The DOJ has hit back at Mark Scott’s motions in limine, labeling them a
transparent attempt to whitewash the trial of the defendant’s criminal conduct and curtail significantly the Government’s ability to introduce relevant evidence.
Below are the main arguments Scott’s attorney put forth that the DOJ object to.
Referring to people who were financially harmed by OneCoin as victims
Scott wants the DOJ banned from referring to OneCoin victims as… well, victims.
The DOJ argues that ‘use of the term “victim” at trial has been widely approved‘, and cite a number of cases in support.
Furthermore that DOJ states that upon proving the allegations that Scott engaged in a conspiracy to launder proceeds of OneCoin, they are entitled to use the term victim
to refer to an individual who invested money in OneCoin based on multiple misrepresentations and falsehoods.
Testimony from OneCoin victims is necessary
Scott want to remove any mention of financial harm inflicted by OneCoin on its victims at trial.
The DOJ argues that
the defendant’s assertion that the “need for actual investor testimony is limited at best” is nonsensical.
Such testimony represents direct evidence of the underlying wire fraud scheme.
Moreover, the defendant’s motion, which fails to cite a single case in support of his position, is unsupported by the law.
As a compromise the DOJ suggests they might consent to Scott’s demand, if he stipulates that OneCoin was a fraudulent scheme (during the time of his alleged conduct).
The principal element of wire fraud is a scheme to defraud another out of money.
The most fundamental evidence of any such scheme is testimony from victims demonstrating that they were defrauded.
The DOJ reveals they intend to call on two OneCoin victim witnesses.
When these OneCoin victims testify, they may properly discuss who they are, how they were persuaded to invest in OneCoin packages at various prices, which packages they purchased, how and when they became aware that their investment was lost, and, at a high level, the effect that loss had on them financially.
The DOJ states these details are important, because what Scott earned for laundering for OneCoin was ‘sourced directly from the purported investments of OneCoin victims.‘
One of the victims will testify that he wired thousands of dollars for a OneCoin package purchase to a German entity, which in turn sent millions of euros directly into (Scott’s) fraudulent investment funds.
Thus, there is a very direct connection between victim’s purported investments and the (Scott’s) money laundering operation.
Testimony from an intended victim who didn’t invest is relevant and admissible
Mark Scott argued in one of his motions that anyone who didn’t invest in OneCoin shouldn’t be able to provide testimony.
The DOJ plan to use testimony from one such individual, to demonstrate
- OneCoin was marketed as an “invest and get rich” scheme via false comparisons to bitcoin (evidence of wire fraud); and
- Scott “knew or consciously avoided learning about OneCoin’s fraudulent nature”.
How Mark Scott spent stolen investor funds he received as compensation
Scott is adamant the jury shouldn’t be told how he spent funds he received from OneCoin.
The DOJ argues this is relevant, because it is
- direct evidence of the charged conspiracies;
- necessary to show that Scott owned and controlled certain funds that he received as his cut for participating in the charged conspiracies; and
- it is relevant to establishing Scott’s intent to commit the charged crimes.
The DOJ puts forth that while Scott worked as an attorney earning “hundreds of thousands of dollars per year”, this paled in comparison to what OneCoin paid him.
Scott is believe to have begun laundering for OneCoin in 2016, after which he began spending big.
- in October 2016 Scott splashed $2.85 million on the Massachusetts mansion he and his wife resided in
- in November 2016 Scott splashed another $245,269 on a Ferrari
- in February 2017 Scott attempted to route $850,000 for the purchase of another property, but the transaction fell through
- in March 2017 Scott splashed $1.31 million on a Sunseeker yacht
- in September 2017 Scott splashed $3.76 million on another Massachusetts mansion
- in November 2017 Scott purchased yet another residence with a third-party for an undisclosed sum
In each instance the DOJ alleges Scott routed funds through Fenero Funds, MSS International Consultants and/or his lawyer.
The evidence at trial will show that each of the purchases described above, and other similar purchases, was paid for with OneCoin fraud-scheme proceeds.
To the extent Fenero Funds and MSS International Consultants was used, the DOJ argues Scott used ‘the same money laundering concealment tactics‘ as he did to launder OneCoin investor funds.
Scott used an elaborate series of financial transactions (sometimes referred to as “layering”), including purported “loans” that were in fact never repaid, and transfers through attorney trust accounts, to hide the source of money that directly funded the purchases of real property, cars, and other luxury items.
The DOJ argues that Scott’s spending of the proceeds of a crime is evidence of his ‘motive and intent for committing the crime‘.
Not withstanding, the DOJ also asserts Scott using the Fenero Funds for his own personal gain demonstrates they were “not legitimate investment funds”.
The transactions often served no apparent purpose other than to deliberately hide the origin of the money.
The stated purpose of the Fenero Funds, as represented to banks by Scott, was to “invest in the financial services industry in Europe”.
The fact that Scott was paid such an enormous sum of money, despite not earning any profit for his supposed “investors,” is highly probative of whether the purported investment funds were legitimate, or were instead being used to facilitate money laundering.
This ties back to Scott’s intent, which the DOJ predicts “is going to be (a) particularly contentious (issue) at trial”.
The Government therefore intends to rely on evidence pertaining to Scott’s purchases of the Property to help explain to the jury why the defendant would be willing to risk his reputation and livelihood, when he was already financially successful, by engaging in criminal activity.
Showing that the defendant earned a substantial sum of money would only be half the story, and would provide the jury with an incomplete view of why the defendant would engage in criminal activity.
Rather, showing the jury how the defendant used the very money he got from his participation in the charged conspiracies, would provide the jury with a complete understanding of why he would commit such serious crimes despite his prior financial success.
Such evidence would also be relevant to rebut any argument by the defense that Scott had no reason to commit the charged crimes given his education, job status, and prior wealth.
Expert testimony from a money laundering expert is relevant in a money laundering case
Scott has argued that the DOJ calling on a money laundering expert for testimony is “not necessary”.
The DOJ argues that the testimony
will be critical to the jury’s ability to interpret and understand the evidence presented at trial regarding the defendant’s sophisticated money laundering operation.
Indeed, even though I myself have written hundreds of articles detailing OneCoin’s fraud, tracking and reporting the various components of the scheme is headache-inducing at times.
How can laypeople in a jury be expected to comprehend the extent of OneCoin’s money laundering operations based on copious amounts of evidence alone?
That evidence has to be put into context, and that’s where the money laundering expert witness testimony comes in.
In this case, Mr. Semesky’s expert testimony will address, among other matters, the various stages of money laundering, the use of shell companies and associated bank accounts, the layering of funds through a series of bank accounts and financial institutions, including through offshore banks, and the use of falsified documentation to disguise the true purpose of transactions.
That testimony is critical to assist the jury in placing evidence regarding the purported investment funds at issue in this case in context, and assessing whether or not those investment funds were legitimate (as the Government expects Scott will argue) or merely vehicles to launder OneCoin fraud proceeds.
It seems beyond silly to have to explain that, but here we are.
Pending a decision on Scott’s motions in limine, stay tuned.