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Note:Defendant and others conspired to defraud prospective borrowers of US$ 23 million by charging an up-front fee to obtain funding contracts. As described by the appellate court, "[t]he testimony presented at trial revealed that the members of the conspiracy advertised and promoted the availability of venture capital funding through the national and international news media. Persons who responded to these offers were initially instructed to submit financial information to a 'broker' working for the organization. The broker made sure that the prospective borrower could afford an up-front fee, which typically ran into the thousands of dollars. Thereafter, the borrower was referred to a 'syndicator' for the purpose of entering into a funding contract. Upon execution of the contract, the up-front fee was placed in an escrow account pending satisfaction of certain conditions. A key condition was that the borrower had to obtain a payment guarantee, in the form of a letter of credit, from a financial institution within several days of execution of the contract. Obtaining the guarantee required some form of collateral, which, in every instance, the prospective borrower was not able to provide. This resulted in a default on the contract and forfeiture of the up-front fee. At that point, the money was moved to an offshore financial institution and distributed to the members of the conspiracy." As a condition of obtaining the contract, the investor had to obtain a payment guarantee in the form of a letter of credit from a financial institution within several days of execution of the contract. Obtaining the LC required some form of collateral which, in every instance, the prospective borrower was not able to provide. As a result, in every instance there was a default on the contract and forfeiture of the up-front fee. The money was moved to an offshore financial institution and distributed to the members of the conspiracy. Defendant was charged with conspiracy to launder money and convicted. Defendant appealed and the imposition of a 188-month sentence. Defendant also sought to vacate a preliminary forfeiture order.

One basis on which Defendant challenged his conviction was that the court excluded as irrelevant the testimony of two lawyers proffered by defense. The first attorney was to testify as to the legality of the funding contracts. The appellate court ruled that "it was the conduct of the parties and the representations that they made to the people that created the fraud." The court further stated that the probative value of the testimony did not outweigh the potential for jury confusion.

Defendant claimed that his defense was improperly curtailed by the trial court's exclusion of his proposed expert witness, Professor James McNutty. The witness was to explain "the whole syndication world" and "what a letter of credit is and why they need to be confirmed by a top 50 or top 100 bank." Moreover, Defendant claimed that this act was compounded by the allowance of "expert testimony" for the government. The appellate court noted that the defense violated the rules of discovery by waiting until the day before commencement of trial to disclose the witness. In rejecting the claim of prejudice, the appellate court stated that the testimony "would have simply provide the jury with background information regarding financial matters" and the exclusion of such would not prejudice the defense. The court also stated that the Defendant improperly characterized as "expert testimony" for the prosecution what in actuality was the testimony of cooperating co-conspirators.

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