United States v. Riesterer (224 F. Supp. 3d 1156, 2016)

ORDER ON FINDINGS OF FACT REGARDING LOSS AND RESTITUTION

William J. Martinez, United States District Judge

Following an evidentiary hearing on December 1, 2016 (see ECF No. 181), the Court has reached findings of fact and conclusions of law in regards to the sentencing of this Defendant, as set forth below.

I. PROCEDURAL BACKGROUND

Pursuant to a Plea Agreement, Defendant Donald Leonard Riesterer (“Defendant” or “Riesterer”) pled guilty on August 3, 2016 (ECF No. 157) to a single-count Information for violation of 18 U.S.C. § 1343 (wire fraud) & 2 (aiding and abetting) (ECF No. 155). .

Both in the Plea Agreement, and when the Court accepted Riesterer’s plea, the parties identified certain factual disputes related to sentencing, primarily bearing on the calculation of restitution and the calculation of loss under the Sentencing Guidelines, U.S.S.G. § 2Bl.l(b). Accordingly, the Court scheduled an evidentiary hearing on “all disputed facts relevant to sentencing” (ECF Nos. 157, 171), which took place on December 1, 2016 (ECF No. 181). At the hearing, the Government called three witnesses including FBI Special Agent Brian Blauser, and victims M.D. and S.W. In addition to testifying himself, Riesterer called three witnesses: Edward Luna, Antonio Blanco, and Amy Ramsey. Messrs, Luna and Blanco both worked with Riesterer on certain efforts related to the “CD monetization” portion of the fraud scheme, as described below. Ramsey was Riesterer’s assistant or secretary.

II. FINDINGS OF FACT

Initially, the parties agree that the elements of the offense to which Riesterer has pled guilty are: first, that Riesterer devised, intended to devise, or knowingly participated in a scheme as stated in the Information; second, that he acted with specific intent to defraud; third, that he transmitted something by means of wire communication in interstate commerce or caused another person to do so for the purpose of carrying out the scheme, and fourth that the scheme employed false or fraudulent pretenses, representations, promises, or omissions that were material. (ECF No. 158 at 4.)

The parties also agree and have stipulated that there is a factual basis for Ries-terer’s guilty plea, as set out in the Plea Agreement. (Id. at 5.)

A. Stipulated and Undisputed Facts:

The following findings of fact, principally drawn from the Plea Agreement, are stipulated or not in dispute. In some instances they reproduce facts and statements from uncontroverted documents in evidence or undisputed testimony,

1.Purported NRI Stock Investment Fraud

1. At all relevant times, Riesterer controlled two companies: Northwest Refining Inc. (“NRI”), and Northwest Financial Group, Inc. (“NFGI”). (Id. at 6.)

2. At all relevant times, Riesterer resided in Minnesota and Wisconsin. (Id.)

3. Beginning in 2000, NRI owned real estate in Roswell, New Mexico on which a metals processing plant was located (the “New Mexico plant”). (Id.)

4. The company associated with the New Mexico plant, NRI, was administratively dissolved by the Minnesota Secretary of State’s Office in 2005 and remained dissolved until April 2010. (Id.)

5. In early 2010, Riesterer’s co-defendant, Daniel Jay Bussema (“Bussema”), began promoting investments in NRI. (Id.)

6. Bussema provided prospective investors, including M.D., S.W., and C.B., with a “Confidential Limited Offering Memorandum,” (the “Memorandum” or “Offering Memorandum”), which purported to offer shares of common stock in NRI to be sold for one dollar per share. (Id.)

7. Another individual, Jerry Shuman (“Shuman”) was involved with Bussema in developing and promoting the Offering Memorandum. At the evidentiary hearing, Riesterer described Shuman as “a gentleman who I had invested a bunch of money with in New Mexico in the late 90s... 96, 97, 98.. .as he was trying to get [the New Mexico] plant running.” Several communications between Shuman and Bussema were introduced into evidence and demonstrate that beginning in approximately February 2010 Shuman was providing Bussema with information to include in the Offering Memorandum. (See, e.g., Exs. A40-43, 45.)

8. The Memorandum stated that the shares to be offered were unregistered securities pursuant to Rule 504 of Regulation D under the Securities Act of 1933. (ECF No. 158 at 6.) The testimony and evidence at the hearing also established that individuals involved in this case commonly referred to this as “Reg D” and also referred to the Offering Memorandum by using this shorthand.

9. The Memorandum stated that NRI’s “principal offices” were at the plant in New Mexico. (Id.).

10. The Memorandum identified Riesterer as the founder and an officer and director of NRI. (Id.; Ex. 4 at 65, 76; Ex. A47 at 9, 20.)

11. The Memorandum also identified Shuman as a company officer, along with Riesterer’s secretary, Amy Ramsey (“Ramsey”). (Ex. 4 at 65, 76; Ex. A47 at 9, 20.)

12. The Memorandum asserted among other things, that “[t]he specialty of the company is in processing gold from ore,” and that NRI was poised to develop “a more efficient and effective means of capturing a maximum amount of gold,” and “plans to market their equipment and proven processes on a global basis within 2010.” (ECF No. 158 at 6-7.) The parties stipulate that these claims were false. (Id. at 6-7.)

13. The Memorandum further stated that the proceeds generated by sales of shares would be deposited into an “Escrow Account with the Law Firm of [J.B.], Esq.” (Id. at 7.) Further, the Memorandum stated that when the proceeds reached $75,000, the money “will be released from the escrow account and utilized by the Company [NRI].” (Id.)

14. Shuman sent Riesterer a copy of the Offering Memorandum on February 11, 2010. (Ex. A47.)

15. In approximately March 2010, according to Riesterer, Shuman sent him an offer to purchase the New Mexico plant for $900,000. In addition to testifying about this attempted contract, Riesterer put into evidence a written contract offer evidently signed and transmitted by Shuman on or around March 8, 2010, but not executed by Riesterer. (Ex. A40.) Riesterer did not claim he ever completed such a contract and did not present evidence that he had done so.

16. A later addendum to the Memorandum promised investors a 15-to-l investment return. Specifically, the addendum stated that NRI “has provided certain assurances regarding further security for shareholders,” one of which involved a “Certificate of Deposit.” The addendum explained that “the implementation of this instrument shall provide a means by which in the event that [NRI] is not successful in the endeavors set forth .... The Company ... shall authorize the monetization of said instrument and upon completion of this action will redeem shares purchased within this Offering. ... no later than October 1, 2010 .... The buyback redemption amount for investors will be $15.00 per share.” (ECF No. 158 at 7-8; Ex. 4 at 85.)

17. As relevant here, three individuals (victims) invested. (ECF No. 158 at 8.)

18. The first victim was M.D., then a resident of Estes Park, Colorado. (Id.) M.D. had been introduced to Bussema in March 2010 by a friend, who went by the alias Celetha Ryos (a/k/a Celetha Ryan) (“Celetha”). (Id.)

19. After discussing the potential investment with Celetha and with Bussema, and having considered the Memorandum, M.D. invested initial sums in the purported NRI stock offering totaling $20,000 ($5,000 on March 26, 2010; $5,000 on April 1, 2010; and $10,000 on April 15, 2010). (Id.)

20. The above funds transferred by M.D. were sent to an account that Bussem a represented was an escrow account controlled by Attorney J.B., as described in the Offering Memorandum. (Id.)

21. S.W. and C.B. were both introduced to Bussema by M.D. and thereafter became victims in this case as additional “investors” in the purported NRI stock offering. (Id at 9.)

22. S.W., a Colorado resident, transferred $30,000 into the same purported escrow account to which M.D. had sent her funds: $15,000 on April 16, 2010 and another $15,000 on May 10, 2010. (Id. at 9.)

23. C.B., a Georgia resident, transferred $10,000 to the same purported escrow account on May 11, 2010. (Id. at 9, 18.)

24. In April 2010, M.D. learned through an Internet search that NRI had been administratively dissolved as a Minnesota business entity. She brought that fact to the attention of Celetha, who in turn informed Bussema. (See id. at 8.)

25. On April 14, 2010, Ramsey, Riesterer’s assistant, acting at Riesterer’s direction, undertook to have the company returned to good standing. (Id.) M.D. received a copy of the certificate of good standing and transferred her $10,000 investment the next day. (Id.)

26. On May 10, 2010, Riesterer transferred ownership of the New Mexico property to third party other than Shuman. Riesterer claims this sale was “conditional” or subject to some form of agreement that Riesterer and/or Shuman would “buy back” the property following this sale. (See, e.g., Ex. B58.) However, the transfer was accomplished by a warranty deed signed by Riesterer (and notarized by Ramsey) on May 10, 2010. (Ex. 30). On May 11, 2010, the buyer of the property completed the transaction by transferring $50,000 to a Riesterer-controlled bank account held in the name of NFGI (“NFGI Account”), (EOF No. 158 at 9.) There is no evidence that a “buy back” agreement was actually concluded or that Riesterer ever actually attempted to repurchase the property.

27. As of early May, 2010, M.D. was considering making another, larger “investment” in NRI stock. Before doing so, she wanted to speak to Riesterer, who she understood to be the owner of NRI. (Id. at 8.)

28. M.D. called Riesterer’s office in the morning of May 11, 2010 and left a message. Riesterer returned her call later that day. M.D. was in Colorado, while Riesterer was in Wisconsin. (Id.)

29. The following facts are stipulated regarding the May 11, 2010 phone call:

a. At least one other person was on the line with Riesterer. (Id.)

b. M.D. explained to Riesterer that she was considering a $100,000 stock purchase in NRI and wanted confirmation that, in offering NRI stock, Bussema was in fact acting on behalf of NRI. (Id.)

c. M.D. was told that about 100 tons of ore were at the New Mexico property and that after becoming operational, the New Mexico plant would produce almost pure gold. (Id. at 9.)

d.Riesterer did not tell M.D. that he had transferred the New Mexico property by way of a warranty deed the day before.

30. Believing what Riesterer had said on the May 11, 2010 call, and unaware that ownership of the New Mexico property had been transferred by NRI the day before, M.D. made her additional “investment,” transferring an additional $100,000 to the purported escrow account on May 13, 2010. (Id. at 9.)

31. No one informed S.W. or C.B. of the May 10, 2010 transfer of ownership of the New Mexico property by NRI. (Id. at 9.)

32. In total, M.D., S.W., and C.B. sent a total of $160,000 to the purported escrow account. (Id. at 10.) Of that total, $60,000 was sent on or before May 11, 2010 (the day of the phone call between Riesterer and M.D.) and $100,000 was sent after that date by M.D. (The amounts and dates of these transfers are reflected on lines 1-7 of the Government’s Exhibit 1.)

33. The account to which M.D., S.W., and C.B. transferred funds was not an escrow account. J.B., the attorney identified in the Memorandum as controlling the account, actually had no affiliation with it. (EOF No. 158 at 10.)

34. The purported escrow account had in fact been opened by Bussema at a bank in Michigan on March 25, 2010 (one day before the first “investment”), in the name of NRI. (Id. at 10.)

35. M.D., S.W., and C.B. received no earnings on the “investments” that they transferred to the “escrow account” in connection with the purported NRI stock offering. The principal amount of these “investments” Aj/as never returned. (Id.)

36. Bussema transferred $16,500 of the monies he received from M.D., S.W., and C.B. to “Celetha” as a commission. (Id.)

37. Following demands by Riesterer, Bussema transferred a total of $28,000 of the monies received from M.D., S.W., and C.B. to a bank account controlled by Ries-terer in the name of NFGI, including $3,000 sent May 28, 2010 and $25,000 sent June 16, 2010. (Id.)

38. Bussema used the remaining funds transferred by the three “investors” for his own personal purposes. (Id.)

39. Neither Riesterer nor Bussema used any of the monies transferred by the three “investors” as represented in the Offering Memorandum. (Id.)

40. None, of the monies transferred by the three “investors” were used as promised on the May 11, 2010 telephone conversation with M.D. (Id.)

41. Neither Riesterer nor Bussema used the monies transferred by the three “investors” to further NRI’s business. (Id.)

42. Riesterer used the $28,000 transferred by M.D., S.W., and C.B. in response to the NRI Offering Memorandum to pay bills, re-pay personal debts, send money to his ex-wife, pay his assistant (Ramsey), buy gasoline, pay for meals, and for other personal expenses. (Id.) Put another way, Riesterer did not return the money he received from Bussema to M.D., S.W., or C.B.

43. At the evidentiary hearing, the Government presented evidence through Special Agent Blauser that Bank records show a total of approximately $110,000 moved from Bussema to Riesterer beginning in May 2010 and continuing through 2012. Bussema also informed the FBI that he delivered an additional $10,000 to Riester-

er in cash. Riesterer did not contest these facts and the Court accepts them as proven.

44. On June 10, 2010, Riesterer e-mailed Bussema stating, inter alia, “If I do not hear from you first thing tomorrow morning, I will take steps to find out what is really going on with my Reg. D. this is complete BS and unprofessional as all hell. The agreement I have signed with you says after the first 75k we have access to the cash.” It further stated “Now you don’t answer my calls, or texts? ?” (Ex. 27.)

2. Stipulated and Undisputed Facts Regarding “CD Monetization” Fraud

45. Riesterer also told M.D. that his other company, NFGI, had a $500 million Chase Manhattan Bank certifícate of deposit, the beneficiary of which was a pension fund in Argentina. (ECF No. 158 at 10-11.)

46. The supposed Argentinian pension fund was allegedly represented by an individual known as Roberto Kling (“Kling”). (Id. at 11.)

47. Riesterer eventually produced three versions of the purported certificate of deposit to M.D. and C.B. Each of the three was a single page marked “International Certificate of Deposit.” Each stated that it was from “Chase Manhattan Bank” and that the “depositor’s name” was “Northwest Financial Group, Inc.” The first certificate said its “date of issue” was January 22, 2009, the second said July 31, 2009, and the third July 8, 2010. The first and second versions of the certificate of deposit each said that the “Principal Amount” was $500 million, while the third version listed an amount of $558 million. (Id.)

48. In fact, Chase Manhattan Bank had not issued any of the purported certificates of deposit. Indeed, Chase Manhattan Bank did not exist as of the 2009-2010 dates listed on certificate(s) of deposit, but had become JP Morgan Chase Bank in 2001. (Id.)

49. The parties also agree that Kling did not actually represent the entities with which he claimed affiliation. Riesterer takes the position that Kling was “the true fraudster in this case,” and also now acknowledges that Kling had been convicted of a federal felony in Florida in the early 1990s. (ECF No. 175-1 at 9,10.)

50. From Riesterer’s evidence, it appears he first contacted Kling in January 2009. (See Ex. B43 (Jan. 5, 2009 e-mail from Riesterer to Kling: “I would like to borrow [$]5,000,000 from you for a check cashing operation in California.”).)

51. Riesterer then recruited a bilingual friend and business associate, Edward Luna, to assist him in dealing with Kling, as Mr. Luna described at the hearing.

52. Riesterer, or Luna acting on his behalf, commissioned a background investigation or report on Kling. On January 8, 2009, Luna received a copy of this report (Exs. 25 & 26.) The report contained the following information regarding Kling:

a. As to Mr. Kling’s identified address, he “ha[d] not lived there for the past four (4) years, and it was not possible to determine a real residence in the Republic of Argentina for Mr. Kling.” (Ex. 26 at 2.)

b. As to a foundation and credit union that Kling claimed to head, the investigation could not confirm their existence. Regarding several possible matches in official records the report stated “it cannot be detei’-mined if there is a relationship with Mr. Kling with any of these organizations from the official registries.” (Id. at 3.)

c. As to the address given for the alleged foundation and credit union: “It is not possible for a foundation to function there, or a credit union[.]” (Id. at 2.)

d. “[Kling’s] business history indicates unpaid debts ...” (Id. at 4.)

e. “He does not have any bank accounts or credit cards in his name.” (Id.)

f. In investigating another identified business address, “It was not possible to obtain any information regarding Mr. Kling.” (Id.)

g. The report identified three prior lawsuits for debts, one that resulted in Kling being ordered not to leave the country. (Id.)

h. The report also identified a criminal history for Kling including arrest for “repeated fraud,” another arrest for “penal code falsification of documents,” and an entry for “Detention—(Resisting Arrest) ... Fraud Use of a False Private Document in Formal Setting with Litigation Fraud Intent.” (Id. at 5.)

53. Thereafter, Riesterer and Luna traveled to Argentina to meet Kling. Luna described this trip in his testimony. Among other things, he testified that they saw the “original” of the certificate of deposit in Argentina, noting it was on “yellowish ... old looking paper.”

54. Beginning in January 2009, documents submitted by Riesterer reflect that he, Luna, and/or his company NFGI or other Riesterer companies contemplated and/or entered into one or more contractual agreements -with Kling or within companies affiliated with Kling. (See, e.g. Exs. B44, B47.) One of these, dated February 9, 2009, states that Riesterer and Luna “wish to form a business relationship in order to perpetuate the creation of financial instruments.” (Ex. B47.)

55. One copy of the alleged certifícate of deposit put into evidence by Riesterer was evidently transmitted to him or to NFGI on or around January 22, 2009, accompanied by an “affidavit” from a Kling associate (Norge Dagotto). The affidavit leads, in bold face type, with the subject line: “Re: Not a STING operation,” and further declares that “the Bank Financial Instrument ... will be of an authentic nature,” and that Dagotto and Kling “are no[t] agents of the US Government, nor of any investigative organization, and certify that this transaction is not in any way a part of sting operation instituted by any government authority, or organization of the US Government, no[r] any other world governmental body.” (Ex. B45.) Riesterer admitted this document into evidence with no explanation of why such Nixonian reassurances were offered in connection with the certificate of deposit, within weeks of his first contact with Kling.

56. On January 29, 2010, Riesterer received an e-mail from a company called Selective Properties, LLC with which he had evidently made inquiries regarding the certificate of deposit. Among other issues raised in this email, the sender asked “Chase Manhattan is now JP Morgan Chase .... Why is this document on CHASE MANHATTAN documents?” and noted that the CUSIP number shown on the certificate of deposit “is not registered with the CUSIP Service Bureau.” (Ex. B46.) Riesterer did not introduce evidence showing any response to this e-mail or its inquiries.

57. Riesterer misrepresented to M.D. that the certificate of deposit could generate money through a process Riesterer referred to as “monetization.” (ECF No. 158 at 11.)

58. Riesterer misrepresented to M.D. and J.B. that before “monetization” of the purported certificate of deposit could begin, an insurance bond, or “wrap” had to be purchased. (Id.)

59. J.B. agreed to provide money to buy the alleged insurance bond or “wrap,” and sent $60,000 to the NFGI bank account on July 12, 2010. (Id.)

60. M.D. told S.W. and C.B. what Ries-terer had said about the purported certificate of deposit and the need for an insurance bond or “wrap,” and Riesterer’s claim that he could use the certificate of deposit to refund their NRI “investments.” (Id.)

61. Relying on the information from Riesterer, C.B. transferred $40,000 to NFGI on July 28, 2010 for the purchase of an insurance bond. M.D. contributed half of this $40,000. (Id. at 12.)

62. Riesterer did not inform either M.D. or C.B. of the $60,000 he had received from J.B. on July 12, 2010 for the alleged insurance bond/“wrap”. (Id.)

63. Riesterer likewise did not inform J.B. of the $40,000 he received from M.D. and C.B. on July 23, 2010 for the alleged insurance bond/“wrap”. (Id.)

64. Riesterer used none of the money he received from J.B., C.B., and M.D. to purchase an insurance bond. Instead, he sent half of the money to Kling, and used the remainder to make payments to his ex-wife, and for other purposes unrelated to an insurance bond. An insurance bond was never purchased. (Id.)

65. Riesterer purported to put up a house in Saint Paul, Minnesota as collateral to guarantee his repayment of the monies received from J.B., C.B. and M.D. related to the insurance bond/“wrap.” (Id.) He did not inform C.B. or M.D. that he had offered the house as security for J.B.’s payment, and he did not tell J.B. that he had done the same for C.B. and M.D. Riesterer promised J.B. he would mortgage the property for J.B.’s benefit, but never did so. (Id.)

66. Riesterer did not personally own the house in Saint Paul, and it was not titled in his name. (Id.)

67. In August 2010, Riesterer asked J.B. for more money, misrepresenting that he needed it because of an increase in the cost of the insurance bond. J.B. responded by sending $5,000 to Riesterer for that purpose on August 11, 2010. Riesterer again did not use this money for an insurance bond or any purpose related to “monetizing” the certificate of deposit. Rather, he used it for personal purposes, including payment of $4,000 to his ex-wife. (Id. at 12-13.)

68. From August 2010 through 2012, Riesterer made a series of false statements to M.D., C.B., S.W., and J.B., and provided fraudulent documents to them. These statements and documents included representations that Riesterer was engaged in efforts to generate funds through “monetization” of one or more of the purported certificates of deposit. (Id. at 13.)

69. Riesterer’s false statements included false representations that Kling was in the United States assisting with the effort to “monetize” the certificate of deposit. (Id.) These are detailed in the plea agreement. (Id. at 13-14.) Those stipulated facts are adopted in full although not reproduced here. In summary, they include statements such as, in January 2010, “Roberto will be in NY tomorrow and I will be meeting him on Thursday”; in February 2012, Kling “will be arriving on Monday night” and “I am still with Roberto tonight,” and in March 2012, “Roberto is still here,” claiming they were “working very hard spending huge dollars on legal to push this through.” (Id.)

70. Riesterer’s representations that Kling was in the United States were false, and Riesterer knew they were false. Kling has not entered the United States since at least February 2007, when the State Department had denied his visa application. (Id. at 14.)

71. Riesterer also made false statements regarding the Federal Reserve Bank of Minneapolis (“Fed”) and its supposed role in facilitating the receipt of money from “monetizing” the purported certificate of deposit. These are detailed in the plea agreement (EOF No. 158 at 14-15) and those stipulated f acts are adopted in full although not reproduced here. In summary, Riesterer claimed that a Fed employee named Marc Graham was assisting him and traveling with him as he tried to get the certificate of deposit “monetized,” and that the Fed was opening a special account to facilitate the receipt of funds. These representations were false. No agent of the Fed prepared an account for Riesterer or NFGIFI; there was no individual by the name of Marc Graham who worked for the Fed; and Riesterer was not at the Fed when he represented that he was in meetings there. (Id.)

72. Beginning in August 2010 and continuing into 2012, Riesterer sent a series of other e-mails to M.D., C.B., S.W., and J.B., misrepresenting that he was traveling to various cities in Europe and meeting with bankers and government officials there as part of his efforts to “monetize” one of the purported certificates of deposit. These emails were all false—rather than being in Europe as he represented, Riesterer actually sent these e-mails from Minnesota or Wisconsin. Examples of these misrepresentations are stipulated in detail in the Plea Agreement. (See EOF No. 158 at 15-17.) The Court adopts those stipulated f acts in full, without reproducing them all here.

73. In summary, Riesterer repeatedly misrepresented to M.D., S.W., and J.B., that he was in Europe for meetings with bankers or government officials (e.g., “we are now working with the Banks here in Zurich”; “I am in nonstop meetings, and running all over Hannover”; “Hello from Frankfurt .... ”), when he was actually in Wisconsin or Minnesota. He repeatedly mis-represented such promises as “We will begin moving money ASAP!!”, “[W]e will be underway on the First [of March 2011]”, “[E]veryone is moving quickly to finish our deal,” “[N]othing bad is happening, and this will close, and we will get money very soon”; and “I know with full certainty that we will have good money on the 10th [of September 2010].” Finally, he repeatedly asked M.D. and/or S.W. for more money to support his travel and expenses. (See id. at 15-17.)

74. As a result of Riesterer’s misrepresentations regarding his efforts to “monetize” the alleged Chase Manhattan Bank eerticate(s) of deposit, and his implication that this “deal” would be seriously compromised if they did not send more money, S.W. and M.D. gave Riesterer a total of $114,500 between October 13, 2010 and January 25, 2012. The dates and amounts of these transfers are stipulated in the Plea Agreement (ECF No. 158 at 18) and set out in the Government’s Exhibit 1 (lines 12-30), and Riesterer does not dispute these facts,

B. Disputed Facts & Additional Findings of Fact

1. Burden of Proof

The issues before the Court are the amount of loss and the amount of restitution attributable to this Defendant. “The government bears the burden of proving loss by a preponderance of the evidence.” United States v. Schild, 269 F.3d 1198, 1200 (10th Cir. 2001). Likewise, “[a]ny dispute as to the proper amount or type of restitution shall be resolved by the court by the preponderance of the evidence. The burden of demonstrating the amount of the loss sustained by a victim as a result of the offense shall be on the attorney for the Government.” 18 U.S.C. § 3664. In other words, the Government must show it is more likely than not that the factual matters on which it bears the burden are true. See, e.g., United States v. Craig, 808 F.3d 1249, 1257 n.7 (10th Cir. 2015).

2. Credibility Determinations

The Court’s findings turn in significant part on the witnesses’ credibility, including their demeanor while testifying, particularly because Riesterer’s testimony was directly contrary to certain of the Government’s factual contentions. It is therefore appropriate to make explicit the Court’s credibility determinations following observation of the witnesses’ testimony and demeanor during the day-long evidentiary hearing, and attempting to reconcile that testimony with the stipulated facts and documentary evidence.

i. M.D. and S.W.-

The Court found no reason to doubt the credibility of M.D. or S.W. Their answers were straightforward, logical, and sincere, without undue embellishment. Their testimony was also consistent with both the substance and demeanor of their prior statements before the undersigned in connection with the sentencing of co-Defendant Bussema, and with their documented prior statements, including to the FBI. The Court credits their testimony as highly credible and reliable.

In addition, M.D. in many instances kept contemporaneous notes of her conversations with Riesterer and/or sent e-mails documenting those conversations shortly after they occurred. Those records were made before any court proceedings were contemplated. The fact that the testimony from S.W. and M.D. was consistent with M.D.’s contemporaneously-created records further, and significantly, bolstered their credibility.

ii. Blauser

The Court had no reason to doubt the credibility of Special Agent Blauser.

Hi Riesterer

In contrast, the Court found Riesterer substantially less credible. Although his testimony was brief, several of his factual statements, while offered emphatically, were not at all credible. In the first place, Riesterer has already admitted to dishonest conduct in this case. In addition, the following discussion both resolves specific factual disputes and illustrates the Court’s overall conclusion that his testimony was not credible or convincing.

(1) Riesterer’s Receipt of Memorandum in February 2010

' Riesterer testified that although he now remembers Shuman sending him the Memorandum in February 2010, he “never even looked at it”, did not authorize it, and was unaware of its existence prior to his May 2010 phone call with M.D. His explanation was that Shuman frequently sent “similar” documents, so he ignored it. For a number of reasons, this testimony is very difficult to believe. Initially, the Memorandum sent by Shuman purported to sell $1 million worth of stock in Riesterer’s own company, NRI. It repeatedly mentioned Riesterer by name and included his ré-sumé. On its face, it sought to raise funds for the same New Mexico plant on which Riesterer testified he had already invested over $800,000, working with Shuman. In short, given its contents and representations, it defies belief that this was a type of document Riesterer would just simply ignore; he had every reason to carefully review this document and to object if it were in fact unauthorized.

Riesterer’s explanation that Shuman sent many “similar documents” was not corroborated by other evidence, such as records showing that Shuman really did, with any regularity, send Riesterer unauthorized stock offerings for his companies. Nor was there corroborating evidence that Riesterer typically ignored communications from Shuman, or any documentary evidence showing that Riesterer ever disclaimed the Memorandum. Riesterer offered no explanation for how he had been fully aware of Shuman’s March 2010 offer to purchase the New Mexico plant for $900,00 but totally unaware of the February 2010 e-mail and Memorandum regarding the same property. Even after Riesterer admits having learned that Bussema had “used [the] Reg D to steal” in NRI’s name (as phrased by Riesterer’s own counsel), there is no record of communication from Riesterer to Bussema or Shuman to corroborate his claim of total ignorance prior to May 2010. If the Memorandum was a total surprise, the Court is left to wonder: Why did he not promptly send something approximating a “cease and desist” request to these individuals? Moreover, how did he know to include Shuman on the May 11, 2010 phone call? Why did he not, on that call, articulate any surprise to learn of the purported stock offering? The lack of logical answers to these questions strongly suggests Riesterer was aware of the stock offering prior to the May 11,2010 phone call.

Furthermore, the contents of the e-mail makes it highly improbable that Riesterer did not at least open the Memorandum in February 2010. The e-mail states only “Please see attached for your review,” attaching a file named “NORTHWESTJRE-FINING_REG_ D_FINAL- 20101102.-pdf.” Given this cryptic title, Riesterer could not have known the Memorandum was “similar” to anything else sent to him by Shuman without in fact first opening it. At the same time, the file name itself indicated it was a proposed “Reg D” stock offering for NRI—something surely worthy of Riesterer’s attention. And, Riesterer did need not to read past the first lines to see (in oversized, bold-faced type) that the Memorandum claimed to be selling $1 million worth of NRI stock.

Finally, Riesterer’s own actions and communications are consistent with the interpretation of the facts that he was aware of the purported stock offering prior to May 11, 2010. His e-mail to Bussema on June 10, 2010 indicates that he was aware of the Memorandum’s existence and its terms. Compare Ex. 27 (Riesterer inquiring about Bussema on June 10, 2010 regarding “what is really going on with my Reg. D” and stating “the agreement I have signed with you says after the first 75k we have access to the cash”) with Ex. A47 at 2, ¶ 1 (February 2010 Offering Memo including term that “Upon the sale of $75,000 of Shares, all proceeds will be delivered directly to the Company’s corporate account .... ”). W hen Riesterer learned that M.D. had called regarding NRI, he knew to reach out to Shuman before returning her call. (See Ex. Bll). Despite having allegedly rejected an offer to sell the New Mexico plant to Shuman for $900,000 in March 2010, he then sold it to someone else for $50,000, the very day before the call, receiving payment the day of the call. Yet Riesterer failed to inform M.D. of any of these facts. And, he had recently directed his secretary to update NRI’s corporate status, within days of M.D. alerting Celetha of this problem.

Given these facts, the Court concludes that it is more likely than not that Riesterer was already aware of dubious schemes involving the New Mexico plant, and was aware of the purported NRI stock offering prior to May 11, 2010, and it is more likely than not that he had reviewed the Offering Memorandum sent to him in February 2010. The Court found Riesterer’s claims to the contrary not credible and they are rejected by the Court.

(2) Riesterer’s Purported Trust in Kling

Riesterer testified, emphatically but with little explanation of why, that he trusted Kling and followed his orders:

Q. The position you’re taking ... were you following Fling’s orders fairly wholesale in terms of when he told you to do things, you did it?

A. Of course.

Q. Why?

A. I believed him.

A careful review of the evidence in the record reveals numerous outsized “red flags” regarding Filing and the certifi-eate(s) of deposit that were known to Ries-terer as early as 2009, as detailed in the findings of fact above. (See supra ¶¶ 48-50, 52, 55-56.) This is also further highlighted by the testimony of Messrs. Luna and Blanco, addressed below. Given this evidence, Riesterer’s unexplained assertion that he simply “believed” Kling and therefore followed his “orders” in “wholesale” fashion was also not credible to the Court.

(3) Riesterer Signaling to Other Witnesses

During Mr. Blanco’s testimony in court under oath, the undersigned personally observed Riesterer deliberately attempting to signal some type of communication or information to Blanco. When the Court instructed Riesterer to immediately stop any further signaling, neither Riesterer nor his counsel offered any explanation that this conduct was anything other than a deliberate attempt to influence the testimony of the witness on the stand. This demonstrated willingness to interfere with the sworn testimony of another witness casts further doubt on the veracity of Ries-terer’s own testimony, his credibility as a witness, and the integrity of his written and oral communications in this case.

iv. Luna and Blanco

Without addressing the veracity or sincerity of the testimony from Messrs. Luna and Blanco, their testimony hurt Riesterer more than it helped him. In short, both testified that they had been recruited by Riesterer to assist him in “monetizing” the Kling CD. They testified that they believed the purported CD was legitimate, and that they observed or understood that Riesterer sincerely believed it was legitimate. However, as analyzed below, whether or not Riesterer had a “good faith” belief in this scheme has little beaiing on the material issue before the court, which is whether the loss caused by Riesterer’s confessed fraud was reasonably foreseeable.

In addition, Luna conceded that his investigation of the alleged certificate(s) of deposit failed to reveal the widely-publicized fact that Chase Manhattan Bank no longer existed as of the CD’s alleged issuance in 2009. In Luna’s narrative of traveling with Riesterer to meet Kling in Argentina, sports cars and armed escorts featured more prominently than banks or business meetings (“they had a leader car ,.. with guys and guns, all kind[s] of cool stuff’).

Likewise, Blanco conceded that although he knew Chase Manhattan Bank had ceased to exist, he nevertheless believed this “certificate of deposit” bearing a New York address was a legitimate financial instrument issued by a “Chase Manhattan Bank” entity in the British West Indies. After testifying extensively about the “gray screen” system at the. center of his plans to verify and “monetize” the CD, Blanco acknowledged that he “cannot guarantee you that it [the “gray screen”] exists or not because I have never been able to see it,” and that legitimate banks will “laugh at you” if you inquire about it. As to Kling, Blanco never met him in person, but testified that “at no time I had any doubts that [he] was trying to help the people in the foundation ... [because] Mr. Kling had, you know something to do with ... Israeli secret police or whatever ,.. something like that.”

In sum, rather than supporting Riesterer’s claim of a good faith belief in the legitimacy of the Kling/CD scheme, this testimony by Luna and Blanco reflected that Riesterer’s dealings with Kling and regarding the certificate of deposit always had the trappings of a scam or illegitimate venture, tinged with criminality and conspiracy theories. In this sense, Luna and Blanco’s claims and testimony were not credible, and this in turn leads to the conclusion that it was more likely than not that Riesterer was either directly a party to the fraud involved in this scheme or, at the very least, unreasonably ignored obvious warning signs that the scheme was fraudulent.

v. Ramsey

Ms. Ramsey’s testimony was also not very helpful in resolving the disputed issues. Although her assertion that she had never heard of or communicated with Bussema prior to taking M.D.’s call and message on May 11, 2010 had some support, Ramsey’s own credibility was undermined by her admissions that she was also implicated in at least some aspects of Ries-terer’s financial misdeeds, including admitting that both she and Riesterer used the NFGI bank account (the account to which a substantial amount of the monies at issue in this case were transferred) for their own personal debts and other purposes.

3. Additional Facts Regarding May 11, , 2010 Call

M.D. took notes of the May 11, 2010 call. As she explained in her testimony, she typed her notes and then e-mailed them'to C.B. She also sent a copy of these notes to the FBI in February 2013 and testified that she reviewed them and confirmed their accuracy and consistency with her memory at that time.

M.D.’s contemporaneous notes strongly corroborate her testimony regarding the call, emphasizing that the primary reason she called Riesterer was to confirm Busse-ma was working with NRI, and that Ries-terer did, in fact confirm that he was working with Bussema:

I ... called Don Riesterer’s office in MN around 9:30 am asking for confirmation that he return my call to confirm that he was working with Dan Busse-ma. I got a call back later in the day including Don, Dan (I though[t] Dan Bussema, but turned out this was a different Dan) and Jerry [Shuman] on the call. I explained that I was just trying to do appropriate due diligence on this stock offering and mainly wanted confirmation that NW Refining was involved in a 504 stock offering put together by Dan. Don and Jerry did verbally confitan that and provided some additional information about the plant, their business and why they are anxious to get the plant online ASAP.

‡ ⅜ ⅜

Don also said that once they get their money, they will be able to get the plant going in 60-90 days.

I didn’t really have any substantive questions to ask because my primary objective ivas just to confirm that NW Refining was working with Dan Busse-ma.

⅜$⅜

Anyway, I explained to Dan that my ONLY objective in calling Don was to hear from him that NW Refining ivas indeed working with him (Dan). I also told him that I had understood that he was on the call with Don and Jerry, because Don had introduced a “Dan”. He said it wasn’t him.

(Ex. 2 (emphasis added).)

Riesterer did not deny that he participated in the May 11, 2010 call. He stipulates that someone on that call made the claims regarding NRI’s gold refining plant to M.D. He did not deny that someone on the call told M.D. that Bussema’s stock offering was being made on behalf of and/or in concert NRI.

M.D.’s testimony was very specific and credible that it was Riesterer who told her he was working with Bussema. The Court credits that testimony and concludes the Government has proved by a preponderance of the evidence that Riesterer told M.D. on May 11, 2010 that he was working with Bussema on the NRI stock offering.

Moreover, even if the Court were to credit Riesterer’s contention that Shuman made most of the substantive statements regarding NRI on the May 11 call, at a minimum, it is clear that Riesterer listened to these misrepresentations and did nothing to disclaim, deny, or correct any of these statements. And, it was Riesterer who chose to include Shuman on this call after receiving a message indicating only M.D.’s name and number, that the call was regarding NRI, and was made “on behalf of’ Bussema. These facts do not support Riesterer’s claim that he was an unwitting and blameless participant with no prior knowledge of the context for M.D.’s call.

4. Additional Findings of Fact Regarding NRI Investment Fraud, Scheme

Given the evidence, the Court concludes that the following additional findings of fact have been proven by a preponderance of the evidence:

75. Riesterer was already aware of the NRI stock offering scheme prior to May 11,2010.

76. Riesterer told M.D. on the May 11, 2010 call that he and/or NRI were working with Bussema on the stock offering.

77. Riesterer either made mis-state-ments regarding the New Mexico plant to M.D. on this call or, through his omission, knowingly allowed those misrepresentations to be made.

78. Riesterer likewise made or knowingly allowed mis-statements to M.D. on this call representing that NRI was debt free and without liens.

79. Riesterer also made, or through omission knowingly allowed, misrepresentations to M.D. regarding the scope and prospects of the New Mexico plant’s gold refining.

■80. Riesterer’s statements and/or omissions on the May 11, 2010 call led directly to M.D.’s decision to “invest” an additional $100,000, transferred on May 13, 2010. (