Free Motion for Miscellaneous Relief - District Court of Colorado - Colorado

Case 1:04-cr-00103-REB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Judge Robert E. Blackburn

Case Number: 04-cr-00103-REB

UNITED STATES OF AMERICA, Plaintiff, v.

4. CHARLES FRANKLIN LEWIS, Defendant.

DEFENDANT CHARLES LEWIS' MOTION TO SEVER SECURITIES FRAUD COUNTS 18-29 CONTAINED IN THE SECOND SUPERSEDING INDICTMENT ________________________________________________________________________

Comes now the Defendant, Charles Franklin Lewis, pursuant to F.R.C.P 14 and through his undersigned counsel, Ronald Gainor, who files this Motion to Sever Securities Fraud Counts 18-29 Contained in the Second Superseding Indictment and, in support, would allege the following: 1. On September 14, 2005, a Federal Grand Jury sitting in the District of

Colorado returned a Second Superseding Indictment against Defendant Charles Franklin Lewis and six others charging them with conspiracy to commit mail, wire and securities fraud in violation of Title 18 U.S.C Section 371; mail fraud in violation of Title 18 U.S.C. sections 1341 and 2; wire fraud in violation of Title 18 U.S.C. Sections 1343 and 2; securities fraud in violation of Title 15 U.S.C. Sections 77q(a) and 18 U.S.C. Section 2 and money laundering in violation of Title 18 U.S.C. Sections 1956(a)(1)(B)(i) and 2.

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2.

With regard to the securities fraud allegations contained in the Second

Superseding Indictment, the Grand Jury specifically charged 12 separate instances of fraud, embodied in Counts 18-29, which are alleged to have occurred from April 4, 2000 through May 20, 2003. 3. As part of these 12 Counts, the government has also specifically pled a

laundry list of eight (8) `material facts' which they assert were concealed from current and prospective investors in connection with the securities fraud (see paragraph 16a through 16g of Second Superseding Indictment). 4. One of these so-called material facts, found at paragraph 16b, is the statement

that Defendant Charles Lewis "had previously been convicted of a felony, theft, in violation of Colorado Revised Statue 18-4-401, in the District Court for the 18th Judicial District of Colorado, and during times relevant to this indictment was on probation for that offense." 5. This conviction was a direct result of the defendant's involvement in an

investment program called Guardian Financial Services International, Inc. (GF) from 1994 through 1996. 6. Undersigned counsel has previously filed a motion before this Honorable

Court seeking the removal of this and other language alleged to be material facts pursuant to a Motion to Strike Surplusage from the Indictment. This Court denied the motion and found that paragraphs 16a-g (formerly paragraphs 19(a), (b), (c) and (h)) did "reference material omissions that a reasonable investor might view as important." (see Court's Order Re: Motions to Strike Paragraphs 29 through 35 of the Superseding Indictment dated May 13, 2005).

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7.

Subsequent to this ruling however, the Court specifically held on May 20,

2005, in an Order Re: Government's Notice of Intent to seek Admission of Extrinsic Evidence of "Other Acts" Pursuant to Fed.R.Evid. 404(B) that seven proffered bad acts including Defendant Lewis' involvement in Guardian Financial Services International, Inc as well as the corresponding felony criminal conviction of Lewis in the 18th Judicial District of Colorado were inadmissible based on a Federal Rule of Evidence 403 analysis. 8. In making this ruling, Court specifically held that "introduction of the

evidence fails to satisfy the requirement of Rule 403. On its own merits, this case presents a complex and byzantine set of facts and circumstances which will consume ten weeks of trial time. Introduction of the evidence the government proffers here not only will prolong the trial, but also raises the specter of a series of mini-trials as to marginally relevant acts which may well confuse and mislead the jury. In addition, the government's proffered 404(b) evidence implicates only four of the seven named defendants. There is thus a very real danger that the non-implicated defendants may be prejudiced by the introduction of the prior bad acts of their alleged co-conspirators, as to which it would be difficult, if not impossible, to fashion an appropriate limiting instruction. Thus, I find that any probative value that evidence of these acts might have is substantially outweighed not only by the danger of unfair prejudice, but also by the dangers of confusion of the issues and misleading the jury. In addition, I find that considerations of undue delay and waste of time further militate against admitting this evidence." 9. It should be noted that the government, in its Notice to Seek Admission of

Extrinsic Evidence of Other Acts Pursuant to Fed. R. Evid. 404(b), argued unsuccessfully

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that Lewis' involvement in Guardian Financial Services International, Inc. and his resulting conviction were admissible, in part, to prove intent to mislead and conceal material information from investors (see page 7 of Government's Intent to seek Admission of Extrinsic Evidence filed on December 30, 2004). 10. Based on the Court's rulings to date, it appears that Lewis' conviction may be a material fact, and potentially admissible in connection with the securities fraud counts. On the other hand, the conviction has also been held to be inadmissible on Federal Rule of Evidence 403 grounds as to every other remaining aspect and charge in the case. 11. It is on this basis that undersigned counsel now moves to sever the securities

fraud counts from the Second Superseding Indictment alleging that insurmountable prejudice will attach to the defendant in the remaining counts in the Indictment based on the disclosure within the securities fraud counts that Lewis was convicted of a felony and on probation of the time the instant offenses were committed. In this regard, undersigned counsel agrees with this Honorable Court's May 20, 2005 Order wherein it was opined that the probative value of such evidence is substantially outweighed not only by the unfair prejudice, but also by the dangers of confusion of the issues and misleading the jury. 12. In the alternative to granting a severance, undersigned counsel would request that this Honorable Court extend its well-reasoned F.R.E 403 analysis to the laundry list of material facts alleged in the securities fraud counts and specifically exclude those material facts alleged in paragraphs 16(b) and 16(a) as being unfairly prejudicial. Counsel concedes that such a finding would render this motion to sever moot.

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13.

In connection with this alternative request, undersigned counsel would point

out that, although this Court did find that the Lewis conviction was a "material omission that a reasonable investor might view as important", it did go on later to categorize the same evidence as "marginally relevant" within the context of the Federal Rule of Evidence 403 analysis. Wherefore, based on the above and foregoing, undersigned counsel for defendant Charles Franklin Lewis, requests that this Honorable Court grant the instant Motion and Order a severance of the securities fraud counts in the Second Superseding Indictment.

Dated this 6th day of February, 2006

Respectfully submitted, s/ Ronald Gainor RONALD GAINOR 6414 Fairways Drive Longmont, CO 80503 (303) 448-9646(phone) (303) 447-0930 (Facsimile) [email protected] Attorney for Charles Lewis

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CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that I have electronically filed the foregoing Motion to Sever Securities Fraud Counts 18-29 Contained in the Second Superseding Indictment on this 6th day of February, 2006 with the Clerk of the Court using the ECF system which will send notification of such filing to the following e-mail addresses:

Matthew Kirsch [email protected] Peter Bornstein [email protected] Thomas Hammond [email protected] Thomas Goodreid [email protected] Daniel Smith [email protected] Declan O'Donnell [email protected] Paul Daiker [email protected]

s/ Ronald Gainor

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