Case 3:06-cr-02252-W Document 59 Filed 01/14/09 PageID.490 Page 1 of 22

 

 

 

KAREN P. HEWITT

United States Attorney ERIC J. BESTE

California State Bar No. 226089 VALERIE H. CHU

California State Bar No. 241709 Assistant U.S. Attorneys Federal Office Building

880 Front Street, Room 6293

San Diego, California 92101-8893 Telephone: (619) 557-5104 / 7837

Fax: (619) 557-7055

Email: Eric.Beste@usdoj.gov, Valerie.Chu@usdoj.gov

 

Attorneys for Plaintiff United States of America

 

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

 

UNITED STATES OF AMERICA,

Plaintiff,

v.

 

ROLAND C. COLTON,

Defendant.

 

)     Criminal Case No. 06CR2252-W

)

)     GOVERNMENT'S TRIAL MEMORANDUM

)

)     DATE:            January 21, 2009

)     TIME:             9:00 a.m.

)     CTRM:            7 (3rd Floor)

)     JUDGE:          Honorable Thomas J. Whelan

)

)

 

                                                                              )

COMES NOW the plaintiff, UNITED STATES OF AMERICA, by and through its counsel, Karen P. Hewitt, United States Attorney, and Eric J. Beste and Valerie H. Chu, Assistant U.S. Attorneys, and hereby files its Trial Memorandum.

I

STATUS OF THE CASE

 

A.INDICTMENT

On October 17, 2006, a Federal Grand Jury in the Southern District of California returned a seven-count indictment against defendant Roland C. Colton (“Colton”) charging him with bankruptcy fraud, in violation of various provisions of 18 U.S.C. § 152. Count 1 alleges that Colton falsely stated under penalty of perjury in his bankruptcy petition and accompanying schedules that he had no interest in real property and personal property, although he in fact did have interests in real property located in

 

06CR2252-W

 

 

 

 

 

France and Laguna Niguel, California, and in over $1.5 million in personal property such as bank and brokerage accounts, in violation of 18 U.S.C. § 152(3). Counts 2, 3 and 4 allege that Colton gave false testimony under oath in examinations taken pursuant to Fed. R. Bank. P. 2004 (“Rule 2004 examination"), in violation of 18 U.S.C. § 152(2). Count 2 concerns Colton’s false claim in his January 15, 2002 examination that his schedules were correct and that they accurately identified all of his assets and liabilities. Count 3 concerns Colton’s false claim that he maintained no other bank accounts. Count 4 concerns Colton’s false assertion that he had not contributed anything towards the purchase of his Laguna Niguel estate. Count 5 alleges that Colton gave false testimony under oath in his Rule 2004 examination on August 14, 2002, when he testified that he paid $85.86 in foreign taxes in 2000. Count 6 alleges that Colton knowingly and fraudulently concealed real and personal property in France belonging to the debtor’s estate from creditors and the bankruptcy trustee, in violation of 18 U.S.C.

§ 152(1). Count 7 alleges that Colton knowingly and fraudulently concealed ownership, control and possession of numerous financial accounts belonging to the debtor’s estate from creditors and the bankruptcy trustee, in violation of 18 U.S.C. § 152(1).

B.JURY TRIAL

This case is presently set for trial on January 21, 2009. No jury waiver has been filed.

C.STATUS OF COUNSEL

Colton is proceeding pro se. At the last status hearing on December 11, 2008, Defendant moved to represent himself. The parties appeared that day before Magistrate Judge Bencivengo, and after conducting a Faretta hearing, Judge Bencivengo relieved retained counsel Jeremy Warren and granted Colton’s motion to represent himself. Colton appeared before this Court later that day, and confirmed his awareness of the trial date. No standby counsel has been appointed.

D.CUSTODIAL STATUS

Colton is out of custody on a $50,000 personal appearance bond.

E.INTERPRETER

The government may need a French-English interpreter for several witnesses during its case-in- chief or in rebuttal.

 

 

 

 

 

F.LENGTH OF TRIAL

At the status hearing on August 18, 2008, parties jointly estimated that the trial would occupy approximately 2 weeks. Since then, Colton has released his counsel and decided to proceed pro se. At the status hearing on December 11, 2008, Colton indicated that he intended to file motions that he expected would reduce the length of trial. At this time, the government believes this trial will be completed in 2 weeks.

G.COURTROOM COMPUTER SYSTEM

The government will be using a computer-based evidence presentation system including individual monitors located at the bench, the witness stand, and at counsel tables for the government and the defense.

H.DISCOVERY

The United States has complied with its discovery obligations, including again making documents available for Colton’s inspection which his previous counsel had already seen. Colton has not produced any reciprocal discovery, and the government will object to the introduction of any documents by Colton which have not been produced in discovery at this time.

I.PRE-TRIAL MOTIONS

On January 6, 2009, the government filed motions in limine to: (1) preclude allegations of government misconduct; (2) preclude pro se defendant from presenting evidence in his role as attorney;

1. admit the expert testimony of trial counsel for the U.S. Bankruptcy Trustee; (4) preclude self-serving hearsay; (5) admit defendant’s statements to his bankruptcy attorney made for the purpose of filing his bankruptcy petition; (6) admit evidence of Nahid Birjandi’s 1994 bankruptcy filing; (7) admit evidence of Colton’s prior tax conviction pursuant to Fed. R. Evid. 609 should he testify; (8) preclude defense exhibits not produced in reciprocal discovery; (9) use trial exhibits in opening statement; (10) exclude witnesses other than the case agents; and (11) order reciprocal discovery.

Colton has not filed any motions in limine.

Consistent with the Court’s chambers rules, motions in limine are scheduled to be heard on the morning of trial, January 21, 2009.

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J.EXHIBITS

By January 15, 2009, the government will make available to Colton a preliminary exhibit list and a set of pre-marked exhibits. The government will provide an updated list to the Court and to defense counsel on the morning of trial. The government’s exhibit list will be updated during trial to reflect additional exhibits that the government finds it necessary to introduce.

K.JURY INSTRUCTIONS

The government’s proposed jury instructions will be submitted under separate cover.

II STATEMENT OF FACTS

A.THE DEFENDANT

Colton, a seasoned trial attorney, graduated from the University of Utah with a degree in accounting, and obtained his law degree from the University of San Diego. Before his admission to the California bar in 1978, Colton was a practicing accountant. At all times material to the indictment, Colton was a partner in the Del Mar law firm of Colton & Roesser.

Since 1998, Colton has resided in a $2.375 million estate in Laguna Niguel, California, with his current wife, Nahid Birjandi, a podiatrist. Colton vacations regularly in France, where he typically spends 2-3 months every summer. For example case, during the pendency of this case Colton’s bond was modified to permit him to travel to France for vacation. While in France Colton stays at his vacation home, known as Chateau de la Briche.

B.COLTON’S BANKRUPTCY CASE

1. Colton’s Filings

On October 11, 2001, defendant electronically filed a voluntary Chapter 7 bankruptcy liquidation petition (“Petition”) and attached schedules with the United States Bankruptcy Court for the Southern District of California, seeking a discharge of some $2.7 million in debts, and attached schedules. These schedules included: (1) a summary of assets and liabilities; (2) specific lists of assets and liabilities; (3) schedules of income and expenses; (4) schedules of exempt assets; and (5) a statement of financial affairs (“Schedules”). Colton electronically signed, and later manually signed, a certification attesting

 

 

 

 

 

to the truth, completeness and accuracy of the statements contained in the Petition and Schedules. Colton signed both of these certifications under penalty of perjury.

In the Petition and Schedules, Colton falsely claimed only $15,650 in assets, consisting of $100 in cash, a Washington Mutual checking account worth $200, a television, a computer, a grand piano and his interest in his law partnership, Colton & Roesser, which he valued at $10,000. He claimed that he no “any legal, equitable, or future interest” in any real property, “including [any] property owned as a co-tenant, community property, or in which the debtor has a life estate.” Defendant also denied that there was any real property in which he held rights and powers exercisable for his own benefit. Colton claimed he had no interest in any other personal property, including any automobiles, other businesses, investment accounts, retirement plans, or insurance policies.

Colton also claimed that during the prior year he had not made any payments to creditors who were insiders, had not given gifts, had not incurred gambling losses, had not executed any property transfers, and had not closed any financial accounts. He claimed his monthly income was $6,533, and that he and his family had monthly expenses of $7,119 (including $2,500 in “rent or home mortgage payment”). Defendant’s claimed liabilities consisted of large California Franchise Tax Board assessments, court judgments, and credit card debts.

On October 11, 2001, the United States Bankruptcy Court for the Southern District of California appointed Richard Kipperman (“Trustee Kipperman”) as a private Chapter 7 bankruptcy trustee. Trustee Kipperman was obligated to identify, and then recover and distribute, assets that were to be for the benefit of the debtor’s estate. Trustee Kipperman retained bankruptcy counsel, Peter Duncan and Susan Stevenson, to assist in this task.

1. Colton’s Statements Under Oath

On January 21, 2002, Duncan conducted a Rule 2004 examination, under oath, of Colton.

During that examination, Duncan asked Colton the following questions:

 

 

Q:        Are there any changes to the [bankruptcy] schedules of which you are presently aware? A:        I think the one my attorney referred to we need to make.

Q:        Any other changes? A:            Not that I can think of.

 

 

 

 

 

Q:        So other than amending the schedules to add the Chevron royalty interest, the schedules are true and correct to your knowledge?

A:        I think so.

Q:        And they accurately identify all of your assets and liabilities other than the Chevron royalty?

A:        Yes.

At the same session, Duncan asked Defendant about the check register, copies of bank statements, and copies of checks for the single Washington Mutual account listed on his Petition. Specifically, Duncan asked:

Q: All right. Sir, we are looking at Exhibit 4, which is your register and statements and checks, and the question pending was are there any other statements or checks of which you are aware that are not in Exhibit 4 for the period?

A:       Not to my knowledge.

Q:        Okay. Is this the only bank account you maintained personally during the period that is reflected in Exhibit 4?

A:        I believe so.

Q:        Okay. Any record that would refresh your recollection to the contrary? A:        I can’t think of anything.

Duncan also questioned Defendant closely regarding a residence located in Laguna Niguel, California. Colton’s wife (Nahid Birjandi) was listed on the title as the owner of the property, but Duncan wanted to know if Colton helped pay any of the $2.375 million purchase price, thereby resulting in Colton (and his bankruptcy estate) having at least an equitable interest in the property. Duncan asked:

Q:     Did you contribute anything towards the down payment of the property? A: No.

Counsel for Trustee Kipperman conducted further investigation into these and other facts in order to determine whether assets of the estate were available to satisfy creditor claims. This investigation led Trustee Kipperman to file separate adversary proceedings against: (1) Colton, his law partner Roesser, and their partnership to recover the debtor’s interest in additional income from the partnership; and (2) Colton’s wife (Dr. Nahid Birjandi) to recover the debtor’s community property interest in their multi-million dollar home.

Colton’s Rule 2004 examination did not conclude on January 15, 2002, but continued on two other occasions. In the follow-up session held on August 14, 2002, Duncan’s law partner Susan Stevenson asked Colton about a deduction he claimed in his 2000 federal income tax return for $8,685 paid in foreign taxes. By this time, Trustee Kipperman had learned that Colton may have had an interest in real estate known as Chateau de la Briche located in Hommes, France. Colton had claimed attorney-

 

 

 

 

 

client privilege in response to questions by Stevenson as to whether Colton had visited Chateau de la Briche, and in what town Chateau de la Briche was located. Coming at it from another direction, Stevenson attempted to clarify the reason Colton paid $8,586 in foreign taxes, as claimed on his tax return:

Q:        Do you know if you paid any foreign taxes in 2001? A:        I don’t believe so.

Q:        Because I see in 2000 you paid – I don’t know, it seems to me like a lot of foreign taxes

– about $8500, $8600.  Do you know what government or country they were paid to?

A:        I think that’s inaccurate.

Q:        Is your tax return inaccurate or is my characterization of Exhibit A to the tax return [which includes the line-item for foreign taxes]

A:        I believe the amount paid was not accurate as indicated on the tax return.

Q: So you’re saying if I look at the tax return I’m going to find a statement that eighty-five, eighty-six in foreign taxes is inaccurate?

A: Well, this came up during the previous 2004 examination. And when I looked at the information that I transmitted to [Colton’s tax preparer] Mr. Hatch, I think it was $85.86 or whatever the number is.

* * *

Q:        Okay. Here we have Exhibit A, itemized deductions to your 2000 return with the eighty-five, eight-six amount.  Is that what you’re saying is inaccurate, it should be

$85.86?

A:        That’s correct.

 

Trustee Kipperman eventually obtained proof that Colton was in fact the owner of the Chateau in France, as well as of several brokerage and bank accounts, some of which he held in the names of shell companies (e.g., Sports Gaming, Inc., Southwest Drilling, etc.). Based on the evidence indicating that Colton had other assets available for the bankruptcy estate, and that he might dissipate those assets outside of the normal bankruptcy process, Trustee Kipperman obtained an ex parte order from the bankruptcy court restraining Colton’s bank accounts and preventing him from selling or encumbering the Chateau and his Laguna Niguel home.

C.COLTON’S ACTUAL FINANCIAL CONDITION

In contrast to the modest $15,650 in total assets Colton disclosed on his Petition, Colton actually had interests in millions of dollars worth of real and personal property in the U.S. and France, and had control over several accounts in the U.S. and in France through which hundreds of thousands of dollars flowed at his behest.

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1. Laguna Niguel Residence

In late 1998, Nahid Birjandi, then Colton’s fiancé, was looking for a new home for herself and her new husband. The couple settled on a newly-built custom home overlooking the Pacific Ocean, located on 59 Asilomar Road in Laguna Niguel, California. The seller agreed with Colton (who negotiated the transaction) to a purchase price of $2,375,000. Birjandi’s claimed income of approximately $10,000 per year was nowhere near enough to make the monthly mortgage payments or cover the necessary expenses of the property. Thus, through a variety of complicated financial transactions and behind-the-scenes moves, Colton provided almost all the money Birjandi used to purchase the property and make the monthly mortgage payments.

First, Colton obtained a $1,400,000 mortgage loan in Birjandi’s name from Hawthorne Savings Bank. While Birjandi’s name would be the only one on the note, Colton personally promised the bank that he would help make the payments. Colton told the loan officer that he did not want his name on the mortgage papers because he was going through a messy divorce, and did not want to be formally obligated on the loan. But Colton’s assistance was necessary to obtain the loan, as Birjandi clearly could not qualify for the $1.4 million loan on her minimal income.

Second, Colton secured a portion of Birjandi’s down payment by obtaining a $553,500 loan for her from a second bank, Pioneer Citizens Bank of Nevada. Again, the note was in Birjandi’s name, but it was collateralized by a Certificate of Deposit (CD) in the amount of $553,000 posted by a company owned and controlled by Colton. Colton provided thousands of dollars over the course of the next year to Birjandi for her to make the interest payments on this loan, and when the note was due Colton simply directed that the CD be liquidated and the funds used to pay off Birjandi’s note.

Third, Colton negotiated a second mortgage “take back” from the seller of the property in the amount of $329,000. Colton provided funds used by Birjandi to make the payments on this note, and even wire-transferred $189,718.84 from a brokerage account he controlled directly to the lender.

After arranging for the purchase of 59 Asilomar Road, Colton continued provided the funds for Birjandi to make the monthly mortgage payments on the couple’s estate. Between March 1999 and March 2000, Colton directed Charles Schwab to transfer thousands of dollars out of a brokerage account he controlled – the account was in the name of “Sports Gaming,” a Nevada corporation of which he was

 

 

 

 

 

the President, Secretary, Treasurer, and Director – into a bank account owned by Birjandi. Colton regularly transferred in excess of the $12,000 per month needed by Birjandi to make the required mortgage payment.

Colton was living at 59 Asilomar when he filed for bankruptcy in October 2001. But the property was identified nowhere on his Petition and Schedules. Instead, Colton listed his address on the Petition as his office in Del Mar where his law firm was located. When asked in his Rule 2004 examinations about his interest in the property, Colton contended that he only paid his wife $2,500 per month in rent to live there.

1. Chateau de la Briche

In or about July 1999, Colton purchased Chateau de la Briche, a French castle located a few hours outside Paris, for over 7 million francs (over $1 million at the time). Built in 1870, the castle has 5 stories and dozens of rooms, including an entrance hall, library, billiards room, sitting room, drawing room, dining room, back staircase, kitchen, and eating area (and all that just on the first floor). The property also includes multiple outbuildings (e.g., horse tables, tack room, garage, barns, greenhouses, kennels, gardener’s building and living quarters, etc.), a swimming pool, vineyards, water tower, orangery, pleasure gardens, a vegetable garden, woods, meadows and footpaths.

To finance the purchase, Colton applied for a loan from CaixaBank in Poitiers, France. In his application and in various letters to bank officials, he presented a far different picture of his financial condition than that depicted in his Petition. In response to a bank officer’s inquiries, Colton authored a letter with additional information about “my most significant investments,” including:

• a bank account at Home Savings of America, valued at $4,596.74;

• a Charles Schwab brokerage account, valued at $1,087,714.44;

• a $30,000 loan from a colleague;

• his “residence: 59 Asilomar,” with a purchase price of $2,375,000, a current value of

$2,800,000, an outstanding loan amount of $1,100,000, and furnishings worth over $737,000;

• a Young-Chang piano valued at $15,000, and a “Steinway (Concert Grand)” piano valued at

$75,000; and

• two cars: a Mercedes Benz valued at $20,000, and a Jaguar XJ 220 valued at $400,000.

 

 

 

 

 

On the CaixaBank formal loan application Colton listed himself as the only borrower, and listed his residence as 59 Asilomar Road. He stated that his annual salary was between 3,000,000 to 6,000,000 francs (approximately $475,000 and $950,000), and claimed that he owed approximately 900,000 Francs on a mortgage. Colton claimed to own many assets in his application, including his residence at 59 Asilomar (valued at 17,000,000 Francs), his law firm (valued at 3,000,000 francs), and miscellaneous personal property, such as securities and vintage cars (valued at over 15,000,000 francs). Colton requested a long term loan in the amount of 4,200,000 francs to purchase “Chateau de la Briche,” which he described as a single family house to be used as his vacation home.

Colton made clear to the bank that he was purchasing the Chateau as his own separate property, and not jointly with his wife, or for any other party. He wrote in a letter contained in his loan file:

I hereby certify that all of the funds which will be used to purchase the Chateau de la Briche come from funds that I had prior to marriage and which I have maintained separate since marriage. I further certify that all the funds which will be used to make payments on the chateau will also come from the same separate funds. Accordingly, ownership of the chateau will be in my name alone, as my separate property.

The sales contract lists the buyer of the property as “Mr. Roland Clark COLTON, Attorney.” The contract lists the financing as a 4,200,000 Fr loan from CaixaBank, to be paid in 144 monthly payments of 37,231.05 Fr (5,674.84 Euros), and a 3,650,000 Fr down payment from Colton. The total purchase price of the Chateau was 7,850,000 Fr.

French property records show that Colton paid property taxes, lodging taxes, and sanitation taxes for Chateau de la Briche from 2000 up until at least 2006. In the year 2000, his payment of French property and lodging taxes on the Chateau alone exceeded $6,000.

1. French Financial Accounts

Colton opened an account at CaixaBank on or about July 20, 1999, around the time he purchased the Chateau. Throughout 2001 this CaixaBank account remained open and active. Colton identified himself as the sole account holder and his listed his address as 59 Asilomar, although he later he gave his wife power of attorney on the account. During the years 1999, 2000 and 2001, Colton periodically transferred thousands of dollars into this account from a Charles Schwab account in the name of “Sports Gaming, Inc.” Records from the CaixaBank account show monthly withdrawals in the amount of the mortgage Colton owed on the Chateau (37,231,05 Francs).

 

 

 

 

 

Throughout 2001, Colton also wrote checks on his CaixaBank account and deposited them into another account, held in his own name, at the French bank Credit Agricole. Colton opened the Credit Agricole account as a joint account with his wife, and listed his address on the application as “Chateau De La Brich.” This Credit Agricole account was active in October 2001, when Colton filed for bankruptcy.

Colton failed to disclose the existence of any of these foreign accounts in his Petition or Schedules, or the many transfers into and out of these accounts – some of which took place just a few days before he filed for bankruptcy.

1. Domestic Financial Accounts

Unlike his foreign accounts, which were in his own name, Colton created layers between himself and his domestic accounts. He controlled the Charles Schwab brokerage account described earlier (which he listed as one of his most significant assets in his letter to the French bank), although the name on the account was a company called Sports Gaming, Inc. Colton opened this account for Sports Gaming on February 12, 1999. Colton frequently transferred money out of this account by sending wire transfer instructions specifying the following:

I am the sole authorized signer for the above-referenced account. Please accept this document as wire instructions for transferring funds to the account indicated below. I realize that the funds are going to an account that is not in my name. Accordingly, Sports Gaming, Inc. is giving up legal ownership to the funds that are being wired.

 

Colton also controlled an account at Washington Mutual Bank in the name of “Southwest Drilling, Inc.,” another company he incorporated. Expenditures on this bank account include debit-card payments for restaurants, hotels, and travel, including travel expenses incurred in France. Colton also concealed this account in his bankruptcy.

Colton maintained another account in his own name at California Bank and Trust that he failed to disclose on his Petition and Schedules. Although the address on the account was Colton’s business address, the transfers of funds out of the account show that it was used for Colton’s personal expenses. For example, between October 2000 and April 2002, Colton transferred approximately $198,980 from this account to his CaixaBank account, and another $198,000 from this account to an E*Trade brokerage account in his name (which was also omitted from his Petition). In April 2002, only after being

 

 

 

 

 

questioned in detail about his finances during his Rule 2004 examination, did Colton change the name on this account from his own name to something called “JMK Family Trust.”

4.        Other Assets Concealed by Colton

Colon concealed from the bankruptcy court several other substantial assets that he owned and used for his benefit. He purchased a Peugeot automobile in France for over $20,000 in June 2000, and registered the car in his own name. In his 1999 loan application for the Chateau, he claimed to be the sole owner of a Jaguar XJ220 sports car valued at approximately $400,000. When he was in California, Colton sometimes drove a BMW with the vanity licence plate “Briche.” Yet on his Petition and schedule, Colton asserted that he owned no cars.

III

LEGAL PRINCIPLES

A.ELEMENTS OF THE OFFENSES

1. False Declaration, Certificate, Verification or Statement Under Penalty of Perjury (18 U.S.C. § 152(3))                                                                       

Colton is charged in Count 1 with making a false declaration, verification, or statement on his Petition and Schedules. To prove a violation of this statute, the government must show that:

1. On or about the date alleged in the indictment, the proceeding in bankruptcy was in existence;

 

1. Defendant knowingly and fraudulently made, and caused to be made, a false declaration, certification, verification or statement in that bankruptcy proceeding or in relation to that bankruptcy proceeding;

 

1. The false declaration, certificate, verification, or statement was made under penalty of perjury, and

2. The statement was as to a material fact.

 

2 Devitt, Blackmar & O’Malley, Federal Jury Practice and Instructions, § 24.07 (4th ed. 1990); United States v. Gaudin, 515 U.S. 506, 522 (1995).

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2.         False Oaths or Accounts (18 U.S.C. § 152(2))

Counts 2 - 5 of the indictment charge Colton with making false statements under oath during his Rule 2004 examinations on January 15, 2002 and August 14, 2002. The elements of these offenses are:

1. On or about the date alleged in the indictment, the proceeding in bankruptcy was in existence,

 

1. Defendant knowingly and fraudulently made, or caused to be made, a false oral statement in that bankruptcy proceeding or in relation to that bankruptcy proceeding,

2. The false oral statement was made under oath, and

3. The false statement was as to a material fact.

2 Devitt, Blackmar & O’Malley, Federal Jury Practice and Instructions, § 24.07 (4th ed. 1990); United States v. Gaudin, 515 U.S. 506, 522 (1995).

A statement in bankruptcy is materially false if it has a natural tendency to influence or be capable of influencing the bankruptcy trustee, any creditors, or the bankruptcy court. Kungys v. United States, 485 U.S. 759, 770 (1988); Ninth Circuit Criminal Model Jury Instructions § 8.66 (2003).

3.       Concealment of Property (18 U.S.C. § 152(1))

Counts 6 and 7 charge Colton with concealing from the trustee real property and personal property belonging to the estate.  To prevail on these counts the government must prove:

1. On or about the date alleged in the indictment, the proceeding in bankruptcy was in existence,

 

1. Defendant knowingly and fraudulently concealed property from a custodian, trustee, marshal, creditor or United States trustee, and

2. The property belonged to the estate of the debtor.

 

2 Devitt, Blackmar & O’Malley, Federal Jury Practice and Instructions, § 24.03 (4th ed. 1990).

The estate of the debtor includes both legal and equitable interests. United States v. Weinstein, 834 F.2d 1454, 1461 n.2 (9th Cir. 1987). Withholding information about an asset constitutes concealment under § 152. Id. at 1462.

 

 

 

 

 

B.USE OF SUMMARY EVIDENCE

1. Summary Witness (Financial Analyst Aaron Rich)

The government intends to call Federal Bureau of Investigation (“FBI”) financial analyst Aaron Rich to testify as to the preparation of schedules and charts summarizing Colton’s voluminous financial documents. Rich, who is a certified public accountant and has received training in commercial accounting and forensic accounting, will help the jury understand Colton’s bank records and financial statements, and describe to the jury the flow of funds into and out of bank accounts controlled by Colton. His testimony will be predicated entirely upon documents that are admissible in evidence, and which have been made available to the defense for review and inspection.

The use of summary witnesses has long been approved by the courts. See United States v. Johnson, 319 U.S. 503, 519-20 (1943) (reversing where court failed to allow summary witness testimony in a tax evasion prosecution); United States v. Baker, 10 F.3d 1374, 1411 (9th Cir. 1993) (noting “this circuit has often allowed the use of summary charts and summary witness testimony based on testimonial evidence (most commonly in tax cases)”), overruled on other grounds by United States

v. Nordby, 225 F.3d 1053 (9th Cir. 2000). As the Ninth Circuit has recognized, summary evidence “can help the jury organize and evaluate evidence which is factually complex and fragmentally revealed in the testimony of the multitude of witnesses.” United States v. Shipley, 884 F.2d 1130, 1133 (9th Cir. 1989) (citation omitted). Because Financial Analyst Rich will not be offering “expert opinions” – but merely adding and subtracting amounts found on Colton’s various financial records – his testimony does not fall within Fed. R. Evid. 702 and need not be disclosed pre-trial pursuant to Fed. R. Crim. P. 16.

1. Summary Charts or Schedules of Voluminous Evidence

In addition to the testimony of a summary witness, the government intends to offer through the witness several summary schedules of voluminous evidence. These summaries are admissible under Federal Rule of Evidence 1006, which provides:

The contents of voluminous writings, recordings, or photographs which cannot conveniently be examined in court may be presented in the form of a chart, summary, or calculation. The originals, or duplicates, shall be made available for examination or copying, or both, by other parties at reasonable time and place. The court may order that they be produced in court.

 

 

 

 

 

Fed. R. Evid. 1006. “The purpose of Rule 1006 is to allow the use of summaries when the volume of documents being summarized is so large as to make their use impractical or impossible; summaries may also prove more meaningful to the judge and jury.” United States v. Johnson, 594 F.2d 1253, 1255 (9th Cir. 1979) (citation omitted). The proponent of a summary under Rule 1006 must establish the admissibility of the underlying documents in order to introduce the summary. See United States v. Meyers, 847 F.2d 1408, 1411-12 (9th Cir. 1988) (allowing government to admit a summary chart of telephone calls and surveillance logs which helped clarify “confusing” events).

Financial Analyst Rich’s testimony will be based upon his review of several years’ worth of account statements from several different domestic and foreign financial accounts associated with Colton. These statements were made available to Colton for his review, and are admissible as business records. Rule 1006 summaries are particularly appropriate where summaries organize information derived from a large number of documents into an understandable format. See e.g., Keith v. Volpe, 858 F.2d 467, 480 (9th Cir. 1988) (summaries necessary to clearly present government agency files).

C.USE OF BUSINESS RECORDS

1. Domestic Records of Regularly Conducted Activity

The government intends to offer into evidence many documents that qualify as “business records,” and thus are free from the prohibition on hearsay. See Fed. R. Evid. 803(6), 902(11). The government has notified Colton in writing of its intention to use Rule 902(11) certifications, and has invited Colton to review the certifications and the underlying documents.

1. Foreign Records of Regularly Conducted Activity

The government will also seek to admit business records from France concerning Colton’s purchase of the Chateau, his purchase of a Peugeot automobile, and his CaixaBank and Credit Agricole accounts – none of which he disclosed in his bankruptcy Petition. These records are admissible over any authenticity or hearsay objection because they comply with the requirements of 18 U.S.C. § 3505. “Pursuant to § 3505, ‘[i]n a criminal proceeding in a court of the United States, a foreign record

of regularly conducted activity, or a copy of such record, shall not be excluded as evidence by the hearsay rule if a foreign certification attests . . .’ to the requirements specified in the statute.” United States v. Hagage, 437 F.3d 943, 956 (9th Cir. 2006) (quoting § 3505). A foreign certification under

 

 

 

 

 

§ 3505 must state that “(A) such record was made, at or near the time of the occurrence of the matters set forth, by (or from information transmitted by) a person with knowledge of those matters; (B) such record was kept in the course of a regularly conducted business activity; (C) the business activity made such a record as a regular practice; and (D) if such record is not the original, such record is a duplicate of the original; unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.” 18 U.S.C. § 3505(a)(1). If a foreign certification meets these requirements, then the proponent of the evidence need not call a live witness to establish its authenticity, and the foreign record may not be excluded as hearsay. Hagege, 437 F.3d at 957. The Ninth Circuit has specifically held that foreign business records admitted pursuant to § 3505 are not subject to the Confrontation Clause requirements of Crawford v. Washington, 541 U.S. 36 (2004), and are sufficiently reliable and part of a “firmly rooted” hearsay exception to satisfy Ohio v. Roberts, 448 U.S. 56 (1980). Hagege, 437 F.3d at 958.

The records at issue here – records of Colton’s accounts at CaixaBank and Credit Agricole, his purchase of a Peugeot, and his purchase of the Chateau – are each accompanied by a certification from a qualified custodian. These certifications will be offered into evidence at the time the underlying documents are moved into evidence. Colton was notified in writing in November 2007 of the government’s intention to rely on § 3505 certifications to admit these records.

1. USE OF FOREIGN PUBLIC RECORDS AND ACKNOWLEDGED DOCUMENTS The government may seek to introduce records from public agencies in France concerning Colton’s ownership of the Chateau, his payment of fees and taxes on the Chateau, and his ownership of a Peugeot automobile. Such records, if offered, will be admissible over any authentication or hearsay

objections by Colton.

Foreign public documents are deemed authentic if under Fed. R. Evid. 902(3) if “executed or attested in an official capacity by a person authorized by the laws of a foreign country to make the execution or attestation, and accompanied by a final certification as to the genuineness of the signature and official position (A) of the executing or attesting person, or (B) of any foreign official whose certificate of genuineness of signature and official position relates to the execution or attestation in a chain of certificates of genuineness of signature and official position relating to the execution or

 

 

 

 

 

attestation.” Fed. R. Evid. 902(3). Even if a final certification is not available, a court may still treat such documents as presumptively authentic if good cause has been shown, and a “reasonable opportunity had been given to all parties to investigate the authenticity and accuracy of official documents.” See United States v. Chung Kong Yin, 935 F.2d 990, 994-95 (9th Cir. 1991).

Documents that are acknowledged by a notary public “or other officer authorized by law to take acknowledgments” are self-authenticating. Fed. R. Evid. 902(8); United States v. M’Biye, 655 F.2d 1240, 1242 (D.C. Cir. 1981) (notarized affidavit); United States v. Estate of Oxarango, 2008 WL 5411719, *4 (D. Idaho Dec. 24, 2008) (recorded mortgages and promissory notes). Many of the documents provided by French authorities are notarized or acknowledged by French judicial officers authorized by law to take such acknowledgments.

Public records are not hearsay so long as they are “[r]ecords, reports, statements, or data compilations, in any form, of public offices or agencies, setting forth . . .the activities of the office or agency . . . .” Fed. R. Evid. 803(8). Each of the public records to be offered into evidence contain records and data compilations concerning the activities of the appropriate public office – e.g., the Ministry of the Economy, Finances and Industry has provided records of taxes owed by Colton on the Chateau, and the Office of the Mayor of Hommes has provided records demonstrating Colton’s ownership of the Chateau. Therefore, each of these public records fit within an exception to the rule against hearsay.1/

E.USE OF RESIDUAL HEARSAY EXCEPTION

The previous owners of the Chateau (as listed on the sales contract with Colton) were Joseph Jacques Bouchard and his wife Marie Marcelle Carole Maranda. The couple authored a French language book about their lives at the Chateau, with photographs of many interior rooms and unique features of the castle. The government may seek to introduce this self-authenticating book and its contents under the residual hearsay exception, Fed. R. Evid. 807. The government has notified Colton

 

 

 

1/ Records from France concerning the Chateau may be admissible under several theories. For example, the purchase contract signed by Colton is admissible under Fed. R. Evid. 801(d)(2) because it was signed and adopted by Colton, and under Fed. R. Evid. 803(14) because it is a record of a document affecting an interest in property.

 

 

 

 

 

of this book (which it only recently acquired), and advised him in writing that it may seek to rely on Rule 807 to overcome any hearsay objection.

F.TRANSLATIONS

Many of the documents relating to Colton’s French assets (including documents written and signed by Colton) are written in the French language. The government has provided Colton with certified translations of these documents. However, to date, Colton has refused to stipulate to the accuracy of these translations. Accordingly, the government may be required to call the French language specialist (Christian Degueldre) who translated the documents to establish their authenticity and accuracy for the jury. Mr. Degueldre’s substantial qualifications have been provided to Colton.

G.EXPERT TESTIMONY

The government may call Mary Testerman DuVoisin, a Trial Attorney with the United States Trustee’s Office, as an expert witness to provide background in the area of bankruptcy. Ms. Testerman DuVoisin’s qualifications and anticipated testimony has been provided to Colton, as required by Fed.

R. Crim. P. 16.

Other witnesses will necessarily testify about the bankruptcy process in order to explain what they did and why they did it. For example, as counsel for Trustee Kipperman, Peter Duncan was engaged to determine if assets were available to satisfy Colton’s estate. In order to do so, Duncan had to analyze Colton’s possible equitable and marital property interests in 59 Asilomar Road, in addition to other assets. While Duncan will not offer “expert opinions” as to whether Colton in fact owned or did not own certain assets, he will be asked why he inquired into certain areas during his Rule 2004 examination of Colton. This testimony will be relevant to prove the materiality of Colton’s falsehoods, and their potential impact on his bankruptcy. While the government does not believe such testimony falls under Fed. R. Evid. 702, out of an abundance of caution, it has provided Colton with written notice of Duncan and Stevenson’s qualifications and anticipated testimony.

V WITNESSES

The government may call the following individuals as witnesses in its case-in-chief at trial, but reserves the right to call additional witnesses during its case-in-chief or in rebuttal:

 

 

 

 

 

1. Paulette Ancharoff

2. Roy Carlson

3. Jessica Colton

4. Christopher Colton

5. Glen Dean

6. Christian Degueldre

7. Jacques Dessoles

8. Peter Duncan

9. Mary Testerman DuVoisin

10. Pierre Gravel

11. Teresa Hardke

12. Phillip Hatch

13. John Hause

14. Jean-Francois Lefay

15. Robert Love

16. Kathleen Love

17. David Oleksow

18. Michael Peters

19. Donald Pelgrim

20. Aaron Rich

21. Susan Stevenson

22. Armand Vallette

23. Philippe Vidoni

24. Jeannette Leon Vittorio

 

 

 

 

 

VI EXHIBITS

Under separate cover, the government is providing Colton with a draft exhibit list and copies of its anticipated exhibits. On the morning of trial, the government will provide Colton and the Court with a final exhibit list, and will provide the Court with copies of its anticipated exhibits.

VII VOIR DIRE

In addition to the Court’s standard questions to the venire, the government requests that the Court consider inquiring of the panel in the following areas:

1. Has anyone been involved in the bankruptcy process, either as a debtor, a creditor, or in some other capacity?

2. Has anyone had any experiences with agents from the Federal Bureau of Investigation that would make it difficult for you to sit as an impartial juror in this case?

3. Has anyone had experiences with the United States Trustee’s Office that would make it difficult for you to sit as an impartial juror in this case?

4. Does anyone have any training or experience in the law, and particularly in the area of bankruptcy law?

5. Some of the evidence you may see in this case comes from France. Does anyone speak or read French? Would you be able to put aside what you know about the French language, and accept what the court-certified French translator says is the English translation of any testimony or evidence in the French language?

6. Has anyone had any particularly positive or negative experiences with the Internal Revenue Service or the California Franchise Tax Board?

7. Does anyone have any training or experience in the area of estate planning, such as wills and trusts?

 

 

 

 

 

The government respectfully requests permission from the Court to personally address the venire and ask follow-up questions.

DATE: January 14, 2009                                Respectfully submitted,

KAREN P. HEWITT

United States Attorney

/s/ Eric J. Beste            ERIC J. BESTE

Assistant U.S. Attorney

/s/ Valerie H. Chu                VALERIE H. CHU

Assistant U.S. Attorney

 

Case 3:06-cr-02252-W Document 59 Filed 01/14/09 PageID.511 Page 22 of 22

 

 

 

1UNITED STATES DISTRICT COURT

1. SOUTHERN DISTRICT OF CALIFORNIA 3

 

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UNITED STATES OF AMERICA,

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Plaintiff,

1. v.

7ROLAND C. COLTON,

1. Defendant.

 

)          Criminal Case No. 06CR2252-W

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)          CERTIFICATE OF SERVICE

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IT IS HEREBY CERTIFIED THAT:

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I, Eric J. Beste, am a citizen of the United States and am at least eighteen years of age. My

1. business address is 880 Front Street, Room 6293, San Diego, California 92101-8893.

2.             I am not a party to the above-entitled action. I have caused service of the GOVERNMENT’S TRIAL MEMORANDUM on the following parties by electronically filing the

3. foregoing with the Clerk of the District Court using its ECF System, which electronically notifies

them:

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Roland C. Colton, rcc7@msn.com

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I declare under penalty of perjury that the foregoing is true and correct.

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Executed on January 14, 2009

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ERIC J. BESTE

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06CR2252-W