OpenCDA

April 16, 2014

An Opportunity for OpenCdA Readers to Ask Questions

Filed under: Probable Cause — Tags: — Bill @ 2:23 pm

DBSIEarlier today OpenCdA had a new registrant with the username “mkjcrich”.  Shortly thereafter, “mkjcrich” attached this comment to our post titled DBSI Update (Subtitle:  Manipulating Audits):

I was foreperson on this jury and after being discharged found this website. The webhost has done an amazing job offering information and insight into the case. It was a very complex case and the jury took its time dealing with each defendant on each issue. Judge Winmill informed us about Agent Morse’s suicide/death yesterday after we were released. Some of the jurors knew but most did not and a few took the information very hard. If there are any questions that I have the answers to….feel free to ask.

Comment by mkjcrich — April 16, 2014 @ 12:51 pm”

First to “mkjcrich”:  Thank you for your jury service. I hope that it was a satisfying and rewarding experience for you and your fellow jurors.  Thank you also for your nice compliment.

I think as a starter, it would be informative to OpenCdA readers to hear your overall comments and impressions about your jury service in a very serious and complex federal criminal trial.   How would you characterize your overall experience with the federal criminal justice system?  What expectations did you have going into the trial as far as your service was concerned?  How would you characterize the overall performance of your fellow jurors?  If since your release from jury duty you have read or heard news reports of the trial, how would you compare the accuracy and completeness of the news reporting with what you observed as a sitting juror?  Given that this appeared to us to be a complex financial crimes case, how would you characterize the ability of the government to present the admitted evidence in a logical, understandable fashion?  Overall, what most surprised you, what most pleased you, and what most disappointed you about your service as foreperson in a federal criminal jury trial?

Additionally, if as it appeared to us DBSI’s principals started up intending to operate lawfully as a legitimate business but devolved into criminal conduct, what lessons can communities and individuals learn from the admitted evidence to help us identify and avoid becoming victims of companies like DBSI?

11 Comments

  1. Good questions, Bill, I’ll be interested in the answers.

    Comment by mary — April 17, 2014 @ 7:45 am

  2. Mary,

    Feel free to add any questions you would like.

    In her comment #6 to the post DBSI Update: Guilty!, reader Stebbijo linked to this KBOI online article from 2008. In it, KBOI’s Vanessa Brown reported, “Mangiantini says several investors are from the Treasure Valley and Coeur d’Alene.”

    It seems to me there is a local interest side to this story, and it was very disappointing that neither of our alleged local and regional skewspapers, the Coeur d’Alene Press and The Spokesman-Review, has paid much attention to the story. Why not? I can understand not wanting to unduly embarrass local victims, but I also have to wonder if our local and regional skewspapers are protecting some local investment advisors, maybe even some who serve on local boards and foundations.

    Good for the Idaho Statesman for the reporting it did.

    Comment by Bill — April 17, 2014 @ 8:01 am

  3. Now that the trial is over, it was a rewarding and satisfying experience. The Jury took the entire matter very seriously and watching a group of 12 very different people with very different backgrounds analyze the mountains of evidence and come to a just conclusion was fascinating. The jury was made up of a retired teacher, a retired college basketball coach, a machinist, two moms with young children, a Fred Meyer Associate, Idaho Power Lineman, A retired state worker, a social worker, a jury commissioner from Twin Falls, a college student. The pool started with 120 people and after 3 full days of voir dire we were the chosen. The jury quickly became friends and after a couple days of testimony/evidence we were aware of the complexity of the case and that most of the issues were above our pay grade. Complicated spreadsheets, financial statement, cash reports, profit statements……income vs. profitability. Then the witnesses were incredible to listen too….the first was an aerospace engineer that designed the thrust systems for the space shuttle in the 1970s. The US Congressman from Montana, and several Harvard MBAs. With the incredibly smart attorneys on the defense battling the well prepared and able US attorneys, and the string of amazing witnesses it was like watching a movie at times. With 9 attorneys in the room it was like watching whack-a-mole during objections…..nearly every other sentence one of the nine attorneys objected and sometimes 3 or more with different objections….after two week Judge Winmill must have told them to only object if they were willing to side bar because the number of objections dwindled but the sidebars increased to as many as 11 a day.
    The Prosecution artfully brought in evidence and witnesses that helped the jury understand the complex issues…..all of us feel as though we have been well educated on financial matters related to large corporations.

    We found out about Agent Morse’s suicide after the trial and some of the jury was pretty shook up…..and expectedly the juror that initially informed the court about her texting. It would not have changed the outcome because the jury relied very little if at all on her testimony.

    The jury believed that DBSI did not conspire to commit the crimes….they occurred out of the course of bad decision making. DBSI became a victim of the real estate boom and greed. When the SEC loosened the laws regarding real estate investments, capital gains, and non-licensed sales DBSI starting buying up properties millions over market value. When DBSI started losing millions a month and had loaned $250,000,000 to failing tech companies and failed to disclose the losses….that is when the jury determined a crime was committed.

    Need to do some work…..what questions did I not answer and what else would you like to know…..I will add that I was surprised that after the fact this case was not more of a media sensation…..there was over a billion dollars in losses and hundreds of investors lost everything they invested….DBSI was still taking money as late as 9/23/08 knowing they were laying off all their employees on the 24th of September. OpenCDA truly had the best coverage and the most access…The statesman did a decent job but I expected more interest.

    Comment by mkjcrich — April 17, 2014 @ 2:14 pm

  4. mkjcrich,

    OpenCDA always has the best coverage! Best little news blog, read from all around!

    First of all, thank you for the details, we, the newsreaders fail to ever know. The jury sounds fascinating and after reading what I have on some news sites, I think I would have run if I had one of those calls that some of the jurors received. I am not very “obedient.” 🙂

    You stated,”It would not have changed the outcome because the jury relied very little if at all on her testimony.” regarding SA Morse’s death. That is easy to understand since the jury was also presented with mountains of evidence and paperwork to mull over. However, there was an article in the Idaho Statesman that reported about some of the conversations received, but the details were left out of the Judge’s order. This kind of makes me a bit uneasy, wondering who might have called those jurors ect? Can you tell us who knew? Can you elaborate on any of this reporting by John Sowell from the Idaho Statesman? Thank you.

    UPDATE: Judge concludes deceased FBI agent was texting during testimony.

    For instance: “The first juror he questioned, a woman identified as Juror No. 33, said someone told her “she died.” The juror said she put up her hands and told the other person to stop talking. She did not indicate that she knew who the person was talking about.

    Juror No. 7, a man, said he got a phone call from an acquaintance who asked him, “What do you do when you kill off witnesses?” He also didn’t seem to be aware of the whom the caller was talking about.

    “It was a shocking thing. It bothered me that I would get that call,” the juror said.

    Both jurors said they could put aside their feelings about those encounters and continue to fairly judge the criminal case.

    Winmill asked the jurors not to say anything about what they heard to their fellow jurors. He asked all 14 jurors to continue not to discuss the case among themselves until they’re asked to deliberate on it.”

    I kind of envy you, I would have relished the chance to see all that “wack-a-mole” action and without a doubt the testimony from the Congressman out of Montana would have weighed heavily. What kind of testimony did the aerospace engineer give? That is interesting. I also find it interesting that the jury did not believe DBSI “conspired”, but later felt the pressure and begin to slip down that nasty slope. Also, knowing that they were “laying off” employees but still taking the money gives us some more insight.

    Great case, thank you for your work.

    Comment by Stebbijo — April 17, 2014 @ 6:16 pm

  5. mkjcrich,

    Thank you for the fascinating answers and insights.

    You’ve answered my last question as well when you responded that, “The jury believed that DBSI did not conspire to commit the crimes….they occurred out of the course of bad decision making.” So often that proves to be true. People begin businesses with the best of intentions, only to find themselves undercapitalized, professionally unprepared, or unable to adapt to the quickly-changing demands of the job or the market. The jury’s assessment of DBSI’s descent into criminal conduct is reminiscent of the downfall of another convicted criminal: Bernard Madoff. Unfortunately, that’s little consolation for the victims, the investors who tried their best to evaluate the risks and benefits of DBSI and concluded it would be a sound and reasonably safe investment. Which leads to another question…

    Did any of the evidence presented at trial suggest or show that there were intermediary financial or investment advisers between some investors and DBSI, intermediaries who may have failed to diligently represent the interests of their investor clients?

    SA Morse’s mode of death undoubtedly shook the juror who had reported the on-stand texting by SA Morse he or she observed, but that juror was absolutely right in reporting it to the Court. The juror could not have known what action Judge Winmill would take nor could the juror have foreseen SA Morse’s reaction.

    Comment by Bill — April 18, 2014 @ 7:20 am

  6. I found this article this morning.

    Comment by Stebbijo — April 18, 2014 @ 7:21 am

  7. Stebbijo,

    Thank you for the link. I fixed it and edited it, too. I’m very, very happy that Mr. Richmond chose to speak to KTVB and to recount the jurors’ experiences. His comments should reassure the public of the importance of diligent, attentive jury service, and I’m glad KTVB included an explanation of the stresses and strains on the jurors. Too often people minimize the importance of jury service, and worse, they demean the jurors who have committed to serve. The performance of the DBSI jurors explains why appeals courts are so reluctant to overturn jury verdicts. The DBSI jury heard the admissible evidence and arrived at very reasonable verdicts. While the defense may raise procedural or legal issues beyond the jury’s control if there is an appeal, I’d be very surprised if an appeals court found that the jury in this trial committed any improprieties or delivered any unsupported verdicts.

    In one of my earlier DBSI posts I included a link to Judge Winmill’s curative Memorandum Decision and Order filed 04/08/14. I am so glad that his introduction included this from the Geders decision:

    “A criminal trial does not unfold like a play with actors following a script; there is no scenario and can be none. The trial judge must meet situations as they arise and to do this must have broad power to cope with the complexities and contingencies inherent in the adversary process.”

    Comment by Bill — April 18, 2014 @ 7:26 am

  8. Regarding who called the jurors and the Statesman’s reporting: One of the jurors went into a friend’s business after jury duty on March 20th and the shop owner blurted out “she died”…the juror asked who died and the shop owner said the FBI agent…the juror immediately told her to stop talking about it. She told the judge about her exposure to the issue and he felt she could continue. Another juror was driving back to Twin Falls after Court on March 21, 2014, when he got a call from a friend….when he answered the friend asked if the “defense was now killing off witnesses”. The juror asked what he was talking about and the caller said the agent committed suicide. That juror stopped the conversation and told the judge with the same result. The judge voir dired each of us individually and nobody else had heard. This jury was impressive that it took the judges admonition to avoid all media very seriously….the dedication became clear when the Judge told us about Agent Morse and the shocked and dismayed reaction of all the jurors. As foreman one of the jurors that knew came to me mid-deliberation and asked if he could divulge information about one of the witnesses to the rest of the jury. We were discussing agent’s Morse’s testimony. I asked him if the information was provided in the trial and if it was relevant and he said it was not provided in trial but he felt it may be relevant in weighing some testimony. I told him if it wasn’t in the trial we could not consider it so we are better off not knowing…..it never came out until after the trial.

    Testimony of Aerospace Engineer: The defense took the position that this witness started the ball rolling in the criminal trial. The witness realized early on that his investment properties were doing extremely poorly early on and he realized that if his properties weren’t making money there were likely other failing properties and the money would stop eventually. He inquired to DBSI about how the entire portfolio was doing and DBSI started giving him the runaround. The witness started a website and contacted all the investors he could find to gather their property information. He put a chart together that was clearly disturbing for any investor that saw it…DBSI was aware of the website and in fact held meetings on how to deal with the website and all the questions that were coming in from investors that were part of the engineer’s “group”. The engineer flew to Boise for answers and he was told everything was fine and that the Portfolio was profitable overall. This was untrue…the portfolio was losing $8million a month and DBSI was upside down $250million.

    As far as intermediaries and due diligence firms….The main firm that “validated” DBSI’s offerings was Mick and Associates. Mick was a due diligence firm that would review the offerings and approve or disapprove them for sale. We never heard from Mick and Judge Winmill said he expects Mick is the defendant in millions of dollars of lawsuits and will likely be out of business. The Judge added that there are hundreds of lawsuits against individual due diligence officers with all the firms that did business with DBSI.

    Anything else anyone is curious about?

    Mark

    Comment by mkjcrich — April 18, 2014 @ 8:37 am

  9. Mark,

    Thank you for the very detailed answers!

    Comment by Bill — April 18, 2014 @ 8:57 am

  10. Bill,
    Your website/blog is fantastic and I am glad I found it….I will share it with like minds!

    Mark

    Comment by mkjcrich — April 18, 2014 @ 9:03 am

  11. Incredible stuff, Mark. Thank you.

    It is my opinion and many may not agree with it but I will say it anyway. After thinking about SA Morse’s death, I believe her texting was an anomaly that no one saw coming. It just happened and I can see where there would be concern and thusly, it melted into the trial. I don’t think her alleged suicide had anything to do with the texting. However, I don’t have enough to believe that she actually committed suicide, I just don’t think she did. But, we may never know, otherwise. Without a doubt, the juror who reported the texting would be devastated.

    Mark’s comments are very helpful and I am all the more satisfied with the verdict. We were very lucky to have him on this jury.

    Comment by Stebbijo — April 18, 2014 @ 6:08 pm

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