1 should not be used to justify making a ruling on an issue that is

2 nothing but a red herring.

3 It is clear what the defendant is attempting to do. He
4 wants the jury not to hear relevant evidence. He doesn't want the
5 jury to hear about the Ranch acquisition, or the limousine rides,
6 or the luxury jet purchase. He also doesn't want the jury to hear
7 what his lawyers and senior management were telling him--that he
8 couldn't use client tax money for long-term personal investments.
9 He also doesn't want the jury to hear about the lies he told his
10 employees regarding the source of funds for his ranch and other
11 purchases. He doesn't want the jury to hear about the lies he told
12 the victim companies in order to lull them into a false sense of
13 security. But all of this evidence is relevant to prove the
14 charges in the Indictment.
15 To his credit, the defendant spells out the remarkable
16 ramifications of a decision to declare that In re Hamilton Taft &
17 Co. represents the "law of the case". He wants:
18 1. Defense counsel to be able to refer to monies at
issue, in both opening and closing statements as the
19 property of Hamilton Taft or Hamilton Taft cash
flow;
20
2. The government not to refer to those monies as
21 "client monies" or "client funds" and not to state
or imply that Hamilton Taft held those monies in
22 trust;
23 3. The government not to present evidence of any advice
which Mr. Armstrong received from lawyers or other
24 experts, to the extent that such advice was
inconsistent with the "law of the case";
25
4. The court to instruct the jury that monies, once
26 delivered to Hamilton Taft, became the property of

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1 Hamilton Taft;
2 5. The court to instruct that Hamilton Taft was free to
use its cash flow to cover its operating expense or
3 to invest those monies for its own benefit and in
anyway it wished;
4
6. The court to instruct the jury that Hamilton Taft's
5 sole duties to its clients were those duties stated
contractually but that clients were free to sue for
6 breach, if Hamilton Taft ever failed to live up to
those duties.
7

8 Nothing in the language, logic, or holding of the vacated

9 opinion in In re Hamilton Taft & Co. comes close to justifying such
10 a gutting of the government's case.
11 The defendant's motion to characterize, as a matter of law,
12 the nature of the relationship between Hamilton Taft and the victim
13 clients, in the form of a pretrial ruling should not be granted.
14 The characterization has not been settled as a matter of law. The
15 characterization, even if accepted as "debtor-creditor", does not
16 negate the presence of a fraudulent scheme or support in any way
17 the six conclusions cited above. The characterization would only
18 confuse the jury, leaving them to wonder about the illogical
19 technicalities of the law.
20 II
21 II
22 II
23 II
24 II
25 II
26 II
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1 III. Conclusion
2 For the foregoing reasons, the government respectfully
3 submits that the motion to dismiss be denied and that the Court
4 deny the request to make In re Hamilton Taft & Co. the law of the
5 case.
6 DATED: November 5, 1996 Respectfully submitted,
7 MICH~~J. YAMAGUCHI

unite~ ta~~s i~~/rn:;, . __

By~I{)~
8
9
10 RONALD D. SMETANA
Special Assistant U.S. Attorney
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