The federal trial for the Hvizdzak brothers for allegations of fraud and wire tapping is two months away, and 33 investors may be called as witnesses.

Shane Hvizdzak

In the past few weeks, attorneys for Shane Hvizdzak, 37, of Bradford and Sean Hvizdzak, 35, of St. Marys and the prosecution have been filing pretrial motions in preparation for the Oct. 20 trial in Pittsburgh before Judge W. Scott Hardy.

The allegations for the trial are that the brothers, through a series of entities they controlled, operated a cryptocurrency investment fund called High Street Capital Fund USA LP formed in March 2019. It was opened for investors in July 2019 and closed in June 2020. “Over $33.5 million was allegedly solicited from investors by falsely claiming the fund would be securely invested in cryptocurrency assets and managed transparently,” according to the indictment.

However, the defendants misrepresented the fund’s purpose, assets and performance; diverted investor money into personal and unregulated accounts including into those of their company Hvizdzak Capital Management; used new investor funds to repay earlier investors; provided false documentation to investors and the fund’s administrator; and concealed the misuse of funds through asset transfers and false statements.

Sean Hvizdzak

The defenses for the pair are presented as well. For Sean Hvizdzak, he will argue that the evidence doesn’t show he made false representations, provided false documents, cheated or deceived anyone, knowingly diverted or misused investor money, or that he was part of any conspiracy to commit fraud. Instead he intends to present a defense that “his actions were in good faith,” the motion read.

As for Shane Hvizdzak, he will argue “the evidence does not show he made materially false statements to investors or acted with the intent to defraud, or was a part of a conspiracy to defraud, or acted with the intent to deceive or cheat investors,” the motion read.

The motions from both sides reveal some of what will be argued at the trial.

The prosecution, headed by Assistant U.S. Attorney Christian Trabold, argued for the inclusion of victim impact evidence at trial, which Shane Hvizdzak asked the judge to keep out.

At trial, Trabold said, he intends to ask victims how much money they invested and how much, if any, they got back. From a smaller group of investors, Trabold said, he intends to ask for an impact of the loss. The total ban of impact testimony sought by Shane Hvizdzak is contrary to law and should be denied, Trabold argued.

In response to Sean Hvizdzak’s motions, Trabold asked the judge to keep any mention of a parallel Securities and Exchange Commission case out of this trial, so it doesn’t confuse or mislead the jury.

Sean Hvizdzak had also asked to keep a deed transfer out of the trial, saying it was unrelated to the matters at hand and was simply a mistake that was made at a time when the brothers’ assets had been frozen by the federal court. However, Trabold said it was relevant in that construction costs of the property were paid from investors’ funds.

“Thus the transfer was not an innocuous mistake by the defendants but rather a purposeful effort to further distance themselves from something tied to the fraud,” he argued.

While Sean Hvizdzak called it a simple mistake, Trabold said it was a defense to the allegation and should be before the jury.

Other property transfers will be introduced, as will text messages between the brothers where Shane told Sean “I want out of the houses,” the motion read. Emails with CNB Bank which Sean Hvizdzak sought to exclude should be admitted, too, the prosecutor argued.

Trabold had argued that witness Special Agent Dianne Shaffer should be allowed to testify more than once, so she could take the stand after a victim testified and describe where the victim’s money had gone.

However, both Hvizdzaks raised objections to her being on the stand more than once, saying it wasn’t necessary or appropriate, and would be time consuming. The government listed 33 investor witnesses, and Sean Hvizdzak noted the impracticality of Shaffer repeatedly being on the stand. There’s no support in case law for it either, he stated.

Shane Hvizdzak had a similar argument, adding that it would be time consuming, tedious and unfair to the defendants.

“Sean Hvizdzak’s primary defense will be that he was not a part of any fraud,” his motion stated. Critical to that is showing the scope of the alleged fraud, and cross-examining Shaffer piecemeal will not be as effective in showing Sean Hvizdzak’s lack of criminal culpability, the motion stated. It puts the defense at a disadvantage in other ways as well, they claim, including giving the appearance of added reliability to the witness’s testimony.

Rather Shaffer should testify last, which would correct those potential problems, Sean’s motion read.

Both brothers argued against the prosecution’s bid to limit character witnesses at this point, saying there is no basis at this time to make that determination. Sean Hvizdzak argued, too, that Trabold cannot impede his ability to present a defense, which includes evidence that he did not benefit from the alleged fraud, and lacked criminal intent.

Shane Hvizdzak argued that not only did he not benefit from the alleged fraud, he also lost money. He should be allowed to present that at trial, his motion stated.

Some of the evidence the prosecution asked to exclude would help differentiate between the conduct and culpability of the brothers, Sean Hvizdzak argued, asking the judge to deny that motion from Trabold.

Counsel for the defense is David Berardinelli and Alec Smith for Sean Hvizdzak and Jennifer Bouriat and John Schwab for Shane Hvizdzak. All are from Pittsburgh.