[00:00:02] Speaker 01:
The next case before us this morning is 23-1192, United States versus Joseph.

[00:00:40] Speaker 05:
May it please the court.

[00:00:41] Speaker 05:
My name is Elizabeth Franklin Best.

[00:00:44] Speaker 05:
I'm privileged to be here and to argue this case on behalf of Dr. Francis Joseph.

[00:00:49] Speaker 05:
And if I could please reserve about five minutes of rebuttal time, I would appreciate it very much.

[00:00:55] Speaker 01:
And that is on you to try and protect that.

[00:00:59] Speaker 01:
So just be aggressive with us, because we're pretty bad at protecting your time.

[00:01:05] Speaker 05:
Thank you, Your Honor.

[00:01:07] Speaker 05:
So what makes this case very different from a number of other COVID related fraud cases that are currently percolating throughout the federal courts right now is that the events here indisputably occurred in the context of a very highly acrimonious business dispute.

[00:01:23] Speaker 05:
The business dispute very much impacted the way that Dr. Joseph was behaving during this time and offered valuable insight into his mental state at the time that he secured these loans.

[00:01:34] Speaker 05:
This isn't a case, and I think of them as sort of the easy cases where the borrower secures the loans and buys luxury goods or takes extravagant medications where they are ledging fake businesses and fake employees.

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I mean, in addition to spending money here on legal fees and Dr. Joseph's efforts to wrest back control of his business, he was making the same kind of expenditures that he did before.

[00:02:02] Speaker 05:
That is a relatively minor piece of it, though.

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I mean, that was $4,000, $4,500.

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Child support, a minor piece of it.

[00:02:11] Speaker 05:
Well, those are expenditures that he was making prior to all of this, to taking these loans out as well.

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I mean, so yes, he was going out to dinner.

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He was spending it on child support.

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He had a bankruptcy attorney.

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He also had a family court attorney.

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So there were those sorts of expenses.

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Again, what he had been using

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what he had been taking money from the business to support his lifestyle prior to taking these loans.

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Yes, I mean, look, there's no question that the government proved and that Dr. Joseph conceded that he obtained these AAP and the PPP loans, moved them into his personal accounts.

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And he also... And used them for personal purposes.

[00:02:54] Speaker 05:
And he acknowledged that, Your Honor.

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He absolutely acknowledged it.

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But what he believed he was going to... Well, acknowledging it

[00:03:00] Speaker 01:
doesn't mean that it wasn't fraudulent.

[00:03:04] Speaker 05:
No, absolutely, absolutely.

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I mean, this is why fraud is different, right?

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I mean, because it matters what his mental state was.

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And at the time that he was taking these loans, he did so because COVID was wrecking his business.

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Eric Papalini was also wrecking his business.

[00:03:19] Speaker 01:
Well, the evidence on COVID wrecking his business, the jury had evidence before it from which it could have reasonably found that that was not true.

[00:03:29] Speaker 05:
But I think, Your Honor, I mean, I know that there was the one witness who said, oh, there was no decline in the business.

[00:03:36] Speaker 05:
But respectfully, Your Honor, I mean, we don't really know that the jury necessarily fully credited that testimony, because, I mean, the world.

[00:03:43] Speaker 01:
Well, we have to.

[00:03:44] Speaker 01:
I mean, you're arguing that there wasn't sufficient evidence for the jury to find mens rea, right?

[00:03:49] Speaker 01:
For mens rea, correct, correct.

[00:03:50] Speaker 01:
Yeah, and so we have to look and say whether, based on this evidence, there was enough that a reasonable jury

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could find, and so we take the evidence in the light most favorable to the verdict.

[00:04:05] Speaker 05:
Well, absolutely, Your Honor, and so if we just concede that there was absolutely no sort of impact on the business at this time, we still know, because it's part of the public record, that there was this business dispute with Eric Papalini, who, according to the Chapter 7 bankruptcy trustee,

[00:04:27] Speaker 05:
was actually sort of raiding SMA of its funds during this time period.

[00:04:32] Speaker 05:
I mean, and that is something that, you know, is a huge sort of part of this, and this is what Dr. Joseph... Was that a two wrongs make a right argument?

[00:04:42] Speaker 05:
No, not at all.

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Again, this goes back to his mental state, and this is what he was up against at the time that he's taking out these loans.

[00:04:50] Speaker 03:
Don't you have, I mean, don't we have to also look at things like there seem to be some tricky maneuvering with the money?

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opening up various bank accounts, moving the money through them, moving the money through kids' bank accounts.

[00:05:04] Speaker 03:
Doesn't that suggest a mental state of trying to hide something and be fraudulent?

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He was moving the money into other accounts.

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That's absolutely true.

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It's well documented.

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Couldn't a reasonable juror conclude that that was evidence that he was intending to hide things and be fraudulent?

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If the jury had heard the full story of what was happening,

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around this time with the business, then absolutely.

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But I mean, that is sort of the key problem here.

[00:05:34] Speaker 01:
So this is your argument that the court abused its discretion by not allowing more.

[00:05:40] Speaker 01:
By not allowing.

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There was quite a lot that came in that he was in a dispute with his business partner, and that he went in and tried to fire people after he was fired, and he did it because

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he didn't think his firing was valid.

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I mean, a lot of evidence came in, and so you have to convince us that the district court abused its discretion by saying enough already.

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Okay, so let's talk about Dr. Joseph's testimony.

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So when he took the stand to put his defense on the record, the district court judge repeatedly prevented him from going into matters related to his

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this problem with Eric Papalini.

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In fact, within the first five pages of Dr. Joseph's testimony, the trial court judge had shut him down three times.

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Then he enlisted the government to also start interceding to keep this evidence from coming out.

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And so then when Dr. Joseph was trying to... Are you saying that no evidence at all got in on the dispute with Papalini?

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No, some did.

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I mean, some did, but not a fulsome

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I mean, you can't... Can you point to us by verse and phrase on pieces of evidence where there's an abuse of discretion for sustaining an objection?

[00:07:10] Speaker 05:
Certainly.

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So, I mean... You're making it sound like it was pervasive.

[00:07:14] Speaker 05:
I believe it was, Your Honor.

[00:07:16] Speaker 01:
Well, it is true that he was able to testify about the civil dispute with

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Papalini.

[00:07:23] Speaker 05:
He was not allowed to talk about the fact that Papalini was engaged in fraudulent activities with regards to the billing, which is, again, in the bankruptcy complaint that was filed.

[00:07:37] Speaker 01:
Well, he testified he reported Papalini for fraud.

[00:07:40] Speaker 05:
Yes.

[00:07:41] Speaker 01:
I mean, that's on 867 to 68.

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But as you're reading the transcript... And he claimed that Papalini forged documents?

[00:07:51] Speaker 01:
Yes.

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To gain access and exclusive control.

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He talked about the civil dispute.

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He talked about his attempt to fire Papalini.

[00:07:59] Speaker 05:
Well, except that at page of the record, 814, the judge said he did not allow him to talk about Papalini's fraud.

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Then he claimed, we're not here trying a civil dispute between Dr. Joseph and Papalini.

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Then he said, we're not going to get into the details of who was right and who was wrong.

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There were significant limitations on Dr. Joseph's.

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The judge using the judge's discretion was saying, well, let in some.

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There's a dispute.

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You claim fraud.

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But as to the details, ins and outs, enough.

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How is that an abuse of discretion?

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Because again, it did not give... I mean, as a fraud case,

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The main issue here is what Dr. Joseph's mental state was.

[00:08:46] Speaker 03:
My client was being defrauded by his partner.

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He was being put in dire financial straits.

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He couldn't keep his business going.

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So he had to

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go out and seek these funds, and it was all because of so-and-so.

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He didn't really want to defraud the government.

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He was forced into it by Mr. Papalini.

[00:09:10] Speaker 05:
He was seeking the funds at the time when a lot of people were seeking the funds.

[00:09:13] Speaker 05:
But again, part of this business dispute is why there were no funds in the business to begin with.

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That's why there needed to be funds coming in.

[00:09:23] Speaker 02:
But the funds weren't going into the business.

[00:09:26] Speaker 02:
He was taking them away from the business.

[00:09:28] Speaker 05:
Well, this was a part when he was trying to expand the business.

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That's how Eric Papalini got involved here in the first place.

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He made a $250,000 cash infusion, took over control of the finances of the company.

[00:09:39] Speaker 05:
I mean, all of this, I think, was incredibly important in understanding what Dr. Joseph's mental state was at the time that he was securing these loans and the placement of them in the children's bank accounts.

[00:09:51] Speaker 01:
Well, he testified.

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This is what I thought and this is why.

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I mean, the jury was told the perspective of Dr. Joseph about why he was doing this and that he thought that he had a right to do it because of this dispute with Papalini.

[00:10:12] Speaker 01:
I don't, I mean, the trial court, can you point us to a case that basically says you have to have a mini trial on a civil dispute in the middle of your criminal trial?

[00:10:22] Speaker 05:
I mean, I guess respectfully, Your Honor, I mean, I don't think that he was asking to do too much.

[00:10:27] Speaker 05:
I mean, he was asking to admit an exhibit, for example, that showed that somebody else had taken over sort of the stock control of the business.

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I mean, and that is something, again, the bankruptcy judge has found that that information was kept from Dr. Joseph at the time that this was occurring.

[00:10:42] Speaker 03:
So what was your evidentiary basis for getting that exhibit in?

[00:10:46] Speaker 05:
that it was relevant to show that Dr. Joseph really, that something was wrong in Denmark.

[00:10:53] Speaker 05:
I mean, that something was going on here, that these allegations of this fraud with Mr. Papalini were not just paranoia.

[00:11:01] Speaker 03:
Did someone on the other side say, objection, hearsay, lack of foundation?

[00:11:07] Speaker 05:
I believe so.

[00:11:09] Speaker 05:
I mean, they did that quite often.

[00:11:10] Speaker 03:
And what was your response to that?

[00:11:11] Speaker 05:
Your Honor, I really do not recall at the time.

[00:11:15] Speaker 05:
Right.

[00:11:15] Speaker 03:
I mean, there are other evidentiary issues, is my point, with your exhibit, other than the exclusion of relevant evidence.

[00:11:22] Speaker 05:
Understood, Your Honor.

[00:11:24] Speaker 03:
And if I could first, I'm sorry.

[00:11:27] Speaker 04:
Isn't the court's approach of allowing some of this testimony in about the dispute, about the claims of fraud, but then

[00:11:40] Speaker 04:
stopping at one point, and that is too much detail.

[00:11:43] Speaker 04:
Isn't that verified by the fact that the evidence got in that there was a court order in state court?

[00:11:51] Speaker 04:
I mean, doesn't that verify exactly what the district court was doing?

[00:11:56] Speaker 04:
You can do a little, but enough.

[00:11:58] Speaker 04:
There's a court order verifying the appellee taking over and operating, verifying you're being fired, and prohibiting you from

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dealing with the ins and outs of the company.

[00:12:13] Speaker 05:
Doesn't that... The court order was there.

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Despite that court order, Papalini proceeded to take $1.9 million out of that.

[00:12:21] Speaker 05:
But be that as it may, when Dr. Joseph, who started this business back in 2014, believed that he was going to gain control back, did not know that he had been removed as the stock owner.

[00:12:32] Speaker 04:
I mean, these are, again, sort of... So you're saying the evidence indicates he had no idea of the two court orders.

[00:12:39] Speaker 04:
He knew of the court order.

[00:12:42] Speaker 05:
He knew of the court order, but he still believed he was going to be able to get control of the business back because he believed he was the sole owner, the stock owner.

[00:12:52] Speaker 05:
But what happened, and this is what the bankruptcy court, this is why there are about 20 counts against him for fraudulent conveyances, is that Dr. Joseph was purposefully kept from information regarding the transfer of that ownership.

[00:13:08] Speaker 01:
I'm going to warn you of your time.

[00:13:10] Speaker 05:
I'm sorry.

[00:13:10] Speaker 01:
If I could have two minutes back on rebuttal, I would appreciate it.

[00:13:14] Speaker 01:
You've got 2.09.

[00:13:15] Speaker 01:
Thank you.

[00:13:24] Speaker 00:
Good morning, Your Honors, and may it please the Court, John Miolas for the United States.

[00:13:29] Speaker 00:
In this case, a jury convicted Defending Joseph for defrauding two United States government programs

[00:13:35] Speaker 00:
established to help people and businesses in need at the height of the COVID-19 pandemic.

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This court should affirm that jury's conviction and the district court's judgment for three principal reasons.

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First, the trial evidence sufficiently established the defendant's intent on the counts of conviction.

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Second, the district court did not abuse its discretion at trial.

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And third, the district court did not err in sentencing.

[00:14:01] Speaker 00:
Joseph raises seven issues on appeal that they're disposed of in those three buckets which this court generally views with deference to the jury and the district court.

[00:14:08] Speaker 00:
Starting with the sufficiency of the evidence, this court has already articulated there was significant evidence from which a reasonable jury viewing it in the light most favorable to the United States and taking all inferences in that light as this court is bound to do for the reasonable jury to convict the defendant here.

[00:14:29] Speaker 00:
As to some of that evidence, both the AAP and the PPP had numerous false certifications on them at the time that they were submitted, which goes to his intent at the time.

[00:14:40] Speaker 00:
There's also the movement of the funds through different bank accounts, the establishment of a new bank account.

[00:14:47] Speaker 01:
And I believe the argument from Dr. Joseph is that you have to show my mens rea at the time I submitted the application and therefore

[00:14:56] Speaker 01:
you're not allowed to look at any evidence that happened after I submitted that application.

[00:15:03] Speaker 00:
So two responses, Your Honor.

[00:15:05] Speaker 00:
First, that's sort of an artificial limitation on permissible inferences.

[00:15:10] Speaker 00:
The Trammell case shows that misspending of money after the fact, you can infer fraudulent intent prior to that.

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But even if you remove that, there was significant evidence at the time of both applications of fraudulent intent.

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You have, in January of 2020,

[00:15:26] Speaker 00:
the joint action agreement with Papalini, which states that Papalini is in control of the finances and the employees of Springs Medical.

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Then you have the day the CARES Act is passed by Congress on March 27th, Joseph opens up a bank account for Springs Medical, in which he's the sole signatory.

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Then the day after, March 28th, he applies for the AAP funds.

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makes false certifications on the form at the time saying that he's the authorized representative entitled to do so despite the language of the Joint Action Agreement.

[00:16:01] Speaker 00:
And then in the ensuing events leading up to the June PPP application, there's even more evidence from which to infer fraudulent intent.

[00:16:09] Speaker 00:
The Fountainhead application, which he tried in early April to apply for a PPP funds using the employee identification number of Springs Medical,

[00:16:21] Speaker 00:
That was bounced because Fountainhead said there was another application using the EIN.

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And then in June, he goes ahead and changes numerous things on the form itself, including using his social security number instead of the EIN.

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He changes the amount requested, the employees, the form of the business, the address of the business.

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And that was after the May 7th court order.

[00:16:45] Speaker 00:
That was after the mutual firing, but the firing of

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Joseph by Papalini.

[00:16:53] Speaker 00:
So all of this and viewing it in the light most favorable to the United States, plus the movement of the funds and the misspending afterwards, which the Trammell case supports using, goes to show that a reasonable jury certainly could have concluded that he had the requisite mental state on these points.

[00:17:12] Speaker 00:
Moving to the limitation on the defense, there was no abuse of discretion here.

[00:17:20] Speaker 00:
It was well within the bounds of permissible choice on the issue.

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There was no secret that something was wrong in Denmark.

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The jury was well aware that there was civil litigation here.

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It was discussed throughout.

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And he was given Joseph's significant latitude both throughout trial and on his testimony to establish the point that he believed he would regain control of the company

[00:17:48] Speaker 00:
thus lacked fraudulent intent.

[00:17:50] Speaker 00:
He was allowed to testify about the civil dispute.

[00:17:52] Speaker 00:
He was allowed to testify about his attempt to fire Papalini, that his belief that he was allowed to use the federal funds because he was the owner of Springs Medical and that it was his salary.

[00:18:03] Speaker 00:
He talked about how he reported Papalini for fraud.

[00:18:06] Speaker 00:
He introduced documents that he claimed Papalini forged to take over the account.

[00:18:14] Speaker 00:
It certainly is not arbitrary, capricious, or whimsical for the district court to draw a line after all of this had come in.

[00:18:22] Speaker 00:
And the exhibit that we're talking about was on redirect after he had already had the opportunity to establish all of this.

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And even with the very exhibit itself, he was allowed to establish with his testimony what the exhibit showed was that he believed it to be fraudulent.

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So in all of that context,

[00:18:43] Speaker 00:
it can't be said to be an abuse of discretion.

[00:18:46] Speaker 00:
And even more so, even if it was, it's harmless error because that one exhibit only went to one of the certifications on the PPP form, and there are numerous false certifications.

[00:18:57] Speaker 00:
So even if you take out that one certification, there's significant evidence on the form itself of false certifications.

[00:19:04] Speaker 01:
Let me shift your focus for a minute to the lay testimony of the accountant, Mr. Petron.

[00:19:13] Speaker 01:
You know, the government missed its deadline to designate the expert.

[00:19:19] Speaker 01:
They had him teed up as an expert.

[00:19:22] Speaker 01:
And so they just said, oh, well, we'll put him on as a lay witness.

[00:19:28] Speaker 01:
The testimony is a very involved forensic analysis of bank accounts, multiple bank accounts, multiple transactions, and then the application

[00:19:41] Speaker 01:
of a accounting principle called the intermediate balance rule.

[00:19:48] Speaker 01:
I think our case law would say that this was an expert, not a lay witness, and that you can't just put a different hat on your expert and get expert testimony in without complying with the expert deadlines and disclosures.

[00:20:11] Speaker 01:
Tell me why I'm wrong.

[00:20:12] Speaker 00:
Certainly, Your Honor.

[00:20:13] Speaker 00:
So there was no expert testimony at trial.

[00:20:16] Speaker 00:
There wasn't testimony as to a specific funds tracing rule, the lowest intermediate balance rule.

[00:20:22] Speaker 03:
But he applied a specific funds tracing rule to do it, didn't he?

[00:20:27] Speaker 03:
He didn't just get out a whiteboard and some bank accounts and start showing them how it all worked.

[00:20:33] Speaker 03:
He had, in fact, if you use his testimony, it doesn't exactly track how he did everything.

[00:20:40] Speaker 03:
He left out the magic words of his complex accounting techniques.

[00:20:46] Speaker 00:
So, Your Honor, he only used simple arithmetic here.

[00:20:51] Speaker 01:
Well, maybe I'm too simple, but that was a lot of arithmetic.

[00:20:55] Speaker 00:
It was essentially balancing a checkbook.

[00:20:57] Speaker 01:
Well, it was multiple checkbooks, multiple accounts, multiple transactions.

[00:21:03] Speaker 01:
And importantly, there are many ways in which you can look at a bank account.

[00:21:08] Speaker 01:
and trace, and that's what he's doing, he's tracing.

[00:21:12] Speaker 01:
And he picked a accounting method, the intermediate balance rule.

[00:21:17] Speaker 01:
It's not the only accounting method, and he applied that method to come up with his explanation of what happened in those accounts.

[00:21:27] Speaker 00:
So your honor, he didn't actually attempt to, just taking a step back, what happened here was,

[00:21:36] Speaker 00:
We had originally noticed that he was going to use tracing methods.

[00:21:40] Speaker 00:
Joseph objected.

[00:21:41] Speaker 00:
The court held a hearing pre-trial, gave us two choices, a continuance to notice it up and allow him to rebut it, or to proceed to trial on the notion that he could only use pure arithmetic.

[00:21:52] Speaker 00:
And we chose option two.

[00:21:54] Speaker 00:
We readjusted all the exhibits.

[00:21:56] Speaker 00:
And pure arithmetic is all he applied.

[00:21:58] Speaker 01:
He used a method of accounting.

[00:22:01] Speaker 00:
So there had to be some.

[00:22:03] Speaker 00:
Yes, there did.

[00:22:04] Speaker 00:
Addition and subtraction was all he used.

[00:22:06] Speaker 01:
Well, no, he didn't just do addition and subtraction.

[00:22:09] Speaker 01:
He had to apply a judgment of when the withdraws from an account change from his use of his personal funds to his use of the loan funds.

[00:22:22] Speaker 00:
So, Your Honor, a way to think about it, there's no dispute that the withdraws and deposits actually happened, right?

[00:22:29] Speaker 00:
And so his method would apply as such to a simple example.

[00:22:33] Speaker 00:
In the morning of day one, there's $1 of non-government money in an account, okay?

[00:22:40] Speaker 00:
$10 of government money comes into the account, and at the end of the same day, $10 goes out, so there's $1 left at the end of the day.

[00:22:47] Speaker 00:
He would have said, and nobody disputes that those transactions happened, he would have said that of the $10 that went out, at least nine of it had to be government money, and that's just

[00:22:57] Speaker 00:
pure addition and subtraction.

[00:22:59] Speaker 00:
He didn't.

[00:22:59] Speaker 01:
Well, it doesn't always work out that cleanly, as your example.

[00:23:04] Speaker 01:
And there are different accounting methods.

[00:23:05] Speaker 01:
He could have done FIFO, first in, first out, right?

[00:23:09] Speaker 01:
He could have done, what is it, LIFO, last in, last out.

[00:23:13] Speaker 01:
He could have done, I mean, there are theories of accounting that when you hire a forensic accountant, they use in applying math.

[00:23:25] Speaker 01:
And I, you know, we have case law

[00:23:27] Speaker 01:
James River Insurance Company that if a technical judgment was required to select an appropriate methodology to follow the funds, you've crossed over from a lay witness into an expert.

[00:23:41] Speaker 00:
Indeed, Your Honor.

[00:23:41] Speaker 00:
And he didn't use any of those methods that you just described.

[00:23:46] Speaker 00:
So talking about the, I think the two cases here are helpful.

[00:23:48] Speaker 01:
Well, if it was only math, he would have calculated all the loan funds

[00:23:52] Speaker 01:
and he would have calculated all the personal funds and he would have subtracted the personal funds from the loans funds and it would have bounced and said, here's the math, this is what he spent.

[00:24:02] Speaker 01:
That's not what he did.

[00:24:03] Speaker 00:
Essentially it is on a daily basis, right?

[00:24:08] Speaker 00:
And so the Bryant versus Farmer Exchange case and the James River cases are helpful to sort of set the spectrum here?

[00:24:15] Speaker 01:
Well, farmers, we talk about if anyone with a grade school education could do it.

[00:24:20] Speaker 01:
Do you think someone with a grade school education could have done what your witness did in this case?

[00:24:26] Speaker 00:
Respectfully, Your Honor, with time, I think so, because in farmers, they talk about a statistical determination of taking the average of 103 numbers, which involves multiplication and division, whereas here, it's just addition and subtraction.

[00:24:41] Speaker 03:
But it requires assumptions.

[00:24:43] Speaker 03:
He had to make some assumptions and use some rules to make his calculations.

[00:24:48] Speaker 03:
He didn't just have to say, OK, I'm going to add this and subtract that every day.

[00:24:55] Speaker 00:
The assumption being the most conservative possible in favor of the defendant to describe the math that is undisputed and the transfers that are undisputed.

[00:25:05] Speaker 03:
Does it make any difference to you?

[00:25:07] Speaker 03:
What struck me was he began his testimony by explaining that he was a CPA and all these years of experience.

[00:25:18] Speaker 03:
I don't remember all those credentials, but there were a lot of them that are irrelevant if your purpose is to say, our expert's just going to get up here with the whiteboard and show you simple math on how this money was stolen basically by the good doctor.

[00:25:37] Speaker 03:
But instead, it makes it sound like, believe our expert.

[00:25:41] Speaker 03:
in his simple math because he's an expert, our lay witness is actually an expert in the field.

[00:25:48] Speaker 03:
He's a CPA, he's a certified financial analyst, he's a forensic this, he's a this and that.

[00:25:55] Speaker 00:
As your honor recognizes, the rules don't talk about lay and expert witnesses, they talk about lay and expert testimony.

[00:26:02] Speaker 00:
So simply because someone has the credentials to be an expert on certain topics doesn't make testimony, expert testimony.

[00:26:09] Speaker 00:
when it's based on pure math.

[00:26:11] Speaker 01:
And I think important- And just because you call him a lay expert doesn't mean his testimony is lay testimony.

[00:26:19] Speaker 00:
Understood, Your Honor.

[00:26:20] Speaker 01:
And important- Let me assume for a minute that we don't agree with you, or at least some of us don't agree with you.

[00:26:27] Speaker 01:
Is it harmless?

[00:26:28] Speaker 00:
I think there's a harmless argument for sure because the agent traced a lot, not traced, but followed a lot of this money and described what it was being used for.

[00:26:37] Speaker 00:
So some of the testimony was cumulative.

[00:26:39] Speaker 00:
And I also think it's important to consider that this is an abusive discretion standard and the district court was policing its own pretrial ruling here.

[00:26:48] Speaker 00:
If you look at 590 in the record, the district court interjected to ask about the math.

[00:26:53] Speaker 01:
The court interjected repeatedly.

[00:26:55] Speaker 01:
Now you're just doing math here, right?

[00:26:57] Speaker 01:
I mean.

[00:26:58] Speaker 00:
And we also had a sidebar about the exhibits where he confirmed that they only, that we had conformed them to his ruling and respectfully,

[00:27:08] Speaker 00:
the district court was in the best position to police its own ruling was sensitive to this question and repeatedly returned to it to ensure that what was happening was in conformance with its pretrial ruling.

[00:27:20] Speaker 03:
I think that that... Were all the bank accounts, the bank records in evidence?

[00:27:26] Speaker 00:
Yes, the underlying records were as well.

[00:27:28] Speaker 03:
And the agent testified about them and would you agree that the agent testified more in the McHugh-Carson method of tracing than the lay

[00:27:38] Speaker 03:
Witness did?

[00:27:39] Speaker 00:
The agent didn't do the full arithmetic.

[00:27:44] Speaker 00:
He was following certain funds and had more color on what they were used for, given that he had additional insight from interviewing the defendant and looking at the rest of the investigation.

[00:27:54] Speaker 00:
So it wasn't fully cumulative.

[00:27:56] Speaker 00:
They complemented each other.

[00:27:57] Speaker 00:
But there was a lot of overlap in terms of following the funds, which counsels for harmless.

[00:28:02] Speaker 04:
And did the agent's testimony cover both the APP

[00:28:06] Speaker 04:
transaction in the PPP transaction?

[00:28:09] Speaker 00:
Yes, Your Honor.

[00:28:11] Speaker 04:
I see my time is up.

[00:28:11] Speaker 01:
And Dr. Joseph himself admitted to improper transfers of the funds, correct?

[00:28:18] Speaker 00:
He did as well, yes.

[00:28:21] Speaker 01:
All right.

[00:28:22] Speaker 01:
Thank you.

[00:28:22] Speaker 00:
Thank you, Your Honor.

[00:28:32] Speaker 05:
Thank you, Your Honors.

[00:28:34] Speaker 05:
So yes, Dr. Joseph did admit that some of these expenditures were improper.

[00:28:39] Speaker 05:
He also testified, though, that he believed that pursuant to the terms and conditions of these loans, that he would be able to repay them at a favorable rate.

[00:28:48] Speaker 05:
So just to make that... What difference does that make?

[00:28:52] Speaker 01:
If he had false information on his application, you know, it's like the embezzler.

[00:29:00] Speaker 01:
You know, I always intended to pay it back.

[00:29:03] Speaker 01:
It doesn't change the fact that he fraudulently obtained the funds.

[00:29:06] Speaker 05:
Well, but what is characterized as sort of the false certification, Your Honor, I think are characterized based on sort of the government's view of it.

[00:29:14] Speaker 05:
I mean, I think that Dr. Joseph legitimately believed that he had control of this company.

[00:29:19] Speaker 05:
I believe that he believed that he had the authority to get these loans because this had been his business since 2014.

[00:29:27] Speaker 05:
He had run it at a profit.

[00:29:29] Speaker 05:
He was looking to expand.

[00:29:31] Speaker 05:
and then all of a sudden he meets this Eric Cappellini, and he signs this joint agreement, and everything kind of gets taken away from him.

[00:29:38] Speaker 05:
But just to sort of briefly talk about this expert, Mr. Patrone, I'd just sort of point out that he also testified he had two master's degrees.

[00:29:47] Speaker 05:
I believe he also was paid.

[00:29:50] Speaker 04:
And specifically as to count one, the APP transaction, that was almost an instantaneous transfer.

[00:30:00] Speaker 04:
I think even I could do the math on that.

[00:30:03] Speaker 04:
The money of $87,000 come in on day one, and either later on day one or on day two, $92,000 go out.

[00:30:13] Speaker 04:
I mean, there's a deficit in the account.

[00:30:17] Speaker 04:
But it immediately went out, and for not the purposes indicated in the loan, correct?

[00:30:24] Speaker 04:
Well, it went into...

[00:30:27] Speaker 04:
the Medicare.

[00:30:28] Speaker 05:
I'm sorry, Your Honor.

[00:30:29] Speaker 05:
I mean, it went into a child's bank account.

[00:30:32] Speaker 05:
I mean, that's for sure.

[00:30:33] Speaker 05:
And that is because... And that's a problem, isn't it?

[00:30:35] Speaker 05:
He believed that Papalini was stealing the money because Papalini was.

[00:30:39] Speaker 04:
Okay, that's one spin on it, you know, but aren't we supposed to put the spin on it that's in the favors of the government?

[00:30:46] Speaker 05:
I mean, if I could just sort of finish that response, Your Honor, I just...

[00:30:50] Speaker 05:
I mean, this is what I think is sort of the fundamental unfairness of this.

[00:30:53] Speaker 05:
I don't think that the jury heard the full story.

[00:30:56] Speaker 05:
I don't think that they heard everything that they needed to hear about this business dispute that was driving Dr. Joseph's actions in these cases, Your Honor.

[00:31:04] Speaker 05:
Thank you.

[00:31:05] Speaker 05:
Thank you.

[00:31:06] Speaker 01:
We'll take this matter under advisement.