I thought the Fund III records would be the central focus for my defense because the volume and thoroughness of the information that each investor had to commit to in order to be part of the Fund were substantial. The Receipt of the Offering Circular, Investor Questionnaire, Purchasers Representative Questionnaire, and Subscription Agreements had to be filled out properly for the investor to be a part of Fund III. Investors had to say that they had read the entire offering circular that had all the risk tolerance questions and agreed to accept all risks.
I recall over 50 questions to assure that virtually every possible outcome was described. For example, an investor would have had sufficient funds to not need the liquidity of the Fund to provide for their needs. Basically, an investor would have to say that they could lose their entire investment. Nobody ever wants that to happen, but that is what they have to acknowledge to be a part of Fund III. Every document related to signing up for Fund III had to be signed by all required parties and good funds had to be delivered in order for an investor to be accepted.
Any investor that might be working with the prosecutors would have to acknowledge that they completed and signed the documents and therefore knew the risk they were getting into. That seemed like it would be very favorable for my defense. Now, the documents are gone. What is going to happen to my case?
Here is a timeline of the documents as it relates to the investigation:
Aug 2001 Securities and Exchange Commission sends out questionnaires to all investors.
Oct 2001 I take inventory of every document in the Fund files and pictures of the boxes as they are being taken away on a truck for safekeeping. Dec 2001 Fund III filed for bankruptcy.
Early 2002 Bankruptcy Trustee receives all Fund III original business records.
June 2002 US Attorney’s office issued subpoenas to an accounting firm for any Fund III records.
July 2002 Government raids Stan’s storage unit and finds some of Fund III’s documents.
Sept/Oct 2002 Trustee/lawyer timesheets show Government agents talking with the bankruptcy trustee about Fund III.
May 2004 Motion to Destroy the original business records submitted by the trustee. The trustee claims that documents were burdensome to keep. Prosecutor’s office and IRS received Motion. I didn’t receive the Motion. There are regulatory requirements on how long you have to keep these records. There was still value in some of the portfolio companies and the ownership for those companies were a part of those documents.
June 2004 The motion was approved. Documents are presumed destroyed, but no one knows.
Fall 2004 Trustee tells the prosecutor that the Fund III documents are gone.
Nov 2004 I was notified that I was the subject of a federal criminal investigation regarding the Fund III.Feb 2005 I was indicted.
March 2005 The Government offers “open discovery” of all their documents. Where are the documents Fund III had?
March 2005 Outside CPA comes to my house to tell me that the Fund III documents are destroyed and that she is helping to reconstruct financials.
May 2005 We file a Motion to Dismiss the case based on the destruction of the original business records. We get a letter from the prosecutor saying in part, “we were surprised to learn records pertinent to the bankruptcy were destroyed and are seeking additional details ourselves.”
June 2005 Prosecutor left a voicemail with my attorney, “I am very disturbed that you have to file the motion, but you got to do what you got to do. As you know the Government has clean hands in this matter so you make whatever argument you want. But don’t expect a light return. I mean I’m kind of over it. First of all, we had no notice; we hadn’t opened this part of the investigation at the time, and we had nothing to do with the destruction of records, and we had no indication that your client had any exculpatory information and we had no hand in it.”
I was left still asking the questions. First, why were the documents really destroyed? Second, how could the Government allow the destruction of the Fund’s original business records during an active investigation? Were the documents actually destroyed? So many other questions and no one that could/would answer them.
I thought that the Government would drop the charges since they had knowledge of the destruction of documents and did nothing to stop it. I was wrong.
We filed a Motion to Dismiss the case based on the destruction of documents.
When you are trying your best to get the truth out, it’s hard work. It shouldn’t be, but in this case, it was. To me, the original business records represented the truth. That’s what documents do – represent what happened. While there was a Motion to Destroy all of the original business records, some of the underlying portfolio companies still had value and it was within less than 3 years since the end of Fund III, it just didn’t add up to me. It was odd that I didn’t get Notice regarding the records being destroyed.
The truth and everyone telling it was growing in importance every day. It was growing in me. Even if I was going to get convicted, I wanted to say and hear the truth. It got very personal. Please don’t lie about me or what I have/haven’t done. I can’t bear it.
People in my community were in disbelief that Fund III documents were thought to be gone within just a few months prior to being charged. It was confusing and I had no answers to offer. Maybe there was more to the story. Maybe I misunderstood something. Everyone that I talked with agreed that the original business records would always be the foundation for understanding Fund III.
How do you recognize the important people in your life to let them know what they mean to you….or do you just assume they know and/or don’t need to hear it?