: This is from: http://www.jg-tc.com
June 29, 2001
on all eight counts
BY KRISTA LEWIN and CARL WALWORTH
URBANA - Arlene Diamond sat quiet and expressionless, looking at U.S. District Judge Michael McCuskey on Thursday morning while the clerk read the word "guilty" eight times, one for each of the counts Diamond was charged with in the Omega Trust and Trade scheme.
Diamond, the first of the Omega defendants to go to trial, was found guilty on three counts of mail fraud, three counts of wire fraud, one count of money laundering conspiracy and one count of conducting a financial transaction with proceeds of illegal activity from the Omega scam.
After court proceedings, U.S. marshals handcuffed Diamond, who was clad in a red jacket, and escorted her out of the courtroom. She will remain in custody while awaiting a formal sentencing hearing, which will be set at a later date.
"I am very happy with the jury verdict," said Esteban Sanchez, assistant U.S. attorney who was the lead prosecutor. "I believe they paid attention and reviewed all the evidence carefully and decided to support the verdict of guilty."
The maximum sentence is 60 years in prison plus substantial fines and forfeiture of property obtained with Omega funds. Diamond likely won't qualify for the maximum. But because she went to trial rather than agreeing to plead guilty, she could receive a substantial prison sentence that, at age 64, could amount to life for the Los Angeles woman.
The jury arrived at a verdict at 11:25 a.m. Thursday after deliberating all morning and for an hour Wednesday afternoon. Jurors made two requests Thursday morning for additional information, including Diamond's bank statements.
McCuskey agreed to the jury's request for Diamond's bank statements but told both attorneys that he would only allow the jury to see the bank statements that were shown during court proceedings, even though additional bank statements existed in the court records.
At about 11:20 a.m., almost one hour after the jury's request for the bank statements, both attorneys and McCuskey concluded they had found all of Diamond's bank statements published in court and provided them to the jury, which arrived at a decision five minutes later.
Prosecutors contended during the three-week trial that Diamond was a key player in the Omega scheme, in which investors were told to expect a $5,100 return on a $100 investment in about nine months. More than 10,000 people worldwide were defrauded of at least $20 million.
Defense attorney Diana Lenik argued that Diamond thought Omega was legitimate, and that she was duped like tens of thousands of others.
But jurors apparently found that because Diamond was a close associate of Omega leader Clyde D. Hood, and because she tried to help co-conspirators avoid grand jury subpoenas, that she knew or should have known the program was fraudulent.
Nineteen people were charged in connection with the Omega scheme but only four of them, including Diamond, pleaded innocent to the charges. The 15 other people pleaded guilty to various charges.
Along with the guilty pleas, the 15 agreed to testify against the four defendants in exchange for possible lesser penalties during their sentencing. The three remaining defendants are scheduled for trial in July.
June 28, 2001
Jury could reach
verdict in Diamond case today
BY CARL WALWORTH
URBANA - Don't be fooled into believing that Arlene Diamond was a victim or even an innocent bystander of fraudulent activity in the Omega Trust and Trading program, a federal jury was told Wednesday.
Unlike other investors, Diamond was a central figure who traveled from Los Angeles to Mattoon to learn more about the program, and for months was involved in daily details of the activity at the Omega office, prosecutor Esteban Sanchez said.
Defense attorney Diana Lenik countered that Diamond, 64, was duped like tens of thousands of others by Clyde D. Hood of Mattoon, and therefore isn't guilty of criminal conduct.
Both lawyers made closing arguments Wednesday afternoon, and the jury deliberated for about an hour before going home for the day. Deliberations begin again this morning as the jury decides Diamond's fate on eight charges accusing her of soliciting and then laundering money for Omega. Prosecutors say more than 10,000 people lost at least $20 million in a program that was to return $5,100 on a $100 investment in about nine months. No one received the promised return.
Rather than go into any sort of offshore or international investment, prosecutors say much of the money was diverted for personal uses of Hood, his friends, family and other co-conspirators.
Lenik called Hood the "Clyde Piper of Mattoon," someone who "seduced" investors into believing he was one of seven people who could complete trades that would result in extraordinary returns.
Diamond accused several witnesses, including Omega co-conspirators who pleaded guilty and now are cooperating with authorities, of lying in their testimony. "She got nothing out of it (Omega)," Lenik said of Diamond, who was described as living in a cramped apartment.
Sanchez said Diamond wants the jury to believe everyone is lying but Diamond.
Diamond, he said, lived off of Omega money for more than two years, and became close friends with the people she now calls "snitches" for the government. "These are her friends and associates," Sanchez said. "She, unlike any other lender, was in Mattoon and worked with Clyde Hood every day (for several months in 2000)."
Diamond says she didn't know Omega was a scam, but Sanchez notes she came to Mattoon to "learn the ropes" so she could take over once Hood retired. Hood, who was an Omega organizer, has pleaded guilty to three charges and acknowledged in court Omega was a scam.
"The issue in this case, plain and simple, is whether the defendant was an active participant in that fraud," Sanchez said, saying there's no question there was fraud.
It's unreasonable to assume that Diamond didn't ask questions about Omega and didn't know about its workings, Sanchez contended. Court documents show that she knew three states issued "cease and desist" orders against the program. She acknowledged laying in the backseat of a vehicle for more than 20 miles until she was sure she wasn't being followed by authorities, and she acknowledged checking into details such as whether a Mexican certificate of deposit had any value. Diamond also had grand jury subpoenas of some co-conspirators stamped with "Refused for Fraud."
"Is it reasonable she believed Clyde Hood was one of seven traders in the world and made no independent inquiry?" Sanchez asked. "She didn't ask because she didn't want to know."
Knowledge of the fraud, Sanchez told the jury, includes suspicion and an "indifference to the truth."
"Is it reasonable to believe that she's a victim, that she had no knowledge?" Sanchez asked in closing arguments. "Is it reasonable to believe that Arlene Diamond is the only one telling the truth? ... Is somebody (Arlene Diamond) shutting their eyes to the truth."
Earlier Wednesday, Diamond completed her testimony before the defense rested its case. Sanchez took Diamond back through a series of transactions, frequently quizzing her on whether she asked any questions of Hood about why things were being done, including transfer of $80,000 from Diamond's account in Dubai to Hood's account in the same foreign bank.
Diamond said she trusted Hood, and had no reason to question his honesty or the legitimacy of Omega.
Lenik portrayed Diamond as one of thousands of victims. She said Diamond not only lost some of her own money, but also saw several friends lose money in Omega. Some of those friends testified in Diamond's defense that they still trust Diamond.
Lenik said it was reasonable for Diamond to believe in the program and reasonable for her to talk to friends about what she was involved in. "This guy talks a good game," Lenik said of Hood.
Now, she said, Hood and others are saying what the government wants them to say in hopes that it will help reduce their sentences. "They're a bunch of lying snitches," Lenik said of co-conspirators who testified against Diamond. "You need to consider what those people said with a great deal of caution."
But Sanchez said Diamond can't now close her eyes to the criminal acts in which she was involved.
"The issue is credibility, plain and simple," Sanchez said. "Which Arlene Diamond are you going to believe?"
Before going home, jurors sent a note asking to see some of the exhibits. Judge Mike McCuskey said he'll likely rule against the jurors receiving transcripts of some of the testimony, but likely will allow them to see exhibits they requested.
Diamond's trial is the first of two scheduled in the Omega case. Fifteen people have pleaded guilty to one or more charges. Three others have a July trial date.
June 27, 2001
Diamond says she didn't know Omega was a scam; Prosecution uses
documents to contradict much of Diamond's testimony
BY CARL WALWORTH
URBANA - Arlene Diamond took her case directly to a federal jury on Tuesday, spending all day testifying in her own defense at her criminal trial.
Diamond displayed communication skills from a work history that included sales positions, smiling and sometimes laughing as she discussed the Omega Trust and Trading program and a variety of other topics. She rambled at length under questioning from defense attorney Diana Lenik, then the tone changed after lunch when prosecutor Esteban Sanchez began asking questions. Diamond told Sanchez that several witnesses made one or more inaccurate statements in testimony earlier in the case. At times Diamond's memory was foggy and Sanchez worked to punch holes in her version of her role in the Omega program, which prosecutors say defrauded more than 10,000 people of more than $20 million. Fifteen people have pleaded guilty to some role in Omega.
Diamond is accused of soliciting money from people who were told to expect a 50-to-1 return on "private party loans" to the offshore program called Omega. She's also accused of playing a role in diverting the money to personal uses of herself and others. No one has received any return from Omega.
Diamond, 64, of Los Angeles, said she believed the Omega program was legitimate until Clyde D. Hood, the program's alleged creator, testified in court earlier this month that it was a scam.
"I had no idea the money wasn't going into the bank account Clyde told me he was putting it into," Diamond said. She said she never solicited anyone to "loan" money to Omega, but told people what she was doing when asked.
Diamond once traveled overseas with Hood and Bill Revelle, presumably on Omega business, and was told that once Omega funded she would replace Hood as one of seven people worldwide who could complete the trades. Hood said he was working with other traders to get Diamond approved as the first woman in the group.
Sanchez quizzed Diamond in detail about her testimony, frequently following a question by putting documents that contradict one or more of her statements on the big screen in the courtroom.
Initially, for example, Diamond didn't remember writing to officials in Hawaii, Missouri and Michigan in response to "cease and desist" orders regarding Omega. Then Sanchez showed receipts for certified mail from Diamond to those state officials, along with a copy of a letter titled a "Bill of Exchange."
The letter appeared to quote from some law, though it wasn't clear what it all meant. Diamond declined to explain, saying she would need to consult with a "book" she studied before writing the documents.
"I know what it means but my ability to explain it so that someone else would know what it means is not the same," she said.
Diamond denied that she told co-conspirator Susan Hoehne that Diamond was a lawyer who could prevent Hoehne from having to testify before a grand jury. Then Sanchez produced a copy of a letter to Hoehne about appearing before the grand jury that was stamped with a note signed by Diamond. The note didn't make sense. One document was stamped in large letters with
"Refused for Fraud."
Diamond also denied that she suggested that Omega investor Neva McKibben of Mattoon sell her house and put the money in Omega because the program was about to fund. Hood, Raymond Miller, Hoehne, Chris Engel, Don Owens, Jody Boyd and Gregory Bryant are among the other witnesses who Diamond contended made one or more inaccurate statements under oath during the trial.
Sanchez took Diamond step by step through Diamond's work history that includes at least 14 different ventures, from selling insurance and real estate, to printing to a variety of network marketing positions, both in sales and training. Diamond said she worked with network marketing companies that sell wigs, organic vitamins, bio-ecology products, cosmetics, custom-fit bras, silver machines, long-distance phone cards and water filters, among others.
Diamond said that Marie Owens, who is now deceased, is the one who first explained Omega to her in 1997. Diamond said she understood it and "loaned" $100 to the program through Mike Kodosky, another co-conspirator. Diamond said she had to borrow $50 to purchase that one unit.
She described working on Omega loans through Kodosky, who later introduced her to Hood at a meeting in Chicago as she became unhappy with the way Kodosky was treating some people Diamond referred to the program. Diamond said she was never paid, and that money she received from Hood for living expenses and computers were loans to be repaid when Omega funded.
Hood told Diamond he was a trader who had completed deals for Fortune 500 companies and wanted to take that ability "to the people" before he retired. Hood reportedly told Diamond he had a numbered account at Credit Suisse bank in Switzerland for Omega's funding.
After Diamond began working directly with Hood, she made a series of short trips to Mattoon and came here in February of 2000 after she said Hood told her they were going overseas to complete the Omega program. Four different times, she said, they ordered tickets to make that trip, but each time there was a "problem." She stayed in Mattoon until being arrested in
"I had no reason not to believe him (Hood)," Diamond said.
Diamond said she always gave refunds to unhappy investors who made a request in writing. Diamond said she now has about $5,000 of her money in Omega and hasn't asked for a refund.
She testified that she told people to send cash wrapped in foil so that postal workers wouldn't detect the money in X-ray machines and steal the cash.
Diamond is to still be on the stand when the trial continues this morning. The prosecution may call one or more rebuttal witnesses after Diamond's testimony before closing arguments.