The United States District Court for the Eastern District of New York

The criminal trial of Scientologist David Gentile and his non-Scientologist co-defendant Jeffry Schneider began on June 10, 2024 and remains underway.

The criminal case focuses on the government’s charges that the defendants feloniously operated a Ponzi scheme in which investors were defrauded of $1.7 billion by use of deceptive Private Placement Memorandums. The government further argues that the defendants used backdated documents, engaged in wire fraud, and committed other criminal acts in an attempt to conceal their activities. 

Two recent motions filed by the defendants suggest to us that the trial is not going well for them and is heading towards guilty verdicts. The motions are posted below in PDF form. 

In the first motion filed by Schneider, but which the government notes applies to both defendants, Schneider asks the court to allow the jury to rule on any money forfeiture judgment. The defendants’ further oppose the imposition of a forfeiture money judgment against them and seek to have the forfeiture allegations against them dismissed.

What is a money forfeiture judgement? The US Attorney’s Office answers (emphasis ours): 

Q. What is an asset forfeiture money judgment?

The role of the Asset Forfeiture staff of the United States Attorney’s Office is to identify, seize, and ultimately forfeit, through both criminal and civil procedures, any assets– tangible property, real property, or cash– and return those assets to victims of the offense that gave rise to the forfeiture through the remission and restoration process.  Asset Forfeiture removes the tools of the trade from the criminals and their organizations, deprives wrongdoers of the proceeds of their crime, and recovers property that may be used to compensate victims by forfeiting proceeds, facilitating property and property involved in the offense…

A: An asset forfeiture money judgment can be obtained when the proceeds or property involved in criminal activity cannot be located.  In such cases, the Government establishes the value of the assets that would be subject to forfeiture.  The court can order a money judgment against the defendant which allows the Government to pursue all available methods of collection in order to obtain that amount of money from the defendant.  Money judgments never expire.

The bolded section is most curious because it suggests that some of the $1.7 billion raised by Gentile and Schneider money cannot be located. This raises speculation about the defendants moving money offshore or otherwise making it disappear.

This motion certainly telegraphs the enormous fear of utter financial ruination via forfeiture of the part of the defendants. While this fear is understandable, the defendants never thought about the possible consequences of their own actions when they were flying on the private company jet and living the high life on investor money.

The government opposes the motion and argues that existing case law makes it quite clear that only the courts can rule on forfeiture money judgments. This motion suggests to us that Gentile and Schneider are preparing for a possible guilty verdict and want to make a case before the jury for a greatly reduced forfeiture or a dismissal of forfeiture altogether. In our opinion, this will never happen. If the defendants are convicted, the Feds will take everything under the government’s forfeiture powers. 

An excerpt from the government’s opposition to the defendants’ forfeiture money judgment motion:

In the second motion filed by defendants Gentile and Schneider, they seek to muddy the waters by having their experts opine on how a “reasonable investor” would interpret the Private Placement Memorandums issued by GPB Capital Holdings and sold by Schneider’s Ascendant Capital.

The government opposes and argues that the experts the defendants want to put on the stand have just filed amended documents for review by the court which constitute a new defense strategy mid-trial. There was a May 20, 2024 deadline for these experts to file the slides and summaries they intended to put before the jury.

Now these experts are asking to discard their previous arguments in favor of new arguments. The fact that these defense experts have apparently changed their minds on what they previously filed with the court calls into question their authenticity as experts, i.e. experts generally do not change their minds once they have offered formal written opinions for use in a criminal trial. What we see here are the criminal defense lawyers using the experts as mere pawns in an attempt to unduly influence the jury. Specifically, experts are not allowed to make legal conclusions while testifying to a jury. This point is contained in the government’s opposition motion.  

The experts have since submitted amended materials documents for review and the government opposes this as an abuse of the court and calls for an exclusion of these amended materials or, in the alternative, a Daubert Hearing:

An excerpt from the government’s opposition:

The attempt of the defendants to argue a new defense strategy during the pendency of their criminal trial is suggestive, at least to us, of desperation. Gentile and Schneider are literally throwing everything at the wall to see what sticks. The government has the weight of case law to oppose their tactics.

The defense attempt to pivot to a new strategy midtrial — along with the motion to preemptively fight a forfeiture money judgment — is indicative to us of the defendants watching the speeding train of justice hurtling directly towards them at full speed. In our view, the defendants are setting up for an appeal while also seeking to avoid an utterly ruinous financial forfeiture that will come if they are convicted.

We think the court will throw out both of these motions made by the defendants.

We are going to Pacer regularly to see what new documents have been filed with the court. Several documents are sealed and we cannot access them. However, in one document the defense objects to the government filing two sur-sur-replies. This letter is interesting as it shows the behind the scenes action during the criminal trial. Click here for a paper discussing sur-sur-replies. This paper observes, “As one federal district court stated when faced with a sur-sur-surreply: “Eventually we reach a point where all this metapleading must stop, and this is that point.” United States ex rel. Hockett v. Columbia/HCA Healthcare Corp., 498 F. Supp. 2d 25, 36 (D.D.C. 2007).”

Is there metapleading going on behind the scenes in the criminal trial of David Gentile and Jeffry Schneider? It appears so as 407 documents have been filed in the case since the indictment was handed down on January 29, 2021. However, as GPB Capital investors are on the hook to pay their legal bills, Gentile and Schneider will metaplead and wallpaper the court with motions. It’s all Monopoly money to them. However, if they are convicted, prison will be very real. 

The letter from David Gentile’s four attorneys on the sur-sur-replies:

The Forfeiture Money Judgement motion: 

The Government’s Opposition to the Experts Motion: