Free Reply to Response - District Court of Colorado - Colorado

Case 1:04-cr-00103-REB

Document 705-2

Filed 04/10/2006

Page 1 of 7

Attachment 1 Second Supplement to James Log- corrected

Case 1:04-cr-00103-REB

Document 705-2

Filed 04/10/2006

Page 2 of 7
I

SECOND SUPPLEMENT TO JAMES LOG corrected
1

-

U.S. v Schmidt et al. 04-cr90103-REB
I
I

I

Stmt #

Date 323412003
I

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."
-

Declarant

Source

I

Bates #s

Admission Bases

Norman Schmidt

Michael Huffman

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

- -

--

-

324 412003

~
I
~

you tell us, pleas& initiallywhat Mr. Harte told you about Mr. Schmidt's relationship to the Reserve Foundation and his role?] A: "That he was a co-owner or -- and participant." Leon Harte respect to the information that 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 1

I

/ ~chmidt

Norman

Michael
I Huffman

r

-

--

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

-

--

, --

- --

Gary Herbert :Deposition
I

p. 20

I

I

I

I

~

Gary Herbert Deposition
I

--

327 2000-2001
I

i

LLCs and the foundation." Leon Harte I[Q: Can you tell us, please, if you know, I based upon your conversations with Mr. Harte, what services he actually performed I for the corporation besides being its spokesman?] "A: I believe he recruited -recruited -- solicited clients and secured clients, that is investors." . C. . 'Leon Harte "[Norman Schmidt] was sort of reorganizing 1 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."
--

l,e,l,k

- -

I

1

- -

Gary Herbert Deposition
I

I
.

-- -

I
'Gary Herbert
-- -

-

-

-

Gary Herbert

Case 1:04-cr-00103-REB
330 1012001

Document 705-2

Filed 04/10/2006

Page 3 of 7
I

1 Jan told Warren Peterson it was because of

1 this investment program that she could pay
for her daughter's education. Jan would receive 2-3% on any referrals.

I

Jannice Mclain Warren
l p -

-

I

331 1012001

,

I
332412002

I
333 512002
I

~

I

-

-

3341 612002

'-I
I
I
L -

- - --

-

335;612002-I

I
I

- -~chmidt Peterson I Jan mentioned that she was a ~ h u r c h - ~ o i n ~ 1 lady and that many people in her church were investing in the program, even cashing in 1 Jannice Mclain Warren Certificates of Deposit. 315070 a, i, j, p 'Schmidt I _-- --Peterson Jan also mentioned to Troy Hall that he could I get a commission of 2% /month of whatever investor funds he was able to bring in. Jannice Mclain I 1 315072 a,d,g '~chmidt Troy Hall -4 i I "1)Danger from the SEC: Sale of unregisteredfp I securities; Definition of an Investment I Meeting Contract; Official SEC position regarding Bank Instrument Trading Programs" ,Michael A. (Agenda, May allo one 21 1750 a, b,k 1 6-19, 2002 1 - - " E ~ o s e d a contract for placement in the is 'Fax to Chuck I program for a Belize Company [Regency LewislNorman ventures, Ltd.] which I personally control as I Director." Michael A. SchmidtlCapital Vallone Holdings, LLC --"M~ke Smith told me that all contracts should I n o w be in the name of Capital Holdings. LLC. since it is replacing Smitty's as far as the
-

I
1

-

-

-

- -

-

t

1

~

L

-

1

-

-

-

p

- -

-

~~

-

-

9
--

program is concerned. Mike further told me that until the trans~t~onfinished we should is

1

Fax to Chuck LewislNorman 1 SchmidtlCapital Holdings, LLC Fax to Chuck LewislNorman SchmidtlCapital Holdings, LLC
-

~

21 35571-fg,h

-

337 612002

I
1

213557 a,e,h
-

-

Email to Cory John Schlabach Kirkham

315100 a,.i,j,k

Case 1:04-cr-00103-REB
338 612002

Document 705-2

Filed 04/10/2006

Page 4 of 7

~

339 612002

-

4

0
I

0

2

341 712002

"[Norman Schmidt] would discuss with his -- 1 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 Norman program]." -- Norman Schmidt said that Mr. Vallone and Mr. Smith were other members of his Norman organization. I Mr. Vallone "was part of this larger ,organization of -- for lack of a better term, sales organization." Norman I Schmidt ~ h e b r i n c i ~ of ~ s high yield investment a this program included Norm Schmidt and Charles
- --

- -

A

Gary Herbert

C

-

I
-

315094 a,e,l
-

342 712002

I

I

I
343 812002

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 0.K this evening I a n d follow up with a call in the A.M. If we can I 1 send and or prepare Certificates of Insurance 'for the 14, 1 will call as to weather [sic] or not '(your and Norms) wishes as to sending them ... We greatly appreciate you."
-

I

I

I

Charles Lewis Charles Lewis

10.000 [of investor money]."

Fax to George Allen Weed NOG sue to Veik

Case 1:04-cr-00103-REB
344 912002

Document 705-2

Filed 04/10/2006

Page 5 of 7
I

I

I "SIS Associates (Val Bough) will have a I 1 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 I I all your agents. B. Provide all agents [sic] I I , names and address's [sic] that are marketing the Capital Holdings Intl., LLC program to the I Northwest Group. C. Supply the agents with approved contracts, and fax New Business ,Norman ~Schmidt, Transmittals to Northwest Group office @ (509)465-5282. D. Your contract Level will be Charles Lewis, Letter to Val & John i ::E : Schlabac and accounting on the Jannice McLain Letter to program." Schmidt AND WE DID Funds History N O T TRY TO PLACE THESE [investor] Statement for 1 FUNDS SOMEWHERE ELSE." I Delta Int'l I

1

1
I

I
~

1

-

Tmberly
~
214984!a.d.e,g.i,l.o
I

:z iiri" 1

~

- -

e,l

-

-

--

~radin~ Beros ,Program
- -

1
209516~ , f j l b
I
I

347 912002
I

"Mr. Norm Schmidt is the this company [Monarch Capital Holdings, LLC] and is the duly appointed Senior Manager and Director."

- I -

-

1 Norman

Funds History I Statement for Delta Int'l

1

I
, -

348 912002

"MCH [Monarch Capital Holdings] acquired approximately Three Million Five Hundred Thousand Dollars ($3,500,000.00) from its sister company named Capital Holdings. LLC."

I
I

INorman

Schmidt &
+-

-

209517 a,f, i, m
-

-

349 912002 Five Hundred Thousand Dollars Statement for ($1,500,000.00) from another company that is Delta Int'l Norman involved in Race Car Motor Sports in the Schmidt & 'Trading United States of America." George Beros 1 Program

1

1

I
I

209517 a,f, i, m

Case 1:04-cr-00103-REB

Document 705-2

Filed 04/10/2006

Page 6 of 7

~
- .. . -

1
j
j

i

!
- -~~

351 112003

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 junder control. I'm holding Chuck completely responsible so you know why he is putting Norman pressure where ever he has to." Schmidt .. 1 .."CB Morris-Broker who brought us [the investors] Milan [Vrckovnik] and Kriselle

1

~

~
I

~~

i

~

-

~

~

-

Note to Michael Smith
~~

~

!
-

,.
1

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

I
205153 a,g,h,l- --

~-

--

foundation]"

[From directio"~~f6;iheio~owingwiree~~
~

F a x to Norman !1 George Beros Shcmidt .

e

II US Bank for: Rev.Jerry Harper - $20,000;
,

transfers:] "Capital Holdings LLC account at

--

--

. . . .. ~ .

353 212003
!
I

i~

i
I

i

:Vince & Jack $1 1,000 (including $3,500 for ' .one broker on Gauthier less $5K for the Atlanta asshole.); David Mays $3,500 (introduced us to Vince & Jack); Computers i $ 1 3.500 Computer equipment if lease falls I through; Furniture $3,500 Remainder of i furniture; George Beros $6.000 Pay personal (bills + expenses for Phoenix & Daytona; Total $57,500" George Beros ' i !"Norm, The following check needs to be !reissued as a cashier check due to 1 'uncollected funds. Robert Wommack: i $2,166.39. With your authorizing signature, I I this cashier check and all future uncollected i funds checks pertaining to December 2002 earnings will be withdrawn from the funds that Mike VallonelCambridge Ventures sent to the Michael Smith Fax to Norman 1 or John North West Group. Thank you." Schmidt Schlabach -~ .~ I - . .~ ;"I redid this.ietter [describing Smitty's 1 I Investments, LLC collateral guarantee I i insurance policy] for my investors (potential Jannice McLain Fax to George investors) as per Norm [sic] directions." / ~ l a Weed n Schmidt

~
~~
~

~

~

~

-

205159a,e,g,h,l . .
--

-

.- - -

~

~

-~ - -

~

~--

-

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

.--..

.

.~~

!

209805 a,b,e,h

Case 1:04-cr-00103-REB
355412003

Document 705-2

Filed 04/10/2006
Michael Huffman transcri~t

Page 7 of 7

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