DOJ claim Burks’ experts “to serve as judge, attorney, and jury”
Things are heating up regarding Paul Burks’ defense experts.
Following an objection filed by the DOJ against John White and Morris Aaron’s proposed expert opinion, Paul Burks filed a reply mostly dismissing the DOJ’s objections.
The DOJ has now filed a reply, claiming Burks seeks to have his experts ‘serve as judge, attorney, and jury.‘
White’s testimony that ZeekRewards did not operate as a Ponzi scheme should be excluded
Burks wants John White to read out the dictionary definition of a Ponzi scheme and then compare that to Zeek Rewards.
The DOJ claim this is an attempt to ‘conflate the issues and ignore and/or misrepresent the relevant law.‘
To the extent that Burks intends to have White offer his Ponzi scheme opinion in response to a Government expert, as he suggests in his brief, this issue is moot as the Government will not call an expert in its case-in-chief to testify that Burks’ scheme is a Ponzi scheme or has the characteristics or hallmarks of a Ponzi scheme.
The DOJ aren’t arguing their case on the merits of Zeek Rewards being a Ponzi scheme. Paul Burks has been indicted for wire fraud, and so the DOJ claim any testimony pertaining to whether or not Zeek Rewards was a Ponzi scheme is irrelevant.
Burks essentially seeks to set up a straw house and then knock it down, by offering expert testimony as to what a Ponzi scheme is and then opinion that Burks’ scheme is not a Ponzi scheme.
But it cannot be disputed that the Government need not prove the existence of a Ponzi scheme to prove any of the charges in this case.
Thus, whether or not Burks’ scheme meets all of the elements of a Ponzi scheme is only a relevant inquiry if the Government seeks to prove “a scheme to defraud” by proving that Burks’ scheme meets all of the elements of a Ponzi scheme.
In his reply to the DOJ’s initial objection to White’s testimony, Burks asserted that
it is “well established” in the law that “the existence, or non-existence, of a Ponzi scheme” is the proper “subject of expert testimony in mail and wire fraud prosecutions”.
The DOJ argue this claim “does not withstand scrutiny”. Four cases Burks cited are dismissed by the DOJ, primarily because the violations in those cases are different to Burks’ case.
Another point of contention between the parties is the nature of White’s testimony. Burks claims White ‘is not offering a legal conclusion; rather he is offering an accounting analysis‘.
Citing White’s filed opinion, the regulator sees things differently;
White begins his opinion by quoting the definition of Ponzi scheme from Black’s Law Dictionary, and then says “[t]he Ponzi scheme characteristics identified above [in the definition] are discussed and compare to Zeekrewards.”
That is, White seeks to instruct the jury on a definition of Ponzi scheme – not based upon any expertise on his part, but using a legal definition – and then “compare” that definition to Burks’ business.
Burks cannot seriously be asserting this is “an accounting analysis.”
To the contrary, it is an obvious attempt to offer a legal opinion and usurp both the role of the Court and the jury.
Tellingly, Burks also fails to address any of the cases the Government cited in support of its arguments that White’s opinion is a legal opinion and one that usurps both the role of the Judge and the jury.
Instead, Burks engages in a game of smoke and mirrors.
In conclusion, the DOJ write
White’s “Opinion regarding Zeekrewards not being a Ponzi Scheme” should be
(1) he is not qualified to offer such opinion;
(2) his legal opinion is not the proper subject of expert testimony;
(3) his opinion attempts to usurp the role of the Judge;
(4) the opinion attempts to usurp the role of the jury; and
(5) the opinion is not relevant, and any marginal relevance is substantially outweighed by the danger of confusing the issues, misleading the jury, and undue delay and a waste of the Court’s time, particularly in light of the fact that Burks is not charged with operating a Ponzi scheme and the Government has not sought to establish “a scheme to defraud” by establishing the elements of a Ponzi scheme.
White’s testimony as to what might have been Burks’ reasoning or methodology for determining the Daily RPP Award should be excluded
At issue here is White raising potential defenses for the calculation of the daily ROI percentage paid to Zeek Rewards affiliates.
Burks ignores all of the conditional statements in White’s report that make clear the speculative nature of his opinion.
Burks’ expert leaps to the conclusion that “changes in the Daily RPP Award are based upon changes in daily Bank Balance and Total Money In,” effectively offering testimony as to how Defendant purportedly determined the RPP.
This assumption by Defendant’s expert should be precluded as it would improperly allow Burks to “speculate a non-existent defense into existence.”
This is all the more true in light of the fact the evidence before the jury is that the RPP was not based upon these items, but instead was, for example, “magic”.
Moreover, even if White’s opinion is found not to comprise improper speculation … it should be precluded … as the probative value is substantially outweighed by the danger of confusing the issues and misleading the jury by improperly implying that Burks used these methodologies and did not have fraudulent intent.
In a nutshell, the DOJ argue White shouldn’t be able to use speculative defense theories to effectively testify on Burks’ behalf.
White’s testimony regarding the notebooks should be precluded
Despite having years to acknowledge and/or produce them as evidence, Burks only recently claimed to possess notebooks pertaining to the operation of Zeek Rewards.
Burks claims the notebooks are ‘powerful evidence … that undercuts a central prosecution theory‘.
Naturally the DOJ want anything to do with the notebooks excluded from Burks’ trial.
Tellingly, Burks does not even attempt to explain his failure to have provided this purportedly “powerful evidence” in response to the Grand Jury subpoena or to explain his Grand Jury testimony.
Nor does he offer any explanation for how or why these handwritten documents seemingly materialized on the eve of his trial.
Instead, Defendant asserts that his paid expert should now be permitted to serve as a conduit to put this withheld evidence, which has not been authenticated and contains hearsay, in front of the jury.
Unless or until Burks testifies, authenticating the handwritten notebook and providing foundational testimony as to how it was purportedly used to calculate the RPP, his paid expert should not be permitted to testify for him, implying that Burks’ purported handwritten notebook illustrates what Defendant was thinking at the time.
Sounds reasonable to me. I mean if the notebooks existed all along, why didn’t Burks bring them up before the Grand Jury? If the notebooks are that important, why were they only disclosed a few weeks ago?
Smells fishy as hell to me, leave alone Burks trying to indirectly introduce the notebooks into the trial through an expert witness.
The DOJ claim “two categories of opinions” Aaron tends to provide testimony on
- what information was available and what thresholds “could” have been used to calculate RPP; and
- what the internal policies and regulations of certain banks and merchants were and the reasons those banks and merchants terminated Defendant’s accounts
The DOJ claim Aaron’s testimony is ‘irrelevant, unhelpful, will confuse the issues and mislead the jury‘.
Aaron’s own opinion that lies bare the speculative nature of his testimony.
For example, he states:
• “The Company had access to the following information in determining the daily RPP Award….” (at 14.)
• “the Company could utilize two primary thresholds to ensure the daily RPP Percentage allowed the Company to operate in a stable, sustainable and solvent manner.” (at 15.)
• “these two thresholds would be relevant and sufficient to derive the RPP Award…” (at 16.)
• “that could be utilized…” (at 16.)
Burks offers no explanation as to how this is not speculative and there appears to be none.
Thus, unless or until Burks testifies or otherwise establishes that the Company not only had access to the information but used it, and not only could have utilized one of the thresholds, but did, Aaron’s opinion is not relevant.
On the testimony regarding banks and merchants;
Aaron’s report essentially proposes that he be allowed to pay Aaron to testify for the banks and merchants.
Tellingly, Defendant’s Opposition Brief does not address or even mention the law the Government cites, but instead seems to have abandoned this opinion altogether, now arguing that he intends to “opine about the reasonableness of Mr. Burks’ actions in” regard to “the manner in which his company processed money and dealt with banks.”
Without further explanation, it is unclear whether this new opinion may be within the proper scope of expert opinion, generally, and Aaron’s expertise in particular.
Wondering why Burks isn’t calling up any bank or merchant staff as witnesses?
Yeah, so am I.
Well, not really. Why Zeek Rewards’ bank accounts were shut down one after another should be obvious.
Aaron should not be permitted to be “little more than a backdoor conduit for an otherwise inadmissible statement.”
That is, Aaron should not be permitted to testify about the particular policies of a particular bank or merchant or what the particular banks and merchants here thought and did.
Sounds fair to me.
The DOJ’s reply was filed yesterday on June 10th. Ideally a decision will be made today (Monday the 11th), otherwise by the end of the week.
Burks’ trial resumes on Monday. Stay tuned…
Footnote: Our thanks to Don@ASDUpdates for providing a copy of the DOJ’s July 10th Reply Brief.