Eidson Appealate Brief May 2016

No.
14-10141 & 14-10196

[consolidated]
IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
DERIAN EIDSON,
Defendant-Appellant.
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_______________
APPELLANTS OPENING BRIEF
_______________
Appeal from the United States District Court
for the Eastern District of California
No. 2:11-cr-234-TLN
Honorable Troy L. Nunley, United States District Judge
BECKY S. JAMES (CA Bar # 151419)
E-mail: BJames@JamesAA.com
JESSICA W. ROSEN (CA Bar # 294923)
E-mail: JRosen@JamesAA.com
JAMES & ASSOCIATES
11999 San Vicente Blvd., Suite 240
Los Angeles, California 90049
Telephone: (310) 492-5104
Facsimile: (310) 492-5026
Attorneys for Defendant-Appellant
DERIAN EIDSON
TABLE OF CONTENTS
Page
TABLE OF CONTENTS ............................................................................................ i
TABLE OF AUTHORITIES ......................................................................................v
INTRODUCTION .......................................................................................................1
ISSUES PRESENTED ................................................................................................1
JURISDICTIONAL STATEMENT ...........................................................................3
BAIL STATUS ...........................................................................................................3
STATEMENT OF THE CASE ...................................................................................3
I.
Statement of Facts Relevant to the Charges of Conviction .............................4

A.
The Build-Up to the Settlement Conferences ............................................4
B.
Settlement Conference on February 17, 2009 ............................................8
C.
Settlement Conference on March 2, 2009 ................................................15
II.
Procedural History .........................................................................................20

A.
Pretrial Proceedings ..................................................................................20
B.
Trial Proceedings ......................................................................................22
C.
1.
The Governments Case ......................................................................22
2.
Defense Request to Play Whole Recordings Under Rule of

Completeness.......................................................................................23
3.
Ms. Eidsons Case ...............................................................................24
4.
Motion for Acquittal, Jury Instructions, and Verdict ..........................25

Sentencing Proceedings ............................................................................25
SUMMARY OF ARGUMENT ................................................................................29

i
ARGUMENT ............................................................................................................32
I.
The Government Failed to Present Sufficient Evidence that Ms. Eidson

Participated in any Money Laundering Conspiracy or Attempted
Money Laundering (Counts 18 and 19).........................................................32
A.
Standard of Review ..................................................................................32
B.
Ms. Eidsons Participation in Negotiations Over a Potential Buyout

of an Equity Interest of a Privately Held Company Does Not
Constitute Attempted Money Laundering as Defined under
1956(a)(1) .................................................................................................33
C.
1.
The Government Failed to Prove Financial Transaction as

Defined Under the Statute ...................................................................34
2.
There is No Evidence, Nor Could the Government Present Any

Evidence Due to its Orchestrated Sting, that the Charged
Attempted Money Laundering In Fact Involves the Proceeds of
Specified Unlawful Activity ..............................................................37
3.
The Evidence Falls Far Short of Establishing Beyond a

Reasonable Doubt that Ms. Eidson Had Any Knowledge of the
Specified Unlawful Activity of the Charged Bankruptcy Fraud
and Concealment of those Proceeds ....................................................38
4.
The Government Failed to Prove that the Purpose of the

Purported Financial Transaction was Designed to Conceal the
Nature of the Proceeds from Any Unlawful Activity or that Ms.
Eidson Knew that the Purpose was Designed for that Very
Reason .................................................................................................43
The Government Also Failed to Prove Ms. Eidson Conspired with
Mr. Zinnel to Commit Money Laundering...............................................48
ii
D.
Even if the Government Could Establish that a Financial

Transaction Occurred and Ms. Eidson Had the Requisite
Knowledge and Intent, the Government did not Meet Its Burden in
Proving Ms. Eidson Took a Substantial Step in Her Attempt to
Launder Money.........................................................................................49
The District Court Erred in Denying the Defendants Motion to Dismiss
Effecting a Constructive Amendment with the Governments Evidence
of Its Sting Operation.....................................................................................52
II.
A.
B.
The Government Effected a Constructive Amendment of the

Charging Indictment .................................................................................52
III.
The Jury Instructions Impermissibly Invited the Jury to Convict Ms.

Eidson on the Legally Invalid Theory that the Simple Transfer of
Cash Can Constitute a Money-Laundering Offense ................................56
A.
B.
The Jury Instructions Were Misleading and Negated the Required

Elements of Money Laundering in Violation of 1956 ..........................57
C.
The Instructional Error Was Prejudicial ...................................................60
IV.
Several Evidentiary Errors Also Require Reversal .......................................61

A.
B.
The District Court Improperly Refused to Exclude Evidence of

Settlement Negotiations in Violation of Federal Rule of Evidence
408 ............................................................................................................61
C.
The District Court Erred in Admitting Prejudicial Legal Conclusions

by Legal Experts .......................................................................................68
iii
D.
Admitting Only the Governments Desired Snippets of Ms. Eidsons

Meetings with Mr. Radoslovich Over Objection and Request to
Admit the Whole Recordings Requires Reversal .....................................69
E.
If Each Error Alone Does Not Require Reversal, the Cumulative

Effect Certainly Does ...............................................................................73
Ms. Eidsons 121-Month Sentence is Procedurally and Substantively
Unreasonable .................................................................................................74
V.
A.
Standard of Review and Applicable Legal Standards ..............................74
B.
Over Objection, the District Court Erroneously Assumed the

Calculation of Ms. Eidsons Loss Amount was $4,000,000 with
Absolutely No Analysis or Consideration of Evidence that
Establishes the Value of the Attempted Laundered Funds was at
most $350,000 ..........................................................................................75
C.
The District Court Clearly Erred in Applying the Sophisticated

Laundering Enhancement, Resulting in Impermissible Double
Counting ...................................................................................................79
D.
Ms. Eidsons 121-Month Sentence Was Substantively

Unreasonable ............................................................................................82
CONCLUSION .........................................................................................................84
iv
TABLE OF AUTHORITIES
Page(s)
Federal Cases
Beech Aircraft Corp. v. Rainey,
488 U.S. 153, 172 (1988) .....................................................................................69
Gall v. United States,
552 U.S. 38 (2007) ...............................................................................................74
Jackson v. Virginia,
443 U.S. 307 (1979) .............................................................................................33
Regalado Cuellar v. United States,
553 U.S. 550 (2008) ................................................................................ 33, 44, 47
Rhoades v. Avon Prods.,
504 F.3d 1151 (9th Cir. 2007) .............................................................................61
Rita v. United States,
551 U.S. 338 (2007) .............................................................................................74
Smith v. United States,
586 U.S. ___, 133 S. Ct. 714 (2013) ....................................................................48
Staples v. United States,
511 U.S. 600 (1994) .............................................................................................39
Stirone v. United States,
361 U.S. 212 (1960) ...................................................................................... 52, 53
Thomas v. Hubbard,
273 F.3d 1164 (9th Cir. 2001) .............................................................................73
United States v. Adamson,
291 F.3d 606 (9th Cir. 2002)......................................................................... 52, 56
United States v. Aguilar,
80 F.3d 329 (9th Cir. 1996)..................................................................................38
United States v. Akintobi,
159 F.3d 401 (9th Cir. 1998)................................................................................36
United States v. Allison,

86 F.3d 940 (9th Cir. 1996)........................................................................... 76, 77
United States v. Anderson,
371 F.3d 606 (9th Cir. 2004)............................................................. 35, 36, 42, 55
United States v. Bakhit,
218 F.Supp.2d 1232 (C.D. Cal. 2002) .................................................................76
United States v. Barona,
56 F.3d 1087 (1995) .............................................................................................58
United States v. Bennett,
621 F.3d 1131 (9th Cir. 2010) .............................................................................32
United States v. Brown,
880 F.2d 1012 (9th Cir. 1989) .............................................................................40
United States v. Cantrell,
433 F.3d 1269 (9th Cir. 2006) .............................................................................78
United States v. Carty,
520 F.3d 984 (9th Cir. 2008) (en banc) ........................................................ 74, 75
United States v. Castellini,
392 F.3d 35 (1st Cir. 2004) ..................................................................................56
United States v. Cedeno-Perez,
579 F.3d 54 (1st Cir. 2009) ..................................................................................44
United States v. Chin-Sung Park,
167 F.3d 1258 (9th Cir. 1999) .............................................................................80
United States v. Choy,
309 F.3d 602 (9th Cir. 2002)......................................................................... 59, 60
United States v. Collicott,
92 F.3d 973 (9th Cir. 1996)........................................................................... 61, 70
United States v. Contra Costa County Water Dist.,
678 F.2d 90 (9th Cir. 1982)..................................................................................62
vi
United States v. Cortes,

757 F.3d 850 (9th Cir. 2014)................................................................................57
United States v. Davis,
2009 U.S. Dist. LEXIS 102559 (E.D. Pa. 2009) .......................................... 66, 68
United States v. Davis,
596 F.3d 852 (D.C. Cir. 2010) ...................................................................... 65, 66
United States v. Deeb,
175 F.3d 1163 (9th Cir. 1999) .............................................................................56
United States v. Doss,
630 F.3d 1181 (9th Cir. 2011) .............................................................................52
United States v. Doxie,
2014 U.S. Dist. LEXIS 109131 (N.D. Ga. 2014) ......................................... 63, 64
United States v. Estacio,
64 F.3d 477 (9th Cir. 1995)..................................................................................36
United States v. Faulkenberry,
614 F.3d 573 (6th Cir. 2010)......................................................................... 44, 47
United States v. Frederick,
78 F.3d 1370 (9th Cir. 1996)................................................................................73
United States v. Freeman,
498 F.3d 893 (9th Cir. 2007)................................................................................74
United States v. Frega,
179 F.3d 793 (9th Cir. 1999)................................................................................57
United States v. Garcia-Emanual,
14 F.3d 1469 (10th Cir. 1994) .............................................................................45
United States v. Garrido,
713 F.3d 985 (2013) .............................................................................................57
United States v. Harper,
33 F.3d 1143 (9th Cir. 1994)................................................................................51
vii
United States v. Hassan,

578 F.3d 108 (2d Cir. 2008) .................................................................................37
United States v. Hays,
872 F.2d 582 (5th Cir. 1989)................................................................................66
United States v. Hirsch,
100 U.S. 33 (1879) ...............................................................................................48
United States v. Hofus,
598 F.3d 1171 (9th Cir. 2010) .............................................................................57
United States v. Hubbard,
96 F.3d 1223 (9th Cir. 1996)................................................................................48
United States v. Jenkins,
633 F.3d 788 (9th Cir. 2011)............................................................. 34, 35, 36, 76
United States v. Katakis,
800 F.3d 1017 (9th Cir. 2015) .............................................................................33
United States v. Knapp,
120 F.3d 928 (9th Cir. 1997)................................................................................60
United States v. Kubick,
205 F.3d 1117 (9th Cir. 1999) ...................................................................... 80, 81
United States v. Lam Thanh Pham,
545 F.3d 712 (9th Cir. 2008)......................................................................... 74, 78
United States v. Leichtnam,
948 F.2d 370 (7th Cir. 1991)................................................................................53
United States v. Lloyd,
807 F.3d 1128 (9th Cir. 2015) ...................................................................... 73, 74
United States v. Lo,
231 F.3d 471 (9th Cir. 2000)................................................................................33
United States v. McAllister,
747 F.2d 1273 (9th Cir. 1984) .............................................................................39
viii
United States v. Melchor-Lopez,

627 F.2d 886 (9th Cir. 1980)................................................................................48
United States v. Montoya,
945 F.2d 1068 (9th Cir. 1991) ..............................................................................61
United States v. Nelson,
66 F.3d 1036 (9th Cir. 1995)................................................................................51
United States v. Ness,
565 F.3d 73 (2d Cir. 2009) ............................................................................ 44, 49
United States v. Nevils,
598 F.3d 1158 (9th Cir. 2010) (en banc) .............................................................33
United States v. Nielsen,
371 F.3d 574 (9th Cir. 2004)................................................................................74
United States v. Olson,
925 F.2d 1170 (9th Cir. 1991) .............................................................................52
United States v. Ortega,
203 F.3d 675 (9th Cir. 2000)................................................................................57
United States v. Otis,
127 F.3d 829 (9th Cir. 1997) (per curiam)...........................................................59
United States v. Pazsint,
703 F.2d 420 (9th Cir. 1983)......................................................................... 53, 54
United States v. Pierre,
254 F.3d 872 (9th Cir.2001).................................................................................57
United States v. Rahseparian,
231 F.3d 1257 (10th Cir. 2000) .............................................................. 38, 40, 41
United States v. Richardson,
658 F.3d 333 (3d Cir. 2011) .................................................................... 44, 45, 46
United States v. Ripinsky,
109 F.3d 1436 (9th Cir. 1997) .............................................................................35
ix
United States v. Ripinsky,

20 F.3d 359 (9th Cir. 1994)..................................................................................56
United States v. Skeddle,
176 F.R.D. 254 (N.D. Ohio, 1997) ......................................................................64
United States v. Stapleton,
293 F.3d 1111 (9th Cir. 2002) .............................................................................57
United States v. Stein,
37 F.3d 1407 (9th Cir. 1994)................................................................... 38, 60, 61
United States v. Sullivan,
522 F.3d 967 (9th Cir. 2008)................................................................................32
United States v. Taylor,
716 F.2d 701 (9th Cir. 1983)................................................................................49
United States v. Turman,
122 F.3d 1167 (9th Cir. 1997) .............................................................................38
United States v. Vallejos,
742 F.3d 902 (9th Cir. 2014)................................................................... 61, 69, 70
United States v. W. Coast Aluminum Heat Treating Co.,
265 F.3d 986 (9th Cir. 2001)................................................................................76
United States v. Wallace,
848 F.2d 1464 (9th Cir. 1988) .............................................................................73
United States v. Ward,
747 F.3d 1184 (9th Cir. 2014) ...................................................................... 52, 53
United States v. Wilkes,
662 F.3d 524 (9th Cir. 2011)................................................................................34
United States v. Yossunthorn,
167 F.3d 1267 (9th Cir. 1999) ................................................................ 49, 50, 70
United States v. Zolp,
479 F.3d 715 (9th Cir. 2007)................................................................................76
Williams v. First Nat. Bank,

216 U.S. 582 (1910) .............................................................................................62
Yates v. United States,
354 U.S. 298 (1957) .............................................................................................57
Statutes
18 U.S.C. 1956 .............................................................................................. passim
18 U.S.C. 1957 ............................................................................................... 49, 53
18 U.S.C. 3553(a) .................................................................................................75
U.S.S.G. 2B1.1 ......................................................................................................76
U.S.S.G. 2S1.1 ............................................................................................... 76, 79
Federal Rules
Fed. R. Evid 408 ......................................................................................................62
Fed. R. Evid. 106 .....................................................................................................69
Ninth Circuit Jury Instructions
Ninth Cir. Model Crim. Jury Instr. 8.147 ................................................................59
Other Authorities
U.S. Attorneys Manual,
Criminal Resource Manual 2127 .........................................................................55
xi
INTRODUCTION
Defendant-appellant Derian Eidson was an attorney who now finds herself
serving over 10 years in prison for two counts of money laundering offenses based
on her representation of co-defendant Steve Zinnel in what she thought were
settlement negotiations to resolve the termination of a business relationship. The
jury did not find Ms. Eidson to have knowingly participated in the underlying
unlawful activity of bankruptcy fraud with Mr. Zinnel, as the jury acquitted her on
one count and deadlocked on all others. Nevertheless, the jury convicted Ms.
Eidson of conspiring to and attempting to launder the proceeds of bankruptcy
fraud, based on a government sting set up to look like settlement negotiations.
The governments case against Ms. Eidson was improperly charged and
insufficiently proven. Ms. Eidson had no knowledge that she was participating in a
conspiracy to launder the proceeds of specified unlawful activity, nor was that her
purpose. Her convictions were obtained through a legally flawed theory and
critical instructional and evidentiary errors. Neither her convictions nor her 121month sentence can stand.
ISSUES PRESENTED
1.
Whether the evidence was insufficient to support Ms. Eidsons

convictions for conspiracy and attempt to launder money based on her
negotiations, as an attorney representing her client, aimed at settling a

dispute over the terms of a buyout of private equity shares.
2.
Whether the government constructively amended the indictment by

charging the offense of actual money laundering under 18 U.S.C.
1956(a)(1), when its case at trial was based on an alleged sting that
should have been charged under 18 U.S.C. 1956(a)(3).
3.
Whether the jury was misinstructed that a simple transfer of cash can
constitute money laundering.
4.
Whether evidentiary errors require reversal, either individually or

cumulatively, including:
a. Whether the district court erred in admitting evidence of settlement
negotiations, the lynchpin of the governments case against Ms.
Eidson, in violation of Federal Rule of Evidence 408.
b. Whether the district court erroneously allowed Ms. Eidsons
purported opposing counsel in the negotiations (who was in fact
acting as a government informant at the time) to offer expert legal
opinions.
c. Whether the district court erred in allowing the government to
introduce snippets of the recorded settlement negotiations without
allowing the defense to introduce other portions that would have
prevented the jury from being misled by the governments

presentation.
5. Whether Ms. Eidsons 121-month sentence was procedurally and
substantively unreasonable.
JURISDICTIONAL STATEMENT
Pursuant to 18 U.S.C. 3231, the district court had jurisdiction over this
federal criminal proceeding. This Court has jurisdiction over this appeal under 28
U.S.C. 1291 and 18 U.S.C. 3742(a). The district court entered its judgment
and commitment order on April 16, 2014. (ER146.) Ms. Eidson filed her timely
notice of appeal on April 18, 2014. (ER475.)
BAIL STATUS
Ms. Eidson is in federal custody, serving the 121-month sentence imposed in
this case.
STATEMENT OF THE CASE
Derian Eidson participated in two settlement conferences, which she thought
were her and another lawyers efforts to resolve the dispute that had arisen between
her client, Steve Zinnel, and Tom Wilbert. What resulted were her convictions for
Counts 18 and 19 of the Superseding Indictment: Money Laundering Conspiracy
and Attempted Money Laundering. The government alleged that Ms. Eidson and
co-defendant Zinnel conspired to commit money laundering and that Ms. Eidson
attempted to launder money up to $4,000,000 when she engaged in the settlement

negotiations to secure an equity buyout of Done Deal, Inc. and Mr. Zinnel from
System 3, Inc. The counts are premised on Ms. Eidson being aware of Mr.
Zinnels concealment of assets in his bankruptcy proceedings. But Ms. Eidson was
tried and acquitted of aiding and abetting in the charged pre-petition bankruptcy
fraud and mistried due to a hung jury on several other counts including postpetition bankruptcy fraud, money laundering, and transactions in criminally
deprived property.
Statement of Facts Relevant to the Charges of Conviction1
I.
A.
The Build-Up to the Settlement Conferences
In the early 2000s, Derian Eidson began a long-distance relationship with

Steve Zinnel. (ER964.) At around the same time, in 2001, Mr. Zinnel entered into
a business formation agreement with his brother, David Zinnel, and Thomas
Wilbert, with whom Mr. Zinnel had been friends for decades and worked together
in the past. (ER519; 1337-40.) They formed an S-corporation System 3, a public
infrastructure construction firm. (ER520; 1337-40.) They agreed in 2001 that Mr.
Wilbert would be the sole shareholder initially and Mr. Zinnel would contribute
$600,000 in capital and start out with no share ownership. (ER519-20; 1337-40.)
A detailed factual background to the overall case against both Ms. Eidson
and Mr. Zinnel is in Mr. Zinnels opening brief.
4
The agreement provided that the following year in 2002, Mr. Zinnel would own
49%; in 2003, 48%; in 2004, 47%; and in 2005, 46%. (Id.) David Zinnel would
end up with an 8% ownership in 2005. (ER1337-40.) Ms. Eidson was not part of
the discussions that led to System 3s formation. (ER697-99.)
Mr. Wilberts understanding of the business formation agreement was that
once System 3 had sufficient funds, Mr. Zinnel would get back his initial
investment, plus interest, and any remaining equity would be distributed
thereafter. (ER526.) The relationship, according to Mr. Wilbert, was that Mr.
Zinnel was to be a silent partner. (ER527.) Evidence also showed that Mr. Zinnel
did consulting work for System 3, including reviewing financials of the company
on a monthly basis. (ER669.) And Ms. Eidson provided legal services for
System 3. (ER724.)
In 2004, Ms. Eidson formed Done Deal, Inc. Mr. Zinnel is mentioned
nowhere in the Articles of Incorporation, and he never obtained any interest in
Done Deal. (ER942.) Ms. Eidson and Mr. Zinnel were employees of Done Deal
and on payroll. (ER1533-47.) On October 4, 2004, Ms. Eidson opened up a bank
account for Done Deal, and on February 22, 2005, Mr. Zinnel was authorized as a
signer on the account and issued a debit card. (ER929.) Also in 2004, Mr. Zinnel
assigned his interest in System 3 to Done Deal. (See ER773.) The year-end
financials for 2003 show System 3 as pretty shaky, and Mr. Zinnel and Ms.
Eidson determined that approximately $30,000 was fair consideration for the
assignment. (ER1469.) Mr. Zinnel would send invoices to System 3 for any
services provided to be paid to Done Deal. (ER501-02.)
By May of 2008, Mr. Wilbert informed Mr. Zinnel (not for the first time)
that he desire[d] to terminate [their business] relationship. (ER1564.) Ten days
later, Mr. Wilbert provided Mr. Zinnel a settlement offer, with a buyout offer of
$3,944,799.00. (ER1565.) In that e-mail correspondence, Mr. Wilbert stated that
he would like to get this resolved sooner than later since the agreement included
a confidentiality provision, which means we cant discuss its details. Mr.
Wilbert concluded, This helps everyone out. (Id.)
In mid-June, Mr. Wilbert sent Mr. Zinnel revisions to the offer and informed
Mr. Zinnel that his attorney Frank Radoslovich advised [him] not to pay out any
more amounts until this [offer] is signed, and that he was taking his
recommendation, no further payments will be made until this document or
something very close is executed. (ER1571.) Ms. Eidson took no part in those
settlement discussions.
At some point in 2008, Mr. Wilbert became a confidential informant for the
FBI. (ER648.) On November 13, 2008, Mr. Wilbert received a letter from the
U.S. Department of Justice confirm[ing] that [he] is not a target in the bankruptcy
fraud investigation that relates to transactions between Mr. Wilbert and Steven
Zinnel. (ER1548; see also ER539-94.) Mr. Wilbert arranged a meeting with Mr.
Zinnel at a Starbucks in December, 2008, and agreed to consensual monitoring of
that meeting. (ER359; 1584.) Not surprisingly, Mr. Wilbert and Mr. Zinnel did
not come to an agreement.
Mr. Wilbert had Mr. Radoslovich prepare a settlement agreement, but Mr.
Zinnel did not find it agreeable and a response agreement was then provided to Mr.
Wilbert. (ER1461.) After Mr. Wilbert received the response agreement, he
refused to communicate any further with [Mr. Zinnel] and said Talk to Frank
[Radoslovich]. (Id.) Mr. Radoslovich also had been contacted by the
government through Mr. Wilbert. (ER830-31.) He met with the FBI and attended
a meeting a few months before Mr. Wilbert received the letter informing Mr.
Wilbert that he was not a target. (ER831-32.)
After Mr. Wilberts apparent refusal to communicate with Mr. Zinnel, Mr.
Radoslovich and Ms. Eidson began correspondences over the matter. In a letter on
February 3, 2009, Ms. Eidson informed Mr. Radoslovich that she had been
retained to represent the interests of Steve Zinnel and Done Deal, Inc., Mr.
Zinnels assignee, as it pertains to discontinuing the business relationship with
System 3, Inc. (ER1419.) She also inquired as to who Mr. Radoslovich
represent[ed] in this matter and requested that Mr. Radoslovich advise [her] of
[his] clients position in this matter. (ER1419.) The two arranged to hold a
settlement conference on February 17, 2009, though unbeknownst to Ms. Eidson,

the conference would never settle anything and instead Mr. Radoslovichs office
would be wired by the FBI with an agent attending the meeting.2 (ER838.)
B.
Settlement Conference on February 17, 2009
At the beginning of the conference, Mr. Radoslovich acknowledged that Ms.

Eidson had sent [him] a letter saying you know, like you wanted to know what
our position was and we kind of went back and forth. (ER1458.) Ms. Eidson
explained her understanding of the formation of System 3, but stated that she did
not know who drafted the agreement. (ER1459.) She further detailed that over
time there were periodic distributions and some consulting work done. She
then informed Mr. Radoslovich that in 2004, Mr. Zinnel assigned his interest to
Done Deal and from 2004 until roughly last March there were periodic
distributions. (ER1459.) As to Mr. Zinnels consulting work, Ms. Eidson
understood that he received and reviewed the financials, and had been provided a
laptop with a specific program so that he could perform his financial consulting
Mr. Radoslovich explained he agreed to assist the government in its sting

against Ms. Eidson and Mr. Zinnel because Mr. Wilbert, wanted us to cooperate,
mandated that we cooperated. He just wanted to cooperate with everything was
very, very scared. So thats why I did it, because he wanted me to cooperate and I
was his lawyer. (ER838.)
8
for the company. (ER1459.) She further understood that Mr. Zinnel was a
consultant employee to System 3 before and after the assignment (ER1486.)
Mr. Radoslovich questioned why Mr. Zinnel would care about this
settlement if [h]e sold his interest in July of 2004 for around $30,000 pursuant to
some agreement. (ER1462.) Ms. Eidson corrected him that Mr. Zinnel had not
sold his interest, but that he assigned it to Done Deal, and that it was an
assignment in the sense that [Mr. Zinnel] remained involved in doing System
Threes financials, providing consulting work for System Three. (ER1463.)
The proposed settlement by Mr. Zinnel and Done Deal terminated his
consulting agreement. (Id.) According to Ms. Eidson, she understood that Mr.
Zinnel and Mr. Wilbert had a verbal agreement concerning Mr. Zinnels consulting
and that Mr. Radoslovichs office prepared [a written agreement] in like
December of 2007, but that it bounced around and nothing came of it, that it
was[nt] executed. (Id.) Ultimately, it was Ms. Eidsons understanding that
there was a consulting agreement from pretty much the outset. (Id.)
In an apparent attempt to resolve the competing agreements, Mr.
Radoslovich stated that Mr. Wilberts proposed agreement flat out mention[s] that
theres this business formation agreement of October 3rd 2001 and that [System 3]
want[s] to buy out whatever interest is in the formation agreement, and asked,
What is the difficulty in tying in this [in] your proposed version the settlement
agreement and mutual release with some recitals that there was a written
agreement in October back in 2001, October 3rd 2001, that there was an assigned
to Done Deal at or about July 2004? Ms. Eidson responded, Well I guess you
can but that wasnt the original agreement. (ER1463-64.) Her understanding
that all along, you know, that distributions would be characterized as consulting
fees and expensed by System Three as such. (ER1465.)
As to any agreement, Mr. Radoslovich stated that weve become, you
know, really concerned because how do you get around two major issues. The
first one is theres an ex-wife. (ER1466.) The second major issue, according to
Mr. Radoslovich, was the bankruptcy issue. (Id.) Mr. Radoslovich explained:
Whether or not this company was assigned or his rights were assigned to Done
Deal , [t]heres none of those assets disclosed in the bankruptcy. (Id.) Ms.
Eidson responded that it was her understanding that the assignment was made
more than a year before the bankruptcy and that [w]ell [Mr. Zinnel] might [have
a problem], but questioned why would System Three have a problem since
System Three doesnt have any control over what [Mr. Zinnel] would or wouldnt
list in the bankruptcy schedules. (Id.) Ultimately, Ms. Eidson proclaimed that
she is not a bankruptcy attorney and that she would have to take a look at the
potential problem that Mr. Radoslovich identified. (Id.)
10
When Mr. Radoslovich continued to press that System 3 is not disclosed

and that System Three or any prior involvement [Mr. Zinnel] had in System Three
are not disclosed in the bankruptcy. (ER1467.) With no knowledge, Ms. Eidson
stated she would take [his] word for it. (ER1468.) Mr. Radoslovich nonetheless
continued to press Mr. Zinnels problem and stated that it looks to us [the
bankruptcy fraud is] still ongoing and asked, How do you come up with a way to
do this in a way that doesnt defraud the bankruptcy trustee? Ms. Eidson again
replied that she did know that; ultimately, that may be of great concern to Steve
than [sic]. (ER1468.)
Ms. Eidsons position at the settlement conference was that she was trying
to figure out what what is the true exposure to Mr. Wilbert and how they could
craft an agreement thats agreeable. (ER1468.) Mr. Radoslovich then berated Ms.
Eidson:
[W]e can sit here, you can come up with these solutions that
says Oh, Steve will hold us harmless from whatever. I mean pick
it whatever civil liability that might be out there. But weve still
got a major problem with a potential criminal issue. I mean, I mean
arent you concerned about that? I mean that kind of blows my mind.
In the event that, for example, somebody finds out or theres some
sort of, you know, I dont know, the U.S. Attorney or the bankruptcy
trustee or somebody decides to prosecute it. I mean they have
theres a press release like they did a couple years ago. This is like a
high profile thing for them, okay? I mean, how can you possibly
protect us against that?
11
(ER1469.) Puzzled, Ms. Eidson replied: I dont know what potential charges are
you talking about? What criminal issue are you referring to? (ER 1469.) Mr.
Radoslovich ultimately suggested that theres a potential (inaudible) just blowing
up the entire bankruptcy. And if they blow up the entire bankruptcy then all the
creditors come back in your life and, you know, the government can do things like,
you know, try to get a restitution or something. (ER1469.) Given that she had
been inquiring about Mr. Wilberts potential exposure, Ms. Eidson responded,
Again Im not understanding how if Tom or System Three is not party to the
bankruptcy how they could be exposed to any liability for bankruptcy fraud.
(ER1469.) Ms. Eidson ultimately stated, Im not a bankruptcy attorney so I think
those are Steve Zinnels issues of what he disclosed in bankruptcy and what he
didnt disclose. (ER1472.)
Mr. Radoslovich also discussed the issue concerning Mr. Zinnels divorce,
and whether the ex-wife could come after System 3 if she found out about Mr.
Zinnels interest. To that, Ms. Eidson replied that Mr. Zinnel and his ex-wifes
community property ceased before the date Mr. Wilbert and Mr. Zinnel entered
into their business formation, and that that should not be a problem. (ER1475.)
Even so, Mr. Radoslovich suggested that they still might have problem if the
divorce might not be over. (ER1475.)
12
With Mr. Radoslovichs proposed risks, Ms. Eidson questioned what

kind of protections would be necessary then to eliminate the perceived risk you see
on behalf of Tom and System Three? (ER1476.) Mr. Radoslovich suggested that
with some fraud allegation that the legal risk of entering a transaction would
just be extraordinary, to which Ms. Eidson replied, I dont believe that there was
any fraud committed here. I dont. And I certainly dont believe that, you know, I
think that is problematic I guess if someone makes an allegation against Steve for
fraud that, you know, it doesnt look good for Tom because there were
distributions made and, you know, they did business for five or six or seven years.
(ER1476.) Mr. Radoslovich then acknowledged Mr. Wilberts prospective tax
problem, as he would take distributions as he was the sole shareholder and he
would pay the taxes on them; how do we make up that tax trail? (ER1476.)
Per Ms. Eidsons understanding, the distributions received were
consulting fees under the consulting agreement between Mr. Wilbert and Mr.
Zinnel. (ER1477.) In the end, Ms. Eidson reiterated that she did not believe there
was any fraud intended and that the inconsistency on paper, I think, you know,
Tom didnt want the community to know that Steve was involved in the business
because it would have been a liability to him due to a bonding companys
judgement against Mr. Zinnel. (ER1477.)
13
At one point, Mr. Radoslovich point blank asked, [W]as that the plan? Was
the plan to do it, you know, to do bankrupt a year after Done Deal? (ER1480.)
Ms. Eidson stated no, that she did not believe that had anything to do with it, but
rather, with what happened with [Mr. Zinnels] creditors. (ER1480.) Thereafter,
Mr. Radoslovich decided, I dont think Zinnel has the ability to protect us I just
dont think he does. This is not like Were buying out a shareholder so were
going to hold you harmless in the event someone slips and falls on our premises.
This is a little different. To that, Ms. Eidson explained that she wasnt as aware
of what [he] see[s] as perceived risks, because Tom and Steve had an agreement
and for years and years and years Tom operated System Three pursuant to that
agreement so then now at this point to say Oh Steve, it was all you and you need
to fix it for me doesnt make sense. (ER1481.)
Ms. Eidson then proposed, So I guess what were coming down to then, is
there a way to end the business relationship where we are both serving our clients
as well as the system and not perpetrating a fraud, because that certainly is not my
intent either. Mr. Radoslovich then asked if Mr. Zinnel would ever consider
going back to the bankruptcy court and like amending the schedules and disclosing
it and coming clean with the whole thing. She replied that she thought thats a
good idea and that thats something for me to talk to him about. (ER1482.)
14
While Mr. Radoslovich did not think this is in Zinnels vocabulary, he

recommended that he should seriously think about dropping (inaudible) and
walking away from this dispute. (ER1490.) He acknowledged, however, that Mr.
Zinnel can litigate and we can see how that all shakes out, or these guys can try to
figure out something that might be legally acceptable. Ms. Eidson agreed, stating,
And thats our jobs. (ER1490.) As expected, Ms. Eidson and Mr. Radoslovich
did not come to an agreement, and Mr. Radoslovich asked, Do you want to talk
again? (ER1492.) Ms. Eidson agreed.
C.
Settlement Conference on March 2, 2009
Ms. Eidson and Mr. Radoslovich again met at his office on March 2, 2009,
to continue what Ms. Eidson thought were settlement negotiations. She first stated
that she kind of had some follow ups after the first meeting. She began with
discussing Done Deals proposed settlement and reiterated that it was initially
taken from the proposed settlement agreement that your office had tendered.
(ER1499.)
The parties discussed Mr. Zinnels prospective issues concerning his
divorce, which Ms. Eidson confirmed that all property acquired by Steve Zinnel
after the date of separation is separate property. And the date of separation was
December 99. (ER1499.) Ms. Eidson then recollected about the bankruptcy
issues that [Mr. Radoslovich] raised last time, and explained that what led Mr.
15
Zinnel to bankruptcy was [t]he judgment [that] was 1.2 million dollars.
(ER1500.) Her understanding was that that could be a potential exposure and
that she would entertain, you know, agreeing to indemnify Tom for, you know, to
that amount. (ER1501.)
To tie up any loose ends from the prior meeting, Ms. Eidson restated
particular compromises: [A]gain, like I said last time, I have no problem doing
two things. One discussing the assignment in the settlement agreement. Done
Deal as the assignee of Steve Zinnel and two having Steve provide you with
something under penalty of perjury that he, you know, will make no ownership
in System Three. (ER1502.) Ms. Eidson did not bring a copy of the assignment,
however, because she did not have Steve Zinnels permission to bring it, but she
reaffirmed, repeating Mr. Radoslovich, that [t]here is a straight up normal
document. (ER1502.)
The third issue Ms. Eidson raised was Mr. Radoslovichs concerns to do
with potential criminal liability of either Tom or System Three. (ER1506.) Ms.
Eidson then stated, I dont know why criminal liability of Steve Zinnel would be
an issue to resolving the matter with System Three. (ER1506.) While Mr.
Radoslovich stated, Its not potential criminal liability of anybody, he again
raised what he perceived as Mr. Zinnels bankruptcy fraud due to his omission on
his schedules and asked if Ms. Eidson had spoken to Mr. Zinnel about that, if
16
there [is] anythinganything developed from that? (ER1506-07.) Ms. Eidson

replied that she shared that information and left it at that, but you have raised
that. (ER1507.)
In response to Mr. Radoslovichs statement that Mr. Zinnel would not
reopen his bankruptcy, Ms. Eidson replied that it may open a big can of worms
because part of what youve got to understand with your clients interest as well is
that Tom has been paying money all along, so hes already the potential issue for
what could happen in the future of any kind of buyout at this point whether its
the consulting agreement or an ownership agreement Toms been for [five] years,
paying money to Done Deal. So that part, I dont how to get him out of at this
point if. (ER1507.) [I]f someone puts a spotlight on this this is kind of
how Im seeing it is that all these issues pre-exist the buyout agreement. All of
these issues Tom and System Three are going to have to deal with if somebody
goes digging around theyre going to have to deal with the last four or five years
or seven years, whatever, of conduct to justify regardless of whether theres a
buyout agreement or not. (ER1508.) She ultimately stated that if Mr. Wilbert
goes back on his word Mr. Zinnel will litigate, even though she is trying like
crazy to avoid that because [she] do[es not] believe thats in anyones best
interest. (ER1508.) To that end, Ms. Eidson had been trying like crazy to figure
17
out how, you know, for Tom to keep his word to Steve about dissolving the
business relationship. (ER1508.)
In this meeting, however, Ms. Eidson became more stern in her attempts to
resolve the dispute. She first explained to Mr. Radoslovich, Well heres really
what it comes down to. What it comes down to is that for five or seven years Tom
and System Three have made some choices in record keeping and representations
to third parties that may or may not have been honest [to] [b]onding companies,
banks, the IRS. Secretary of State. (ER1513.) She then further stated, I dont
know, you know, what kind of representations [by Mr. Wilbert] were made to the
banks when he got the Porsche or when he bought the building on the houses [sic]
that were purchased in Texas. (ER1513.) And while Mr. Radoslovich took it as,
[W]hat Im hearing is like if [Mr. Wilbert] doesnt do a deal with Steve or you
that basically Steve or you are going to blow the whistle to these various people
the bonding companies, and banks and IRS and everything else? (ER1513.) Ms.
Eidson replied that she did not want that to happen, but those issues pre-date the
dissolution of their business relationship. (ER1513.) She would, however,
certainly advise [Mr. Zinnel] against [reporting]. (ER1514.) [A]ll [Ms. Eidson]
[was] saying is that this hole was dug. (ER1514.) Ms. Eidson ultimately
informed Mr. Radoslovich that she does not have control over what other people
do. [She] can only advise. (ER1515.)
18
Mr. Radoslovich asked, Well, so if Im going to communicate a message to

Tom, what should I tell him? (ER1515.) Ms. Eidson replied:
If Tom were my client as best as I can say to you. If Tom
were my client I would say Theres some decisions that were made
before I got involved in the case about some representations that were
made to employees about the form of this business or whatever.
During that time there was also an oral consulting agreement. So if
you want to terminate your relationship with Steve, you can either do
a termination of ownership interest which has not been disclosed, or
do a termination of consulting agreement. And then everyone walks
away with bad decisions that were made before cant really be
changed at this point, you know, everyone has followed through with
what they agreed to. Thats what I would say.
(ER1515; GX 2306.) Mr. Radoslovich asked, And if he says no, then what
happens? (ER1515.) Ms. Eidsons prediction would be litigation. (ER1515.)
The parties again did not reach an agreement. Mr. Radoslovich concluded
the meeting with:
Think about the security issue and again think about the, you
know, hitting the books on this potential criminal issue, because its
very scary. And I dont know how I mean securing the amount of
money in the face of that is a big issue. But, again, we still have these
we still have the basic issues of like I mean I really need to get
like a, I would say like a lengthy opinion letter from you. And then
Ill stand back and Ill look at it rationally and see if that if it holds
water.
(ER1519.) Mr. Radoslovich then stated, [T]he only reason that Im involved in
this is to try and get the deal done without it getting uglier. (ER1519.) No further
settlement conferences were held.
19
II.
Procedural History
On June 8, 2011, the grand jury returned an indictment charging Mr. Zinnel
and Ms. Eidson with various counts of bankruptcy fraud, both pre-petition and
post-petition, in violation of 18 U.S.C. 152(7) and 152(1); conspiracy to commit
money laundering in violation of 18 U.S.C. 1956(h); money laundering in
violation of 18 U.S.C. 1956(a)(1)(B)(i); and transactions in criminally derived
property in violation of 18 U.S.C. 1957. (CR 1.) The grand jury returned a
superseding indictment on December 8, 2011, preserving the original counts
against Mr. Zinnel and Ms. Eidson, and adding two additional charges of
conspiracy to commit money laundering (Count 18) and attempted money
laundering (Count 19) against Ms. Eidson. (ER179-204.)
A.
Pretrial Proceedings
Ms. Eidson and Mr. Zinnel filed several pre-trial motions. Ms. Eidson filed
a motion to dismiss Counts 18 and 19, and Mr. Zinnel filed his motion to dismiss
Counts 18 and 19 or to sever, which Ms. Eidson joined. (CR78, 80, 81.) As to the
motions to dismiss, the parties ultimately contended that Counts 18 and 19 must be
dismissed because the settlement negotiations that took place were a government
set-up and the government cannot create a false conspiracy to just try to produce
admissions. (CR80.) The parties also moved to dismiss the counts, arguing the
bulk (if not all) of the evidence against Mr. Zinnel and Ms. Eidson as to the counts
20
is subject to exclusion under Rule 408, as discussed in a companion motion.

(CR77.) Ms. Eidson and Mr. Zinnel also filed a motion to suppress the recordings
of the settlement conferences, arguing that Rule 408 precluded its admission.
(CR79.)
The government opposed the pretrial motions on March 29, 2012, April 2,
2012, and April 5, 2012. Ms. Eidson and Mr. Zinnel filed their replies on May 17,
2012. Thereafter, the district court held a hearing on the parties pretrial motions
on May 24, 2012.
In denying the parties motion to suppress the recordings under Rule 408,
the district court presumed Ms. Eidsons guilt:
[Rule] 408 was designed to deal with settlement discussions
that were between parties at arms length who were actually trying to
resolve a case. Here youve got discussions that involved an attorney,
but the settlement was, at least according to the government, part of a
conspiracy or shakedown. So it really wasnt truly a settlement that
408 contemplated.
(ER2-3.) And the district court, echoing the governments argument, determined:
The fact that you have an attorney involved in it, if that were
the case, thats all you would ever have to do is put an attorney in the
room, and there would never be any conspiracy, any type of wire
fraud or shakedown or any type of extortion because the attorney was
there.
(ER3.) Yet, the district court made no finding under any burden of proof, much
less considered whether Ms. Eidson was in fact part of a conspiracy or
shakedown. (ER3.) Instead, the district court assumed that the business
21
activities that [Mr. Zinnel and Ms. Eidson] were involved in was what is illegal,
regardless if a legitimate settlement of a dispute between parties that were
involved in business activities occurred, which may be true. (ER4-5.) The
district court then denied the parties motions to dismiss Counts 18 and Count 19
and motion to sever based on the district courts conclusions as to the parties
motion to suppress. (ER11, 12-13.)
B.
Trial Proceedings
Before trial, the parties filed several motions in limine. The parties again
raised the Rule 408 issue, arguing that, as an evidentiary matter, Rule 408
precludes admission of the recordings. (See CR171.) The district court again
denied the requests. On the eve of trial, the government provided the defense
financial summaries it intended to present to the jury. Both Ms. Eidson and Mr.
Zinnel objected to this late disclosure, as it did not provide them any opportunity to
evaluate the governments proposed financials and have an accounting expert
review the summaries for accuracies, omissions, or misleading placement of
expenses and sought a continuance. The district court overruled the parties
objection and denied the request to continue. (See 07/01/2013 RT 57-65.)
1.
The Governments Case
Trial began on July 1, 2013. The trial was aimed at Mr. Zinnel. Almost all
testimony, percipient and expert, was directed at proving the charged conduct
22
against Mr. Zinnel. Many witnesses testified that they did not know Ms. Eidson or
that they rarely talked with Ms. Eidson. (See, e.g., ER344.)
In an attempt to connect Ms. Eidson to Mr. Zinnels alleged criminal
conduct, the government introduced into evidence various banking activity related
to Ms. Eidson, such as her ownership in the Done Deal checking accounts and the
fact that she endorsed several checks from System 3 that were deposited into Done
Deals bank account. (See, e.g., ER571, 582.) But to the extent Mr. Zinnel was
engaged in criminal activity, the government presented no direct evidence that Ms.
Eidson knew or ever became aware of the underlying transactions that resulted in
payment to Done Deal. Indeed, Mr. Zinnel sent the Done Deal invoices to System
3. (ER579.) And though the government presented evidence that System 3
deposited money directly into Ms. Eidsons client trust account, it was Mr. Zinnel
who directed the deposit, and no evidence was presented that Ms. Eidson
instructed or even condoned Mr. Zinnels actions. (ER563-65; see also ER71819.)
2.
Defense Request to Play Whole Recordings Under Rule of

Completeness
The primary evidence that the government presented against Ms. Eidson was
the recordings of her statements and responses to Mr. Radoslovich during the
settlement conferences, and Mr. Radoslovichs testimony of his apparent
understanding of those statements and responses. Given the importance of the
23
recordings, and especially after Mr. Radoslovichs testimony in which he

summarized the settlement conferences, Ms. Eidson moved the district court to
include the whole recordings under Rule 106, the rule of completeness. (ER84748.) Ms. Eidson explained the governments presentation was misleading as [t]he
government has merely played a snippet where there is a discussion which they are
claiming sounds like a threat. (ER857.) The district court denied Ms. Eidsons
request; it limited its analysis to whether the played portions of the recordings
demonstrated that [Ms.] Eidson was attempting merely attempting to avoid
litigation, and concluded that the portion that has been played to the jury
captures that. And whats also clear on the tapes that have been played for this
jury is that defendant Eidson was interested in avoiding litigation. (ER859-60.)
3.
Ms. Eidsons Case
Ms. Eidson presented a defense limited to character witnesses, who testified

to Ms. Eidsons charitable nature who would loan friends money to achieve or
maintain professional aspirations, (ER973-74; 978-79), and that the most important
thing to Ms. Eidson is her children and friends, (ER979.) On cross-examination,
the government took the opportunity to confirm it was Ms. Eidson on the
recordings, to which the character witness stated that the voice on the recordings
was hers. (ER975-76; 982.)
24
4.
Motion for Acquittal, Jury Instructions, and Verdict
Before the case was submitted to the jury, Ms. Eidson and Mr. Zinnel moved
for acquittal under Rule 29, which the district court denied. (ER989-90.)
Thereafter, the district court heard argument concerning proposed jury instructions.
As to the money laundering instruction, the defense objected to the governments
proposed instruction because it is a very specific charge and must be the proceeds
from bankruptcy fraud. And the proceeds are money that was part of the
bankruptcy estate. (ER979.) The district court denied the defense objection, only
stating: The Court is going to give governments proposed jury instruction
number 41 in its entirety. (ER983.)
After seven days of testimony and four days of jury deliberation, the jury
returned a verdict of not guilty as to Count 1, pre-petition bankruptcy fraud against
Ms. Eidson, and deadlocked on Counts 2-6 and 13-16. The jury found Ms. Eidson
guilty only of Counts 18 and 19, the charges related to her participation in the
sting settlement negotiations.
C.
Sentencing Proceedings
The probation office filed its final PSR on January 30, 2014. The probation
office recommended that the loss amount be calculated at the amount of
$4,000,000, (see PSR 10-13, 19), and recommended a number of enhancements:
sophisticated money laundering; abuse of a position of trust; and obstruction of
25
justice. The recommended total offense level was 31, which placed her sentence at
a Guidelines range of 108 to 135 months; the probation office recommended 121
months. The government and Ms. Eidson filed their objections to the PSR and
sentencing position on February 14, 2014. (ER298.)
Ms. Eidson first contended that, given the recommended enhancements have
a disproportionate impact, the district court must find by clear and convincing
evidence that the enhancements apply, and made several objections to the PSR.
(ER297-98.) She objected to the loss amount, contending, Because the [purported
intended loss] occurred in the context of a negotiation, it is incorrect for the court
to find a $4,000,000 intended loss. No attorney would have expected to get
$4,000,000 under these circumstances; in general, no attorney walking into a
negotiation expects to get their opening bid. (ER298.) She also objected to the
sophisticated money laundering enhancement because the PSR improperly
base[d] the enhancement upon conduct separate from counts 18 and 19, (ER299),
and that applying sophisticated money laundering here would be double counting
because the governments basis is consistent with the actions of an attorney and
the skills employed by an attorney, (ER1304.) And she objected to the abuse of
position of trust enhancement, (ER300), and to the obstruction of justice
enhancement as well, (ER296-97, 301).
26
On the eve of Ms. Eidsons sentencing hearing on March 3, 2014, the

government filed a supplemental sentencing memorandum in support of its
position that Ms. Eidsons sentence be enhanced by her alleged obstruction of
justice. (CR318.) As scheduled, the sentencing hearing occurred on March 4,
2014. The district court ruled on forfeiture and then began Ms. Eidsons
sentencing proceeding. The district court first noted that it would apply the clear
and convincing standard as to the loss amount, but that the other enhancements
would be found by preponderance of the evidence. (ER1160.) The district court
then began to rule on Ms. Eidsons objections to the PSR. After overruling one
objection, it arrived at Ms. Eidsons objection to paragraph 15, the factual basis of
obstruction of justice. Ms. Eidson had received the governments supplemental
memorandum at 4:30pm the day before, and the district court ultimately continued
the sentencing hearing. (ER1168-69.)
On April 2, 2014, the district court proceeded with Ms. Eidsons sentencing.
After reviewing the evidence concerning the obstruction of justice enhancement,
the district court overruled Ms. Eidsons objection. Even though the district court
stopped the sentencing proceedings at paragraph 15 at the prior sentencing hearing,
the government nonetheless informed the district court that its memory was that
we got all the way up to paragraph 27. (ER1302.) What resulted was a
27
confusing proceeding, in which it is unclear whether the district court sufficiently

ruled on Ms. Eidsons objections.
The district court ultimately overruled Ms. Eidsons objections to the abuse
of position of trust enhancement, but also apparently overruled Ms. Eidsons
objection to sophisticated money laundering enhancement in ruling on the abuse of
position of trust enhancement. (See ER1307-09.) The district court had not gone
over the loss amount at the prior hearing, but the parties nonetheless stated that
they believe[d] we did. (ER1310.) The district court stated that it was just
making sure that weve gone over each of these because they are important ones
here, and stated that it does overrule that objection. (ER1310.) The district
court followed: Clearly, the evidence adduced at trial showed that the defendant
Eidson was seeking a $4 million buyout that she wished paid to Done Deal, not to
Zinnel himself. In the Courts estimation, that was part of the broader scheme to
launder money Zinnel received from System 3. (Id.)
The district court determined Ms. Eidsons offense level was 31 and
recognized the Guideline range was 108 to 135 months. (ER1313.) The district
court stated that it intended to sentence Ms. Eidson to 120 months, and allowed the
parties to make further argument.
The district court sentenced Ms. Eidson to 121 months. In sentencing Ms.
Eidson, the district court repeatedly scolded her for being an attorney. The district
28
court first stated, I dont think its really enough to say, well, you know, well, the
defendant Eidson was in love, and she did what she did out of love. Shes an
attorney. Shes an officer of the court. Shes an extension of this very same
institution that she stands before right now. (ER1324.) As to 121 months, the
Court concluded: I dont think, quite frankly, there is any significant difference
between a sentence of, what, 108 months, nine years, versus a sentence of 121
months, which is a year and a month more than that sentence. I dont think there is
any significant difference there. But quite frankly, in the Courts estimation 121
months is appropriate. (ER1327.) Ms. Eidson timely appealed her conviction and
sentence.
SUMMARY OF ARGUMENT
Ms. Eidson was erroneously convicted of conspiracy to commit money
laundering and attempted money laundering for representing her co-defendant, Mr.
Zinnel, in what she thought were two settlement negotiations of a buyout of his
interest in System 3. The government failed to present sufficient evidence as to
any of the elements of money laundering a financial transaction or monetary
transaction affecting interstate commerce, knowledge that the funds at issue
represented the proceeds of unlawful activity, and a transaction done with the
purpose of laundering the proceeds of specified unlawful activity. Moreover, the
government failed to prove an agreement between Ms. Eidson and Mr. Zinnel to
29
commit money laundering to support the conspiracy charge, or a substantial step to

support the attempt charge. Perhaps most fundamentally, the government failed to
prove any transaction that in fact involve[d] the proceeds of specified unlawful
activity because the supposed negotiations would never have led to money
changing hands, much less laundering of that money, but were instead only a
government sting.
Congress has enacted a specific provision applicable to government stings:
18 U.S.C. 1956(a)(3). However, Ms. Eidson was not charged under that
subsection. The government instead charged Ms. Eidson with conspiracy and
attempt under 18 U.S.C. 1956(a)(1) and 1957. The governments proof of its
sting effected a constructive amendment of the indictment, as neither the grand
jury nor the petit jury found, or could have found, the required elements under 18
U.S.C. 1956(a)(3) that the government agent, Mr. Radoslovich, made an
adequate representation that the funds at issue were the proceeds of bankruptcy
fraud, and that Ms. Eidson specifically intended to conceal the proceeds of Mr.
Zinnels bankruptcy fraud.
Several trial errors also require reversal. First, the district court gave
erroneous jury instructions that invited the jury to convict Ms. Eidson on an invalid
legal theory based on the governments proposed instruction that the[t]he simple
transfer of cash from one person to another may constitute a money laundering
30
offense. (ER1023.). Over objection, the district court erroneously admitted

excerpts of recordings of the settlement negotiations in contravention of Federal
Rule of Evidence 408, which generally precludes, for sound policy reasons, the
introduction into evidence of offers to compromise disputed claims. The district
court also admitted in error legal conclusions by attorney-witnesses, including Mr.
Radoslovich. And in denying Ms. Eidsons request to play the whole recordings of
the settlement negotiations pursuant to the Rule of Completeness, the district court
permitted the government to admit misleading and incomplete excerpts that
allowed the jury to convict Ms. Eidson, in what was, at best, a very close case.
While each error alone certainly warrants reversal, taken together the cumulative
effect requires reversal.
Finally, the district court committed multiple errors in sentencing Ms.
Eidson. First and most fundamentally, the district court erroneously calculated Ms.
Eidsons loss amount at the exorbitant amount of $4,000,000, where no evidence
supported such a calculation, and in fact evidence overwhelmingly established a
much lower amount of no more than $350,000. The district court also
impermissibly double counted when it applied the sophisticated money laundering
enhancement, silently overruling Ms. Eidsons objection and basing the
enhancement on its findings for the abuse of position of trust enhancement. And
even if the district court had not made significant procedural errors, the sentence
31
was nonetheless substantively unreasonable, as 121 months is far greater than

necessary to meet the goals of sentencing for Ms. Eidsons conduct in carrying out
two settlement negotiations on Mr. Zinnels behalf.
ARGUMENT
I.
The Government Failed to Present Sufficient Evidence that Ms.

Eidson Participated in any Money Laundering Conspiracy or
Attempted Money Laundering (Counts 18 and 19)
No matter which way the government argues its case, the evidence cannot
sustain Ms. Eidsons money laundering convictions for the alleged illegal activity
that occurred in 2009, three years after the bankruptcy court discharged Mr.
Zinnels debt. First and most fundamentally, Ms. Eidsons negotiation of a
business buyout the only conduct supporting Counts 18 and 19 does not
constitute money laundering as defined under 18 U.S.C. 1956(a)(1). But even if
the governments faulty theory could survive scrutiny, the government nonetheless
failed to present sufficient evidence on every element of the charged offenses. The
Court must therefore vacate Ms. Eidsons convictions.
A.
Standard of Review
A claim challenging the sufficiency of the evidence supporting an element

of an offense is reviewed de novo. United States v. Bennett, 621 F.3d 1131, 1135
(9th Cir. 2010) . The Court employs a two-step inquiry for challenges to
convictions based on sufficiency of the evidence. See United States v. Nevils, 598
32
F.3d 1158, 1164 (9th Cir. 2010) (en banc). First, a reviewing court must consider
the evidence presented at trial in the light most favorable to the prosecution. Id.
(citing Jackson v. Virginia, 443 U.S. 307, 319 (1979)). Second, the reviewing
court must determine whether this evidence, so viewed, is adequate to allow any
rational trier of fact to find the essential elements of the crime beyond a reasonable
doubt. Id. (emphasis and alteration omitted) (quoting Jackson, 443 U.S. at 319).
More than a mere modicum of evidence is required to support a verdict, id.
(quotation omitted), and insufficient evidence occurs where the evidence of the
crime itself was attenuated, United States v. Katakis, 800 F.3d 1017, 1027 (9th
Cir. 2015); see also United States v. Lo, 231 F.3d 471, 477 (9th Cir. 2000).
[E]vidence is insufficient to support a verdict where mere speculation, rather than
reasonable inference, supports the governments case, or where there is a total
failure of proof of a requisite element. Katakis, 800 F.3d at 1023 (9th Cir. 2015)
(quotation omitted).
B.
Ms. Eidsons Participation in Negotiations Over a Potential Buyout of

an Equity Interest of a Privately Held Company Does Not Constitute
Attempted Money Laundering as Defined under 1956(a)(1)
The federal money laundering statute, 18 U.S.C. 1956, prohibits specified

transfers of money derived from unlawful activities. Regalado Cuellar v. United
States, 553 U.S. 550, 556 (2008). Ms. Eidson was convicted under 18 U.S.C.
1956(a)(1)(B)(i), which makes it a crime for a person to conduct a financial
33
transaction that involves use of the proceeds of a specified unlawful activity,

knowing that the transaction is designed in whole or in part to conceal or
disguise the nature, the location, the source, the ownership, or the control of the
proceeds of specified unlawful activity. United States v. Jenkins, 633 F.3d 788,
804 (9th Cir. 2011) (quoting 18 U.S.C. 1956(a)(1)(B)(i)). Thus, the government
must prove that (1) the defendant conducted or attempted to conduct a financial
transaction; (2) the transaction involved the proceeds of unlawful activity; (3) the
defendant knew that the proceeds were from unlawful activity; and (4) the
defendant knew that the transaction [was] designed in whole or in part (i) to
conceal or disguise the nature, the location, the source, the ownership, or the
control of the proceeds of specified unlawful activity. United States v. Wilkes,
662 F.3d 524, 545 (9th Cir. 2011) (quotation omitted).
1.
The Government Failed to Prove Financial Transaction as

Defined Under the Statute
Under 1956, financial transaction is defined as:

(A) a transaction which in any way or degree affects interstate or
foreign commerce (i) involving the movement of funds by wire or
other means or (ii) involving one or more monetary instruments, or
(iii) involving the transfer of title to any real property, vehicle, vessel,
or aircraft, or (B) a transaction involving the use of a financial
institution which is engaged in, or the activities of which affect,
interstate or foreign commerce in any way or degree.
18 U.S.C. 1956(c)(4). The Court has further explained that [a]s it is used in 18
U.S.C. 1956, then, the term financial transaction is a term of art constituting
34
both an element of the offense and a jurisdictional prerequisite. United States v.

Anderson, 371 F.3d 606, 611 (9th Cir. 2004) (citing United States v. Ripinsky, 109
F.3d 1436, 1443-44 (9th Cir. 1997), as amended by 129 F.3d 518 (9th Cir. 1997)).
The government failed to prove the element and that the district court had
jurisdiction over the purported transaction.
A financial transaction under 18 U.S.C. 1956(c)(4) must itself affect
interstate or foreign commerce in a way, or use a financial institution that is
engaged in or affects interstate or foreign commerce. Jenkins, 371 F.3d at 804.
Here, the government presented no evidence that Ms. Eidsons purported conduct
involved a financial institution that is engaged in or affects interstate or foreign
commerce; rather, the government charged her with demanding some transfer of
$4,000,000 without any proof that any financial institution would be used. And
there was absolutely no evidence that a financial institution would be used (and it
never would have gotten to that point, since the negotiations were a government
set-up). Therefore, the government was required, but failed to prove that the
alleged financial transaction itself affected interstate or foreign commerce. The
governments failure results in insufficient evidence of both Counts 18 (conspiracy
to commit money laundering) and 19 (attempted money laundering).
Although the jury was erroneously instructed that [t]he simple transfer of
cash from one person to another may constitute a money laundering offense,
35
(ER1023), more fully discussed below, the attempted simple transfer here cannot
sustain any money laundering conviction. At most, the government presented
evidence that Ms. Eidson attempted to resolve a dispute with a settlement bid at
$4,000,000, with no indication as to how the payout might occur, other than it
might occur in installments. This simple transfer alone is insufficient to
establish a financial transaction that affects interstate or foreign commerce.
Indeed, the Court has explained acts [that] affect interstate commerce and
certainly are financial transactions include the transfer of funds by wire and
writing checks, Jenkins, 633 F.3d at 804-05, and the use of personal checks,
United States v. Akintobi, 159 F.3d 401, 404 (9th Cir. 1998) (personal check[s]
falls within the purview of the statute because it is a monetary instrument); see
also United States v. Estacio, 64 F.3d 477, 479-80 (9th Cir. 1995). But no
evidence established that the purported transaction would have resulted in a wire
transfer, a check, or some type of transaction that would inevitably and sufficiently
touch interstate commerce. The government simply failed to meet its burden in
proving beyond a reasonable doubt a required element of the offense and []
jurisdictional prerequisite. Anderson, 371 F.3d at 611.
36
2.
There is No Evidence, Nor Could the Government Present Any

Evidence Due to its Orchestrated Sting, that the Charged
Attempted Money Laundering In Fact Involves the Proceeds of
Specified Unlawful Activity
Congress provided that to prove beyond a reasonable doubt the defendant

committed or attempted to commit money laundering in violation of 18 U.S.C.
1956(a)(1), the government must prove that the alleged financial transaction in
fact involves the proceeds of unlawful activity. But the government concocted
the charged attempted money laundering scheme, in which settlement negotiations
between two lawyers occurred due to confidential informant Wilberts insistence
that Mr. Zinnel speak with his attorney, Mr. Radoslovich, also a confidential
informant. Thus, the government could never prove that the funds [s]he
[attempted to] launder[] were in fact the proceeds of [the bankruptcy fraud].
United States v. Hassan, 578 F.3d 108, 127 (2d Cir. 2008). The $4,000,000 in
supposed proceeds was a government fiction. There was never going to be a
buyout for $4,000,000 or any amount, and thus, there were no proceeds that in
fact could ever be involved in a financial transaction at all. Accordingly, the
governments money laundering charges in Counts 18 and 19 fail on the most
fundamental level.3 18 U.S.C. 1956(a)(1).
Indeed, defendants made a pretrial motion to dismiss Counts 18 and 19 on

this basis. (CR 80, 81.) As discussed in that motion, a government sting operation
3
37
3.
The Evidence Falls Far Short of Establishing Beyond a

Reasonable Doubt that Ms. Eidson Had Any Knowledge of the
Specified Unlawful Activity of the Charged Bankruptcy Fraud and
Concealment of those Proceeds
While the government is not required to prove defendant knew money

laundering was itself illegal, to sustain Ms. Eidsons convictions for conspiracy to
launder money and attempted money laundering, the government had to prove
that [s]he knowingly engaged in a financial transaction with the proceeds of
unlawful activity, that is, that she knew the [attempted] laundered funds were
derived from [bankruptcy] fraud. United States v. Turman, 122 F.3d 1167, 1169
(9th Cir. 1997) (citing United States v. Stein, 37 F.3d 1407, 1410 (9th Cir. 1994));
see also United States v. Rahseparian, 231 F.3d 1257, 1264 (10th Cir. 2000).
The government was required to prove that Ms. Eidson actually knew of
the specified unlawful activity in order to support its convictions for conspiracy to
commit money laundering and attempted money laundering. See United States v.
Aguilar, 80 F.3d 329, 330-331 (9th Cir. 1996) (actual knowledge is an essential
element of a crime under a with knowledge statute). [T]he Government may
not carry its burden by demonstrating that the defendant was mistaken, recklessly
cannot support a money laundering charge under 1956(a)(1), as a matter of law.

(Id.) Moreover, as discussed below, while 1956(a)(3) covers government sting
operations, the government did not and could not charge an offense under that
section, and to allow the government to proceed with evidence based entirely on a
sting effected a constructive amendment.
38
disregarded the truth, or was negligent in failing to inquire. United States v.

McAllister, 747 F.2d 1273, 1275 (9th Cir. 1984). Indeed, the Supreme Court
recently reaffirmed the longstanding rule that wrongdoing must be conscious to
be criminal. Elonis v. United States, 575 U.S. ___; 135 S. Ct. 2001, 2009 (2015)
(citations omitted). Permitting a jury to convict on the basis that the defendant
should have known is inconsistent with the conventional requirement for
criminal conductawareness of some wrongdoing. Id. at 2011 (quoting Staples
v. United States, 511 U.S. 600, 606-607 (1994)).
The jury did not find Ms. Eidson to have personally participated in
bankruptcy fraud. In fact, the jury acquitted Ms. Eidson on the pre-petition
bankruptcy fraud charge (Count 1) and deadlocked on the post-petition bankruptcy
fraud charge (Count 2). Yet Ms. Eidson was convicted of Counts 18 and 19, even
though the specified unlawful activity was the charged bankruptcy fraud.
The government also failed to prove that Ms. Eidson actually knew that Mr.
Zinnel committed bankruptcy fraud or that the buyout under negotiation
represented the proceeds of his bankruptcy fraud. The governments contention
that her romantic relationship with Mr. Zinnel demonstrated her motivation
because it aligns their interests and [t]here isnt any greater motivator to helping
someone than being in a romantic relationship with them, (ER1050.), in no way
establishes that she was aware of Mr. Zinnels alleged bankruptcy fraud. Were that
39
the case, then virtually every spouse or girlfriend could be found guilty based on
their mere association. Nor is motive sufficient to establish guilt because motive is
not an element of the crime. Cf. United States v. Brown, 880 F.2d 1012, 1015 (9th
Cir. 1989). Indeed, the jury obviously rejected the governments argument that
Ms. Eidsons supposed motivation to help Mr. Zinnel was sufficient evidence,
since the jury did not find her guilty of helping Mr. Zinnel commit bankruptcy
fraud. And the government theorized that Ms. Eidson must have known of Mr.
Zinnels apparent bankruptcy fraud because he was given access to bank accounts
for Done Deal and that she deposited checks from System 3 into those bank
accounts. But the fact of their joint banking, even that Ms. Eidson endorsed and
deposited checks from System 3, is insufficient to prove that Ms. Eidson knew Mr.
Zinnel had allegedly committed bankruptcy fraud.
In an analogous case, the Tenth Circuit reversed the defendants money
laundering convictions for insufficient evidence as to his knowledge of the
specified unlawful activity. See Rahseparian, 231 F.3d at 1264-67. The court first
found that the government failed to prove by sufficient evidence that defendant had
knowledge of his co-defendants sons fraudulent telemarketing business even if the
defendants activity in his and his co-defendant sons joint bank account was
incriminating in some way. Id. at 1262-63. Where the defendant is not the
source of the illegal funds, the inquiry into whether he knew of an intent to conceal
40
occurs only after it has been established that he knew the funds were illegal. Id.
at 1264. And having concluded the defendant was a non-participant in his sons
mail fraud and conspiracy, the court concluded that the mere fact that [defendant]
was handling his sons banking cannot evidence any intent to conceal money
from an illegal source if he had no knowledge the money was illegally obtained in
the first place. Id. at 1265. As in Rahseparian, Ms. Eidsons conspiracy to
commit money laundering and attempted money laundering convictions cannot
stand because the government failed to prove by a reasonable doubt that Ms.
Eidson had knowledge of the unlawful activity or that she was even a
participant, and ultimately requests the Court to infer that she knew of Mr.
Zinnels bankruptcy fraud. But such an inference requires a degree of speculation
and conjecture that makes [the] inference unreasonable. Id. at 1263.
The government is left with its theory that Ms. Eidson nonetheless knew of
Mr. Zinnels bankruptcy fraud as evidenced in the recordings of the two meetings
with government informant Frank Radoslovich.4 However, the recordings
establish that she did not know. Indeed, when Mr. Radoslovich suggested that Mr.
Zinnel may have committed bankruptcy fraud due to his apparent failure to
disclose his ownership in System 3 in the bankruptcy court, Ms. Eidson stated that
As discussed below, the recordings of Ms. Eidson and Mr. Radoslovich

were admitted in error and highly prejudicial to Ms. Eidsons defense.
41
she did not know what Mr. Zinnel listed on his bankruptcy schedules, and that if he
failed to disclose certain ownership, he might have a problem. (ER1466-67.) And
at the second meeting, Mr. Radoslovich again merely hypothesized that Mr. Zinnel
may have failed to disclose his ownership in System 3 in the bankruptcy and may
have a potential criminal issue. (ER1506.) Hypotheticals are insufficient to
infer knowledge. And even if Ms. Eidson knew of Mr. Zinnels and Mr. Wilberts
uncharacteristic business relationship, whereby Mr. Zinnels consultant status
was a cover for his silent ownership, that would still not prove that Ms. Eidson
knew Mr. Zinnels secret status was to defraud the bankruptcy court.
Ultimately, the government orchestrated this sting, discussed more fully
below, and even with its opportunity to design the scenario the government
failed to supply Ms. Eidson the requisite knowledge of the specified unlawful
activity. See Anderson, 391 F.3d 970, 977 (9th Cir. 2004). [B]ecause the money
laundering conviction in this case hinges entirely on [Mr. Radoslovichs]
representations to [Ms. Eidson], it is incumbent on the government to ensure that
its representations sufficiently track the federal crime in order to put the
participants on notice of the crime. Id.
42
4.
The Government Failed to Prove that the Purpose of the Purported

Financial Transaction was Designed to Conceal the Nature of the
Proceeds from Any Unlawful Activity or that Ms. Eidson Knew that
the Purpose was Designed for that Very Reason
The government also failed to prove Ms. Eidson knew that the purported
transaction was designed in whole or in part to conceal or disguise the nature,
the location, the source, the ownership, or the control of the proceeds of specified
unlawful activity, that is the proceeds of Mr. Zinnels charged bankruptcy fraud.
18 U.S.C. 1956(a)(1)(B)(i). While the governments evidence at most
demonstrated that the parties to the settlement negotiations of Mr. Zinnels and Mr.
Wilberts business dissolution recognized that the buyout was intended to conceal
something, and that if Mr. Zinnel did in fact omit his ownership in his bankruptcy
schedules the buyout would have the effect of concealing Mr. Zinnels purported
ownership in System 3, the government failed to prove that the supposed financial
transaction was designed to disguise the proceeds of the listed attribute the
charged bankruptcy fraud.
In interpreting an identical section under the money laundering statute,
1956 (a)(2)(B)(i), the Supreme Court has expressly held:
The statutory text makes clear [,] a conviction under this provision
requires proof that the purposenot merely effectof the
transportation was to conceal or disguise a listed attribute. Although
the evidence suggested that petitioners transportation would have had
the effect of concealing the funds, the evidence did not demonstrate
that such concealment was the purpose of the transportation because,
43
for instance, there was no evidence that petitioner knew about or

intended the effect.
Cuellar, 553 U.S. at 567 (interpreting 1956(a)(2)(B)(i)). Several circuits have
applied the reasoning to 1956(a)(1)(B)(i). United States v. Huezo, 546 F.3d 174,
179 (2d Cir. 2008) (Cuellar confirms that a conviction for transaction money
laundering, like a conviction for transportation money laundering, requires proof
that the purpose or intended aim of the transaction was to conceal or disguise a
specified attribute of the funds.); see also United States v. Ness, 565 F.3d 73 (2d
Cir. 2009); United States v. Cedeno-Perez, 579 F.3d 54, 60-61 (1st Cir. 2009);
United States v. Faulkenberry, 614 F.3d 573, 586 (6th Cir. 2010); United States v.
Richardson, 658 F.3d 333, 341 (3d Cir. 2011).5
The government does not meet its burden of proving purpose beyond a
reasonable doubt by merely [showing] that a transaction had a concealing effect,
and it is not enough that the transaction was structured to conceal the nature of
illicit funds. Faulkenberry, 614 F.3d at 586. Concealment even deliberate
concealment as mere facilitation of some other purpose, is not enough to
convict. Id. Ultimately, [w]hile there are many things that criminals can do with
their profits that would arouse suspicion of an intent to launder the money, actions
that are merely suspicious [] do not provide substantial evidence of a design to
This Court has not had the occasion to consider Cuellers application to
1956(a)(1)(B)(i).
5
44
conceal [and] will not alone support a conviction. United States v. GarciaEmanual, 14 F.3d 1469, 1475 (10th Cir. 1994).
Under similar circumstances to the facts here, the Third Circuit reversed a
defendants money laundering convictions. See Richardson, 658 F.3d 333. The
defendant was in a romantic relationship and later fiance of her co-defendant.
The fiance argued that the government failed to prove that she participated in
financial transactions [with co-defendant,] knowing that they were designed (at
least in part) to conceal the nature, location, source, ownership, or control of the
money, among other arguments.6 Id. at 340. The court agreed. While the
government argued that the evidence demonstrated that the co-defendant may have
committed a classic example of money laundering and that the fiance deposited
one of the four checks under $10,000 that demonstrated the deposits were designed
to avoid any reporting requirements, the court concluded: The problem the
government faces, however, is that there is precious little evidence connecting [the
fiance] to the pattern of suspicious depositing. Id. at 341. The government had
not offered [] evidence from which to infer that [the fiance] participated in or
was aware of the other deposits and when [v]iewed as a whole, the evidence was
not sufficient to establish knowledge of a design to conceal on [the fiances]
The fiance conceded that the transactions involved at least some drug
money. Richardson, 658 F.3d at 338.
6
45
part. Id. at 341-42. The court noted, After all, without knowledge of a design to
conceal the nature, source, or ownership of the money, [the fiance] could not have
agreed to conceal the nature, source, or ownership of the money. Id.
As in Richardson, the government presented precious little evidence [if
any] connecting Ms. Eidson to Mr. Zinnels supposed design to conceal his
bankruptcy fraud due to his deliberate omission of his equity interest in System 3
on his bankruptcy schedule a year after he assigned the interest to Done Deal. See
id. at 340-41 ([t]he government need not prove that defendant herself had the
intent to conceal one of the listed attributes of the funds, but must at least
establish that the defendant knew someone else had that purpose.). While Ms.
Eidson was in a romantic relationship with Mr. Zinnel, as was the fiance with her
co-defendant, the relationship alone is insufficient to prove knowledge of purpose.
And as discussed below, far from intending any concealment, Ms. Eidsons
participation in the settlement negotiation was as an attorney representing Done
Deal and Mr. Zinnel in an attempt to avoid litigation concerning Done Deal and/or
Mr. Zinnels rights in System 3. Her so-called threats, as Mr. Radoslovich put it,
are an attorneys reasonable attempts to point out weaknesses in System 3s
negotiating position. She repeated several times that she wanted to avoid any
potential litigation, both Mr. Zinnel and Mr. Wilbert had made bad decisions in the
46
past, and would have to live with the consequences should she and Mr.
Radoslovich not reach an agreement. (ER1515.)
To the extent the settlement meetings establish that there was some purpose
to conceal the buyout, mere facilitation of some other purpose, is not enough to
convict.7 Faulkenberry, 614 F.3d at 586 (emphasis added). At most, the
recordings admitted into evidence establish a litany of other purposes to conceal
Mr. Zinnels ownership. Indeed, Mr. Radoslovich himself acknowledged a
number of other reasons, as did Ms. Eidson. The list includes: tax evasion by
Wilbert, misrepresentation of the extent of Wilberts ownership of System 3s
equity to the Secretary of State, misrepresentations to banks, and also to bonding
companies. (ER1511; 1516; 1517.)
The district court instructed the jury that it must find the defendants knew
that the transaction was designed, in whole or in part, to conceal or disguise the
nature, location, source, ownership, or control of the proceeds of bankruptcy
fraud. (ER1023.) However, the instruction did not inform the jury that design
means purpose or plan. See Cuellar, 553 U.S. at 563. By omitting the very
important definition of design, the jury was permitted to, and likely did, find that
Ms. Eidson knew that the financial transaction was designed to conceal the
ownership of the proceeds of bankruptcy fraud because the attempted
transaction would have the effect of concealing the bankruptcy fraud. But as
discussed above, a conviction under [ 1956(a)(1)(B)(i)] requires proof that the
purposenot merely effectof the [financial transaction] was to conceal or
disguise a listed attribute. Id. at 567.
7
47
C.
The Government Also Failed to Prove Ms. Eidson Conspired with Mr.
Zinnel to Commit Money Laundering
Besides the governments deficiency in proving each and every element

under 1956(a)(1)(B)(i), as discussed above, the government also failed to establish
that Ms. Eidson agreed, expressly or tacitly, to participate in any conspiracy. The
essence of conspiracy is the combination of minds in an unlawful purpose.
Smith v. United States, 586 U.S. ___, 133 S. Ct. 714, 719 (2013) (quoting United
States v. Hirsch, 100 U.S. 33, 34 (1879)). But as demonstrated above, the
government failed to prove this most basic element of conspiracy.
This Court has explained that it is proper to draw inferences of the
existence of such an agreement if there be a concert of action, all the parties
working together understandingly, with a single design for the accomplishment of
a common purpose. United States v. Hubbard, 96 F.3d 1223, 1226 (9th Cir.
1996) (quoting United States v. Melchor-Lopez, 627 F.2d 886, 890 (9th Cir.
1980)). Here, there was no such working together understandingly, with a
single design for the accomplishment of a common [unlawful] purpose. Id. The
only evidence of any agreement between Ms. Eidson and Mr. Zinnel was their
agreement to have Ms. Eidson represent Mr. Zinnel in negotiating the termination
of the business relationship of Mr. Zinnel and Done Deal, with Mr. Wilbert and
System 3. The evidence was insufficient to support that Ms. Eidson explicitly or
tacitly agreed, through her representation in these negotiations, to knowingly
48
participate in unlawful efforts to launder the proceeds of Mr. Zinnels alleged

bankruptcy fraud.8
D.
Even if the Government Could Establish that a Financial

Transaction Occurred and Ms. Eidson Had the Requisite Knowledge
and Intent, the Government did not Meet Its Burden in Proving Ms.
Eidson Took a Substantial Step in Her Attempt to Launder Money
[A] conviction for attempt requires proof of culpable intent and conduct
constituting a substantial step toward commission of the crime that strongly
corroborates that intent. United States v. Taylor, 716 F.2d 701, 711 (9th Cir.
1983) (emphasis added). And [e]ven when the defendants intent is clear, [her]
actions must cross the line between preparation and attempt by unequivocally
demonstrating that the crime will take place unless interrupted by independent
circumstances. United States v. Yossunthorn, 167 F.3d 1267, 1271 (9th Cir.
1999).
The conspiracy charge, Count 18, charged two objects of the conspiracy:
18 U.S.C. 1956(a)(1)(B)(i), discussed above, and 1957. For the same reasons
Ms. Eidsons conviction fails under 1956(a)(1)(B)(i) since the government failed
to prove any financial transaction, so does the 1957 charge. The government
cannot prove Ms. Eidson engaged or attempted to engage in a monetary
transaction affecting interstate or foreign commerce. 18 U.S.C. 1957(a) and
(f)(1). Moreover, in order to sustain a 1957(a) conviction, a financial institution
must have been involved. Ness, 565 F.3d at 78. As discussed above under
SectionI.B.1, the government presented no evidence that a financial institution
would have been used had the financial transaction even been possible, nor is
there any evidence that any transaction could have occurred that would affect
interstate or foreign commerce.
49
Ignoring Ms. Eidson participated in two sting settlement negotiations and

that the crime could never take place, the government failed to prove that Ms.
Eidson took a substantial step in her alleged attempt to launder money.
Yossunthorn is on point. 167 F.3d 1270-73. The Court rejected the governments
theory that it established defendants substantial step where all major elements of
the drug transaction were accomplished and that [defendant] and [informants]
scheduled [] meeting was merely to arrange ministerial details, because the
defendant and informant had neither agreed on the quantity of heroin that
[defendant] would purchase nor on the delivery time and method. Id. at 1272.
The Court concluded the government could not prove a substantial step, as there
were essential elements of the transaction yet to be arranged. Id.
Strikingly similar here is the lack of any evidence that Ms. Eidson and Mr.
Radoslovich arranged the essential elements of the transaction. Id. While Ms.
Eidson indicated her desire to negotiate a deal to avoid litigation, the key
elements of the deal were incomplete. Like in Yossunthorn, the key ingredients
of the settlement at issue had not been determined, nor were they even close to
coming to an arrangement. Again, ignoring that the settlement negotiations were a
creation by the government, the recordings establish that at most Ms. Eidson and
Mr. Radoslovich were still in early stages of discussing settlement, including
50
whether the equity buyout of privately held System 3 could even occur, given the
potential exposure Mr. Wilbert faced.
Moreover, Ms. Eidsons expressed eagerness to consummate the deal and
[her] efforts towards doing so are at most evidence of intent, rather than
evidence supporting a finding that [Ms. Eidson] took a step of such substantiality
that, unless frustrated, the crime would have occurred. United States v. Nelson,
66 F.3d 1036, 1043-44 (9th Cir. 1995) (quoting United States v. Harper, 33 F.3d
1143, 1147 (9th Cir. 1994)). Indeed, if the evidence establishes anything (which it
does not), it is that Ms. Eidsons actions were mere preparation, and were not
sufficient to show an attempt to launder money. Id. at 1044. Her actions were
too tentative and unfocused to be an appreciable fragment of the crime of
concealing the nature or ownership of proceeds from specified unlawful activity.
See id. Accordingly, the evidence does not support a finding that Ms. Eidson took
a substantial step toward violating 1956(a)(1)(B)(i).
51
The District Court Erred in Denying the Defendants Motion to

Dismiss Effecting a Constructive Amendment with the Governments
Evidence of Its Sting Operation9
II.
A.
Standard of Review
When a defendant raises a constructive amendment claim before the district

court, the Court reviews de novo. United States v. Ward, 747 F.3d 1184, 1188
(9th Cir. 2014). The Court also reviews de novo a claim that there was a fatal
variance between proof at trial and the facts alleged in the indictment. United
States v. Doss, 630 F.3d 1181, 1191 (9th Cir. 2011). A constructive amendment
always requires reversal, but a variance requires reversal only if it prejudices a
defendants substantial rights. United States v. Adamson, 291 F.3d 606, 615 (9th
Cir. 2002) (quoting United States v. Olson, 925 F.2d 1170, 1175 (9th Cir. 1991)).
B.
The Government Effected a Constructive Amendment of the Charging

Indictment
Under the Fifth Amendments Grand Jury Clause, defendants have the right
to be tried on the charges set out in the indictment and only those charges. Stirone
v. United States, 361 U.S. 212, 215-216, 218 (1960). It is the exclusive
prerogative of the grand jury finally to determine the charges, and once it has done
so neither a prosecutor nor a judge can change the charging part of an indictment to
Ms. Eidson also joins in Mr. Zinnels argument that a constructive

amendment occurred as to Counts 1 and 2, rendering Ms. Eidsons convictions
invalid because the money laundering was predicated on uncharged conduct.
9
52
suit [his or her] own notions of what it ought to have been, or what the grand jury
would probably have made it if their attention had been called to suggested
changes. Ward, 747 F.3d at 1189 (quoting United States v. Leichtnam, 948 F.2d
370, 357-76 (7th Cir. 1991)). The government effects a constructive amendment
by charging the defendant with one crime but presenting proof of another,
uncharged crime. United States v. Pazsint, 703 F.2d 420, 422-24 (9th Cir. 1983).
A constructive amendment requires reversal because it destroy[s] the defendants
substantial right to be tried only on charges presented in an indictment. Id.
(quoting Stirone, 361 U.S. at 217).
Here, the government charged conspiracy to commit money laundering
under 18 U.S.C. 1956(a)(1) and 1957, and attempted money laundering under
18 U.S.C. 1956(a)(1). As discussed above, those charges required proof that the
transaction actually involved criminal proceeds or criminal derived property. Yet,
the governments proof at trial as to Counts 18 and 19 against Ms. Eidson was
entirely based on its sting operation there were no actual criminal proceeds or
criminally derived property that would be involved in a financial or monetary
transaction.10 Congress provided a specific statutory subsection to address sting
10
A constructive amendment also occurred as to the attempted money

laundering charge due to the erroneous date of the alleged conduct in Count 19 as
taking place in 2010. Understandably confused, the jury sent a note questioning
Count 19 as it informed the jury that the charged conduct related to activity in
53
operations in money laundering cases: 18 U.S.C. 1956(a)(3). The government,

however, did not charge an offense under 1956(a)(3).
Recognizing this fundamental flaw, prior to trial, the defendants moved to
dismiss Counts 18 and 19 because it was orchestrated and fabricated by the
government and therefore could not constitute money laundering as charged.
(CR80.) The district court denied the motion and permitted the government to
introduce the recordings of its sting. In so doing, the district court permitted a
constructive amendment of the indictment which allowed the jury to erroneously
convict based on an uncharged offense under 18 U.S.C. 1956(a)(3).
The failure to charge the correct offense here was critical, as Ms. Eidson
cannot be convicted for a crime not charged in the indictment. See Pazsint, 703
F.2d at 422-24. Under 1956(a)(3), the government was required to prove that a
government agent or individual at the direction of the government represented to
the defendant that the financial transaction at issue is the proceeds of specified
unlawful activity, 18 U.S.C. 1956(a)(3), and that the defendant not just knew of a
2010, not 2009. Ms. Eidson moved to dismiss the count based on the
governments failure to inform her that it would present evidence that the charged
conduct occurred in 2009 rather than 2010 as to the attempted money laundering,
but the district court denied her request and over objection, instructed the jury that
the charged conduct relates to alleged actions in 2009. (See 07/15/13 RT 1208,
1210-12, 1214-17.) The government admitted that it was aware of [the erroneous
date] prior to trial commencing, but that it believed that this was not something
that [it] wanted to lose a trial date over by going back to the grand jury. (07/15/13
RT 1207.)
54
design to conceal the proceeds of specified unlawful activity, but believed such
statements to be true with specific intent to proceed in the set-up transaction. See
U.S. Attorneys Manual, Criminal Resource Manual 2127; see also 18 U.S.C.
1956(a)(3). Neither the grand jury nor the petit jury was asked to find either of
these elements.
Nor could either jury have found the missing elements of 18 U.S.C.
1956(a)(3). As discussed above, the evidence was insufficient to establish Ms.
Eidsons knowledge, even adding together the recordings plus circumstantial
evidence, and it certainly was insufficient to establish that Mr. Radoslovich
actually represented the buyout to be the proceeds of specified unlawful activity.
The Court has explained that while it is not unsympathetic to the governments
argument that providing its targets with too much detail would spoil the sting, []
the statute requires that the scenario of the sting represent specific unlawful acts.
Anderson, 317 F.3d at 611. [I]t is incumbent on the government to ensure that its
representations sufficiently track the federal crime in order to put the participants
on notice of the crime. Id. at 612.
Nor was there any evidence that Ms. Eidson had the requisite belief and
intent under 1956(a)(3). The intent requirement is bolstered by the requirement
that the financial transactions in question must involve property represented to be
the proceeds of specified unlawful activity. United States v. Castellini, 392 F.3d
55
35, 45 (1st Cir. 2004) (quoting 18 U.S.C. 1956(a)(3)) (emphasis in original).

The government agent need not expressly state that the funds are proceeds of
illegal activity if that is the natural inference to be drawn., id. at 46, but the agent
must nonetheless make a representation. A representation is the manifestation
to another that a fact exists. Id. at 46-47 (quoting Blacks Law Dictionary
1327 (8th ed. 2004)). But nowhere in the record was Ms. Eidson advised that
bankruptcy fraud in fact existed or had even occurred. Instead, at both meetings,
Mr. Radoslovich presented that there may be a potential criminal issue. (ER1519
[emphasis added]; ER1469.)11
III.
A.
The Jury Instructions Impermissibly Invited the Jury to Convict Ms.

Eidson on the Legally Invalid Theory that the Simple Transfer of
Cash Can Constitute a Money-Laundering Offense
Standard of Review
The district courts interpretation of the money laundering statute and the
scope of the conduct covered by the statute is a question of law reviewed de novo.
United States v. Deeb, 175 F.3d 1163, 1166-67 (9th Cir. 1999) (citing United
States v. Ripinsky, 20 F.3d 359, 361 (9th Cir. 1994)). The Court review[s] the
Given that [t]he line between a constructive amendment and a variance is

at times difficult to draw, Adamson, 291 F.3d at 615, if the Court views the
governments proof at trial as a variance, it is nonetheless fatal. The divergence
between the crime charged and the crime proved prejudiced Ms. Eidsons
substantial rights for the same reasons discussed above. See id. at 616.
11
56
district courts formulation of jury instructions for an abuse of discretion, United

States v. Hofus, 598 F.3d 1171, 1174 (9th Cir. 2010) (citing United States v.
Ortega, 203 F.3d 675, 684 (9th Cir. 2000)), and review[s] de novo whether the
instructions misstated or omitted an element of the charged offense, id. (citing
United States v. Stapleton, 293 F.3d 1111, 1114 (9th Cir. 2002)). The relevant
inquiry is whether the instructions as a whole are misleading or inadequate to guide
the jurys deliberation. Id. (quoting United States v. Frega, 179 F.3d 793, 806
n.16 (9th Cir. 1999)). An error in criminal jury instructions requires reversal
unless there is no reasonable possibility that the error materially affected the
verdict or, in other words, that the error was harmless beyond a reasonable doubt.
United States v. Cortes, 757 F.3d 850, 857 (9th Cir. 2014) (quoting United States
v. Pierre, 254 F.3d 872, 877 (9th Cir.2001)).
B.
The Jury Instructions Were Misleading and Negated the Required

Elements of Money Laundering in Violation of 1956
[C]onstitutional error occurs when a jury is instructed on alternative

theories of guilt and returns a general verdict that may rest on a legally invalid
theory. United States v. Garrido, 713 F.3d 985, 994 (9th Cir. 2013) (quotation
omitted); see also Yates v. United States, 354 U.S. 298, 327 (1957) (conviction
could not stand where jury was never told that Smith Act did not criminalize
abstract advocacy and therefore court gave wholly inadequate guidance to the jury
57
on this central point in the case), overruled on other grounds, Burks v. United
States, 437 U.S. 1 (1978). Thus, [w]here the jury is presented with a legally
inadequate theory, as opposed to a factually inadequate theory, Yates requires that
the conviction be vacated and the case retried as to that charge. United States v.
Barona, 56 F.3d 1087 (1995).
Over objection, the district court gave the governments proposed jury
instruction for money laundering that included, [t]he simple transfer of cash from
one person to another may constitute a money-laundering offense. (ER1023.)
The instruction allowed the jury to conclude that it could find money laundering
based on an attempted simple transfer of cash from one person to another
without finding the requisite effect on interstate commerce or use of a financial
institution engaged in interstate commerce.
Section 1956 specifically delineates what constitutes a financial
transaction for purposes of the money laundering statute:
(A) a transaction which in any way or degree affects interstate or
foreign commerce (i) involving the movement of funds by wire or
other means or (ii) involving one or more monetary instruments, or
(iii) involving the transfer of title to any real property, vehicle, vessel,
or aircraft, or (B) a transaction involving the use of a financial
institution which is engaged in, or the activities of which affect,
interstate or foreign commerce in any way or degree.
18 U.S.C. 1956(c)(4). The statute plainly does not define financial transaction
to include the simple transfer of cash from one person to another.
58
Likewise, nowhere in the Ninth Circuit Model Criminal Jury Instructions for
laundering monetary instruments in violation of 18 U.S.C. 1956(a)(1)(B) is
financial transaction defined as the simple transfer of cash from one person to
another. See Ninth Cir. Model Crim. Jury Instr. 8.147. Instead, the government
came up with its proposed instruction on its own, citing United States v. Otis, 127
F.3d 829, 832-33 (9th Cir. 1997) (per curiam). However, Otis provides no support
for the instruction nor is it even on point.
In Otis, defendants were convicted under a different section of the money
laundering statute, 18 U.S.C. 1956(a)(2), and contended on appeal the mere
delivery of money from a defendant to a money launderer does not constitute
taking steps to conceal or disguise the nature of the funds being transferred. Id. at
832-33. The Court rejected the defendants contention without analysis, simply
stating: There was sufficient evidence for the jury to find that the defendants
intended to assist the Cali cartel in laundering its money, and were not merely
delivering money. Id.
This Courts opinion in United States v. Choy, 309 F.3d 602, 606 (9th Cir.
2002), is instructive. In Choy, as here, the government presented an invalid theory
of guilt (an overbroad theory of bribery). Id. at 605-06. The district court then
invited the jury to convict on that theory when it instructed the jury using the
governments flawed theory of the offense. Id. at 606. This Court found
59
reversible error, explaining that the conduct for which the defendant was convicted
of bribery did not come within the statutory definition of the crime: and his
conviction constituted legal error. Id. at 606. Likewise, here, the simple transfer
of cash from one person to another, the conduct for which [Ms. Eidson] was
convicted of [money laundering] did not come within the statutory definition of
the crime: [her] conviction constituted legal error. Id.
C.
The Instructional Error Was Prejudicial
While the district court did give Instruction 8.147 of the Ninth Circuit Model
Criminal Jury Instructions, the insertion of the governments proposed language
negated the accurate definition of financial transaction:
A financial transaction is a transaction involving the use of a
financial institution which is engaged in interstate commerce, or
activities which affect interstate commerce in any way, including
transactions that cause transfers of funds across state lines. The simple
transfer of cash from one person to another may constitute a
money-laundering offense. The government need not prove that the
entirety of the money involved in the financial transaction came from
tainted proceeds. Proof that funds came from an account in which
tainted proceeds were commingled with other funds is sufficient.
(ER 1022-23.)
This Court has held: Where two instructions conflict, a reviewing court
cannot presume that the jury followed the correct one. United States v. Knapp,
120 F.3d 928, 931 (9th Cir. 1997) (quoting Stein, 37 F.3d at 1410). This is so,
because by applying the later [simple transfer of cash] instruction, a jury could
60
convict [Ms. Eidson] without finding that any financial transaction as defined
under 1956(c)(4) occurred. Stein, 37 F.3d at 1410. And worse, by using the term
money-laundering offense in that instruction, the district court misled the jury to
believe that it could convict by finding that the simple transfer of cash alone
constitutes a money-laundering offense by its own terms.
IV.
A.
Several Evidentiary Errors Also Require Reversal

Standard of Review
The district courts construction of an evidentiary rule is a question of law that

is reviewed de novo. United States v. Montoya, 945 F.2d 1068, 1078 (9th Cir.
1991). The Court review the district courts decision on the Rule of Completeness
and other evidentiary rulings for an abuse of discretion. United States v. Vallejos,
742 F.3d 902, 905 (9th Cir. 2014) (citing United States v. Collicott, 92 F.3d 973,
983 (9th Cir. 1996)).
B.
The District Court Improperly Refused to Exclude Evidence of

Settlement Negotiations in Violation of Federal Rule of Evidence 408
Rule 408 is designed to ensure that parties may make offers during
settlement negotiations without fear that those same offers will be used to establish
liability should settlement efforts fail. Rhoades v. Avon Prods., 504 F.3d 1151,
1161 (9th Cir. 2007). Over repeated objection, the district court admitted
settlement discussions (though it was a government set up and apparent sting
61
operation) between Mr. Zinnel and Tom Wilbert, and between Ms. Eidson and Mr.
Wilberts attorney, Frank Radoslovich, to prove Ms. Eidsons and Mr. Zinnels
criminal liability and the invalidity of Mr. Zinnels contractual claim, based upon
the district courts pretrial determination of guilt, for which it relied solely on
unproven allegations.
Federal Rule of Evidence 408 prohibits admission of conduct or statements
made during compromise negotiations about the claim either to prove or disprove
the validity or amount of a disputed claim or to impeach by a prior inconsistent
statement or a contradiction. The primary policy underlying Rule 408s exclusion
is to promote the public policy favoring the compromise and settlement of
disputes. Fed.R.Evid 408, Advisory Comm. Notes. The Rule is intended to
encourage frank discussion among parties uninhibited by fears that statements
made in negotiations will be used in court. United States v. Contra Costa County
Water Dist., 678 F.2d 90, 92 (9th Cir. 1982). The Supreme Court has long
recognized the critical importance of this public policy. Williams v. First Nat.
Bank, 216 U.S. 582, 585 (1910). Nevertheless, the district court ignored wellestablished law and public policy, and admitted the recordings of settlement
conferences.
The district court first erred in adopting the governments contention that
settlement conferences were not real settlement negotiations, but a transaction
62
[that] papered over its fundamental illegality, and thus, outside the purview of
Rule 408. (ER 2-5; CR 106.) The statements made in the meetings were certainly
compromise negotiations, as even Mr. Wilbert and Mr. Radoslovich admit they
were such. (ER674.) And the recordings, taken as a whole, certainly demonstrate
that the parties to the compromise negotiations were trying to reach an agreeable
resolution, regardless if it would ever in fact happen since the meetings were a
government set-up. Ultimately, the district court presumed Ms. Eidsons and Mr.
Zinnels guilt in concluding Rule 408 did not apply. But even so, the fact that
there might be criminal activity afoot does not take the settlement conference
outside of Rule 408.
The court in United States v. Doxie, 2014 U.S. Dist. LEXIS 109131 (N.D.
Ga. 2014) adopted by district court, 2014 U.S. Dist. LEXIS 107031 (N.D. Ga.
2014) rejected such a proposition. There, the government argued that the
settlement talks should be admitted because the defendants statements were made
to mislead the company into believing that no fraud had taken place. The Doxie
court reasoned:
This argument is puzzling and not helpful. Surely, the governments
attorney knows that the court cannot assume for purposes of this ruling
that [defendant] is guilty of the fraud charged in the indictment.
Regardless of [defendants] guilt or innocence, the issue for the Court is
whether the statements submitted by [defendants] attorney were
intended to be a part of negotiations towards compromise of a civil
dispute.
63
Id. at *11; see also United States v. Skeddle, 176 F.R.D. 254, 256 (N.D. Ohio,
1997) (excluding defendants interviews with corporate counsels investigators that
were made in an effort to facilitate settlement in related litigation). Here, on the
other hand, the district courts ruling depended on the untenable premise that the
government could defeat Rule 408 simply by making an allegation of illegality,
especially where there was no evidentiary hearing or any evidence offered to prove
the governments allegations.
Nor were the recordings admitted for a permissible purpose. The
government claimed that it used the evidence for a permissible purpose under Rule
408, i.e., proving their knowledge that the funds were the proceeds of the
bankruptcy concealment, for proving that there was an agreement between Zinnel
and Eidson, for proving their attempt to engage in a transaction, for proving [their]
intent to disguise and conceal assets, and proving the amount of the attempted
transaction. (CR106.) But every purpose for which the government offered the
negotiations was expressly forbidden under Rule 408.
The fundamental problem with the governments argument is that the
government used the settlement negotiations as direct evidence of the defendants
guilt. In fact, Counts 18 and 19 were based entirely on the fact that settlement
negotiations occurred and the conduct and statements at those meetings. The
government hoped and was ultimately allowed to present the evidence so that the
64
jury could find there was nothing legitimate about [Mr. Zinnel and later, Ms.
Eidson] approaching Tom Wilbert for this payout, and thus that Ms. Eidson and
Mr. Zinnel committed Counts 18 and 19. (CR 106.) But the governments
purpose unquestionably was to show that Ms. Eidsons and Mr. Zinnels claim to
payments from System 3 was invalid precisely the purpose forbidden by Rule
408 and thus, to prove their consciousness of guilt.
Several courts have rejected similar attempts to use civil settlement
negotiations to prove a defendants guilt. For example, in United States v. Davis,
596 F.3d 852 (D.C. Cir. 2010), the trial court allowed the government to introduce
statements by a fraternitys national treasurer (the defendant) to his replacement,
offering to repay some of the allegedly embezzled funds to make this go away.
Id. at 859. The court reversed, holding:
There can be no doubt that [defendant] offered to compromise a
disputed claim. His offer was to split [repayment of] the $29,000 in
checks to cash he thought the fraternity had discovered. The claim
was disputed as to validity or amount. Fed.R.Evid. 408(a). It is
also clear that the government intended to introduce [defendants]
settlement offer in order to prove [defendants] guilt, or in the words of
Rule 408(a), his liability.
Id. In doing so, the court rejected the governments position that Rule 408 does
not require exclusion if the evidence is offered for purposes not prohibited by [Rule
408(a)]. Id., at 860. The problem for the government is that it wanted to use
[witness] testimony as evidence of [defendants] knowledge of his own guilt, which is
65
to say his liability. Id. As the Davis court reasoned: [T]he prosecutor had argued
to the jury that the conversation revealed [defendants] consciousness of guilt. But
that is one of the prohibited purposes in Rule 408(a). Consciousness of guilt proves
liability for a disputed claim under Rule 408(a). Id. at 861; see also United States
v. Hays, 872 F.2d 582, 588-589 (5th Cir. 1989) (rejecting the governments claim
that evidence of a settlement agreement was properly offered to assist the jury in
its understanding of the breadth of the conspiracy.); United States v. Davis, 2009
U.S. Dist. LEXIS 102559 *5 (E.D. Pa. 2009) (Davis II) (settlement agreement
between a fraud defendant and an alleged victim, which contained admissions of
the defendants liability for the fraud charged in the indictment, inadmissible under
Rule 408 to prove liability for a claim, i.e., the defendants guilt.)
And the introduction of the settlement negotiations was indisputably
prejudicial. This evidence was the entirety of the governments case as to Counts
18 and 19, the only counts on which Ms. Eidson was convicted. Even with this
evidence, the evidence was insufficient to convict Ms. Eidson, as discussed above;
without this evidence, the evidence as to Counts 18 and 19 was non-existent.
The government hammered the negotiations evidence throughout the sevenday jury trial, and played the recordings at every chance it could, including during
its opening statement and closing argument. One-third of AUSA Segals opening
statement discussed the negotiations. (ER478-86.) The government played audio
66
clips from the recorded meetings 27 times during trial testimony with the
transcripts simultaneously displayed for the jury. (ER803-20.) The government
introduced 19 settlement-related exhibits. (E.g., ER1353; 1419-35.) Mr.
Radoslovich gave 94 responses to questions about the negotiations, about the
interests at stake, Ms. Eidsons statements in the negotiations, the meaning of his
statements to Ms. Eidson, and his impressions of Ms. Eidsons meaning and
intentions. (ER786-821.)
The negotiations evidence was central to the governments arguments, and
the only evidence as to Ms. Eidsons charges of conviction. They argued, inter
alia, that the recordings showed that Mr. Zinnel had concealed assets from the
bankruptcy trustee, that Ms. Eidson knew of the concealment, and that their efforts
to obtain $4,000,000 proved conspiracy to launder proceeds of the bankruptcy
fraud. (ER1043-44; 1048; 1114-16; 1132-35.) AUSA Hemesath replayed several
excerpts, including Ms. Eidsons comments that it would be in everyones best
interests to avoid shining light on their arrangement, and argued that the recordings
and proposed agreements proved Counts 18 and 19. (ER1065-68.) And AUSA
Segal argued in rebuttal that Zinnels own voice on a recording demanding
money overcame the impeachment of discredited witnesses Thomas and Julia
Wilbert. (ER 1115-16.) He further argued that Ms. Eidsons responses showed
that she knew Mr. Zinnel was committing bankruptcy fraud and laundered the
67
proceeds, and that Ms. Eidson lied on the tape about her involvement with Mr.
Zinnels bankruptcy because she knows that the bankruptcy is red hot with fraud.
(ER1133-34.)
Finally, even if the government could construct some permissible purpose
under Rule 408, which it could not, the district court failed to conduct the required
balancing analysis under Federal Rule of Evidence 403. The evidence was
substantially more prejudicial than probative, as discussed above. Indeed, based
on the risk that a jury will view the agreement as a confession of liability and guilt,
regardless of the purpose for which the evidence is received, Rule 403 required
exclusion. Davis II, 2009 U.S. Dist. LEXIS 102559 at *14. In the present case,
the risk was enormous that the jury would use the settlement evidence for the
improper purpose of establishing liability and consciousness of guilt. Accordingly,
the Court should reverse on all counts, remand for a new trial, and instruct the
district court to exclude admission at retrial of all statements made during
negotiations, and testimony about such negotiations.
C.
The District Court Erred in Admitting Prejudicial Legal Conclusions

by Legal Experts
Ms. Eidson joins in Mr. Zinnels argument, as Mr. Radoslovichs improper

expert legal testimony was error and prejudiced her. Mr. Radoslovichs
68
testimony, and specifically his explanations and understanding of her statements

at the meetings, was the primary evidence against Ms. Eidson.
D.
Admitting Only the Governments Desired Snippets of Ms. Eidsons

Meetings with Mr. Radoslovich Over Objection and Request to Admit
the Whole Recordings Requires Reversal
The full recordings of the settlement discussions between Ms. Eidson and
Mr. Radoslovich demonstrate that Ms. Eidson was trying to act as a lawyer, on
behalf of her client Mr. Zinnel, not participate in some conspiracy to commit
money laundering. But the government nonetheless only offered snippets of the
recordings that best suited its theory that Ms. Eidson knew of Mr. Zinnels charged
bankruptcy fraud and that she agreed to conspire and attempt to money launder to
conceal it, even though the recordings as a whole demonstrate that she did not
know of the charged bankruptcy fraud or attempt to commit money laundering.
The Federal Rules of Evidence provide that [i]f a party introduces all or
part of a writing or recorded statement, an adverse party may require the
introduction, at that time, of any other part or any other writing or recorded
statement that in fairness ought to be considered at the same time. Fed.R.Evid.
106. Rule 106 codified the common law Rule of Completeness, which exists to
avert misunderstanding or distortion caused by introduction of only part of a
document. Vallejos, 742 F.3d at 905 (quoting Beech Aircraft Corp. v. Rainey, 488
U.S. 153, 172 (1988)). The Court has explained that while it is often perfectly
69
proper to admit segments of prior [recordings] without including everything, and

adverse parties are not entitled to offer additional segments just because they are
there and the proponent has not offered them, the district court must nonetheless
be mindful of whether the complete recording would serve to correct a
misleading impression in the edited statement that is created by taking something
out of context. Id. (citing Collicott, 92 F.3d at 983).
The whole recordings show that Ms. Eidson was not even close to a
substantial step in the attempted money laundering, as the recordings amply
establish that the parties had not agreed upon the key elements of the deal. See
Yossunthorn, 167 F.3d 1272. In fact, Mr. Radoslovich confirmed they were far
from reaching satisfactory terms to settle. (ER1519.) For example, Mr.
Radoslovich sought a guarantee that Mr. Zinnel could provide indemnification
before the parties could come to an agreement. (See ER1481.) He proclaimed,
however, that he did not believe Mr. Zinnel could ever guarantee that. (Id.) Thus,
had the whole recordings been played for the jury, it would undoubtedly have
concluded Ms. Eidson had not taken any step, much less a substantial step, to
conducting some financial transaction.
The whole recordings also demonstrated that the purpose of the proposed
confidentiality of the settlement, aside from it being first proposed by Mr. Wilbert,
was that Mr. Wilbert had various reasons that Ms. Eidson assumed would be in his
70
and System 3s interest in not disclosing Mr. Zinnels interest in System 3. (See
ER1476; 1506; 1513-14.) Had those parts of the recorded settlement negotiations
been played to the jury, the jury would absolutely have seen that there was much
more at play than merely some notion that the concealment of Mr. Zinnels
interest was to continue his charged bankruptcy fraud.
Most damning was the governments excerpt of only Ms. Eidsons
statement:
If Tom were my client as best as I can say to you. If Tom
were my client I would say Theres some decisions that were made
before I got involved in the case about some representations that were
made to employees about the form of this business or whatever.
During that time there was also an oral consulting agreement. So if
you want to terminate your relationship with Steve, you can either do
a termination of ownership interest which has not been disclosed, or
do a termination of consulting agreement. And then everyone walks
away with bad decisions that were made before cant really be
changed at this point, you know, everyone has followed through with
what they agreed to. Thats what I would say.
(ER1515.) Of course, the district court admitted this statement without any context
or suggestion that Ms. Eidson was responding to Mr. Radoslovichs question,
Well, so if Im going to communicate a message to Tom, what should I tell him?
(ER1515.) And that question came after the two discussed in detail the potential
exposure Mr. Wilbert (not Mr. Zinnel) faced if Mr. Zinnels interest was disclosed.
Mr. Radoslovich thereafter asked, And if he says no, then what happens?
(ER1515.) Ms. Eidsons prediction would be litigation. (ER1515.)
71
But she and Mr. Radoslovich both expressed during the negotiations that
their goal was to find a lawful way for System 3 to buy out the interest. (ER1490.)
While Mr. Radoslovich pointed out several times that Mr. Zinnel may need to
reopen the bankruptcy to disclose the assignment of interest in System 3 to Done
Deal, and ultimately stated there might be a potential criminal issue, (ER1519),
Ms. Eidson stated that she did not know what Mr. Zinnel disclosed in his schedules
and that she did not have control over Mr. Zinnel, nor did she (or Mr. Wilbert)
assist Mr. Zinnel in preparing the schedules. (ER1470.) She ultimately wanted to
find an agreeable resolution that limited any exposure to Mr. Wilbert and System
3. (ER1468-69.)
In the end, the recordings unquestionably show that Ms. Eidson was
participating in what she believed to be valid settlement negotiations, in which she
was simply attempting to zealously represent her client and advance his interests.
Indeed, Ms. Eidson repeated that she wanted to come to an agreement with Mr.
Radoslovich to legally resolve the dispute with as little exposure to both Mr.
Wilbert and Mr. Zinnel. (ER1490.) Thus, had the full recordings been played for
the jury, the jury would have understood that Mr. Radoslovich and Ms. Eidson
were far from completing the alleged substantive offense, and in fact participating
in what appeared to be valid settlement negotiations, regardless of Mr.
Radoslovichs status as a confidential informant.
72
E.
If Each Error Alone Does Not Require Reversal, the Cumulative

Effect Certainly Does
Even if the individual errors do not rise to the level of reversible error, their
cumulative effect may nevertheless be so prejudicial that reversal is warranted.
United States v. Wallace, 848 F.2d 1464, 1475 (9th Cir. 1988); see also Thomas v.
Hubbard, 273 F.3d 1164, 1180 (9th Cir. 2001) ([E]rrors that might not be so
prejudicial as to amount to a deprivation of due process when considered alone,
may cumulatively produce a trial setting that is fundamentally unfair.), overruled
in part on other grounds by Payton v. Woodford, 346 F.3d 1204, 1218 n.18 (9th
Cir. 2003). The Court has explained that where there are a number of errors at
trial, a balkanized, issue-by-issue harmless error review is far less effective than
analyzing the overall effect of all the errors in the context of the evidence
introduced at trial against the defendant. United States v. Lloyd, 807 F.3d 1128,
1168 (9th Cir. 2015) (quoting United States v. Frederick, 78 F.3d 1370, 1381 (9th
Cir. 1996)). And where the governments case is weak, a defendant is more likely
to be prejudiced by the effect of cumulative errors. Id. (quoting Frederick, 78
F.3d at 1381.)
The trial errors taken together, including the erroneous jury instructions, in
this weak, almost non-existent case may have substantially swayed the jury in
concluding that the government had met its burden of proving [Ms. Eidsons]
knowledge and intent. Lloyd, 807 F.3d at 1170 (citing United States v. Freeman,
73
498 F.3d 893, 905 (9th Cir. 2007)). The risk that the improperly admitted
evidence affected the verdict is increased because the governments closing
argument repeatedly encouraged the jury to rely on this evidence, especially the
governments repeated argument (and playing of the recorded excerpts) concerning
the settlement negotiations. Id. Any review of the record demonstrates that the
Court cannot be fairly assured that the jury was not substantially swayed by the
error[s] in convicting Ms. Eidson. Id. (citing Freeman, 498 F.3d at 905).
Ms. Eidsons 121-Month Sentence is Procedurally and Substantively
Unreasonable
V.
A.
Standard of Review and Applicable Legal Standards
The government has the burden of proving the facts necessary to support a
sentence enhancement by a preponderance of the evidence. United States v. Lam
Thanh Pham, 545 F.3d 712, 716 (9th Cir. 2008). A district courts sentencing
decisions are reviewed for abuse of discretion. See Gall v. United States, 552 U.S.
38, 49 (2007); United States v. Carty, 520 F.3d 984, 993 (9th Cir. 2008) (en banc).
However, the district courts interpretation of the Sentencing Guidelines is
reviewed de novo. See United States v. Nielsen, 371 F.3d 574, 582 (9th Cir. 2004).
Sentences are reviewed for reasonableness, and only a procedurally erroneous or
substantively unreasonable sentence is set aside. See Gall, 552 U.S. at 46; Rita v.
United States, 551 U.S. 338, 351 (2007); Carty, 520 F.3d at 993. The Court first
74
consider[s] whether the district court committed significant procedural error, then
it consider[s] the substantive reasonableness of the sentence. Carty, 520 F.3d at
993.
Procedural errors include failing to calculate (or calculating incorrectly) the
proper Guidelines range, failing to consider the factors from 18 U.S.C. 3553(a),
and deciding a sentence based on clearly erroneous facts. See Carty, 520 F.3d at
993. And in considering the substantive reasonableness of a sentence, the Court
consider the totality of circumstances. See id. The overarching statutory charge
for a district court is to impose a sentence sufficient, but not greater than
necessary to reflect the seriousness of the offense, promote respect for the law,
and provide just punishment; to afford adequate deterrence; to protect the public;
and to provide the defendant with needed educational or vocational training,
medical care, or other correctional treatment. Id. at 991 (quoting 18 U.S.C.
3553(a)).
B.
Over Objection, the District Court Erroneously Assumed the

Calculation of Ms. Eidsons Loss Amount was $4,000,000 with
Absolutely No Analysis or Consideration of Evidence that Establishes
the Value of the Attempted Laundered Funds was at most $350,000
The Sentencing Guidelines provide that the loss amount under Guideline
2S1.1(a)(2) is determined by the value of the funds laundered. To calculate that
amount, the district court is directed to use the offense level amounts in Guideline
75
2B1.1. The Guidelines provide that an estimate of loss shall be based on

available information taking into account various factors such as the fair market
value of the property taken or the replacement cost. U.S.S.G. 2B1.1. Cmmt.
n.3(c)(i).
The Court has repeated time and again that when calculating loss amount,
the sentencing court should take a realistic, economic approach to determine what
losses the defendant truly caused or intended to cause, rather than the use of some
approach which does not reflect the monetary loss. United States v. Allison, 86
F.3d 940, 943 (9th Cir. 1996); see also United States v. Bakhit, 218 F.Supp.2d
1232 (C.D. Cal. 2002) (court shall find realistic economic approach to calculating
securities value in securities fraud cases for offense level calculation); Jenkins,
633 F.3d 788 (sentencing court considered two methods of calculating securities
value in securities fraud case). Indeed, loss calculation is highly individualized
and fact specific; the same method is not necessarily appropriate in all
cases. United States v. Zolp, 479 F.3d 715, 718 (9th Cir. 2007). And the Court has
cautioned that [r]ealistic, economic projections of intended loss which are
necessarily hypothetical present special challenges. United States v. W. Coast
Aluminum Heat Treating Co., 265 F.3d 986, 991 (9th Cir. 2001).
Here, the district court acknowledged that it must find Ms. Eidsons loss by
clear and convincing evidence. (ER1160.) Even so, the district court failed to find
76
by any standard that Ms. Eidsons loss amount was $4,000,000. Instead, it adopted
the governments fictitious number of $4,000,000, which the probation office
recommended, without conducting any independent analysis to determine the fair
market value of that equity interest or even looking to the record as to what Ms.
Eidson could truly attempt to launder. See Allison, 86 F.3d at 943. Indeed, Mr.
Wilbert testified at trial that he purchased Mr. Zinnels interest in System 3 from
Zinnels bankruptcy estate for $350,000. (ER672.) That testimony was in
response to the bankruptcy court reopening Mr. Zinnels bankruptcy on June 17,
2011, (see Motion to Take Judicial Notice, Ex. A)12, in which the trustee had
actually valued at fair market Mr. Zinnels interest, (Ex. B). The trustee noted that
System 3 made its historical books and records available for review and that
valuations and sales of minority interests in closely-held companies are difficult.
(Ex. C, D.) The trustee recommended, subject to overbid, that the bankruptcy court
approve the sale of Mr. Zinnels interest in System 3 for $350,000 to Mr. Wilbert.
(Id.) After a fairly detailed economic analysis noting that the recession (which
began in 2008) had diminished System 3s value, the bankruptcy court approved
the $350,000 sale. (Ex. G.)
12
The following exhibits cited relate to the exhibits attached to the motion to
take judicial notice.
77
If it was important for the bankruptcy court to undertake such an analysis for
the debtors and creditors benefit, it is certainly critical in the sentencing context
when Ms. Eidsons liberty is at stake. The district court erred in simply accepting
the PSRs non-existent calculation of the attempted funds she truly could have
attempted to launder when assigning an offense level for Ms. Eidson, especially in
the face of an objection. Indeed, the calculation was the governments creation and
simply represented a fictitious amount. Accordingly, the district court was
required to properly calculate Ms. Eidsons loss amount at the fair market value of
Mr. Zinnels purported ownership of System 3 shares as of March 2009.
When the Court conclude[s] that the district court committed a significant
procedural error, such as a material error in the Guidelines calculation that serves
as the starting point for the district courts sentencing decision, Pham, 545 F.3d
at 716 (citing Gall, 552 U.S. at 51), the Court will remand for resentencing
pursuant to 18 U.S.C. 3742(f). Id. (quoting United States v. Cantrell, 433 F.3d
1269, 1280 (9th Cir. 2006)). Here, the loss calculation had a material indeed,
enormous impact on the Guidelines calculation because it would reduce Ms.
Eidsons offense level by six levels. If the court had used a different Guidelines
calculation as the starting point, it is reasonable to expect that the court would have
ended up imposing a lower sentence. At the least, the district court must be given
the opportunity to make that decision on resentencing.
78
C.
The District Court Clearly Erred in Applying the Sophisticated

Laundering Enhancement, Resulting in Impermissible Double
Counting
Over objection, the district court ruled without any meaningful explanation
that the sophisticated money laundering enhancement applied. Section 2S1.1(b)(3)
of the Guidelines provide: If (A) subsection (b)(2)(B) applies [the defendant was
convicted under 18 U.S.C. 1956]; and (B) the offense involved sophisticated
laundering, increase by 2 levels. The Commentary further explains: For
purposes of subsection (b)(3), sophisticated laundering means complex or
intricate offense conduct pertaining to the execution or concealment of the 18
U.S.C. 1956 offense. U.S.S.G. 2S1.1 comm. n. 5(A). But Ms. Eidson did
nothing complex or intricate in carrying out the apparent attempted money
laundering, other than attending and participating in two settlement conferences
per Mr. Zinnels request as his representation. (ER1304.) Instead, the district
court apparently took into account its conclusion that she abused her position as an
attorney and conflated the sophisticated enhancement with the abuse of
position enhancement.
The district court made no finding of sophisticated money laundering.
While the district court initially acknowledged the sophisticated money laundering
enhancement, (ER1307), it nonetheless proceeded to explain why the abuse of
position applied and apparently silently included in that analysis its ruling on
79
sophisticated money laundering. Shortly after its determination on abuse of

position, the district court asked: There was also an objection to paragraph 21
[sophisticated money laundering] of the presentence report. Did we also go over
that one? to which the government replied, We did. (ER1310-11.) The record
demonstrates at most that the district court overruled Ms. Eidsons objection to
sophisticated money laundering based on its conclusion that the abuse of position
of trust applied. The result was impermissible double counting.
Impermissible double counting occurs where one part of the Guidelines is
applied to increase a defendant's punishment on account of a kind of harm that has
already been fully accounted for by the application of another part of the
Guidelines. United States v. Kubick, 205 F.3d 1117, 1125 (9th Cir. 1999)
(quoting United States v. Chin-Sung Park, 167 F.3d 1258, 1261 (9th Cir. 1999)).
Ms. Eidson affirmatively informed the district court that the application would be
an instance of double counting: [I]f the Court finds sophisticated money
laundering and the Government has asked it to find that the conduct described
there is it is consistent with the actions of an attorney and the special skills
employed by an attorney. (ER1304.) Nevertheless, the district court proceeded to
erroneously find that Ms. Eidson abused her position as an attorney, and somehow
jumble into that determination its apparent additional determination that she
advanced sophisticated money laundering. (ER1307.)
80
The Court has found that the district court does not engage in double
counting where the defendants enhancements are based on different acts. In
Kubick, the defendant contended that the sentencing court impermissibly double
counted when it applied the abuse of position enhancement due to his status as an
attorney and also applied an enhancement for the defendants involvement in
violat[ing] any judicial or administrative order, injunction, decree, or process not
addressed elsewhere in the guidelines due to the defendants perjury in the
bankruptcy court. 205 F.3d at 1125. The Court explained the sentencing court did
not engage in double counting because, although the defendants different acts,
broadly speaking, were to the same end concealment of [co-defendants] assets,
the Court found that double counting was not implicated because apart from the
things that [defendant] did as a lawyer , he gave perjured testimony in the
bankruptcy court. The harm from the perjurious testimony is different from (and
beyond) harm to the process by helping to conceal assets. Id.
Here, on the other hand, there is no separate and different harm that
differentiates one enhancement from the other, and the government cannot identify
any. Ms. Eidsons apparent abuse of her position as an attorney and the purported
sophisticated money laundering were the same course of conduct and resulted in
the same harm. Thus, the district court double counted when it applied both the
81
abuse of position enhancement and the sophisticated money laundering

enhancement.
D.
Ms. Eidsons 121-Month Sentence Was Substantively Unreasonable
Ms. Eidson joins in co-defendant Zinnels arguments regarding the

excessiveness of the Guidelines in fraud-related offenses and the disproportionate
sentences imposed in this case. The Guidelines undue focus on loss amount is
particularly problematic in Ms. Eidsons case because the $4,000,000 loss amount
was based on a fictitious negotiation, orchestrated by the government, in which
other parties not Ms. Eidson had come up with the $4 million buyout figure,
and as discussed above, the $4,000,000 figure bore no relation to any fact-based
determination of the actual value of the interest at issue. In fact, ample evidence
showed the valuation of the interest at $350,000 at most.
The district court also provided no meaningful response to Ms. Eidsons
disparity argument, other than imposing a higher burden than required:
And, you know, we talk about disparity in sentencing, and I
think to some extent the argument is kind of misplaced about disparity
in sentencing.
And I think that, quite frankly, we have this expectation that we
treat white-collar criminals differently than we do as [defense
counsel] said a moment ago. He said that shes not like a criminal
without a network of law abiding, helpful people.
Well, you know, in my estimation, I think that creates a higher
burden for her. Because we see criminals come before this Court who
dont have that network, who dont have her means, who dont have
82
her education, who dont have her network of friends. And because of
circumstances in which they find themselves, environmental, or any
other factors, some other factors, they commit crimes out of
desperation.
[]
And so I dont you know, this whole disparity argument that
we should treat one classification of people different from another
classification of people simply doesnt fly with this Court. It doesnt
fly.
(ER 1325-26.) But Ms. Eidson was not arguing for favorable and preferential
treatment for all white-collar criminal defendants. Rather, she argued that the facts
of her case, and her minimal involvement in the case overall, especially placed
against other white-collar criminals demanded that the district court consider
whether her individual sentence was disparate. Especially where the criminal
offense arose from Ms. Eidsons representation of a client, 121 months certainly
produces a chilling effect in a profession where one has an ethical obligation to
zealously represent his or her client.
Ultimately, not only was the district courts reliance on the inflated
Guidelines calculation and refusal to consider the disparate treatment of Ms.
Eidson unreasonable, but the court went further and sentenced Ms. Eidson above
the low-end of the Guidelines range for no apparent reason:
And I dont think, quite frankly, there is any significant
difference between a sentence of, what, 108 months, nine years,
versus a sentence of 121 months, which is a year and a month more
than that sentence.
83
(ER1326.) The district courts comments reflect a failure to exercise meaningful

discretion in sentencing, as well as a shocking callousness to the real-life effects of
sentencing. It is easy for a judge to say that a year and a month behind bars does
not really matter, but for Ms. Eidson, her family, her friends, and the children she
has had to leave behind, every one of those 395 additional days matters very much.
CONCLUSION
For all the foregoing reasons, Ms. Eidsons conviction should be vacated and
her immediate release ordered or, in the alternative, reversed and remanded for a
new trial and/or resentencing.
Dated: March 1, 2016
JAMES & ASSOCIATES

By: /s/ Becky S. James
Becky S. James
DERIAN EIDSON
84
STATEMENT OF RELATED CASES

Defendant-Appellant Derian Eidson is aware of the following pending
case(s) that are related as defined in Ninth Circuit Rule 28-2.6:
United States v. Zinnel, Case No. 14-10141
CERTIFICATE OF COMPLIANCE
United States v. Eidson, No. 14-10196
Pursuant to Fed. R. App. P. 32(a)(7)(C), the undersigned counsel hereby
certifies that the attached opening brief is proportionately spaced, has a typeface of
14 points or more and contains 19,864 words, and that a motion seeking leave to
file an oversize brief is being filed concurrently with this brief.
Dated: March 1, 2016
JAMES & ASSOCIATES

By: /s/ Becky S. James
Becky S. James
DERIAN EIDSON
CERTIFICATE OF SERVICE
United States v. Eidson, No. 14-10196
I hereby certify that I electronically filed the foregoing with the Clerk of the
Court for the United States Court of Appeals for the Ninth Circuit by using the
appellate CM/ECF system on March 1, 2016.
I certify that all participants in the case are registered CM/ECF users and
that service will be accomplished by the appellate CM/ECF system.
I declare under penalty of perjury that the foregoing is true and correct and
that this declaration was executed on March 1, 2016, in Pacific Palisades,
California.
/s/ Becky S. James

Becky S. James

Eidson Appealate Brief May 2016

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No.

14-10141 & 14-10196

Statement of Facts Relevant to the Charges of Conviction .............................4

The Build-Up to the Settlement Conferences ............................................4

Settlement Conference on February 17, 2009 ............................................8

Settlement Conference on March 2, 2009 ................................................15

Procedural History .........................................................................................20

Pretrial Proceedings ..................................................................................20

Trial Proceedings ......................................................................................22

The Governments Case ......................................................................22

Defense Request to Play Whole Recordings Under Rule of

Ms. Eidsons Case ...............................................................................24

Motion for Acquittal, Jury Instructions, and Verdict ..........................25

SUMMARY OF ARGUMENT ................................................................................29

The Government Failed to Present Sufficient Evidence that Ms. Eidson

Standard of Review ..................................................................................32

Ms. Eidsons Participation in Negotiations Over a Potential Buyout

The Government Failed to Prove Financial Transaction as

There is No Evidence, Nor Could the Government Present Any

The Evidence Falls Far Short of Establishing Beyond a

The Government Failed to Prove that the Purpose of the

Even if the Government Could Establish that a Financial

Standard of Review ..................................................................................52

The Government Effected a Constructive Amendment of the

The Jury Instructions Impermissibly Invited the Jury to Convict Ms.

Standard of Review ..................................................................................56

The Jury Instructions Were Misleading and Negated the Required

The Instructional Error Was Prejudicial ...................................................60

Several Evidentiary Errors Also Require Reversal .......................................61

Standard of Review ..................................................................................61

The District Court Improperly Refused to Exclude Evidence of

The District Court Erred in Admitting Prejudicial Legal Conclusions

Admitting Only the Governments Desired Snippets of Ms. Eidsons

If Each Error Alone Does Not Require Reversal, the Cumulative

Standard of Review and Applicable Legal Standards ..............................74

Over Objection, the District Court Erroneously Assumed the

The District Court Clearly Erred in Applying the Sophisticated

Ms. Eidsons 121-Month Sentence Was Substantively

United States v. Allison,

United States v. Cortes,

United States v. Hassan,

United States v. Melchor-Lopez,

United States v. Ripinsky,

Williams v. First Nat. Bank,

Whether the evidence was insufficient to support Ms. Eidsons

negotiations, as an attorney representing her client, aimed at settling a

Whether the government constructively amended the indictment by

Whether evidentiary errors require reversal, either individually or

prevented the jury from being misled by the governments

attempted to launder money up to $4,000,000 when she engaged in the settlement

The Build-Up to the Settlement Conferences

In the early 2000s, Derian Eidson began a long-distance relationship with

settlement conference on February 17, 2009, though unbeknownst to Ms. Eidson,

Settlement Conference on February 17, 2009

At the beginning of the conference, Mr. Radoslovich acknowledged that Ms.

Mr. Radoslovich explained he agreed to assist the government in its sting

When Mr. Radoslovich continued to press that System 3 is not disclosed

With Mr. Radoslovichs proposed risks, Ms. Eidson questioned what

While Mr. Radoslovich did not think this is in Zinnels vocabulary, he

Settlement Conference on March 2, 2009

there [is] anythinganything developed from that? (ER1506-07.) Ms. Eidson

Mr. Radoslovich asked, Well, so if Im going to communicate a message to

is subject to exclusion under Rule 408, as discussed in a companion motion.

The Governments Case