what I was going to
5 do so you can get an idea of what I thought was the right