Lyndon Larouche Trial -closing Arguments

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VOLUME XIV IN THE UNITED STATES DISTR EASTERN DISTRICT OF VlfcGINI Alexandria Divisio X- ------____---__-----x UNITED STATES OF AMERICA -vs-

CRIMINAL ACTION NO. 88243-A

LYNDON LaROUCHE, et al., Defendants.

X- - - - - - - - - - - - - - -

-x

Wednesday, December 14, 1988 Alexandria, Virginia Transcript of trial proceedings on the fourteenth day of trial in the above-captioned matter. BEFORE: The Honorable ALBERT V. BRYAN, JR., Judge United States District Court APPEARANCES: (As heretofore noted;)

'J H

***

DON McCOY, RPR OFFICIAL COURT REPORTER

683-3668

2

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THE COURT: Gentlemen, I told you this morning what the charge will be. There will be the general introductory statement to the jury, that statements and argument of counsel are not evidence in the case* fch© credibility-of-witnesses instruction, the introduction that I gave you last night, which I will give you again if you want it repeated. The conspiracy charge will be generally in the language that both parties seem to agree on. That is the general bit about a conspiracy is a combination of two or more persons, partnership in crime, and mere similarity of conduct and so on is not proof of a conspiracy; definition of willfully and knowingly, and these are things that neither party really object to. I will give that portion of the defendant LaRouche's instruction that indicated that I want to caution you that membership in a political organization like the NCLC or in a political committee like NEC is not criminal nor is it evidence of criminal activity or participation in a criminal conspiracy. An active membership in a political organization which espouses honest albeit controversial views is not unlawful under our Constitution but is in fact a protected activity.

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I will instruct them about the acts and declarations of

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co-conspirators, a portion of which I have already indicated , the elements of the offense, that the conspiracy described in the indictment was willfully formed and was existing at or about the time alleged. Second, that the defendant that you then have under consideration willfully became a member of it. Third that while the conspiracy was in existence, one of the conspirators knowingly committed at

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least one of the overt acts, and that the overt act was

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knowingly done in furtherance of some object or purpose of the

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conspiracy.

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I will define an overt act. I will give the

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Government's Instruction No. 11, which cautions them that

14

certain overt acts are not protected by the First Amendment if

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they are in furtherance of the conspiracy. I will tell them

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there must be more than one conspirator.

17 I will give Mr. LaRouche's Instruction No. 7, 18

although in slightly different language with regard to good

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faith reliance on expert advice.

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I will give Government's Instruction No. 29 on the

21 nature of the tax conspiracy. I will give Government's 22

Instruction A, B and C. I understand that counsel want to be

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heard on some of these, so I am not ruling that out. I just

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want to tell you — I will give defendant LaRouche's

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Instruction No. 13, omitting the first paragraph.

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I will give Government's Instruction 32. I will give defendant LaRouche's Instruction 9, omitting the novel and just confining it to the debatable application of the tax laws and omitting the last paragraph. I will give them Government's Instruction 34, 35, 3 6, defendant's Instruction 20, eliminating the first sentence. I will give Government's Instruction 37, 39 , defendant LaRouche's Instruction 11, eliminating the first paragraph, since that's already in the other instruction, and eliminating the last sentence. I will give the Government's Instruction 33, eliminating example 3 and 5 and adding to it, "Bearing in mind that it is particularly the intent of the party making the payment or transferring the property that is controlling." I will give defendant LaRouche1s proposed > Instruction 16, eliminating the second paragraph, however adding, "However, that an expense is deductible by a corporation or business as an ordinary and necessary business expense is not determinative of whether receipt of such expense is to be considered part of the income of the person receiving it." Now, on the mail fraud claim, I will give Government"s Instruction 14, 15 with an addition in the third from the last paragraph of the language, "Or is made with requisite difference as to its truth or falsity," and

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adding to the last paragraph on the first page of 15, "However, a statement made merely in innocent error or

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negligently does not constitute a fraudulent statement even if it concerns a material fact." The rest of 15 will be given as submitted. The defendants1 proposed Instruction 14 will be given eliminating the first paragraph. Government's Instruction 16/ 17, 18 will be given. Government's Instruction 19 will be given, omitting the third paragraph. Defendants' Instruction 16 will be given, eliminating the first sentence. Government's Instruction 21 will be given, 22, 24. I will instruct on aiding and abetting. It's a fairly boilerplate instruction, adding of course that mere presence at the scene of a crime and knowledge that a crime is being committed are not sufficient to establish that a defendant aided and abetted that crime. You must find beyond a reasonable doubt that a defendant to be convicted as an aider and abetter was willfully a participant and not merely a knowing spectator. I will give an instruction on character evidence. I will remind the jury that the crimes charged in this case require proof of specific intent, defined as meaning more than the general intent to commit the act. To establish specific intent the Government must prove that a defendant knowingly did an act which the law forbids, or knowingly failed to do an act which the law requires, purposely

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intending to violate the law. Such intent may be dei.er,xiined by all of the facts and circumstances surrounding the case. And then the paragraph with which you are familiar, intent ordinarily may not1-be proved directly-;because there' is no

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way of fathoming or scrutinizing the operation of the human mind* I will give Government's Instruction 21 with regard to not confusing intent and motive. I will give the boilerplate instruction on opinion evidence. I will tell them about experts who have made assumptions as to what will happen in the future. I will tell them about the charts and summaries prepared by witnesses. I will caution them that if the charts or summaries do not correctly reflect the facts or figures shown by the evidence in the case, that the jury should disregard them. 1 will of course instruct the jury on the presumption of innocence, proof beyond a reasonable doubt. I will instruct the jury unless counsel do not want me to, and so indicate, that a defendant's failure to testify shant prejudice him. He has the absolute right not to testify. I will instruct the jury that the defendants have been charged with separate crimes in the various counts of the indictment. The jury should give separate consideration, render separate verdicts with respect to each defendant and as to each count. Each defendant is entitled to have his guilt or innocence as to each of the crimes charged determined from his own conduct

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and from the evidence which applies to him as if he were being tried alone. And that's it. Now, I will hear from counsel on — MR. WILLIAMS: If I may make a brief objection, Your

Honor,

to

the

omission

by

the

Court

of

the

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missing-evidence instruction. THE COURT: All right. MR. ANDERSON; I would like you to give that reasonable doubt instruction as often as you can. Judge. THE COURT: Mr. Rossi wanted to be heard particularly you said last night on Instruction C of the Government, I believe. MR. ROSSI: Yes. Your Honor, Instruction C and also Instruction B only briefly. THE COURT: If you will come over to the lectern, Mr. Ro s s i. Let me get it. MR. ROSSI: Briefly on Instruction B. THE COURT: B? MR. ROSSI: B. Correct. Government's B. I would ask first of all that the last sentence be omitted or at least something added to it because it's misleading but what I am most — I'll mention that. I'll go back to that in a

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moment. THE COURT: I think it should be qualified unless it meets the -~ MR. ROSSI: Exclusion. THE COURT: — exclusion, which I will in the immediately ensuing instruction. MR. ROSSI: That.1 s all I wanted on that portion. And then at the very beginning where they define gross

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income as meaning all income from whatever source derived, Section 61 of the Code goes on to say,."Unless specifically excluded by law," and I think that should be included. That's in our instruction, and our instruction, I believe, is — THE COURT: Unless what is it, unless specifica-Ily? MR. ROSSI: Unless specifically excluded by law, and that's taken right out of Section 61. THE COURT: All right. I don't mind putting that in, MR. ROSSI: The instruction I have the most problem with is C. That is the meals and lodging. There are a couple of points. First of all, our No.. 14, which is the corresponding instruction. THE COURT: Let me catch up with you. All right. MR. ROSSI: That instruction, the language of that is taken right out of the IRS publication, which is attached, Taxable and Nontaxable Income. It's an IRS publication,

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which is distributed to the general public- The language in our instruction is taken right out of that. The three-part test of our instruction in fact comes directly from that and also from case law, and Section 119 of the Code itself. Now, for instructing the jury, I think it behooves us to make the instruction as understandable as possible, and

the

fact

that

the

IRS

uses

this

language

in

the

publication they send out to the general public on this very topic is a good indication that it's something they expect

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the general public to be able to use. THE COURT: Is there any substantive difference between -MR. ROSSI: Yes. First of all, C is wrong as far as lodging. They say that the meals and lodging must be — this is part second of their test. The meals and lodging must be provided for a substantial noncompensatory purpose. In fact, in regard to lodging, the regulations specifically do not say that, and there are cases and even a portion of the regulations which say that lodging is still excludable even if it is compensatory, as long as the test in Section 119 is met, and if that test is met, meals furnished in connection with the lodging are also excludable. So it's wrong. It's just not a correct statement of the law. There is a case, Coyner, C-o-y-n-e-r, versus Bingler, B-i-n-g-1-e-r, 344 Fed 2d 736, which goes along with

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the regulations in stating that lodging expenses are exclud-

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able, even if compensatory as long as Section 119 test is met

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The instruction is just wrong in that regard. It's totally

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misleading when it lumps meals and lodging together in that

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respect, and the test in our No. 14 is accurate. It comes

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from the case law, the regs and the IRS publication. 1 don't see why we have to revamp the test and do a one,

two, three as the Government has done it, which it 9 has aspects that are incorrect according to the law, and also 10 just misleading in addition to being wrong.

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In addition, part 3 of the Government's test uses the word "indispensable" in connection with lodging* That

13 is just not true. The test is convenience of the employer. 14 In fact, there is a case. Junior Chamber of Commerce case, !5 which is 334 F 2d 660, which says you don't use such a strict 16 test. I think the Government in that case argued that the

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test was one of absolute necessity, and the Court said no,

IS

it's just reasonable. It's the convenience of the employer 19

looked at in a reasonable manner.

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Our Instruction 14 covers that. And it's taken

right out of the IRS pamphlet.

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THE COURT: All right.

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MR. ROSSI: Those are the only significant arguments

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I want to argue in detail. I would just ask that the Court also include

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Instruction No. 15, which is on gifts, which is from our instructions, and No. 6, legitimate tax avoidance, Wo. 5, the mental state required. That's all I have to say, Your Honor. THE COURT: Other counsel want to be heard? MR. MOFFITT: Your Honor, the only thing I would just like to know, are you giving the character instruction as we asked for it?

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THE COURT: No. I'll tell you what I am going to give. "Where a defendant has offered evidence of the opinion of others as to the defendant's character and of good general reputation for truth and veracity or honesty and integrity or as a law-abiding citizen, the jury should consider such evidence along with all the other evidence in the case. Evidence of a defendant's reputation of the opinion of others as to those traits of character ordinarily involved in the commission of a crime may give rise to reasonable doubt, since the jury may think it improbable that a person of good character in respect to those traits would coinmit such a crime." This is the part you are not going to like. "Evidence of good reputation, however, should not constitute a reason to acquit a defendant, if the jury after weighing all the evidence including the evidence of good character is convinced beyond a reasonable doubt the defendant is guilty

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of the crime with which he is charged." MR. MOFFITT: You're right. Your Honor. That's the part I don't like. Note an objection to that. THE COURT: All right. Mr, Webster, you looked like you were getting ready to say something? MR. WEBSTER: Yes, Your Honor. I have two matters: first of all, I would like to orally suggest the addition of another instruction, which is that evidence involving the

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campaign activities cannot be used in the jury's consideration in connection with the substantive counts under the mail fraud. Those would be the counts under which they allege a specific — THE COURT: Tell me again what you are suggesting? MR. WEBSTER: Suggesting, if Your Honor please, and I think this is correct as a matter of law, that the evidence relating to the campaign activities — THE COURT: To campaign activities? MR. WEBSTER: That's correct. If Your Honor recalls of course there is the TLC or the LaRouche campaign and Independent Democrats for LaRouche. There were soliciations, et cetera and activities in connection with those campaigns. But they -THE COURT: Give me those initials again. TLC and what was the other one?

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MR. WEBSTER: IDL, Independent Democrats for LaRouche. THE COURT: Right. MR. WEBSTER: And the LaRouche campaign, TLC; that evidence relating to either soliciation of funds or activities involving the campaign could not be used for consideration by the jury in connection "with any of the substantive counts of mail fraud, because those mail fraud counts are all counts relating to Campaigner or Caucus. THE COURT: Infrastructure loans. MR. WEBSTER; Infrastructure loans, correct. Your

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Honor. THE COURT: All right. MR. WEBSTER: The only other matter I have, Your Honor, is in order to preserve rights, I would make on behalf o£ my client and on behalf of all other defendants an objection to the Court1s not giving the instructions as we have submitted them. If Your Honor wishes to hear argument on each and every one, we will be glad to present it. THE COURT: No, I don't. MR. WEBSTER: But I assume you don't. THE COURT: No, I don't. MR. WEBSTER: And therefore in the exercise of Your Honor's interest in proceeding with the matter and making the blanket objection is sufficient to preserve our

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right on appeal. THE COURT: All right. I am not going to entertain oral argument on renewed Rule 29 motions. So I will just assume and for the record say that those will be treated as renewed. MR. WEBSTER: Your Honor, may I be heard very briefly joist on one narrow point in light of the fact that Your Honor has accepted the instruction that I have just proffered there? THE COURT: Well, I haven't accepted it yet. I haven't heard from the Government on their response to particularly Mr. Rossi's comments with regard to Exhibit C and your suggestion of an oral — MR. WEBSTER: I think in two to three minutes. Your

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Honor, I can make the very narrow point I would like to make, which I think is very compelling. THE COURT: On the renewed 29? MR. WEBSTER: Yes. THE COURT: Let me resolve the instruction matter first. MR. WEBSTER: Thank you. MR. ROBINSON: Your Honor, if I could I would like to first address Mr. Webster's request that the jury be instructed that activities relating to the campaign borrowing shouldn1t be considered on the substantive counts. We

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disagree with that charge, and in fact I think the defense has disagreed with it throughout this case. If the Court recalls those charts that we spent so much time on yesterday, thoe charts contained both campaign borrowing and the company borrowing and campaign repayments together with the company repayments. It's been treated as one organization by the defense throughout this case, and I don't think we can now artificially carve it up. Indeed, the allegation of the mail fraud charge incorporates by reference the conspiracy charge, including the portions of the conspiracy charge that specifically refer to the campaign fundraising. It's all one scheme as far as we are concerned, Your Honor, It's the same fundraisers. It's the same executive members of the organization overseeing it. I don't see that there is any

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way that we can create artificial divisions at this point. THE COURT: Okay. Let me hear you on Instruction C as opposed to the defendants' proposed Instruction 14. MR. ROBINSON: The first portion of it that Mr. Rossi I think took exception to was part 2 of the Government's test which said it must be for a substantial noncompensatory purpose. That's taken more or less directly out of some case law. Your Honor, the case law particularly is Bob Jones University versus the United States, which is cited in the footnotes to my instructions. It's at 670 F 2d 167. And

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frankly what the Court did in that case was weigh all the circumstances to determine whether the housing was being given to the employees of the university for the business purpose of the university or in effect as additional;' compensa tion, to make up for the fact that they didn't have a salary that was comparable to what other teachers at the other institutions were getting. So I do think it's an appropriate part of the test, and I think that case rather clearly sets that out. Second, I think his primary dispute with the third part of the Government's test relating to the convenience of the employer was the use of the term "Indispensable." That again is a term taken directly out of the case law cited to in the footnotes that I placed in that instruction, and I think it's a fair characterization. It is frankly not that much different from the second sentence of the third part of

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the defendants' test, which says that this means that a person must accept the lodging to properly carry out the duties of his job. There is a sense of it being mandatory in both that sentence and in what the Government has said, namely, that it is a requirement of the job that he work there, that him working there is indispensable to the performance of his duties. That is the point we are trying to get across. THE COURT: Okay.

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MR. ROBINSON: But I think that the first sentence of Part 3 of the defendants' instruction is just too broad and too vague to be adequately informative to the jury. It says a person must accept the lodging at his eraployer's place of business — just a second — THE COURT: As a condition of his employement. MR. ROBINSON: T don't have any problem with that sentence either. The problem I had was on the following page where they seek to limit that and say that an employer only needs a good business reason for providing meals and lodging. I think that clearly cuts against what is in their paragraph 3. I frankly don't have that much trouble with their paragraph 3. I do think the substantial noncompensatory purpose belongs in there. THE COURT: It seems to me fair to substitute defendants' paragraph 3 for your paragraph 3. MR. ROBINSON: Okay.

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THE COURT: That's not going to satisfy all of your objections, Mr. Rossi. MR. ROSSI: Can I be heard briefly on the one remaining objection, just to rebut what Mr. Robinson said? THE COURT: All right. MR. ROSSI: I haven't had a chance to examine with a fine-tooth comb the two cases he cites. You are taking

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1

out the indispensable part. Fine. So we are dealing only

2

with —

3 4 5

THE COURT: I am taking out his third and putting in your No. 3. MR. ROSSI: So it's just part two of his,

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substantial noncompensatory purpose, which is at issue. That

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language is taken right out of the regs involving meals, but

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in fact, as I cited the Coyner case to you earlier, and the

9

regs in fact say that the exclusion applies even if the

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lodging is furnished as compensation and if that test applies

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lodging is excluded and meals that are furnished in

12

connection with the lodging are excluded. I believe that the

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substantial noncompensatory purpose language applies only to

14

meals that would be separate from lodging. It has no : appli-

15

cation to lodging. It only applies if there are meals. They

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have a situation where the employee is not living on the

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premises of the employer and you are looking only at meals

IS

and that language then applies. But it's totally misleading

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to put it in there when it has nothing to do with lodging and

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21 22

cases and regs specifically say that. Even if the lodging

is compensatory, if it meets the three-part test, then it's excludable.

23 24

THE COURT: Do you want to address the difference

between meals or meals and lodging in your second?

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MR. ROSSI: Were you addressing this question to

1'9

Mr. Robinson? THE COURT: Yes. Unless you wanted to be heard

first. MR. ROSSI: No. MR. ROBINSON: Your Honor, I think the point of our No. 2 is that there must be a purpose other than compensation for both meals and lodging. To be sure, meals, it specifically says that in the regulation. I think it says that by inference as well about the lodging and certainly the case law says that. It is true that compensation can be, that the exclusion can be met, and it can result in some compensation to the employee. But the point is that the purpose of it has to be for something other than compensation. And really, paragraph 3 goes to that same point- It has to be in furtherance of the business purposes of the employer. It has to be material to the employee's performance of the duties. It has to be for something other than compensation. That's the point we are trying to put forth in the second paragraph. MR. ROSSI: I have no problem with that statement,

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Your Honor. Our paragraph 3, which has been substituted, says that, which says there has to be a good business purpose. THE COURT: Your paragraph 3? MR. ROSSI: Which I believe that is the one that's been added, the paragraph that starts —

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THE COURT: For lodging but not meals is your paragraph 3. MR. ROSSI: Correct. THE COURT: And that's what I am going to give in place of what is designated third on the Government's proposed Instruction c. MR. ROSSI: Okay.- I was looking at paragraph 4, which uses the good business reason language, part 4 of mine, which is the top of the second page of my No. 14. THE COURT; I am not going to give that. I am going to leave second in as is. MR. ROSSI: All right. Note my exception. THE COURT: Yes, sir. Now, Mr. Moffitt and Mr. Webster wanted to be heard briefly on their — MR. WEBSTER: Your Honor, just one clarification before you leave instructions: do I understand you to be giving the reliance on advice of expert instruction to apply to only the tax case, or is that going to be applicable to the remaining case, because I do have Mr. Morganroth1s testimony in for Mr. Spannaus that Mr.

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Morganroth advised Spannaus to change the form of the promissory note to a letter of indebtedness and that Mr. Spannaus relied on that advice in making changes. THE COURT: I don't think that's sufficient to give

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you a good-faith reliance on an attorney in this case. I am not going to give attorneys' advice instruction on anything but the tax case. MR. MOFFITT: Your Honor, if we may be heard, Mr, Yepez tried to make that change some form of criminal activity. That was sort of the way it was characterized by Yepez when he talked about it. And the change was not for that purpose according to the testimony of Mr. Morganroth. If you remember the testimony of Mr. Yepez, he said it was changed. He wasn't sure why it was changed. He spoke with Mr. Spannaus about it, and the reason why it was changed is a result of what Mr. Morganroth said. MR. WEBSTER: Your Honor, I really didn't want to put Mr. Morganroth on, I mean to ask him questions about that, but I really felt constrained to do so to clarify it. It was indeed only the advice of counsel for Mr. Morganroth, who introduced the question in Mr. Spannaus1 mind but he took it to another lawyer and received the advice from Mr. Morganroth. I think if there is any time that you could be entitled to an instruction on reliance on professional advice, that this would be such a circumstance, particularly when -THE COURT: I have never understood the Government

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to argue that the change in form of the obligation was criminal. MR. ROBINSON: I don't think the change in form is,

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Your Honor. I think obviously Mr. Spannaus1 involvement in creating a form, whether it's a promissory note or a letter of indebtedness, is 1 agree irrelevant, but his involvement in that and in setting up the terms of it at a time when he knew that they were having difficulty repaying the loans is relevant. But I think the important point is all Mr. Morganroth testified about, all he was consulted about was whether they should use a promissory note or a letter of indebtedness. That's all. That doesn't have anything to do with it. Our issue with Mr. Spannaus is that he was involved in — let me further add that Mr. Morganroth said that he knew nothing about at that point in time the terms that were going to be included in the letter of indebtedness nor the performance the organization was having on its outstanding loans. All right. So he was involved in none of what the Government wants to infer about Mr- Spannaus' criminal conduct from the use of the letters of•indebtedness from that point forward. Namely, that he created a document that had certain terms in it, that he knew couldn't be met. That is the Government's point. Mr. Morganroth didn't have anything to do with it. The fact that it's a letter of indebtedness

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rather than a promissory note doesn't have anything to do with it.

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MR. WEBSTER: Your Honor, if the Government wants to infer criminality from that act I think I am entitled to that instruction. And that's just what Mr. Robinson;, said. Ee just said it. THE COURT: The change in form of the note? I don't think you are entitled to an instruction on that. I will not give it. MR. MOFFITT: Your Honor, with respect to Rule 29, aside from renewing all my other motions, I would ask the Court to look at Count X on page 38 of the indictment. This will take me exactly a minute to explain it to the Court. THE COURT: I don't believe that, but — I don't believe it's only going to take you a minute. MR. MOFFITT: I understand that you don't. Your Honor, but it's going to be rather obvious to you when I say what the problem seems to be. THE COURT: I don't have the indictment right before me. MR. MOFFITT: Your Honor/ I can hand it up to you, and you can see what I am talking about. THE COURT; Count X? MR. MOFFITT: Yes. Count X charges the solicitation of a $5,000 note. There is simply no testimony concerning a $5,000 note. Every piece of evidence concerning that particular solicitation involves a $15,000 note and not a

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$5,000 note. The Government has rested without making any corrections with respect to that, and it is clear that the letters of indebtedness and various other things that they have put in that that solicitation was a $15,000 solicitation

5

as opposed to a $5,000 soliciation. I don't know whether that is

6

the same thing. I don't know whether they are talking about a

7

different situation, but I think if you go back and look at the

S

Goodwill Post solicitation and all of the exhibits, the 10

9

series, I believe, that the Government has put in evidence with

10

respect to that charge, they are all regarding a $15,000 note,

11

and a $15,000 obligation incurred in that with respect to that

12

particular situation. That's all I have to say.

13 14 THE COURT; Go ahead, Mr. Robinson. 15 16

MR. ROBINSON: He is correct. Your Honor, that it's a $15,000 note that we are talking about, and that is in fact 37

what is set forth in Overt Act No. 64 of the conspiracy IS charge. 19

Mr. Moffitt has picked up a typographical error in

20

Count X, and that's precisely why there's a space between

21

the dollar sign and the 5, too, I presume, as there is no-

22

where else. I think it's an immaterial typographical error,

23 Your Honor. We proved more than what this alleges frankly. 24

We proved a $15,000 loan instead of a $5,000 loan- I

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certainly don't think that the defense has been misled in any

25

way by the typographical error in the indictment. I think it's the sort of thing that is within the Court's discretion to amend. THE COURT: Are you moving to amend it? MR. ROBINSON: Yes. MR. MOFFITT: I object, Your Honor. They have rested. It's their indictment. I object to an amendment at this point. THE COURT: I will grant leave to amend Count X. MR. MOFFITT: Note my exception. THE] COURT: Now.— MR. MOFFITT: May I have that indictment back? THE COURT: Yes. MR. MARKHAM; If I may briefly address the Court about one more matter? THE COURT: Mr. Webster wanted to be heard on the renewal of his Rule 29, I gather. MR. WEBSTER: I am focusing, Your Honor, if Your Honor please, on the substantive counts again on the mail fraud counts. As Your Honor knows, Mr. Spannaus was not involved in fundraising or soliciting, had nothing to do with any of the soliciations. There is no evidence that he was involved in any of the solicitations involving any of those individuals. I pointed out previously to Your Honor that the difference between his being involved in the first

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2b

overt actr not being involved, excuse me, with Ms. Sexton was because there was a promissory note. He is alleged to be involved in the remaining except for the last, which Mr. LaRouche is the only one involved in. The difference therefore is the question of the difference between the promissory note and the letter of indebtedness. I believe- we have now placed more precise evidence before the Court that this action was taken in connection with a legal technicality, brought to his attention by a lawyer, for which he sought a solution from another lawyer, accepted that solution and implemented it and it was implemented in accordance with Mr. Morganroth's suggestions as Mr. Morganroth testified. I suggest. Your Honor, that the stuff of complicity in that count is just entirely lacking. I would renew the motion for its being dismissed from the indictment at least as to those counts, THE COURT: That motion will be denied. Mr. Anderson? MR. WEBSTER: Your Honor, I did not hear whether we had a ruling on my suggested instruction concerning the political campaign evidence. THE COURT: I will not give that instruction. MR. WEBSTER: May 1 say, address one miscellaneous matter as long as I am up here?

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THE COURT: Yes. MR. WEBSTER; Counsel, defense counsel received last night a red-line copy of the indictment and a redacted copy of the indictment, not including the red-line material. Obviously in preparation of our closing arguments, not all of us have had an opportunity to look very carefully at that. We would like to have leave to bring any changes to the attention of the Court first thing tomorrow morning. THE COURT: Before the indictment goes to the jury. MR. WEBSTER: Before the indictment goes to the jury, yes, Your Honor. THE COURT: All right. MR. WEBSTER: There is a matter of the Government's chart -- is that what you were — there is a proposed chart here that I would like to be heard on. MR. MARKHAM: No, that's not what I wanted to — MR. WEBSTER; Is this still a suggested piece of evidence? MR. ROBINSON: Yes. MR. WEBSTER: I do have an objection to this chart. I don't know whether the Court has a copy of the chart or not. It was presented to us last night at the close of business. I think the Government took the position that -- I don't have a clean copy. Maybe you all do. The Government took the position they didn't, and the defense counsel, they

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didn't need to call a witness to put the chart in but I think we did preserve our right to challenge the chart. I do so on three grounds, Your Honor, as being misleading: number one, this chart is entitled, "Profit analysis derived from tax returns 1979-1984." Number one, I point out to the Court that all of the tax returns are in evidence, so this is only, a summary chart. The underlying evidence has already been admitted by the Court. MR. ROBINSON: Your Honor, that's just not true. The tax returns are not in evidence. There's about 3 0 tax returns here. Your Honor. We haven't put them in evidenceMR. WEBSTER: Is there a reason? MR. ROBINSON: Yes. They were never part of our case until now, until it arose in response to the defendants' expert yesterday. These are the corporate tax returns. There has never been any discussion of them up until now. MR. WEBSTER: I stand corrected then on that. They are available to be put in evidence. I think that this chart is misleading, however, for three reasons: the first is and most importantly, it purports. Your Honor, to present a false impression that this was the state of mind of the individuals who are supporters of LaRouche in this case during the time period. In fact, this summary chart summarizes what was on tax returns, which as I understand it were not prepared or at least signed until 19 87. So the

29

impression one gets from this is that these figures were available contemporaneously throughout the years from

Page 28 of 248

1979 through 1984, when in fact as I understand it, the returns for which this chart is a summary, do not speak until this date. Secondly, with respect to the figures on there, I think there is an inaccuracy. And that is that the income column here, as I understand it, does not contain deferred revenue. And as such, it is an inaccurate figure therefore on the total income column in the chart. Thirdly, if Your Honor please, another inaccuracy: I think that the expenses against which you compute the income which came from the underlying tax returns also are overstated. Therefore, causing a — THE COURT: Do you contest that these figures aren't figures front the tax returns? I mean do you assert that they are not? MR. WEBSTER: I do not contest that they are figures from the tax return with respect to my second and third arguments. Your Honor. I am suggesting the underlying returns when you take these figures, they contain misleading conclusions as to what the total income was. For example, on the second column there, for the two reasons that it does not contain deferred revenue, and the expenses are overstated. But most importantly, it

30

suggests a state of mind. The jury looks at this, they are going to think that everybody in the organization had available to them information upon which this chart was based, and the fact is that the returns were not prepared until 1987,

Page 29 of 248

which is not true. The issue in this case, Your Honor, as you know, is at what point. There will be a large argument about what point was this., the Government will argue, recklessness and the disregard, and they are going to move that back to the 1985 time frame, and they are going to use this chart to do it, and this chart is going to be based on tax returns that weren't prepared until much later. They will give a false, misleading impression. MR. REILLY; I just have one other exception to the chart, and that is the heading. Your Honor, profit analysis. That's just not accurate. This is an analysis of what the tax returns show. It's not a profit analysis. It's been the experience, I know everybody who has been involved in working with businesses there are frequently businesses which are profitable and show tax losses. THE COURT: I think you can argue that to the jury. I don't think this purports to be anything more than what the tax returns reveal. MR. REILLY: My concern right now, in addition to Mr. Webster's, is this heading, I think, is not accurate. I think the jury may not be —

31

THE COURT: Well, don't the figures, profit or loss, aren't they — you don't suggest they are not the same figures that the tax returns themselves revealed? MR. REILLY: They are tax profit and loss. That is not a true profit figure. THE COURT: That is all this says.

Page 30 of 248

MR. REILLY: Well, it doesn't say that. If it said tax profit analysis, I wouldn't have a problem, Your Honor, but it says more than that. It says profit analysis, and it's going to be argued by the Government that this proves that these companies were in fact not making a profit, and that heading seems to make that argument and the logical leap that they are going to have to convince this jury of is that you can go from a tax profit to an actual cash profit. I don't think they should have the advantage of having an exhibit which seems to confirm that when it's just their heading that they pick out. THE COURT: Objection overruled. It will be received in evidence. MR. ANDERSON: Your Honor, may I make just two brief points: Your Honor, in Mr, Markham's argument on Rule 29, he quoted or purported to quote one of the witnesses as saying a particular thing. I have gone back to my notes. All of us, I have asked three or four other counsel to go back to their notes, and —

32

1

THE COURT: Who are you talking about?

2

MR. ANDERSON: This is Pam Cowdery. Pam Goldman

3

Cowdery. Mr. Markham quoted her as saying it's the fund-

4

raisers' job to make the money and it's my job to determine

5

where the money was spent.

6

I do not believe that that testimony was offered by

7

that witness from this witness stand. None of us have that

S

reflected in our notes. I took down every — in the context

Page 31 of 248

9

of the trial, tried to take down every statement anyone else

10

put in Mr. LaRouche's mouth. And that was one of my princi-

H

pal note-taking tasks. It's not there. I suggest that it

12

wasn't said. Mr. Markham heard it in another context but

13

didn't get it in evidence. I don't want — I am just

14

suggesting that if Your Honor's memory or even at this stage

15 16

Mr. Markham's memory is the same as mine and other counsel, that he not argue that that statement was made to —

17

THE COURT: My memory is not that good.

IS

MR. ANDERSON: Your notes are. Your notes are

19

excellent.

20

THE COURT: That's to keep awake.

21

MR. ANDERSON: There is one other point, Your Honor:

22

could we approach the Bench?

23

THE COURT: Yes.

24

(Whereupon, a conference was held at the Bench with

25

Court and counsel, out of hearing of the jury, and reported

33

1 2 3

as follows:) THE COURT; When did Cowdery testify? Do you have any recollection of that?

4

MR. REILLY: I will find out.

5

MR. ROBINSON: A week ago Monday.

6

THE CLERK: December 1st.

7

MR. MARKHAM: Your Honor, I remember what she said

8 9 10

because it's one of the reasons X put her on. THE COURT: December 1st? MR. MARKHAM: Yes, Your Honor.

Page 32 of 248

11 12 13

THE COURT: Your recollection, is that she didn't say it? MR. ANDERSON: She testified to a similar thing

14

which is a statement they attribute to Mr. LaRouche regarding,

15

I make the decisions and Will Wertz carries them out, some-

16

thing to that effect. But that's a different statement. I

17

don't contest something along those lines was said by her but

18

this one wasn't.

19

THE COURT: What is your recollection, Mr. Markham?

20

MR- MARKHAM: Your Honor, my recollection is that

21

she came down to do a music thing. She talked about what

22

Will Wertz was doing in New York. Mr. LaRouche said what

23

Will Wertz is doing in New York, he is doing with my

24

authority. It's important that Will be given all the

25

latitude that he needs.

3"4

MR. GETTINGS: She didn't say that. MR. MARKHAM: Besides it is your -- the fundraisers' job to raise the money. It is my job to make the policy decision as to how that money is spent. That is my job, not your job. MR. ROBINSON: What I distinctly recall, Your Honor, was the part of the quote where she said Mr. LaRouche told her the members of the organization have gotten more stupid since they joined and therefore it was their job to spend the money and his job to decide what happened to it. MR. ANDERSON: I remember the stupid part of it. The other part just didn't exist.

Page 33 of 248

MR. ROBINSON: That was the context. THE COURT: I have that Mr. LaRouche said you have to understand that I make policy. Wertz just carries it out. MR. ANDERSON: I don't contest that. MR. MARKHAM: But that's not all that was said on that subject. THE COURT: He said people have to realize he needed money to carry out his policies. People have become more stupid. He needed money to carry out his policies. Is it in that general area? MR. MARKHAM: Yes, sir. MR. ANDERSON: That's exactly it. Just the statement .- is one that was not made. I know Mr. Markham

35

probably heard it before. MR. REILLY: I think she has said it in the past. She just couldn't say it in this trial. MR. MARKHAM: Your Honor, I believe she said it because the reason for her saying -THE COURT: I don't have it. And I, like Mr. Anderson, tried to get down particularly what Mr. LaRouche, what was attributed to Mr. LaRouche. So I think you had better stay away from that statement in your closing argument. MR. MARKHAM: Yes, Your Honor. If we have a chance to get with the Reporter over the noon recess and if we find it — MR. ANDERSON: That's fine. If it's there, it's

Page 34 of 248

there. THE COURT: All right. MR, ANDERSON: One other point. Your Honor. I hesitate to suggest or possibly suggest arguments for the Government to make in their closing but I suspect that they have already considered this and I am concerned that they will in fact do it. And that is that there is in the testimony about it, whatever the food it was that Helga's dog was fed during the period of time. I heard it, everybody heard it. This was in some redacted portions I believe or one of the, maybe it was the Hintz — I'm not sure precisely.

3'6

MR. GETTINGS: One of the attachments in the Hintz memoranda — MR. ANDERSON: Some suggestion they were heating dog food. That's out. There is no evidence in this case. I don't want Mr, Robinson and John Markham arguing that while Helga's dog was eating boned chicken, someone was eating dog food. MR. MARKHAM: We won't mention that. We may mention the dog food — THE COURT: Oh, I'm sure you will. MR. WEBSTER: Your Honor, I have one other problem about that chart, Your Honor. Since the underlying tax returns are not in the case, we don"t have an evidentiary basis for correcting the jury's misimpression. We could put in the tax returns or perhaps the Government would stipulate to the fact that the chart here is based on tax

Page 35 of 248

returns prepared by Grant Thornton, I believe, right? MR. ROBINSON: That's right. MR. WEBSTER: In the year 1987? MR. ROBINSON: No. They were prepared in 1985. MR. WEBSTER: My understanding from Mr. Seay is that they are prepared, possibly initiated and signed in '87? MR. ROBINSON: No. Mr. Morganroth you will recall met with Mr. Eoubrowsky in December of '84 to begin that. Mr. Welsh testified what he did and beginning in early 1985.

37

Mr. Offutt met with Mr. Morganroth in February or later of 1985 and so on. The payment dispute arose between Grant Thornton and the client, and as a result, the returns were not released to them until 1987, So they weren't signed until then but they were prepared by them in 1985. MR. WEBSTER; Could we stipulate to the date on the returns then? MR. ANDERSON: There were substantial corrections made to the proposed returns that Grant Thornton prepared. The returns that were filed were not the final copy Grant Thornton prepared but in fact an enhanced and corrected version of it. So in terras of the completion of those returns that were filed, it was not until 1987. MR. ROBINSON: Your Honor, these are the same returns that the defense expert relied upon in putting his

Page 36 of 248

schedules together. Okay. All we have done is take the expense parts out of those returns that he ignored and put them on this chart. All we are doing is introducing a chart that's got one column on it that the defendant didn't have. The deductions part. That's all there is to this. I don't understand what the problem is. MR. REILLY: All we are asking at this point is the date when the returns were filed. It is very relevant. MR. WEBSTER: The date signed.

38

THE COURT: Whether it was signed in '87 — MR. REIXiLY: Yes. THE COURT: Filed in ' 8 7 ? MR. REILLY; Yes.

THE COURT: You can argue they were prepared earlier, MR. ROBINSON: All right. MR. MOFFITT: Your Honor, one other thing while we are at the Bench: I have both the Peruvian and the Venezuelan suit which ultimately resulted in the banning of the book Narco Trafico. 1 would like to put them in evidence. Mr. Rasch doesn't want to put the entire suit in evidence, but wants only to put the injunction in evidence. I am not a Spanish translator. I would have to go through and find the injunctions which would take me a while. But I think the entire suit is relevant. It's all in Spanish anyway. THE COURT: I don't think the entire suit is. I think the banning itself is relevant. 1 will accept -- I don't want this jury to be trying those two cases, too.

Page 37 of 248

MR. ANDERSON: In Spanish. MR. MOFFITT: I need your help. Thank you, Judge. All right, Your Honor, if the Government is willing to stipulate that the book was banned in both places as a result of lawsuits, then I don't have a problem in '85 and •86-

39

MR. RASCH: That's fine- And the dates of the . banning. That's fine. MR. ROSSI: There are three exhibits, Defendants1 QGQ34, 35 and 36 which I am going to offer into evidence. Mr. LaRouche, portions of Mr. LaRouche1s NBC testimony, portions of Mr. LaRouche's Grand Jury testimony in Boston and some bank records* MR* ROBINSON: X don't have any objection to the bank records, I had hoped to speak with Mr,Rossi before we started Court this morning about the transcript references. I am afraid this is a pingpong that's been, going back and forth between us. I had transcript references that I wanted in. They changed those and submitted a revision. I have got some additional changes I want to submit and discuss with them. If the Court is ready to take a recess I would suggest that we could spend maybe five minutes and hopefully resolve that. MR. ANDERSON: One thing may encourage Your Honor in that direction, the defense is not going to present any more evidence. We rest.

Page 38 of 248

THE COURT: All defendants rest? MR. MOFFITT: Yes. MR. WILLIAMS: Yes. THE COURT: Did you come to any conclusion about whether you want me to instruct on the failure of the

40

defendant to testify? MR. ANDERSON: Yes, I do. THE COURT: You do want, that? MR. GETTINGS: Yes. MR. ANDERSON: Yes. MR. MOFFITT: A couple other matters it seems to me: One involved the Hintz memorandum. Your Honor, and the redactions which aren't in there — MR. ROBINSON: We did that last night. We substantially went along with all of your redactions with one or two minor exceptions. I think that's something you are going to want to look at before they go to the jury but we don't intend to refer to the specifics of any of the parts that you sought redactions of during our closing argument, MR. MOFFITT: Can we have that kind of agreement with the Curtis redaction, too? MR. ROBINSON: That's something we had better look at first. MR. MOFFITT: I think we need to look at the Curtis THE COURT: I am not going to take a long recess because I want to start this jury at 10:00. There is no more -- the Government putting on

Page 39 of 248

anything else? MR. MARKHAM: We have one matter, Your Honor, apart from this very brief summary witness, we proposed to call

41

another witness — THE COURT: Wait a minute. This very brief summary witness. MR. ROBINSON: That's obviated by that. MR. MARKHAM: All right. The only witness we will put on if we cannot get a stipulation. The witness would testify that their experts and agents had access to the records at the warehouse from on and after the indictment. They have said it twice in their case that they didn't have access, once through Richard Welsh and once through the expert. MR. GETTINGS: Yesterday said they weren't really contending that. But I think that given some of the cross examination of him and his reliance on his not having access to the records — MR. ANDERSON; Your Honor, he didn't say he didn't have access. He said he didn't have the records was what he said. And the fact the Government cross examined and there was a potential access but the Government has made the argument all along that the two million-plus documents were at all times available and in fact the combined costs to copy those portions which were copied and those which were necessary for trial preparation and were necessary by the client to conduct the ordinary course of their business was

Page 40 of 248

a huge expense. The fact that —

42

THE COURT: I am not trying to resolve how the jury should treat that. If you can't work it out in a stipulation then you can call him. MR. MARKHAM: A five-minute witness. THE COURT: Um hum. So I'll take a short recess. Then we'll hear that witness- I would expect to go right into the closing arguments. MR. ROBINSON: Yes, sir. MR. MARKHAM: Yes. THE COURT; All right, okay. (Thereupon, the conference at the Bench was concluded, and the following proceedings were held:) THE COURT: We'll take a short recess. (Whereupon, at 10 o'clock a.m., a short recess was taken.) THE COURT: Yes, sir? MR. MARKHAM: Your Honor, if it please the Court we have a brief stipulation that we have just reached that will reduce the number of witnesses in rebuttal by another one-May I read the stipulation that's been agreed upon? THE COURT: Yes. When the parties have stipulated to something, members of the jury, that is something that need not be proved, and you should accept it as proved. MR. MARKHAM: The stipulation that has been reached is as follows: "After the search of October 5th and 6th,

Page 41 of 248

43

1986, the defendants and their agents had access to the records and documents taken during that search." Thank you. Your Honor. MR. ANDERSON: Your Honor, there is one loose end. Could we just approach? THE COURT: Yes, sir, MR. ANDERSON: One more in open Court, Your Honor, and then one we need to approach the Bench on just briefly. MR. ROSSI: Your Honor, as part of the defendants' case I just want to move into evidence Exhibits QQQQ-34, 35 and 36, the portions which I have given to the Clerk, and I understand there is no objection. MR. ROBINSON: That's correct. Your Honor. THE COURT: They will be received in evidence. (Defendants' Exhibit Nos, QQQQ-3 4, 35 and 36 were received in evidence.) MR. ROBINSON: The Government also has a fewexhibits which I think we can be rather quickly moved in by way of rebuttal. I have discussed them with Mr. Rossi. These all relate to prior testimony of Mr. LaRouche. They are first of all Exhibits 49-C, D and E. Next would be — may I have just a moment. Your Honor? (Pause in the proceedings) 43-A and 43-B. For the benefit of all counsel, I should mention that 43-B is a copy of one of the Wayne

Page 42 of 248

Hintz

44

memos, the March 30th, 1985, memo. It has been redacted in 43-B in precisely the same way it was when it was introduced through Mr* Hintz' testimony as well. MR. REILLY: Just to clarify. Your Honor, the LaRouche transcripts are coming in only against Mr. LaRouche, as I understand. MR. ROBINSON: That's correct. These are his statements, that's correct, THE COURT: They are only to be regarded as to him? MR., ROBINSON: That is correct. THE COURT: All right* Anything else by way of rebuttal that the Government is going to put in? MR. ROBINSON; I believe there is one further stipulation, Your Honor, which Mr. Rasch will read. MR. RASCH: Yes, Your Honor. This is a stipulation. The parties stipulate that there were injunctions issued preventing the distribution and ordering the recall of the book Dope, Incorporated, in the countries of Peru and in Venezuela. On September 2nd, 1985, the injunction was issued in Peru. On February 8th, 1985, in Venezuela. THE COURT: Anything else? MR. ANDERSON: Just the one thing at the Bench. THE COURT: Yes. (Whereupon, a conference was held at the Bench with

Page 43 of 248

45

1 2 3 4 5 6 7 8 9 10

n 12 13 14 15 16 17 18

Court and counsel, out of hearing of the jury, and reported as follows:) MR. ROSSI: Your Honor, Mr. Robinson has indicated me he would like to play the portions of the tape of the Boston Grand Jury testimony of Mr. LaRoucher those portions that relate to the same portions of the transcript that the Government has admitted in evidence. I have requested and he is opposed and therefore we are bringing it to the Court, that those portions only be played in context and what has happened is I have introduced portions of the Grand Jury testimony of Mr. LaRouche which include the Government's portions and additional portions either before or after that portion, and those are now in evidence as part of what I just introduced. I would object to him playing his portions out of context leaving us to later play our portions out of context. I think the whole thing should be played at once. It doesn't make sense otherwise. MR. ANDERSON: The transcripts are in. I think

19

there shouldn't be any playing. But if there is going to be

20

a playing, the jury is going to have it. They can read it.

21 The Government can argue what they want to argue, and we can 22

argue what we want to* I see no point in playing it, but if

23

there is going to be one, then they are going to have the

24

same thing twice. Because in order for us to play what we

25

consider significant, which is what the Government has, we

Page 44 of 248

46

have to play a little bit before and a little bit after so they are going to hear essentially the -- they are playing it twice* I don't understand why we don't just get down to argument now. MR. ROBINSON; May I call Mr. Markham up here. MR. MARKHAM: I don't think I am even going to play it. I apologize. I don't think I am going to play it. MR. ROBINSON: That takes care of that. MR. MARKHAM: We reserve the right to reply in 10

rebuttal if it's appropriate. I am not replaying the

11

LaRouche in my argument.

12

THE COURT: If you want to, we'll take it up again,

13 more than just a single extract out to be played in 14 fairness. IS

MR. MARKHAM: I do plan to play the Billington tape.

16

THE COURT: All right.

17

MR. ROBINSON: The same portion previously played.

18

MR. ROSSI: Thank you. Your Honor.

19

THE COURT: All right. You can use your hour-and-

20

three-quarters any way you want. If you want to play tapes

21

during it, that's fine with me.

22

MR. MOFFITT: One other matter, Your Honor. It's

23

Exhibit OOO-C-T regarding redactions. I don't know what the

24

Government's problems are with the redactions.

25

MR. ROBINSON: I don't have any problem with the last line.

Page 45 of 248

47

What's the problem here? You want that first paragraph? MR. MOFFITT: No. I want this paragraph here, the vague recollection -MR. ROBINSON: We can take that out. MR. MOFFITT: And this here. THE COURT: Can't you all take this up later? I would like to get on with the argument unless this is going to be referred to. MR. ROBINSON: I think we can take that up later, Your Honor. To the extent I may refer to any of this, it's not going to be in the portions that you have a redaction. MR. MOFFITT: Fine. THE COURT: Are you ready to go? MR. ROBINSON: Mr. Markham is ready to go. THE COURT: All right. (Whereupon, the conference at the Bench was concluded, and the following proceedings were held:) THE COURT: Members of the jury, to give you some idea of what's going to occur, you are now going to hear the closing arguments of counsel today. I hope to charge you first thing tomorrow morning, I mean 10:00. Then you will get the case for deliberations. The charge will probably take about an hour, an

48

Page 46 of 248

hour-and-a-half. So you will have the case for deliberation tomorrow. We are not going to keep you overnight after you get the case for deliberation. But we will want to stay in session until the case reaches a verdict, that is successive days. So we will go Thursday, Friday, Friday if necessary and Saturday if necessary. All right, Mr. Markham. MR. MARKHAM: May I proceed, Your Honor? THE COURT: Yes, sir. MR. MARKEAM: In this country, we don't try peole in criminal Courts for their ideas. We don't bring them to the bar of justice to determine the sincerity with which they talk about AIDS, SDI, world recovery, world famine, or anything else. You are sitting in what we lawyers refer to as the jury box. The three of you in the front are for the purposes of this in the jury box. You are not in a ballot box. This case, and you sitting in the jury box, is for the purpose of looking at the issue which Mr. Robinson raised in his opening statement, the way in which the LaRouche organization raised its money. The ends, however noble they may be, and whatever you believe of the sincerity of the defendants, whatever credit you wish to give them for the ideas that they were talking about, is not the point. It does not however noble, justify lying to people to get the money to do what you want

43

Page 47 of 248

to do. Elizabeth Sexton's money belongs to Elizabeth Sexton Lita Witt's money belongs to Lita Witt. And so on. If those people want to give money for the most noble cause in the world, fine. If they want to give money for the stupidest cause in the world, fine. That's another American principle. It's ours to give if we have earned it. But if on the other hand Elizabeth Sexton and all the rest of them say they can't give it, they need it, it's theirs, but they are willing to lend it, then you cannot under our law lie, make misstatements, tell half truths, fabricate, in order to induce them to loan by not telling them the whole truth. Your Honor, may either I or the Marshal put up the first of the charts that was referred to yesterday- Thank you. (Whereupon, the Marshal set up the referenced chart.) THE COURT: Do you want the easel over there or back here? Because I am going to keep you at that podium or somewhere close by it. So if you want to approach that easel, you may want it somewhere else. MR. MARKHAM: I don't care to approach it but could I ask it be turned a bit more so the jury can have an easier time seeing it?

50 That's fine. Mr. Reilly, can you see? MR. REILLY: Perfect. Thank you, Mr. Markham.

Page 48 of 248

MR. MARKHAM: You have heard from some of the victims of the borrowing, but this case involves a scheme to borrow large sums of money. In fact, the charts prepared by the defendants show the extent of the borrowings. If you look where the orange is, you are looking at the scheme. In 1983 there was a modest increase in borrowing over 1982. That is the orange figure. In 1984 the borrowing skyrocketed. 1984 was when Mr. LaRouche brought Mr. Wertz into the head office to orchestrate a national fundraising effort. The loans skyrocketed. You will have the exhibits to look at when you go back into the jury room, and you will see that by March of 1985 the man who was then responsible for trying to manage whatever loan repayments could be managed, Wayne Hintz, who testified, wrote, he wrote a memo in March of '85 to Mr. LaRouche and Mr. Wertz and Mr. Rose. Mr. LaRouche, the evidence is, is in charge of this organization. Mr. Wertz was in charge of fundraising. And Mr. Rose was in charge of loan repays, to the extent that there were any. Those are the three people, by the way, who lived on Ibykus farm. That memo in March of 1985 by Wayne Hintz says,

51 1

1984, that big orange column there, was the year of the loan.

2

We borrowed $10 million, approximately, in 1984. Now, their

3

expert's chart says $12 million, but the Wayne Hintz■ memo

4

warned of $10 million in early 1985. And he warned that

5

90 percent"of that $10 million was coming due within a year,

6

and that something had to be done.

Page 49 of 248

7

Attached to that, memorandum of his were memoranda from two of the fundraisers, or at least which had been seen by two of the fundraisers: P R

G

and J

Those two memos which were attached to the

primary memo, set forth their concerns about people who had not been repaid. So that as of 1985, with the first skyrocketing — I'm sorry, as of 1985 that's the second skyrocketing, they knew they had problems with the 1984 skyrocketing. They kept on borrowing. After that memorandum they borrowed a lot of money from Elizabeth Sexton, a lot of money from Mrs. Landegger, a lot of money from Dorothy Powers, a lot of money from Goodwill Post, and on and on. And Goodwill Post, and Elizabeth Sexton, and Dorothy Powers, and everybody that you heard from is but a very small portion of the unrepaid loans that you are looking at up there. This is a case about the total borrowing. The callousness used when people wanted their money back.

52 The failure to call thera up with the common decency to say, "Yes, we have your $112,000. Yes, we assured you that it was safer than in a bank. Yes, we assured you you would get it back on time* But there has been a problem." Elizabeth Sexton didn't even get that kind of a phone call. Instead, they kept on borrowing. And those orange figures kept on getting taller, and taller, and taller.

Page 50 of 248

Just to make it clear that they were not simultaneously paying back everything that they owed, I would ask if the Marshal could put up the second chart that they prepared. (Whereupon, the Marshal put up the referenced chart.) MR. MARKHAM: On this second chart that they prepared, orange is again the rate of borrowings. You can see that from the time Will Wertz was placed in charge of fundraising by Mr. LaRouche that the orange line looks more like a cliff than anything else. You will also see that they have on that same graph put in their loan repayments, and that is the green line. It is self-evident that it is nothing like the orange line. They weren't giving back what they were bringing in. They weren't keeping their promises. Most of these loans, according to the Hintz memo, are one-year loans. And '85 was

53

as bad from the standpoint of loans as '84. The '84 loans became due. They weren't being paid back. Incidentally, that green line, however lower it is than the orange line, is inflated, because in it is included not only money actually given back but the amount of money that they could get people to forgive under their loan forgiveness policy. . You will remember the testimony that it was decided that the policy would be that once the loans were received

Page 51 of 248

the people would be called back when they became due and asked to forgive. Not one of the victims that you heard from, not one, said that when they were initially called and asked for loans that they were told about this forgiveness policy. Not one of them said that they were told that, "We have financial problems that might make it impossible to pay you back or to pay you back on time.11 Not one of them was told that these people were so dedicated to Mr. LaRouche and to their perception of his security needs that if it was decided that some costly outlay had to be made — MR. MOFFITT: I object. Your Honor, may we approach the Bench? THE COURT: Objection overruled. MR. MARKHAM: That if some costly outlay had to be made, that that would take precedence over paying them back.

54 They weren't told about any bank seizures, or that people were asking for the loans. They were just given a false, rosy picture, with assurances that the money was safe. There comes time for the money to be repaid. The picture has changed. Oh, well, now, let me tell you a few things. And the stories begin. If in fact they bothered to call back-J

R

called Elizabeth Sexton virtually

every day in early 1985, asking for money. She got over $100,000. When it was gone, when there was nothing left, she asked her to go and borrow from the bank. When the bank

Page 52 of 248

called Caucus, because the bank knew, the testimony is that the bank knew that if it was loaning money it was loaning it to her to give as an investment to Caucus, and that Caucus was going to be responsible, according to J

's plan, for the repayments. The bank called J

. Jo

called back Mrs.

Sexton and said, "Forget the bank loan. They are becoming too inquisitive." Banks do that. Banks ask things like, "Tell me of your financial situation. Prove it to me. Send me documents. What is your repayment rate?" All those things that maybe Mrs. Sexton should have asked, and certainly in hindsight she should have asked, but the law of mail fraud, the law of scheming to defraud, protects everyone, not just sophisticated banks.

55 It protects Elizabeth Sexton from falsehoods and half-truths. It protects Goodwill Post. It protects Audry Carter. The defendants are charged with three, with two separate crimes. And Mr. LaRouche, as you know, was charged with the third crime. The third crime is the charge that he conspired to cover up his tax liability. And Mr. Robinson will be addressing that when I close. The charges relating to the loans break down into two: the first is that all of the defendants are charged with conspiring to commit loan fraud. In the second, the defendants are charged with scheming to use the mails to commit the loan fraud. A scheme is a pattern of conduct, a

Page 53 of 248

course of"conduct, or a plan, and T submit to you the evidence is that there was a pattern of conduct. It started every day at 9 o'clock. They came in, They got their briefing. If they weren't in the head office, they got a briefing through the mail and they picked up those phones and they started with the rosy promises that if you give us your money, you will be repaid. And it went on, and it went on past the point when they all knew that there were problems of repayments. Richard Yepez told them early in the game before he left in the summer of 1984 that the repayments weren't being made. They kept on borrowing. Wayne Hintz alerted them in

56

writing in March of '85, and they kept on borrowing. And . they kept on borrowing pursuant to a plan or a pattern of conduct. Obviously, a scheme to be illegal" under the mail fraud statute has to be fraudulent. Fraud is simply dishonesty. It is the intentional misstatement of fact known to you to be false, or it is facts stated by you with reck 8

less disregard of the truth. The facts, of course, have to

9

be material. No one here is charging any wrongdoing because

10

they may have said something about a political belief that

11

may or may not be true or may or may not be viable. Those

12

are not material to why people lend money.

13

Materiality is something that a reasonable person

Page 54 of 248

14 would rely upon, and reasonable people rely upon statements 15

like, our money is safer than the bank. We always repay

16

people. You heard a tape recorded conversation of Mike

17

Billington saying to Audry Carter, in February of 1986, two

IS years after this mess, "Audry, don't worry about it. I know 19

your interest means a lot to you, but not even our enemies

20

have ever said we don't repay people on time."

21

That is a material statement. The evidence is that

22

that statement is false, it is knowingly false, it is a lie,

23

by their own documents* He said it to induce a loan.

24

But in addition to out and out knowing falsehoods,

2 you are not allowed, you are simply not allowed under this

57 law to make baseless, false, misleading statements that have no basis in fact. We are as safe as a bank. We are safe. You will get repaid on time. People are lining up. Why the book alone will make enough to pay you back, no problem. Those are baseless, and given the financial circumstances with which all of. the defendants are aware, were aware, those were reckless, and they shouldn't have been made An example, I am trying to insure my barn, and I tell the insurance company I want it insured for fire. If at the time I am on the phone talking to him from my kitchen, my barn is on fire, and I don't tell him, and I know it, I have

Page 55 of 248

committed an intentional misstatement. If the barn has been on fire five times in the last year, and I am sitting in my kitchen and I ask for some barn insurance and I say my barn is the safest fire-free barn in the world, and I don't even look out the window to see whether it's burning, that is reckless, and that is precisely what these defendants did and precisely why you have two orange towers on the chart behind that chart, two tall orange towers. It is not reasonable to conclude that those orange towers would be constructed unless people believed that they would get their money back, And if you don't think that these people who testified and the others didn't want their money back, read

58

the letters that they wrote. I will not read all of them, but I will read some of them. After Elizabeth Sexton had given J or at J

's request given Caucus everything she

had, $5,000 first, then another $5,000, then 525,000, then another $25,000, then another $25,000, then $14,300, then $5,000, then $4,000, then-$2,000, then going to*, one.-bank-..and that didn't work and then going to another bank and borrowing $4,000, After it was gone, and it became due, and Elisabeth Sexton wanted the promise fullfilled, she didn't even get a phone call. Jo

was out in Chicago

helping some woman get elected from Indiana, working on the phone team. If there is one thing the evidence will show,

Page 56 of 248

they had access to phones. And they could have called, and they didn't. Then Elizabeth Sexton wrote, "Dear J

, since

you were the only one that I have had financial dealings with, 1 am directing this letter to you. I am a confused patriot. I tried to help, and it appears was destroyed in my effort." This is in evidence. It is one of the Sexton exhibits, and you will have it. "You cajoled me steadily and relentlessly by phoning nearly every day. You told me my money would be safer and worth more with CDI than in a bank or in my investment house. You said the more money I would lend CDI, the more money I

59

would make." I am skipping parts of it. "When you were sure I had reached the bottom of my money last summer, you asked me to borrow $50,000 from the bank and laughed at me when I said I didn't approve of borrowing, because I was afraid of being in debt. You replied, there was nothing to fear, that CDI would faithfully meet each monthly obligation. I tried borrowing the money and as you know, when the bank became too inquisitive, you called it off." "When April 13 arrived, the day my $100,000 note was due, no one was honest or courteous enough to get in touch with me." According to Mrs. Sexton's testimony, shortly after tis letter was sent, P

G

called her and

Page 57 of 248

said, "J

is out now. She got your letter, and

she cried.11 P

G

assured Mrs. Sexton that somebody

would take care of the problem. No one did. While it may have been fine for J

to have cried,

Elizabeth Sexton wished she had cried before she took every dime that Elizabeth Sexton had. Getting no money as a result of this letter and only yet one more fake promise over a phone to P

G

,

she wrote Mr. LaRouche and said, "Are you aware that CDI holds my money, and that I gave it to them, and that they loaned it, but it's money that I had been living on. I need

60

it back. Can you do something?" Mr. LaRouche writes back -- these are ail in evidence -- "Dear Elizabeth Sexton" — I am quoting — "Be assured there has been no reneging on promises by J or anyone else linked to me." I respectfully submit that is a false statement. There had been reneging, there is a whole orange tower of reneging by the time this letter was written. By the way, this letter is written in May of 1986, and the letter to J

was written in April of 1986 after the money

became due. Mr. LaRouche goes on to say something else, after he explains that it's his enemies that got him down and they couldn't pay and since 1984 we have been under attack and they have taken all of our money. Of course, none of that

Page 58 of 248

was told by J when

they

were

milking

to Elizabeth Sexton her.

Now,

of

course,

it's

very

convenient to blame everyone else in the world, He says, quote, "Constant audit and other monitoring shows that there is no voluntary avoidance of loan repayments by CDT." You have heard of nothing but voluntary avoidance of loan repayments. They have money. They have money for the purposes that they want to spend it on. One of the exhibits in evidence is Richard Welsh's documents, their

61

auditor, the one who worked with their expert, the one that marshals all the financial records on the computer. Exhibit 15-0, which you will have, is, it's got both a yellow and a red sticker on it. It talks about Ibykus improvements, money spent, on Ibykus at a time when Mr. LaRouche is telling some nice woman in Connecticut that they can't even pay her back a dime of her money, not all of it, not a dime, not so much as a postage stamp will they give her, at a time, ladies and gentlemen, when they are listing the same period of August of 198 6 the following improvements: cattle facilities for Ibykus, $3,900; fencing for Ibykus, $11,000; high-tensile fence gates, $4,000; land preparation, $6,000f pond construction, and I repeat, pond, p-o—n~d, little water in the ground construction, $97,000. And he says constant audit and other monitoring shows that there is no voluntary avoidance of loan repayments

Page 59 of 248

Who made them put that pond in? No one. They chose to put it in. They chose to spend almost the entire amount of money that they borrowed from Elisabeth Sexton to put in a pond instead of paying her back. It goes on. The horse barn cost $82,000. The cattle cost $20,000, the fencing cost $30,000. By now, ladies and gentlemen, if this money had been spent, we would have repaid Elizabeth Sexton, Lita Witt and Dorothy Powers.

62

Fish stock, that's only $700; rock wall is $15,000; landscaping, $33,000. By now we have paid off yet more of these people who were told, gee, we can't because the enemies are all over us. Landscaping? Now, we have taken the position in this case that we do not dispute their perception of the risk to Mr. LaRouche's security. Some of these are security expenses, but wouldn't it have been nice if these individuals going into this scheme had been told, look, our perception is this guy is in a lot of trouble, and if we think there is somebody coming to get him, then all bets are off. If people make a loan under those circumstances, then they deserve the risk because they have been informed of it. But none of these people were told about it. And even if they were, what bogeyman coming to get Mr. LaRouche is scared away by a well-landscaped property? By a pond? By a swimming pool? By a riding track? Those are costly items. That money wasn't theirs. That money was the people that you heard from, and the many, many, many other people up

Page 60 of 248

on that big orange column. I keep referring to it as the one behind. The painting of the house was $38,000; a new furnace is $10,000; driveway is $33,000; garden installation is $13,000; swimming pool construction is $19,000; the deck next to the swimming pool is $6,500; the riding ring was $4,600. The recreation barn cost $88,600; $4,100 and $400 for the

63

different things. The guest house cost $15,000, $9,000 and $8,000. The road cost $67,000. The farmland improvements totalled $3 09,000. There is no any evidence that they ever earned a dime from that farming or from the landscape or the road or anything else. Now, in addition- of course was the hundreds of thousands of dollars put into the Ibykus property. You heard that they used Terry Anderson to borrow the mortgage money until they could pay it off. But they paid off $900,000 to him, and in addition they had to put up some $400,000 apart from all these expenses that I have read, just to get it* It's acres and acres and acres. in fact, only one of which acres was made secure, according to their expert. The rest of it you could walk across. Anybody could walk across. It wasn't needed for security. And 199 acres of prime Leesburg farmland would have gone a long way towards paying back some of the principal that was owed or certainly could have set up a fund to start paying back the principal. But they didn't do

Page 61 of 248

that. And they didn't do it for the reason that you heard from the witnesses who were former members. Mr. LaRouche has instilled in his followers an arrogance about how right they are and about how wrong everybody else is, and people don't deserve their money, and it's ours, not theirs, because we are saving the world; and

6'4

Mr. Wertz would say how/dare they demand theiromoney back. And Mr. Spannaus would say how dare they demand their money back, given all the wonderful things we are doing. Again, I do not want to debate with anyone whether what they were doing was wonderful. In this country, they have the right to do it* But they do not have a right to do it while they are lying to people to finance their operations, their trips overseas, their trips to go to India, their trips to Europe, their trips to South America, their accompanying foreign governments to help with the eradication of drugs is all fine and even laudable if you are doing it with your own money. But if you are doing it at a time that these nice people who trusted you are waiting by a phone that no longer rings, then it's a crime. And it is a crime to write somebody and say, "Constant audit and other monitoring shows that there is no voluntary avoidance." She

writes

Mr.

LaRouche

back,

and

she

says,

"It's gratifying to know that there has been no reneging. Where is my money?" And Mr. LaRouche writes back to her and says — this

Page 62 of 248

is his second letter -- "I should inform you that I have had no financial interest or executive authority over the affairs of Caucus Distributors." You heard their expert yesterday. Mr. LaRouche is switching of course. In his first letter he is telling her,

65

gee, our enemies are all over us and we couldn't pay. MR. MOFFITT; Your Honor, I object. I came ..to the Bench about that yesterday. Precisely about that point. If I have to, I will come to the Bench now and tell you what it means. THE COURT: All right. Maybe you .had better. (Whereupon, a conference was held at the Bench with Court and counsel, out of hearing of the jury, and reported as follows:) MR. MOFFITT: Testimony was elicited from the expert with respect to Count XIII- I made an objection at that time because of the whipsaw effect of that testimony. They are now using that testimony in the loan case. And arguing it with respect to the loan case. And they said at that particular point that the only purpose of getting that testimony in was with respect to Count XIII. THE COURT: I believe that's right. Objection sustained. MR. MARKHAM: I assumed I can refer to the other parts of the letter, Your Honor? THE COURT: Refer to it all you want but it's the testimony of what's his name — MR. MOFFITT: I want the jury instructed that was not

Page 63 of 248

admitted for purposes of the loan case at that particular point.

66

THE COURT: I will, (Whereupon, the conference at the Bench was concluded, and the following proceedings were held;) THE COURT: Members of the jury, you are instructed that the testimony of the witness yesterday with regard to Mr. LaRouche's employee status which was referred to by counsel just a minute ago■is only related to the Count XIII, the tax count and must not be considered by you with regard to any other count in the case. MR. MARKHAM: He tells her that he has no executive authority over or financial interest in the affairs of Caucus Distributors. Yet you have heard from witnesses testifying before yesterday; you have heard from Charlie Tate. You have heard from Mr. Bardwell. You have heard from Mr. Yepez. You have heard from Mr. Curtis that Mr. LaRouche dictates the finances of this organization through Will Wertz. As Pan Cowdery, and I am not even going to try her Italian name, Francesca-sontething or other said from the stand, when a couple of people from New York were at Mr. LaRouche's home performing one of the many seranades for him, they had flown down to do that. They had flown down with money I suppose that Mrs. Sexton would have wanted to have back rather than to have Mr. LaRouche have a concern, but that aside for the moment, Pam Cowdery and some others said, look, do you know what Wertz is doing in New York? Everybody is spending every

Page 64 of 248

67

hour on the phone. They are working themselves to death. It's not good* And Mr. LaRouche said, Will is doing what he is doing based on my authority. He has my authority to do this. You people are stupid and Will is acting with my authority in doing what he is doing. Yet, when it comes time to talk to somebody about the little matter of the -$112,000 that was promised, he has no executive authority over anything. Mr* Anderson referred to him as a square peg in a round hole. I respectfully submit he makes himself a square peg when he sees trouble coming in the form of a round hole, and when the trouble coming is in the form of a square hole, he makes himself into a round peg. He makes himself whatever is convenient to duck the moral obligation on his organization, and the legal obligation of his organization. He goes on to tell her, "Any rxonperformance in loan

repayment

has

been

solely

the

result

of

wicked

operations by adversaries of CDI." What about the pond? What about the pool? What about the property in Southern Virginia that they purchased with hundreds of thousands of dollars? What about the purchase of Ibykus for $100,000? What about the garden? What about the guest house? Those are funds that would have been available, and those are not the result of wicked moves. Those are the result of something that they wanted to do.

Page 65 of 248

68

Fine with their money, but not with his, with hers. He says there has been no discretionary nonperformance. I respectfully submit that the evidence is that there has been nonperformance. He ends this letter with the following -- this is now three full months since her principal was due, the principal that she said she needed to live on. This is now long since she has ever had an interest payment from these people, and he says: "I will pass" — I am quoting — "I will pass the letter along to GDI for their information. That is my only authority in the matter. Otherwise, all I have to recommend is that you let your conscience guide you." The way J

treated Elisabeth Sexton

shows that she had no conscience* The way Mr, LaRouche responded with his assurances that there was no money around shows he has no conscience with respect to this matter. It shows the very arrogance that the former members talked about when they said that Mr. LaRouche would exhort them to use any means short of thievery and thuggery, that Mr. LaRouche Would tell them people don't deserve their money. We do. When people would come to Mr. Wertz and say, "What are we going to do about loan repays? People are calling in?" Wertz would say, "This is war. In war there are casualties." Well, they treated Elizabeth Sexton and the others as their casualties, only they didn't tell them going in that

Page 66 of 248

69

that was going to happen. Going in, they simply said, "You will get repaid." Because of that, and because of all the evidence in this record that shows that they knew when they were calling these people about the bad financial situation and the loans piling up, we ask you to find beyond a reasonable doubt that when they made the representations that they made, over the telephone, the assurances that they made, that they were acting with intent to deceive in order to get the money in the first instance. Alternatively, we are asking you to find that in making the representations that they made, they acted with reckless disregard of the truth, with a conscious avoidance of finding out what the real situation was, with a failure to. look out the window to see if the barn is back on fire for the fifth time this year, because had they looked, they would have seen massive debt, massive failure to repay, and as of the time that the bankruptcy froze everything, they had $25 million of unrepaid loans, and they had assets of $300,000 tops, plus some subscriber lists. And for people to be on the phone taking the money of other people in that circumstance is baseless and reckless And given what they had put in their own memoranda, it's also intentional. Now, before I go into some other specifics, talking

70

Page 67 of 248

about the fundraisers, I want to step back for a moment and talk about the indictment. Count I, as I said, charges the conspiracy count. Count II through Count XII charge mail fraud counts, and each of the mail fraud counts articulates a separate mailing that was placed in the United States mails, in order to further the scheme. You have heard that there were many, many mailings in this case to the victims. The Grand Jury in returning the indictment selected one mailing that related to each of the loans about which you have specifically heard testimony-1 and the exhibits that show those mailings are in evidence. The United States Government through the Congress has outlawed the use of the United States mails to further a scheme to defraud, and one of the things we have to prove beyond a reasonable doubt is in fact that the mails were used to further the scheme. In each of the cases, in each of the counts that we charge the mail fraud count, the substantive mail fraud counts, we charge that a particular letter was deposited in the mail and sent to one of these victims with a particular promise to that victim, therefore furthering the scheme. In most instances, the mailing involved is the letter of indebtedness or the promissory note, which clearly furthers the scheme. One exception to that, and that is

71

Count XII, the last of the substantive mail fraud counts,

Page 68 of 248

specifically charges Lyndon LaRouche with furthering the scheme to defraud, the entire scheme including both of the orange towers, by a specific mailing to Elizabeth Sexton, the last letter I read to you, where he tells her that there was no discretionary nonpayment/ that there was no money available, that he had no executive authority over CDI, and that she should let her conscience be her guide. That letter with those falsehoods sent to her in order to induce her to try to forgive that debt at a time when there were swimming pools being built and all the rest of it, we have charged as a separate substantive mail fraud count. That is Count XII. Count I, as I said, is the conspiracy count. We will be addressing that in a little while. Counts II, III, IV, V, VI, VII, VIII, IX, X and XI are substantive counts charging the individual fundraisers who had responsibility for making the false statements to the lenders that you heard from. For example, there is a count charging J

with

sending or causing to be sent through the United States mails a letter of indebtedness or a loan form to Elizabeth Sexton. The Judge will tell you in his instructions that in order to be responsible for the mailing you have to be a participant in the scheme but you don't have to be the one

72

who actually goes over and drops the letter in the mailbox. If it is reasonable for you to assume based upon the practice

Page 69 of 248

that a mailing would be sent out to further the scheme and you do something to cause that to happen, you are guilty if we prove that beyond a reasonable doubt and the other elements. And in connection with each of these defendants, the solicitors, it is clear from the evidence that the practice was that if a loan was received, the machinery would crank up, a loan request form would be filled out, the initials of the exhibitor would be placed on it, and that paperwork would result in a loan form going to that person. And so we have charged the individuals for these mailings. And you will see when you go through the counts which individual was charged with which mailing in connection with which lender, because it's all listed there on one page. I believe it's page 33. Of course, there is evidence that there were more loans taken in that just those specific notes referred to in the indictment. There were more loans taken in with each of the victims referred to. For example, I think the one on Goodwill Post talks about $15,000. She loaned $45,000. Elizabeth Sexton I think talks about one of the, one promissory note, but she had many promissory notes. In addition of course, this scheme is broader. It's alleged to be broader than the victims that you heard from. It is alleged to include the orange post. It is alleged to

73

include the massive year of the loan, $10 million that Wayne Hintz tried to warn them about. The similar figure for 1985, and the somewhat reduced figure for 1986. Now, in addition to charging the individual

Page 70 of 248

solicitors on the mail fraud count, Lyndon LaRouche and Will Wertz are charged in every mail fraud count because the evidence in this case is -that they set this in motion. They ran the organization. They determined the fundraising quota. They insisted the quota be met. They insisted these fundraisers get on the phones and make their quotas at a time when they had been told the loans were not being repaid, and they knew the fundraisers were getting loans because they monitored the loan situation. The fact that at sometime in 1985 they put a ceiling on loans doesn't matter, because they never started to reduce the loans at the rate that they were bringing them in. The first priority was, quote, "Get the money." That's what they told the fundraisers to do. When the fundraisers didn't do it, they were humiliated. Their sexuality was attacked. They were held up to ridicule. Get the money. Your job is to make the money. And because of that, because they were pressing and pressing and pressing for the very acts that occurred at a time when they knew that there was a loan problem, they are charged as aiders and abetters. Aiding and abetting is --

74

the Judge will give you a longer definition of it and obviously what he says on that controls, but I am giving you an encapsulation of it -- aiding and abetting constitutes willful association with the crime and doing some act to

Page 71 of 248

help carry out the crime, to help the crime occur. Mr. Wertz everyday got everybody together in a meeting, read them Paton,. told them this was a war footing, told them that Lyn's life depended on it, told them that they had to raise this money because Lyn said the money had to be raised. He raised the quota from $300,000 to about $600,000 over the course of two years. He demanded that it be met. They kept on borrowing. And he kept on making them borrow. And he kept on telling them to make their quota. And they kept on doing it. And when J to Elizabeth Sexton and

n was on the phone and thereafter Dennis

Small were talking to Goodwill Post about Dope, Inc., they were doing it because Will Wertz had said that was a fine idea, and Will Wertz was their manager and he controlled them and they responded to him and this is a hierarchy. If nothing else has been shewn beyond any doubt, it is that these people adore Lyndon LaRouche, and they do what he wants. When Will Wertz comes to New York on Mr. LaRouche's authority and Will Wertz sets up a program because Lyn says it has to be set up, and you don't have to take just Mr. Bardwell's word for that or just Mr. Curtis' word for

75

that. The Spannaus notebooks that you have heard a little talk about, the testimony is that he writes down what Lyn says and what other people say and that when he is talking to others, he refers to what Lyn has said. He refers to Lyn as Lyn. You have heard these identified as Mr. Spannaus1 notebooks. They have Ed written

Page 72 of 248

on the front of them. In the notebook covering the period of December '83 to March of '84, on a January 14, 1984 meeting, Mr. Spannaus writes in his notebook, "Lyn, parenthesis at Sunday meeting, $200,000 to $210,000 operating budget, 40 a week TLC. Set priorities to repair infrastructure. Consolidate NCR fund-raising. Don't let sectors slip back into old ways. Will plan good." Your Honor, may I have Exhibit 7, I believe it is, P, the Robert

notebook?

THE COURT! It's apparently in evidence, but you all retrieved them, we are told. MR. MARKHAM: Well, we'll have that for you when you go into the jury room. That is a notebook in which Robert wrote down the following: "Will Wertz:, Will W.:" underlined in the upper left-hand corner and the testimony was that that is where Mr. G

attributed his source, "Will Wertz: question

for LHL." And this is in June after the plan had been in effect according to the testimony of the

76

witnesses in this, first notebook. Six months later, the question from Will, "Questions for LHL," and of course the question would go to LHL, because he dictates the finances- "Question for LHL from. Will. Need strict guidelines on repayments. Proposal forget or forget indefinitely." You can read it.. You will read it. It's been clipped. Incidentally the portions of these voluminous notebooks that we wish to give you to refer to, we have

Page 73 of 248

clipped, and we have tried to make the little arrow part go to the part we want, but look at both sides of the page. That conversation occurred in June of 19 84. I believe it was June 14th. It was the first entry in Robert 's notebook of that day. In Mr. Spannaus' notebook, an entry later on in the day, at least it's not the first entry, Mr. Spannaus writes, "Lyn, loans. Forgive or forget." Mr* Wertz and Mr. LaRouche controlled the operation, what was written in the notebooks says what they wanted to do about the loans, what each of the witnesses who took the stand says happened to them. We were asked to forgive, and if we didn't forgive, we might as well forget. And so, they are charged with aiding and abetting. Mr." Spannaus is charged with aiding and abetting, not on every count, because he did not have the daily operation with

11

1

fundraising like Mr. Wertz did or the ultimate authority and

2

ultimate dictation that Mr. LaRouche had and exercised by

3

saying forgive or forget; but he is charged with those counts in which the form that he devised was used to make the false promises to the lenders. You remember that Mr. Yepez went to Mr. Spannaus and talked about a new loan form, and Mr. Spannaus said no, we don't want something too formal. We don't want these people to think that we are in the business of making loans, which they were in the business of borrowing

Page 74 of 248

10

money. That's what they were doing.

11

We want to do a letter of indebtedness. You will

12

hear that Mr. Spannaus, or you heard that Mr. Spannaus went

13

to a lawyer about the wording of the letter of indebtedness.

14

Didn't tell that person anything about the underlying loan

15

problem, devised a form which was used, and every single time

16

a letter of indebtedness that Mr. Spannaus devised was used,

17

he is charged, because his handiwork containing his

18

phraseology of the promise to be repaid went through the mail. At the time he made those promises, he had already

20 written in his notebook, "Loans, forgive or forget." And that's not all he had written. He wrote, "Loans

23 22

are our curse."

23

He wrote, "None of the companies have ever made a

24

profit except" — "None of the publishing companies have ever

25 made a profit except EIR. " He wrote that, and so he knew

78

that. He had written about a conversation with Shelly Asher in which someone is quoted as saying, "We don't pay back loans." He had written many different things in his notebooks that show his knowledge, in his own handwriting, that they weren't paying back loans, and they are marked, and you can read them. Not only that, he was a legal adviser for this organization, and people would come to him with

Page 75 of 248

complaints of lenders to be repaid. You heard of one example where somebody came to him in 1984 and said there is a lender complaining about their money, and Mr. Spannaus toeing Mr. LaRouche's line about how people don't deserve their money back said quote, "Who does he think he is?" And that's the arrogance with which these people treated other people. You heard a tape of Mike Billington. In the short remaining time, I am going to replay that tape and make some comments about it again. Before I do, I wish to point out to you that the evidence of the solicitors that we offer against each of the solicitors in not only the extraordinary promises that they were making, given the financial situation, but the fact that J

had written a memorandum, which

indicated that she knew about the loan problems, or at

79

least if she didn't write the memorandum, it's copied to her, and it involves her lenders. She had been told by Mr. Yepez that there was a loan problem. She kept on borrowing. The same with Mike Billington. He kept on borrowing. P G

had been told; he kept on borrowing. P

G

wrote a memo about his problems. He kept on

borrowing. Dennis Small .— take a look at the Dennis Small contact card, which is in evidence. It's about eight or nine pages of millions of dollars of loans that he raised, and they are all listed in whole numbers. For Van Sickle, he lists 200* She got $200,000. For

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Post, he lists 15, She lent $15,000- The numbers are in thousands, and therefore the totals are millions. And you heard his assurances to people that they would be repaid at a time when there was no business to make those assurances. You heard all of the witnesses testify about the assurances. And I submit that there is no evidence in the record to contradict that testimony, but there is evidence that corroborates it. And that is because Mr. Billington taped some of his phone calls, and here is one of them which shows you a little freeze frame picture of exactly the kind of assurances that each of these citizens took the stand and said they received from these solicitors who were making the calls at the request of Mr. LaRouche and Mr. Wertz. {Whereupon, counsel played an excerpt from the tape.)

80

MR. MARKHAM: (Interposing) If they are due, they will be coming out. They didn't. And he said it as casually as if oh, yes, that's absolutely no problem. (Whereupon, the tape excerpt was resumed to be played.) MR. MARKHAM: (Interposing) The letter of indebtedness he referred to is the form crafted by Mr. Spannaus. Now, Mr. Spannaus went to a lawyer for the phraseology of that form, but Mr. Spannaus, the evidence is, didn't tell that lawyer anything about the rotten state of their loan repayment plan. But instead he kept that to himself, got the legal

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phraseology of the form, which included a promise to repay and then sent, had the organization use that form in connection with Counts III through Count XII and a lot of other counts and a lot of other mailings that are in evidence. (Whereupon, the tape excerpt was continued to be played to the jury.) MR. MARKHAM: (Interposing) Oh, yes, absolutely. That1s not a problem. I hear you saying that you really need the interest payments. Absolutely. That was false. Listen to what he says next. (Whereupon, the tape excerpt continued to be played.) MR. MARKHAM: (Interposing) Nobody has ever tried to imply that our loans are not good. Wayne Hintz had already tried to say that directly. Richard Yepez had said

81

it. The complaints were coming in. Will Wertz was screening the phone calls so these people wouldn't have to be bothered by the little matter of people saying they needed their interest back. Everybody was saying that the loans were a problem. They were obviously a problem. That was obviously a lie. So you have heard one little freeze frame of what each of these victims told you were the assurances made to them and by which, in which they placed their trust and by which they got burned, and burned badly, and burned by a group of people who just think thatthey are better and can

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use the money better than anyone else. One moment. Since we are splitting up the argument, I needed to consult. I want to very briefly touch on Count I, which is the conspiracy, which charges all of the defendants with conspiring together to commit the loan fraud, which is shown on the two orange towers over there, and which is referred to apart of it referred to specifically in Counts II through XII. A conspiracy is an agreement of two or more people to do an illegal act. The illegal act in this case is the fraudulent solicitations and the mailings. The agreement involved does not have to be written

82

1

down, although loans, forgive or forget, comes pretty close

2

to written down. The agreement doesn't even have to be

3

expressed. It can be tacit. It's just a common understand-

4

ing among individuals that they are engaged in a course of

5

conduct to defraud. If you find that there was a common understanding, and we submit that the evidence is overwhelmingly that there was, loans forgive or forget, and that's what happened and that's what they did, and that is what they didn't tell people. If you find that, that there was a common agreement, that alone does not equal a conspiracy, because there has to be, and the Judge will tell you more about

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this, one overt act to further the conspiracy. If two people agree to rob a bank, that alone is not a conspiracy, but if one of them in furtherance of that agreement, goes to a hardware story to buy a hammer to break into the bank that night, the act of buying a hammer, if it's done in furtherance of the conspiracy, makes it a crime because it's being done in furtherance of an illegal conspiracy, even though the act itself, going to the hardware store to buy a hammer is in other circumstances legal. The evidence about a conspiracy, I have addressed in the context of the other evidence, the common understanding about who needed the money, the common understanding

83

about how the money was to be raised, the common understanding about what was to be said to lenders when they called back in, that they were to be screened and all the rest of it The overt actions in furtherance of the conspiracy are listed in the indictment. The Court will tell you we only have to prove one. We have proved scores. Each of the mailings is an overt act.* The statements made over the phone are overt acts. The letters that went to and from are overt acts, and they are all listed. I respectfully submit to you, ladies and gentlemen, that the totality of the record, the evidence in this case shows that these defendants got together to advance their

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goals, and they did it with the common understanding that they were going to do it with other people1s money, and that they were not going to be honest when they tried to get that money. And that as a result of their misstatements, their overstatements and their omissions of material facts, a lot of people lost a lot of money, and as a result, we ask you to find beyond a reasonable doubt that they are guilty of the charges. Thank you. MR. ROBINSON: Good morning, ladies and gentlemen. I am going to talk to you just a couple of minutes about the tax charge. Before I do that, I am just going to follow up on something Mr. Markham said for just a few moments about the individual fundraisers. He mentioned to you the

84

memorandum that Wayne Hintz wrote in March of 1985 and said that attached to it were two other memos. I just wanted to take a few seconds to highlight those memos to you because I think they are that important. One of them was a memo dated December 10th, 1984, and it was entitled, "Special report on major contributors. ." That's December 10 of 1984. It was either written by

or she got a copy of it, one of

the two things happened. In any event, it listed the status of

's major contacts. Here's one of the

things it said, "Arthur Hawkes has loaned us a lot of money. I feel that if he gets $2,000 a month interest payment, we will be able to renegotiate the $50,000 due in January-"

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Here is another thing it said. "Helen Murray. She has never gotten any payments as far as I know and it would be very important to get her some kind of payments as she has been doing a lot of organizing, raising money from friends, et cetera." Ladies and gentlemen, that memo shows that in December of 1984,

knew that loans were not

getting repaid. They certainly weren't getting repaid on time. This shows that she knew people had not been getting their payments. It shows that she knew they had to write up special requests to try to get people money. That memo was

85

written before any of the substantive counts in this case. That was written before she talked to Cecilia Landegger, before she talked to Elizabeth Sexton. This is the very beginning of the time frame of everything you have heard about, and when she talked to the lenders, she didn■t admit to any of this. She didn't admit they were having trouble making payments. The other memo, the one written by P

G

is exactly the same- It's dated December 13th, 1984. In that he says for example Paul Wicke (phonetic), "If we pay him $1,314 a month and pay back approximately $2,500 other dollars, he will be calm and there will be a lot more money." That says it all. He knew that people weren't getting repaid. He was suggesting repayment as a means of getting more payment out of this guy. And he wrote that memo

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before he talked to any of the victims whose testimony you hear in this case. He wrote that before he promised Max Harrell in 1986 that he could get his money back, and he wrote that before he promised Jerry Corbin in 1985 that he would get his money back. P

G

knew

those promises were false when he made them to those people over the telephone. And that memo proves it. The other memo proves the same thing about

.

As for Mr. Small, remember, he was the specialist in selling Dope, Incorporated, Remember what Chris Curtis

86

told us about that. He said they just made that up. They made up figures that they used over the telephone. They just made up things that they said to people about Dope, Incorporated. Sure, we have seen a couple of books put into evidence about Dope, Incorporated but that just leads to two questions: one, why weren't the books published when the people loaned the money in the first place? Like Elizabeth Sexton lending $100,000 in 1985; and second, if the books were published, what happened to the money from the books? How come nobody got repaid? That was Dennis Small's specialty, and like Mr. Markham said, those contact cards show him pulling in millions of dollars. I submit he knew those loans weren't going to be repaid either. Plus, one final note on Mr. Small: he borrowed $25,000 from Martha Van Sickle in one shot on one day. Remember how much you have heard about the loan ceiling in this case? Remember how the loan ceiling was supposed to be $150,000 a week? Well, that

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was supposedly because the organization understood there was a limit to how much debt they could bring in. Well, Dennis Small almost doubled that ceiling in one day. He knew that loan wasn't going to be repaid, and it wasn't. Now, turning to the tax case for just a couple of minutes. Mr. Billington I think I needn't cover further. The tape speaks for itself about the false statements he made

87

Turning to the tax case, Mr. LaRouche is not charged with tax evasion. He is not charged with failing to file a tax return. And there is a simple reason for that. We don't know how much money he made. We don't know what his income was. Instead, he is charged with conspiring to hide his money from the Internal Revenue Service. He is charged with conspiring with other people to pretend that he had no income Now, basically he is charged with trying to fool the Internal Revenue Service, Now there are a couple of things that have gone into evidence that you haven't heard yet. Let me just read two of them to you. These are transcripts of some sworn testimony that Mr. LaRouche gave back in 1984, when he was asked about his circumstances. It will just take me a few minutes to read it. "Question: Do you pay the rent at Woodburn Farm?" "Answer" — and this is Mr. LaRouche talking — "I personally? I personally do not pay the rent at Woodburn Farm." "Q Does Helga LaRouche pay the rent at Woodburn Farm? A I do not believe so.

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Q Do you know if anyone pays the rent? A I assume someone does. Q Who do you assume pays it? A I don't know. Q Where does the money come from?

88

A

What do you mean?

Q

Where does the money come from which pays for your

stay at Woodburn Farm? A

Obviously, I don't know, do I.

Q

Did you eat dinner last night?

A

Yes.

Q

Where did you ea-t?

A

At the house.

Q

Was there food in the house?

A

Yes.

Q

Did you buy it?

A

No.

Q

Did Helga LaRouche buy it?

A

Not to my knowledge.

Q

Who bought it?

A

I don't know.

Q

With what money?

A

I don't know.

Q

How do you take care of daily living

expenses, Mr. LaRouche? A

I don't know.

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Q

Do you live free?

A

I don' t know." Here's another excerpt from his testimony.

"Q

Who paid for the suit you are wearing, Mr. LaRouche?

89

A I don't know, Mr. Cavalier (phonetic)" — the name of the lawyer. "Question: You just found it in your closet, did you? A No. It was a gift by persons associated with me some years ago. Q Are the other suits in your closet ones that you went out to a store and bought? A I have on no occasion gone out to a store and bought any articles of more than a haircut, a $5 price in the past ten years. Q Do you know who pays for all the suits in your closet? A I do not, Mr. Cavalier. I do not know in detail. I have some general idea that they are gifts from people associated with me or other." The point is, he is denying any knowledge of his financial circumstances. He is trying to pretend that this money just kind of filters into his life without him having any idea where it comes from, and that's obviously absurd. And you saw the absurdity of that in this trial. Rick Magraw bought his suits. Rick Magraw testified that he did. Rick Magraw bought his suits with money from

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the LaRouche organization. And Mr. LaRouche knew that. But when he gave that sworn testimony, he had to try to hide all

90

of that, because he was trying to hide the fact that he had income. And he did a good job. That is exactly why we can't figure out today exactly how much income he had. Let's take a little bit of a look for just a few minutes at what the income did show -- excuse me — what the evidence did show about his income. This Rick Magraw checking account, the budget for that was $2,500 a week or thereabouts. The accounting records that resulted from that that the expert witness was looking at yesterday showed that more than $200,000 were billed to something called advisory expenses between July and December of 1985. That is just part of the year. More than $200,000. We don't know how much of that went to Mr. LaRouche. We tried to piece it together the best we could with the minimal incomplete records that Mr. Magraw and his wife kept, but we don't know how much of it went to Mr. LaRouche. And remember this, he only had to get $1,081 in 1985 to be required to file a tax return. Maybe that's why when they asked him where his clothing came from and who paid for his housing, he said I don't know, because he had to try to distance himself from it. That was all part of the scheme to hide his income from the Internal Revenue Service. Ladies and gentlemen, the practice of paying all

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of Mr. LaRouche's personal expenses standing alone is enough to

91

show that he had income during the years in question. We don't even have to get into Ibykus Farm and the housing and everything else. That is enough to show that he was getting income, and he was doing it in a way that was trying to hide it. But let's talk about the housing and the meals for just a second. Mr. Markham went into great detail about how much was spent on Ibykus, I don't need to do the same. There is a question about whether or not that's taxable income to him. The Judge is going to instruct you on what the law says about that. And what the law says is that under certain circumstances, and employee of a business doesn't have to report income for housing provided to him. Well, the first problem with that with Mr. LaRouche is that every . chance he has gotten in the past, he has distanced himself from this organization. He specifically said he wasn't an employee. He has specifically said that he wasn't affiliated or associated with Caucus Distributors or Campaigner Publications. Now, all of a sudden, we are in Court on trial on a criminal tax case, and the defense says he is an employee. It's a little bit too late to make that change of course for Mr. LaRouche. He is not an employee. If he is not an employee, then housing and the lodging is taxable to him.

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9-2

Second, the housing and lodging has to be provided for a noncompensatory purpose. All I mean by that is, you can't just decide not to pay somebody's salary and give him a house instead. There has to be a business purpose for it. Well, we submit that on the evidence in this case, it's clear that what this organization did, what Mr. LaRouche and his associates did was enter into a scheme to avoid paying him a salary, to avoid paying him normal wages like your normal person gets, for doing things like writing books. And instead, gave him a house. In effect, what they did was just try to circumvent the normal procedures so that there would be no way of figuring out how much he had really gotten in the way of inc ome. Now, as I said it's not just a question of whether or not he had income but it's also conspiracy to conceal that income. First of course he didn■t file tax returns. Second, when he Was asked about it, you have heard the testimony, he gave what can best be described as misleading answers to the questions asked of him. You have seen the records, what little of them there are. They don't show how much money went to Mr. LaRouche, and there were a lot of different people involved in that record keeping process. The Magraws, Richard Welsh, many people were involved in this scheme to conceal his money.

Page 89 of 248

93

When Richard Magraw takes the witness stand, all of a sudden he is describing things that have been given to Mr. LaRouche, like clothing as gifts. Isn't it curious that that is exactly what Mr. LaRouche said when he gave the sworn testimony that I read to you a moment ago. Obviously, these people were working in concert, Obviously, they were working together to try to create this false impression that Mr. LaRouche doesn't have any income. A few other specific instances: Richard Welsh goes to talk to Murray Altman in the early 1980's, to prepare tax returns. He tells him that Mr. LaRouche is living with friends. That wasn't true. New Benjamin Franklin House Printing Company was paying $5,000 a month rent for an apartment for Mr. LaRouche. He wasn't staying with friends. In December of 1984, Richard Welsh, after Mr. Morganroth's conversation that he testified to yesterday, after that, Richard Welsh sits down and starts to come up with some schedules to see how it would affect the corporate tax liability if they backed out everything paid to Mr. LaRouche, if they treated it all as gifts. There is only one reason he could have been doing that, and that was because in December of '84, they were thinking about trying to reclassify all of the money spent on LaRouche as gifts. Why gifts? Because gifts aren't taxable. Obviously even then they were worried about money

94

Page 90 of 248

paid to him three years earlier, worried about trying to cover it up, trying to change what it was called so Mr. LaRouche wouldn't have a tax liability. Or that they could claim that he didn't have a tax liability. Two other things I want to mention to you: there are two specific exhibits in evidence. Could 1 have 20-R and 20-S? These are two exhibits I ask you to take a close look at when you get back in the jury room. These are some vouchers that were submitted for the purchase of things at Ibykus Farm. You will see right up here it says, "Title," and it's whited out there, and after that it says, "Entertaining," and over the white-out somebody has written in "VIP," Well, if you hold it up to the light just right, and those of you who have ever tried to read what was under white-out before will know what 1 mean. If you hold it up to the light just right, you can see what it says underneath that white-out. It used to say, "LaRouche." When it was originally typed up somebody typed up, "LaRouche entertaining. This is for formal china and silverware for Ibykus. Somebody whited that out and put VIP over that. That is the kind of records they kept. They did everything they could to conceal when expenses were being paid for LaRouche. They whited out what little records there were. 20-S the same way. Exactly the same thing happened.

95

Lastly, you will recall there was testimony that

Page 91 of 248

a whole series of letters was sent to Mr. LaRouche by the IRS asking him where his tax return was, and asking him to explain why he hadn't filed a tax return. You will remember Richard Welsh testified that he received a letter back from IRS at the post office box that he had given them, but that's not the only evidence that Mr. LaRouche received those letters back. Exhibit 7-D, Ed Spannaus' notebook, page 217 — sorry -- page 204 — here's what it says; "IRS, three letters, standard form letter, LHL, care of CFL, Citizens for LaRouche, request of info about tax form. We have not received 1040 for period ending '81, '82, '83." Ed Spannaus saw the letters that the IRS wrote to Lyndon LaRouche asking him about his tax returns. You can infer from that that Lyndon LaRouche knew that the IRS had written to him asking him about his tax returns. You heard from the IRS witness that they never got a response back to that. Now, if Mr. LaRouche's status is so aboveboard/ if Mr. LaRouche has been open and up front about his status, why didn't he just write back to them? He didn't write back to them because he couldn't, because he was involved in trying to conceal his income. It would have been simple to write a letter back, but he didn't, and that, I submit, is the final

96

piece of evidence showing that there was a conspiracy to defeat

Page 92 of 248

the Internal Revenue Service, to try to fool the Internal Revenue Service, and Mr. LaRouche's involvement in it with several other people. Thank you, Your Honor* THE COURT: Suppose we take a short recess before defense counsel begin. (Whereupon, at 11:40 a.m., a short recess was taken.) THE COURT; Mr. Moffitt? MR. MOFFITT: Yes, sir. May it please the Court, ladies and gentlemen of the jury, I promised myself that I was going to be very low key in this argument because I represent Dennis Small and there hasn't been a great deal of evidence regarding Dennis Small or any criminal behavior. about Dennis Small. I just changed my mind. I changed my mind because if hyperbole and misstatement are crimes to acquire money, hyperbole and misstatement to acquire a conviction is at least as bad. These two gentlemen over here are guilty. I want to refer back to my opening. I told you in my opening that I represent a man, flesh and blood, not a they, not a them, not an organization, not a group of people, a man, Dennis Small. Now, Dennis Small is a dreamer and an activist, and I am not going to back down on that. I am not going to run from it, and I am not going to hide from you with respect to

97

it. Dennis Small raised money in support of the ideas that he believed in. And the Government, without objection, has put in a card of all the money that Dennis Small raised- And

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they told you it was all loans. They just told you it was all loans, and they know that's not the case. Why? How does one finance their dreams in America? How do we do anything? Debt is not a foreign concept to us. Each one of us has incurred a debt for a dream. Many of you have purchased your house and incurred a debt. Many of us have credit cards. Many of us have borrowed from a bank, and from time to time many of us have asked a loan to be rolled over. Not because we intended to defraud the bank at the time that we charged the loan, but simply because circumstances were such at that very moment we could not pay back the loan. You want, to talk about debt? Think of our Government. $1 trillion in debt. And certainly, certainly institutions like Chrysler and Lockheed incurred all kinds of debt before they almost went bankrupt. Corporate borrowing in this country is at an all-time high. You can read it anywhere. It is not a crime to borrow money. Two principles that we talk about, and only one was stated by those gentlemen. We don't prosecute people in this country for incurring debt. We do not have debtors prisons in the United States. Not here. So when you think about it,

98

think about it in terms of any other corporate entity in this world or in this country that borrows money. And as you heard yesterday, borrowing takes all kind of forms. It is okay to borrow money. There is nothing wrong with it. And it is also okay to borrow money in an effort to

Page 94 of 248

grow, even when you are in a negative position, if you believe that growth is possible. It happens everyday, and the idea is not to turn your back on the common experience of this world simply because the Government has created a bogeymen. They have made a bogeyman out of Lyndon LaRouche. And they are telling you that it is sufficient to convict any person associated with him merely because they are associated with him. What did they tell you? That Mr. LaRouche says that they are better than everybody, so that the end justifies the means. And he has imparted that and they have all lost their free will and it's a mob running around under the orders of this man. That's what they are telling you, that Dennis Small doesn't have any responsibility for himself, because he is associated with that man. That is not how we do business in this country. That is not what this case is about. In order to dream, we must finance those dreams, and everybody who is not independently weal thyfinances their dreams with some form of debt. Everyday.

99'

Now, what happens when you don't live up to your expectations? When the debt becomes too great? What happens? Does that mean at the time that you borrowed the money that you didn't believe that you were going to grow? Or that your dreams were not going to come true? Because that is what they are selling here. They are selling that there was debt at the end in 1987, and they 'didn't grow, and therefore in 1984,

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they shouldn't have made the attempt. That is what they are selling. Woe be it to the dreamer if he can't make the attempt. What kind of society would we live in if those who dream and made the attempt and failed became criminals because they failed? That's what's being sold. Think about it. Think about all of the businesses that have borrowed money and gone bankrupt. A crime? They didn't expect to go bankrupt. You have seen what these businesses produce. You may not agree with it, and I don't ask you to agree with it. I don't agree with it. But that's not important. They have the right to try. They have the right to try, to convince you and I that they are right. And whether we agree is not important. This organization was seeking self-sufficiency, like any other organization. It made investments. It attempted to sell its literature. It tried to raise revenue through sales, and clearly, it tries to raise revenue through the

100

opening consulting businesses. You heard about that. You have heard about SELA. You have heard about Mr. Richard Morris. You have heard that they had the best private intelligence agency in the world. The purpose of that was to sell information, and to become a think tank and to do the things that these people have always dreamed about. Now, the question becomes was it wrong to anticipate that there was going to be growth and there was going to be

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success, and whether that optimism was wrong, illegal, unconscionable. That is what it is about. Now, you have got to ask yourself the question, ■ where does Dennis Small fit into this program? Who is Dennis Samll? What do we know about Dennis Small as opposed to the propaganda that you just heard about Dennis Small? Think back to Goodwill Post. Think back to Martha Van Sickle and think back to Alan Rither, because that's what we are talking about with respect to Dennis Small and be mindful that Alan Rither is a lawyer. He is not a little old lady. Mr. Markham wanted to make that point. This is not an unintelligent man. This is not a man who is not skilled in asking questions. He does the same thing for a living that I do. Use your common sense. He is an attorney. He has been trained. He knows what questions to ask, and he knows that he contributed to a political organization for political causes.

101

My God, the Democratic Party almost went bankrupt. Should we prosecute everyone because they did, and they continued to solicit- ,contributions and loans? Why are we prosecuting these folks? Think about it. Let's talk about what Dennis Small did and what the evidence is, not what their wish list was, because what you just heard was a wish list. We wish we had proved that Dennis Small solicited money only for Dope, Inc. There is not one witness that said that. There is simply not one witness that said that. What they said was that Dennis Small solicited money around the war on drugs. Dope, Inc.

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was included in that. And you heard, you heard from General Anyez (phonetic) that he overheard a solicitation of Dennis Small's about the war on drugs in Latin America, and that it was truthful- That is what you heard, because Mr. Markham asked him if he ever heard a solicitation or had anything to do with a solicitation. You heard that. Now, did he come here to lie for Dennis Small? Did he come here not to tell you the truth? Look at Martha Van Sickle. Exhibit No. 11-1. It has in her own handwriting what Dennis Small said to her from her. From her typewriter. It doesn't just talk about Dope, Inc. Look at it. That's not what was happening. And ask yourself, ask yourself when you read the indictment what's happened to part of the Government's case? Part of their case was

102

originally that things were solicited for that didn't happen. What was the solicitation of the $200,000 for from Martha Van Sickle? It was for a conference that she went to, that she observed, and that she said the expenses for were reasonable. That's what happened with that $200,000 that Mr* Robinson wants to know, because she testified to that; and ask yourself what that soliciation was about. It's in evidence, Also in evidence is 11-V. It's a letter to Dennis Small from Martha Van Sickle. It acknowledges the fact that the bad publicity is causing difficulty in raising money. 11V. You will have an opportunity to read it. Mrs. Van sickle

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was not an unsophisticated lady, and she testified here that she knew she was taking a risk. She knew she was investing in a political and humanitarian, to use her own words, organization. That they were not successful does not mean that they never intended to be, because you see in order to prove the scheme, you have got to prove that when they solicited the loans, they never intended to be successful. Does that make any sense? Think about it. That the whole thing was a scheme, that there was never any success intended. Now, ask yourself in light of the things that Dennis Small saw, is that plausible to him? in light of the reports

ro3

that he prepared, the influence in South America that he saw through the presidents of Peru and Venezuela, was it plausible to him that this organization never intended to be successful? And ladies and gentlemen, ask yourself, ask yourself, regarding an organization that has had the problems with law enforcement and financial warfare that they have talked about, if they never intended to be successful, then they expected to end up here, because they were being watched. The Kissinger letter, Dear Bill, to the head of the FBI. How many American citizens can request that a group of people can be investigated by writing a Dear Bill letter? Can you do it? Can I do it? I suggest not- They knew that they were under scrutiny, so a scheme that is never intended to be successful, the obvious result was clear. These are not foolish people. You heard the educational

Page 99 of 248

backgrounds of virtually every person sitting over at that table. They are not crazy, and they are not foolish. But I think with respect to Dennis Small, you must ask yourself, did he believe that this did not intend to be successful? Were his expectations unreasonable? He wrote the SELA documents, the documents prepared by this organization to what was compared by the witnesses to an economic equivalent of the Organization of American States, That was requested. He met with the ministers in preparation of those

104

documents. You heard about the Peruvian contract from Sylvia Bruda. Remember Sylvia Bruda? They didn't talk about Sylvia Bruda. Did you ever see a more intelligent lady or a more competent person? She worked on the Peruvian document, the Peruvian contract. Do you think that she had an expectation that that was going to lead to business? Officials of the. Reagan Administration, you saw them; this is not a figment of anyone's imagination, ladies and gentlemen, and most assuredly it is not the figment of Dennis Small's imagination, because you see it wasn't hearsay to Dennis Small. No one was telling him the story. He was living it. He was personally living it. He was the person who was doing it. This was not a figment of his imagination. Once again, my friend, Mr. Markham, asked the question, did you ever meet with Dennis Small? He met with

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Dennis Small and officials from a Latin American government brought to him by Dennis Small. So when Dennis Small talked about the war on drugs, this was not something that someone made up for him. He was a warrior. He was a participant, and when he briefed people and told them what he did and what was going on, it wasn't because he had been told by the evil Ming the merciless. It was because he was there. I submit, ladies and gentlemen, he has done more than anyone else in this courtroom with respect to that. And we ought to be lauding him for it. Now that he communicated

105

that fact to other citizens to solicit money to continue that work and to make those organizations grow, that were doing that work, that wasn't being done by anyone else, is not a crime. I state that unequivocally. It is not a crime. And you can't be afraid of that, because when the dreamer steps out of the dream and decides to realize it, he should not be afraid that-if he fails, he will be prosecuted. VJhat kind of society would we live in if we couldn't attempt to realize our dreams? What kind of place would we be? I suggest to you that we would be very mediocre if not out-stripeed by other countries where the dreamer would be allowed to dream. Do not be afraid of the ideas. Ideas are important, and if they are bad ideas, then the fact that they are out there, it will become clear. To not let the ideals spill over into this courtroom that there is something evil here

Page 101 of 248

and that people are sitting under the influence of some evil presence. That is not important here. The important thing here is, can the dreamers dream? Can the dreamers realize their dreams? Can the dreamers try? That's important. And try the only way they know how. You know, it's very interesting in our society, even the wealthy borrow money. Even those who can finance their own businesses , use other people's money. The Rockefellers borrow. Everyone borrows. So don't be afraid of the fact

106

that people borrow. There is nothing wrong with it. Let's talk about Dope, Inc. for a second. :-__-Mr. Robinson stood up and asked you why Dope, Inc* wasn't printed in as many forms or as many times. Remember what the Judge read you. He read you a stipulation, a stipulation, that means that both sides agreed, and this is the kind of thing that really angers me. A stipulation that that book was banned in two countries. It was picked up off the shelf because it offends people. Let me tell you, go back and read it. Go back and read it and you will understand why we have Dear Bill letters written in this case. It offends. It tells a story that nobody likes. It talks about banks. It talks about money laundering. It talks about things that are not talked about publicly. It is offensive. And in countries that are less free than ours, it was banned. And it is offensive. Go back and read it and see who it talks about. It talks about some of the most prominent

Page 102 of 248

people in this country and other places. I submit to you, ladies and gentlemen, that is part of the reason that we are here. MR. MARKHAM: Objection, Your Honor. That is a misstatement of why we are here. It'.s arguing vindictive prosecution which is a matter for the Court to decide. I object to that and ask that be stricken. THE COURT: Objection sustained.

107

MR, MOFFITT: Now there is evidence of what the fundraisers thought in this case. It was put on by the Government. Chris Curtis. Remember Chris Curtis? He testified in 1988 in front of you ladies and gentlemen of the jury that he was raising money in 1984 and '85 and '86, knowing that the money wasn't going to be repaid back. That would be a nice piece if that was the truth. He testified a year ago in another courthouse, another Federal courthouse, that all the money he raised, he raised in good faith, that the people were concerned that the solicitors were concerned about their contacts, that he was not bombarded with phone calls from angry contributors, and that he believed that the organizationwas going to pay back all the loans. Go back even further- The first time he met with the police, the FBI and the Virginia State Police, he told them that very thing. Now, what happened to Chris Curtis? Why now in 1988 is Chris Curtis testifying the way that he testified? What's happened to him? What's changed him? What's made his mind

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different? And why after ten hours in Boston preparing his testimony with Mr. Markham over there, why did he testify in Boston the way he did? And why was it necessary to spend five more hours with him between now and Boston? Because, ladies and gentlemen, if he testified the way he did in Boston before you, that whole side of the table would not be

108

there. It would not be there. All of a sudden, the English meaning of the words good faith need explanation. They don't mean what they commonly mean. All of a sudden what he said in Boston is not true, and has to be read in a totality. He, unlike any other witness, cannot be asked a question and expected to give a truthful answer. His whole testimony must be read. His testimony was sculpted. It was chnaged for this case. You heard the testimony of the police officers that interviewed him. Those were his words. Those were his words Not some figment of anyone else's imagination. You heard from Chris Curtis that when he raised this money, he did it in good faith, and he told the police that the first time he met them, and he told another group of jurors in a courtroom under oath the same thing. Are you to believe the new version? Are you to believe the new version? He also told you something else. He told you that he knew Dennis Small. He knew that Dennis Small's brother was a victim of drugs. He had a family member himself that was a victim of drugs, who died. When

Page 104 of 248

they were raising that money, that was their concern, and today with 20-20 hindsight and 15 hours of playing around with the Government tailoring testimony, it"s changed. It doesn't change the facts of what they were doing when they were raising the money. The most important

10 9

statements that Chris Curtis made were those that he made originally. And he still is not sure, ladies and gentlemen,:that he did anything wrong. And if he did, where is his chair? Where is his chair over here, because look at Goodwill Post. Who raised that money? Who closed that deal? Who said that every loan that was made with Goodwill Post closed the deal? Who said it? Chris Curtis, He has no chair. He has no chair. They believe he raised the money in good faith. That's why he has no chair. He has no chair. So ask yourself. Read the letters. Exhibit 10, 10 series, those are the Goodwill Post letters. Who are they written to? Who made out the letter of indebtedness and who was CC on every document coming from the finance office? Not Dennis Small. Christopher Curtis. Let's talk about that particular incident for a second. It is important to talk about it. Mrs. Post was invited to the farm. She had dinner at Mr. LaRouche's house and didn't speak to him. He didn't speak to her. They ignored one another. She was taken around and shown the facilities. She was taken to Mr. Small's office and given a briefing. And she was requested to lend money by

Page 105 of 248

Dennis Small or contribute at that particular point. She said no. No. So four days later, Chris Curtis called her on the phone and asked her again, and that's when the loan was given, at the

110

1 2

behest of Christopher Curtis. The mere fact that this gentleman briefed her,

3

Mr. Small, briefed her on his participation in the war on

4

drugs was not the reason she gave the money, because she did

5

not give it then. She gave it because of her relationship

6

with Christopher Curtis that has extended well in advance.

7

This gentleman over here is charged. Why is he

8

charged? 9-F is why he is charged, ladies and gentlemen, the

9

card that Mr. Markham made reference to. He raised a lot of

10

money. He funded a lot of things, and an organization like

11

this walks on the money it raises. And if people no longer

12

can raise money, the organization dies.

33

14

Look at the Goodwill Post documents, because they are important- They are extremely important.

15

Let's talk about Mr. Rither for a second.

16

Mr. Rither1s loan was a two-year loan when it was raised by

17

Mr. Small, Look at the check. I will give you the exhibit

18

number. It's 36-QQQ. The check says two years, and that

19

involved a single $10,000 loan on August 1st. They put in

20

two. I guess they expected you to guess about them, which 21

one they were actually charging him with. But look at the

Page 106 of 248

22

check. It says two years. The finance office returns a

23

piece of paper and letter of indebtedness that says one year.

24

Arid then it's renegotiated. Mr- Small had nothing to do with

25

either of those two events about when that loan was going to

Ill

be repaid. It was a two-year loan when he negotiated it. And it was two years from August of 1985, which made it August of 1986, which was after the bankruptcy. He is charged. Ask yourself why? Ask yourself why. Dennis Small participated. He saw it. You heard about the situation in Guatemala, and you heard that he participated. You heard about the conferences throughout Latin America. Why was he interested in Latin America? Same reason Chris Curtis was. They both had spent their early lives there. I want you also to look at Chris Curtis' 171, because it's real important. It shows the pride that he took in what he was doing when he was doing it, the debt watches, the pride that he took in raising money. It's on the 171 form. That's all been changed. He no longer is proud of that. But he was proud enough of it 1986 to write it the way he wrote it on his 171. He raised money until May of 1986 before he left the organization because he thought that the money could not be paid back. There is not a loan in this case that dates subsequent to the date of Chris Curtis' leaving the organization. Why should Dennis Small be punished for being less perceptive than Chris Curtis in his own mind? When Chris

Page 107 of 248

Curtis still struggles? Because that is what they are simply asking you to do.

112

Now, Mr. Hintz, Mr. Yepez, did they mention Dennis Small? Did they say that they talked to Dennis Small and told him that the loans were not going to be repaid? They didn't. Dennis Small was out fighting the war on drugs. He was not on the phone. He was not your average solicitor. And would it be unusual for an organization to take the person who was on the front line and ask that person to talk to contributors about what was happening on that front line? Is there something invidious about that? Something sinister, something wrong? I suggest to you that it isn't. And what did he see on that front line? What did he feel? What was told to Martha Van Sickle, and what did she remember? She remembered that people with this organization risked their lives. Is there evidence of that? Look at SSSS-19 and 12. That is a letter from the justice minister of Columbia, about threats to members of this organization. There is a dedication in the book Narco Trafico. You will have it. It's a dedication to that gentleman. He was killed in the fight. That book is in evidence. This man risked his life. This man believed. But he didn't believe out of some cosmic smoke or some Svengali behavior of Lyndon LaRouche. He believed because he was there, Mr. Rebasa (phonetic) and General Anyez talked about this man's character. They talked about this man's character

Page 108 of 248

113

They came here from Latin America to tell you that he told the truth and that he would abide by the law. That's important. Arrayed against that, what is the evidence? That he believed that they would be successful, that he solicited money in the belief that they would be successful, and that he tried his best, his best, his physical best to make those dreams come true, That is who Dennis Small is, and that's what this case is about, Dennis Small. It is not wrong to fail. It is not wrong to fail. It is not wrong to try, and if it becomes wrong to fail or try, we will lose a great deal of what has made this country great, I have nothing else left to say. This is my last opportunity to talk to you. You will hear a lot of closing arguments, and you will hear rebuttal. Remember Dennis Small. Remember what he did. Remember what he tried because it is important. And even if you don't believe in what he believes, it is important in our society that people like him try, and it is important in our society that we not make it criminal for people to believe and act on those beliefs and to do something to change something. We cannot be that afraid of our Government. Thank you very much. MR. WILLIAMS: Ladies and gentlemen, before I begin my argument, let me take you back to the beginning of this case. I am sure all of you will recall that when you first

Page 109 of 248

114

got here, there were a great number of jurors in this courtroom . And it took us several hours to go through that number of jurors; and you remember the lawyers were at the Bench, and at the time we were up there, we were picking jurors is what we were doing. Not only the Government but the defense were going through each of. your names and your addresses and trying to find out who we. wanted and who we thought were the people who were going to be true to their oath as jurors. And what I mean by true to their oath as jurors is that they will decide this case solely on the evidence as it was presented in this courtroom and on the law as His Honor will instruct you* You remember that after you were chosen, after you were chosen, all stood up and the Clerk asked you, will you truly try and a true deliverance make between the United States and these defendants and a true verdict give, according to the evidence, so help you God. My recollection is everyone of you said yes. And that's what we are here for today, to ask you to abide by that oath and to look at this evidence unemotionally, look at this evidence without bias one way or the other, and render your verdicts according to the evidence. And the reason we picked you was because we had faith that you jurors would do that. And you are special people as far as we are concerned, and you are very special

ris

Page 110 of 248

people as far as our clients are concerned, because their freedom depends on your decision. Before I go much further, let me just remind you of a couple of the great principles of our criminal justice system. His Honor will instruct you on these at the close of the case, after all of us have argued, and tomorrow morning; but there are three great principles of the criminal justice system in the United States. And the first is the presumption of innocence. Anyone charged in the United States with a crime, whether it be State or Federal or anywhere else is presumed to be innocent/ and that is a presumption that stays with that person throughout the trial, and unlike in other countries where you are presumed to be guilty and the only thing the jury or the judge has to determine is just how guilty, here, you are presumed to be innocent until you are proven guilty beyond a reasonable doubt. And that is the second great principle of our system of justice, that the Government has a very heavy burden placed upon them in criminal cases in that they must prove each defendant guilty and they must prove element of each defense that each defendant is charged with. Unlike a civil case where the burden of proof, the burden of proof is just by a preponderance of the evidence or if the scales were tipped ever so slightly in favor of one

116

Page 111 of 248

party or the other, in a criminal case, ladies and gentlemen, the Government must put so much evidence on that the scales of justice are tipped very, very far. Finally, the third great principle of the criminal justice system of the United States is that a verdict has to be unanimous, that every juror, every juror, must decide as to each offense that each-defendant is charged with, that they have an abiding conviction of the guilt of that person before a guilty verdict may be returned, Now those are the three great principles. I trust that you will abide by those and you will abide by the Court's instructions when you examine this evidence. Now, before I begin, let me say, too, that what I say to you today is not evidence, nor is what the Government said to you today. The purpose of lawyers in summing up the evidence is to try to show the jury what they think is important, so far as their case is concerned. And so what the Government said in its opening, and what I am about to say, and what all the other lawyers are about to say, is not evidence. You have to determine the evidence from the exhibits, and from what the testimony was on the witness stand, and from whatever stipulations that were made throughout this trial, Now, let me talk a little bit about the evidence. You know that there are two conspiracies charged in this case

117 There is one in the first count of the big mail fraud

Page 112 of 248

conspiracy that everybody is in, and then there are several counts, II through XII, are what are called substantive mail fraud counts against individual defendants. And then there i this final conspiracy count that only Mr. LaRouche is charged in. And to understand the charges in this case, you have to understand what has been done by the Government in bringing this case. What they have done is carved out a piece of time in the history of this organization, of the NCLC, and they have said, ladies and gentlemen, that during that piece of time crimes were committed by these various defendants. And the piece of time they have carved out in the conspiracy case runs from July of 1983 through April of 1987, when several companies were put into involuntary bankruptcy. Yet — and the substantive counts that they have charged have specific dates of these notes that were supposedly mailed on that time, on those specific times. Finally, the tax conspiracy, which I have nothing to do with, is a little longer piece of time that you will see later on. Now, the issue in this case, the issue as to my client

, as to the substantive counts and

as to the mail fraud conspiracy count, is what was in her mind at the time of the conspiracy. And as to the substantive

118

counts what was in her mind at the time she is alleged to

Page 113 of 248

have solicited loans from Mrs, Landegger and from Mrs. Sexton on the speicifc dates that are alleged in the indictment. Now, the specific loan that she is supposed to have taken in Count VI of the indictment from Mrs. Sexton occurred in late November, I think it was November 24th, of 1985. And the specific loan that she was supposed to have taken from Mrs. Landegger occurred about two weeks later in December, December, I believe, the 4th of 1985. Now, those are the two specific mail fraud counts she is charged with. Let's for a minute look and try to determine from all the evidence what was in the mind of my client during this conspiracy, and more specifically in late November and early December, 1985. If you will look at this chart over here you will see that the history of the organization or the loan history of the organization as expressed on that chart starts in 1979 But we have heard a lot of other evidence that this organization started as early as back in the Vietnam War days, back in the late 60's, and developed and grew somewhat in the 7 0's and then in late 1979, they began to grow at some more rapid rate. And if you look at this, the revenues as expressed by those black pillars there, you will see that from 1979 up through 1986 at least there was a general constant growth in

119

revenues. I am not saying that that thing has anything to do

Page 114 of 248

with expenses or deductions or whatever else. The testimony is that that has to do with revenues. I will get back to that a little bit later. Now, Mr. Jackson, would you mind putting that other chart up there. Now, you also know from looking at this chart that that A up there represents the Illinois primary that occurred in March of 1986. So if that occurred in March of 1986, and that is the first quarter then of 1986, the last quarter of 1985 is when my client,

, is charged with

these two loans that she solicited. And it's at that time with regard to these specific loans that we have to, that you as jurors have to try to determine beyond a reasonable doubt what her, what was in her mind at that time and whether she had a good-faith belief in the last quarter of 1985, that these loans that she solicited from Mrs. Landegger and Mrs. Sexton would be repaid. Now, how do you go about determining that? I mean it's impossible to read another person's mind, but you have to do that as jurors in this case. You have a difficult task of doing that as jurors in this case. And the way you go about it is that you use circumstantial evidence, because you can't go in there and read their mind, and you can't today go back and examine what was in my client's mind in December

120

of 1985 or throughout 1985. So you have to use what's available to you and that's the evidence to determine what was in

Page 115 of 248

her mind. Mind you, you have got to be able to say before you can find her guilty that you believe beyond a reasonable doubt that ~this is what was in her mind at that time, when she was soliciting those loans. Now, you remember that the evidence shows that she was in this organization early on. She came into the organiza tion in the 70's, that she grew with the organization, that she was out there, and she did various things for the organization, and then she was put on a phone team. Now, this organization, the evidence shows, was an organization, it wasn't just a political party. It's not like the Democratic Party or the Republican Party, This is a political organization, a political movement. Not only do they run candidates for office, but they publish books, they publish newspapers, they go out and hold seminars. They do things with computers and try to convince people and in some instances do sell their computer products to various countries with regard to economics and that sort of thing. They do all sorts of things that you have heard about in this trial. So it's not just a political party. But there in a part of this political movement that raises funds for the organization. It raises two kinds of funds and in election years, you heard that they raised

121 funds for Mr. LaRouche when he ran for the presidency. That is that TLCr IDL, those kinds of loans. They were maximum of $1,000 on those loans. They raised those hinds of things. But then they had another part of the

Page 116 of 248

organization, another part of this big organization, a small part where people who raised infrastructure loans or loans for whatever the organization needed, whether they needed to publish a book, whether they needed to buy some computers or whatever they needed, they raised money for; or if they got into a crisis and they had to have some money, they would raise money. You will remember that the organization was broken up into regions. There was a regional office in Houston. There was a regional office out on the West Cost. There was 10 11 12 13 14 15 16 17 18

a regional office in Chicago. There was a regional office in Atlanta. There was a regional office in New York. But you shouldn't confuse the regional office in New York with what was called the national center. They were two separate entities in two separate offices. The national center had its office and it had its own phone team. Each region had its office or their offices, and they had their own phone teams where these fundraisers resided or stayed with their telephones. was in the New York regional

19 20 21

offic The phone team in the regiona.1 office. And the only person

22 23 24 25

122

Page 117 of 248

who testified here in this trial about having been in the same phone team with my client,

, was Vera

Cronk. The only thing, as I recall, that Vera Cronk said about Ms.

's solicitations was that she was a

specials person on the phone team. In other words, she solicited loans and contributions in excess of $5,000. Vera Cronk didn't testify about overhearing her solicitation-or anything else about Mrs.

. The only thing she said

as I recall was that she was a specials person. Now, let's get to the time period that we are talking about. In 1973, July of '73, if you look over here on this chart, you will notice that from back in 1979 — I guess that's — I'm sorry. 1983 or '84 is when this chart starts. In '84, and you follow that black line, you will notice that although there are ups and downs in the black line, from the beginning of the line up until the Illinois primary, it is a general continuum of an upward growth. And

,

who was down in the regional office, soliciting loans, would know of that because these daily briefings that were testified about. There were these little news things that you heard testimony about of the daily briefings that were sent out everyday to everybody in the organization, and they briefed them on all sorts of topics, on various nev/s topics, on the situation with money, and the deal, and you can assume that she got those briefings and that

123

she knew, having been in the organization all this time, of this sort of upward trend in revenues.

Page 118 of 248

And when in early 198 4, that this testimony begins about her, Mrs. Sexton and Mrs. Landegger, first talking to her, she was in the regional office. She was dealing with various people, not only these two women, but with other people that she had made loans to. Now, the evidence about this memorandum that both prosecutors have talked to you about this morning and both prosecutors have emphasized very much, and it?s important to them because they feel that this puts, this memorandum, shows that J

knew in December of 1984, that

there were problems with loans. Now, I want you — either of the prosecutors, by the way, neither of the prosecutors told you the exhibit number of that exhibit* And they have a reason for not telling you the exhibit number of that exhibit, becuase as I crossexamined whoever it was, I guess it was Wayne Hintz who testified about this memorandum, the exhibit number is 36-D2, is the exhibit number. When I cross examined him on this memorandum, I brought out that the memorandum says, J several parts, J

is, in

is meeting with him today, referring

to Nick Anderson. Then it says J

should be notified.

And then later on it says, it is vital that J

124

be kept briefed on payment plans so that she can brief them in advance, meaning her contributors. And then it goes on to say, J

has signed most

of the papers. If you will remember, the cross examination,

Page 119 of 248

Mr. Robinson got up and says, well, the memorandum also said I did this. I did that. Well, the I refers to the person who is writing the memoranda, who is obviously not J

from the

face of it. I want everyone when you get back there in the jury room, the first exhibit I want you to look at is 36-D-2 and you read it for yourself and see if she wrote it, as Mr. Markham was suggesting to you or heard it. He also said, well, she either wrote it or she heard it. Or she got it. That's what he said twice in his -Now, let me ask you, the only evidence on the face of this document that she would have any knowledge about is that it says on the back of it, "Copy to J ." Now, if I write a letter to Joe Blow, and I put down the bottom of the letter, C.C., send it to one of the jurors; do you think that you would want to be bound by proof beyond a reasonable doubt that you had knowledge of that letter? I mean, the letter is not sent to you certified mail. There is no evidence that you received it. There is no evidence on the face of this that she got that letter; and the Government is doing their utmost not only one of them but both

125 of them got up here and tried to convince you that she knew about that and that she wrote it or that she got a copy of it, Where, where, ladies and gentlemen, where is the

Page 120 of 248

proof beyond a reasonable doubt that that knowledge was in her head at that time? I submit to you that it is just not there. That is why they get up and scream in their closing arguments about it, because they know there isn't any evidence there. I am not saying she didn't know there were people out there that weren't getting paid. She had her lenders and people that she dealt with who obviously at times were not getting paid. Now, she is down in the region, she is in the regional office, and she knows that some of her lenders and some of the people who she is dealing with from the regions may not be getting paid on time or may need money and she is sending requests; and her other people in the region are sending requests up the line. And who is it that is up the line? Well, we know that Yepez was up there for a while in early 1985 or '84. And then Hintz comes in in about August of '84. And Hintz stays there up the line from the regions. He stays there from late, or from August of "84 until he leaves the orgakization some time in '86. Now, Hintz is getting memoranda from all the

1-26

1

regions, and he is writing these memoranda that are introduced

2

into evidence based upon you know what's coming up from all

3

the regions. Now, there is no evidence in this case, there

4

is no evidence in this case that my client, J

5

has the scope of knowledge or the understanding of what's

e

,

Page 121 of 248

6

going on all over the country that Hintz does, because Hintz

7

is right up there where everything is coming up. What did

8

Hintz say? What did he testify to? He said that until he

9

left the organization in mid-19 36, it was either May or June,

10

I don't recall, mid-1986, six months, six months after my

11

client solicited these loans in December of 1985, and late

12

November of 19 8 5, he said until he left the organization in

13

June of J.uly or May or June, of 1986, he still believed that

14

these loans could be paid. That was what was in his mind-

15

He had an overview of all of the loans. j-That^swhy they put

16

him on the stand, to give that overview of all the loans.

17

But my client down in the New York region, who

18

doesn't have that overview, they are coming here, and they

19

are telling you that you ought to convict her. You ought to

20

convict her of crimes for which she could go to jail because

21

she ought to have --

22 23 24 25

MR. MARK HAM: Objection, Your Honor. That is the second time. That is improper argument. The Court decides whether there is going to be such punishment, not Mr. Williams.

127

MR. WILLIAMS: I said for which she could go to jail, not that she was going to jail. THE COURT: The jury should not give any consideration to the matter of punishment. That is solely an inquiry the Court must make. Your inquiry will limited to whether a defendant is guilty or not guilty, MR. WILLIAMS: Very well, Your Honor.

Page 122 of 248

Anyway, they are attributing to her in December and throughout 1905 and particularly in late November and early December of 1985 knowledge that she, that what she ought to have done was at that time to have the knowledge and to quit ■ taking loans, whereas, Wayne Hintz doesn't say that he has such knowledge or he has come to such opinion until mid1986. I submit to you, ladies and gentlemen, that on that basis alone, on that basis alone, there must be a reasonable doubt in your mind as to whether my client had a good-faith belief throughout 19 85 and late November and early December of 1985, a good-faith belief that these loans would be paid back. I submit to you that if you look at that chart and you see how that income was coming in, and you examined this case from her perspective. You have to because the law says that you are going to have to determine what was in her mind at that time she solicited these loans, that the only conclusion you can come to is that she did not know, and she

1-2 8

had a good-faith belief that those loans would be repaid. Now, let's examine just a minute Mrs. Sexton and Mrs. Landegger. The Government makes a big to-do about how these two women were bamboozled. But let me discuss them just a minute. The evidence shows that they were — they came in or they came in contact with, the organization in mid to late 1984 Mrs.

Page 123 of 248

Sexton was on her way from Connecticut up to her summer place in Maine. She ran into some people from the NCLC at a liquor store in I don't know where on her way up there. I am not from that part of the country obviously. So anyway, she ran into them and ,she got a subscription to one of the magazines or newspapers. And then she began receiving calls from various persons, and they briefed her on what was going on in the organization and briefed her on what was going on in the world; and she eventually was contacted by J . And she testified that she talked to Mrs. R almost every day. Almost every day but at least every other day, and her conversations over the phone were 45 minutes to an hour. And she also was receiving the publications that they were printing. She was receiving the newspapers that they got. And she obviously, obviously was a sophisticated woman. You saw her testify on the witness stand. You look at people and you can tell how sophisticated they are. I mean,

129 you don't have to just listen to their voice. You have a right to determine a witness1 credibility from their demeanor on the witness stand, the way they respond to questions on the witness stand, the way they respond to cross examination on the witness stand; and how they basically act. And just as in everyday life, you walk up to somebody and you talk to them, I mean you determine for yourselves whether they are telling you the truth or not, not only by what they say to you but by their body language, by how you evaluate then.

Page 124 of 248

And that is what you are supposed to do as jurors. And Mrs. Sexton, if you do that kind of evaluation/ and you see how the loans progressed and how she was conducting herself and how Mrs. R

was

conducting herself throughout 1985, you have to come to the conclusion that she knew what was going on, that she obviously was sophisticated and smart enough to Jcnow what was going on. What happens after she decides that she is going to turn against the organization? She goes out and hires some high-faluting lawyers, former attorney general of Connecticut I think she hired some lawyer by the name of Brownell, who was in the Administration, in the national Government. You wonder, you wonder from Mrs. Sexton's testimony what was it -- I mean she' is reading the newspapers. She is talking to J

every day. She obviously knows the crisis

that the organization is going through. She knows the threats

130

they are getting. And she keeps lending money to the organization, until, until April, April of 1986 is when she first complains by writing a letter to J J

after

had moved in late 1985 out to Chicago. Now, what happened? What happened as far as Mrs.

Sexton is concerned? I submit, ladies and gentlemen, that the clear inference is, that when the Illinois primary was won in March of 1986, and when all these press articles hit the newspapers and hit the newspapers throughout the country

Page 125 of 248

and the editorials and everybody else was writing about how crazy this bunch of people were, who had won these two elections, Mrs. Sexton started having second thoughts. And that's what happened. And that's what happened. I submit to you that you can draw that inference from the testimony in this case. Now, Mrs. Landegger was about the same sort. Mrs. Landegger was a very sophisticated woman. She had lent some money to the organization. She obviously was concerned about what her friends might think if something hits the newspapers about who she has been lending this money to. If you could look at the history of her loans, and her relationships with the organization, it changed just about the same time, and I 'submit for the same reason. But that's not the issue in this case. The issue in this case is what was in Jo

e

R

s mind at

the

131 time she solicited these loans. Can you say beyond a reasonable doubt that you have an abiding belief that she misrepresented these people, that she lied to these people, that she bamboozled these people out of their money, both of whom were, the evidence shows, were strong supporters, strong supporters until the Illinois primary. Ladies and gentlemen, as you can tell from my size, I don't like to miss lunch, and I haven't used all the time that the Court has allotted me, but I would like to say just a few final words. After this trial is over, and after you

Page 126 of 248

all have done your duty, as we are sure you will do, examine this evidence, and come to a just decision based upon the evidence, and after you have applied the rules that the Court will instruct you on, reasonable doubt, presumption of innocence and unanimity of the verdict, you will go home, you will render your verdict and you will go home and six months from now you will, you know, will have more or less forgotten about this case. These people here are going to live with this for the rest of their lives. They are going to live with this case for the rest of their lives. And I, like Mr. Moffitt, only have a brief time to talk to you. I hope I have done my best, and I hope I have laid out the evidence on behalf of my client in a way that will encourage you' to look at the evidence in this case and look at it in a waylthat you are supposed to,

132

I submit to you, ladies and gentlemen, that if you do that, take your time, look at the evidence, apply the law, you cannot find, you can not find Jo guilty of any of these crimes beyond a reasonable doubt. THE COURT: Who is next? MR. WEBSTER: Mr. Jackson, could I get you to help me put those charts up on .the easel, please. One moment. Your Honor. At the outset in opening arguments, opening statements, I made the statement to you that I was last and also least and 1 think that's been proven true here, that my client, Mr. Spannaus, has been mentioned least in connection

Page 127 of 248

with this trial. To the extent he has been mentioned, he is practically mentioned most in connection with Count XIII, which is the tax count. He is not charged in that tax count, as His Honor will make clear to you. . I would like to spend initial time here discussing the evidence against him. Then I would like to take a few moments and put this entire case if I could in some perspective, at least as I view it. And invite you to view it the same way. And then to make some overall observations about what is at stake here. Turning initially to the question of the indictment, as I have already noted, Mr. Spannaus is not charged in Count XIII, is not charged in the tax count. He is charged

13 3

in the count involving the conspiracy and he is charged in some of the individual substantive counts, but what perhaps is most important, and I urge you to focus on this as Your Honor will give you the indictment, at least as redacted to conform with the proof here, because not all the things originally placed in that indictment were proved here. I draw your attention to what was page 37 at least, the page that lists the substantive complainant in this case, and point out to you that in Count II, the count against Mrs. Powers, that Mr. Spannaus is not charged and that in Counts III through XI, that he is charged. Now, something happened }fc>etween the date of Mrs. Powers and the date of Mr. Rither in the Government's eyes at

Page 128 of 248

least to somehow warrant including Mr. Spannaus in this case. It's that point I want you to focus on for a moment with me. The date of the conspiracy as you know is running from the middle of July or middle of the year in July of 1933 until mid-'87, Now, these substantive counts here that I referred to, Mrs, Powers is in June of '85, almost two years after the original conspiracy started, and the count against Rither is in August of ? 85. So somewhere between, June and August of 1985, somewhere almost two years after the Government alleged the original conspiracy started, they start to include Mr. Spannaus.

134

1

Now, that event, I suggest to you, is the one that Mr.

2

Markham referred to in his closing statement here. That event is

3

the change of a mere form, I suggest to you, of the promissory note

4

to the letter of indebtedness. As you know, Mr. Spannaus' job there

5

was as a legal coordinator. He is not an attorney. He functioned in

6

a variety of different ways concentrating his efforts ,on various

7

lawsuits and articles, In connection with those legal

8

responsibilities of course he had to identify lawyers for whom, who

9

could perform services for the various entities and supporters of

10

Mr. LaRouche, work on depositions, papers, briefs, motions, and so

11

forth. The testimony I suggest to you, which I will come to in more

12

detail in a moment, clearly underscores consistently that that was

13

his function there.

14 15

As legal coordinator, then, why is he brought into the conspiracy by this narrow, thin thread of an accusation that is

Page 129 of 248

16

changed from a promissory note to a letter of indebted

17

ness is sufficient to sweep him within the ambit of these charges

IS

and require him to stand trial here as he has over the past month?

19

You heard the testimony of Mr. Hintz, who gave a less

20

complete version because he didn't know it all of what Mr.

21

Morganroth testified just yesterday and that version through Mr.

22

Hintz, the Government witness, was that at the time there was a

23

concern about the form of the promissory note

24 25

135

that this form was questioned as possibly being a security within the meaning of the securities laws, and that to remove the argument that it was not a security, a change of form might be appropriate. And Mr. Hintz testified that Mr. Spannaus sought professional advice, he was not sure whether it was an accountant or a lawyer. Mr. Morganroth was able to come on right at the end of the case and clarify that matter for you. He indicated that indeed an attorney named Pat Moran had brought the matter to Mr. Spannaus1 attention as legal coordinator, as coordinating views of legal matters, then Mr. Spannaus at Mr. Moran's suggestion contacted Mr. Morganroth, getting hopefully the best legal advice he could find since Mr. Moran wasn't in a position to give advice on that technical subject, and Mr. Morganroth gave an opinion that to subtract any argument, even though he didn't agree with the possibility that it was a security, to subtract any

Page 130 of 248

argueiunt, remove any doubt, that they changed the form. Mr. Morganroth testified to you that the form was changed. Indeed he had seen it afterward, and that it reflected the changes that he suggested and became the form of a promissory note -- excuse me — in the form of a letter of indebtedness instead of a promissory note. That I suggest to you as you look at the indictment

136

and analyze it correctly, that is the reason that Mr. Spannaus is before you today, because some lawyer brought to his attention a legal problem and he went out and secured itThe Government will go on and suggest to you that there are other reasons he is here and I 'am sure you will hear that .in rebuttal. This is my last opportunity as it is for all defense counsel to speak to you. So I won't be able to answer Mr. Robinson when he gets up here again, but in the indictment here, that is basically what we are talking about. There is another thing for you to concentrate on when you are looking at what he did or what he didn't do. There is an accusation here that he wrote a letter and that that letter was in connection with his position as treasurer if you will, remember, of one of the political campaigns of Mr. LaRouche, and that that letter, informed in a rather lengthy letter which you have not seen but you are welcome to look at when you get back there, informed the recipients who were those people loaning money to the political campaign,

Page 131 of 248

not to the infrastructure type loans which are reflected in must of the testimony here- But those people that the program for repayment was reinstated after being virtually disrupted. Now, you heard two pieces of testimony, two independent witnesses that that was true. I suggest to you that you have had no testimony that that is not true. Namely,

137

that with respect to the campaign loan, that in the middle of 1985, May 15th, to be precise, which is the date of the letter,

that

there

was

a

reinstated

program

to

make

payments. Indeed, Mr. Bell, who testified before you, again as a Government witness, indicated that yes, indeed, there was such a program back in effect at that time and moreover, that there had h^en substantial accomplishments in repaying campaign loans. Those accomplishments, as I recall his testimony and your recollection governs, was that of approximately $4 million that there was somewhere between $1.5 and $2 remaining. In other words, probably more than 50 percent had been paid out. Now, it is curious that the Government has not charged campaign loans here. All of the complainants that yo have heard about and all who have testified before you testified in connection with what we might call infrastructure loans, but not political campaign loans, and therefore, 1 suggest to you that in your consideration of that letter, which I would submit has been demonstrably proved to be true

Page 132 of 248

insofar as the single statement that they isolate in the indictment, as not being proved, namely that a program was in place, because indeed it was according to two witnesses. No witnesses contradicted. And secondly, there was a sub-stantial progress on repaying those loans. But I suggest to you that the reason why the

138

political loans are not brought to you in the form of complainants, the very good reason that there is a serious debate about whether a political loan should be treated in the same manner as any other kind of loan, and if it were treated in the same mannerr I think you well from your personal experiences can think of a number of political candidates who might be sitting at criminal defense tables for not paying back their political loans which they have borrowed either from individuals or from corporations. And the names of Hart and Glenn are those that come to mind immediately. So the Government has very cleverly worked into this indictment in a way to kind of I would suggest to you, and your conclusion governs, to pollute the matter by bringing these campaign loans in and absent any substantial basis for including Mr. Spannaus, they have put that May 15 letter into evidence. Again, I suggest to you that the only evidence before you is the evidence that the statement, the single sentence made was true, that there was a plan as stated, that there had been total disruption, which is acknowledged in the letter, prior to that time and that the

Page 133 of 248

evidence shows there was substantial efforts to go ahead and repay that thereafter. The evidence here demonstrates a number of things which in overwhelming totality suggest that Ed Spannaus is not the proper person to be before you today. This case

1-39

essentially is a case about infrastructure fundraising, and you can ask yourself this: was he a fundraiser? I think the answer to that is no, he was not. Was he a solicitor of funds from individuals? No, Ii didn't hear any testimony here that he did. Did he make any solicitation to any of the alleged victims or complainants here? I suggest to you the answer is no. There is no soliciation whatsoever by him of those people. Did he ever speak or communicate with any of those alleged victims? No. Was he responsible for fundraising? No. Was he responsible, for policies involving fundraising? No. Was he involved in setting quotas? There is no such evidence. Was he involved in repayment priorities? No such evidence. Was he involved in repayment policies? There is no such evidence except the Government may argue that the use of these forms, these mere forms, satisfies some participation in a policy which I suggest to you for the reason I have mentioned is not so. Did he participate in fundraising meetings? I didn't see any fundraising meetings involving the loan committee in which he participated. Was he part of the finance office? No. Was he involved in the corporate

Page 134 of 248

affairs of the two corporations who were lending money to these individuals, Caucus Distributors, and the answer is no also to those things.

140

1

There are a dozen noes that I have recited to you,

2

one for each of you as you sit and deliberate, and I suggest

3

that the totality of the evidence and the focus of the

4

matter clearly shows that Ed was not involved in what is at

5

issue here.

6

I will come back to this, because this is a part of

7

the total theme in putting the matter into perspective that I

8

would like to raise with you. But let me go a little bit

9 10

n 12 13 14 15 16 17 18 19 20 21 22 23

further into some of the specific evidence that was given here, that did mention Ed Spannaus, although very infrequently Number one, you heard :of course about his notebooks, He obviously wasn't trying to hide or conceal anything in the course of his activities in this case or we wouldn't have kept the 20 notebooks that the Government from time to time has quoted from in one measure or another. You heard from Agent O'Connor, who testified about the seizure of these notebooks, but that is certainly not evidence of a crime. You heard about Mr. Bardwell in an effort to substantiate that these were Mr. Spannaus' notebooks and that he, Bardwell, had seen him writing in a book. Cearly not evidence of a crime. You heard of various testimonies of four individuals concerning Ed Spannaus in a way that didn't mention anything about loans or infrastructure. Mr. Morganroth

Page 135 of 248

I have already alluded to there. Sandy Roberts

24 25

testified to you, and itientiohed Ed, but only in the context that Ed was his boss

141

and

worked

which

I

on

various

brought

out

lawsuits, through

which

cross

he

articulated

examination

of

and

other

witnesses. Mr, Offutt, the representative of Grant Thornton, the accounting firm that performed services in an attempt to help

the

entities

here

straighten

out

their

bookkeeping

system since it was being put into place by people who are not professionals, who are not professional accountants; and Mr. Anderson, if you will remember from Oklahoma, a delightful gentleman, who lent a large amount of money for purposes fo purchasing Ibykus there, indicated that he had dealt with Ed

in

connection

with

the

arrangements

involving

the

financing there. Again, it was appropriate interface based on his response as legal coordinator. Those witnesses gave you Ed's name but not in any way that implicated him in connection with this matter. You did hear from what we might call some of the Government witnesses, the Government Pinocchio-nose witnesses, if you will* I am sure you could see those noses growing from time to time as they were on the stand. You did hear from Mr. Tate, for example, with all his venom against the entity and his motives, whatever they may be, for saying what he said. You did hear him say that Ed had had — he had overheard a brief discussion between Ed and some individual

Page 136 of 248

whom he couldn't recall or .identify, and it related to an existing lawsuit and he ascribed to Ed a statement about the

1"42

individual not deserving to be repaid. That statement interestingly was not contained in the 302 report* I remember Your Honor asked whether the Government would stipulate to the fact that it wasn't in there, and they did. The witness acknowledged it. Yet, he had at the time of interviewing Agent Klund in the February interview and again in the May interview, he had tried to give all of the information that he could remember. Certainly, he was motivated to give whatever information that he could against everybody and everything he could think of. He failed to put any recitation of that event in there. And on cross examination, he admitted two important things besides that-One was that there/were no witnesses, to this event, that he was the only one, and moreover, he couldn't even remember who it was that said this to Ed Spannaus. And secondly, that it basically was acknowledged a conversation that took place in the context of discussing a legal matter because of either an existing or threatened lawsuit by that particular contributor. So I suggest that this type of activity that is discharging his obligation as a legal coordinator, is not sufficient to warrant his being brought in before you to answer these serious criminal charges, and that the evidence is insubstantial to support the claims that the Government has

Page 137 of 248

made.

143

His Honor will instruct you that mere membership in the National, NCLC, or the NEC, the national executive committee, about which you have heard some things, that mere membership in those organisations is not sufficient to substantiate any of the charges brought. I bring that to 'your attention because Ed of course was a member throughout this time of the national.executive committee. In connection with his membership in and participation in it, why he did receive certain memoranda, which were circulated to all ". members. : His Honor will instruct you also that mere knowledge of what was going on is not sufficient to satisfy the allegations that are brought here against Mr. Spannaus. And in connection with the NEC, I think that the wisdom of the instruction that you will receive, namely that mere membership is not sufficient, is illustrated by the fact which I brought to your attention in opening statement and which I indeed brought again to your attention during the course of the cross examination here, which was the size of this national executive committee, being some 13. If you remember, I pointed out through the witness that only three are brought before you today. But you have heard the names of many others, who were active in that, in the NEC, including a number of people who were very active in fundraising who are not before you today, who are part of the

Page 138 of 248

144

Government's selective process in bringing the defendants here And those of course include Mr. Phau or Mr. Papert, and I am not suggesting that they should be here. I am merely pointing out that at least with respect to Rose and Papert, they were also members of the NEC and it's clear that it would not be fair to hold mere membership in this executive committee against the client in any.way that would substantiate criminal guilt. The same is true of course for the NCLC, which has the 350 members. I, in summary, feel that and urge you to conclude that the indictment is insubstantial when it comes to making these charges against my client, and I urge you when you get back there to think about some of the other provisions in the indictment which do detail charges which are brought against others and not against him as a contrast between what they are saying Ed Spannaus was responsible for and what they are saying he was not responsible for/ because you can read into another provision, for example, paragraph 27 which I won't go over in detail does lay out a lot of things that others they allege were responsible for, but does not include him in the allegation there. Based on these points, I think it is clear, and I won't even argue the reasonable doubt standard because I don't think that1s even approaching reasonable doubt here,

Page 139 of 248

145 that there is no basis for holding Ed responsible for whatever charges the Government is pursuing here. And that's the reason why I am somewhat brief in my recitation of the matter involving Ed and would like to save some time to place this case a little bit more in context which perhaps will assist you in understanding in my view at least what is really going on here. The most curious facet of the case is the total irrationality of an individual who would have the intent to defraud in this case. Your Honor will instruct you that it takes a specific intentr not just a general intent, but a specific intent to find responsibility under these mail fraud charges. Here is — first, you conclude this is unlike any• kind of a scheme or artifice as the language of the indictment reads, any kind of a scheme or artifice that you have ever heard of. Usually these types of things involve hit and run, but this is a political movement which has been around, as Mr. Williams told you and you heard from the evidence, since the 70's. It has been very active in the SO's. It has been successful, and that may be the product of its problem. It has been successful particularly through those Illinois campaign primary victories in February of 19 86. Now, that means with the purchase of real estate, with the concentration of its functioning in offices down

Page 140 of 248

146 there, it is going to be there. It's a place that can be found, and the people can be found there. They are not people who are running, and they are not people that are hiding. In addition, they have documented their activities extensively. The two million pages that were seized during the raid of October 1986 have been used consistently by the Government here and the case. If this were a traditional fraud, one would hardly leave the kind of paper trail that you see in this case. You should consider that in connection with your views of whether people had or didn't have a specific intent to defraud. Why does one with the objective of fraud create the documents here? Why do they hire professionals such as Grant Thornton, for hundreds of thousands of dollars to come in and help them straighten out their finance system? The answer is that they are not professionals themselves. .There isn't a professional accountant in the organization. There isn't a professional lawyer in the organization. They didn't have the management that they might have had. And you heard Mr. Yepez, I believe it was, say that. If they had had a good office manager, things might have been different. The point is that they were people who were committed to this movement. That was their primary reason for-being together. It wasn't a selection process based on the fact that they could run a computer well or create an

147

accounting system or take care of the legal problems. Those

Page 141 of 248

were collateral duties. Those were duties that they had to take on because with the mushrooming of this, the contributions and the sales in this matter that they needed more and better expertise, and they didn't have it in their own organization. They didn't have the information retrieval system. They didn't have,the accounting system to set it up to recover all the figures, and they didn't have the total professional expertise to support what they were doing. Now, that is the perspective in a way of what's going on here, and there are a number of course of very interesting questions, such as if they really did intend to do something wrong, why did they create these documents? Why did they create programs to try to assess and cure their problems? You have heard the testimony of our Pinocchio-nosed witnesses, the Tates, the Curtises and so forth, but those were people who left the organization. In a way, they are renegades. They are abandoners. They are quitters, because they left at a time when things were tough and rocky. If these people had intended a great scam, why didn't they bail out at that point? Why didn't they just fold up the tent, and walk away from it? They stayed to try to cure it. And now they are being penalized for that, Now, you could say in hindsight that perhaps they

148

shouldn't have taken as many loans as they did. But you saw the borrowers. There are two years, or within a two-year period really, in which there were extensive loans. But

Page 142 of 248

there were many years before when there weren't, and when they realized and saw some of the problems, they imposed their management structure to try to do something about it. They weren't professionals. But they did try. Although the Government has read certain excerpts from Mr. Spannaus' notebooks, let me read a couple more which illustrate that management was concerned and that they were trying to do something about this. There was a reference to loans being the curse. It's killing us. But the next line is that 60£ of income is better than Si in loans. And that is back in September of '85. There was documentation in 1-1, page 55 — I give you a reference because it is in the notebooks and you can look it up if you wish — in September that sales are pol pos effect, and I think you heard the testimony which meant, to the effect on the stand that there was this trilogy of assessment and that sales meant a political positive effect and then it says loans is pol neg effect for political negative effect, and thirdly contributions pol neutral. The policy then was to try to sell, and the bulk of the money over the total panorama of ten-year period here is coming from sales, coming from sales of New Solidarity, of

14'9

EIR, of Fusion, of some of the Spanish publications, and you will have a list as I think you saw introduced of those actual publications so that you can see the total reach and range of what they were.

Page 143 of 248

It was felt therefore that sales were the lifeblood, the lifeblood and that loans were bad, and that contributions were neutral, and they were building up the political movement through these publications and through the sale of them. That's what they were doing, and that's 'September "'85.,. Loan ceiling was imposed, here's another quote, September 28th, loan ceiling of 25 percent contributions, 15 percent, as time goes on by December, you have an entry, at 7-T, page 43, "Hit 400 slant WK, in sales.", A reasonable person might interpret that, and it's up to you, to mean hit $400,000 a week in sales, because '400 isn't very much a week. 12

And then underneath that it has "600 EIR subs/week,

13

1,000 NS subs and 1,000 NDPC memberships." This was the program

14

that they were trying to push. Further references for example as we

15

turn into '86 with the policy is mass sales. That's at 7-T, page

16

250.

17

Cost cutting comes into play, perhaps you might say late

18

in hindsight in 20-20 vision, and there are references in 7-x at

19

page 147 to cutting everything else, it's some reference above,

20

cutting travel, cutting inefficiency in sales

21 22 23 24 25

150 cutting expenses. The point is that these documentations are not the work of people who are trying to hide something. They do

Page 144 of 248

reflect, although the Government cites some material, they do reflect also and confirm the policy of management to do something about it and the charts themselves show you that we are dealing with a narrow band of time, in which loans once thought to be some assistance here were deemed to be perhaps a curse as has turned out, it certainly was. But this is hindsight. We are in here today to judge it. The Apollo program is another indication of the peculiarity of this, if it is really what the Government says, a scheme or artifice to; defraud, why, well, well, well before any criminal charges are brought through an indictment in this case, some eight weeks ago in February of '87, why do they write a letter to all of their supporters to try to determine what it is that they are owed? The Apollo program letter, February 3, 1987, Defendants' Exhibit QQQQ-27-A, says, "We are therefore asking for your assistance in reconstituting our records. First, we want to compare what information we still have with what information you have." Here is an effort on their part to find out what they do and what they owe, and if people would stay out of their hair, maybe they would have a chance in '.doing something about it.

151

That's not the act of someone who is involved in a scheme or an artifice to defraud. This is a controversial movement. It has, I'm sure as you heard throughout, elements that may attract you in

Page 145 of 248

one area and repel you in another, or might repel you in all areas. But the testimony will surely indicate to you that there are aggressive actions taken to promote their ideas and their thoughts, and that not all of them are going to be accepted by a lot of people. But the defense brought in to you during the course of this matter a very interesting variety of individuals to demonstrate the legitimacy of views that they are propounding and the support that they have. You can't bring in 1,000 witnesses. Judge Bryan would certainly frown on that, to say the least, but there is a sampling, and think for a moment about what that sampling showed you. That sampling came in from the United States. We had -- you can call Mr. Morganroth a supporter, but you had Mr. Morris from the National Security Council, executive director. He obviously felt that these ideas were worthwhile, the information that these people provided would be helpful to the United States Government and that Mr. LaRouche at all times acted in good faith and in the best interests of the Government. The witnesses I am mentioning now are not for any

152

particular — I am not trying to describe the purpose that they were here for. I am merely trying to illustrate to you that they came from all walks of life and corners of the country and the world, indeed, and many professions. We had also Mr. Anderson come in and tell you about his support for the entity from Oklahoma. You had Mrs.

Page 146 of 248

Anderson, a courageous and brave woman, who from Selma, Alabama, to tell you about her support of the organization. We had people from Indiana. You had Mr. Perricone from New York, a common worker there, tell you about his support for the entity. You had some witnesses from foreign countries. You had General Anyez, you had General Scheer (phonetic), you had Dr. Seale. You had people from London, from Bonn, from Bolivia. You had people in military. You had people in medicine. You had people in humanitarian ventures. You had them from all walks. I suggest to you that they illustrate a very important point, which is that while these might not be your ideas, that they are legitimate ideas, and they have a following, and they come from various corners of both this country and abroad. But ask yourself when you place this case in perspective, why would you intentionally cut off your life-blood by defrauding these people? Isn't that really the measure of intent in this case? These are the people who support the organization.

153

Why do you want to defraud them if you are going to remain around as you have in the past to pursue this political movement? There may be as I come to the final portion of what I have to say to you, there may be even a larger issue here. The case against Ed is really basically nonexistent. Its flimsiness is symptomatic in a way of what's gone on here in the courtroom. There is another symptom which isn't

Page 147 of 248

my responsibility, but it's the tax case. Have you ever seen a nameless, faceless tax case, a tax case where they don't charge you with any specific violations of the Internal Revenue Code? He is not charged with evading income taxes. He is charged with this general overall thing of violating the Internal Revenue Code, impeding, impairing-, et cetera, the collection of the revenue. It doesn't have a face because they won't tell you the amount. They just say, well, this amount is attributed to you. The taxpayer, the tax collector never came knocking at his door and said, by the way, I think you owe us some money. Why don't you tell us some facts, and let us sort this out. I mean, if this had been Lee iococca, do you think he would be sitting on trial here if he worked for a dollar a year and the IRS had a quarrel over whether he had attributable income to him? Again, that's something Mr- Anderson will address

154

to you in further reach, but isn't it another symptom of what's happening here, why you single out Ed, why you heap on, pile on as the NFL would call it, a bogus tax case. The issue when you throw some of these things out is the question really of what is the issue here. There is an irony in a way. The irony is that this case is being tried here in Virginia. This was the native soil of Thomas Jefferson. He did write that Declaration of Independence. He wrote it at a time when some others were rebels or rebelling against their Government, indeed attacking the Government.

Page 148 of 248

Certain inalienable rights, the right to life, liberty and the pursuit of happiness. Maybe that!s in a larger sense what this case is all about. This political movement, as I said, is not a polite one. My client's responsibilities have been to write articles. You will have several editions here. You can go through and see some of the articles that involve his activities —■ MR. MARKHAM: Your Honor, I object to the articles leaving the impression that he is being prosecuted for what he wrote or that there is some reason for prosecuting him because of their political beliefs. It's not the case. That is the implication he is trying to leave. I object. MR. WEBSTER: I; think they have time for rebuttal, Your Honor. They can address it in rebuttal. I am. trying

155 to tell what Ed Spannaus did. And that is what he did. THE COURT: Well, objection overruled. MR. WEBSTER: Thank you. And you will have the list of publications as well. You can see the books that this organisation has put out on the last page here. There are quite a few. There are 50 books. Some of them aren't very very polite, as Mr." Moffiitt has told you, if you want to taKe a look at some of the interior portions of Dope, Inc., or Karco Trafico. Some of them are interesting, the Schiller book on poet of freedom, or the St. Augustine book. But a lot of them do

Page 149 of 248

attack ideas, institutions, and particularly our Government. The concept as you have heard through the testimony is a belief not unlike other organizations which feel that they are in the mainstream, which is that their ideas are rooted in the Christian-Judean tradition. That many of the concepts that they foster illustrate those concepts from which our country has drifted away. But whatever you think of these ideas, as again Mr. Moffit said, they certainly have the right to say them. The question of what it is that is happening here, we have brought before you a charge that says that they are criminally liable for not paying back debts in accordance with the terms and conditions. This is not a larceny case where somebody says they took the property of another with

156

the intent to deprive them thereof permanently. This is a very peculiar charge which says you didn't pay your debt back on time. That is a principle that you are asked to approve. Now, that chart over there is merely a forecast. It is an assumption that if you had a growth rate of 10.85 percent, as you had in the prior however many quarters Mr. Seay selected there, that you would have a growth in the revenues coming front (a) sales and (b) contributions of an amount over and above they actually received, and that amount is reflected by all that red. It adds up to some $40

Page 150 of 248

million We are not saying that they have $4 0 million to spend, which is what Mr. Robinson was trying to point out on cross examination incorrectly. What we are saying is you would have that additional revenue, but it would cost ycu something to get that revenue. You would have to pay some expenses of receiving your continuing debt. And you would have perhaps some other expenses to offset. But you could make some decisions out of that revenue, and some of that revenue could be used in connection with this loan problem. Now, was it reasonable for some of these people to feel that, given the success and dramatic success of the entity here, the movement here, and all of the entities combined, that they wouldn't have this happen. You heard

157 about many events that could conceivably interfere with and chill the receptiveness of this organization and its people with Government. And some of those things involve, for example, the Kissinger letter. If you want to see what Kissinger's signature looks like, you can look at this letter. It is in evidence. The Dear Bill letter that Mr. Moffitt referred to.- There is some interesting language there. "I have taken the liberty of asking my lawyer, Bill Rogers, to get in touch with you to ask your advice, especially with respect to security." He is saying that because these people have been getting increasingly obnoxious.

Page 151 of 248

When Mr. Kissinger writes Bill Webster, head of the -- and it says so right here — Director of the Federal Bureau of Investigation, you can bet that he stands up and takes notice. His lawyer. Bill Rogers, a former Attorney General. Mrs. Sexton hired Herbert Brownell, former Attorney General. You can look in Mrs. Sexton's cards, there is another interesting piece in there. She has a telephone number written down in Washington, D.C., telephone number written down. And after it says "Edmund Meese." There is a lot of powerful people. You heard of being contacted about this matter. You heard the testimony of Mr, Quinde. Again, your recollection governs on what was said here, but you remember on redirect examination the

158

Government having opened up this problem he told you about the substance of this conversation with Edward Bennett Williams. Edward Bennett Williams was on the President's Foreign Policy Advasory Intelligence Board, and stated that as a member of PFPAIB, or President's Foreign Intelligence Board, I was involved in dirty tricks against LaRouche. I was out to nail LaRouche,.to bankrupt New Solidarity and affiliated corporations, and that — MR. MARKHAM: Objection, Your Honor. That just misstates the testimony that came from Mr. Quinde about bankrupting these. He is out to bankrupt him. He is out to pull dirty tricks. That never came out of Mr. Quinde's mouth.

Page 152 of 248

THE COURT: I don't recall. Are you reading from an exhibit? MR, WEBSTER: I am not reading from an exhibit, Your Honor. I am reading from amalgamated notes that I have collected in connection with those who were present in the Courtroom at the time of the testimony. I unfortunately do not have the full transcript. It was not available. THE COURT: I have no recollection of that. The jury may recall it, if they do* I don't recall if he did or didn't. I am not willing to strike it. if the jury heard it," fine. MR. WEBSTER: Further, that he went to DJ and tried

159 to get something started against LaRouche. Now, there is in addition the testimony of MrMorris, whom I questioned on behalf of Mr. Anderson. He told you that in his position as Executive Director of the Rational, to, to Judge Clark, the National Security Council, that there were those people who were coming to him who were members of the intelligence staff in an attempt to dissuade him from meeting, accepting information or forwardinc information to others on the Council from Mr. LaRouche's organization. You remember the series of names that they had called Mr. LaRouche. These are intelligence people on the staff who were drawn from among other agencies, the CIA, and the DIA, the Defense Intelligence Agency. They said they were calling him Communist, KGB member, fascist, and

Page 153 of 248

even — and it brought laughter to all — a Democrat. In this Republican administration. There were those who were creating a disinformation program. This being in about a year, according to Morris, after he came to that position, which would have made it about the beginning of 1983. Now, these things, the Williams letters, from Williams, the contacts of high level people, the disinformation services, have got to have a chilling effect, a chilling impact on the ability of an entity to do what it does in its

160 1

political movement and in connection with its revenue-

2

returning endeavors, the sale of its various publications,

3

its lifeblood.

4

I go back to Mr. Jefferson, and ask you whether it

5

isn't ironic that we are here, and I urge you in your duties

6

in support of your oath to consider the issues involved

7

which include the protection of these inalienable rights,

8

life, liberty, and the pursuit of happiness, including

9

pursuit of this political raovement against what you may want

10

to conclude is an overreaching if not oppressive Government.

11

Thank you

12 13 14 15

THE COURT: We will recess until 3 o'clock for lunch. (Whereupon, at 1:56 p . m . . Court was recessed to reconvene at 3 o'clock p . m . , the same day.) 16 17 18 19

Page 154 of 248

161

AFTERNOON SESSION Wednesday, December 14, 1988 3 o.'clock p.m.

THE COURT: Yea, sir. MR. ANDERSON: Good afternoon, Your Honor, and ladies and gentlemen. Unlike Mr. Moffi-tt, I have not changed my presentation because of what I heard, nor have I decided to modulate it, or accelerate it. At the beginning of this case, ladies and gentlemen, I suggested to you, the Government suggested to you that they would, through the presentation of the evidence in this case, compel you to a conviction of guilt as to all defendants on all charges. And in our various ways defense counsel suggested that other results would obtain at the end of the factual presentation. I

suggested

that

in

fact

the

compelling

conclusions would be far different because the Government

Page 155 of 248

was presenting twisted and misconstrued facts. I will let the evidence speak for itself. In your judgment, you heard it. I am not going to spend a lot of time telling you what witnesses said on the witness stand, because what I remember them saying doesn't matter. It is what you remember them saying. I will take occasion to remind you of some statements that I recall-

162 There has been some humor in the case. I have contributed to that on occasion, because I think that sometimes humor can focus one's attention, or refocus one's attention on a different aspect of a fact. However, I want tc make one thing perfectly clear. I don't think there is anything funny about this case. My client doesn't think there is anything funny about this case. None of the other defendants do. None of us think there is anything funny of the fact that they are here, or the fact that a number of persons~took the witness stand and testified that they had not to date received money back that they expected to get. Nothing funny about this case. But what is the case? In my view, ladies and gentlemen, the Government's entire view, the Government's entire theory of this case, is nonsensical- They are suggesting to you, in essence, that the individuals in this room conspired to defraud certain individuals of money. I am dealing obviously with the fraud aspect of the case. I will get to the sillier aspects of the case later. The fraud aspect of the case. If there is one thing

Page 156 of 248

that is clear, or I hope is clear, from what you have heard about the history of the National Caucus of Labor Committees, it is that it is a political, philosophical organization with ideas and principles, and that it depends for its very lifeblood, its very existence, on the continued

163

and increasing support of persons not members of the organization but outside, who share in part or in whole those goals and those ideas. They depend on those persons not only for their political support, but vitally for their financial support. And in that context, a theory of the case which suggests an intent to commit a fraud on the very persons on whom the organization depends for its continued existence is implicitly ridiculous. Another aspect of the Government's theory of the case which is more implicit than explicit, but it is there. When you get the indictment, take a careful reading of the first, the introductory paragraphs before you get to the specific matters in the names and terms of the indictment, the manner and means of the overt acts. Before you get to that, there is some general introductory language. What that really says is that in the view of the Government, the National Caucus of Labor Committees is in and of itself a conspiracy, that it was in the beginning, and has at all times been one by virtue of the way it is organized, by virtue of the conduct it engages in. They say

Page 157 of 248

it is a conspiracy. They don't charge it, but they say it. Because that is the underpinning for their entire case. Without that, but for that implicit allegation made by the Government, there is no case. There is a sad set of facts, and a sad set of realities, but there is no criminal

164

case. And, of course, in that conspiracy, as is obvious from the indictment, Mr. LaRouche, Lyndon H. LaRouche, Jr., is the focus and center and soul\ of that alleged conspiracy. Why? Not by virtue of any specific act he did. Not by virtue of any conduct he had with anybody in this case - contact, excuse me —but by virtue of the fact that he is who he is. That he is the leader in one sense of the word of the National Caucus of Labor Committees. There is no question about that. But what kind of leader, and a leader of what? Which gets us to who-is-Lyndon-LaRouche, and whyis-Lyndon-LaRouche aspect of this case* Most of us, ladies and gentlemen, live our lives from day to day with expectations and, let's call it, a normal form. We have the normal, average desires. We have the normal, average expectations. We hope to send our children to good schools. We hope to live in a nice community. We hope to upgrade the quality of the house we live in. We hope to own one someday. We hope maybe to move from a Chevrolet to a Buick, or from a Buick to whatever is one step from a Buick, an Oldsmohile, I guess in that line. And those are normal.

Page 158 of 248

There is nothing wrong with it. It is fair. It is average. It is us. But there are certain people who agree with themselves to forego those normal desires and to commit their

165

lives to a higher goal, recognizing full well the consequences that will have on their life. I suggest here, ladies and gentlemen, from the evidence you have heard, Lyndon LaRouche is certainly one of those rare people. That doesn't mean, as you have heard a number of people say, that you have to agree. As a matter of fact, I suspect that at least maybe you agree with some of it. Maybe you agree with the war on drugs, and don't agree with the debt situation in South America. Maybe you agree with the SDI, and don't agree with the perceived Communist attack on Western Europe and Western Civiliation. What — the point is that the ideas are important in and of themselves whether or not you agree. And an idea without action is not very useful. Our whole, not only American society but the entirety of Western Civilization is based on among other things a belief in the fact that a collision of ideas, the conflict of ideas in the marketplace, the presentation of competing views on things, is what leads us and causes us to develop in all oif our social and economic and other forms. Without that collision of ideas, there is no development. There is no anything. So all of those persons who participate in that collision of ideas are providing and performing a vital

Page 159 of 248

function for those of us who have chosen to take a different course, maybe an easier course, or a more normal course, with

166 our lives, Those persons don't, I think, and historically — I am not going to get into naming names. You can search for your own historical examples of such people. But there has always been a consequence to their life. Frequently, the ultimate consequence, which meant they had to give their life up for those ideas. And,, hopefully, that is not what we are talking about obviously, but in a way it is not an unfair parallel because everyone who has participated over the years in the National Caucus of Labor Committees has in making that commitment. They work far harder than one might expect. They have committed their lives totally to what they consider to be vital and important social issues. And for that, and from that they have gotten very little in return, You have heard what they get in terms of wages. You heard how they live. Is there any among you who would trade places with Lyndon LaRouche in terms of the way he is obliged to live? Is there any among you who would give up the walks in the park, would give up a night at the movies, a night out with the ability to walk your dog down the street, the ability to go down to the local grocery store, to hang around on the street corner, to go and watch a football game, just to goof off, to live a life of essentially total commitment and total work?

Page 160 of 248

167

1

Well, I think that is a question you have to ask

2

yourself,, because in the — as we get back into Count XIII

3

later, you are going to have to judge in fact among other

4

things that precise issue, the so-called lavish lifestyle

5

of Lyndon LaRouche, to use the Government's words. Is he

6

living a lavish lifestyle? Is he a flamboyant gadabout,

7

eating off the fat of the-land, or is he in fact actually a

8

prisoner in his own jail? It is his own choosing, but

9

nonetheless a prisoner in his own jail. If that's the

10

lavish lifestyle of Lyndon LaRouche, then I think it is one

11

none of us would choose to share.

12

Now, the Government alleges, and I have to break

13

this indictment down. As I mentioned, or as you know,

14

Lyndon LaRouche is charged in every count of the indictment.

15

There is a reason for that, because that is what this case

16

was all about in the first place. This is the LaRouche case.

17 18

19 20

21 22 23

24

Everybody calls it the LaRouche case. It was the LaRouche case before it existed as a case.

It was the LaRouche case, I suggest to you in the minds of the Government as they formulated the way to bring

it to fruition. They wanted to get Lyndon LaRouche in a Courtroom. And they didn't really care how. John Markham tells you that, ladies and gentlemen,

in this country, we do not try people for their ideas. Well,

Page 161 of 248

25

thank God there are no laws in this country that prohibit

168 or that allow a person to be tried directly for their ideas. But what happens is that they get tried for something else because of the ideas. The object is to get them into Court and the means are incidental. And that is why he is here. This is his day — this is his destiny. This is the Government's intent. MR. MARKHAM: Your Honor, I object to that. MR. ANDERSON: I can understand why. MR. MARKHAM: Your Honor, that is not proper to argue prosecutorial motive. That is a matter for the Court. MR, ANDERSON: I am arguing the facts that developed in this Courtroom, THE COURT: I think you can argue that, but I think that last argument is improper. MR. ANDERSON: All right, Your Honor. I am not going to reiterate arguments previously made. You don1t need to hear it again, and again. It is not going to make it any more convincing to hear it again and again, and I certainly have other things to talk about. But one of the things we are talking about here, ladies and gentlemen, is what were the reasonable expectations of those persons within the National Caucus of Labor Committees in terms of the future during the relevant years? Now, they have, as you have heard, over the years been the recipient of periodic episodes of what has been

Page 162 of 248

169 called various types of attacks, financial warfare. Now, financial warfare has a specific meaning because it is a specific kind of attack. It is an attack based on breaking the financial back of the National Caucus of Labor Committees as opposed to a more frontal political attack, the collision of ideas in the political marketplace. That is one thing. This is a -specific type of attack, and it came from many directions. You heard the other day from the witness stand, and one of the other counsel argued this morning, the statement made to Herb Quinde by Edward Bennett Williams. Now, Edward Bennett Williams is a very, very influential gentleman, as you heard. And Edward Bennett Williams told Herb Quinde that "I am going to nail them to the boards. I am going to break them financially." That was not his sole idea. Lots of people share that view. They want to go out and break the back of the National Caucus of Labor Committees financially. While there had been attacks in the past, there had been adverse media in the past, there had been lawsuits in the past, there had been allegations made in the past, and those had been weathered, and those members of the National Caucus of Labor Committees became not only used to them to some degree, in terms of the fact that they expected that something like that might happen again, but it was not cyclical. It was not

Page 163 of 248

170

1

forecastable. You never knew when it was going to happen.

2

And even if it did, I think you can, from the very fact of

3

their continued existence over the years of difficulties,

4

can conclude that they had optimism that they would be able

5

to continue to overcome such periodic difficulties as arose

6

and move onward and upward.

7

That is the point of the graphs, I am not going to

8

put them up there. You have seen them. You are going to

9

have them in the jury room. You can draw what conclusions

10

you think is appropriate from them. Both the Government and

11

those of us in the defense have argued various interpre-

12

tations. You have heard from the person who put them

13

together what they were intended to be.

14

But one thing that is clear is that there was the

15

rather dramatic growth over the relevant period of years r

16

Beginning prior to any of the so-called year of the loan.

17

Which was a growth in two directions. It was a growth

18

financially and it was a growth politically. I mean, the

19

significance or the impact that the National Caucus of Labor

20

Committees was able to have under various events, the

21

contacts that opened up to them, that enabled them to have

22

influence on specific programs' and projects not only in this

23

country but abroad were on the increase. Everything was

24

moving onward and upward.

25

And that probably is the most crucial fact, because

171

1

Page 164 of 248

2

it was in the minds and souls of every member of the National Caucus of Labor Committees, at least those who

4 5 6 7 8 9 10 11 12 13

kept the faith. Now, what did they have a reasonable basis to expect? They had a reasonable basis to expect that they would be able to overcome such periodic problems, and that they would continue to grow. What they didn't and couldn't expect was the piling on that took place at a particular point in time, the multiple attacks that developed in a specific point in time with the view principally, or at least among other things of negatively impacting them financially. Now, in some ways I think I should not even have to

14 argue this, because it doesn't really — I will tell you why

15

a little later — it doesn't relate to my client directly,

16

but I am going to argue it anyway because it is critical in

17

my view to the overall case, and certainly to the

18

Government's presentation of what they purported to present

19

as facts, that the state of mind of the individuals who

20 were participating in their respective capacities -- I think 21

you have learned everyone had a role. If it was told to dig,

22

you picked up a shovel. There were no neat, fine, clean

23

distinctions in most cases. It was basically a collective

24

effort. Certain people had specific definable and clear

25

tasks. Others pitched in and helped in various areas at

172

Page 165 of 248

other times. But they certainly had the expectation that I have suggested. And when things began to come apart, when they would have their backs against the wall during the critical period of time financially, really what were the options available to them? They had two. To do what those who were attacking them financially, including the Government, wanted them to do* Which was fold the tent and walk away. To use a different example. If a ship was on the ocean and was under attack, there really are two options, You can do whatever you can do to keep the ship afloat and to get it into port, because the only alternative to that is that it goes down with all hands. If it goes down with all hands, everybody loses, because the "all hands" are not only the individual members of the National Caucus of Labor Committees, but all those people around the world who supported them politically and/or finaneially, which means, and would have meant at any period of time that if the ship went down, that all of those persons would have lost irrevocably everything that they had put into it. And they wouldn't let that happen to their supporters. In fact, the facts fly precisely against the Government's theory of the case. They wouldn't let it happen. They wouldn't let the supporters lose their money. So they continued to persevere, and to fight for their

173 existence and for their supporters.

Page 166 of 248

Yes, there was, there were loans taken after the point where some loans were not being repaid precisely according to the terms and on time. But that shouldn1t strike anyone as strange, in a couple of contexts. One, they were fighting for survival. Two, I think it is fair to say that given the limited number of witnesses you heard from that you can draw the inference that most of those persons who lent money were not the same as those who took the witness stand, but were different in kind, and in fact recognized full well the political nature of the loans, recognized to whom they were lending it, and that there were inherent risks involved because of the war that was going on. The war which this organization not only believed they were involved but in fact told everyone they had occasion to tell through their, verbally and through every publication that they write, that they were in. And they took these loans with a good-faith belief that they would be able to use those loans to satisfy the short-term obligations that were coming due, but with a continuing good-faith belief that they would be able then to handle the long-term obligation thus created by the new loan It is not untypical, as has been suggested, by other counsel, of the way any business in financial difficulties would respond. The key is the good-faith belief that they

174 2 2

^

would be able to meet and honor their commitments. I think if you approached it as I suggested in terras of what this organization is about and who these

Page 167 of 248

4

people were, you have to recognize the fact that ultimately

5

that was the first commitment. Now, there were other things paid for. No question

7

about it. I disagree with the Government's structuring of

8

what was paid and when, but I am not going to suggest that there were not other expenses paid, of course there were.

JO

11

Those were the expenses paid to keep the ship going. You can' t just stop .

12

I mentioned before that it was clear, I think, and

13

I certainly concede, I don't think there is any question

14

about the fact that Mr. LaRouche is in one sense or another

15

the leader of the National Caucus of Labor Committees. But

16

how does he lead? And what does he do within his leadership

17

capacity?

18

He doesn't function as a chief executive officer.

19

He doesn't function as a hands-on manager of a small

20

business who knows what everyone is doing at all times.

21

That is not his function. You have heard what he does.

22

He leads and is accepted as the leader, let's say the first

23

among equals if you will, the philosopher on the rock,

24

because principally among other things is the fact that he

25

is the intellectual mentor of others and the intellectual

175

sponsor of many, if not most, of the ideas and projects of the National Caucus of Labor Committees. He has developed these concepts in the areas of philosophy, developed some various political initiatives, and economic initiatives around the world. You have heard all about them.

Page 168 of 248

I mean, you don't do that in your spare time. That is not something you- just whacked out in between administering and keeping hands on control over the finances and the expenses and the publications and everything else. It is ludicrous to conceive of the Lyndon LaRouche that the Government suggests because no one is a man for all seasons. You can't do everything at the same time. He also led, not because he had any inherent power to do so, but because those who associated with him in the National Caucus of Labor Committees respected his leadership and respected him. They respected his total , commitment. They respected his lack of concern for his personal well being. And they recognized him as the significant player in events of critical importance to the world. That is how he led. He led by, among other things, the power of reason and the power of contribution to these various events that he was involved in. To get back to one point I started to make earlier and got diverted on, the Government alleges against

176

Mr. LaRouche four different types of conduct. Two are alleged involvement in a conspiracy to accomplish some improper purpose; one being the defrauding of these individuals* the other being a conspiracy on the tax case. But then there are nestled in between those two, on

Page 169 of 248

those Counts I and XIII, 12 others. I think it is in'structive to look at those 12 and ask, why LaRouche? This is not to dignify the underlying charges at all. But for purposes of demonstrating the faultiness of the theory, I am going to draw an example on Counts II through XI, LaRouche is what the Government calls an aider or abettor. He had no involvement in any of those 12 counts. As a matter of fact, I think what we heard from the witness stand was that his total amount of contact with any of those individuals who testified was the exchange of letters with Mrs. Sexton. And that is significant on a number of levels. Let me get back to one, but it is significant because despite the fact that LaRouche is as busy as he is and as committed to those activities which round out his days and week and months and years as he is, he took the time to respond to two letters directed to him when he didn't need to. I mean he had no — and you are going to have the letters. You can read her letters to him, and his letters to her. But one of the interesting things is, why did

177

Mrs, Sexton write those letters and who wrote those? The FBI wrote that second letter- Her lawyers and the FBI. She was already a Government agent. She was recording phone calls. She had already sought advice. She wrote those letters to draw LaRouche out essentially to try to entrap him. Now, that didn't-happen by an accident. Mrs. Sexton, I suggest to you, didn't dream that up herself. Look who her

Page 170 of 248

lawyers were. And her lawyer was talking to the FBI. Draw your own conclusion as to what was going on. But Mr. LaRouche responded. Now his contact with one of the lenders was the dinner that Goodwill Post attended at the house. I think she said it was the strangest meal of her life. Well, it sounded like a strange meal, One thing is clear. She had no discussion with Mr. LaRouche. Mr. LaRouche never solicited money from her, never encouraged her, never tried to ask her to roll it over, forgive it or anything else. As a matter of fact, he engaged apparently in some business discussions with several other gentlemen that she didn't know who they were while Mrs. LaRouche had discussions with Mrs. Sexton about common interests of their, the war on drugs or whatever it was. The final contact Mr. LaRouche had with any of

178

of those — Rither, I think it was — the Christmas card. So, it certainly wasn't because of any contact he had with any of those* It certainly wasn't because even in the most outrageous stretch of construction I have heard in a while, the reference to Ed Spannaus, because on the advice of counsel he redrafted a promissory note into a letter of indebtedness that somehow- that implicates him. It is even more remote than that. It is not because of anything he did. It is because of the perception that I spoke to in the first instance, which is the Government's view that the

Page 171 of 248

National Caucus of Labor Committees is a conspiracy and because LaRouche is the leader of that, he is responsible. Now, think what that means. Assume, as I don't reject in this case, in a different context, that, for example, President Reagan in supporting the Contra policy, which he supported constantly in his speeches and his various statements to the press and within his adiainistration, exhorted his supporters to support the Contra effort and to go out and raise money for them on a private basis, because they were freedom fighters. Now, whether you agree with that or disagree with that, assuming one of his fellows in the conduct of that fundraising, assuming that might be Oliver North, went and did something wrong, broke a law. Do you charge the President because it was his -- because he is the President? Do you charge the President because he exhorted

179 support for the Contras? If something was done wrong, and I reject that in the context of this case, but if something was, you don't charge the President, not unless you have the bizarre construction the Government puts on Mr. LaRouche!s function within the National Caucus of Labor Committees which means implicitly he is guilty because of who he is. That's what it's all about. Take a lesson. That's the President-Let's take a different example. A boys' club leader wants to put a new pool in. And he exhorts his supporters to go out and try to raise funds for the new pool. One of the persons who is raising funds goes and does something wrong. Is the boys' club leader going to be indicted along with the person who did something wrong because he is the head of the boys' club? Of

Page 172 of 248

course not unless you take the bizarre construction that the Government wants to put on the case that Lyndon LaRouche must be guilty because he is the leader of the National Caucus of Labor Committees. Only in that context can you make that bizarre connection. I want to point to a few of let's call them dirty tricks or sneaky games played by the prosecutor in this case. You can draw your conclusions as to why they are doing it, if you find, if you agree with me that they are. I told you at the beginning of the case that Mr. LaRouche, that the Government was going to play you a tape. I told you they had told me they were going to play you a tape, in

rso

which Mr. LaRouche said — MR. MARKHAM: Your Honor, there is no evidence in this record about a tape or about playing a tape, and what Mr. Anderson perceives he was told before this case is not in evidence. I object to it. MR. ANDERSON: Are you denying it? THE COURT: Objection sustained. MR. MARKHAM: Your Honor, I didn't hear you. MR. ROBINSON: He sustained it. MR. MARKHAM: Oh. MR. ANDERSON: The issue of Elizabeth Sexton came up in a different context. The Government alleges in the indictment that Mr. LaRouche misled, made misleading statements regarding his understanding of Elizabeth Sexton, in

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which context Mr. LaRouche had said, and you will see a transcript of this, which is in evidence, that Mr. LaRouche depicted her as an elderly woman who was under some attack from her family by virtue of having supported Mr. LaRouche and the National Caucus of Labor Committees. The family was very resistant to it and tried to get her to withdraw her financial and actual support that she was in fact going on tours and went on tours afterwards. Well, you heard from I think it was Herb Quinde or maybe it was someone else or maybe it was Richard — I get lost, but one of the witnesses told you who Elizabeth Rose

181

was. Elisabeth Rosa -- that that person was Elizabeth Rose. The Government knows about Elizabeth Rose. But they chose to try to make a point of evidence and. chose to allege in the indictment, knowing full well who Elizabeth Rose was, that Mr. LaRouche was intentionally misleading someone or attempting to intentionally mislead someone when he mistakenly called Elizabeth .Rose Elizabeth Sexton. Now, another one. The Government also, and this is also partially Elizabeth Sexton. The Government makes an argument, made one this.morning in the context of the letters to the Internal Revenue Service from the Internal Revenue Service, that LaRouche could have responded except he was trying to cover someth ing up. Now, first thing, there is absolutely — you have no evidence before you that you could from any stretch of

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the imagination could conclude that there was an obligation on anyone, one, that LaRouche ever received it himself, or two, that even if he had, that he had any obligation to respond to those. Those were routine inquiries about an issue which he had no obligation to respond because of the facts you heard. But they argue that his failure to so respond was because he was trying to cover something up. But then they argue that in the writings, and in that case it is the failure to write a letter is the cover-up but then they argue that in the writing of the letters he

182

wrote to Elizabeth Sexton that he was trying to cover something up and that's why he wrote the letters. So in their view, Mr. LaRouche is guilty whether he writes a letter or he doesn't write a letter. I mean that's typical of the way they are presenting evidence. The third thing, in the indictment, as you have heard some testimony, is an allegation involving a locket, or some type of pendant, that had in the notations in the underlying documents, L gift to H. It's in the indictment, yet the Government knows that never happened, because they have the receipt that shows it returned. But they didn't tell you that. Why didn't they tell you the truth about it? And then just another final example from this'.a morning, and I am not going to go on, but I am just going to do one more. This morning Mr. Robinson stood up and read you from the indictment, and this was the sequence. "Was

Page 175 of 248

there food in the house? Yes. Did you buy it? No. Did Helga buy it? No. Who buys your clothes? I don't know." Then he stopped. He wanted to create an impression

1*83

But what he didn't read you, ladies and gentlemen, and you will have the indictment. Test your memories, was the last line in which Mr. LaRouche said in response to a continuing inquiry that, "You don't know who pays for your food?" He said, "I know in general. I do not know in detail." Now, that is a significant difference. They also didn't tell you the context in which these statements were made, how many days of depositions and the hostile relationship that was going on in that deposition room. They present is as a piece. It's unfair and unfortunately typical. Moving on to Count XII, Count XII alleges that LaRouche defrauded -■*- this is a specific count, a specific count of fraud — Elizabeth Sexton by virtue of sending a letter on July 5th, 1975, which is the second letter -- read the letter. They suggested that this was somehow a solicitation for forgiveness or something of the loan. As a matter of fact, in the last sentence read to you where Mr. LaRouche says, let your conscience be your guide or some such

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language, he is referring to a threat by Mrs. Sexton in the letter to him that she is going to take him to Court and report him to the authorities. If that letter was anything, it was just exactly not what the Government is presenting it as. So what is that count all about? I mean that count is as bizarre, I suggest to you, as the theory of his involvement

184

because of his position as the head of the National Caucus of Labor Committees in acts that he had nothing to do with, to the extent that they happened at all. Now, moving along to Count XIII, as I suggested to you, ladies and gentlemen, in opening, the facts of Mr. LaRouche's tax situation is what he has and has not done have been open and on the. public record for essentially the entire time, never hidden from anybody. And that is a strange conspiracy when you reveal just inherently. I mean, ask yourself, conspiracies take place in the dark, not in the bright light of day, and when someone declares openly that they have not filed and have not paid, what does that say about a conspiracy? Just on a threshold matter? But let's look at the facts. Now, in 1979, the year in question, you heard that an attorney named Morganroth who testified and a Certified Public Accountant named Doherty met with LaRouche in Michigan, and one of the issues of the discussion was Doherty's questioning to Morganroth as to whether or not his view that LaRouche had no taxable income or any obligation to file was accurate and whether it was a defensible position

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from an attorney's point of view.as distinct from an accountant's point of view. And what does Morganroth tell him? He hears the facts and circumstances presented in terms of the way LaRouche lives and the way he functions and the reasons for

185

it. And he says, yep, I agree. There is no, given the peculiarities of the Internal Revenue Code and those exemptions and exclusions available, in fact LaRouche, given his odd circumstances of life, has no need to file and has no taxable income. So you get a CPA and an attorney in 1979 telling Mr* LaRouche that in fact his view of his circumstances, in other words, nothing has changed for him. He has no expendable income. He has nothing that is taxable. That was his view — is correct. So not only did he have his own views supported, but now he had two basis and you are going to receive an instruction from the Judge on this called reasonable reliance. And he reasonably relied on the assessment of his tax situation by that accountant, CPA, and by that attorney, and did what they — or didn't do what they suggested he didn't have to do which was either file, which is to file an income tax return. Then you get into the bizarre circumstances around other people thinking, well, it doesn't look right and maybe something should be filed anyway for appearances or for whatever reasons; and those phoney checks which were never cashed and never even written apparently when they were

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supposed to have been written and the curious thinking that went into that by whoever it was who dreamt it up, but in any event, it's never filed. As you heard from the expert

1-86

witness, it should not have been. It would have been the wrong thing to do if it was filed because it would have been filed based on false information and for false reasons. So in fact, the situation continues. Then you heard Richard Welsh testify that he went and saw Murray Altman and that certain people had lingering concerns about how it looked. And that's understandable, because it looks pretty strange. It looks pretty strange, you know. What did they say? There are two things certain, death and taxes. Most of us or all of us paid at one time or another, and so it's pretty difficult to understand how someone who doesn't could not be doing something wrong. But in fact, ladies and gentlemen, you heard from — you heard what those attorneys had to say on that account. You heard from the expert witness, Mr. Seay. And he told you why that is the case. Now — and he also said, you know, I'm not saying it's right or wrong. I am just saying it's the case. That's what the Code says. And in fact, in 1984, I believe it was, when Morganroth is now engaging Grant Thornton to do this catch-up tax project -I'm not sure of the date but I think it was '84. It might have been -- I'll leave that to your memories — he consults with Doubrowsky, Mr. Doubrowsky, who was the head of the Detroit office of Grant Thornton to discuss the scope of the project that Grant

Page 179 of 248

Thornton might

187

become involved in, and one of the issues of the discussion at that time is LaRouche's tax situation. Run it by another person for another opinion. It's run by Mr, Doubrowsky, the head of the, 'the managing partner of the firm in that office, and he confirms the prior assessments. Under those circumstances which you have described to me, those which you also heard in much more detail, but what you heard, there is no obligation to file a tax return for Mr. LaRouche, and there is no taxable income. So this continued reliance on a now new expert opinion, and in fact you heard Mr. Seay say that if during any of those years LaRouche or someone on his behalf had come to his office and asked him for his opinion as to those circumstances, that he would have given them the same advice at all relevant times. So the fact is, ladies and gentlemen, however odd it might sound or seem to you that a person could live -even though this is certainly not an average situation that Mr. LaRouche lives in. I think we all recognize that. He does not live the way most people live, under the circumstances most people live, and the Internal Revenue Code was not based on bizarre or different models. It was based on typical situations. They are trying to pull as much into certain specific categories and in that, they define various relationships a person can have with a business. Mr. Seay

Page 180 of 248

188

told you that the — you .know, you take, this was the square peg that Mr. Markham tried to turn into a round hole or whatever that was all about, and the odd or different circumstances of Mr. LaRouchers life. You don't find any clear parallels, "so what you have to do is you have to go to the definitions in the Internal Revenue Code and based on those things that he heard, the, facts that he heard, not the characterizations, not the fact that Mr. LaRouche considers himself to be a philosopher on a rock, that he considers his role to be one of giving advice and consulting on various projects and that his, you know, he writes, for the reasons that you have heard people state, or the opinions of Molly Kronberg that in her view — what does she know? She doesn't know what the definition of an employee is — she says he is our principal author. I mean, that's how she views it. But the Internal Revenue Code doesn't have those categories. It has others and very few. And Mr. Seay told you that in fact the only reasonable category in the Internal Revenue Code that the facts fit into is that LaRouche is an uncompensated employee within the mind of the Code. But this is only — to some degree it's only background, because the Government doesn't charge a tax evasion. They don't file a failing to file. They could have charged a failing to file. They allege it as an overt act. They

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189

told you, gave you some song and dance about we didn't know the figures. Well, that's — they knew he didn't file. They could have charged a i.failing to file. But no, they didn't want to charge a failure to file. They wanted to charge something that was conspiratorial. They didn't want to . charge a straightforward tax offense. They wanted to charge a conspiracy so they coul-d muck it up with all the dirt that's been thrown in. They wanted to charge a conspiracy because their theory is implicitly conspiratorial from the beginning. LaRouche is a conspirator because he is the head of the National Caucus of Labor Committees. So they don't charge an honest tax count, one that we could have met with the evidence. They charge one that we have to meet in a different way. We have to meet up in that conspiratorial netherland somewhere in the dark skies of night. But ask yourself this: given what LaRouche believed in good faith to be his obligation vis a vis taxes, given his reasonable reliance on the opinions of experts from during the entire relevant period of time, what was he conspiring to do? It's a conspiracy without a goal. I mean, that's the inherent absurdity of the whole thing. They charge a conspiracy that had no purpose, because it was unnecessary. And that's what their whole case is about. That's the same thing that they have wrapped and rewrapped throughout the whole case regarding Mr. LaRouche.

190

Page 182 of 248

It's all that voodoo conspiracy stuff that no one can get a firm grip on where they don't ask you to deal with facts. They want you to deal with some type of feeling they can create in the pit of your stomach, some inherent distaste or dislike. That's what they want you to decide. They don't want you to decide straightforward facts. They want you to decide garbage. Now, getting back to the issue of finances within the National Caucus of Labor Committees, you know, and some of the language you have heard, you know I am not going to dignify it. You hear it from Charlie Tate. All right, now, make your judgments, ladies and gentlemen, based on your own common sense. Charlie Tate was the guy who wanted to turn a Volkswagen into a limousine. It's obvious why he wanted to do that. There was no limousine. He knew there was no limousine. But he wanted to create in your minds the limousine. I feared for you when he was sitting so close that some of that venom might spill into the jury box and infect someone. It was so disgusting, it could have been fatal. 21

But in any event, that's the kind of, the Charlie

22

Tates said certain things were said. But I have no doubt

23

that things were said in a way within the National Caucus of

24

Labor Committees which has certainly a different sense if

25

you are on the outside than if you are on the inside. And

191

Page 183 of 248

the reason is obviously when you are dealing with someone in close association, you don't have to go through the detail that you might have to do with someone on the outside, phrases mean things. Formulations mean things. It's like everyone understands because they are part of the same group, and this is language that they are familiar with. But in any event, take the thing-s that were attributed to LaRouche, even the worst case, the worst cases. Assume for a moment that those persons whose honesty I suggest you ought to question to some degree were being completely honest for purposes of this mini-discussion. Let's take the thievery and thuggery. It was attributed to Mr. LaRouche.that he said in the context of a presentation of some kind to the assembled members in the context of raising funds and fundraising and the significance of raising funds and the significance of the activities for which those funds were going to be expended, that they should raise these funds by any means short of thievery and thuggery. Now, let's take a step back from that for a moment. What does that mean? The Government wants to put OIXQ cast on it. They want to call this a license to steal. This was — I am not surprised that they present it that way -- but they want to say this was LaRouche1s approval of any type of conduct by his colleagues that goes to show that he is responsible for it. Well, in fact what does that mean if you

192

think about it? Just take the words — I went through this briefly before but I am going to argue it briefly. This is in

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terms of presentation of evidence. Thievery, it means something specific in the law, a theft, a robbery is one specific kind of thing. Theft, there is petty theft, these all have specific meanings. But in general parlance, theft means taking something from someone that doesn't belong to you* That's thievery. What is thuggery? That means conduct that's brutal, that's inherently improper by virtue of its aggressive nature, whether physical or whether physical or verbal. Now,, what's he saying in that context? Go out and do anything you want? No. That's nonsense. What he is saying is look, go get it honestly. It's sort of like the Monroe bonding (phonetic) or whatever it was, do it, do it the hard way. Go out and work for it. We are not going to get involved in stealing. We are not going to get involved in thuggery and brutal. That's not what — what he is saying I assume is I don't want anything like that done in my name. But you have to understand the context. You know, it can be bent and twisted. I suggest that's what's happened. It's been bent and twisted for a particular purpose. But what else did Mr. LaRouche have to say? You know, they say LaRouche was responsible, that LaRouche

193 1

exhorted, that LaRouche controlled, that LaRouche was on

2

fingertip, manipulative control over the finances and every

3

other thing. What did he say? What have we heard in testimony that he said about the loans problems?

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First, he recognized when it was brought to his attention, the Hintz memo, that there was insufficient funding for repayments. Hintz admitted it. I think Hintz was certainly in terms of those exassociates, the only one who didn't go indulge in dramatic overkill, dramatic exaggeration. 10

He maintained some integrity and some honesty. But he said

11

he thought LaRouche was responsible for the formulation

of *2 that policy although he doesn't know it because he wasn't 13 there, but that was his feeling. 14

And then we learn that LaRouche said loans are bad.

15

Contributions are neutral. Sales are good. What's he saying:

16

Look, don't take loans. Only take loans for special

37 projects. Go out and do it the hard way. Sell the litera18

ture. Don't even do it the middle way. That is neutral.

19

Don't even get contributions. Sell the literature. That's

20 what we are all about. We want to get the word out. Let's 21

get our revenues up by increasing the sales of our literature

22

And then he said, he was responsible as you have

23

heard evidence for a suggestion that there had to be a

24

scaling down of the loans ultimately to zero, to zero

25

Because that's not the way. Loans were not the best way on

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Page 186 of 248

a long-term basis to try to raise funds. Short-term basis they were okay. In critical situations, they are okay. But they were not the best way to do it. So in fact, what we are hearing is a recognition and an attempt to deal with from his position with certain of the difficulties created in the context of the financial warfare that was going on at the time. Just a few other sort of rambling things that came out in the context of the Government's opening or have otherwise occurred to me since I put this thing together: the Government seeks to, in the context of the notebooks, to create an inference that is unsupported from the evidence. John O'Connor, who was a Secret Service agent who testified. 1 don't think any of us would quibble with the fact that he was honest, that his testimony was truthful. He acknowledged that he doesn't know. He has spent hours and hours and hours reviewing the notebooks, trying to familiarize himself with the contents of it. He doesn't know what any of it means. He doesn't know what the format was- He doesn't know whether these were questions to or from first-hand, third-hand, fifth-hand or underhand. He doesn't know anything about it. And that's all — there is really no way to tell. You heard some evidence from the tape that everyone took notes and everyone briefed each other. So whose notes were they? Were they something you know and how much

195

rambling was there in the transmission? How much accuracy? You hear this stuff — what appears is forgive or forget in

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one notebook, turns up as forget or forgive in another. I mean, that shows — and what does it mean? It's shorthand. Who knows what it means? Who knows what the context is? The Government wants to supply you the context. They want to tell you what it means. You can draw your own conclusions, ladies and gentlemen. That's why you are in the jury box. It's your common sense and not the Government's lack of it that controls here fortunately, and you can make whatever conclusions appear to you to be the right ones to draw from the facts that are yours. But — am I still within my allotted time,. Your Honor? THE COURT: Yes, sir. (Pause in the proceedings) MR. ANDERSON: Could 1 have just a moment, if Your Honor please? THE COURT: Yes. (Counsel conferring off the record) MR. ANDERSON: Back to Count XIII for a moment. Another peculiar aspect of this conspiracy to thwart the lawful purpose of the Internal Revenue Service is the Government's allegation that somehow that you know, they are guessing. We just couldn't tell* We don't know. If they don't know, they shouldn't have indicted him. The fact is

196

the records were there- Now, what kind of a conspiracy is it that writes down those attributions of income by L's and H's or otherwise that the Government is alleging were the object of concealment.

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I mean, it's again implicit contradictions within the Government's case that I think is most revealing. You don't keep records that demonstrate the expenses that you are trying to cover up. It's silly. It's worse than silly. Now, ladies and gentlemen, this is a criminal case. It's not a civil case. Mrs. Sexton has not to date been repaid some money on loans, obligations taken, but you know, your function, and I think it would be -- I expect you to feel badly for her. I would be surprised if you didn't. I mean, you know there is a lot of money hanging out there -But the issue is, you know, she could have brought a civil suit to recover. Maybe she will- Maybe she has. It's not in evidence. You just don't know. But that's another issue for a different Court, potentially a different set of jurors. The issue in this case is not whether we feel badly for those persons who didn't get their money back. And you can't make your decision based on that. You can't feel, you can't decide on the basis of compassion for those people. You can't decide on the basis of pity. You have to decide on the hard facts, and the question is, no one feels good about that. You can't think for a second that any of these fundraisers

197

or anybody else feels anything but badly about that fact. I mean, their entire lives, their past lives, the things they have worked so many years for are at stake here, are at stake at least in part because of the Government's allegations regarding the status of these loans. They feel badly that these — they did not create the situation which

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caused those loans to be unpaid during such periods of time that they could do anything about it. Those actions were external. Those actions came from enemies of various kinds that would for various reasons, including the Government, who precipitated this case, and the bankruptcy. And the fact that they are not paid today should not be a consideration in your minds. I think you are going to have to fight to get it out of there, because it's normal to feel badly for someone who has if not lost their money, at least not gotten it back yet. But you have to decide this case on other facts and other considerations. And obviously I am not — I have made it clear about my feelings of the underpinnings of the Government's case and the way it was delivered, and I suggest that some of that bad smell that we had in the courtroom on occasion didn't come from the outside. But was the rotting carcass of the Government's case that was whiffing up our noses.

198

MR. MARRHAM: Your Honor, on a very brief matter, could we approach the Bench just very quickly? THE COURT: Yes. (Whereupon, a conference was held at the Bench with Court and counsel, out of hearing of the jury, and reported as follows:) MR. MARKHAM: Mr. Anderson just told this jury that the Government precipitated the bankruptcy and the Court

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order was very clear in that regard and I just wonder since we are going to be waiting around anxiously for the Court to give the charge, will the Court consider a curative instruction from us if we lodge it tomorrow morning? MR. ANDERSON: I didn't hear. What is this about? I did not say that. That is not what I said. I would like to get the Court Reporter to read it back. THE COURT: Precipitated by the Government — MR. ANDERSON: I didn't say that. THE COURT: 1 think you are crazy to ask for the instruction. It's going to do nothing but highlight it. I will tell the jury right now to disregard it if you like. I think it was such a -- really I don't think actually it contravenes the Court's order anyway. MR. ROBINSON: Let us consider it and see where the rest of the argument is going. MR* ANDERSON: We can argue the transcript portion

200 I said to you at the outset of this case that it's not about money. I stand by that. What this case is about is about a group of people who have spent and devoted their entire lives to fighting for truths and ideals that they hold dear. When I say devoted their lives, that is a word that people have a tendency to throw around kind of loosely. There are people that talk about, I can't think of a good — devoting their whole lives to keeping a good suntan or devoting their whole lives to raising roses or something like

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that."' When I say these people devoted their lives, please listen to what I an saying. I mean, you heard I believe it was Vera Cronk testify in response to some questions from Mr. Anderson that from 9:00 in the morning until 11:00 or 12:00 at night working in Mr. Anderson's poorly furnished anthill or whatever it was he called it. They did it by choice- They did it out of a sense of commitment. I suggest to you folks that that is not something that can or should be taken lightly by any of you when you get to the ultimate issue in this case. 1 would further suggest to you that this case is about a political movement. There is no question about that. It's a movement that has devout members. It's been a movement that has dedicated followers that want to see it succeed. It's about a movement that has powerful enemies who want to

199

1

of that.

2

THE COURT: I don't think we need do that.

3

(Whereupon, the conference at the Bench was concluded, and the following proceedings were held:) THE COURT: Mr. Clark?

6 7

MR. CLARK: Thank you. Your Honor. Ladies and gentlemen, as this case w'inds down, and it really is winding down, one thing occurs to me, and that is that this case is somewhat remarkable in several respects* As you listen to

10

the evidence it might have occurred to you that the Government

Page 192 of 248

11

has spent the better part of four weeks attempting to present

12

evdience of a fraud. What they managed to do in the course

13

of four weeks is present evidence, and I would say conclusive

14

evidence, that some people loaned money to these people, and

15

some are dissatisfied and some didn't get repaid.

16

It's perhaps even more remarkable that the Government managed to spend one full hour this morning arguing to you

18

and convincing you that people were loaned money and didn't

19

get paid back. That's all they have proved, and that's all

20

that they have argued. They spent four weeks proving it and

21

an hour arguing it.

22

i would suggest to you that that is not a mystery

23

in this case. Nobody is contesting that. That is not to

24

say however that this case is without mystery, because there

25

is, and the Government has not endeavored to address it.

201 see it fail. I would suggest to you and perhaps most importantly, this case is about not money but it's about the state of mind of each and every one of the individuals seated behind me at the time that they solicited loans from supporters of their organization in an effort to permit their organization to continue to flourish, in an effort to permit their organization to continue to decimate its ideals. And the issue is a very, very simple one. You have to be convinced at the conclusion of all of the evidence and the conclusion of these arguments that these people, of course I am referring specifically to Mike Billington, you have to be

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convinced beyond a reasonable doubt that at the time that these people solicited the loans that you have heard about over the last month, that they did so without the intent to repay those lenders. Period. Nov?, I would suggest to you, I said there was some mystery that attaches to all this. Doesn't it seem mysterious to you that seven out of 350, who have and I'll repeat the words and I'll probably repeat them more than you want to hear them, devoted their lives, given up and forsaken material possessions, families, everything else, in an effort to create really in their minds a better world for this generation, future generations, doesn't it seem mysterious to you that these people would be willing after devoting their entire

2UZ

life, that they would be willing to steal, they would be willing to steal money, to promote those goals? It's a mystery the Government hasn't addressed in four weeks nor in an hour this morning. Doesn't it seem mysterious to you that people who have devoted their lives to gathering support for their ideals would then be willing to purposely and intentionally, with malice aforethought, steal money from the very people, who they have won over to their side, that they would steal money from the very people that they have convinced to believe in their ideals? Ladies and gentlemen, doesn't it seem mysterious to you that these seven people would intentionally steal from

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their supporters and yet at the same time devote I don1t know what the figure is, but I will say thousands of hours and thousands of dollars keeping records of those financial transactions, that they devoted thousands of manhours and thousands of dollars to devising plans to curtail lending, that they spent thousands of dollars and thousands of hours trying to generate other sources of revenue to repay those loans? If you are going to take the money and run, do it. Do it. Don't replace Kr_ Yepez with Mr. Hints and thereby replace him with a computer so that you can figure out how to get these things straightened out and get them repaid. Don't

203

spend all that money. You have got it in your pocket. Why don't you use it for whatever your fraudulent purpose is supposed to be? The reason they didn't do it is because that wasn't their purpose. They fully expected to repay these loans at the time they took them. They fully expected to repay them today. Ladies and gentlemen, doesn't it seem mysterious to you that these people would defraud their best supporters while at the same time maintaining continuous contact with them? Over the telephone, through the mail, through the mailing of what it sounded to me raore subscriptions than they ever wanted to see, if they are trying to defraud them? I would suggest to you that if you are convinced

Page 195 of 248

that these people committed fraud, you also have to be convinced that they did so with a commitment to be absolutely sure that they weren't going to get away with it. They have been around since 1970. They have gone out of their way to tell each and every lender, eaLch and every supporter and everybody else who would listen who they are and where they are. I would suggest to you that with this organization what you see is exactly what you have got. You have got honest, dedicated people who are fighting an uphill battle against very powerful enemies, in their enemies1 backyard.

204 And right now they are on..the down side maybe. Now, I would ask you, what evidence have you heard from the Government to convince you that a fraud existed? I suppose that that question always has to start with the witnesses obviously, and the logical starting point for me is the same as the logical starting point for most of the other lawyers who have spoken to you, and that's Chris Curtis. The Government told you at the outset that it considered Chris Curtis to be no different than any other fundraiser in this case except for the fact that Chris Curtis quit, that Chris Curtis walked away from his obligation. You have all heard that over and over again. Well, Bill Moffitt asked the rhetorical question in his opening statement, where is Chris Curtis' chair? Well, that shouldn1t have been a

Page 196 of 248

rhetorical question, and frankly, I don't like him to point at me when he is asking where is Chris Curtis' chair. I got no problems with Chris Curtis not sitting over here. I do have a problem with Chris Curtis' chair being over there. (Indicating the witness stand) And I am not sure why I have that problem. But it's something that you all should give a lot of thought to, and a lot of consideration to. Bill offered one explanation to you as to why Chris Curtis' testimony is different in December 19 88 than it was when he spoke to Special Agent Bryant, when he spoke to agents

205 1 2

of the FBI, and when he testified under oath in Boston. The explanation is that his testimony was changed and

3

sculpted and that he sat up there and told you something that

4

wasn't true. It's a reasonable explanation.

5

I for one would like to think that there is an

6

alternative explanation. I leave it to you to make up your

7

minds. I would suggest tp you that if Chris Curtis got on that

8

witness stand and intentionally and purposely and malevolently

9

said something that wasn't true, then shame on him.

10

But think about Chris Curtis for a minute in the

11

context of this entire case and I use him -- you saw what he had

12

to say and the way he said it. You saw what Charlie Tate had to

13

say and the way he said it, I put this to you: what Chris Curtis

14

and Charlie Tate had to say certainly had a different cast to it

15

than what the current members of the NCLC had to say who were

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16

called as witnesses. It certainly had a different cast

17

to it than what the lenders had to say who were called as

IS

witnesses. Those people basically got on the witness stand and

19

said, yes, I loaned some money and I would sure like to have it

20

back. I think that the issues that this organization support are

21

important. I loaned money to a humanitarian cause. I am distressed

22

that I lost my money, but I still believe in what the organization

23

is doing, despite all of the stuff I have heard and despite what

24

the

25

206

Government has told me and despite the fact that these people are on trial in a courtroom-It goes deeper than that with Charlie Tate. It goes deeper than that with Chris Curtis. And again, the question is why. Again, the example that I will use is Chris Curtis. For 12 years, Chris Curtis was as devoted to this cause as any of the seven people that are sitting back there. I believe he said he joined when he was 25 years old. He worked in the same anthill that Mike Billington worked in, J

R

, P

G

. He did the same things that

they were doing. He believed in the same things they believed in. No reason to believe he was any less committed. I would suggest to you that I suspect that that is a pretty good mind set to have. It probably gives you a pretty good feeling to sit there and say, you know, I am giving up the things that are important to most people. I don't care about getting a new car every couple of years. I don't care about blasting around the river in some big

Page 198 of 248

powerful boat. What I am going to devote myself to is the betterment of mankind. I am going to, with every ounce of courage and energy that I have, that is what I am going to do. And that's what Chris Curtis did for 12 long years. And Chris Curtis gave up a lot, I would also suggest to you that I suspect for each and every person who takes that route, it requires some real

207

introspection to come up with that commitment. Chris Curtis said when he was being asked even about the loans that are the issue in this case, I convinced myself that people were going to get paid back. I thought about it and I didn't want to believe it." I was playing games with my mind. Well, I would suggest to you that probably when you are in about the 14th or 15th hour of any given day sitting in that anthill working for what you believe in, every now and then you have got to ask yourself, what am I doing here? Why don't I go out and get a tan? Why don't I go to the beach? Why don't I get a regular job and, you know, get a four-bedroom house somewhere? Well, if that's the sort of mind set that you have to achieve in order to commit yourself to a cause, think about what Chris Curtis, think about what Charlie Tate must have gone through when they made the decision to give it up. They walked away from it. The job is still undone. The organization is still there. Your mates are still back there doing

Page 199 of 248

everything they can to further your ideals while you are walking away from it, getting a job drawing cartoons for the newspaper, whatever it is that Curtis did. That is when you really have to convince yourself that you have made the right move. They are talking about money in this case. Well, some of us have got more money than others but I would suggest

208

1

to you each and everyone of us has about the same amount of time

2

on this earth and unless Chris Curtis and Charlie Tate can

3

convince themselves that leaving was the right thing to do, they

4

have thrown away 12 years of their lives. So maybe that's an

5

explanation. I personally have a real problem sitting around

6

calling somebody a liar, because that's probably about the worst

7

thing you can call somebody, but I do know that Chris Curtis

S

testified differently before you all then what he told Charlie

9

Bryant and what he told under oath in a courtroom in Boston,

10

I think that's set forth in some testimony that Chris

11

Curtis gave in response to some questions that Bill Moffitt asked

12

him-back on November 28th, the weekend of this trial. Bill asked

13

him and said words to the effect, do you remember telling Mr.

14

Klund that you did not believe the telephone soliciating

15

employees acted in anything other than good faith in their

16

solicitation efforts?

17 18 19

Curtis told him, no, Mr. Moffitt. Those are not my words. Bill asked him, did you say that in substance?

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20 21

Curtis said 1 don't believe so. Later on, the same day, Bill asked him, not about a

22

statement he had made to a law enforcement officer. He asked him

23

about a statement he had made under oath. And the question — Bill

24

asked him if he had made that statement under

25

20'9

oath in Boston. The question that Bill read to him was, "I am talking about solicitors per se. The phone team solicitors per se or the field solicitors as opposed to any other individuals„ I am asking you whether or not there is any question in * your mind as to whether or not those solicitors were in fact engaging in their activities in good faith?" His answer in Boston: No. I thought they were acting in good faith. In this courtroom, Bill asked him again, "Did you say that at the trial in Boston?" Curtis said yes. Later that same day, I asked Curtis, "Do you recall telling Special Agent Bryant on February 10th, 1987, that Mike Billington would fall on the sword and that he had the personality of a missionary?" Curtis wasn't willing to say no. What he did saw was, "1 may have said that. I just don't recall specifically. I don't think that's my formulation." On Thursday, December 8th, Special Agent Bryant got on the stand, was confronted with that same statement and said simply, "Those were Chris Curtis' words."

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Something has changed Chris Curtis in the last yearand-a-half. It's caused him to go from characterizing Mike Billington as a dedicated individual with a personality of a missionary, to somebody who would resort to I would say

210

inane and childish names referring to the people that are iraportant to him, supporters of this organization, rather than being described as a missionary, Chris Curtis used the word, "Zealot," used the word, "Ruthless." I would suggest to you again — I hope Chris Curtis wasn't lying. I know he changed his statements. I know he changed his testimony. And perhaps he should be more the object of your pity than your scorn, because I would suggest that Chris Curtis is not trying to convince you all of anything, He is trying to convince himself. For whatever the reason, I simply go through this exercise to ask you to please examine and scrutinise the testimony of Chris Curtis, Charlie Tate, and the other quitters with some very close scrutiny to determine their bias and their reason for testifying:as they did. Now, I would like to shift gears and get down to what I think this case is really about and that is not what did Chris Curtis and Charlie Tate know but it was what did Mike Billington and the other fundraisers in this case really believe when they were soliciting loans? Well, I would suggest to you that a good indication of what they probably believe came from Wayne Hintz, another former member. He is the fellow you may

Page 202 of 248

recall who wasn't a fundraiser, but he was the guy who was in charge, took oyer from Mr. Yepez, and was in charge of dealing with the most

211

troublesome aspects of the loan repayment plan. If somebody was really bummed out, that's when Wayne Hintz came to hear about it. And you will see a bunch of memos that he wrote about these troublesome loan cases. I think they are very, very instructive. For one thingr if you choose to look at them, look at them very, very closely. Look at them with the thought in mind that there were according to who you believe between 3,000 and 3,500 lenders to this organization. Count the names on Wayne Hintz' memos. How many big problems were there? 50, 75, 100? You check it out. Furthermore, I think that you have to, if you look at the memos, you have a peculiar insight. You know more than Wayne Hintz knew when he was writing those memos. I would suggest to you that Wayne Hintz probably took the most conservative imaginable approach in trying to take care of his special problem cases. I say you know more than Wayne Hintz knew because I guess the question is what did it take to get on the gloom and doom list that Wayne Hintz had? You know, these people got to be repaid. This is a big problem. That's a big problem. Well, there is a name that appears as often as any other on Wayne Hintz' doom and gloom list, and you have

Page 203 of 248

heard what that person had to say. Nick Anderson. That's the man from Oklahoma who got up there and said yes, I loaned money

212

1

for the house and Jbykus and I did all this other stuff, and they

2

were paying me this money every month and asked himr were you

3

satisfied? Yes, I think they are pretty good people Yes, I am

4

satisfied. I am getting my money back. The guy's name is all over

5

Wayne Hintz1 raemos. This is a big problem.

6 7 S 9

10 U 12 13 14 15 16 17 18 19 20 21 22 23 24

I would suggest to you that perhaps Wayne Hintz is the best example of the fact that these people didn't have any fraudulent intent at all when they were soliciting loans. They had Wayne Hintz running around like the chicken with no head trying to get everything taken care of and everything that was possibly conceivably a problem he was bringing it to people's attention. The same guy who is doing all this also gets up on the witness stand and tells you, when I left in mid-1986, I was optimistic. That's not my word. That's his word. I was optimistic that these loans would ultimately be repaid, extended or forgiven, and that that optimism pervaded the organization. How is Mike Billington supposed to be less optimistic than the guy who is in charge of taking care of the big problems? Now, I would suggest to you that the Government has attempted to suggest to you that a fraud was perpetrated by these fundraisers by the representations that they made to perspective lenders. What were they?

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25

213

You have heard evidence that each and every loan that was solicited by these people was preceded by the mailing of subscriptions, describing the battles that the organization was inr describing what they were about, describing What they were doing. Each and every representation that was made included the fact, look, we are not a business, we are not out -- you know, we don't have a diamond mind in South Africa that is going to make $10 zillion next month so it's a good investment. The whole pitch was perfectly honest. It was we need money. We are in dire straits. We have a battle to fight here, and if we can win it, everybody is going to be better off. We are not a money-making proposition. We need your money so we can spend it right now to fight a battle. How, I think that's borne out by what the lenders said. Dorothy Powers took notes, yes, SDI and the New Republic articles a big problem. Everything is coming down around their shoulders. They needed my money. That's what the pitch was. I think it's important to understand that. It's important to understand when the Government says well, you know, that they made a big point. Were you told your loan, you might be asked to forgive it? Were you told you might be asked to roll it over? There wasn't anything wrong with that. You know, they are making some big fraudulent —• if I

Page 205 of 248

214

ask you to lend me ten bucks and you do it and I am thinking, geez, I hope he never asks me to pay him back or I hope he agrees to extend it, it's not a fraud, it's not a fraud. So let's not get confused about that. But did they tell you that there was financial warfare? Did they tell you this, that and the other thing? Well, I think that what John Markham tried to use, I guess after this case is all said and done will be remembered as the metaphor of the burning barn when he is talking about the representations, and as far as it went, it was neat? didn't have anything to do with this case, but it was neat. The reason it didn1t have anything to do with this case is that when Mike Billington was on the phone asking for money, he wasn't watching the barn burn down. What he was doing was building the barn. And that's what he told people. He was building it up. And he needed their money to do it. When Mike Billington was soliciting money, the barn hadn't burned down. In fact, the barn is still standing up now except for a few planks that the Government has jerked out and has sitting on these chairs back here. What Mike Bilington, if you want to carry his metaphor farther, what he did tell lenders was that I am building this barn and it1 s importantT and it's got to be built, but because there's so many vandals around my neighborhood, I can't get insurance from anybody else to

Page 206 of 248

215

insure it. I can't go to a bank. I am going to you. What he told them, ladies and gentlemen, was the truth. There is another reason that that metaphor is not apt to this case, and that is what we said over and over and over again/ This isn1t a strict commercial deal. I will admit it. When I was trying to get my argument together, I was trying to think of a metaphor, too. I started thinking of the stock market, you know, they lock up all the stockbrokers and they ask you to put your money in the stock market That buys into the Government's theory. This isn't a moneys making proposition. I think each and every person who loaned you know you take your money out of your money market that's making 9 percent and you give it to somebody who calls you on the phone and gives you an unsecured promissory note for 10 percentThat's not smart business, and I think each and every lender almost to a person said, sure, I knew it was a humanitarian cause and I wanted to help. You want to talk about representations, I think that the apt analogy is one that's been touched on in this case. And that analogy is the United States Army. And those of us that came of age during the Vietnam War probably listened to all those ads about why you ought to join the Army, I know I did. I found out you could join the Army if you wanted to see the world. I found out you could join the Army if you wanted to get money for a college education. I found out you

216

Page 207 of 248

could join up if you wanted to serve your country. I found out you could join the Army if you wanted to learn a trade. Now, when the Army told me that, they knew that we had been at war for 19 of the last 70 years. Were they perpetrating a fraud on me because they didn't tell me that I might not get to use that college scholarship because if we go to war I night go to some country I never heard of and get my face shot off? No, Because I knew what the Army was all about. I knew they were fighting a war. There is no guarantees in a war except one. Except one. And that is the guarantee that Hike Billington gave. He guaranteed his personal word of honor that he is going to be around. That he is going to see it through. If he gets prosecuted and has to go to a courtroom and fight his battle there, he will fight it. He will survive it. And he is not going to quit. He didn't tell them about any diamond mines. He didn't tell them about any prospects of acquiring a lot of personal security, a lot of security for all these loans. He gave them his personal word of honor, and that is exactly what the case is about. The truth. Now, if you want to talk about material misrepresentations, do you want to talk about material omissions? Let's talk about them. Let's talk about them right now. Did you notice that during their case, the Government played to you a couple of tapes of Mike Billington talking to

217 Audrey Carter. Did it seem weird to you that they played the 2

same tape again during their closing argument? It didn't seem

Page 208 of 248

3

weird to me. There was a reason for that. Keep in mind that

4

the Government — I wish I could remember what the word was

5

they used. It was a good one. He said that I have you a

6

freeze frame- That's what it was. I gave you a little freeze

7

frame of Mike Billington. That's what it was. During their

8

case they gave you three minutes out of 43 years. That's

9

about 90 second too long. So they cleaned it up in their

10 11

argument. They gave you just 90 seconds. Well, don't forget about the other 90 seconds. And

12

keep in mind, you know, go back and listen to the tapes

13

again. Read the transcripts. Do what you want.

H

Keep in mind that the tape that they played you, it

15

wasn1t a fundraising solicitation. It was a tape from

16

February 20th, 1986 that Mike Billington tapes after Audrey

17

Carter had decided to back out on a loan that she had

18

previously offered. The tapes will show that Mike Billington

19

was talking to her and trying to find out why she had backed

20

out, trying to find out if the Government was influencing her

21

or saying bad things about the organization; in fact Audrey

22

testified from the stand that the FBI agent showed up and

23

given her a packet full of derogatory newspaper articles.

24 25

The Government is suggesting to you or has suggested to you in its argument that Mike Billington was raising money

218

from Audrey Carter on the tape that it played to you. It1

s

Page 209 of 248

not true. He hadn't even called her* Audrey Carter had called him. She was asking about her interest payments. Now, what Mike told her was, hey, look, we are not selling stocks and bonds here. Nobody who has brought operations against us has.said our loans aren't good. It's true. Then they say, well Wayne Hintz said it, Wayne Hintz hadn't run — They are talking about their enemies. What Mike Billington was saying to Audrey Carter was we got a lot of enemies. They hate our politics. They may hate us personally. But they have never said our loans aren't good. Have you heard from any of the enemies of the organization who said the loans weren't good? What's more important is that they elected not to play you the other tape. Maybe you will forget about it. Don't forget about it. Let me read to you Mike Billington's hard sell, Mike Billington's dishonest fundraising approach. December 19th, 1985: Audrey Carter. "The only thing that -- the thought has come to me that there is no — I wouldn't say insurance but no guarantee that the money is going to be there to refund me if I need it." Mike Billington responds to that. Here comes the hard sell: "Well, it's a better guarantee than a company

219

that's about to go bankrupt can give you." Audrey Carter. "Well, I am not going to give it any more thought."

Page 210 of 248

Mike Billington: "Right. Well, you can put your money in a "bank if .you think that's safe. I mean —" Audrey: "No, no." Mike: "Not really. I mean nobody is safe in that sense. That is a reality we all have to face." This is the ruthless, evil guy. It's a pretty hard sell, Mike. There is nothing dishonest about that. Make no mistake about it: Mike Billington was committed to his cause and he was committed to raising money to promote it, but he is not about dishonesty. That's what Mike Billington is about, but the Government elects not to play that for you. They play you another tape that has nothing to do with fundraising. They play you a tape from February 20th, 1986 when Audrey Carter calls to ask about her interest payment. You heard evidence from Audrey Carter. You have exhibits in the file that tell you what she was calling about. She made two loans, one on November 12th, 1985 and one on November 26th. Quarterly interest payments were due on February 12th and February 26th. She called on February 20th to complain and the tape that they played you, Mike says okay, 1 hadn't heard from you. I didn't know if you had the same address* We will take care of the interest

220 1

payment. She got the payments. She got the payments. She got the

2

checks in the file. You have got the testimony from Audrey

3

Carter. She got the payments.

4

Granted, it was downhill after that, after the spring

5

of r86. You have heard more evidence than you need to heard. But

Page 211 of 248

Mike Billington wasn't lying. Mike Billington is not a

6 7

mind reader. Mike Billington can't see into the future. That's not

8

what this case is about. Let's look with a fairly critical eye at the little

9 10

snippets that the Government gives us. You have got to look at the

11

whole picture. Now, I guess the final question is when Mike Billington

12 13

was soliciting loans, what did he know when he was making the

14

representations to lenders that he was making? Well, he knew about

15

EIR. He knew about debt watch. He knew about Fusion Energy. He knew

16

about the vast and numerous publications that had growing

17

subscriber lists that were making money. He knew about the Latin

18

American contacts that Sylvia Bruda told you about. He knew about

19

the contract that they had with Peruvian industrialists. He knew

20

about the contacts that that contract had engendered with Latin

21

American political leaders. He knew that the organization was

22

growing He knew that Dennis Small had been invited on

23 24

numerous occasions to Latin America to meet with the people at

25

the very, very highest levels of government and the

221 military. He knew of the intelligence reports that were authored by members of the organization were becoming increasingly valuable to members of the business and Government community- , He knew about the Craw Canal project begun in 1982, that Sylvia Bruda talked about that was expected to generate a tremendous amount of income. He knew about the

Page 212 of 248

political gains that the organization was making. He knew of the reduced loan ceilings. He knew of repayment schedules that were set up in the national finance office, supplemented by payments in the regions. And perahps most importantly, when he made the loans to Ms. Powers, Ms. Carter and Witt that you have heard about, he knew that at least at the outset the loans were fine. Up until the spring of 1986, those ladies were all paid. Maybe a month or, you know, a couple of weeks or a month late, but they all got their first interest payments. It was down the 10 11 12 13 14 15 16 17

road that things began to degenerate. To make a long story short, Mike Billington had every reason to believe that this organization had made the right decision, that they had borrowed money to get started to get their ideas across, that they were building, and that they were on the brink of becoming self-sustaining. Now, I don't think it's a good idea to talk in generalities when someone's future is in your hands. And I

IS 19 20 21 22 23 24 25

222 think that there are two perhaps small but I would

Page 213 of 248

suggest important bits of evidence that really go to the heart of what these people's intent was all about: the first is the regular delivery of bought-and-paid-for subscriptions to supporters of this organisation. Number one, they are keeping in constant contact, but number two, and I think perhaps more importantly, if you are about stealing, you don't just steal loans- You steal money. It seems to me that if you are going to steal, it would be a lot easier to call up a supporter and say, I'd like to sell you something. Would you like one? And you get somebody to want one, and they say okay, send it, I'll send a check- You get the check. You don't sent the magazine. What an easy way to steal money. They didn't do that, because it's not what they were all about. They were about spreading their ideas, and they needed money to do it. The second bit of evidence is Dorothy Powers, Dorothy Powers. Remember her? She's a wonderful lady, and she was owed a lot of money; still is. She loaned $30,000. She also made contributions in smaller amounts over the years, some to the companies, some to the political campaigns. In fact, she was so devoted, she gave the political campaigns too much money. Now, if you are about stealing, you can do one of two things. You can just keep the money and hope nobody

223

finds out about it or if you are worried about the Federal Election Commission, you write Dorothy Powers a check for $500. You put it in an envelope. You mail it to her. You

Page 214 of 248

call her up and say, "Dorothy, good news. Here is $500 against what the, to reducing our debt that we owe you. They didn't do that. And the reason they didn't do it is because they are not dishonest. What they did was wrote the check and put it in the mail along with a letter saying, "Dorothy, you gave us too much money. If we keep this, we will be breaking the law* The Federal Election Commission doesn't let this happen. You can only give $1,000. You gave 9

us $1,500. Here is your money back. Thank you very much.

10 II 12 13 14 15 16 17 IS 19 20 21 22 23

The next question is, what didn't Mike Billington know, what could he have not foreseen when he was soliciting the loans that are the subject of this case? I know it's Christinas time and it reminds me of the song, you have heard it so many times, so many different ways, I am almost reluctant to repeat it to you again, but harassment by the Government borne out by the Kissinger letter, the FBI involvement, speaking directly to people that are their most ardent supporters as borne out by Audrey Carter, the immediate reaction to the Illinois primary, the October 1986 raid that decimated the organization's records, and finally, I guess sort of the death knell at this point is the involuntary bankruptcy that has prevented them from repaying loans-

24 25

224

Don't you think that those events may have had something to do with why these people didn't get repaid and

Page 215 of 248

don't you think that Mike Billington or none of these other lenders had any way of knowing that those events would take place, that"those events would decimate^ their ability to raise money? 1 would suggest to you that if you examine it, all the evidence will show that there was every reason subjectively and objectively, for Mike Billington to have a reason for optimism, cause for optimism when he raised those loans. There is only one other point that I want to address to you, and it's one that I hope I have the words to convey, because it's important to the understanding of this case and that is this: it may occur to one or more of you that, well* I don't think there was a reason for optimism, I don't even know who the president of Peru — I didn't know who the president of Peru was until this case started. Why should it be a big deal that Alan Garcia gets elected president of Peru and says he wants to stomp out drugs. Why should that make Mike Billington optimistic? Why is it a big deal that we are being consulted about the burning of the palace of justice in Columbia? Why should it be a big deal that a couple of people win the democratic primary on the State ballot in Illinois in 1986? Why should it be a big deal that we have access to

225

Richard Morris on the National Security Council and he accepts what we say about information that's being passed out? Why is that a big deal? I don't care about that* What I want to do, I

Page 216 of 248

am worried, to me a big deal is that my kids get into college or that I meet my mortgage payment or that I go where I want to go on my vacation, In order to understand this case, you can't think like an ordinary person. You have to think like somebody who has committed themselves to achieving a goal that to you or me or most anybody else probably seems absolutely unattainable And what might seen like a little victory to you, you know, a primary victory by somebody you never heard of is a big thing when you are as close to it and you are in the middle of it like Mike Billington and the rest of these folks. I would suggest to you that they have taken on some very, very powerful people. They are playing by their rules. They are playing on their home court and what might seem like a little victory to you or something unimportant, something you have never heard of, it's what it's all about to Mike B'illington and these people. I would suggest to you that fraud and deceit is simply not what they are about. Thank you. THE COURT: Take a short recess. (Whereupon at 5:00 p.m., a short recess was taken.)

22. MR. GETTINGS: May it please the Court, members of the jury, the lenders in this case were wronged, and as between the defendants and as between Will Wertz and the lenders, the lenders deserve all the sympathy in the world, and these people deserve none. The lenders lost money. And it sure wasn't their

Page 217 of 248

fault. They were wronged, and there's just no way that-I or any of my colleagues are going to attempt to get around that fact. But was that wrong criminal? That is what this case is all about. It is taking an obvious wrong, a conceded wrong, something that nobody in their right minds could possibly question as a wrong and saying to yourself, can we escalate that wrong and should we escalate that wrong, because it is ultimately beyond anything else totally in your hands. If you choose to escalate the wrong through criminal conduct, that is within your power, and if you refuse to escalate that wrong through criminal conduct, that is likewise solely in your power. Now, for you to find that criminal wrong, and find that Will Wertz or anybody else was a part of it, you have got to go through a thought process. It is uncomplicated. As a matter of fact, it is simple. But it involves just a little bit more than finding the wrong and finding that Will Wertz or anybody else was involved. And that thought process and the fact that you would earnestly and diligently

227 sincerely engage in it is absolutely fundamental. Our entire system of criminal justice is premised on you, the jury, a jury, any jury that sits in any Courthouse from coast to coast on any given day, in these great United States, any jury is obliged to honor the cornerstone of fairness that is built into the American system of justice, that gives us something to brag about, something that we

Page 218 of 248

boast about, and something that we say with pride that we have the best and the greatest system of criminal justice devised anywhere at any time in any part of civiliation. And we all brag about it. And the fundamental thing that makes our system different from any other, different from Russia, different from China, different from Peru, Brazil, wherever, is the very simple concept that is recognized that all criminal justice systems are inherently loaded against a defendant. That is just the way it is. The defendant always has to be the defendant on the defensive, defending charges that are defined by the Government and where the Government rightly, rightly — there is nothing wrong with this, and believe me 1 am not complaining, I am not hollering about it. That is the way it is. it is fair because in the end it works. But that system is loaded against the Government, and here in America we recognize that. We recognize that that is the way it has got to be or else it would just all be

228 crazy. So we give the defendant one thing, one thing the.t does not exist anywhere else in the world. That is, we give the defendant the obligation, the right/ the power to sit back and say "Government, you have got to prove it; and Government, you have got to prove it beyond a reasonable doubt." That is the one thing in the American system that evens it up. And you can't just say it happened and Will Wertz

Page 219 of 248

was there. He was involved. There is no question he was involved. And there is no question that if there is a money loss and this were a civil case, he could be stuck with civil liability all over the place. But in the criminal system it is different. We are not talking money, dollars, cents, nickels and dimes ? things like that. We are talking freedom. We are talking felony convictions. We are talking felony conduct with enormous consequences down the road, so our system says when that kind of thing, that kind of powerful, enormous thing is at stake, we are going to shift and we are going to shift the burden of proof to the Government to persuade you and to prove to you that they have proven by the evidence that these defendants are guilty of the crimes charged, not wrongs, but of the crimes charged, not just crimes, the crimes charged beyond a reasonable doubt. Now, that is a thought process that you must go through after you find the obvious, the clear, the evident

22 9

thing, that indeed there was a wrong here, and that my client at least, I will speak for him, I won't speak for anyone else, but he was certainly involved in it* That's the rule. That's what juries all around the country have been doing ever since we put this system into practice. It's something that we all had in mind when you were selected back four weeks ago, and I haven't seen a thing on the face of anyone that gives me the slightest concern, that gives Mr. Wertz the slightest concern that you folks will do that, that you will go back there and you will hold the Government in

Page 220 of 248

your deliberations, that in essence in a word, in a sentence is really all it is that you will hold the Government to that burden of proving beyond a reasonable doubt that these defendants have committed more than a mere wrong that resulted in loss, substantial loss to some otherwise totally innocent persons. Now, that, members of the jury, is really the straightforward part of the Government's case, the lenders. That was easy. That could have taken us two or three days at the very most to hear. If you were to retire to deliberate after having heard that, I think you must understand by now that you wouldn't have been able to convict them of anything, certainly not to convict them of the charges in this indictment, because that straightforward part of the case isn't enough, and indeed, that is why we have

23 0

been in here for certainly longer than the three days that it might have taken for the Government to put on that evidence, much longer than that. As I talk with you about some of the Government's, the details" of the Government' s case, I am going to be attempting to show you that once you get past the lenders and all of the facts and circumstances surrounding the way the loans were taken, once you get past that, which, for the Government to prove its case, they had to do, you get yourself into a thicket. You get yourself into a dark pit, a black hole as it were, because simplicity all of a sudden disappears from the case, and the sunlight kind of

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goes behind the clouds and you are left to wander around in the thicket of all the other evidence, past the lenders, beyond the lenders that you saw and there was literally, literally brought in and dumped before you. I said earlier the Government's burden is a burden to produce the evidence that persuades you beyond a reasonable doubt, and as part of that, too, they have the burden of them persuading you that that indeed is what-they have done; and they can't do what they have done in this case and merely bring in all of the rest of the evidence, like the notebooks, for example, and the notebooks are there for you to read, for you to go through willy-nilly at your leisure and pick and choose whatever you may, that is in there; but

231

they can't just bring that in and throw it in front of you and say, there is something in there. They can't give you what

they

have

conversations,

given

you,

overhearings,

snatches

and

conversations

back

bits and

of

forth

between people, conversations that took place four or five years ago where there are some failures of recollection; there are conflicting recollections as to what was going on. They can't just give that to you and say to you, members of the jury, it's all there, sort it out. They have the burden and the obligation and the responsibility to add all of that up for you and tell you what it means and persuade you that it means what they say it means. And I have yet to hear them do that with any part of this case past the easy part, past the straightforward part, past the lenders.

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It is a given that you have got to go past the lenders to find the conspiracy. You can't just assume that because a bunch of people were involved in a common proj ect, a common program with common goals that are all legitimate, that everything else that they do becomes automatically a conspiracy because just a few wrongs or even several wrongs are committed in the course of this. You can't just assume that. You have got to have evidence of that. And there is a ton of evidence here from the different types of people that you have heard, people from

232

the inside of the organization, who are still inside the organization and who testified in some fashion perhaps uncomfortably or reluctantly but truthfully. They have given you evidence beyond what you heard just from and about the lenders. And you heard from some people who were no longer with the organization but were with them at one point or another. I. call them drop-outs.I suppose as any number -you know, quitters, you can call them anything that you will. There were some of them who testified with, hey, kind of matter of factly. Mr. Yepez comes to my mind. Mr. Hintz does, too. I don't think that I would agree or ascribe to everything that they said, but their testimony was by and large pretty much balanced, and I would say that if you were to go back and consider the testimony of those gentlemen and the people from within the organization and on top of the

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lenders, that well, you would have more towards that conspiracy that you have to look at and towards that scheme which is virtually the same thing as the conspiracy. But you still wouldn't have enough. And of course, the Government knows this. They didn't bring in Chris Curtis and Charles Tate, because they like them or because they just wanted to give them a place to sit and spout off their views. They brought Charlie Tate in here, and they brought Chris Curtis in here because they need them. And if you put that thinking process in motion

233

when you do deliberate, probably beginning tomorrow and you start there and you start asking yourselves, well, yes, isn't it true that the only reason we would have ever heard those people was because the Government needed them and if you want to put aside all of the rest of the evidence and add it up and see if in fact you can come up with proof beyond a reasonable doubt, I think, you will find rather quickly no, you can't do that; and in fact, when you get right down to it, when you get right down to the facts and the considerations of this case, holding the Government to its burden of proof, holding them to the fact that they have got to prove it and they have got to prove it beyond a reasonable doubt, members of the jury, you are going to conclude that unless you believe the testimony of Charlie Tate and Chris Curtis, you can't convict these people honestly and fairly, and you can't give them the fair trial and the fair outcome that they are really entitled to.

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You are going to come to that very early in your deliberations, and pretty soon thereafter, I suspect you are going to be wondering, could we convict anybody of anything where it came down to an issue of believing or not believing Charlie Tate and Chris Curtis. You will reach that point sometime tomorrow, I sincerely believe, members of the jury. Now, I am going to get back to that area. I have been sort of scratching around in the thicket, but I haven't

234

gotten into it yet, and I really do want to focus on something that I consider to be the bright side, a bright side. The sunlight that I hope when you are done with your deliberations and you go through that thicket that you also find on the other side of the thicket, and that is very simply the defense case. The defense case is not hokum. The defense case is very real, and ycfu have charts here, and I am just as happy as can be that someone else used them. I was the one yoy may remember who got them in here in evidence, I'm sure glad someone else used them, but for my money# the defense case is indeed all in those charts. And I would like to focus you if you would be focused for just a few minutes on those charts, and let me tell you what I think they show. I would ask you to look at the first one, which is the big bar chart showing the revenues of the totality of the organization for a ten-year period. They show that, and

Page 225 of 248

they call them towers and you know, you know what the chart is in terms of everything that it contains but I want you to look at it from another point of view, and it1s simply that the Government, to find the charges in this case, they norrowed the time period. Of course they didn't have this chart but they probably knew very well that if they had that chart r that would indeed be what it showed. Maybe not exactly but something like that, and so they knew what they were doing

235 when they picked essentially two years out of the ten-year lifespan of a very going, viable organization, and said, forget the other. Focus on this. We don't care about anything that took place before then, and you shouldn't pay very much attention to anything happening since then* So just focus on those two years. That's what they would like you to do. Well, of course,■that1s not right. They have no right to. force you to do that. They have no right or power to make us sit still for it, and the whole ten years are in. It gives you quite a different picture. It gives you a picture of an operation certainly that could not in anybody's conception of things accord with your routine scam or fraud operation or sting, you know, the sting, the bunch of guys, a real conspiracy, though, for whatever else it's worth, what was going on in that movie, the sting was indeed a conspiracy to defraud and what you have is just a bunch of people get together and they decide to rip off a bunch of other people

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and they come to town and they put their thing into effect. They conduct their ripoff, and they are gone, and you never see them again until maybe they show up two or three years later in yet another scam. Well, that's not this operation. These people have been around for a lot longer as an organization than 1979, but we just happen to start there, and they are still around. They don't have as any necessary incident of their operation

236 anything that you could conceivably call fraud. It's just not built for that. And the Government would also ask you to focus in on a very small part of the finances of the operation. Now, they want you to focus in on finances instead of the whole organization, and they only really want you focusing in on one part of the finances,, and that's fundraising, and then they only want you to focus on one little part of fundraising as a part of financing and so on. They want you to just look at a very tiny, little part of the entire picture, the entire environment, that Will Wertz lived in, the thing that surrounded him, the thing that was his life during the relevant months of the conspiracy as charged. Well, I think you have a slightly different picture and a different perspective from just seeing that as to what was going on at the time. Now, may I have the next chart, please. The next chart, again yon have seen it, and you know

Page 227 of 248

what it is; it shows a couple of things that are kind of significant, though. It shows you when you look at what was going on with the taking of loans in 1984, what got thera into this mess. I don't think it takes a great deal of imagination or sagacity to figure out that the press of the presidential campaign that year overcame all caution. I mean they just, they were in it, in for a penny, in for a pound,

237 and they had it in mind, and they were right in terms of what it would do for the organization, that the campaign would give it a boost, and they threw caution to the winds, They weren't very businesslike. But they weren't reckless, and they weren't criminal. They just got in over their heads. It wasn't until really by even the Government's evidence, it wasn't until March when Mr. Hintz writes his first memorandum that anybody really has a handle on what had happened the year before and how deeply into it they were. So what do they do? Do they, if you are in a fraudulent scheme, a scam, a sting operation, well, you cut and run. It is all over. We are in over our heads. We can't possibly get out of this. We have gotten all we can get. Let's get out of town before the cops come. Is that what they do? No, that isn't what they do. With their classical sense, I call it classical because I think you have heard all of these people have every type of cultural background and avocation. You have poets. You have anthropologists. You have writers. You have artists. You

Page 228 of 248

don't have any businessmen. There is no businessmen in this operation. So this collection of other people without being businessmen, they try to do something — they don't ignore the problem that Hintz brings before them, and it isn't very long before that doesn't seem to cure the problem.

238

And then out comes the very first thing that has an effect at all, and that is never mind for the moment paying back where we are in the hole now, let's start moving ahead and how can we build for the future. And what is the first thing you have got to do there? Well, you have got to cut out loans. And you heard that a loan ceiling of 4 0 percent went into effect along about Hay or June, which is in the second quarter of 1985. And then you heard that another loan ceiling was imposed in September of 1985. That is what they did. They did not ignore the problem* We then get to November of 1985, which I have to believe is where the Government would really like to tell you that, hey, if they didn't know up until now, if it was all kind of not come together, you heard they didn't have a very good accounting system, and they are working like crazy to set up just some method of keeping track of the loans, and they are trying to convert from a manual system to computers, and all that sort of stuff is going on in the tag end of 1984, and on through up until 1985, and you have two different offices working on loan paybacks. You have

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one office doing the campaign staff and you have another office doing the other. But it all comes together in Marchf when Mr. Hintz writes his memorandum focusing only

239 though on the downside situation. That is to say, the outs* Well, they would probably concede, though, that from then on through the year there were attempts, and they did try to do it, but by November, hey, come on, when Hintz writes that November memorandum, which attaches to it the success or concededly the total failure of the loan repayment problem to accomplish anything to getting them out of this mess. Well, the Government is saying to you, by the entire way they tried this case, that from then on they should have quit. They should have gone out of business. Now, I ask you to take a particular look at the fourth quarter of 1985, and that is the box that is just to the left. I don't want to get up there with a pointer. I don't think Judge Bryan will let me. But that is the box to the next column over. And what do you see there? Well, you see a kind of level income after having reached a peak the prior quarter, but you also see a dramatic drop in loans being taken. Now, that chart was not in existence at. the time that these events were taking place, but Will Wertz and all of these people, they knew what the situation was. They knew that, yes, loans had been cut back, and so, if you asked them, would it look like that? They would have told you that,

Page 230 of 248

"Sure, we knew that." And they also knew that, hey, income was steady.

240 And lo and behold, the very next quarter what happens? You get this tremendous upsurge. And then if you look at the distance between the peak at A and the valley on the orange line, you see a wide, wide gap there, the widest yet in any financial history of this sort that this company could have had. And you say. Gee, if you are lookinc at that picture as of October, November, December, January, February, March in 1986, wouldn't you be crazy to fold your tent and walk away just because the gloom and doom die? You can't hate, you can't hate Hintz. And we don't hate him because that is all he is doing. He has got the most thankless job in that entire operation. All he is doing is trying to contend with one single, small problem. So it is no wonder that his picture is gloomy. But Will Wertz gets more than just his picture. He is looking at that picture, and he is saying, "Hey, wait a minute. We can't just walk away from this," Because, I tell you, they walk away from it, what are they really doing? Well, they are letting all of the lenders, lock, stock, and barrelr hold the bag. I mean, that's what happens then. And so instead, instead of walking away from it, all the evidence is that they kept on going. Now, sure, Curtis walked away from it, when you get up to June. But these people, these people that are in the dock here,

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they

241 didn't walk away from it. And they had good reason for optimism despite the downside, the absolutely unmistakeable downside caused by the negative publicity resulting from the results of the Illinois primary, which in ordinary circumstances you would think they would have right in the world to celebrate, but it came right around and bit them; because, and there is no question about that, because the expert testified that the tremendous loss during that period was solely out of contributions. The magazine sales, periodic sales, are still booming. And look at the next quarter. They picked themselves up again. These people are resilient. These people are used to being knocked down and then picking themselves up again and not running away with their tails between their legs. They are by nature optimistic. And, sure enough, they turn it around again. Until what happens at B? Well, in comes the Feds. They don't like what is going on here. So they come in, ransack the place, take all their records. Cause chaos. And, boom, send them on a downturn. And then, of course, the next event, the involuntary bankruptcy, which you will see over at C. But they still don't quit. Because look again at what happened thereafter. Now, that shows a spirit of nonrun from the problems that pervaded every single mind at

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242 the very darkest hours when the Government said they shouldn't have been taking any more loans. These people were saying, "No, we can do it. We can do it. We-can do it." They were the little train that could, if you will. And if they were wrong, and I don't even know that you can find that they were wrong because those intervening events were out of their control., but even if they were wrong, was there not a fair and decent and arguable basis for that optimism? Was there pie in the sky? I guess if you look at Hintz' stuff you would say yes, nobody in their right mind could look at this and think there was anything to be optimistic about. But in fact the overall picture was a whole lot better by far than the Government would lead you to believe, and that's what they believe, and that's why, members of the jury, there just was not any crime here. I think I have — how much time do I have left, Judge Bryan? THE COURT: You have some more time. MR. GETTINGS: I know, but I am trying to budget it. THE COURT: Well, if you are going on a 45-minute schedule you have about five minutes and if you want an hour, you have got until eight minutes after 6:00. MR. GETTINGS: Let me get right to Tate and Curtis. I am not going to try and persuade you that really in order

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243

to convict in this case you have got to believe them. It would take too long. I don't know, I am an advocate. I am supposed to say things like that. I don't think that my leaning on you to that effect would be half as useful as you folks persuading yourself when you really do what I think you are going to do. I have every confidence that you are going to do, you know, hold the Government to its burden and you are going to be thoughtful about all the evidence you heard. You are just not going to say well, it was all there somewhere. They must be guilty and walk out. I don't have a fear in the world as I said that that is what you are going to do. So I am just going to make the statement and then I am going to go into the critical, as I look at it, nature of their testimony. What I am trying to find in my notes — I suspect I can remember — and that is you should keep firmly in mind that the principal thrust of everything that Tate and Curtis had to say was relating conversations whether with one of the defendants or with someone else or which they overheard, that in one fashion or another, were incriminating as to one or more of these defendants and which with two notable exceptions were one-on-one. There is not and has not been, members of the jury, a single person who has come forward and corroborated a

24 4

Page 234 of 248

single bit of testimony that Chris Curtis gave you as to any conversation that he related to you that is part of this case and that incriminates anyone of these defendants. There is not a single bit of testimony that anyone has given you that the Government has brought to you that corroborates Charlie Tate as to any conversation that he overheard coming from or to or relating to- any of these defendants. Not only must you believe them in order to convict these people but you must believe them uncorroborated. You must take their testimony on faith. There is plenty of room for that in the American system of criminal justice, It's done. You have solid people up there where you can look right in the eye and you can respond fairly to questions on cross examination and have no particular axe to grind as to any of the people they are testifying against; and when they come in. and they testify that such and such happens, hey, that's it. You accept it, and juries can act, juries can convict, juries can award damages in civil cases, they can do all sorts of things on the uncorroborated testimony of a single person, but that has got to be a pretty sterling person. You, in order to convict, are going to have to rely on the testimony of two people who I suggest to you are less than sterling. They are moreover openly vehemently hostile to every defendant in this case and certainly you all saw it,

2^45

Chris Curtis in particular as to my client, Will Wertz. You saw Curtis every chance he got, he reached out and tried to put Will

Page 235 of 248

Wertz into something, when no one ever even asked him. He would be relating to Mr. Clark conversation that Mr, Clark was asking him about that related to his client, and was with his client, and right in the middle of that he would pop in with, and ye.s, Wertz was in on that, too. Now, when you see that type of bias and hostility, you have got to weigh very carefully, indeed I would think, whether you are going to take that particular witness1 testimony and convict anybody on it, because again that is what you have to do. Their testimony that incriminates these people are conversations that are uncorroborated and for the most part, that's the way it was devised, except as to a couple of conversations that I will get to in a minute because I want you to also focus on the question that Mr. Clark asked you, which was essentially, can you figure Chris Curtis out, what made him change, do you know where he is coming from, and I hope I can give it all to you in a minute, because when he resigned, quit from the organization in May of 1986, he certainly didn't run to law enforcement with any tales of all the evil deeds that he had been involved in. As a matter of fact when he quit, he didn't go very far. He continued taking money from them. And he continued

24 6

1

to permit his wife to work for them, and he applied to the

2

Federal Government, and he applied to the most among them

3

select and inquisitive investigative agencies in the Govern-

4

ment, the CIA, and he told them where he had worked and he

Page 236 of 248

5

told them how proud he was of what he had been doing in

6

fundraising when he was partly responsible for increasing

7

the revenue from $12 million to $30 million annually. He

S

wasn't hiding anything, because he hadn't done anything. And

9

he didn't give it a care.

10

He didn't even start thinking about it until

11

Mr. Klund comes knocking on the door. He knew what was

12

coming. He knew that there was indeed trouble up the road.

13

There had been that raid. Everyone out there knew it. He

14

was still living out there. And they come in. But he

15

hedges with them. He hedges with them. He doesn't know

16

which way to jump. He doesn't know where this thing is

17

going. And so he tells Mr. Klund some nice things about

18

these people and it kind of gives, oh, it wasn't all

that 1?

bad. These people in balance, in sum, they acted in

good 20

21 22

faith.

Now, you know maybe that closes the book. Maybe Mr. Klund goes away with his Grand Jury subpoena. Indeed,

23

for two or three months, that appeared to be what happened

24

until February 10th. What happens on February 10th? Well,

25

they put Curtis in a room with three or four people. They

247

interrogate him for several hours, a little more comes out, a little more, a little more; he mentions Mr. Levinson incidentally in that conversation, and he tells the law enforcement people that you know, I used to call

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him from time to time just to talk over our techniques. That's the only mention of Levinson. He is visited the next day by Charlie Bryant. Then he is visited a couple more days by Charlie Bryant. Charlie Bryant calls him on the 21st of May and on the 24th of May, Charlie Bryant shows up with a whole bunch of memoranda, statements that he had previously given, all of these interviews from the 10th to the.14th, this big flurry of activity over these two weeks is all on him. Here, read them. Read them over carefully. Make any corrections. He makes corrections. He doesn't expand on the Levinson story in this particular occasion. He signs it. Out he goes, and at this point in time he says, uh huh, it isn't going to go away. And now I got a jump, because he is looking ahead to the day that this whole thing is going to be in a courthouse somewhere. When you are in a courthouse, with those kind of people up there, and you got those kind of people down there, and believe me, it's more preferable to be one of those than one of those. So oomes June, well, he is one of them. And he is writing up notes and he is giving them to Charlie and telling them things they never heard. And this

248

is dynamite. And he is safe, and he is clean; and he stays the witness over there, and those people who he describes, his former colleagues, the people that he had worked with for 14 years, he writes out in a memorandum this will get those sons of bitches. And that's what happened to Charlie Tate and you are going to believe that? You are going to

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convict somebody on the testimony of someone like that? I hardly think so. I tell you, I will give you the one conversation, all of the evidence that there is in this case as to the one conversation that Charlie Curtis, Chris Curtis, and -- Chris Tate, Charlie Curtis — that Curtis could have been corroborated on, the one single conversation that came out of his mouth and his direct testimony where somebody else was; and that of course was the story about the chat with Mr. Yepez after having the meeting in the morning with Mr* Wertz where Mr. Wertz says those loans are going to be paid back. Curtis then goes to Yepez and says, are those loans going to be paid back? And Yepez says no, those loans aren't going to be paid back. And then he goes to Wertz, and he repeats the conversation that he had with Yepez with Mr. Wertz, and Wertz then tells him, well, that's a common practice in the campaign, and so on and so forth. That, of course, is in there for Curtis' purpose to tell you, I alerted management of my doubts and my concerns as early on as October or November 1984. I had this

2'4 9

conversation with Wertz in which Wertz lied to me. The problem with that testimony is, members of the jury, it's a fabrication. It almost got to the witness stand, but it never got there insofar as being corroborated. The one conversation that Chris Curtis unmistakably placed in October or November of 1984, later on down the year, you never heard as corroboration out of the mouth of Mr. Yepez when he testified. He testified about a whole lot of things, but they

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never asked him did he have a conversation with Mr. Curtis in October or November of 1984, and the reason they didn't ask him was because they knew he didn't. And the reason they knew he didn't was the same reason that everyone else knows that he didn't. And it was Yepez was long gone by October or November of 19 84. Yepez cut out in August. The Government knew that that was what lay in store for them, creating that conflict for you all to decide when they decided uh huh, we are just not going to ask that question. But they still want you to believe Chris Curtis. Let me talk for a minute about Charlie Tate. Charlie Tate has a conversation, a single conversation, that in the ordinary course of things could be corroborated. He relates to you and it's an overt act, members of the jury, in the indictment. The Government thinks it's pretty important. They don't have to allege every conversation, every event or

250

anything like that- In an indictment, they only allege the important ones, and they think this one is an important one. It's Overt Act 19, in July or August of 1984 Will Wertz stands up again at one of these morning briefings and he flat out tells everyone there is no such thing as a loan. And it is the policy of the NCLC not to repay loans. Now, he did this.in front of 40 people, according to Curtis. Well, you didn"t have a single one come in and say, yes, I heard that, too- Not a single one. And there was another half to that story which the

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Government did not give you. The Government only gave you the testimony from Mr. Tate, right up to the moment that he was leaving that morning meeting room. They said that's what you heard, and then Mr. Markham's last question was, and was there any reaction from anyone else? And the answer is yes. Nothing further on that issue. Let's go on somewhere else. Now, what the Government wanted you to believe was that was that whole story. Well, on that one, we of course were a little readier for him, because we knew there was more to that story; and we asked him to finish that story under oath, Mr. Curtis, and so he does. Because he is down on record under — somewhere else and he can't get out of telling you about the conversation with Spida, with Mr. Spida, the colleague who he overheard as he tells it to you in times by when he is testifying about it, it's a conversation that

2'51

Mr. Spida could hardly forget. Spida and he have known each other for years, and they couldn't lob that one off as forgetfulness, but clever Mr. Tate said well, I will switch it over, and that will be in over here and how could he ever remember what he ever said. Maybe he will get by that one. But he testifies to that particular conversation that he claims to have had with Spida; and then he goes on and tells about going down and visiting Sandy Roberts. And he tell you that he told Sandy Roberts all about what had happened that morning. He thought Roberts was there, and there was conversation back and forth between he and Roberts precisely on the subject of there is

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no such thing as a loan. It is the policy of the NCLC not to pay back loans. That's what he tells you reluctantly that he and Roberts discussed, and of course what happens after that? Well, Mr. Spida comes in and he contradicts him. He said it just didn't happen. Then Mr. Roberts comes in, same thing. Yes, I had a conversation with him ■ all right, about loans. And remember, Roberts is in legal. He doesn't have conversations with these people with the loan solicitors that often. He would remember that. He'd say, yes, I had a conversation, a couple of months before. It was about something entirely different. All Curtis was doing was wondering is this loan forgiveness okay. I hope you members of the jury don't have any doubt, any illusions,

252

any concerns about a loan forgiveness policy or program or asking somebody, hey, would you please forgive us, if there is anything wrong with that. Well, that's what Roberts' recollection of what Curtis came to him was. He was pretty straightforward about that. Now, what do you have? Well, you have in Tate, a guy who spews forth venom at every chance he gets at everyone of these people, who's been shown to have a motive to lie and now you have him actually lying under oath. That* s Tate. You going to believe anything else he says? I seriously doubt it* The same thing with Curtis. Here you have got a guy who has got a motive to lie, all the motive in the

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world. With him it seems to me it's almost something he seeks out, coming in and thumping all over these people. He has got the motive to lie. He has got the motive to save himself, which he did. Join up forces with the prosecution. I will ride their horse and maybe they are riding his horse. I haven't figured that one out. I don't know whether this is the Government tagging along behind Charlie Curtis or whether Charlie Curtis saw which way the horse was going and he jumped aboard. I really don't know what the answer is. All I will tell you is this, members of the jury. This case is inextricably tied to Charlie Curtis. That is the horse that the Government has chosen to ride. What else

233

or whatever else there is to say about iv. The reason I can say this to you, and I think you are beginning to understand, is because most of what ties the conspiracy case together and what makes it something more than the straightforward case of just the lenders is the venom that comes from Tate and Curtis. If you can, if you could purge all of that stuff from your minds that they spewed forth here and then compartmentalize and fairly consider that case, I would say well, I guess you got a try except for one other thing. This is a mess and you should not have to do that, and we, these defendants, who are entitled to a fair trial, shouldn't have to rely on your ability, your almost superhuman ability to erase from your brains the poisonous testimony of those two people when they began it, when they

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put them on the stand, and when they put both of them on the stand knowing they were liars. The Government knew the problem — THE COURT: Mr. Gettings, we don't need to be shouted at. MR. GETTINGS: I'm sorry, Your Honor. THE COURT: Either back off from that microphone or tone it down. I am not going to have the jury shouted at like that. MR. GETTINGS: I apologize.

254

THE COURT: You have been doing it for 20 minutes. MR. GETTINGS: I wish you had quieted me down before, Your Honor. THE COURT: I believe I should have. MR. GETTINGS: I apologize to you, members of the jury. I am just a little caught up in this, I suppose. The point, though, I think that gets made in that they called him, they knew as to both Curtis and Tate what the other testimony was, what the true facts were. They knowingly took a chance and brought them in front of you and I think by that act they have shown disregard for you, disregard for these defendants; and they ought to suffer the ultimate consequence of you, if you reject their testimony, then rejecting the entirety of the remainder of the Government's case because you can't get their testimony out of your minds. It's impossible. And if you do that, and if you will hold the Government to the burden of proof that the

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law requires you to hold to, and that Judge Bryan is going to tell you you have to hold them to, then I have every ■ confidence in the world that you meinbers of the jury will be able to do the right thing by Will Wertz and the right thing by all the rest of these defendants. And that is to send them home and send them back to where they were on that revenue and loan activity chart at the end of the third quarter of 1988, just a couple of months

25 5

back, and despite all of these glitches along the way, give them a chance to keep going, And the real reason you ought to do that, members of the jury, is because this is probably the only fraud case -that you will ever see or that anyone else in this courtroom has ever seen that is absent one thing. In all fraud cases, you have profit motive. You have people you are trying in one fashion or another to line their pockets. That's the quintessence of fraud. You don't have that here. With people who are trying to line their pockets, you have greed. I cannot remember a fraud case ever being tried where the word greed wasn't argued all over the Court. You haven't heard that from the Government because there is no greed here, will Wertz is not a greedy person. Neither are any of these other defendants. There is no greed. And members of the jury, if you go back to the bottom of it and if you don't find greed, it is impossible to find fraud, and instead of muddling around and wallowing in that thicket, look at the defendants' side of this thing. Give their case a fair shake, too. And send them home. I thank you very much for

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listening. I thank you five times as much because it's obvious I was at a higher decible level and I should have --I am not really used to the microphone. I would just as soon

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do it without the mike* I hope I didn't offend you. I certainly wasn't shouting at you. I was, I guess I was shouting, though. I was raising my voice for emphasis. Again, I was not doing it at you. I was trying to persuade you, too. It1s their turn now to persuade you. Thank you very much. THE COURT: Mr. Reilly? MR. REILLY: Don't I get one, Your Honor? THE COURT; Mr. Reilly, you want to approach the Bench? And the Government. (Whereupon, a conference was held at the Bench with Court and counsel, out of hearing of the jury, and reported as follows:) THE COURT: Mr. Reilly, I am afraid they are not going to pay any attention to what you say at this hour. I am willing to let your argument go over until in the morning. I don't know how much more this jury can absorb. It seems to me more unfair to let you argue and let the Government have all evening to rebut *-■* MR. REILLY: If that is the choice I definitely would like to close tomorrow.

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THE COURT: How long is your argument? These arguments are terribly repetitive. MR. REILLY: About 4 0 minutes. THE COURT: I don't want you to use this evening

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recess to beef that up. I had hoped these arguments would not be long. The only one who lived up to his promises was Mr. Anderson. MR. ANDERSON: Thank you, Your Honor. MR. GETTINGS: I apologize, Your Honor. THE COURT: You were getting worse and worse. I had to stop you. MR. GETTINGS: I wish you had stopped me earlier. THE COURT: I wish I had, too. MR. GETTINGS: I think- it is the mike. I will try not to use the mike. THE COURT; I think we will go over until tomorrow. (Thereupon, the conference at the Bench was concluded, and the following proceedings were held:) THE COURT: Members of the jury, I don't know about you, but I have heard about all the argument I can take for one day. We will adjourn until tomorrow morning. You can only absorb but so much. I don't know about you but I have reached my absorption maximum. I think in fairness to both the remaining defendants and the Government, they ought to get you when you are a little

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fresher than you are now. We will adjourn until tomorrow morning at 10 o'clock. (Whereupon, at 6:10 p.m., the Court was adjourned to reconvene at 10 o'clock a.m., the following morning.)

258 ' CE^TirXCATE OF-OFFICIAL REPORTER COMMONWEALTH OF VIRGINIA ) ) BS,

CITY OF ALEXANDRIA } I, EDWARD DONOVAN McCOY, Registered Professional Reporter and Official Court Reporter for the United States District Court for the Eastern. District of Virginia, appointed pursuant to the provisions of Title 28, United States Code, Section 753r do hereby certify that I was: authorized to report, and did so report in Stenotype, the foregoing proceedings; THEREAFTER, -my Stenotype notes were reduced to typewriting under my supervision; and I further certify that the pages herein numbered contain a true and correct transcription of my Stenotype notes taken herein. DONE and signed, this - - - ^ iL^-^—-____ day of HtAs ' 19if21__' in the City of Alexandria, Commonwealth of Virginia.

EDWARD DONOVAN WcCgSY//KPR Official Court Reporter

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