Free Govt's Proffer - District Court of Colorado - Colorado

Case 1:04-cr-00103-REB SECOND SUPPLEMENT TO JAMES LOG
Stmt # Date 323 4/2005

Document 677-3

Filed 03/09/2006

Page 1 of 6

U.S. v Schmidt et al. 04-cr-00103-REB Declarant Source Bates #s Admission Bases

Description Norman Schmidt suggested to Michael Huffman that he set up a promotional company [Rocky Mountain Sports Promotions, LLC]. Norman Schmidt said "he would have his attorney [Gary Herbert] draw [the articles of incorporation for Rocky Mountain Sports Promotions, LLC] up."

Norman Schmidt

Michael Huffman

558199 a,d,e,g,l,o

324 4/2005

Norman Schmidt

Michael Huffman

558200 a,d,f,g,i,l

325 2000-2001

326 2000-2001

327 2000-2001

328 2001

329 2001

[Q: Can you tell us, please, initially what Mr. Harte told you about Mr. Schmidt's relationship to the Reserve Foundation and his role?] A: "That he was a co-owner or Leon Harte participant -- and participant." [Q And with respect to the information that you had outside the source of those documents from Mr. Harte, what was he able or did he tell you about Mr. Schmidt's affiliation with those LLC's?] "THE WITNESS: That there was an ownership interest, but it varied amongst the various Leon Harte LLCs and the foundation." [Q: Can you tell us, please, if you know, based upon your conversations with Mr. Harte, what services he actually performed for the corporation besides being its spokesman?] "A: I believe he recruited -recruited -- solicited clients and secured Leon Harte clients, that is investors." "[Norman Schmidt] was sort of reorganizing and revivifying the activity of those entities [related to the Reserve Foundation Trust] or taking over from Harte." Leon Harte "[The funds used to purchase the Redstone properties] had, in fact, been investor funds." Leon Harte 1

Gary Herbert Deposition

p. 20

a,e,k

Gary Herbert Deposition

p. 16

a,e,l,k

Gary Herbert Deposition

p. 19

e,l,k

Gary Herbert Deposition

p. 41

a,e,f

Gary Herbert Deposition

p. 33

a,b,f,k

Case 1:04-cr-00103-REB
330 10/2001

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Jan told Warren Peterson it was because of this investment program that she could pay for her daughter's education. Jan would receive 2-3% on any referrals.

Jannice Mclain Warren Schmidt Peterson

315070 a,i,p

331 10/2001

332 4/2002

333 5/2002

334 6/2002

335 6/2002

Jan mentioned that she was a church-going lady and that many people in her church were investing in the program, even cashing in Jannice Mclain Certificates of Deposit. Schmidt Jan also mentioned to Troy Hall that he could get a commission of 2% /month of whatever Jannice Mclain investor funds he was able to bring in. Schmidt "1)Danger from the SEC: Sale of unregistered securities; Definition of an Investment Contract; Official SEC position regarding Michael A. Bank Instrument Trading Programs" Vallone "Enclosed is a contract for placement in the program for a Belize Company [Regency Ventures, Ltd.] which I personally control as Michael A. Director." Vallone "Mike Smith told me that all contracts should now be in the name of Capital Holdings, LLC, since it is replacing Smitty's as far as the program is concerned. Mike further told me that until the transition is finished we should still send funds to the account for Smitty's at Michael A. Wells Fargo." Vallone "I am giving a copy of the contract to Mike Smith so he will stay in the loop." Michael A. Vallone

Warren Peterson

315070 a, i, j, p

Troy Hall

315072 a,d,g

Meeting Agenda, May 16-19, 2002 Fax to Chuck Lewis/Norman Schmidt/Capital Holdings, LLC

211750 a, b,k

213557 a,e,o

336 6/2002

Fax to Chuck Lewis/Norman Schmidt/Capital Holdings, LLC Fax to Chuck Lewis/Norman Schmidt/Capital Holdings, LLC

213557 a,e,f,g,h

213557 a,e,h

337 6/2002

"I read the links [to internet sites concerning fraudulent high-yield investment programs] Email to Cory and have a call into the principals to get some John Schlabach Kirkham answers for [u]s."

315100 a,.i,j,k

2

Case 1:04-cr-00103-REB
338 6/2002

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339 6/2002

340 6/2002

"[Norman Schmidt] would discuss with his -the other members of his organization the contents of [Gary Herbert's June 17, 2002 letter to Jannice McLain Schmidt describing the insurance protection supposedly applicable to the Capital Holdings investment program]." Norman Schmidt said that Mr. Vallone and Mr. Smith were other members of his organization. Mr. Vallone "was part of this larger organization of -- for lack of a better term, sales organization."

Norman Schmidt Norman Schmidt

Gary Herbert Deposition Gary Herbert Deposition

p. 55

b,e,m

p. 56

b,e

Norman Schmidt

Gary Herbert Deposition

p. 72

b,e

341 7/2002

342 7/2002

343 8/2002

The principals of this high yield investment program included Norm Schmidt and Charles John Schlabach Lewis from Colorado. "I am faxing 14 monthly dispursment [sic] and placement forms. These are one [sic] we feel are very important at this time. I will cross check with Norm as to his O.K this evening and follow up with a call in the A.M. If we can send and or prepare Certificates of Insurance for the 14, I will call as to weather [sic] or not (your and Norms) wishes as to sending them... We greatly appreciate you." Charles Lewis "I took the 10,000 [of investor money]." Charles Lewis

Cory Kirkham

315094 a,e,l

Fax to George Allen Weed Note to Sue Veik

226262 a,b,e,g,h.l,o 228686 a,b,g,l

3

Case 1:04-cr-00103-REB
344 9/2002

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"SIS Associates (Val Bough) will have a protected area in California to Marketing the Capital Holdings Intl, LLC, program. 1. That your company SIS Associates will be the Marketing Arm for the State of CA and that your responsibility will consist of: A. Training all your agents. B. Provide all agents [sic] names and address's [sic] that are marketing the Capital Holdings Intl., LLC program to the NorthWest Group. C. Supply the agents with approved contracts, and fax New Business Transmittals to NorthWest Group office @ (509)465-5282. D. Your contract Level will be 9%."

Norman Schmidt, Charles Lewis, Letter to Val & John Bough & SIS Schlabach Associates Letter to Kimberly Perrin Funds History Statement for Delta Int'l Trading Program Funds History Statement for Delta Int'l Trading Program Funds History Statement for Delta Int'l Trading Program Funds History Statement for Delta Int'l Trading Program

21984 a,d,e,g,i,l,o

345 9/20002

346 9/2002

"I do all the paperwork and accounting on the Jannice McLain program." Schmidt "X No, WE DID NOT PLACE, AND WE DID NOT TRY TO PLACE THESE [investor] FUNDS SOMEWHERE ELSE." Norman Schmidt & George Beros

208765 e,l

209516 b,f,j,l

347 9/2002

"Mr. Norm Schmidt is the principal partner in this company [Monarch Capital Holdings, LLC] and is the duly appointed Senior Manager and Director." "MCH [Monarch Capital Holdings] acquired approximately Three Million Five Hundred Thousand Dollars ($3,500,000.00) from its sister company named Capital Holdings, LLC."

Norman Schmidt & George Beros

209517 a,e,i,

348 9/2002

Norman Schmidt & George Beros

209517 a,f, i, m

349 9/2002

"MCH acquired approximately One Million Five Hundred Thousand Dollars ($1,500,000.00) from another company that is Norman involved in Race Car Motor Sports in the Schmidt & United States of America." George Beros

209517 a,f, i, m

4

Case 1:04-cr-00103-REB
350 12/2002

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351 1/2003

"Mike, We need every piece of paper to be approved or take [sic] a look at it with all that has been happening with the letters and all he sent out. I visited with Chuck and told him to have everything run through his office so Gary Herbert or myself can look at it. We're growing fast and we must keep this thing under control. I'm holding Chuck completely responsible so you know why he is putting Norman pressure where ever he has to." Schmidt "CB Morris-Broker who brought us [the investors] Milan [Vrckovnik] and Kriselle [Foundation]" George Beros [From directions for the following wire transfers:] "Capital Holdings LLC account at US Bank for: Rev.Jerry Harper - $20,000; Vince & Jack $11,000 (including $3,500 for one broker on Gauthier less $5K for the Atlanta asshole.); David Mays $3,500 (introduced us to Vince & Jack); Computers $13,500 Computer equipment if lease falls through; Furniture $3,500 Remainder of furniture; George Beros $6,000 Pay personal bills + expenses for Phoenix & Daytona; Total George Beros $57,500" "Norm, The following check needs to be reissued as a cashier check due to uncollected funds. Robert Wommack: $2,166.39. With your authorizing signature, this cashier check and all future uncollected funds checks pertaining to December 2002 earnings will be withdrawn from the funds that Mike Vallone/Cambridge Ventures sent to the Michael Smith or John North West Group. Thank you." Schlabach "I redid this letter [describing Smitty's Investments, LLC collateral guarantee insurance policy] for my investors (potential Jannice McLain investors) as per Norm [sic] directions." Schmidt 5

Note to Michael Smith Fax to Norman Shcmidt

214977 a,b,e,g,k,l,o

205153 a,g,h,l

352 1/2003

Fax to Norman Schmidt

205159 a,e,g,h,l

353 2/2003

Fax to Norman Schmidt

216461 a,b,e,g,h.k,l

354 3/2003

Fax to George Alan Weed

209805 a,b,e,h

Case 1:04-cr-00103-REB
355 4/2003

Document 677-3

Filed 03/09/2006
Michael Huffman transcript

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"[H]e'd get me some money wired in [to the Rocky Mountain Sports Promotions account]." Norman Schmidt

558205 a,e,i,l

6