Genuine Miscarriages Of Justice
692
Transcription
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
694
1 M O R N I N G S E S S I O N
2
3 (The following takes place in the absence of the
4 jury.)
5 THE COURT: Good morning.
6 MR. TRABULUS: Good morning.
7 THE CLERK: Jury entering.
8 (Whereupon, the jury at this time entered the
9 courtroom.)
10 THE COURT: Good morning, members of the jury.
11 Please be seated.
12 Permit me to compliment
you on getting here ahead
13 of time. Now, that's what I call responsibility and
14 efficiency.
15 Thanks very much.
16 You may proceed, Mr. White.
17 MS. SCOTT: The government calls Dr. Bradley
18 Fischman.
19 THE CLERK: Please raise your right hand.
20
21 B R A D L E Y F I S C H M A N,
22 called as a witness, having been first
23 duly sworn, was examined and testified
24 as follows:
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
695
1 THE CLERK: Please state your name and spell your
2 last name slowly for the record.
3 THE WITNESS: Bradley Fischman.
4 F I S C H M A N.
5
6 DIRECT EXAMINATION
7 BY MS. SCOTT:
8 Q Good morning, Dr. Fischman. Can you tell us what you
9 do for a living?
10 A Dentist.
11 Q Where do you practice?
12 A Great Neck,
New York.
13 Q How long have you been a dentist?
14 A 27 years.
15 Q Do you know Bruce Gordon?
16 A Yes.
17 Q Can you see him in the courtroom today?
18 A Yes.
19 Q Please state who he is by indicating what he is
20 wearing and where he is sitting?
21 MR. TRABULUS: Identification conceded, your
22 Honor.
23 THE COURT: Very well.
24 Q How do you know Bruce Gordon?
25 A He was a patient.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
696
Fischman-direct/Scott
1 Q I am showing you Government's Exhibit 622, which
2 consists of two checks.
3 THE COURT: Is that for identification?
4 MS. SCOTT: That's for identification.
5 Q Do you recognize those?
6 A No. They are made out to me. I never handle the
7 checks in my office.
8 Q Does it appear that they are handled by the person
9
who regularly does handle the checks?
10 A Yes, they have our stamp on the back, made out to us
11 and they are appropriate for the work done.
12 Q What are those amounts?
13 A $1,500 and $2,500.
14 MS. SCOTT: I offer Government's Exhibit 622,
15 your Honor.
16 THE COURT: Any objection?
17 MR. TRABULUS: No objection.
18 THE COURT: Government's Exhibit 622 in
19 evidence.
20 (Government's Exhibit 622 received in evidence.)
21 Q What are the dates indicated on those two checks?
22 A 4/14/92 and 12/10/92.
23 Q What is the name of the person or entity that made
24 out the checks to you?
25 A Who's Who Worldwide Registry, Inc.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Fischman-direct/Scott
1 Q And that's on both checks?
2 A Both checks.
3 MS. SCOTT: Thank you. No further questions.
4
THE COURT: Anything?
5 MR. TRABULUS: Very briefly.
6
7 CROSS-EXAMINATION
8 BY MR. TRABULUS:
9 Q Good morning, Dr. Fischman.
10 You were paid for performing dental services on
11 Mr. Gordon; is that correct?
12 A Yes.
13 Q And you believe those are the two checks used to pay
14 that; is that correct?
15 A Yes.
16 Q As you sit here today, do you know whether or not the
17 corporation itself took a tax deduction for that?
18 A I have no knowledge.
19 Q Or do you know whether or not it is simply regarded
20 as a loan to Mr. Gordon?
21 A No knowledge.
22 MR. TRABULUS: Thank you.
23 MS. SCOTT: Nothing further.
24 THE COURT: You may step down, Doctor.
25 Please call your next witness.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Fischman-cross/Trabulus
1 (Whereupon, at this time the witness left the
2 witness stand.)
3 MR. WHITE: Your Honor, the government calls
4 Joyce Grossman.
5 THE COURT: Do you want to raise your right
6 hand.
7
8 J O Y C E G R O S S M A N,
9 called as a witness, having been first
10 duly sworn, was examined and testified
11 as follows:
12
13 THE COURT: Please be seated.
14 State your full name and spell your last name.
15 THE WITNESS: Joyce Grossman, G R O S S M A N.
16 THE COURT: You are the only witness I ever
17 permitted to wear a hat, Ms. Grossman in a court building,
18 do you know that?
19 THE WITNESS: Really?
20 THE COURT: You have made history.
21 I would not ask you to remove it. If you were a
22 man I would certainly do that. And it is not because of
23 any gender bias at all.
24 THE WITNESS: Thank you.
25 THE COURT: You may proceed.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 MR. WHITE: Thank you, your Honor.
2
3 DIRECT EXAMINATION
4 BY MR. WHITE:
5 Q Ms. Grossman, can you tell us how old you are?
6 A 71.
7 Q Tell us where you live?
8 A In California, Los Angeles.
9 Q How long have you lived there?
10 A About 46 years.
11 Q Do you work?
12 A Yes.
13 Q What do you do?
14 A I am an interior decorator.
15 Q And does your interior decorating business have a
16 name?
17 A It is my name, Joyce Grossman interiors.
18 THE COURT: You have to pull the microphone a
19 little closer and keep your voice up, Mr. Grossman.
20 THE WITNESS: Yes, I will.
21 Q Are you married?
22 A Yes, I am.
23 Q Is your husband Dr. Grossman who testified here
24 yesterday?
25 A Yes, he is.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 Q Now, do you know a man named Bruce Gordon?
2 A Yes, I do.
3 Q How do you know him?
4 A He is my brother.
5 Q Now, are you testifying here today pursuant to a
6 court order granting you immunity?
7 A Yes, I am.
8 Q Tell us your understanding of that court order, and
9 what it means?
10 A That anything I say today will not be held against
11 me.
12 Q Are you familiar with a company known as Who's Who
13 Worldwide Registry?
14 A Yes, I am.
15 Q Did you and your husband invest in that company?
16 A Yes, we did.
17 Q Now, prior to the time that you invested, did you or
18 your husband have any discussions regarding your
19 investments with Mr. Gordon?
20 A Yes, we did.
21 Q And who handled that, those discussions with
22 Mr. Gordon?
23 A Primarily my husband.
24 Q How much did you and your husband invest in the
25 company?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 A $125,000.
2 Q Can you tell us approximately when you made that
3 investment?
4 A In the summertime of 1990.
5 Q Can you tell us in general terms how that investment
6 was structured?
7 A Well, the funds were to come from our family trust
8 and my husband's retirement plan.
9 Q And the $125,000, was that to be repaid to you?
10 A Yes.
11 Q Were you to have any ownership interest in the
12 company?
13 A 25 percent.
14 Q Who owned the remaining 75 percent?
15 A Bruce Gordon.
16 Q Now, from the time you invested right up until today,
17 has your percentage ownership of the business ever been
18 greater than 25 percent?
19 A No, it hasn't.
20 Q And when you invested, what was your understanding of
21 what role you and your husband were to have in the
22 management or financial affairs of the company?
23 A No involvement, except as a silent partner.
24 Q Now, were you ever consulted in advance regarding
25 business decisions of the company?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 A No, I was not.
2 Q Mrs. Grossman, let me show you
3 Government's Exhibit 582 for Identification; if you can
4 look that over.
5 (Handed to the witness.)
6 Q Now, do you see a signature on that document?
7 A Yes, I do.
8 Q And does that appear to be your signature?
9 A Yes, it is.
10 MR. WHITE: Your Honor, may I just have one
11 moment to speak with Mr. Trabulus?
1
2 THE COURT: Sure.
13 (Mr. White confers with Mr. Trabulus.)
14 MR. WHITE: Your Honor, the government would
15 offer Exhibit 582 as a business record of Who's Who
16 Worldwide.
17 MR. TRABULUS: No objection.
18 THE COURT: Government's Exhibit 582 in
19 evidence.
20 (Government's Exhibit 582 received in evidence.)
21 MR. JENKS: Mr. White, it is offered only against
22 Mr. Gordon?
23 MR. WHITE: Correct.
24 MR. JENKS: And Mr. Reffsin.
25 MR. WALLENSTEIN: I don't think it is offered
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 against Mr. Reffsin.
2 THE COURT: Who is it offered against,
3 Mr. White?
4 MR. TRABULUS: Your Honor, I would offer it in
5 favor of Mr. Gordon.
6 MR. WHITE: Mr. Gordon.
7 THE COURT: Okay.
8 Q Mrs. Grossman, let me show you Exhib
it 582-A. Is
9 that simply an enlargement of 582?
10 A Yes.
11 MR. WHITE: Your Honor, the government offers
12 582-A.
13 THE COURT: Any objection?
14 MR. TRABULUS: No objection.
15 THE COURT: Government's Exhibit 582-A in
16 evidence.
17 (Government's Exhibit 582-A received in
18 evidence.)
19 Q Now, Mrs. Grossman, do you recall specifically ever
20 signing that letter, Exhibit 582?
21 A No, I don't.
22 THE COURT: 582 is a letter?
23 MR. WHITE: Yes.
24 THE COURT: What date?
25 MR. WHITE: It is dated January 10th, 1990.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 Q Now, Mrs. Grossman, did you prepare that letter?
2 A No, I did not.
3 Q Was it typical that you or your husband would be sent
4 Who's Who Worldwide documents for your signature?
5 A Yes. But I don't recall anything as early as this.
6 Q Now, if you could read along on the copy in front of
7 you, while I read the first paragraph aloud.
8 It is dated January 10th, 1990. The addressee is
9 Bruce Gordon, 99 Seaview Boulevard, Port Washington, New
10 York, 11050.
11 Dear Bruce:
12 We have now created a new corporation in New York
13 State known as Who's Who Worldwide Registry, Inc., parens,
14 called the Corporation, close parens. I have been issued
15 and am holding 75 percent of the shares of the
16 Corporation.
17 Do you see that, Mrs. Grossman?
18 A Yes, I do.
19 Q Now, did you or your husband have anything to do with
20 the incorporation of Who's Who Worldwide in New York
21 State?
22 A No, we did not.
23 Q Did you ever personally own 75 percent of the shares
24 of the corporation?
25 A No, I did not.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 Q Did you or your husband or any of your family
2 entities ever own 75 percent of the shares of the company?
3 A No, we did not.
4 Q Now, if you could follow along while I read the third
5 paragraph.
6 As majority shareholder, and in view of my great
7 geographic distance from the corporation's headquarters in
8 New York, I grant you full authority to operate and manage
9 the corporation's affairs, and to unilaterally make all
10 relevant business decisions. This grant of authority
11 includes the right to vote my shares as you see fit. In
12 addition, if you should find it desirable in advancing the
13 corporation's interests, I authorize you to state to third
14 parties that you are the owner of my shares in the
15 corporation.
16 Affectionately, Joyce Grossman.
17 Do you see that, Mrs. Grossman?
18 A Yes, I do.
19 Q To your knowledge, were you ever the majority
20 shareholder?
21 A No, I was not.
22 Q And did you ever authorize your brother, Mr. Gordon,
23 to state to third parties that he was the owner of your
24 shares?
25 A No, I did not.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 Q Did you ever grant voting control of the shares that
2 you and your husband, and your family trust owned to
3 Mr. Gordon?
4 A No, I did not.
5 Q And the letters dated January 10th, 1990, to the best
6 of your recollection, have you or your husband invested in
7 the company in January of 1990?
8 A No. It wasn't until the summer of that year.
9 Q Now, Mrs. Grossman, let me show you Exhibits 585 and
10 586, which are already in evidence.
11 (Handed to the witness.)
12 Q Now, Mrs. Grossman, those are Who's Who Worldwide
13 stock certificates; is that correct?
14 A Yes.
15 Q And if you look at Exhibit 585, it indicates that on
16 January 23rd, 1990 these certificates -- this certificate
17 was issued to you; is that correct?
18 A That's what it says.
19 Q Were those issued to you in January of 1990?
20 A No, they were not.
21 Q Did you ever own 75 percent of the company?
22 A No, I did not.
23 Q When was the first time that you saw these stock
24 certificates?
25 A The first time I remember, I believe it was in your
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 office.
2 Q And do you remember approximately what year that was?
3 A Last year.
4 Q 1997?
5 A Yes.
6 Q Mrs. Grossman, let me draw your attention to December
7 of 1992. Did you or your husband receive any compensation
8 from Who's Who Worldwide around that time?
9 A Yes, we did.
10 Q Tell us what you received?
11 A Two checks from Who's Who, amounting to $400,000,
12 less taxes.
13 Q And tell us what your understanding was of what that
14 payment was for.
15 MR. TRABULUS: Objection, your Honor,
16 understanding.
17 THE COURT: What does understanding mean? Was
18 she told what the payment was for? Did the checks have on
19 it, or the letter accompanying it have any information?
20 MR. WHITE: I will ask her.
21 Q Did you have any discussions with Mr. Gordon
22 regarding what that payment was for?
23 A No, I did not.
24 Q Had you previously performed any work for Mr. Gordon
25 for Who's Who Worldwide?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 A Yes, I did.
2 Q Tell us what work you had performed?
3 A Decorating services.
4 Q What had you decorated?
5 A His office in Lake Success, and later on his
6 condominium, and after that the penthouse in Manhattan.
7 Q Now, did you ever have any discussions with
8 Mr. Gordon regarding his compensation in Who's Who
9 Worldwide?
10 A Not any discussion. I didn't want to make any money
11 off my brother. I told him that the first project, which
12 was at Lake Success, that I did alone, with my husband
13 helping me somewhat, that I wouldn't charge him anything.
14 He would pay cost price for everything. And that's
15 exactly what happened.
16 In fact, I arranged for him to pay the sources
17 directly.
18 MR. JENKS: Judge, I am going to object as the
19 response not being responsive to the question.
20 THE COURT: Let me hear the question,
21 Mr. Reporter.
22 MR. WHITE: Your Honor, I agree it is not
23 responsive. I believe the witness misunderstood the
24 question.
25 THE COURT: Strike out the answer as not being
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 responsive.
2 Q Ms. Grossman, we will focus on the decorating in a
3 moment. Let me ask you about another topic.
4 Did you have any discussions with your brother
5 regarding what compensation he was receiving from Who's
6 Who Worldwide?
7 A Absolutely not.
8 Q Did you ever discuss with anyone at Who's Who
9 Worldwide Mr. Gordon's compensation?
10 A No, I did not.
11 Q Did you ever discuss any written compensation
12 agreement with any Who's Who employee?
13 A No.
14 Q Did you ever
verify for any employee that there was a
15 written agreement?
16 A No.
17 Q Compensation agreement, no?
18 A No.
19 Q Now, let me direct your attention to the summer of
20 1993.
21 Is it correct that Mr. Gordon's son passed away
22 at that time?
23 A Yes, it is.
24 Q Did you give or loan Mr. Gordon any money in
25 connection with his son's funeral expenses?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 A No, I did not.
2 Q Let me show you Government's Exhibit 425, and its
3 attachments, which are already in evidence.
4 (Handed to the witness.)
5 MR. WHITE: Your Honor, that is one of the
6 documents which was previously passed out to the jurors.
7 Q Now, Mrs. Grossman, if you can turn to the second
8 page of that document, which is 425-A. And that's a
9 pro
missory note; is that correct?
10 A That's what it looks like.
11 Q It is dated July 25th, 1993; is that right?
12 A Yes.
13 Q The amount of the loan reflected is $15,000?
14 A Yes.
15 Q Did you ever make the loan to Mr. Gordon that is
16 reflected on this note?
17 A No, I did not.
18 Q Now, aside from when you met with your own attorney
19 or met with the government in connection with this case,
20 have you ever seen that document before?
21 A No.
22 Q You can put that away now.
23 Let me again focus your attention on late 1992.
24 Did you have any discussions at that time with
25 Mr. Gordon regarding his purchasing a home?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 A Yes.
2 Q Tell us what your discussions were?
3 A He told me that he was looking for a condominium to
4 purchase, and asked if I would be interested in helping
5 him decorate it.
6 Q Did you have any role in decorating a condominium?
7 A Yes, I did.
8 Q Is that the one at Hummingbird Road in Manhasset?
9 A Yes, it is.
10 Q Can you tell us what work you performed?
11 A We did the floor plans, color selection, furniture
12 selection, as well as household items, as well as dishes,
13 linens, etcetera.
14 Q Can you tell us how it was that you were paid?
15 A I invoiced him at the manufacturer's cost, plus ten
16 percent.
17 Q What was the ten percent for?
18 A For my partner's salary, and our business expenses
19 pursuant to the project.
20 Q And the actual suppliers of the furniture and other
21 merchandise, who actually paid them?
22 A We did.
23 Q So, you were paid by Who's Who Worldwide and you paid
24 them?
2
5 A That's correct.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 Q Now, Mrs. Grossman, let me show you Exhibits 600
2 through 609 for Identification.
3 (Handed to the witness.)
4 Q Can you tell us what those are?
5 A They are progress payments.
6 Q To Joyce Grossman Interiors?
7 A Yes.
8 Q Was that on your work on the Hummingbird condominium?
9 A Yes.
10 MR. WHITE: The government offers 600 through
11 609.
12 MR. TRABULUS: May I have a brief voir dire, your
13 Honor?
14 THE COURT: Yes.
15 MR. TRABULUS: Thank you.
16
17 VOIR DIRE EXAMINATION
18 BY MR. TRABULUS:
19 Q Mrs. Grossman, I believe you were asked a question by
20 Mr. White as to whether or not you were paid, your company
21 was paid by Who's Who Worldwide?
22 A That's correct.
23 Q Is that correct?
24 Now, these checks which were just shown to you
25 and which are in front of you, were not checks from Who's
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 Who Worldwide, are they?
2 A Publishing Ventures.
3 Q And these are the checks by which you were paid; is
4 that correct?
5 A Yes.
6 MR. TRABULUS: Thank you, your Honor. No
7 objection.
8 THE COURT: Government's Exhibit 600 through 609,
9 is it?
10 MR. WHITE: Yes, your Honor.
11 THE COURT: In evidence.
12 (Government's Exhibits 600 through 609 received
13 in evidence.)
14
15 DIRECT EXAMINATION (cont'd)
16 BY MR. WHITE:
17 Q New, Mrs. Grossman, from reviewing those checks, can
18 you give us an approximate figure how much you were paid
19 on the decorating services at the condominium?
20 A My fee or the merchandise?
21 Q I am sorry, the total of those checks.
22 A It is about 200,000.
23 Q Mrs. Grossman, let me show you Exhibit 610, which is
24 already in evidence.
25 (Handed to the witness.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 Q Now, Mrs. Grossman, have you ever seen that document
2 before?
3 A No, I haven't.
4 Q Now, if you can turn in there to the page that
5 begins, list of equity security holders, which is the
6 lower right-hand corner of the enlargement, which is
7 610-B.
8 Now, if you look on that page, it indicates that
9 you are the 75 percent shareholder of Who's Who Worldwide
10 Registry and that your husband is a 25 percent
11 shareholder.
12 Is that information accurate?
13 A No, it's not.
14 Q If you can turn to that page, which is the upper
15 right-hand corner of Exhibit 610-B.
16 Again, it indicates there that you are the 75
17 percent shareholder and your husband is a 25 percent
18 shareholder; is that accurate?
19 A No, it's not.
20 Q Now, did you ever have a discussion with Mr. Gordon
21 regarding his statements about your ownership interest in
22 the company?
23 A Only at the very beginning, when he suggested that
24 for our investment he would receive 15 percent interest.
25 And I protested and said that's ridiculous. We weren't
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 going to be doing anything. I didn't want anything. And
2 he said, no, you would have 25 percent.
3 Q Now, did there come a time that Mister -- you learned
4 that Mr. Gordon said that you owned more than 25 percent?
5 A Only when the law cases, the legal cases involved.
6 And not before that.
7 Q And after you learned that did you have a discussion
8 with Mr. Gordon about what he had said?
9 A Yes.
10 Q Tell us when this took place approximately?
11 A Last year.
12 Q 1997?
13 A Yes.
14 Q And where was this conversation? Where did this
15 conversation take place?
16 A In his present home.
17 Q Tell us what was said?
18 A I asked him how in good conscience he could say I
19 owned 75 percent of his company?
20 And he answered, well, don't you?
21 And I said, what are you saying?
22 And he said, I have bad advice.
23 MR. WHITE: Your Honor, I have no further
24 questions.
25 THE COURT: Cross-examination.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-direct/White
1 MR. TRABULUS: Thank you.
2 MR. WHITE: Do you want to leave that there or
3 will you not need this?
4 MR. TRABULUS: You can take it away.
5 THE COURT: Do you want to remove the lectern
6 also, unless you need it.
7 Do you want to use it?
8 MR. TRABULUS: The easel? No. It is not
9 necessary. Actually the blackboard.
10 I will take it.
11
12 CROSS-EXAMINATION
13 BY MR. TRABULUS:
14 Q Good morning, Mrs. Grossman. I should have
15 introduced myself before. But we did speak very briefly
16 yesterday during the break; is that correct?
17 A Yes.
18 Q I just told you that I was Mr. Grossman's lawyer; is
19 that correct -- Mr. Gordon's lawyer, excuse me.
20 That's the last time we spoke?
21 A Yes.
22 Q The last answer you gave where you said you had a
23 conversation with Mr. Gordon, and he said that I had bad
24 advice, it was a little ambiguous as I understood it, and
25 I wish you would clarify it. When he said "I" did you
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-cross/Trabulus
1 understand him to be referring to himself, or was he
2 referring to you?
3 A I don't understand why you don't understand what he
4 said. I said he said I had bad advice.
5 Q I meaning you or I meaning himself? Are you putting
6 it in quotes?
7 A Quotes.
8 Q So you understood him to say that he had bad advice
9 as opposed to you having bad advice?
10 A That's correct.
11 Q And my question didn't offend you, did it?
12 A I thought it was very explicit, my answer.
13 Q Okay.
14 Now, you are angry at your brother, are you not?
15 A No, I am angry at you for not understanding.
16 Q I hope you understand when I ask you questions, I am
17 trying to make things clear for the jury. I may make a
18 mistake. If something comes to me and I don't understand
19 it, it may be my limitations, but I want to be sure the
20 jury has an understanding as well. I will try to clarify
21 things. Can you accept that?
22 A Of course.
23 Q All right. That's the way we will proceed.
24 Now, Ms. Grossman -- Mrs. Grossman, excuse me.
25 You said this was your signature; is that correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-cross/Trabulus
1 A Yes, it is.
2 Q Now --
3 THE COURT: This is what?
4 MR. TRABULUS: This is Exhibit 582-A. And I will
5 be referring to that rather than the 582, so everyone can
6 see what we are talking about.
7 Q Now, do you have any recollection at all as to when
8 you signed it?
9 A No.
10 Q Now, when you signed it, there was printing on it,
11 the words were on it; is that correct?
12 A I have no recollection of signing that.
13 Q Well, do you ever have any recollection of being sent
14 a blank piece of eight and a half by 11 paper with an
15 arrow telling you to put your signature at exactly a
16 particular place, and then to turn it over to Who's Who
17 Worldwide? Did anything like that ever happen?
18 A I don't recall.
19 Q Do you remember that? Wouldn't that be a little odd?
20 A At that particular time there was no reason for me to
21 try to remember dates or items, because I didn't know we
22 were going to be in these circumstances.
23 Q I think we can agree, can we not, that when this was
24 signed, it was after January 10th, 1990? We can agree to
25 that?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-cross/Trabulus
1 A I don't remember ever signing it or seeing that piece
2 of paper, although I admit that that is my handwriting.
3 Q Did you say you don't admit or you do admit?
4 A I do. That is my signature.
5 Q If it is your signature, and you put it on the
6 original piece of paper, can we agree that it was after
7 January 10th, 1990. I think you indicated you had not
8 even made the investment yet as of January 10th.
9 A That's right.
10 Q And if you had been given this document back on
11 January 10th, 1990, certainly it would have been very
12 strange at that point, you were not in a position at that
13 time to be signing these documents?
14 A That's correct.
15 Q There did come a point of time when you did get
16 documents from Who's Who Worldwide, when you would sign
17 them and return them; is that correct?
18 A Occasionally that would happen. But mostly my
19 husband would sign them.
20 Q It would mainly be your husband?
21 A Yes.
22 Q And when they would come would they be given -- would
23 your husband receive them and sometimes give you a
24 document or two from a packet and then have you sign it?
25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-cross/Trabulus
1 Q And then it would go back?
2 A Yes.
3 Q And, of course, some of these would be bank
4 documents?
5 A Yes.
6 Q And some would relate to credit card accounts?
7 A Yes.
8 Q And did anybody explain to you why you would be
9 signing something relating to a bank document?
10 A I questioned Bruce.
11 Q And what did he tell you?
12 A Myself. And he said that it was only as a protection
13 in case something happened to him that I and perhaps my
1
4 sons would be available to carry on his business.
15 Q And the credit card documents as well? Did you sign
16 documents relating to that?
17 A Yes.
18 Q And when you signed these documents, was there
19 anything under your name, like a title?
20 A I don't recall.
21 Q Well, when you say you don't recall, is it that today
22 you don't recall one way or another, or did you not know
23 this at the time?
24 A I guess I didn't notice.
25 Q Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
721
J. Grossman-cross/Trabulus
1 Certainly when you signed bank documents, you
2 were not signing documents relating to your own personal
3 bank accounts; is that right?
4 A That's right.
5 Q You understood when you were signing them, you were
6 signing them in some sense relating to your relationship
7 to Who's Who?
8 A Yes. And I did question it at that time.
9 Q Okay.
10 Did you ask Mr. Gordon why a title would appear
11 if it did --
12 A I wasn't as concerned about a title, but as to why I
13 was signing bank documents for a business I had nothing to
14 do with.
15 Q Okay.
16 Now, did you ever -- did Mr. Gordon ever ask you
17 in signing a document, not to read it?
18 A No, he never did.
19 Q Did Mr. Gordon ever tell you, we are going to be
20 sending over some documents, and I just want you to sign
21 it, and you don't have to bother looking at it; did he ask
22 you that?
23 A No.
24 Q Did your husband ever tell you that Mr. Gordon asked
25 you not to look over any document?
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J. Grossman-cross/Trabulus
1 A Absolutely not.
2 Q So, as far as you knew, if
you signed a document and
3 returned it, or had it returned to Mr. Gordon or Who's
4 Who, Mr. Gordon would have no reason to believe that you
5 had not looked at it; is that correct?
6 A That is correct.
7 Q Now, I think you testified that you never gave
8 Mr. Gordon the authority to vote your shares?
9 A That's correct.
10 Q Have you ever given anybody authority to vote shares
11 that you owned of anything?
12 A I have never owned any shares of anything.
13 Q Again, not to pry too much in your personal affairs,
14 but do either you or the family own any stocks in the
15 family trust perhaps?
16 A Yes.
17 Q And do you ever get proxy statements?
18 A Yes.
19 Q And proxy statements are where the management of the
20 company or maybe somebody else asks for your authority to
21 vote the share; is that correct?
22 A I throw them away.
23 Q These are written forms, and you understood if you
24 wanted to give the authority you would simply write in the
25 form and mail it back, and you would not have to talk to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
723
J. Grossman-cross/Trabulus
1 anybody about it, you would simply do it?
2 A I would not do it.
3 Q But you --
4 A The reason I threw them away is because I didn't
5 understand anything about the situation.
6 Q So, you didn't want to give your authority to vote
7 the shares over to some management that you didn't know
8 anything about; is that correct?
9 A That's correct.
10 Q In fact, you did own, you and I should say your
11 family trust, and your husband's defined benefit plan, I
12 think we have no disagreement that they owned, and
13 certainly in the beginning, 25 percent; is that right?
14
A That's correct.
15 Q Now, is it fair to say that you and your husband had
16 agreed and understood that Mr. Gordon would basically be
17 running this company?
18 A That's right.
19 Q And that it was going to be something -- I think you
20 said you were going to be basically silent partners?
21 A Yes.
22 Q Is it fair to say that you did get involved to a
23 certain extent, but basically as Mr. Gordon requested?
24 A Involved how?
25 Q Well, did there come a point in time that Mr. Gordon
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-cross/Trabulus
1 came to California, and either at that point or beforehand
2 told you that he was interested in opening up an office in
3 California?
4 A Yes. But my involvement was strictly on a decorating
5 basis.
6 Q From California?
7 A Yes.
8 Q Did you recommend a real estate broker to Mr. Gordon,
9 other than the one he used, but a real estate broker in
10 order to find leased space for an office?
11 A Yes.
12 Q And Mr. Gordon then went to another real estate
13 broker, a Mr. White, Darren White?
14 A I remember Darren.
15 Q C.B. Realty, or something like that?
16 A Yes.
17 Q And do you remember Mr. Gordon -- withdrawn.
18 Do you recall there was actually plans made for
19 the space?
20 A Yes, my company made the plans.
21 Q Do you recall also that Mr. Gordon was interviewing
22 people possibly to work in that space?
23 A Yes.
24 Q He came with his company, with people from his
25 company out there?
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J. Grossman-cross/Trabulus
1 A Two other people.
2 Q And you have a son named Michavel; is
that correct?
3 A Yes.
4 Q He is successful in business; is he not?
5 A Fairly successful. He is a salesman.
6 Q Do you recall Mr. Gordon discussing with you the
7 possibility of Michavel coming into the business?
8 A Yes, he did.
9 Q Did Mr. Gordon tell you that his own sons,
10 Mr. Gordon's own sons, were not really suited to operate
11 in a business -- to operate in a business at all?
12 A Yes.
13 Q And he thought that Michavel might be?
14 A Yes.
15 Q And did he discuss with you that he, Mr. Gordon, was
16 getting on in years, and was looking forward -- was
17 looking to eventually getting out of the business or
18 simply being a consultant?
19 A Yes.
20 Q And he was considering having Michavel run the
21 business?
22 A Yes.
23 Q Now, based on those discussions was Mr. Gordon
24 seriously suggesting the possibility that the business
25 would pass through his hands to Michavel's?
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J. Grossman-cross/Trabulus
1 A Michavel wasn't interested.
2 Q But this is somebody that Mr. Gordon was suggesting,
3 correct, even though Michavel wasn't interested?
4 A It wasn't a serious discussion. It was a top of the
5 head discussion.
6 Q It was something he brought up?
7 A Yes.
8 Q Mr. Gordon brought up?
9 A Yes.
10 Q And because Michavel was not interested you regarded
11 it as a top of the head discussion; is that right?
12 A That's what it was.
13 Q Now, I assume since you don't remember signing this,
14 that you don't remember whether any other documents
15 accompanied it or were signed with it when you signed it?
16 A That's correct.
17 Q Now, if this were sent back to Mr. Gordon, you would
18 have no reason for thinking that Mr. Gordon wouldn't be
19 able to rely on it, would you?
20 A I never thought about it. I never saw that until I
21 was in the -- my lawyer's office.
22 Q Now, when you say you never saw it -- when you say
23 your lawyer's office, which lawyer?
24 A Mr. Picard.
25 Q Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-cross/Trabulus
1 When you say you never saw it until you were in
2 Mr. Picard's office, is it fair that you never focussed on
3 it until you were in Mr. Picard's office?
4 A You can say that. I never saw it.
5 Q If you signed it, presumably you didn't sign it with
6 your eyes closed; is that right? You probably did see it
7 if you signed it? You may not have paid any attention to
8 it?
9 A I can tell you, I never saw that.
10 Q When
you say you never saw it, are you suggesting
11 that maybe you didn't sign it?
12 A That's my signature. I don't know.
13 Q Did you ask anybody to do a handwriting analysis on
14 it?
15 A I think a handwriting analysis was done. It was
16 indicated that that is my signature, and I am saying it is
17 my signature.
18 Q Okay.
19 Do you know who did the handwriting analysis?
20 A Someone in the government.
21 MR. TRABULUS: Your Honor, I would call for
22 production of the handwriting analysis, if there was one.
23 THE COURT: Was there a handwriting analysis done
24 of this signature?
25 MR. WHITE: No, your Honor. Analysis was done on
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J. Grossman-cross/Trabulus
1 this document, but not a handwriting analysis.
2 MR. TRABULUS: Okay.
3 Q Now, did there come a point in time when you learned
4 that there had been a raid on the witness, on the Who's
5 Who?
6 A Yes.
7 Q Now, did there also come a point in time when there
8 was a message on your answering machine in California from
9 Mr. Gordon that he needed money right away to hire an
10 attorney in connection with that? Do you recall that?
11 A No, I do not.
12 Q Do you recall loaning or sending money to an attorney
13 in connection with that?
14 A I never sent any money to an attorney.
15 Q Do you recall sending $15,000, or asking somebody
16 else to send $15,000?
17 A No, I did not.
18 Q Do you recall any instance in which you loaned
19 $15,000, or paid $15,000, and Mr. Gordon repaid you
20 $18,000 on that loan afterwards?
21 A No.
22 Q Okay.
23 Were there occasions when you came to New York
24 and visited the premises of Who's Who?
25 A Yes.
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J. Grossman-cross/Trabulus
1 Q And when you visited those premises, which ones did
2 you visit?
3 A The one in Lake Success.
4 Q And did you also visit the condominium in Manhasset,
5 200 hummingbird?
6 A Yes.
7 Q How many times had you been there?
8 A Twice.
9 Q Did you see that there was an office there?
10 A Yes.
11 Q And can you describe what you saw by way of the
12 office?
13 A A desk, a computer, all the equipment that an office
14 has.
15 Q Okay.
16 Did you see Mr. Gordon working there?
17 A He was showing me the entire physical space.
18 Q Now, you participated in -- your company decorated --
19 A Yes.
20 Q -- the condominium?
21 Did Mr. Gordon discuss with you what the
22 condominium was going to be used for?
23 A He was going to live there, entertain there, and that
24 was it.
25 Q Did he talk about members of Who's Who possibly
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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J. Grossman-cross/Trabulus
1 staying there?
2 A He mentioned it briefly.
3 Q Did he talk about people being brought in from out of
4 town, perhaps employees staying there while they were
5 being trained?
6 A Yes.
7 Q Now, let's go to the penthouse facility in Manhattan.
8 Your company also participated in decorating
9 that?
10 A Yes.
11 Q Is that right?
12 And were there discussions as to what that was
13 going to be used for?
14 A Entertainment.
15 Q Entertaining whom?
16 A Out of country or out of the city clients for
17 networking and business.
18 Q When you say clients, you mean people who were
19 members of Who's Who Worldwide?
20 A Yes.
21 Q And were you aware of any instances in which that
22 occurred, parties, cocktail parties, receptions?
23 A I heard about two of them.
24 Q Okay.
25 Now, the testimony you had, your conversation of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
731
J. Grossman-cross/Trabulus
1 the testimony you had with Mr. Gordon at the place he was
2 living, your reaction -- withdrawn.
3 His response was when you asked him, how could
4 you say that I was a 75 percent shareholder? His
5 statement to you was, weren't you?
6 A Uh-huh.
7 Q And he indicated to you at that point that he thought
8 you were?
9 A That's all he answered, in quotes, aren't you, end
10 quote.
11 Q And you say he said that he had bad advice?
12 A Yes.
13 Q And did you ask him what the advice was?
14 A I said, what do you mean?
15 He said, I don't want to discuss it any further.
16 Q Did you understand him to mean -- withdrawn.
17 Now, you indicated you are testifying under a
18 grant of immunity.
19 Mrs. Grossman, is it fair to say that you don't
20 believe you committed any crime or did anything wrong?
21 A Absolutely not.
22 Q Absolutely not, you did not commit any crime?
23 A I did not commit any crime.
24 Q And I am not saying you did.
25 And your husband also, he was also testifying
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732
J. Grossman-cross/Trabulus
1 under a grant of immunity?
2 A That's correct.
3 Q And is it fair to say that you have the same view as
4 to him, that he absolutely did not do anything wrong?
5 A That's correct.
6 Q Now, there came a point when you and your husband
7 were sued by a bankruptcy trustee; is that correct?
8 A That is correct.
9 Q And is it fair to say that the bankruptcy trustee
10 alleged that you and your husband, along with Mr. Gordon
11 controlled Who's Who and some other companies?
12 A I guess they alleged that.
13 Q And the allegation was that some monies from Who's
14 Who were misapplied to yourself or other companies? Do
15 you recall that allegation, or something to that effect?
16 A The bottom line was --
17 Q I am not asking the bottom line.
18 A I am not aware of anything else, except for the
19 bottom line.
20 Q I am just asking whether or not -- and I am not
21 saying it was right -- but that you were accused by the
22 trustee of engaging in wrongdoing along with your husband
23 and Mr. Gordon relating to the assets of Who's Who; is
24 that fair to say?
25 A
I really don't know.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
733
J. Grossman-cross/Trabulus
1 Q Okay.
2 Did you understand that the trustee was alleging
3 that you and your husband together were -- or you and the
4 trust, and so forth, owned all of Who's Who?
5 A Yes.
6 Q And that allegation was something that you wanted to
7 refute; is that correct?
8 A That's correct.
9 Q And, indeed, when Mr. Picard showed you 582, your
10 lawyer in the bankruptcy, that was something which he
11 showed you in connection with whether or not that
12 allegation was true or not; is that right?
13 A That's correct.
14 Q You have no reason to believe -- withdrawn.
15 We know this was signed after January 10th --
16 THE COURT: What is this?
17 MR. TRABULUS: I am sorry, 582. And I am showing
18 her 582-A.
19 Q We
can agree that this was signed after January 10th?
20 A Since I don't recall any of the wording in that, or
21 my having signed that particular letter --
22 Q Do you think it might have been signed January 10th,
23 1990?
24 A I can't really tell you. I don't recall ever seeing
25 that letter.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
734
J. Grossman-cross/Trabulus
1 Q Okay.
2 You have absolutely no idea as to when it was
3 signed?
4 A That's correct.
5 Q Do you recall when the last time was that you signed
6 stuff and sent it back to Mr. Gordon?
7 A No. I signed very few things.
8 Q And do you remember, was there a point in time when
9 that stopped?
10 A I can only guess.
11 Q What is your guess?
12 A When we started receiving legal documents from
13 Backenworth and Grossman, from approximately that time, or
14 just before then.
15 Q Mrs. Grossman, did you also help on buying art work
16 for the offices of Who's Who?
17 A Yes, I did.
18 Q You helped select that artwork?
19 A I purchased it all.
20 Q Okay.
21 And do you know how -- was that paid with Who's
22 Who's money, do you know?
23 A Yes.
24 Q And did Mr. Gordon go with you when you purchased it?
25 A No. My husband did.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
735
J. Grossman-cross/Trabulus
1 Q Did you also -- at the penthouse did you see artwork,
2 decorations and urns, did you see fairly expensive looking
3 artwork?
4 A I selected it.
5 Q Was there stuff there that you didn't select as well?
6 A Yes, there was.
7 Q Can you just describe what some of that was.
8 A Important glass pieces from Italy, and imported. And
9 other accessories.
10 Q When you say important, you mean high quality?
11 A Lovely things.
12 Q And that was in the facility that you understood to
13 be used for entertaining, networking and so forth?
14 A Yes.
15 MR. TRABULUS: No further questions.
16 THE COURT: Anybody else want a
17 cross-examination?
18 MR. GEDULDIG: A few questions, your Honor.
19
20 CROSS-EXAMINATION
21 BY MR. GEDULDIG:
22 Q Mrs. Grossman, between the period of 1990 and
23 approximately 1995, were you misled by your brother --
24 MR. TRABULUS: Objection, your Honor.
25 THE COURT: Can I hear the question again,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
736
J. Grossman-cross/Geduldig
1 please?
2 MR. GEDULDIG: I have not finished.
3 THE WITNESS: May I ask who you are?
4 Q My name is Martin Geduldig,
and I represent the lady
5 with the dark hair?
6 A Who is she?
7 Q One of the defendants in this case with your brother,
8 she is charged in crimes involving Who's Who.
9 Have you ever seen that lady before?
10 A No.
11 Q Okay.
12 The question I was going to ask you is this:
13 Between the period of 1990 and 1995, were you misled by
14 your brother regarding your ownership position, the stock
15 that you held the percentage that it represented, in the
16 ownership position of Who's Who Worldwide?
17 MR. TRABULUS: Objection.
18 THE COURT: Sustained. I don't understand what
19 that question means. Therefore I am thinking that perhaps
20 the witness doesn't.
21 Do you mean were there false representations
22 made? What do you mean by misled? Was she given the
23 wrong address for the office? What do you mean by
24 misled?
25 Q
Were you misled by your brother regarding the
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J. Grossman-cross/Geduldig
1 percentage of stock that you believed to own in the
2 company Who's Who Worldwide?
3 MR. TRABULUS: Objection, your Honor.
4 THE COURT: Did your brother ever make a
5 representation to you with respect to how much stock you
6 had in the company?
7 THE WITNESS: Did he verbally tell me?
8 THE COURT: Verbally and in writing.
9 THE WITNESS: Not until all of this came to pass
10 in the lawyers' offices, or the prosecutors' offices, did
11 I ever see anything. He never said anything to me.
12 THE COURT: All right.
13 Q Did you not testify on direct examination that your
14 brother told you that you would have a 25 percent interest
15 in the company, and you expressed the thought that you
16 didn't want any
interest in the company at all?
17 A That was at the very beginning, before we even
18 invested anything.
19 Q Was that in 1990?
20 A Yes.
21 Q And your brother insisted that you take an interest,
22 a percentage of the stock in the company?
23 A Yes.
24 Q And he told you it would be 25 percent?
25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
738
J. Grossman-cross/Geduldig
1 Q And that was in 1990?
2 A Yes.
3 Q And it came to pass that you believed in fact you
4 owned through your husband or through the pension plan
5 that you and your husband had, or through the trust fund
6 that you and your husband had, you came to believe that
7 you owned 25 percent of the stock in Who's Who; is that
8 correct?
9 A Yes.
10 Q And did not your brother tell you that you owned 25
11 percent of the
stock in Who's Who?
12 A He never repeated it. It was a one time
13 conversation. And that's what I assumed until all this
14 came to pass.
15 Q And thereafter, did you learn that representations
16 were made by your brother that you, your husband, or the
17 pension plan, or the trust that you and your husband
18 controlled were claimed to own 100 percent --
19 MR. TRABULUS: Objection, your Honor. May we
20 approach?
21 THE COURT: All right. Come up.
22
23 (Whereupon, at this time the following took place
24 at the sidebar.)
25 MR. TRABULUS: Your Honor, I am going to object
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
739
J. Grossman-cross/Geduldig
1 to this entire line of questioning by Mr. Geduldig,
2 because frankly, the evidence that this witness gave was
3 not in any respect against his client. The only things
4 she testified to that remotely pertained to his client
5 would be entirely favorable, tending to show the
6 legitimacy of the operation of Who's Who Worldwide.
7 What he is trying to do is to set a stage, set
8 the stage for the argument down the road that my client,
9 Mr. Gordon lied to his own sister, and therefore you can
10 assume that he lied and took advantage to his own client.
11 And frankly, I don't believe it is a proper use of the
12 cross examination here. Really, I don't think he should
13 be permitted to do this.
14 THE COURT: That raises some interesting issues.
15 Number one, whether a defendant who is not
16 expressly incriminated by the testimony of a witness has a
17 right to cross-examine that witness. And my opinion is
18 that any lawyer in the case does have a right to
19 cross-examine. If you have any authority that says that
20 they do not -- I think it is discretionary on my part, and
21 I will certainly let him do that.
22 If the purpose is to show that Mr. Gordon
23 misrepresented things to people, and, therefore, is likely
24 to misrepresent things to his own employees, I will let
25 him try to do that. They are part of this case. And as I
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J. Grossman-cross/Geduldig
1 mentioned in the motion to sever, that it sometimes is
2 advantageous to be in the case with a major player when
3 you have a minor player, sometimes very advantageous.
4 MR. WALLENSTEIN: My sentiments exactly.
5 MR. JENKS: Judge, what appears -- Edward Jenks
6 for the corporations.
7 What appears to be developing here, and I believe
8 what Mr. Trabulus is complaining about, is a set of
9 antagonistic defenses are beginning to develop, at least
10 through Mr. Geduldig at the current moment, and namely,
11 that Bruce Gordon made misrepresentations to everyone, and
12 their clients were misled along with the rest of the
13 family members and never intended to defraud anyone in the
14 substantive mail fraud or conspiracy to commit mail fraud.
15 Essentially, I think all the employees, what
16 Mr. Trabulus is complaining of, is antagonistic defenses
17 in the case.
18 MR. TRABULUS: That's true.
19 MR. LEE: If I can say something.
20 Winston Lee, for Laura Weitz. Mr. Geduldig
21 jumped up before I could say I have some questions. But I
22 also intend to ask Mrs. Grossman some questions. I wanted
23 everyone to be aware of that.
24 MR. TRABULUS: Your Honor, we have here basically
25 propensity evidence being developed by co-defendants
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J. Grossman-cross/Geduldig
1 against my client. It is like a 404(b) type situation.
2 What the government elicited from her is relevant
3 to the evidence that the government was trying to prove.
4 But I don't believe it should be admissible for the issues
5 which the defense is seeking to raise it. I understand
6 your Honor has the discretion to permit them to question
7 witnesses, but we are talking about the particular
8 questions going on here. They are trying to develop
9 propensity evidence against my client in support of an
10 antagonistic defense.
11 THE COURT: I was thinking about that,
12 Mr. Trabulus, about 404(b). However, we are talking about
13 cross-examination and untruthfulness.
14 Truthfulness is always a prime reason to
15 cross-examine and bring out questions. So, it may be that
16 another ancillary purpose, if he did lie to his own
17 sister, that he would lie to anybody. I can't prevent
18 that.
19 MR. TRABULUS: It seems to me they are calling
20 negative character witnesses before we call any character
21 witnesses.
22 I agree there would be a basis to cross-examine
23 Mr. Gordon on these things if he were to testify because
24 his truthfulness can be brought in. But we are getting to
25 a situation here of what amounts to character evidence,
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J. Grossman-cross/Geduldig
1 and very prejudicial, because it is his own sister being
2 used as a negative character witness on truthfulness.
3 I submit, your Honor, it is not proper and highly
4 prejudicial, specifically when being used as clearly an
5 antagonistic defense, which is now emerged.
6 MR. WHITE: Your Honor, Mr. Trabulus is talking
7 about propensity evidence and 404(b). This is direct
8 evidence of the tax charges against Mr. Gordon.
9 Based on what Mr. Geduldig did yesterday with
10 Dr. Grossman, and what he started to do today with
11 Mrs. Grossman, it sounds that he is just going over the
12 transactions that she has already testified about, and
13 clearly relevant, and Mr. Trabulus didn't object to on the
14 tax charges. He has to live with it. It is not
15 propensity or 404(b) evidence.
16 THE COURT: It is also -- there is also
17 documentary evidence, where your client said that the
18 Grossmans owned more than 25 percent of the stock. And
19 some of it is signed by him.
20 MR. TRABULUS: No question, and signed by
21 Mrs. Grossman.
22 THE COURT: That's in the case.
23 MR. LEE: Your Honor, relevance is motivation to
24 testify, and prejudice and bias, which I think whatever
25 the individual parties' reasons are, it is relevant, the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
743
J. Grossman-cross/Geduldig
1 motivation to testify, and bias.
2 THE COURT: To testify against her brother?
3 MR. LEE: To testify as she had testified,
4 whether it is prejudice or bias.
5 MR. TRABULUS: At this point I would move to
6 sever from Mr. Geduldig's client.
7 MR. GEDULDIG: You are asking me to get out of
8 the case, or you want to get out of the case?
9 MR. TRABULUS: I just don't think we ought to be
10 tried together.
11 THE COURT: I would like to look into this
12 question of antagonistic defenses further, so I will
13 reserve decision on that.
14 Anything else now?
15 MR. TRABULUS: Nothing else.
16 MR. WHITE: The only thing I can say is I know I
17 can refer your Honor Zafiro versus U.S.
18 THE COURT: I don't know. I need all the help I
19 can get.
20 MR. WHITE: Z A F I R O, versus U.S. It is a
21 Supreme Court case, which says -- on severance, your
22 Honor, where it says the claimed basis for the severance
23 is antagonistic defenses. It has to be so antagonistic
24 that it means to convict one you have to acquit the
25 other. And that's not the case here.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
744
J. Grossman-cross/Geduldig
1 MR. JENKS: That's exactly the case, because the
2 way Mr. Geduldig is handling the defense is going to be
3 like this: He is going to say that there may have been
4 all sorts of misrepresentations made concerning the mail
5 fraud, but the employees were not aware of the
6 misrepresentations, the misrepresentations were made by
7 Mr. Gordon and not the employees. Gordon's defense by
8 Trabulus on the mail fraud I assume is there was not a
9 mail fraud period, there was no misrepresentations made,
10 it was maybe puffery, but that's all. So that is striking
11 the defenses you maintain in that Supreme Court case.
12 MR. TRABULUS: If there were any
13 misrepresentations it was made initially by the employees,
14 and Mr. Gordon was not aware of it.
15 THE COURT: I do not believe at this point that
16 there are antagonistic defenses, if there are any, that it
17 rises to such a level that it calls for any severance.
18 And I will take a look at the law. As I said I will
19 reserve decision.
20 Let's proceed.
21
22 (Whereupon, at this time the following takes
23 place in open court.)
24 Q Mrs. Grossman, let me try to rephrase the question I
25 was about to ask you.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
745
J. Grossman-cross/Geduldig
1 There came a point in 1990, either through
2 conversations or letters, where you came to believe that
3 you and your husband, either personally or through your
4 trust, or your pension plans, owned 75 percent of the
5 stock in Who's Who; is that right?
6 A 1990?
7 Q Yes. Roughly May of 1990?
8 A 75 percent?
9 Q Did I say that? 25 percent, I am sorry. That you
10 owned 25 percent of the stock of Who's Who?
11 A 25 percent, yes.
12 Q And thereafter you came to learn -- withdrawn.
13 And that 25 percent stock ownership was a
14 representation you learned about through conversations, or
15 through letters, telephone conversations or face to face
16 with your brother; is that right?
17 A The 25 percent?
18 Q Correct.
19 A Correct.
20 Q And years later you came to learn that there were
21 representations made by your brother that you or your
22 husband either personally or through the trust and pension
23 plan that you had owned 100 percent, or 75 percent of the
24 stock in Who's Who; is that right?
25 A We saw it in the papers we were shown, right.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
746
J. Grossman-cross/Geduldig
1 Q My question to you is: Were you misled by your
2 brother regarding the percentage of the stock that you and
3 your husband personal or through your trust or pension
4 plans owned in the company, Who's Who?
5 MR. TRABULUS: Objection.
6 THE COURT: Sustained.
7 Q Did you believe you had any active role to play in
8 the operation of Who's Who from roughly 1990 to roughly
9 1995?
10 A None whatsoever.
11 Q Did you come to learn that there were representations
12 made that you personally did have a role
to play in the
13 operation of that company?
14 MR. TRABULUS: Objection.
15 THE COURT: Learn in what way?
16 Q Through documents or through conversations with your
17 brother.
18 THE COURT: One at a time.
19 Q Did you learn through documents that you viewed at
20 your lawyer's office?
21 MR. TRABULUS: Objection. Relevance.
22 THE COURT: I didn't hear the end of the
23 question.
24 MR. TRABULUS: I am sorry.
25 Q That you had a role to play in the operation of Who's
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
747
J. Grossman-cross/Geduldig
1 Who?
2 MR. TRABULUS: Objection.
3 THE COURT: Sustained.
4 MR. GEDULDIG: Nothing else.
5 THE COURT: Mr. Lee, did you have any questions?
6 MR. LEE: Yes. Thank you, Judge.
7
8 CROSS-EXAMINATION
9 BY MR. LEE:
10 Q Good morning, Ms. Grossman.
11 My name is Winston Lee, L E E. I am an attorney,
12 and I represent a person by the name of Laura Weitz, a
13 salesperson employee of Who's Who Worldwide Registry. Do
14 you understand that?
15 A Yes.
16 Q Now, you recall when Mr. Trabulus was asking you some
17 questions, you responded that you recall that there came a
18 time when a bankruptcy trustee was alleging that your
19 ownership of Who's Who was greater than it really was, he
20 was alleging perhaps a 100 percent ownership or
21 involvement by you and your husband; is that correct?
22 A I never really read all the documents, but I
23 understand that.
24 Q That is what this bankruptcy trustee was alleging as
25 far as you and your husband was concerned, that your
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
748
J. Grossman-cross/Lee
1 involvement was greater than what it really was; is that
2 correct?
3 A Yes.
4 Q In your mind it was an unjust accusation on the part
5 of this trustee against you and your husband, correct?
6 A Correct.
7 Q And in your mind, the person who placed you in that
8 position, where you were unjustly accused of something,
9 doing something you did not do, that person was your
10 brother, Bruce Gordon, correct, as a result of his actions
11 that you were placed in that position; is that correct?
12 A Are you asking me how I feel about it?
13 Q Yes.
14 A I don't feel anything like that. I feel that the
15 trustee was out to close him down and take anybody along,
16 that had anything to do with the company.
17 Q You feel that the trustee was acting on accurate or
18 inaccurate information when he made these accusations
19 against you and your brother?
20 A I think they would have used anything they could to
21 close him down and take anybody along with him that they
22 could.
23 Q And there are claims against you and your husband,
24 they were based upon what? What was the basis upon which
25 they brought you into the bankruptcy proceedings? What
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
749
J. Grossman-cross/Lee
1 was the basis for doing that?
2 MR. TRABULUS: Objection.
3 THE COURT: Sustained.
4 MR. LEE: I have no further questions, your
5 Honor.
6 THE COURT: Anybody else?
7 MR. WALLENSTEIN: Yes, your Honor.
8
9 CROSS-EXAMINATION
10 BY MR. WALLENSTEIN:
11 Q Good morning, Ms. Grossman.
12 My name is John Wallenstein, and I represent
13 Martin Reffsin; do you know that name?
14 A I heard of it.
15 Q Have you ever met Mr. Reffsin?
16 A No, I have not.
17 Q Have you spoken to Mr. Reffsin?
18 A No, I have not.
19 Q Ever have any business dealings with Mr. Reffsin?
20 A No, I have not.
21 Q You understand Mr. Reffsin was an accountant doing
22 accounting work for your brother and his companies; is
23 that correct?
24 A Correct.
25 Q How long have you been in business, Ms. Grossman?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
750
J. Grossman-cross/Wallenstein
1 A Over 30 years.
2 Q How many employees have you had over that time on
3 average?
4 A Not together, at one time?
5 Q Yes.
6 A Over the years, about six, seven.
7 Q And on the average, how many employees do you have at
8 any one given time?
9 A One.
10 Q And does your company operate as a corporation?
11 A No.
12 Q Do you employ an accountant?
13 A Yes.
14 Q And is that the same accountant that your husband
15 uses?
16 A Yes.
17 Q And your husband operates a dental practice; is that
18 correct?
19 A Yes.
20 Q And that involves both the professional end, the
21 dental end of it, and the business end of the practice; is
22 that correct?
23 A What does?
24 Q His operation of his dental practice, it is a
25 business, isn't it?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
751
J. Grossman-cross/Wallenstein
1 A Yes.
2 Q Okay.
3 Both of you are the trustees of a family trust?
4 A Yes.
5 Q And the beneficiary of that trust are other than
6 yourself, but other people are the beneficiaries of the
7 trust?
8 A When my husband dies, I am the beneficiary, and vice
9 versa, and we both die, the children are.
10 Q Your children are the beneficiaries of the trust?
11 A Yes.
12 Q And you and your husband are the beneficiaries of his
13 retirement plan?
14 A He is.
15 Q He is?
16 A Yes.
17 Q And is it fair to say between the trust and the
18 retirement plan, your business and your husband's
19 business, that there is several hundred thousand dollars
20 to be taken care of?
21 A Yes, on retirement.
22 Q And that has been the case for many years; is that
23 correct?
24 (No response.)
25 Q And that's the case for many years; is that correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
752
J. Grossman-cross/Wallenstein
1 A Yes.
2 Q And particularly the time between 1990 and 1995, the
3 trust and the retirement plan controlled assets of several
4 hundred thousand dollars, and you and your husband were
5 the administrators of those plans; is that correct?
6 A That's correct.
7 Q And during that time you also operated a fairly
8 successful decorating business?
9 A Yes.
10 Q And approximately how many corporate clients did you
11 have in that time period?
12 A You mean how many of my clients own corporations?
13 Q Let me rephrase the question. It is a bad question:
14 During that time period how many of your clients
15 were corporate clients as opposed to individuals wanting
16 to decorate their homes?
17 A Half were corporate clients.
18 Q Approximately what is that number?
19 A Most were attorneys.
20 Q What is the number, that's the question?
21 A Half a dozen.
22 Q Okay.
23 In the period, say 1980 to 1990, approximately
24 how many business people did you have as clients?
25 A A dozen.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL
COURT REPORTER
753
J. Grossman-cross/Wallenstein
1 Q Was it unusual -- withdrawn.
2 Other than the work that you did for your brother
3 and his companies, had you ever had occasion on other
4 times, or for other clients, to receive corporate monies
5 for the decoration of personal residences or personal
6 offices?
7 A Sometimes.
8 Q Would you say that that was not unusual?
9 A It happened occasionally.
10 Q You got a business check from somebody, right?
11 A Yes.
12 Q Okay.
13 Did you question --
14 A No, I didn't.
15 Q Let me finish my question, and then you can say, no,
16 you didn't.
17 Did you question those people as to why they were
18 using business funds as opposed to personal funds, for the
19 purchase of any particular item?
20 A No, I did not.
21 Q When you came to New York to assist your brother in
22 the decorating of the offices in Lake Success, did you
23 physically see those offices?
24 A Yes.
25 Q There were people working there and it was an office;
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
754
J. Grossman-cross/Wallenstein
1 is that correct?
2 A Yes.
3 Q And when you visited the condo and decorated the
4 condo, it was your understanding that there would be a
5 business purpose for that as well; is that correct?
6 A Yes.
7 Q In fact, you received business checks for the
8 payments that he made to you for the condo; is that
9 correct?
10 A Yes.
11 Q And with respect to the decoration of the penthouse,
12 you understood there was a business purpose for that as
13 well?
14 A That was almost entirely business.
15 Q And you received business checks for purchases in
16 connection with that as well?
17 A Yes.
18 Q Am I correct that you did not charge a fee for
19 yourself for the decoration of Lake Success or the
20 penthouse?
21 A That's correct.
22 Q And for the condo, you took ten percent, just so your
23 junior partner could be paid; is that correct?
24 A That's correct.
25 Q And when you took the funds for the decoration of the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
755
J. Grossman-cross/Wallenstein
1 penthouse and Lake Success they were business checks -- I
2 am sorry -- they were business checks that were used for
3 the purchase of items for those locations; is that
4 correct?
5 A That is correct.
6 Q Would it be fair to say that when you got the
7 $400,000, or what was left of it after taxes at the end of
8 1992, you considered that to be in some respects repayment
9 for services rendered?
10 A That's right.
11 MR. WALLENSTEIN: Thank you, Mrs. Grossman.
12 No further questions, your Honor.
13 THE COURT: Anything else?
14 MR. WHITE: Yes.
15
16 REDIRECT EXAMINATION
17 BY MR. WHITE:
18 Q Mrs. Grossman, do you recall Mr. Trabulus asking you
19 whether Mr. Gordon had ever asked you not to read a
20 document that he sent you?
21 A I remember the question.
22 Q And your answer is that, no, Mr. Gordon had not done
23 that; is that right?
24 A That's right.
25 Q If Mr. Gordon had specifically asked you not to read
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
756
J. Grossman-redirect/White
1 a document that he wanted you to sign, would that have
2 aroused any suspicion in you?
3 A Of course.
4 MR. WHITE: No further questions, your Honor.
5 THE COURT: Anything else?
6 MR. TRABULUS: Yes, very briefly.
7
8 RECROSS-EXAMINATION
9 BY MR. TRABULUS:
10 Q Mr. Wallenstein asked you some questions about other
11 work you had done for other clients.
12 Let me ask you, the budget for the work you did
13 on the condo, the Lake Success offices, the penthouse, was
14 that typical within the range that you would have spent
15 for facilities of that type?
16 A Absolutely.
17 Q So, it is nothing unusually lavage for a business
18 facility?
19 A That's right.
20 Q Let me ask you, some of the things you saw in the
21 penthouse facility, the urns, the crystals, do you know if
22 they were paid by using an American Express cards that
23 Mr. Gordon was allowed to use?
24 A You mean the items I did not purchase?
25 Q That's correct.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT
REPORTER
757
J. Grossman-recross/Trabulus
1 A I have no idea as to that.
2 MR. TRABULUS: Thank you, that's all.
3 THE COURT: Anything else?
4 You may step down, Ms. Grossman.
5 (Whereupon, at this time the witness left the
6 witness stand.)
7 THE COURT: Members of the jury, we will take a
8 ten-minute recess. Please do not discuss the case and
9 keep an open mind. Please recess yourselves.
10 (Whereupon, at this time the jury leaves the
11 courtroom.)
12
13 (Whereupon, a recess is taken.)
14
15 THE CLERK: Jury entering.
16 (Whereupon, the jury at this time entered the
17 courtroom.)
18 THE COURT: Please be seated, members of the
19 jury.
20 You may proceed.
21 MS. SCOTT: Your Honor, the government calls
22 Jeanne Dietrich.
23 THE CLERK: Please raise your right hand.
24
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
758
1 J E A N N E D I E T R I C H,
2 called as a witness, having been first
3 duly sworn, was examined and testified
4 as follows:
5
6 THE CLERK: Please state your name and spell your
7 last name slowly for the record.
8 THE WITNESS: My name is Jeanne Dietrich,
9 D I E T R I C H. First name, J E A N N E.
10
11 DIRECT EXAMINATION
12 BY MS. SCOTT:
13 Q Good afternoon, Ms. Dietrich.
14 A Good afternoon.
15 Q Can you tell us what you do for a living?
16 A Yes. I am employed as a physical scientist with the
17 Internal Revenue Service National Forensic Laboratory in
18 Chicago.
19 Q And what are -- how long have you been doing that
20 job?
21 A I have been there just a little over eleven years.
22 Q What are your responsibilities?
23 A We routinely examine document evidence to try and
24 determine how and when it was produced, if there were any
25 alterations done to it, the method of typewriting or
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
759
Dietrich-direct/Scott
1 printing, things like that.
2 Q Now, what was your job before you went to work at the
3 IRS?
4 A I worked at the Chicago Police Department Crime
5 Laboratory as a drug chemist.
6 Q How long did you do that?
7 A Approximately four and a half years.
8 Q And what education have you had?
9 A I have a bachelors of science in chemistry from
10 Illinois Benedict College which is in Lisle, L I S L E,
11 Illinois.
12 THE COURT: Do you want to move back a little
13 from the microphone? You have a very good strong voice
14 and it comes over well.
15 Q What other training have you had to prepare you for
16 your job?
17 A I have had quite a bit of in-house training at the
18 Internal Revenue Service lab with the document examiners
19 there, and also with the examiners at the U.S. Secret
20 Service laboratory and the Bureau of Alcohol Tobacco and
21 Firearms.
22 Q And what did that training consist of specifically?
23 A Primarily the concentration was on ink analysis,
24 which allows you to identify ink formulation, and the date
25 of production. Also various other document examining
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
760
Dietrich-direct/Scott
1 techniques, developing indentations, examining alterations
2 or obliterations, identifying typewriting, printing
3 processes.
4 Q Now, when you described identify indentations, what
5 do you mean by that?
6 A Indentations come about when, for instance, you write
7 on the top sheet of a pen and paper, you leave
8 indentations on the writing and the sheets underneath. We
9 can develop that writing and determine what it says, or
10 match it up with other entries we have in our documents.
11 Q Now, are you affiliated with any organizations as
12 part of your job?
13 A Yes, I am. I belong to both the American Academy of
14 Forensic Scientists, and the Midwestern Association of
15 Forensic Scientists.
16 Q How do you keep up with friends in your field?
17 A Most of those organizations holds annual meetings,
18 and workshops and seminars that concentrate on the field
19 and document examination.
20 Q Have you ever been qualified as an expert in forensic
21 document examinations?
22 A Yes.
23 Q How many times?
24 A Approximately 15 times.
25 Q Where have you been so qualified?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
761
Dietrich-direct/Scott
1 A Well, in U.S. district courts throughout the country,
2 and also in the state court in California.
3 Q Have you ever been rejected as an expert?
4 A No.
5 MS. SCOTT: I offer Ms. Dietrich as an expert in
6 forensic examination techniques.
7 MR. TRABULUS: No objection.
8 THE COURT: I qualify her as an expert in
9 forensic examination techniques, did you say?
10 MS. SCOTT: Yes.
11 Q Now, I am going to show you Government's Exhibits 582
12 through 588.
13 582 through 586 are in evidence, and 587 and 588
14 are stipulated --
15 MS. SCOTT: Your Honor, the government stipulated
16 that these are promissory notes executed by Bruce Gordon.
17 MR. TRABULUS: Of the organizations indicated on
18 the notes, yes.
19 THE COURT: You are offering those documents?
20 MS. SCOTT: Offering 587 and 588 in evidence.
21 THE COURT: Any objection?
22 MR. TRABULUS: No.
23 THE COURT: Government's Exhibits 587 and 588 in
24 evidence.
25 (Government's Exhibit 587 received in evidence.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
762
Dietrich-direct/Scott
1 (Government's Exhibit 588 received in evidence.)
2 THE COURT: You say they are promissory notes
3 signed by Bruce Gordon?
4 MS. SCOTT: Yes, Publishing Ventures, 587, and
5 588 is on behalf of Sterling Who's Who.
6 THE COURT: Very well.
7 Q Ms. Dietrich, have you seen these documents before?
8 A Yes, I have.
9 Q How do you recognize those documents?
10 A When I examine these I place my initials on the
11 bottom corner of each document.
12 Q What tests did you perform on those documents?
13 A Well, I perform a series of different examinations
14 that include an ink analysis, indentation examination. I
15 examine the printing processes, the typewriting and the
16 paper itself that the documents were made of.
17 Q What is an ink test?
18 A An ink examination is designed to identify a
19 particular ink formulation, and the manufacturer, and
20 determine when we can, if we can, when the particular
21 formulation was first manufactured, determine how many
22 different types of ink we have on our series of documents,
23 and determine, you know, how they were produced using that
24 ink.
25 Q And what is the purpose of discovering the time of a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
763
Dietrich-direct/Scott
1 particular ink formulation?
2 A Well, by identifying the ink formulation that perhaps
3 was not manufactured until a
date that is after the date
4 that is on the document, we can tell that the document
5 could then not have been made until a certain time frame.
6 Q And how many ink tests have you performed in your
7 career?
8 A Oh, probably thousands.
9 Q And taking a look at Government's Exhibit 584 in
10 front of you, and actually, I will ask you to look at 583,
11 and I am showing you Government's Exhibits 583-A and
12 584-A.
13 Do Government's Exhibits 583 and 584-A contain
14 true and accurate enlarged representations of 583 and 584?
15 A They appear to.
16 MS. SCOTT: I offer Government's Exhibits 583-A
17 and 584-A.
18 THE COURT: Any objection?
19 MR. TRABULUS: No.
20 THE COURT: Government's Exhibits 583-A and
21 584-A, in evidence.
22 (Government's Exhibit 583-A received in
23 evidence.)
24 (Government's Exhibit 584-A received in
25 evidence.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
764
Dietrich-direct/Scott
1 Q Now, looking at Government's Exhibit 584, what was
2 the result of your ink test on that document?
3 A There is actually two different ink formulations on
4 that document. One is a blank ball pen ink. The other is
5 a black non-ball pen ink -- I take it back. They are two
6 black ball pen inks, but two different formulations.
7 The one used to create the Bruce Gordon
8 signature, use an ink formulation not available until
9 1993.
10 Q If you look at the date of the document, what is that
11 date?
12 A January of 1990.
13 Q Now, if you take a look at the minutes of the
14 meeting, that would be Government's Exhibit 583, what was
15 the result of your ink test on that document?
16 A It was actually the same formulation as the one I
17 spoke about, a black ball pen ink not manufactured until
18 1993.
19 Q What can you tell us about the inks on the other
20 documents?
21 A There were four other formulations I found on the
22 entries of the other document, and all of those four
23 matched ink available in 1990.
24 Q Just because the inks were available in 1990, does it
25 mean that the documents were signed in 1990?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
765
Dietrich-direct/Scott
1 A No, they could be signed any time after the inks
2 become available.
3 Q Now, can you tell the jury what an indentation test
4 is?
5 A Yes. As I said before, just for example, if you
6 write on the top sheet of a pad and paper, it leaves the
7 indentations of the writing on the sheets underneath. And
8 we can develop those indented impressions. And the
9 results of the examination comes out like a transparency
10 sheet.
11 With that transparency then, you cannot only read
12 the entries you have developed, but if you have other
13 documents to match up the writing with, you can actually
14 lay it right on top, to determine if the indentations you
15 developed came from a particular entry on a document you
16 have.
17 Q How many indentation tests have you performed in your
18 career?
19 A Again, probably thousands.
20 Q Now, looking at Government's Exhibit 585 and 584,
21 what was the result of your indentation test on 585?
22 A On Exhibit 585 I developed indentations, that the
23 first entry was a Richard Grossman signature. I matched
24 up that signature as coming from the Richard Grossman
25 signature on Exhibit 584.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
766
Dietrich-direct/Scott
1 MS. SCOTT: Is this going to work?
2 THE COURT: Go ahead.
3 Q You were saying the signature on 584, this signature,
4 matched an indentation that you found on this document
5 here?
6 A That's correct.
7 Q And can you indicate -- withdrawn.
8 I am showing 585-B. Do you recognize that?
9 A Yes.
10 Q What is that?
11 A Actually the transparency created from the
12 indentation analysis.
13 Q And which document does that transparency represent?
14 A This is from the examination of
15 Government's Exhibit 585.
16 MS. SCOTT: I offer Government's Exhibit 585-B,
17 your Honor.
18 MR. TRABULUS: No objection.
19 THE COURT: Government's Exhibit 585-B in
20 evidence.
21 (Government's Exhibit 585-B received in
22 evidence.)
23 MS. SCOTT: I would ask the Court's permission to
24 publish it to the jury?
25 THE COURT: Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
767
Dietrich-direct/Scott
1 (Whereupon, the exhibit/exhibits were published
2 to the jury.)
3 MS. SCOTT: I need to add also, because it has an
4 unusual surface, it can't be removed from inside the
5 sleeve.
6 Q While the jury is examining 585-B, can you tell them
7 where on Government's Exhibit 585 you found the
8 indentation of Richard Grossman's signature?
9 A It appeared approximately where the
10 Government's Exhibit -- well, maybe more in the middle
11 than the Government's Exhibit sticker.
12 Q Is that over here?
13 A Well, a little higher and more toward the middle.
14 Q The upper left-hand corner of the exhibit?
15 A Approximately, I would think.
16 MS. SCOTT: I would like to give the jury a
17 moment to take a look
at the transparency as it goes
18 around.
19 THE COURT: What does this mean in lay language?
20 THE WITNESS: Your Honor, that means that when
21 this particular signature was executed --
22 THE COURT: What signature?
23 THE WITNESS: The Richard Grossman signature on
24 Government's Exhibit 584 --
25 THE COURT: Government's Exhibit 584 is a waiver
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
768
Dietrich-direct/Scott
1 of notice of special meeting dated January 3rd, 1990; is
2 that correct?
3 THE WITNESS: Correct.
4 THE COURT: There is a signature, Richard
5 Grossman on that.
6 THE WITNESS: Correct.
7 THE COURT: And what happens after that?
8 THE WITNESS: By the indentations I found, that
9 indicates that this document was physically on top of
10 Exhibit 585 when the Richard Grossman signature was
11 executed.
12 Q By that you mean this document, which is now marked
13 as 584-A, would have been on top of 585?
14 A Exactly.
15 Q For this signature, the Richard Grossman signature,
16 to be written on the upper left-hand corner?
17 A Correct.
18 Q Now, taking a look at Government's Exhibit 582, what
19 was the result of your indentation test on that document?
20 A Actually I developed some more indentations on the
21 first one. I think I only mentioned the Richard Grossman
22 signature.
23 Q Yes.
24 A Is that correct?
25 Q Yes, going back to Government's Exhibit 585, the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
769
Dietrich-direct/Scott
1 stock certificate, what else did you find on that
2 document?
3 A I also found an entry that reads Richard, sign as
4 secretary on all six, and then the 6 was in parenthesis,
5 and certified and sent back.
6 Q Now, approximately where on that stock certificate
7 did you find that indentation?
8 A That was approximately right in the center.
9 Q So, it would be about here, in the middle of the
10 document (indicating)?
11 A I would say yes.
12 Q I am pointing out the center of 585-A to show where
13 that indentation was located.
14 A Yes.
15 Q Did you find any other indentations on that document,
16 585?
17 A No, just that entry on the Richard Grossman
18 signature.
19 Q Okay.
20 I will turn your attention now to
21 Government's Exhibit 582.
22 What was the result of your indentation test on
23 that document?
24 A On this document I developed an indentation in the
25 lower left corner that read: Joyce must sign. And the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT
REPORTER
770
Dietrich-direct/Scott
1 must sign was underlined a couple of times.
2 Q Are you saying you found it right about here?
3 A Approximately, yes.
4 Q And that's the lower left-hand corner of
5 Government's Exhibit 582.
6 A Yes.
7 Q And I am showing you Government's Exhibit 582-B.
8 Do you recognize that?
9 A Yes, I do.
10 Q What is that?
11 A This again is the transparency that was developed
12 from the indentation exam of Government's Exhibit 582.
13 MS. SCOTT: I offer Government's Exhibit 582-B.
14 THE COURT: Any objection?
15 MR. TRABULUS: No.
16 THE COURT: Government's Exhibit 582-B in
17 evidence.
18 (Government's Exhibit 582-B received in
19 evidence.)
20 MS. SCOTT: I would also like to publish this
21 exhibit to the jury as well, your Honor.
22 THE COURT: Yes.
23 (Whereupon, the exhibit/exhibits were published
24 to the jury.)
25 Q Once again, you stated that that indentation is in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
771
Dietrich-direct/Scott
1 the lower left-hand corner of the document?
2 A Yes.
3 Q What is the meaning of that result?
4 A That indicates to me that there was another piece of
5 paper, perhaps a note that was on top of
6 Government's Exhibit 582 when that particular entry was
7 written.
8 Q And the entry being, Joyce must sign?
9 A Yes.
10 Q And did you ever find a piece of paper that said,
11 Joyce must sign, on it?
12 A No, I did not.
13 Q Taking a look at Government's Exhibit 584, did you
14 perform an indentation test on that document?
15 A Yes, I did.
16 Q What was the result of that test?
17 A Again, I found a note on -- an entry in
the lower
18 left-hand corner, an entry that said, must sign, and
19 underlined. I also developed two different Richard
20 Grossman signatures.
21 Q I am showing you Government's Exhibit 584-B.
22 (Handed to the witness.)
23 Q Do you recognize that?
24 A Yes, I do.
25 Q What is that?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
772
Dietrich-direct/Scott
1 A This is the transparency from the indentation
2 examination of Government's Exhibit 584.
3 MS. SCOTT: I offer Government's Exhibit 584-B.
4 THE COURT: Any objection?
5 MR. TRABULUS: No.
6 THE COURT: Government's Exhibit 584-B in
7 evidence.
8 (Government's Exhibit 584-B received in
9 evidence.)
10 MS. SCOTT: Once again, I would like to publish
11 that exhibit for the jury, your Honor.
12 THE COURT: Yes.
13 (Whereupon, the exhibit/exhibits were published
14 to the jury.)
15 Q Ms. Dietrich, can you tell us where you found the
16 indentations on 584.
17 A Yes. The must sign entry was approximately in the
18 lower left corner. The two Richard Grossman signatures
19 are on the right side, about in the middle.
20 Q Approximately this area?
21 A Yes.
22 Q The middle of 584.
23 What does that result suggest to you?
24 A It suggests that there was at least one, if not
25 three, pieces of paper, on the top of Exhibit 584, when
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
773
Dietrich-direct/Scott
1 those three entries, the two Richard Grossman signatures
2 and the must sign entry, were written.
3 Q Did you ever see the documents that contained the
4 original Richard Grossman signatures and the must sign,
5 that you found the indentations of on
584?
6 A No. I could not match up the signatures with any of
7 the documents I had. I did not have that note at all.
8 Q Just for clarification, which of tests you performed,
9 between the ink test and the indentation test which did
10 you do first?
11 A We always do the indentation test first.
12 Q Why is that?
13 A To do the ink examination test we have to move small
14 little plugs from the document. We do any other
15 examinations first so we don't interfere with the results
16 when we do the ink exam.
17 Q You mentioned other tests you performed on the
18 documents. Can you briefly describe what those are?
19 A Yes.
20 First of all, I looked for watermark on the
21 paper, that is a mark put in during the manufacturing
22 process of the paper, the two stock certificates had
23 Weston, W E S T O N, bond water marks on it, information
24
from the manufacturer indicating that that water mark has
25 been around since about 1920. So that provided me with no
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
774
Dietrich-direct/Scott
1 dating information other than it has been available for 70
2 some years.
3 The other sheets did not have a water mark. I
4 did look at the printing process, they were all done with
5 what is known as an ink jet printer. I tried to identify
6 the type style, which I kind of came up with a general
7 type style, but nothing in particular, nothing specific,
8 because of a lack of enough letters to be able to identify
9 a specific type style.
10 MS. SCOTT: Thank you.
11 I have no further questions.
12 THE COURT: Cross-examination.
13 MR. TRABULUS: Thank you.
14
15 CROSS-EXAMINATION
16 BY MR. TRABULUS:
17 Q Good morning, Ms. Dietrich. Just a couple of
18 questions for clarification.
19 I believe you testified there was an ink used on
20 one -- on two of the documents, two of the signatures that
21 was not available until sometime in 1993; is that correct?
22 A Yes.
23 Q And specifically, you prepared a report in connection
24 with your examination, is that right?
25 A Yes, I did.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
775
Dietrich-cross/Trabulus
1 Q And the date on which that ink was first
2 manufactured, according to your report was January 4,
3 1993?
4 A Yes, sir.
5 Q Basically what you testified to was that with regard
6 to the various documents signed by Richard Grossman, it is
7 consistent with all them being signed pretty much on a
8 stack, with note it is indicating, must sign, or something
9 like that; is that fair enough?
10 A Yes, that is generally how you get the indentations.
11 Q The document that has the signature Joyce Grossman,
12 you also developed an indentation on that and it said must
13 sign?
14 A Specifically it said, Joyce must sign.
15 Q Joyce must sign?
16 A Yes.
17 Q And another one had Richard Grossman's signature and
18 it said must sign; is that right?
19 A Yes.
20 Q Can you tell us if the two must signs were in the
21 same handwriting?
22 A I am not a handwriting examiner, so, no.
23 Q Were they both underlined?
24 A Yes.
25 Q In a similar way?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
776
Dietrich-cross/Trabulus
1 A As similar as an underline can be.
2 Q I believe you said one of them had a couple of
3 underlines?
4 A Yes, that's true, one had two underlines, and one had
5 one.
6 Q So they are not impressions of the same writing, must
7 sign, two separate entries?
8 A Two separate.
9 MR. TRABULUS: No further questions. Thank you.
10 THE COURT: Anything else?
11 MS. SCOTT: Nothing further from the government.
12 THE COURT: You may step down.
13 Please call your next witness.
14 (Whereupon, at this time the witness left the
15 witness stand.)
16 THE COURT: Do you want to remove these
17 documents.
18 MR. WHITE: We will take this one, your Honor,
19 but this one here will be referred to.
20 THE COURT: All right.
21 MS. SCOTT: The government calls Steven Adler.
22 THE COURT: Rise, please, and raise your left
23 hand.
24
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
777
1 S T E V E N A D L E R,
2 called as a witness, having been first
3 duly sworn, was examined and testified
4 as follows:
5
6 THE COURT: Please be seated.
7 State your full name and spell your name,
8 please.
9 THE WITNESS: Steven Adler, S T E V E N,
10 A D L E R.
11 THE COURT: You may proceed.
12
13 DIRECT EXAMINATION
14 BY MS. SCOTT:
15 Q Good morning, Mr. Adler.
16 A Good morning.
17 Q Tell us what you do for a living.
18 A I am an attorney.
19 Q What kind of law do you practice?
20 A Mostly real estate and corporate law.
21 Q Who do you work for?
22 A My own practice, law practice.
23 Q How long have you had your own law practice?
24 A Since 1992.
25 Q Do other people work for you in your business?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
778
Adler-direct/Scott
1 A I have one assistant, yes.
2 Q How long have you had your assistant?
3 A Since last July.
4 Q So, you have had your assistant about six or seven
5 months?
6 A That's correct.
7 Q Now, where do you work?
8 A I work out of my apartment, which is at 2250
9 Broadway. I have my office in the apartment, in
10 Manhattan.
11 Q And what kind of services do you provide?
12 A Well, I do real estate transactions for clients, I do
13 some corporate work for clients. That's essentially it.
14 Q What services do you perform for them?
15 A I do contracts, I do closings, I work with mortgage
16 lenders. I draft documents, negotiate agreements, typical
17 commercial law matters.
18 Q Do you know Martin Reffsin?
19 A Yes, I do.
20 Q How do you know him?
21 A Before I had my own practice, from 1990 to 1992, I
22 worked for a real estate developer in Long Island City,
23 named Louis Evangelista.
24 THE COURT: How do you spell Louis?
25 THE WITNESS: L O U I S; Evangelista.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
779
Adler-direct/Scott
1 E V A N G E L I S T A. I was his in-house counsel for
2 that two-year period. And Mr. Reffsin was his accountant,
3 and spent a lot of time working in the office. And we
4 worked together on many matters.
5 Q Do you know Bruce Gordon?
6 A I did some work, legal work for him several years
7 ago, and I met him once, yes.
8 Q And when was that legal work performed?
9 A In early 1994.
10 Q Now, what -- who gave you that assignment in 1994?
11 A Mr. Reffsin contacted me and asked me to prepare
12 legal documents.
13 Q What specifically was your assignment?
14 A I had to -- he described Who's Who business, the
15 Who's Who business, and the investment by
Mr. Gordon's
16 sister and brother-in-law in it, and said the investments
17 had been made several years before, but they had never
18 documented the investment transaction. So, it was my job
19 to prepare some corporate minutes and some promissory
20 notes.
21 Q What did you do with these documents after you
22 drafted them?
23 A I forwarded them to Mr. Reffsin.
24 Q You say this was in March of 1994?
25 A Approximately.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
780
Adler-direct/Scott
1 Q Now, I am showing you Government's Exhibit 671.
2 Do you recognize that?
3 (Handed to the witness.)
4 A Yes. That's a copy of the fax that I sent to
5 Mr. Reffsin transmitting drafts of the documents I had
6 prepared.
7 MS. SCOTT: I offer Government's Exhibit 671.
8 THE COURT: I wish you would designate it for
9 identification. We have hundreds of documents. At least
10 for my edification, I would appreciate each lawyer saying
11 if it is not in evidence yet, for identification.
12 MS. SCOTT: I offer what is now as
13 Government's Exhibit 671 for Identification, I offer into
14 evidence.
15 THE COURT: Any objection?
16 MR. WALLENSTEIN: No, your Honor.
17 MR. TRABULUS: No, your Honor.
18 THE COURT: Government's Exhibit 671 in
19 evidence.
20 (Government's Exhibit 671 received in evidence.)
21 MS. SCOTT: Now I request permission to publish
22 it to the jury.
23 THE COURT: Yes.
24 (Whereupon, the exhibit/exhibits were published
25 to the jury.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
781
Adler-direct/Scott
1 THE COURT: What is the date on that exhibit?
2 THE WITNESS: The date is March 30th, 1994.
3 Q Going through that exhibit, Mr. Adler, can you tell
4 the jury what each page is.
5 A The cover sheet is my fax cover sheet with my heading
6 at the top.
7 The next page, the next two-pages are a draft of
8 promissory, a promissory note.
9 The two pages after that are the draft of the
10 different promissory note.
11 Q Any date on the two promissory notes?
12 A Yes, the first one is dated January 31st, 1993. And
13 the second one is dated May 31st, 1993.
14 Q Please continue.
15 A Then there is a draft of a letter from Joyce Grossman
16 to Bruce Gordon, one page.
17 There is a one-page waiver of notice of special
18 meeting of the board of directors of Who's Who Worldwide
19 Registry ink.
20 Q Can you tell us the date on that document?
21 A The date on that is January 3rd, 1990.
22 Q I am sorry, the document just prior to that, what was
23 that?
24 A That was a promissory note -- no, I am sorry, it is a
25 letter from Joyce Grossman to Bruce Gordon dated January
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
782
Adler-direct/Scott
1 10th, 1990.
2 Q And following that --
3 A The waiver of notice of the minutes of special
4 meeting.
5 Then there is the minutes of special meeting of
6 the board of directors of Who's Who Worldwide Registry
7 ink.
8 Q Is there a date on that document?
9 A It says that the meeting was held January 9, 1990.
10 Then following that there is a waiver of notice
11 of special meeting of the board of directors of Publishing
12 Ventures ink, with the date of January 13th, 1993; and the
13 minutes of that meeting, that's the next page, a one-page
14 document stating the meeting was to have taken place on
15 January 31st, 1993.
16 Following that is a one-page waiver of notice --
17 THE COURT: You have to slow down a little bit,
18 Mr. Adler.
19 THE WITNESS: Sorry.
20 Following that is a one-page waiver of notice of
21 special meeting of board of directors of Sterling Who's
22 Who, Inc. the date of that notice -- of that waiver, is
23 May 10th, 1993.
24 Following that there is a one-page document,
25 minutes of special meeting of board of directors of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
783
Adler-direct/Scott
1 Sterling Who's Who ink, with the date of May 14th, 19,
2 1993.
3 And that's that.
4 Q Thank you.
5 Now, you say that the request for -- the request
6 you received from Mr. Reffsin to create these documents
7 came in early 1994; is that correct?
8 A That's correct.
9 Q How were you paid for your service?
10 A I was given a check for $1,500 by Mr. Reffsin after I
11 completed my work.
12 Q And I am showing you Government's Exhibit 671-A for
13 Identification.
14 (Handed to the witness.)
15 A This is a photocopy of a deposit slip, in which I
16 deposited the $1,500 into my checking account.
17 MS. SCOTT: I offer Government's Exhibit 671-A.
18 THE COURT: Any objection?
19 MR. TRABULUS: No objection.
20 MR. WALLENSTEIN: No objection.
21 THE COURT: Government's Exhibit 671-A, or Abel,
22 in evidence.
23 (Government's Exhibit 671-A received in
24 evidence.)
25 Q How do you know that that deposit slip represents a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
784
Adler-direct/Scott
1 deposit for a payment you received from Mr. Reffsin?
2 A Because I wrote it in my own handwriting, $1,500,
3 M. Reffsin, legal fee, which is my typical way of dealing
4 with deposits. I write the amount of the deposit -- I
5 mean I write the source of the deposit right on the
6 deposit slip, so I have it for my own reference.
7 Q Now, Mr. Adler, can you tell us whether the check for
8 $1,500 was a check issued -- withdrawn.
9 Do you remember who made out the check for $1,500
10 that you received?
11 A Well, I don't have a specific memory of the check,
12 but I am fairly careful and accurate in entering my
13 deposits. And if I wrote M. Reffsin legal fee, it is
14 because I would have gotten the check from Mr. Reffsin.
15 If it was someone else I would have written their name on
16 it.
17 Q And the dates that you have read off the documents
18 that you created for Mr. Reffsin and Mr. Gordon, can you
19 tell us who told you those dates to place on the
20 documents?
21 A Obviously those dates are substantially earlier than
22 I prepared them. The reason I did that is at
23 Mr. Reffsin's request. He indicated the transactions had
24 taken place in those early years. And as is fairly
25 typical when you have a transaction within a family on an
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
785
Adler-direct/Scott
1 informal basis, they often could not generate the
2 paperwork at the time the transaction is to take place.
3 So I was asked as I have been asked to do in other places
4 is to prepare the documents as of the time the
5 transactions I was told took place.
6 Q Were you told the exact dates that the transactions
7 occurred?
8 A I probably wasn't. I was probably told the month in
9 general. I notice going through this again, I made the
10 date of the notice of the meeting several days before the
11 day of the minutes of the meeting, which would just show
12 that the notice came before the time of the minutes, which
13 is a standard practice, to show that it was done in proper
14 order.
15 MS. SCOTT: Thank you.
16 I have no further questions.
17
18 CROSS-EXAMINATION
19 BY MR. TRABULUS:
20 Q Good morning, or perhaps good afternoon, or right at
21 the cusp there, Mr. Adler.
22 I am Norman Trabulus. I am Mr. Gordon's lawyer.
23 I think you indicated that you met Mr. Gordon
24 only once; is that correct?
25 A That is correct.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
786
Adler-cross/Trabulus
1 Q Is that was at the offices of Who's Who?
2 A Yes, it was.
3 Q Okay.
4 Was that after the things you have just been
5 testifying about?
6 A Yes. It was after, Mister --
7 Q You don't need to answer any further.
8 At the time that all these things that you
9 testified about happened, you had not had a meeting with
10 Mr. Gordon?
11 A That is correct.
12 Q And had you spoken to Mr. Gordon before meeting him
13 at that time?
14 A No.
15 Q And so, at the time that everything you are talking
16 about happened, you had never met nor spoken to
17 Mr. Gordon; is that correct?
18 A That is correct.
19 Q And the only thing you ever heard from Mr. Gordon or
20 his business affairs came from Mr. Reffsin; is that
21 correct?
22 A Yes.
23 Q I think you mentioned it is not at all atypical in a
24 business that is owned by family members to have a lack of
25 documentation; is that fair to say?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
787
Adler-cross/Trabulus
1 A Yes, that has been my experience.
2 Q And have there been many times that years after the
3 fact you have put together sets of minutes, corporate
4 minutes of meetings, and so forth?
5 A Yes, it happened many times.
6 Q Nothing improper about that?
7 A Correct, as long as it reflects what took place at
8 the time.
9 Q And your understanding of what took place at the time
10 came from Mr. Reffsin; is that correct?
11 A Yes.
12 Q Not from Mr. Gordon?
13 A That is correct.
14 Q That's the same with regard to promissory notes, you
15 could have a situation where money was lent earlier, and
16 no note written to reflect it, or a note can be written, a
17 term we use as lawyers to memorialize what happened
18 before?
19 A Yes.
20 Q And that's okay?
21 A Yes, that's okay.
22 MR. TRABULUS: No further questions.
23
24
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
788
Adler-cross/Wallenstein
1 CROSS-EXAMINATION
2 BY MR. WALLENSTEIN:
3 Q Good afternoon, Mr. Adler.
4 A Good afternoon.
5 Q I am John Wallenstein, I am Martin Reffsin's lawyer.
6 How long have you known Mr. Reffsin?
7 A I met him in 1990 when I started working for
8 Evangelista.
9 Q And during the period between 1990 and today how many
10 occasions have you had to work with Mr. Reffsin?
11 A Well, I worked extensively with him while we were
12 both employed at Evangelista's office for a two year
13 period. After that time when I left Evangelista, I set up
14 my own law practice. Mr. Reffsin and I were friendly. He
15 indicated he would try to get me legal work from clients
16 that he knew, and he did that on a number of occasions.
17 Q Approximately how many times did he refer legal work
18 to you?
19 A Well, there was this matter. There was at least one
20 other matter I remember, a bottling company. I did some
21 legal work for them. In addition, I handled the purchase
22 of his residence by Mr. Reffsin. I handled that for him.
23 Q When did Mr. Reffsin contact you for the first time
24 with respect to this matter that you are testifying about
25 today?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
789
Adler-cross/Wallenstein
1 A I don't have an exact memory. But since this fax was
2 sent out March 30th, 1994, probably shortly before that.
3 It was a relatively small assignment, and there was not
4 lengthy discussions about it. He told me to prepare, and
5 I would have prepared it.
6 Q Did he tell you specifically what documents to
7 prepare, or did he tell you what transactions had occurred
8 and leave to you what documents were necessary?
9 A No. There was fairly specific instructions as to
10 what was needed. He told me it was a family transaction.
11 They had never created the necessary documents. It was a
12 later date now, but it was necessary. And he asked me to
13 prepare them and describe the transactions.
14 We probably had some discussions back and forth
15 about what would be needed, and then I prepared the
16 documents. They were in draft form.
17 My fax to him at March 30th at the bottom lists
18 what I am transmitting, and it says any comments or
19 questions, implying if they are not correct they have to
20 be revised.
21 Q When did the meeting with Bruce Gordon take place in
22 relation to the fax of March 30th?
23 A It took place afterwards. I remember the work had
24 been completed. Mr. Reffsin said that --
25 Q Mr. Adler, my question is when did the meeting take
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
790
Adler-cross/Wallenstein
1 place.
2 A I am sorry.
3 Q Lawyers make traditionally the worst witnesses.
4 A I am sorry.
5 Q Did you meet with Gordon on one occasion or more than
6 one occasion?
7 A One occasion.
8 Q After March 30th of 1994?
9 A Yes.
10 Q And when Mr. Reffsin first contacted you with respect
11 to this particular document preparation, was that the
12 first time that you became aware of the existence of Who's
13 Who, or did you know about it before then?
14 A It was the first time.
15 Q And how long was your discussion with Mr. Reffsin?
16 A There were probably several phone calls, I don't
17 remember exactly, in which he told me, would have told me
18 what he needed. I might have called back to ask questions
19 as to putting the documents together. So it was a
20 dialogue between us to get the documents in the right
21 form.
22 Q Do you know -- withdrawn.
23 And did he ever tell you that he had any interest
24 in Who's Who, or Publishing Ventures, other than the fact
25 that he was their accountant?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
791
Adler-cross/Wallenstein
1 A He never told me anything of that sort.
2 Q And did he indicate to you that in fact these
3 meetings that you were memorializing with these documents,
4 did he tell you he was present at any of the meetings?
5 A No, he did not.
6 Q Did he indicate to you in the course of your
7 discussion that the information that he was relaying to
8 you came in fact from Bruce Gordon or other corporate
9 officers?
10 A Yes.
11 Q You indicated you had worked with Mr. Reffsin since
12 about 1990?
13 A That's correct.
14 Q Did Mr. Reffsin indicate to you in the course of your
15 discussions or your preparations of the documents that
16 Gordon was the source of the information that Reffsin was
17 supplying to you?
18 MR. TRABULUS: Your Honor, not an objection, but
19 a limiting instruction, if any such statement was made by
20 Mr. Reffsin as to what Mr. Gordon may or may not have told
21 you, it is not admissible as to the truth against
22 Mr. Gordon.
23 MR. WHITE: Objection to that. I think there is
24 a basis --
25 THE COURT: Overruled, based on whatever the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
792
Adler-cross/Wallenstein
1 conspiracy count is.
2 Q Can you answer that?
3 A What was the question again?
4 MR. WALLENSTEIN: May the reporter read back the
5 questions?
6 THE COURT: Yes.
7 (Whereupon, the court reporter reads the
8 requested material.)
9 A The answer is yes.
10 Q Thank you, Mr. Adler.
11 Now, it is correct, is it not, that memorializing
12 prior transactions even years later is a standard practice
13 in corporate law?
14 A Yes, particularly in closely held situations,
15 where -- such as this, where family members are involved.
16 Q Would you say it is fairly typical in your experience
17 that family members who own corporations together don't
18 bother with the niceties of documentation until it becomes
19 necessary at some point?
20 A That's very common, yes.
21 Q And would it also be common to say that approximately
22 at this time, the end of March, 1994, there was a
23 bankruptcy proceeding and there was documents necessary
24 for that?
25 A
I was unaware of any bankruptcy proceeding mentioned
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
793
Adler-cross/Wallenstein
1 here.
2 Q Did you at sometime learn that there was a bankruptcy
3 proceeding?
4 A This morning.
5 Q Did you perform any other services with respect to
6 this particular matter at or around March or April of
7 1994?
8 A Not that I remember. There was a number of
9 documents. I got paid a $1,500 fee for it. It is
10 possible that there may have been other documents, but I
11 do not remember.
12 Q The $1,500 fee that you testified on direct, your
13 deposit slip indicates that the source of the check was
14 Mr. Reffsin; is that right?
15 A That's right.
16 Q And the check itself is not here, and you have not
17 seen it, I presume, since sometime in 1994; is that
18 correct?
19 A That is correct.
20 Q And is it fair to say that you do not know recollect
21 as to whether it was Mr. Reffsin's check or some other
22 entity?
23 A Well, I don't have the exact memory, but given my
24 practice I would have put on my deposit slip the source of
25 the check.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
794
Adler-cross/Wallenstein
1 Q Well, the legal services that you performed with
2 respect to these documents were not for Mr. Reffsin
3 personally, or any entity that he had an interest in; is
4 that correct?
5 A To my knowledge, that's correct.
6 Q In fact, you were performing the services on behalf
7 of Who's Who Worldwide and Publishing Ventures; is that
8 correct?
9 A Well, those entities, or Mr. Gordon, for that
10 business group.
11 Q You knew it was Gordon's -- Gordon's businesses as
12 opposed to Reffsin's businesses; is that right?
13 A Yes, I knew that.
14 Q Is it possible that the reason you received a check
15 from Mr. Reffsin was that your fee was lumped into some
16 other monies that Mr. Reffsin had received from
17 Mr. Gordon, so Mr. Reffsin cut you his check out of
18 whatever proceeds he received from Mr. Gordon or his
19 entities?
20 A It is certainly possible.
21 I had no contact with Mr. Gordon. I wanted to be
22 paid, and discussed my fee with Mr. Reffsin, and we
23 probably reached the number of 1500. He forwarded a check
24 to me, which was not unusual to me, because he was the
25 only person I had dealt with.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
795
Adler-cross/Wallenstein
1 Q Now, you don't know in fact whether the source of
2 those funds was Mr. Reffsin's personal funds or some
one
3 else?
4 A I don't know as a fact.
5 Q Now, you indicated that you had worked with
6 Mr. Reffsin since 1990 on several different matters, and
7 rather extensively the early 90's; is that correct?
8 A Yes, in connection with my employment by Louis
9 Evangelista.
10 Q During the course of that time did you have the
11 opportunity to observe Mr. Reffsin and the manner he
12 worked?
13 A Yes, I did.
14 Q Did you ever have the feeling that Mr. Reffsin was
15 other than 100 percent honest with and/or his clients?
16 A No, I did not.
17 Q Did you ever get the feeling or any kind of
18 indication from any source that Mr. Reffsin was doing
19 anything underhanded or dishonest?
20 A No.
21 Q Did you ever discuss with Mr. Reffsin at any time the
22 manner in which he practiced vis a vis the laws or the
23 rules, or the regulations of the Internal Revenue Service,
24 or the practices of certified public accountants?
25 A Yes, I did. He and I were in a similar situation.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
796
Adler-cross/Wallenstein
1 We were both working for a real estate developer that was
2 failing, having a lot of legal problems and accounting
3 problems. We had to deal with it. We were conscious of
4 the fact that we had to keep ourselves clean. It was an
5 important issue to both of us. We were both very
6 concerned about our moral standards and our professional
7 reputations.
8 Q Did you ever have the occasion to discuss
9 Mr. Reffsin's reputation with anyone else?
10 A No.
11 Q Was your opinion, however based on your personal
12 observation of Mr. Reffsin and your discussions with him,
13 that everything he did was open and aboveboard and in
14 compliance with the law; is that correct?
15 A That's correct.
16 MR. WALLENSTEIN: Thank you, Mr. Adler.
17 No further questions, your Honor.
18 THE COURT: Anything else?
19 MS. SCOTT: Yes.
20
21 REDIRECT EXAMINATION
22 BY MS. SCOTT:
23 Q Now, Mr. Adler, in these documents in which you
24 memorialized meetings and agreements, was it represented
25 to you by Mr. Reffsin that these meetings and agreements
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
797
Adler-redirect/Scott
1 had actually occurred?
2 A Not necessarily, because you have this informal
3 intrafamily situation, people don't normally sit down and
4 hold a board meeting when two or three family members own
5 a corporation. They don't actually go through those
6 formalities. People don't act that way in real life.
7 Nevertheless, that's the way the world needs to
8 see the documents, so you have waivers of notice of
9 meeting, you act like a meeting took place. The important
10 thing is the substance of what took place.
11 Q And was it your understanding from what Mr. Reffsin
12 told you that the substance of the agreements was
13 something that had actually occurred between the parties?
14 A Yes, that reflected the economic arrangements that
15 the family members had made.
16 Q And, so, when you drafted the documents, you believe
17 that these documents accurately represented the agreement
18 that existed between all the interested parties; is that
19 correct?
20 A Yes.
21 Q You believed that because of what Mr. Reffsin told
22 you; is that correct?
23 A That is correct.
24 Q Now, you mentioned that you would have clarified on
25 your deposit slip the source of the check used to pay you;
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
798
Adler-redirect/Scott
1 is that correct?
2 A I would have indicated it, yes.
3 Q Now, by the source of the check, do you mean the
4 payor of the check?
5 A Yes. The printed name at the top of the check.
6 MS. SCOTT: Thank you. No further questions.
7 MR. TRABULUS: Very briefly.
8
9 RECROSS-EXAMINATION
10 BY MR. TRABULUS:
11 Q Mr. Adler, in the course of performing, drafting
12 contracts and performing legal services for business type
13 clients, have you ever had an occasion to draft a document
14 which reflects after the fact an agreement that something
15 occurred as of a certain date?
16 A I don't understand the question.
17 Q I will rephrase the question, I am sorry.
18 Is it fair to say on certain occasions people in
19 business relations enter into business agreements as of
20 certain dates?
21 A Yes.
22 Q And that would be an agreement that would be entered
23 into after the date that it is as of? Is that fair to
24 say?
25 A You are touching a touchy subject here, you know,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
799
Adler-recross/Trabulus
1 lawyers being asked -- I am going beyond exactly what you
2 asked me.
3 Q I don't want you to go beyond what I asked you, but
4 it can be lawful to enter into an agreement whereby
5 something is kind of changed retroactively? In other
6 words, you agree as of a certain date in the past the
7 relations between you were a certain way? Is my question
8 too general?
9 A It is too general and touching on a very difficult
10 subject. The idea is that that would have had to have
11 been the arrangement as of the date you made it and it
12 would not have changed since, that's the important thing.
13 Otherwise the lawyer is getting into a very difficult
14 area.
15 Q Can you have people between themselves agree,
16 clients, or parties to an agreement, between themselves
17 agree that as between themselves they have agreed to
18 change the relation as it originally existed, but make the
19 change as of an effective date? Can that be done?
20 A Certainly parties can make an arrangement and change
21 the arrangements later. It becomes a real question for
22 the lawyer, if I had any sense that that was taking place
23 I would have to inquire further and probably speak to the
24 client itself to see if that was what was actually going
25 on.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
800
Adler-recross/Trabulus
1 Q I am not suggesting that that is not what you were
2 told in the first instance, but that can be done --
3 A Certainly people can change relationships, that's the
4 normal business relationships.
5 Q There -- it is reflected by a document which is
6 backdated in your experience?
7 A Not in my experience. That would be improper.
8 Q Would it be improper if the people agreed that they
9 would agree that their relations would have been different
10 as of an earlier date?
11 A You are getting into something that as of an attorney
12 I would have to very carefully inquire. I would probably
13 want to create a document pass of the original date, and
14 at a later date create a different document showing a
15 change was made if in fact their relationship had changed.
16 Q When you say this is a difficult area for an
17 attorney, you are saying some fine lines are here?
18 A I am saying some important ethics issues arises and a
19 lawyer has to be very sensitive to that.
20 Q I am not suggesting in any way, shape or form you
21 crossed any line you shouldn't have had.
22 Would it be fair to say in your experience
23 clients may not be aware of some of the niceties that a
24 lawyer is aware of?
25 A Yes, one of the functions of a lawyer is to raise
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
801
Adler-recross/Wallenstein
1 these for clients.
2 MR. TRABULUS: Thank you.
3
4 RECROSS-EXAMINATION
5 BY MR. WALLENSTEIN:
6 Q Mr. Adler, in response to Ms. Scott's questions on
7 redirect, you indicated that the substance of the
8 documents which you prepared came from Mr. Reffsin; is
9 that correct?
10 A The information was given to me by Mr. Reffsin;
11 that's correct.
12 Q Is it also fair to say that Mr. Reffsin indicated to
13 you or that you knew at the time that the information that
14 Mr. Reffsin was relaying to you came to him through
15 Mr. Gordon?
16 MR. TRABULUS: Objection to form, your Honor.
17 THE COURT: Overruled.
18 A Yes. The information -- Mr. Reffsin did indicate to
19 me that the substantive information had been given to him
20 by Mr. Gordon.
21 MR. WALLENSTEIN: Thank you very much.
22 No further questions.
23 THE COURT: Anything else?
24 MR. TRABULUS: Just one question.
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
802
Adler-recross/Trabulus
1 FURTHER RECROSS-EXAMINATION
2 BY MR. TRABULUS:
3 Q The question that Mr. Wallenstein just asked you,
4 when he said -- you said you were told or knew at the time
5 that the information came from Mr. Gordon, is it fair to
6 say you were told?
7 A I was told. I had no direct knowledge because I had
8 not spoken to Mr. Gordon.
9 THE COURT: Anything else?
10 MR. WALLENSTEIN: No, your Honor.
11 THE COURT: You may step down.
12 (Whereupon, at this time the witness left the
13 witness stand.)
14 THE COURT: Please call your next witness.
15 MR. WHITE: Your Honor, the government calls
16 Johan Strom.
17 THE COURT: Step up and raise your right hand.
18
19 J O H A N S T R O M,
20 called as a witness, having been first
21 duly sworn, was examined and testified
22 as follows:
23
24 THE COURT: Please be seated.
25 State your full name and spell your name.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
803
1 THE WITNESS: Johan Strom. J O H A N is the
2 first name, Strom, S T R O M is the last name.
3 THE COURT: You have to speak up. Pull the
4 microphone closer to you.
5 THE WITNESS: Johan Strom, J O H A N. Last name
6 Strom, S T R O M.
7 THE COURT: You may proceed.
8 MR. WHITE: Thank you, your Honor.
9
10 DIRECT EXAMINATION
11 BY MR. WHITE:
12 Q Mr. Strom, can you tell us how you are employed?
13 A Concierge at the front desk at the building 250 East
14 54th Street.
15 Q And the name of that building the, Mondrian,
16 M O N D R I A N?
17 THE COURT: What is it?
18 MR. WHITE: M O N D R I A N.
19 Q How long have you been the concierge there?
20 A The opening of the building, 1993.
21 Q What year?
22 A 1993.
23 Q Tell us what your duties are as concierge?
24 A We make sure anybody coming in the building are the
25 people living in the building or their guests. We take
HARRY RAPAPORT, CSR, CP,
CM OFFICIAL COURT REPORTER
804
Strom-direct/White
1 care of their dry cleaning, packaging, any service we can
2 do for the tenant in the building.
3 Q What are your responsibilities with respect to dry
4 cleaning and packages?
5 A People come, we log it and accept it. The tenant
6 comes into the building, we ask them if they want to pick
7 up the dry cleaning and packages, UPS, FEDEX, etcetera.
8 Q Do you have a desk or office in the building?
9 A A desk.
10 Q Where is it located?
11 A As you enter the building on the right-hand side.
12 Q In the lobby?
13 A In the lobby.
14 Q Do you work a particular shift?
15 A Correct, in the mornings, 7:00 a.m. to 3:30.
16 Q 7:00 a.m. to 3:30 p.m.
17 A Correct.
18 Q How many floors at the Mondrian?
19 A 43.
20 Q Now, do you know a man named Bruce Gordon?
21 A Yes, I
do.
22 Q Do you see him in the courtroom today?
23 A Yes, I do.
24 MR. TRABULUS: No issue as to the identification,
25 your Honor.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
805
Strom-direct/White
1 THE COURT: You concede the identification?
2 MR. TRABULUS: Yes.
3 THE COURT: Very well.
4 Q Now, can you tell us how you know Mr. Gordon?
5 A He used to occupy Penthouse 4 in the building.
6 Q And can you tell us approximately when it was that
7 Mr. Gordon lived in Penthouse 4?
8 A Sometime in '94 to '96.
9 Q And tell us how is it that you know that Mr. Gordon
10 lived there?
11 A I see him coming in and out of the building.
12 Q I am sorry?
13 A I see him coming in and out of the building. I mean
14 I was notified that this is his new tenant, Mr. Gordon, he
15 is moving into Penthouse 4.
16 Q In the mornings, would you see Mr. Gordon?
17 A Yes.
18 Q What would he be doing?
19 A Coming down, going to work.
20 Q How often would you see Mr. Gordon in the mornings?
21 A I mean I work Tuesday to Saturday, so I don't see him
22 on Mondays. But I would say two to four times a week.
23 Q Now, did you ever have any conversation with
24 Mr. Gordon about any other residences he had?
25 A No.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
806
Strom-direct/White
1 Q Did anyone else live with Mr. Gordon in Penthouse 4?
2 A Not in the beginning. Later on a lady came in the
3 picture.
4 Q Did this lady live with Mr. Gordon in Penthouse 4?
5 A Yes.
6 Q How did you know that?
7 A I saw her coming and going.
8 Q Tell us the circumstances under which you see her
9 coming and going?
10 A To my knowledge first she was a girlfriend and then
11 she became the wife. I assumed they were married, but I
12 don't really know.
13 Q Did you ever see this woman with a child?
14 A Yes, I did.
15 Q Under what circumstances?
16 A They said they had a child.
17 Q At the Mondrian, can the owner of an apartment give
18 permission for someone else to enter their apartment when
19 they are not there?
20 A Sure.
21 Q How do they go about doing that?
22 A They can tell us before they leave that I am going to
23 have a guest coming in, give permission to Mr. or Mrs.
24 Jones to enter my apartment on such and such a weekend.
25 We log it. When the person comes we give them the key, or
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
807
Strom-direct/White
1 maybe the key has been given to the guest by the tenant
2 itself.
3 Q And you say you log it. Where do you log it?
4 A In our log book.
5 Q Let me show you Government's Exhibit 817 through 822
6 for Identification.
7 Now, have you previously looked at those logs?
8 A Yes.
9 Q Tell us what they are?
10 A A log book.
11 You want me to tell you what is inside?
12 Q For 817, does it cover a particular year?
13 A I am sorry?
14 Q The book that has the sticker that has 817 on it,
15 does it cover a particular year?
16 A Yes. That covers 1994.
17 Q And the book underneath it?
18 A I think it is '96 -- '95, I am sorry, this is '94
19 here.
20 Q 817 is 1994, for clarification?
21 A Yes.
22 Q And 818 is January through March of 1995?
23 A Yes. And then the other half there.
24 Q 819 is April through June of 1995?
25 A Correct.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
808
Strom-direct/White
1 Q And looking at 820 through 822, are those pages of
2 the books that cover through 1996, January of 1996?
3 A Correct.
4 MR. WHITE: Your Honor, the government would
5 offer 817 through 822.
6 THE COURT: Any objection?
7 MR. TRABULUS: No.
8 THE COURT: Government's Exhibits 817 through 822
9 in evidence.
10 (Government's Exhibits 817 through 822 received
11 in evidence.)
12 Q Mr. Strom, do you recall Mr. Gordon ever giving
13 permission for people to enter his apartment when he
14 wasn't there?
15 A Sure.
16 Q Can you give us an idea of approximately how many
17 times?
18 A Two to four times that I know.
19 Q Now, if for example, a delivery man was coming while
20 Mr. Gordon was at work, would that be noted in the log?
21 A Yes.
22 Q If someone were coming to enter and
stay there would
23 that be entered in the log?
24 A Yes, it would be logged.
25 Q Now, if you can take Exhibit 817, the 1994 book --
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
809
Strom-direct/White
1 THE COURT: Excuse me for a minute.
2 (Whereupon, at this time there was a pause in the
3 proceedings.)
4 THE COURT: You may proceed.
5 MR. WHITE: Your Honor, I have a few more
6 minutes, I see it is approaching 12:30. Do you wish I
7 continue?
8 THE COURT: Let's take a recess because it is
9 approaching the hour of lunchtime.
10 You may step down.
11 THE WITNESS: Thank you.
12 (Whereupon, at this time the witness left the
13 witness stand.)
14 THE COURT: Members of the jury, we will recess
15 for lunch. Please do not discuss the case among
16 yourselves or anyone else. Keep an open mind. Come to no
17 conclusions. We will recess until 1:30.
18 Have a nice lunch.
19 (Whereupon, at this time the jury leaves the
20 courtroom.)
21 (Luncheon Recess.)
22
23
24
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
810
1 A F T E R N O O N S E S S I O N
2
3 (Whereupon, the following takes place in the
4 absence of the jury.)
5 THE COURT: Did one of the lawyers want to talk
6 to me about something?
7 MR. NEVILLE: I am sorry, yes.
8 We have cold air coming down on us here. I want
9 to know if it can be shut off. My client asked me to ask
10 that.
11 THE COURT: I will see what can be done.
12 MR. NEVILLE: Thank you.
13 THE CLERK: Jury entering.
14 (Whereupon, the jury at this time entered the
15 courtroom.)
16 THE COURT: Please be seated, members of the
17 jury.
18
19 J O H A N S T R O M,
20 called as a witness, having been previously
21 duly sworn, was examined and testified as
22 follows:
23
24 THE COURT: You may proceed.
25 MR. WHITE: Thank you, your Honor.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
811
Strom-direct/White
1
2 DIRECT EXAMINATION (cont'd)
3 BY MR. WHITE:
4 Q I believe you testified before lunch that you recall
5 a handful of times Mr. Gordon gave permission for someone
6 to enter his apartment without being present?
7 A Yes.
8 Q If you can look at Exhibit 817, which is the log of
9 the condominium from 1994.
10 First of all, if you can turn to February 21st
11 and 22nd.
12 A February --
13 Q 21st and 22nd.
14 A February 21st, correct.
15 Q If you can look at the next page, the
22nd.
16 A Okay.
17 Q Does that reflect that Mr. Gordon moved in on those
18 days?
19 A Yes.
20 MR. TRABULUS: Objection to form, your Honor.
21 THE COURT: Sustained as to form. Strike out the
22 answer.
23 Don't lead the witness, please.
24 MR. WHITE: Your Honor, the document is in
25 evidence.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
812
Strom-direct/White
1 THE COURT: Then you can read from it, I guess,
2 right?
3 MR. WHITE: Yes.
4 Q Mr. Strom, what are the entries on those two dates
5 reflect?
6 A That Mr. Gordon moved into the building.
7 THE COURT: You will have to talk up.
8 What did you say?
9 THE WITNESS: That Mr. Gordon moved into the
10 building.
11 THE COURT: When did he move into the building?
12 THE WITNESS: According to this log, the 22nd of
1
3 February, 1994.
14 Q Now, the instances you mentioned about when
15 Mr. Gordon gave permission for others to enter, does that
16 include things such as deliveries or repairs?
17 A Yes.
18 Q Now, if you can look at the entry for June 7th,
19 1994.
20 A Yes. Okay.
21 Q Is there an entry there relating to Mr. Gordon's
22 apartment?
23 A Yes.
24 Q Can you read what it says?
25 A The name for the person is Gordon and Sylvester, or
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
813
Strom-direct/White
1 referring to it as being Gordon, a guest by the name of
2 Sylvester, being given permission.
3 THE COURT: Sylvester, S Y L V E S T E R?
4 THE WITNESS: Correct.
5 THE COURT: He had a guest Sylvester? Is that
6 what it says?
7 THE WITNESS: Yes.
8 THE COURT: Okay.
9 Q Maybe I will do this
another way.
10 Let me read it and you can tell me what it means.
11 It says PH-IV. Gordon, Sylvester, let in 245.
12 Now, Mr. Strom, from reading that, tell us what
13 your understanding is and what that means?
14 A An entry for Penthouse 4, it says Gordon, Sylvester
15 as you said. It mentions that it is Gordon's apartment.
16 There is a guest by the name of Sylvester, or the guest
17 that comes in is Gordon Sylvester, given permission to
18 enter the apartment at 245.
19 Q So, you are saying the word "Gordon" there, you are
20 not sure if it is a reference to Mr. Gordon or the first
21 name of the guest?
22 A Correct.
23 Q Look at the entry for August 13th, and I will read
24 it.
25 It says PH-IV, Mr. Sang, S A N G, to be let in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
814
Strom-direct/White
1 around 11:00 a.m. And then there appears to be a
2 signature below that.
3 Mr. Strom, what does that mean?
4 A It means a guest by the name of Mr. Sang came to
5 Mr. Gordon's apartment, and was authorized to enter the
6 apartment. As you said, I assume it to be Mr. Gordon
7 signed it.
8 Q Take a look at October 6th and 7th; and let me read
9 from October 6th. It says Dr. and Mrs. Rappaport,
10 R A P P A P O R T, okay, PH-IV to enter; and October 7th
11 it says PH-IV, Roman numeral 4, PTE-KIB, Dr. and Mrs.
12 Rappaport, Mr. Gordon okayed.
13 Now, first of all, tell us what PTE stands for?
14 A Permission to enter.
15 Q And what does KIB stand for?
16 A Key is in the box. We have a key box where we keep
17 keys. Just to give him a key.
18 Q Those two entries for October 6th and 7th, what does
19 it indicate?
20 A A couple by the name of Mr. and Mrs. Rappaport came,
21 and that it was all right to enter the apartment.
22 Q And finally, if you can turn to the entry for
23 November 1st.
24 That reads PH-IV, Roman numeral four, Joyce and
25 Rich Grossman, PTE, KIB, for duration.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
815
Strom-direct/White
1 What does that mean?
2 A It means they are authorized to enter the apartment.
3 Q Now, if you can flip back to June 15th, 1994; I will
4 read from that. It says PH-III, 11:20 p.m., Mr. Berlin,
5 B E R L I N, reports a bad flood from up above. PH-IV,
6 Mr. Gordon, was told to turn off jacuzzi. Louis went up
7 to PH-III to mop up excess water and service requests were
8 filled out. J B.
9 Do you know who J B is?
10 A Yes, a former employee of the building, James Burke.
11 Q Burke, B U R K E?
12 A Correct.
13 Q And if you can look at October 10th, 1994, it says
14 8:55 p.m. Mr. Gordon found his living room window open
15 and he wants to know why, question mark. He wants to
16 speak with the manager.
17 Mr. Strom, prior to court today did you review
18 this log for the period between August 8th, 1994 and
19 September 17th, 1994?
20 A Correct.
21 Q -- aside from the people that already had permission
22 to discuss, do the logs give anyone else permission during
23 that time period?
24 A Not to my knowledge.
25 Q If you can look at Exhibit 818, which is for 1995.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
816
Strom-direct/White
1 A Yes.
2 Q And could you look at the entry for February 3rd,
3 1995; and I will read it, all concierges, colon, per
4 Mr. Gordon's instructions, under any circumstances --
5 actually I will ask Mr. Strom
to see if he can read the
6 handwriting.
7 A To let, to let without -- it is bad English. But I
8 am -- what he is trying to explain is not under no
9 circumstances is anybody allowed up to Penthouse 4 without
10 calling in first.
11 Q So, let me read it, what it actually says.
12 All concierges, colon, per Mr. Gordon
13 instructions, under any circumstances to let without
14 calling first PH-IV anyone go up, parens, visitors only
15 maid, M A I D, or his son is allowed, but call first. And
16 there is no close parenthesis.
17 So, your understanding what that means given the
18 English is what?
19 A Just don't want to let anybody up there except the
20 two people, the maid and the son, but call first.
21 Q You mentioned letting someone up to the penthouse.
22 How would you go about doing that?
23 A There are two ways. It can be programmed into the
24 computer and the elevator takes you right up there.
25 Because the elevator opens right into the living room.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
817
Strom-direct/White
1 The penthouse has that feature. We have five penthouses,
2 one to five, and they all open to the living room. They
3 can be punched in by computer which tells elevator to go
4 up to that particular penthouse, or key can be given which
5 you turn and it goes up.
6 Q Do you ever recall daily meetings of people other
7 than Mr. Gordon in his apartment?
8 A No.
9 MR. TRABULUS: Objection to form, your Honor.
10 THE COURT: Sustained as to form. Strike out the
11 answer.
12 Q How frequent, if ever, did meetings take place in
13 Mr. Gordon's apartment without him present?
14 A I can't recall any.
15 Q As part of your duties as concierge, did you deliver
16 mail to the penthouse?
17 A In the beginning we didn't have mailboxes, and we
18 delivered all the mail, and then after that the mailman
19 took over.
20 Q Did Mr. Gordon receive mail at the penthouse?
21 A Yes.
22 Q As part of your duties as concierge would you receive
23 UPS or Federal Express packages for the people in the
24 building?
25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
818
Strom-direct/White
1 Q And did Mr. Gordon receive those?
2 A Yes.
3 Q As part of your duty as concierge would you receive
4 dry cleaning for occupants in the building?
5 A Yes.
6 Q Did you do that for Mr. Gordon?
7 A No.
8 Q Why not?
9 A He picked up and dropped off his own.
10 Q If you can take a look at March 15th, of 1994 --
11 THE COURT: '94 or '95?
12 MR. WHITE: '94.
13 A This one?
14 Q Yes; March 15th, 1994, do you see the dry cleaning
15 column?
16 A Yes.
17 Q Is Mr. Gordon listed there?
18 A Yes.
19 Q And go back to Exhibit 819, which is 1995.
20 Look at May 2nd, 1995?
21 A May 2nd?
22 Q May 2nd, 1995.
23 A Okay.
24 Q Is Mr. Gordon listed there as receiving dry cleaning?
25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
819
Strom-direct/White
1 MR. WHITE: Your Honor, no further questions.
2 THE COURT: Cross-examination.
3
4 CROSS-EXAMINATION
5 BY MR. TRABULUS:
6 Q Good afternoon, Mr. Strom, I am Norman Trabulus,
7 Mr. Gordon's lawyer.
8 The log books you are looking at, they would
9 reflect a situation in which a tenant had left permission
10 for someone to enter an apartment or a penthouse, without
11 the tenant being present; is that right?
12 A Correct.
13 Q And they would not -- there would be no entry in the
14 log books, if a tenant brought somebody to the apartment
15 or penthouse; would that be correct?
16 A Yes.
17 Q It is only that fairly unusual situation where
18 someone would allow the apartment or penthouse to be used
19 by someone else without being present; is that correct?
20 A Yes.
21 Q You would get off at 3:30 every afternoon; is that
22 correct?
23 A Yes.
24 Q And, therefore, you would not be in a position to see
25 whether or not Mr. Gordon or any other tenant entertained
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
820
Strom-cross/Trabulus
1 anybody in the evening, for example?
2 A Correct.
3 Q So, you would have no knowledge of whether or not
4 there was any business entertainments going on in the
5 evenings; is that right?
6 A Not me, correct.
7 Q And there would be no record maintained in any of
8 those log books, would there be?
9 A No.
10 Q How many tenants were there or had there been --
11 withdrawn.
12 How many living units are in the Mondrian?
13 A 178.
14 Q Do you make any specific -- withdrawn. Do you have
15 any specific reason to keep track on a tenant by tenant
16 basis as to their comings and goings?
17 A No.
18 Q I assume you developed some familiarity with it by
19 working there?
20 A Correct.
21 Q I think you indicated in response to a question by
22 Mr. White that there was an entry that Mr. Gordon moved
23 in, I think, in February, February 21st, 1994?
24 A Yes.
25 Q Now, would a move in entry be made whenever there is
HARRY RAPAPORT, CSR, CP, CM OFFICIAL
COURT REPORTER
821
Strom-cross/Trabulus
1 a new tenant for an apartment?
2 A Yes.
3 Q And it doesn't necessarily mean someone is physically
4 living there on a full-time basis; is that correct?
5 A No, that's irrelevant. Correct.
6 Q It just means there is a new tenant --
7 A We get the information from the sales office
8 notifying there is a new tenant moving in, if they are
9 moving in or not moving in --
10 Q Sure.
11 In fact, if you look at the entry for February
12 24th --
13 A What year?
14 Q Of 1994, just look at 1994.
15 A February --
16 Q 24th; there is an entry for wall units; is that
17 right, for PH-IV, the right-hand column about a quarter of
18 the way down.
19 A Do you have a time on that?
20 Q We are on February 24th, 1994, and my copy doesn't --
21 I don't know where the times would even
be. I don't see
22 anything -- yes, wait a second -- no, I don't see a time.
23 But right below it there is something that says 3:40, or
24 maybe it is 34D, I can't tell.
25 A I see it now, Penthouse 4.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
822
Strom-cross/Trabulus
1 Q And that would signify that wall units were being
2 delivered that day?
3 A Correct.
4 Q And on March 2nd, also for Penthouse 4, furniture was
5 delivered then.
6 Really the move in signifies the beginning of a
7 tenancy; is that correct?
8 A Right.
9 Q Now, I think you indicated that you would see
10 Mr. Gordon two to four times a week, and that you worked
11 there from Tuesdays through Saturdays?
12 A Uh-huh.
13 Q Is that correct?
14 A Correct.
15 Q Did he sometimes come just to pick up mail or
16 packages, do you know?
17 A No, I seen him coming in and going back.
18 Q Did it vary over a period of time, did he start
19 appearing there more infrequently after a certain period
20 of time? Do you recall that one way or another?
21 A I guess in the beginning I didn't see much of him.
22 As time went I saw more of him.
23 Q Was there a certain period of time that he was there
24 more often?
25 A I guess.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
823
Strom-cross/Trabulus
1 Q Do you have any way of recalling when that was?
2 A If you say you moved in here, and over here he was
3 more around, so I would say down the road.
4 Q Was there a period of time after the tenancy first
5 opened when he was there relatively infrequently?
6 A Yes.
7 Q And at another point in time in the future after that
8 he came more often; is that fair to say?
9 A Yeah, that's fair to say.
10 Q Okay.
11 Did Mr. Gordon talk to you about his business?
12 A No.
13 Q Did he talk to you at one point about possibly
14 working as a concierge for Who's Who?
15 A Yes, he offered me that.
16 Q He did?
17 A Yes.
18 Q Did he explain to you what type of concierge he was
19 looking for at Who's Who?
20 A He said someone with my background, and what he had
21 seen me doing would benefit in his business.
22 Q Specifically did he describe the type of thing that
23 you would be doing would be providing similar type of
24 services as you had been providing to the tenants of the
25 building, but now to the members of Who's Who?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
824
Strom-cross/Trabulus
1 A Yes. He specified it would be coordinating people
2 coming and
going.
3 Q Did he show you a magazine?
4 A Yes.
5 Q Called Tribute?
6 A Yes, I seen one or two of them.
7 Q Did he talk to you about a group within -- I don't
8 know if you remember it, or exactly what he said, but did
9 he talk to you about a group within Who's Who to be called
10 the Inner Circle? Do you remember that phrase?
11 A I don't know if I heard that from him or just read it
12 through the magazine. But I went through it.
13 Q You did hear that?
14 A I heard Inner Circle, yes, something about it.
15 Q Did he explain to you it would be a group of members
16 for whom different services would be provided, hotel
17 reservations, recommendations, invitations to certain
18 events, limousine services, things of that sort?
19 A The only thing I know is I was offered to do things
20 what I am doing now for his company, of people coming and
21 going.
22 Q To perform a concierge type service?
23 A Correct.
24 MR. TRABULUS: Your Honor, I will show the
25 witness what I am going to mark now, I couldn't find a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
825
Strom-cross/Trabulus
1 sticker, as Gordon C for Identification, of course. I
2 will put a sticker on it later.
3 Q Mr. Strom, I am going to show you Gordon C, which is
4 a magazine which says Tribute on it, and I would like you
5 to look through it, and also look to page 45, in that
6 advertisement there. Take a look through there and see
7 whether or not you have seen that magazine before.
8 (Handed to the witness.)
9 A I can't tell. I don't know if I have seen this
10 particular magazine. But I saw some kind of magazine with
11 him, with his picture on it, something about Who's Who.
12 Q Did you see the particular advertisement relating to
13 the Inner Circle that I am referring to?
14 A No.
15 Q You don't remember seeing that specifically?
16 A I just went through the magazine. There was another
17 one I went through it to put it aside. I didn't read the
18 magazine. But I remember his picture was in there. He
19 was greeting somebody. That's how I kind of recognized
20 him.
21 Q I am going to show you Government's Exhibit G for
22 Identification, another Tribute magazine. Do you
23 recognize this?
24 A Yes.
25 Q Is that the magazine he showed you?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
826
Strom-cross/Trabulus
1 A I don't know.
2 Q That's the picture?
3 A Yes.
4 Q He showed that to you in connection with asking you
5 to be a concierge for his company?
6 A I don't think it was really an association. This is
7 really what I do, and then I look through it, and then
8 referring to the work he covered me came later.
9 Q This was kind of background to offering you the work,
10 something that happened before?
11 A I think this was more telling me what he was doing,
12 because we had no idea what he was doing, or Who's Who.
13 We don't know what it belongs to.
14 Q Was it your understanding that the penthouse had a
15 relationship to Who's Who?
16 A It was on the register, Who's Who, when it came
17 upstairs from the sales departments, it was written in,
18 moving in, Who's Who, Gordon.
19 Q Okay.
20 Were you aware that there was sometimes Who's Who
21 functions that happened there, not necessarily the time
22 you were there, not necessarily the time you were working
23 there but at other times during the day?
24 A I can't say I heard of it.
I can't say that I
25 don't. It is not in my shift.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
827
Strom-cross/Trabulus
1 MR. TRABULUS: Your Honor, I would offer Gordon
2 D.
3 MR. WHITE: Mr. Trabulus didn't bother to show it
4 to me.
5 MR. TRABULUS: Mr. White has seen it previously.
6 (Counsel confer.)
7 MR. WHITE: Your Honor, I have no objection.
8 THE COURT: Defendant's Exhibit D for Dog, in
9 evidence.
10 (Defendant's Exhibit D received in evidence.)
11 MR. TRABULUS: Your Honor, may I publish this to
12 the jury?
13 THE COURT: Yes.
14 MR. TRABULUS: Thank you.
15 (Whereupon, the exhibit/exhibits were published
16 to the jury.)
17 Q Mr. Strom, in terms of the mail or packages received
18 there, do you know if it was business mail or personal
19 mail, or business packages or personal
packages?
20 A I think it was personal. But I don't know if it
21 wasn't a business, really.
22 Q Did you see sometimes FEDEX packages that looked like
23 business packages?
24 A I would say yes.
25 Q Were the return addresses, did they appear to be
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
828
Strom-cross/Trabulus
1 business return addresses?
2 A I am sorry?
3 Q Were the return addresses business return addresses
4 in addition to business type things, if you recall?
5 A I don't recall.
6 MR. TRABULUS: Nothing further.
7 THE COURT: Anything else?
8 MR. WHITE: I do, your Honor.
9
10 REDIRECT EXAMINATION
11 BY MR. WHITE:
12 Q Mr. Strom, do you know if it was business or personal
13 dry cleaning you received for Mr. Gordon?
14 A The dry cleaning at the beginning, and I wanted to
15 take this up, he did his dry cleaning himself, went there,
16 dropped it off, sometimes when he returned from work he
17 had the dry cleaning with him. As you see, you confronted
18 me in the book deliveries with dry cleaning. So, yes, he
19 would have it delivered.
20 Q You said in response to Mr. Trabulus' questions that
21 your shift wasn't at night; is that correct?
22 A Correct.
23 Q So, would you be aware if Mr. Gordon were
24 entertaining people at night at the penthouse?
25 A No, I can't say.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
829
Strom-redirect/White
1 Q For example, if you can look at June 15th, 1994,
2 would you be aware whether or not Mr. Gordon was
3 entertaining business clients in the jacuzzi that day at
4 11:20 p.m.?
5 MR. JENKS: Objection to the form of the
6 question.
7 MR. TRABULUS: Objection to the form of the
8 question.
9 THE COURT: Overruled.
10 Q You wouldn't know if Mr. Gordon was entertaining
11 business clients in his jacuzzi at 11:20 p.m. on June
12 15th, 1994, would you?
13 A No.
14 MR. WHITE: That's all.
15 THE COURT: Anything else?
16 MR. TRABULUS: No.
17 THE COURT: You may step down.
18 THE WITNESS: Thank you.
19 (Whereupon, at this time the witness left the
20 witness stand.)
21 THE COURT: Please call your next witness.
22 MS. SCOTT: The government calls Douglas Skalka,
23 S K A L K A.
24 THE COURT: Raise your right hand.
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
830
1 D O U G L A S S K A L K A,
2 called as a witness, having been first
3 duly sworn, was examined and testified
4 as follows:
5
6 THE COURT: Pl
ease be seated, state and spell
7 name, please.
8 THE WITNESS: Douglas Skalka, S K A L K A.
9 THE COURT: You may proceed.
10 MR. WHITE: First I will clear away the exhibits
11 from the previous witness.
12
13 DIRECT EXAMINATION
14 BY MS. SCOTT:
15 Q Good afternoon, Mr. Skalka.
16 A Good afternoon.
17 Q What did you do for a living?
18 A I am an attorney.
19 Q Where do you work?
20 A I am a principal in a law firm based in Connecticut.
21 Q What type of law do you practice?
22 A Primarily the practicing areas of bankruptcy and
23 creditor's rights.
24 Q How long have you been at your current law firm?
25 A I have been with my current firm since June of 1995.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
831
Skalka-direct/Scott
1 Q What did you do before you started working at your
2 current law firm in 1995?
3 A Prior to June 1995, I was a partner the firm of
4 Whitman Breed Abbott Morgan. I was with that firm and its
5 predecessor firm, Whitman and Ransom from 1985 through
6 June of 1995.
7 Q How long have you been a bankruptcy attorney?
8 A Since approximately, 1989.
9 Q And during that time how many bankruptcy cases have
10 you been involved in working on?
11 A In various forms, probably two or three hundred.
12 Q What, if any, specialized training have you received
13 on the subject of bankruptcy law?
14 A I have obtained a certification in business
15 bankruptcy from the American Bankruptcy Board of
16 Certification. I have attended numerous seminars. I am
17 on the executive committee of the commercial law and
18 bankruptcy section of the Connecticut Bar Association. I
19 am a member of the American Bankruptcy Institute and
20 various other professional associations.
21 Q How do you keep yourself up-to-date with current
22 events in bankruptcy law?
23 A Either myself or my firm subscribes to numerous
24 bankruptcy related publications. As I stated I am a
25 member of many active bankruptcy professional
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
832
Skalka-direct/Scott
1 associations, and frequently attend monthly or quarterly
2 meetings.
3 Q Have you ever published any writings on the subject
4 of bankruptcy law?
5 A Yes, various trade associations journals, and --
6 THE COURT: You are going to have to slow down,
7 Mr. Skalka, considerably.
8 THE WITNESS: Sorry, your Honor. I understand.
9 A I have written numerous articles for trade
10 publications, newsletters. I have -- this year, for 1997,
11 I have contributed to a treatise on bankruptcy published
12 by Wiley, W I L E Y, Publications,.
13 Q Now, just by way of background, what do the
14 bankruptcy laws permit a person or company that is
15 undergoing bankruptcy to do? How do the laws protect that
16 person within the company?
17 A Bankruptcy laws enable a person or company to get a
18 fresh start or breathing spell from their creditors to
19 allow them to reorganize, if that's what they want to do,
20 or restructure their debts and bills, in an attempt to try
21 to pay them back in a more orderly fashion over a period
22 of time, with an agreement with all the creditors.
23 Q When you use the word "creditors" what do you mean?
24 A Creditors are people or businesses who are owed money
25 by the person or company who has filed for bankruptcy.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
833
Skalka-direct/Scott
1 Q Now, what sort of protection do the bankruptcy laws
2 offer to a bankrupt company, for instance?
3 A One of the primary protections that our bankruptcy
4 laws provide is what is called an automatic stay. Meaning
5 once a company or a person files for bankruptcy, all
6 efforts by creditors to try to collect bills, by phone
7 calls or lawsuits are automatically stayed by the federal
8 bankruptcy laws, creditors can no longer pursue collection
9 activities.
10 Q That means they can't pursue collecting the debts
11 owed to them?
12 A That's correct. All legal proceedings must be
13 stayed, or all collection activities must be stayed.
14 There are penalties under the bankruptcy laws for parties
15 who continue to pursue bankruptcy activities after a
16 company filed for bankruptcy.
17 Q What are the two most common kind of bankruptcy
18 proceedings?
19 A The two most common kind are commonly referred to as
20 a liquidation proceeding or Chapter 7 proceeding, and a
21 reorganization proceeding, which is referred to as Chapter
22 11. Those are the various chapters of the bankruptcy
23 codes relating to those types of proceedings.
24 Q Could you relate to the jury what the difference is
25 between those two different kinds?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
834
Skalka-direct/Scott
1 A Certainly.
2 A Chapter 7 proceeding, as I said is a
3 liquidation proceeding. Essentially in that type of
4 proceeding a company or a person simply seeks to have
5 their assets liquidated. So if someone files for chapter
6 7 they must stop operating and basically turn over the
7 keys of that operation to a court-appointed bankruptcy
8 trustee, who has a right to take the assets as they are
9 and liquidate it to the creditors as a whole.
10 Q And what do you mean by liquidate those assets?
11 A Sell them, either at auction or an arm's length sale
12 to a third-party.
13 Q Can you also explain to the jury what a Chapter 11
14 proceeding is?
15 A Yes, it means with the reorganization proceeding I am
16 mentioning, in that proceeding in which both a company or
17 individual may seek -- may file for Chapter 11, that
18 company or individual will try -- will be able to maintain
19 all their assets, continue to operate while in bankruptcy,
20 in trying to propose a plan to their creditors of how they
21 expect to want to be able to pay back their bills over a
22 period of time.
23 Q Now, in your experience, which type of experience,
24 Chapter 7 or Chapter 11 is preferred by most of those who
25 file for bankruptcy?
HARRY RAPAPORT, CSR,
CP, CM OFFICIAL COURT REPORTER
835
Skalka-direct/Scott
1 A Most businesses will seek to file a Chapter 11
2 proceeding first. Because in that case they continue to
3 operate. If they file Chapter 7, they simply have to
4 close their doors and go home. Under Chapter 11 they
5 continue to operate. The hope is they come up with a plan
6 to pay their creditors over a period of time. In most
7 cases the company will at least try to file chapter 11 to
8 try to work things out with the creditors first.
9 Q In a Chapter 11 proceeding who oversees the
10 reorganization of the company?
11 A In a Chapter 11 proceeding the bankruptcy court has a
12 great deal of supervisory roles, or the bankruptcy court
13 and the various creditors have rights under the bankruptcy
14 code to oversee the operation of the company. In
15 addition, in the bankruptcy court there is an arm
of the
16 bankruptcy court referred to as the United States Trustees
17 Office, which oversees or administers the bankruptcy case.
18 Q Now, when a company has filed for Chapter 11
19 bankruptcy, what is that company called in the course of
20 the proceedings?
21 A The term which is commonly used is a debtor in
22 possession, because a debtor seeks bankruptcy protection,
23 but they are still in possession of their assets, that's
24 why they are referred to as a debtor in possession.
25 Q Is the professional term for a bankrupt company in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
836
Skalka-direct/Scott
1 general the word "debtor"?
2 A Yes.
3 Q What is the role of a bankruptcy attorney in a
4 Chapter 11 proceeding?
5 A A bankruptcy attorney in a Chapter 11 proceeding will
6 either represent the debtor or the company see
king
7 bankruptcy protection or a creditor or group of
8 creditors. For example, if I am representing a creditor,
9 my role is to generally oversee the proceedings and
10 protect my client's interest, which is to get paid as
11 quickly as possible and little cost as possible.
12 If I am representing the company my role as a
13 bankruptcy attorney is to try to allow the company to
14 maintain as normal a role as possible and negotiate a deal
15 with the creditor body to pay their bills or a portion of
16 their bills at least, over a period of time, without
17 destroying the viability of the bankrupt company. When I
18 say viability, allowing that company to continue to
19 survive.
20 Q Now, at the end of the bankruptcy proceeding how does
21 the debtor's attorney get paid?
22 A The debtor's attorney under the bankruptcy code must
23 file what is called a fee application with the bankruptcy
24 court asking the Court to approve the payment of all their
25 fees and expenses. All creditors and the U.S. trustee's
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
837
Skalka-direct/Scott
1 office has a right to come in and comment under the fee
2 applications, and they can object if they feel the fee is
3 too high, or object if they feel the debtor's attorney
4 didn't do a good enough job, whatever they think is the
5 appropriate objection. And then it is up to the Court to
6 decide whether those fees should be awarded.
7 Q In your practice, do you typically represent the
8 debtor, by that I mean the bankrupt company, or do you
9 typically represent the creditor, or one of the creditors,
10 the people owed money by the bankruptcy company?
11 A I primarily represent creditors.
12 Q Have you ever heard of a company called Who's Who
13 Worldwide?
14 A I heard of a company called Who's Who Worldwide
15 Registry, yes.
16 Q And how did you first come in contact with that
17 company?
18 A While I was a partner in the firm of Whitman Breed
19 Abbott and Morgan. I was advised that one of the firm's
20 clients, Reed Elsevier, Inc. was a creditor of a company
21 called Who's Who Worldwide Registry.
22 THE COURT: Do you want to slow down?
23 THE WITNESS: I am sorry, your Honor, yes.
24 THE COURT: Are you ever asked to slow down when
25 you are in the bankruptcy courts?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
838
Skalka-direct/Scott
1 THE WITNESS: I frequently am, your Honor.
2 THE COURT: You frequently are.
3 Please slow down so we can all get the benefit of
4 your testimony. Okay?
5 THE WITNESS: I will, your Honor.
6 THE COURT: You were saying while you were at
7 Whitman law firm, what happened?
8 THE WITNESS: While I was a partner at Whitman
9 Breed Abbott and Morgan, I was advised that one of our
10 firm's clients, Reed Elsevier was a creditor of a company,
11 the company that the prosecutor mentioned, Who's Who
12 Worldwide Registry, Inc. and I was asked by the firm to
13 serve as the bankruptcy counsel in connection with the
14 bankruptcy proceedings of Who's Who Worldwide Registry,
15 Inc.
16 Q What kinds of bankruptcy protection had Who's Who
17 Worldwide Registry claimed?
18 A They filed a Chapter 11 petition.
19 Q What was the first step at -- that Who's Who
20 Worldwide had to take in order to start this bankruptcy
21 proceeding?
22 A The company to start the proceeding had to file what
23 is referred to, or commonly known as a bankruptcy
24 petition.
25 Q What is the purpose of a petition?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
839
Skalka-direct/Scott
1 A A petition is a fairly simple two-page document
2 simply stating the name of the company, an address, and
3 providing the Court with enough information to determine
4 that it has jurisdiction for that particular bankruptcy
5 proceeding and some basic information about the company,
6 such as tax ID numbers, the attorney, the size of the
7 company, and things of that nature.
8 Q Who signs the bankruptcy petition?
9 A The petition has to be signed by either an owner or
10 officer of the company.
11 Q And what else must the debtor file when the debtor
12 files the petition to start the bankruptcy proceedings?
13 A The debtor is required to file a list of all their
14 known creditors at the time, as well as a set
of documents
15 referred to as bankruptcy schedules. And these are a
16 fairly thick packet of documents, which in fairly great --
17 fairly specific detail set forth all of the assets and
18 liabilities of the company.
19 MS. SCOTT: Your Honor, I will be showing
20 Mr. Skalka a copy of Government's Exhibit 610, which is
21 already in evidence.
22 (Handed to the witness.)
23 In addition, I would ask the Court's permission
24 to publish this document for the jury. It is
25 Government's Exhibit 610.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
840
Skalka-direct/Scott
1 THE COURT: Yes.
2 MS. SCOTT: I am sorry, was that a yes?
3 THE COURT: Yes.
4 (Whereupon, the exhibit/exhibits were published
5 to the jury.)
6 Q Mr. Skalka, do you recognize
7 Government's Exhibit 610?
8 A Yes, I do.
9 Q What is it?
10 A It is a copy of the bankruptcy petition filed by
11 Who's Who Worldwide Registry Inc., as well as numerous
12 attachments to the petition.
13 Would you like me to go through each one of
14 those?
15 MR. WHITE: I would like to start with the first
16 couple of pages on that document.
17 Would you explain to the jury what those first
18 two-pages are?
19 A The first two pages are the bankruptcy petition that
20 I mentioned earlier.
21 Q What information is at the top of the first page?
22 A The name of the company, the tax ID number for the
23 company, the address of the company, the case number is
24 stamped in on the right side at the top of the page.
25 Towards the middle of the page is some basic
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 information regarding the company, including the fact that
2 it was a corporation that was not publicly held, and that
3 this was a business filing, rather than a consumer
4 bankruptcy filing, and that the type of business, which
5 was referred to as a sale of membership business.
6 Q Which box is that in?
7 A In the middle of the page, under type of business A,
8 you will see that other business is checked off, and under
9 B, the words: Sale of membership is typed in. A little
10 obstructed by the stamp.
11 Q What does it say under the box chapter of bankruptcy
12 filed?
13 A Eleven.
14 Q On the next page, whose signatures appear on that
15 page?
16 A The attorney for the company at the time, who was
17 Neil Flaum. And also the signature of Mr. Gordon.
18 Q What is the date of the signature?
19 A March 21st, 1994.
20 Q Now, skipping to two pages, where it says affidavit
21 pursuant to local bankruptcy Rule 11, can you explain to
22 the jury what that is?
23 A Yes. Under the bankruptcy local rulings of the
24 Eastern District of New York, an affidavit must be filed
25 with some basic information regarding the company. Again,
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1 it has to be signed by either an officer or owner of the
2 company. And that's what this is.
3 Q What information is contained in that affidavit?
4 A Essentially that the affidavit describes the type of
5 business that the company has or that it is engaged in.
6 The number or types of lawsuits that are pending against a
7 company at the time of the filing. Where the company
8 maintains its business operations. The number of
9 employees. The fact that it wants to continue to operate
10 as a debtor in possession.
11 Q Now, turning to the next page where at the top it
12 says Exhibit B, the next page after the affidavit.
13 A Yes.
14 Q Can you explain to the jury what Exhibit B contains.
15 A That's a list of the creditors of the company as of
16 the date of the filing, March of 1994.
17 Q And whose name appears at the top of that list?
18 A Reed Elsevier.
19 Q And that's your client?
20 A Yes.
21 Q Now, skipping one page, there is a page reading at
22 the top, United States Bankruptcy Court, and in the middle
23 of the page it says 20 largest unsecured creditors mailing
24 matrix.
25 Under that there is a -- it says cover sheet for
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1 list of creditors.
2 Can you explain to the jury what that means?
3 A The bankruptcy code and rules requires the company at
4 the time they filed bankruptcy to provide the Court with a
5 list of their 20 largest unsecured creditors, meaning
6 those creditors who don't have a lien on any of the assets
7 of the company. The Court likes those to be a mailing
8 matrix. For the Court's purposes it makes it easy for
9 them to mail out notices to these 20 largest creditors,
10 and that's what this is. This is a cover sheet for that
11 list of creditors.
12 Q On the next page, can you explain to the jury what
13 the information is on the next page?
14 A The next page which is also commonly referred to as
15 Exhibit A to a bankruptcy petition, again provides the
16 Court with some basic information about the company at the
17 time they are filing bankruptcy.
18 The company's tax identification number is
19 revealed again, and a brief summary of the company's
20 financial status is listed.
21 In this case it shows the amount of -- the value
22 of the assets, the amount of liabilities at the time of
23 the filing, and the types of debts that the company has.
24 In this case the company is showing that it had $1,998,695
25 of unsecured debt. Again these being creditors that don't
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1 have any liens on the company's assets, and $146,029 -- a
2 little over $146,000 of disputed claims, meaning claims
3 that the company is disputing.
4 At the bottom of the page they describe the
5 business as a sale of membership, the type of business it
6 is engaged in, and also this document also reveals the
7 people who own more than 20 percent of the stock of the
8 company.
9 In this case it is revealed as Richard C.
10 Grossman as the person who owns 20 percent or more of the
11 stock of the company.
12 Q Now directing your attention to the next page, the
13 top of which says secretary's certificate.
14 A Yes.
15 Q Can you explain to the jury what that means.
16 A This is a corporate document which would be required
17 under almost I think any state law wherein a corporation
18 is seeking bankruptcy protection. It is entitled
19 secretary's certificate. But basically it is a corporate
20 document signed by Bruce Gordon, stating that the company
21 was authorized to take this step to file bankruptcy
22 protection, because it is a fairly -- it is a significant
23 step and would require the authorization of the company's
24 board of directors.
25 Q Now, I am going to ask you to skip the next page
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1 which reads summary of schedules and go straight to
2 schedule A, real property.
3 First of all, can you explain to the jury what
4 schedules are?
5 A Schedules are a requirement under the bankruptcy laws
6 that require a company to list in great detail all of
7 their assets.
8 You will see the first few schedules all refer to
9 the company's assets. And then towards the back of the
10 schedules you must list all the company's liabilities or
11 all their creditors. And those creditors are divided into
12 different categories, depending on whether they have a
13 lien or have any other type of priority under the
14 bankruptcy laws.
15 Q The first schedule, which is schedule A, can you tell
16 the jury what that means?
17 A This is a listing of whatever real property or real
18 estate that the company may have owned. And it indicates
19 that the company claimed that it did not own any real
20 estate as of the time it filed bankruptcy.
21 Q Now, looking at schedule B, personal property.
22 A This is a three-page schedule which asks again in
23 pretty specific detail what types of personal property or
24 tangible property that the company owned as of the time it
25 filed bankruptcy. And it is broken down to I think into
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1 33 different questions or categories. And the company
2 lists on the first page certain bank accounts it had and
3 the amount of money it had in those bank accounts, and
4 also some security deposits that the company had.
5 The second page of this schedule B lists some
6 other assets that the company had. Under number 15 it
7 lists the company's account receivables, basically the
8 money owed to the company. And it
indicated, indicates
9 that the company was owed about $100,000 at the time it
10 filed bankruptcy.
11 Question number 18 refers to equitable or future
12 interests, and it states -- I am not sure any of the
13 things listed here qualify for equitable or future
14 interests, but, in any event, the company lists certain
15 assets under 18, including notes receivables, a note
16 receivable from a corporation, loans receivable from
17 officers and employees. And the total of those assets
18 valued at the time of the bankruptcy filing was listed as
19 being a little more than 2.6 million dollars.
20 Q What does the term notes receivables mean?
21 A It means that these are, these are basically IOUs,
22 basically it is a promissory note, where it says notes.
23 An IOU, or something that was signed by somebody or some
24 company saying I owe Who's Who Worldwide Registry X amount
25 of money. And in this case they are claiming they had
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1 these notes totaling over two million dollars.
2 Q And what are the other amounts listed there as
3 receivable?
4 A Again, a receivable is money owed to you, and a loan
5 receivable was more money owed to a company from a
6 corporation. It doesn't say who, of $91,000, a little
7 over, and again, loans receivable from officers and
8 employees, indicates that certain individuals owed money
9 to the company in excess of $462,000.
10 Q I will ask you to skip schedule C and go to schedule
11 D and explain to the jury what that says? Is the
12 government making any claim about creditors holding
13 secured claims?
14 MS. SCOTT: We can skip that, your Honor.
15 THE COURT: It is all very interesting
, and the
16 jury will be completely educated on what a bankruptcy is.
17 In fact, I am getting educated on it. But let's get to
18 the meat.
19 Q Let's skip to schedule E, which is creditors holding
20 unsecured priority claims.
21 THE COURT: If there is any meat. When I say
22 meat, if any.
23 A Schedule E is a list of creditors holding a priority
24 claim under the bankruptcy laws. In this case it is
25 simply a list of the tax authorities owed money by the
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1 company at the time of the bankruptcy filing.
2 Q I would ask you to turn to the next page, which is
3 schedule E, creditors holding unsecured priority claims,
4 which lists -- withdrawn -- I am sorry, I mean schedule
5 F.
6 A Schedule F is a listing of creditors holding
7 unsecured non-priority claims, which is basically
8 everybody else, unsecured creditors. Here is a listing of
9 the bulk of the creditors in the bankruptcy case. And it
10 is a three-page listing of those creditors, and the total
11 of those claims, which as shown on the bottom of the page
12 here, a little over 3 million dollars.
13 Q Where does Reed Elsevier appear here on this list?
14 A On the third page listing of the unsecured
15 non-priority claim, the second claim from the top is Reed
16 Elsevier.
17 Q What does it show Reed Elsevier is owed?
18 A It shows we are owed 1.7 million dollars.
19 Q Turning to schedule G, executory contracts on
20 unexpired leases. I would ask you -- sorry.
21 A Those are a list of the contracts or leases that the
22 company had in place at the time it filed bankruptcy, and
23 there is a rider to this schedule there is an attachment,
24 and it lists about 11 different contracts or leases that
25 the company had either signed or was a guaranty of, was a
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1 party to.
2 Q Looking at item six, it says W & M Properties, Inc.
3 A Yes.
4 Q What does that indicate?
5 A That the company had a lease on an apartment in New
6 York City located at 250 East 54th Street, apartment
7 PH-IV.
8 Q Looking at item seven of the next page of that rider,
9 what does that say?
10 A It indicates that the company -- the way I would read
11 this is that the company had a lease for the property at
12 750 Lexington Avenue, but since they are also referring to
13 Sterling's lease, I know what this is, that Who's Who
14 Worldwide Registry was a guarantor, or basically
15 guarantees the payment that a lease had been signed by
16 Sterling Who's Who for property located at 750 Lexington
17 Avenue in New York.
18 Q What does it mean to be a guarantor?
19 A Basically it means that if the primary party who had
20 signed the lease details, the guarantor says I will be
21 liable and pay that lease.
22 In this case it was a lease signed by Sterling,
23 and if Sterling Who's Who failed to pay the rent, then
24 Who's Who Worldwide Registry would have been liable and
25 would have been required to pay the rent.
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1 Q Now, I will ask you to go past six pages, skip six
2 pages, and go to the page that lists the stockholders in
3 the company, a page that looks like this.
4 I was pointing at the lower left-hand corner of
5 Government's Exhibit 610-B.
6 Can you tell the jury what that says?
7 A Yes, this is a form required in all bankruptcy cases,
8 and it is the listing of equity security holders, commonly
9 known as stockholders. And in this form it indicates that
10 Joyce Grossman was a 75 percent shareholder and Richard C.
11 Grossman was a 25 percent shareholder of the company.
12 Q And whose signature appears on that page?
13 A Bruce Gordon.
14 Q And what is the next section of this petition, just
15 briefly?
16 A The next set of documents is another listing of the
17 20 largest unsecured claim holders in the case, with my
18 client, Reed listed as the first creditor, and with
19 Mr. Gordon signing the end of that document.
20 Q And that's approximately four pages?
21 A Yes.
22 Q And then finally we come to the statement of
23 financial affairs?
24 A The statement of financial affairs is a series of
25 questions that the company has to answer with regard to
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1 the background of the company, the nature of the company,
2 and what they do.
3 Q And looking at item 19 of that page, what do you see
4 under item 19.
5 It is the page that looks like this, pointing to
6 the upper right-hand corner of 610-B?
7 A 19 relates to the names of the officers and directors
8 of the company, as well as the names of all of the
9 shareholders who own more than five percent of the
10 company.
11 Q What does it say there?
12 A It indicates Mr. Gordon is an officer and director,
13 also has the title of CEO, and that the shareholders of
14 the companies -- of the company is Joyce Grossman as a 75
15 percent shareholder, and Richard C. Grossman as a 25
16 percent shareholder. It also indicated that both Richard
17 Grossman and Joyce Grossman are directors of the company.
18 Q Now, I am showing you Government's Exhibit 610-A for
19 Identification. And do you recognize that document.
20 (Handed to the witness.)
21 MS. SCOTT: Your Honor, it is already in
22 evidence.
23 Q What is that document?
24 A First of all I recognize this document. It is a
25 bankruptcy court order amending the bankruptcy schedules
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1 filed by the company. Attached to the order is a copy of
2 the applications or motion filed by the company's lawyers
3 to amend certain parts of the bankruptcy schedules.
4 Q What amendments were made to the petition for the
5 schedules that had already been submitted?
6 A There are several. The first was that the company
7 had I think inadvertently put down the wrong address for
8 Reed Elsevier, and corrected the address to put the name
9 of the attorney, my former law firm, Whitman Breed Abbott
10 and Morgan. They added -- the company added one creditor,
11 Tony Murray and Associates as additional creditor in the
12 case with a claim of a little more than $111,000.
13 They also amended the statement of financial
14 affairs to include the income that the company had
15 generated in the years 1991, 1992, 1993, and 1994, and
16 they also added several lawsuits to their statement of
17 financial affairs that I don't know was previously
18 disclosed.
19 Q Going back to the bankruptcy proceeding, other than
20 filing a petition to get the bankruptcy started, what else
21 must the debtor company do to move the process along?
22 A The company has under the bankruptcy laws, has
23 numerous requirements it has to follow.
24 First of all, as I said earlier, their operations
25 are supervised by the bankruptcy court. They have to
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1 appear at what are called Section 341 creditor meetings
2 which are held by the U.S. Trustees office periodically
3 through the bankruptcy case, and those are meetings in
4 which creditors are invited to appear and ask questions of
5 a representative of the company, regarding how the company
6 is doing, how are the operations, are they staying current
7 under their bills, do they have a plan to pay back their
8 creditors? That's one of their obligations.
9 Another obligation is they must file monthly
10 financial operating reports with the bankruptcy court, in
11 which all creditors would have a right to get a copy of
12 those. And those operating reports are like financial
13 statements basically saying how the company is doing,
14 whether they are making money after they filed bankruptcy,
15 whether they are losing money. It gives people an idea of
16 how profitable the company may be.
17 Q Now, what is the ultimate requirement that the debtor
18 must fulfill through the bankruptcy proceeding?
19 A A Chapter 11 proceeding, in order for the company to
20 emerge from bankruptcy, they have to file what is called a
21 plan of reorganization, or a bankruptcy plan. That's the
22 plan in which the company hopes to be able to pay back
23 their debts to all their creditors.
24 The creditors would have a right to vote on that
25 plan to say, yes, we agree with it, or no, we don't.
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1 If the company can get enough of the creditors to
2 approve the plan, and the bankruptcy court approves the
3 plan, they can emerge from the bankruptcy, pay back the
4 creditors under the terms of the plan that is adopted and
5 continue to operate.
6 Q If a plan is submitted by the debtor and approved by
7 the creditors, how does it finally come into force?
8 A If they complied with all the bankruptcy laws and
9 rules and gotten approval, the Court will confirm the
10 plan, called a confirmation order, and adopt it and give
11 the company also a discharge of all of their debts prior
12 to the commencement of the bankruptcy proceeding, which is
13 one of the goals of the company also, to get a discharge
14 of all the claims.
15 Meaning if you are not a creditor covered by the
16 terms of a plan, the company is no longer liable for that
17 plan and you will not be paid. That's essentially how a
18 company comes out of bankruptcy. They get a confirmation
19 order approving the plan and abide by the terms of the
20 plan, they emerge from bankruptcy and go on and continue
21 to operate.
22 Q How long does the debtor have in order to create a
23 plan of reorganization?
24 A Under the bankruptcy laws the debtor has the
25 exclusive right, meaning they are the only party who can
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1 propose a plan during the four months of the case. After
2 that four months, which is called an exclusivity period,
3 after that period expires, then anyone is free to come in
4 and propose a plan, meaning another creditor can come in.
5 Usually a company that filed for bankruptcy
6 protection, doesn't want the creditor to come in and
7 propose their own plan, because in most cases the plan
8 proposed by a creditor would be harsher than the one
9 proposed by the company. So the company has the exclusive
10 right during the first four month, but the company can
11 also ask the bankruptcy court to extend that exclusivity
12 period.
13 Q By the company, you mean the debtor company?
14 A Yes, the debtor.
15 Q Now, what is Reed Elsevier?
16 A It is an international publishing company that
17 published numerous types of publications from children's
18 books, to trades journals, to magazines, to reference
19 books, to scientific journals.
20 Q Now, what was the relationship between Reed Elsevier
21 and Who's Who Worldwide Registry that gave rise to the
22 debt that Who's Who Worldwide Registry owed to Reed
23 Elsevier?
24 A Reed Elsevier owns certain trademarks in its
25 business. Some of those trademarks are -- entities
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1 referred to as entities like Who's Who in America, Who's
2 Who in the World, and several other Who's Who
3 publications. And Reed Elsevier commenced a trademark
4 infringement lawsuit against Who's Who Worldwide Registry,
5 Inc. in 1992, claiming that Who's Who Worldwide Registry
6 ink was infringing on its trademarks.
7 Q What was the result of that lawsuit?
8 A The result was in early March 1994, the judgment was
9 entered in favor of Reed Elsevier for 1. -- a little over
10 1.6 million dollars for trademark infringement.
11 Q A damage award against Who's Who Worldwide?
12 A Yes, it was.
13 Q And when did Who's Who Worldwide file the bankruptcy
14 petition in relation to when this judgment came down for
15 1.6 million dollars?
16 A Approximately two weeks afterward.
17 Q What was
Reed Elsevier's interest in the bankruptcy
18 proceeding?
19 A It was Reed Elsevier's position that it was the
20 largest creditor of Who's Who Worldwide Registry. Who's
21 Who Worldwide Registry, the debtor throughout the -- most
22 of the bankruptcy proceeding disputed Reed's claim, and,
23 in fact, brought an appeal of the trademark judgment.
24 Q Now, turning to Who's Who Worldwide petition, as the
25 attorney for Reed Elsevier what was the first thing you
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1 did in connection with the bankruptcy proceeding after
2 Who's Who Worldwide filed their bankruptcy petition?
3 A I was not brought into the case by my client or my
4 firm until roughly about six weeks after the company filed
5 bankruptcy. They filed bankruptcy on March 22nd, I
6 believe, 1994. I believe my first
involvement in the case
7 was in late April or early May, 1994. And at that time I
8 was given a copy of the bankruptcy schedules, and
9 bankruptcy petition. I reviewed them and saw that we were
10 listed as the largest creditor, although our claim was
11 being disputed, we still were, if our claim was to be
12 allowed, we were going to be the largest creditor. And at
13 that point I started to ask some questions of the
14 company's lawyers regarding their plans for the bankruptcy
15 proceeding.
16 Q And what sort of questions did you ask them?
17 A I asked what type of plan they ultimately thought
18 they were going to file on behalf of the company, how they
19 were going to be able to pay back their obligations. And
20 also I asked specific questions about the assets listed on
21 the company's schedules.
22 As I mentioned earlier, the bulk of the company's
23 assets were these loan receivables, and promissory notes
24 referred to in I think it was Schedule B of the bankruptcy
25 schedules.
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1 Q What did you ask about those loans?
2 A I wanted to know who they were to, what the terms of
3 those loans were, when they would get paid back, under
4 what terms they would get paid back, and was that going to
5 be the source for funding a plan to pay back the creditors
6 of Who's Who Worldwide.
7 Q What else did you want to know from them? What else
8 did you ask?
9 A Regarding those loans?
10 Q No, other than the loans.
11 A There were a couple of other things in the schedules
12 that I had to ask some questions about, and specifically
13 some of the leases referred to. I wanted to know the
14 terms of some of the leases. Frankly I wanted to know why
15 the company had some of the leases, because some of them
16 didn't seem to be related to the company's business. I
17 wanted to know if they would reject the leases under the
18 bankruptcy law.
19 One of the benefits in bankruptcy is you can
20 reject a lease, terminate it, without the same kind of
21 penalties you would have if you weren't in bankruptcy.
22 So, I asked if they would reject some of those
23 leases to limit the company's exposure on some of the
24 leases.
25 Q Which leases are you referring to particularly?
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1 A I recall the ones I was mostly concerned with was the
2 penthouse apartment in New York, and the guarantee of the
3 lease for the office space for Sterling Who's Who in New
4 York.
5 Q Now, you say you asked Who's Who Worldwide about
6 these issues. What response did you get?
7 MR. JENKS: Objection.
8 MR. TRABULUS: Objection, your Honor. May we
9 find out who the response was received from?
10 THE COURT: Who did you speak to?
11 THE WITNESS: In this case the company's lawyers
12 was Flaum, Buzzio, or Basile, B A S I L E, and Berdi,
13 B E R D I, and I was speaking with the lead lawyer on the
14 case, who at that time was Neil Flaum, and I believe it is
15 F L A U M.
16 Q Did Mr. Flaum give you any answers to your questions
17 about the loans and about the leases?
18 A Not right away.
19 Q What did you do to obtain answers?
20 A In my discussions with Mr. Flaum it became obvious --
21 clear to me that the company and my client Who's Who in a
22 very adversarial posture. As I said, the company was
23 appealing the trademark judgment, and it
appeared that
24 there was not going to be -- the answers to my questions
25 were not going to be coming very easily.
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1 So my client authorized my firm to file more
2 formal papers, interrogatories and requests. These are
3 pleadings you file on the other party for answers to
4 specific questions, and also for certain documents. So we
5 filed interrogatories and requests for productions.
6 Q You on behalf of Reed Elsevier filed interrogatories
7 on Who's Who Worldwide?
8 A Yes.
9 Q Asking for more specific information?
10 A Yes.
11 Q What was the response you got to those
12 interrogatories?
13 A Again, we didn't get a response right away. As a
14 result my client authorized my firm to file another motion
15 referred to as a motion to compel, to
try to force the
16 company to respond to the interrogatories and requests for
17 production.
18 Q I am showing you Government's Exhibit 637 for
19 Identification.
20 (Handed to the witness.)
21 Q Do you recognize that?
22 A Yes, I do.
23 Q What is that?
24 A It is a copy of the first set of interrogatories
25 filed by my -- by an associate of my old firm on Who's Who
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1 Worldwide Registry.
2 Q And these interrogatories were questions that were
3 filed on behalf of Reed Elsevier?
4 A That's correct.
5 Q And these questions were asked of Who's Who
6 Worldwide; is that correct?
7 A That's correct.
8 Q Now, can you read --
9 MS. SCOTT: I offer Government's Exhibit 637.
10 THE COURT: Any objection?
11 MR. TRABULUS:
No, your Honor.
12 THE COURT: Government's Exhibit 637 in
13 evidence.
14 (Government's Exhibit 637 received in evidence.)
15 Q Can you read to the jury paragraph 7 and 8 of that
16 set of interrogatories.
17 A Question seven is: Identify the debtors' corporate
18 business purpose or justification for lending funds at any
19 time to Bruce W. Gordon, Joyce C. Grossman, Richard
20 Grossman, Sterling Who's Who, Inc., Publishing Ventures
21 Inc., or any other entity, actually or beneficially owned
22 or controlled by the officers and directors of the
23 debtor.
24 Q And what does paragraph eight say?
25 A Identify the debtor's corporate business purpose or
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1 justification for guarantying leases or other obligations
2 of Bruce W. Gordon, Sterling Who's Who, Inc., Publishing
3 Ventures, Inc., or any other entity, actually, or
4 beneficially, owned or controlled by the officers and
5 directors of the debtor.
6 Q Now, you say you didn't get responses to these
7 questions right away?
8 A That's correct.
9 Q So, you filed a motion to compel; is that correct?
10 A Yes.
11 Q And what was Who's Who -- when you filed this motion
12 to compel answers to these questions, what was Who's Who
13 Worldwide's response to your motion?
14 A Who's Who Worldwide responded through their attorneys
15 by filing a request, or a motion in the bankruptcy court
16 for a protective order, to protect them from having to
17 produce any documents we requested, or to answer any of
18 the questions we had asked.
19 Q What did they say was the reason for why they needed
20 this protection?
21 A The reasons were that they claimed
that Reed Elsevier
22 was a competitor of Who's Who Worldwide Registry, Inc.,
23 and some of the questions were documents we had asked for,
24 or asked about, were trade secrets, or trade information
25 that they didn't think they should have to divulge to a
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1 competitor.
2 They were also disputing our claim as a creditor,
3 and didn't thing they should have to answer the questions
4 or produce the documents to a disputed creditor.
5 Q Now, what did you do on behalf of Reed Elsevier after
6 that?
7 A After the company filed the request for a protective
8 order?
9 Q Yes.
10 At approximately this time did you file another
11 motion on behalf of Reed Elsevier?
12 A At approximately this time, which I think was
13 sometime in the summer of 1994, on
behalf of my client I
14 filed a motion for the appointment of a Chapter 11
15 trustee, or in the alternative, if the Court wouldn't give
16 a Chapter 11 trustee, I asked for authority to have Reed
17 Elsevier file a lawsuit to recover what we claimed as
18 fraudulent transfers which had been made to third
19 parties.
20 MR. TRABULUS: Objection, your Honor.
21 THE COURT: Sustained.
22 Strike out the reference to any fraudulent
23 transfers. The jury is instructed --
24 The jury is instructed to disregard that
25 reference to any fraudulent transfers.
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1 Q Going back to the motion for a trustee to be
2 appointed, I am showing you Government's Exhibit 629 and
3 629-A for Identification.
4 (Handed to the witness.)
5 Q Do you recognize those documents?
6 A Yes.
7 Q What are they?
8 A Exhibit 629 is a copy of the notice of the motion for
9 appointment for a Chapter 11 trustee, as well as a cover
10 letter to the Court which is attached to this notice of
11 motion. 629-A is a copy of the memorandum of law filed by
12 my law firm -- my former law firm on behalf of Reed
13 Elsevier's motion for appointment of a trustee.
14 MS. SCOTT: I offer Government's Exhibit 629 and
15 629-A.
16 MR. TRABULUS: Objection.
17 THE COURT: Sustained.
18 MR. JENKS: I will object also, your Honor.
19 THE COURT: Sustained.
20 MR. WHITE: Your Honor, could we be heard on that
21 issue, either now or at the break?
22 THE COURT: Let's do it now.
23 Members of the jury, we will take a ten-minute
24 recess. Please do not discuss the case, and do not
25 discuss the case. Keep an open mind. And recess
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1 yourselves.
2 (Whereupon, at this time the jury leaves the
3 courtroom.)
4 THE COURT: Mr. Skalka, do you wish to step out,
5 please.
6 (The witness exits the courtroom.)
7 THE COURT: What is the relevancy and how is it
8 admissible?
9 MR. WHITE: First of all, your Honor, they are
10 certified copies from the bankruptcy courts so their
11 authenticity is not at issue.
12 They are relevant for this reason: Mr. Gordon
13 and Mr. Reffsin are charged with obstructing the
14 bankruptcy proceeding.
15 We have to show the course of the bankruptcy
16 proceeding to show why it is that their lies or alleged
17 lies would have the effect of corrupting, obstructing the
18 bankruptcy proceeding, and the contempt, the corrupt
19 intent, that they are lies.
20 THE COURT: Corrupt intent to do what? Tell me
21 what the fraud is?
22 MR. WHITE: It is not the fraud. One of the
23 elements of the obstruction of justice is they had to have
24 had a corrupt intent to obstruct the bankruptcy
25 proceeding.
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1 THE COURT: How do you say they obstructed the
2 bankruptcy proceeding?
3 MR. WHITE: There are two counts. One count
4 charges Mr. Gordon and Mr. Reffsin with filing false, the
5 false logs that ostensibly showed how the penthouse and
6 condominium were used for business purposes.
7 THE COURT: These documents have nothing to do
8 with that.
9 MR. WHITE: Actually they do.
10 THE COURT: You show me how they have to do with
11 that. I thought there was a court order directing --
12 MR. WHITE: Yes, I have to take
a minute to page
13 through the document, but let me explain what my theory
14 is.
15 Reed was attempting to impose a trustee on Who's
16 Who Worldwide. Among the grounds that they cited to the
17 bankruptcy court as reasons for why such an appointment
18 was appropriate was alleged mismanagement by Mr. Gordon,
19 namely, that he was having the company pay for his
20 personal residence in Manhasset and the penthouse.
21 You can only understand Mr. Gordon's lies,
22 submitting the phony logs and giving false testimony about
23 the two residences, unless you understand what comes
24 before it.
25 In other words, Mr. Gordon knows, hey, the
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1 creditors are asking questions about this. Unless I have
2 an answer the bankruptcy court will appoint a trustee, and
3 then I am off the gravy train.
4 THE COURT: You want to show they are for the
5 obstruction not for the logs, because there simply you
6 have to show an order directing that there be logs, and
7 the logs were false.
8 MR. WHITE: Yes, your Honor. But I feel this
9 adds some background.
10 THE COURT: It adds a lot of allegations, though,
11 doesn't it, allegations, charges.
12 These are legal papers replete with all kinds of
13 charges, aren't they?
14 MR. WHITE: Yes, your Honor.
15 THE COURT: That's very prejudicial, isn't it?
16 MR. WHITE: Your Honor, you can't understand
17 Mr. Gordon's motivation, unless you know that he knows --
18 unless the jury understands that the trustee was asking
19 questions about the specific things that he lied about.
20 MR. JENKS: How do Mr. Skalka's declaration, your
21 Honor, on this notice of motion relevant to Gordon's
22
motivation in the case? These are arguments of a lawyer
23 contained in an affidavit. They are self-serving
24 statements, hearsay and legal papers besides. I don't
25 care if they are certified twice.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 MR. WHITE: Your Honor, perhaps admitting the
2 whole document would be overbroad. Can we at the end of
3 the day today if Mr. Skalka is still going on, we can go
4 through these and see if we can't redact it in such a way
5 so all that is reflected, all that is received by the jury
6 is simply what I am suggesting, that the trustee was
7 asking questions about these various topics.
8 THE COURT: I think that is more appropriate than
9 letting in all these documents, which we know are all
10 kinds of claims and assertions.
11 MR. WHITE: We will try to do that, your Honor.
12 I think we can narrow it down.
13 THE COURT: All right.
14 MR. TRABULUS: I have something on an unrelated
15 matter that I would like to bring up.
16 THE COURT: Go ahead.
17 MR. TRABULUS: If you remember about a week ago I
18 sought to introduce a document which I marked as Gordon B
19 for Identification, and that's a collection information
20 statement which bears what I believe to be Mr. Gordon's
21 signature on it, and sought to be introduced by the
22 government. There were objections, and the government was
23 unable to acknowledge as to whether or not that particular
24 document was filed.
25 Because it was produced by the government, I
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1 assumed that it was something that was filed. It was
2 explained to me by Mr. White that it may have come
3 originally from the documents seized in the raid and given
4 over to the trustee, and apparently because it is a 1990
5 document -- although it appears to be a 1991 document, but
6 they have not looked into it because it was before the
7 statute of limitations.
8 I would hate to ask your Honor for a subpoena for
9 this, but I would ask your Honor to direct the government
10 to provide all collection information statements that were
11 filed on or behalf of Mr. Gordon during the time period of
12 the tax crimes alleged in the indictment.
13 MR. WHITE: Your Honor, we have already produced
14 all the ones in our possession. As Mr. Trabulus
15 established in testimony last week, there is the
16 information file relating to Mr. Gordon for a certain
17 period of time, which is lost.
18 That file encompasses I believe the time period
19 they are talking about here. Mr. Trabulus wants to
20 introduce the document, it is his burden. Mr. Gordon can
21 file about it, someone who mailed it to the IRS can
22 testify about it. Lots of ways he can do it. It is not
23 the government's burden. It is his burden.
24 MR. TRABULUS: The alternative is to ask for your
25 Honor to sign a subpoena.
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1 MR. WHITE: I have already done it.
2 THE COURT: Mr. Trabulus, the Assistant United
3 States Attorney says you have all those documents. You
4 can serve all the subpoenas you want. They have no more
5 of them. That's what he said.
6 MR. TRABULUS: He said he has given us everything
7 in his possession. He hasn't said that a search was made
8 for this particular document.
9 I don't think the testimony of the witness who
10 testified about this indicates a search was made for the
11 document. If this copy was filed a -- document was filed
12 a document should have been filed under Rule 16.
13 THE COURT: Was a search made by the information
14 or whoever has these documents?
15 MR. WHITE: As I said, your Honor, last week, a
16 search was made for the entire file covering this period.
17 THE COURT: As to from the IRS?
18 MR. WHITE: Yes.
19 THE COURT: It was made.
20 Anything else?
21 (No response.)
22 THE COURT: See you shortly.
23
24 (Whereupon, a recess is taken.)
25
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1 THE CLERK: Jury entering.
2 (Whereupon, the jury at this time entered the
3 courtroom.)
4 THE COURT: You may proceed, Ms. Scott.
5 You may be seated, ladies and gentlemen.
6 Mr. Skalka.
7
8 D O U G L A S S K A L K A,
9 called as a witness, having been previously
10 duly sworn, was examined and testified as
11 follows:
12
13
14 DIRECT EXAMINATION (Cont'd)
15 BY MS. SCOTT:
16 Q You testified a minute ago you made a motion on
17 behalf of Reed Elsevier to appoint a trustee in the
18 bankruptcy action?
19 A That's correct.
20 Q What did you hope to achieve by appointing a trustee,
21 by having a trustee appointed?
22 MR. JENKS: Objection.
23 MR. TRABULUS: Objection.
24 THE COURT: Overruled.
25 A My clients at the time we filed the motion, I believe
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1 in July or August of 1994, at that time we were concerned
2 about the ability of this company, of Who's Who Worldwide
3 to come up with a plan of reorganization. And I believe
4 the case was at least four
months old, so the initial
5 exclusive period had expired, or was about to expire. We
6 had not gotten much with respect to any of the information
7 with regard to the loans we saw in the bankruptcy papers.
8 We didn't see any effort by the company to collect on
9 those loans. We saw the company was continuing to spend a
10 lot of money on leases which we didn't think was necessary
11 for a company in bankruptcy.
12 Frankly, we were concerned we would never be able
13 to recover any money on our judgment.
14 We thought all the creditors, not just Reed,
15 would be better served if a third-party a trustee would be
16 appointed to run the company, to collect these loans, make
17 sure that only necessary expenses were being incurred, and
18 come up with a plan to pay back the creditors.
19 Q And by the judgment you are referring to is the 1.6
20 million dollars judgment
that Reed Elsevier won; is that
21 correct?
22 A That's correct.
23 Q Now, what kind of trustee did you ask to be
24 appointed?
25 A We asked the bankruptcy court --
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1 THE COURT: Let's not get into what you asked
2 for. Was a trustee appointed?
3 THE WITNESS: Yes, your Honor.
4 THE COURT: Let's get to it.
5 MS. SCOTT: Your Honor, this is much later on.
6 This is entirely relevant.
7 THE COURT: This is entirely relevant?
8 MS. SCOTT: It is, your Honor. It is relevant to
9 an issue raised by the defendant.
10 THE COURT: Right now I am telling the jury that
11 this witness' allegations as to what Who's Who did or
12 didn't do during the bankruptcy is irrelevant, and you are
13 not to consider it at all. We don't want his
14 contentions. We want to know what happened.
15 MS. SCOTT: Your Honor, I am asking for type of
16 trustee that they requested.
17 THE COURT: I am not interested in what they
18 requested. What did they get?
19 MS. SCOTT: May we approach, your Honor?
20 THE COURT: No. No approach. Let's get to what
21 happened. I am not interested in this well-meaning, and
22 fine attorney's contentions of what his client thinks; and
23 whether they made timely responses is not relevant.
24 Q Mr. Skalka, what is a trustee?
25 A A trustee in a timely context is someone who is
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1 appointed to either operate a bankrupt company or
2 liquidate or sell all the assets of a bankrupt company.
3 Q So, a Chapter 11 trustee -- what is a Chapter 11
4 trustee?
5 A A trustee who has powers to run a business, as
6 opposed to one who could only liquidate or sell the assets
7 of a business.
8 Q Now, the type of trustee that Reed Elsevier was
9 seeking was a Chapter 11 trustee; is that correct?
10 A Yes.
11 Q Why is it that Reed Elsevier did not seek the
12 appointment of a Chapter 7 trustee?
13 MR. TRABULUS: Objection, your Honor.
14 THE COURT: Sustained.
15 Q What did Who's Who Worldwide do with respect to the
16 appointment of a trustee?
17 A They objected to the motion.
18 Q I will show you Government's Exhibit 630.
19 (Handed to the witness.)
20 MS. SCOTT: This is for identification.
21 Q Do you recognize that document?
22 A Yes.
23 Q What is that?
24 A It is a copy of an affidavit signed by Bruce Gordon
25 in opposition to Reed's motion for the appointment of a
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1 Chapter 11 trustee.
2 MR. WHITE: I offer Government's Exhibit 630.
3 THE COURT: Any objection?
4 MR. JENKS: Objection, your Honor.
5 MR. TRABULUS: I object as well, the version I
6 have is incomplete.
7 THE COURT: I have the complete one. But what is
8 the relevancy of this?
9 You can tell the jury that Who's Who Worldwide
10 objected to the appointment of a Chapter 11 trustee. Is
11 there anything in here that is relevant?
12 MS. SCOTT: Yes. Statements are made there.
13 THE COURT: Where? What page and what
14 paragraph?
15 MS. SCOTT: We were going to go through that.
16 THE COURT: You are not going to go through it
17 before it comes in evidence. Tell me what the number is.
18 MS. SCOTT: Very well, your Honor.
19 Paragraph 15; paragraph 17 --
20 THE COURT: One minute, let me
take a look.
21 (A pause in the proceedings.)
22 THE COURT: Yes.
23 MS. SCOTT: Paragraph 21, and paragraph 22, your
24 Honor.
25 (Whereupon, at this time there was a pause in the
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1 proceedings.)
2 THE COURT: That's what you want in?
3 MS. SCOTT: Yes, your Honor.
4 THE COURT: Any objection to those paragraphs
5 going in?
6 MR. TRABULUS: Yes.
7 Your Honor, if things are going to go in I would
8 ask the entire affidavit go in.
9 THE COURT: I was going to ask you that question
10 next. You beat me to it, Mr. Trabulus. You are a step
11 ahead of me, as usual.
12 MR. TRABULUS: Your Honor, in addition there is a
13 reference in this affidavit to a plan annexed to it. I
14 don't have it here, and I don't know if it is attached to
15 the exhibit. That should go in, too, if anything is going
16 in.
17 MR. JENKS: I object to any of the paragraphs
18 going in, including the documents, your Honor.
19 THE COURT: Assuming I will let in the paragraphs
20 that I just said that I intend to let in, do you want the
21 entire document to go in?
22 MR. TRABULUS: Yes.
23 MR. JENKS: No. I don't want the entire document
24 in, your Honor.
25 My argument -- I make the same arguments I made
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1 to the introduction of the affidavit before in the notice
2 of motion to appoint a trustee by Mr. Skalka and
3 Mr. Bailey, who signed that application.
4 THE COURT: I will give you a double no. I will
5 let the whole thing in.
6 Now, where is the attachment? Is there an
7 attachment? Where does it
say anything about an
8 attachment, Mr. Trabulus?
9 MR. TRABULUS: Paragraph four, the last sentence
10 in parenthesis.
11 THE COURT: Do we have that, Exhibit A?
12 MR. WHITE: What Mr. Trabulus has in the exhibit
13 is the certified copy from the bankruptcy court, so if
14 there is nothing attached, then the attachment was not
15 filed with the bankruptcy court.
16 THE COURT: I will overrule the objection and let
17 it be filed without the plan.
18 Nobody has a copy of this plan of
19 reorganization?
20 MR. TRABULUS: Your Honor, there was such a plan
21 of reorganization. I have seen it in the bankruptcy court
22 file. I don't have a copy of it with me.
23 THE COURT: Well, when you find it, if it is the
24 copy that is annexed to this, we will annex it to it.
25 Meanwhile, Government's Exhibit 630, in its
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1 entirety, in evidence.
2 (Government's Exhibit 630 received in evidence.)
3 Q When did Mr. Gordon file this affidavit in opposition
4 to the motion for a trustee?
5 A In early August, 1994.
6 Q Now, taking a look at paragraph 15 of that affidavit,
7 could you read that aloud to the jury, please.
8 A Reed has made great issue of the fact that the
9 principals of the debtor have established other
10 corporations and aided in the capitalization of such
11 corporations. It is Reed's contention that the principals
12 of the debtor have established these corporations so as to
13 enable them to, quote, siphon off, unquote, the debtor's
14 assets and defraud the creditors of the estate. Reed
15 relies heavily --
16 THE COURT: Let's skip the law part of it. Let's
17 get to the next paragraph on the
next page, in the instant
18 case.
19 THE WITNESS: In the instant case there is no
20 identity of function, purpose or goal between the debtor
21 and the related corporations. PVI, Sterling, and
22 Executive Club, were formed to complement the debtor, not
23 usurp its functions.
24 Q Can you explain what you understood that term to
25 mean?
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1 MR. TRABULUS: Objection, your Honor.
2 THE COURT: Yes. Sustained.
3 Q Now, turning to paragraph 17 of the affidavit, would
4 you please read that allowed to the jury?
5 A Reed first urges this Court --
6 THE COURT: You have to read slowly, slowly,
7 Mr. Skalka, slowly.
8 THE WITNESS: All right.
9 Reed first urges this Court to focus on loans of
10 the debtor to PVI for the acquisition, improvement,
11 furnishing of my, quote, personal residence, unquote.
12 While I maintain the property located on Hummingbird Lane,
13 it is not my personal residence. The loan to PVI is a
14 legitimate corporate investment. It is repayable at an
15 interest rate of 7.5 percent, the property is available to
16 the debtor for use by non-residential merges, the property
17 is also used for in-house training as well as a conference
18 area for executive employees. Since we have been in the
19 process of founding a west coast operation, it will be
20 also be used to temporarily house and train executives
21 based in California.
22 Q Turning now to paragraph turn of that affidavit,
23 there is a word in that paragraph affiant, can you explain
24 to the jury what affiant means?
25 A That's the person who is signing this affidavit.
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1 Q And in this case who is that person?
2 A Bruce Gordon.
3 Q Now, could you please read that paragraph outloud to
4 the jury.
5 A It is further alleged in Reed's moving papers that
6 loans made to your affiant and the Grossmans are evidence
7 of a mismanagement of the debtor. These loans were duly
8 authorized by the debtor in the ordinary course of
9 business to be repaid in the future by the officers and
10 shareholders of the debtor. At the time of the
11 transaction the debtor was not insolvent, nor was it
12 anticipating insolvency. The issue of insolvency did not
13 arise until Judge Jordan issued this decision in favor of
14 Reed. As such the transfers cannot be characterized as
15 fraudulent as the debtor was not anticipating the need to
16 file for bankruptcy.
17 Q And can you read paragraph 22.
18 A Finally, Reed contends that cash disbursements to the
19 Grossmans are indicative of the dishonest and fraudulent
20 intentions of the debtor. Such payments were made while
21 the corporation was fully solvent and were based upon a
22 return upon the Grossman's investment over the debtor's
23 four years of conducting business profitably.
24 Q Now, what was the outcome of the dispute over the
25 trustee, and the dispute over the interrogatories of
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1 questions that you had asked?
2 MR. TRABULUS: Objection to form, your Honor.
3 THE COURT: Sustained.
4 Q Was the dispute over the trustee immediately
5 resolved?
6 A There was a stipulation entered into by the parties
7 regarding the trustee motion, as well as some other
8 motions that had been filed.
9 Q Okay.
10 When was that stipulation first discussed?
11 A On August 9th, 1994.
12 Q And what happened on that day? You don't need to
13 worry about sticking that back in. Thank you.
14 A There was a bankruptcy court hearing scheduled on
15 numerous motions in the case, some of the motions filed by
16 Reed, and some of the motions filed by Who's Who Worldwide
17 Registry.
18 Q On August 9th, 1994, did the parties meet?
19 A Yes. We all met in the bankruptcy court because all
20 those motions were pending before the bankruptcy court.
21 Q Did you enter into negotiations at that time?
22 A Yes.
23 Q And what did you agree upon at that time?
24 A We reached the terms of the stipulation or agreement
25 that I mentioned which provided for --
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1 Q
Before you go into that, can you just tell the jury
2 who was present at that meeting.
3 A I was present as counsel for Who's Who Worldwide, as
4 well as I believe, one other attorney from my firm at the
5 time.
6 Mr. Gordon was there, Neil Flaum was there on
7 behalf of the company.
8 Q On behalf of Who's Who Worldwide?
9 A On behalf of Who's Who Worldwide, and I believe
10 Mr. Reffsin was there as the accountant on behalf of Who's
11 Who Worldwide. Neil Ackerman was there. It was frankly
12 unclear -- he is an attorney. It is unclear as to who he
13 was representing at that time. And I believe someone else
14 from Mr. Ackerman's office was there.
15 Lastly, William Kahn was there, the attorney for
16 the bankruptcy attorney in the creditors's case.
17 THE COURT: Is that C A H N?
18 THE WITNESS: That is K A H N.
19 Q Now, what issues were in dispute
at that time?
20 A The issues regarding the production of documents and
21 answering of questions posed by Reed, and the protective
22 order that was being sought by Who's Who Worldwide, and
23 the motion for an appointment of a trustee, as well as a
24 motion that was filed by Who's Who Worldwide to extend
25 that exclusivity period that I mentioned before, whereby
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1 they would be the only one allowed to file a plan.
2 Q What happened in the course of these negotiations,
3 and during this meeting?
4 A I recall that the negotiations or meetings took
5 virtually the entire day. By the end of the day we had
6 reached the terms of an agreement. We reported to the
7 bankruptcy judge the essential terms of the agreement on
8 the Court record in bankruptcy court, and indicated
to the
9 Court that we would be the attorneys -- that the attorneys
10 would be drafting up a written stipulation to memorialize
11 the terms of the stipulation, and we would submit it to
12 the Court once every one has signed off on it.
13 Q You indicated to the Court would you put your
14 agreement in writing; is that correct?
15 A Yes.
16 Q Would you tell the jury what the terms of your
17 agreement were that you discussed in the meeting?
18 A Essentially --
19 THE COURT: Wait a minute. What you discussed or
20 what was agreed upon?
21 Q What was eventually agreed upon?
22 A Essentially what was agreed upon is that Who's Who
23 Worldwide would, I believe, by early September answer
24 almost all of the interrogatories, or the questions that
25 had been posed by Reed. They would also produce most of
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1 the documents that had been sought by Reed.
2 And this was -- part of our stipulation or part
3 of the agreement was that some of the documents or answers
4 would be produced pursuant to a confidentiality agreement
5 that Reed and the creditor's committee would agree not to
6 divulge the information to third parties. And sometimes
7 it was only given to the attorneys, and that was to
8 address Reeds -- excuse me, Who's Who's concern that Reed
9 was a competitor, and some of the information was trade
10 related information.
11 Reed agreed, and the creditor's committee agreed
12 to extend the exclusivity period to December 1994.
13 And it was also agreed that Reed's motion for the
14 appointment of a trustee would also be continued to the
15 end of December 1994, until after we got the Answers to
16 Interrogatories, and we got the documents we sought.
17 Lastly -- not lastly, but the company agreed that
18 there would be no more loans to Mr. Gordon or any of the
19 Grossmans, or any affiliate entity without notice and
20 approval by the bankruptcy court, and the affiliated
21 companies, mean PVI and Sterling Who's Who, as well as
22 Who's Who Worldwide Registry, also agreed to keep log
23 books at the penthouse in New York and at the Hummingbird
24 Road property in Manhasset. These were log books to keep
25 track of who was using these properties on a daily basis.
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1 Because one of Reed's contentions were that there was
2 really no business purpose for keeping the properties in
3 place, and they were costing too much money. And Who's
4 Who Worldwide was contending there was a business
5 purpose.
6 So, the log books were agreed upon to provide
7 some proof to all the parties that the property was either
8 being used for business purposes or they were not.
9 Q Now, you say you went before the bankruptcy judge on
10 August 9th, 1994, right after this meeting?
11 A That's correct.
12 Q I show you Government's Exhibit 631 for
13 Identification.
14 (Handed to the witness.)
15 Q Do you recognize that?
16 A Yes, I do.
17 Q What is it?
18 A A copy of the transcript of the Court hearing in the
19 bankruptcy proceeding for Who's Who Worldwide Registry on
20 August 9th, 1994.
21 MS. SCOTT: That's also a certified copy, your
22 Honor, and I offer it as Government's Exhibit 631.
23 THE COURT: Any objection?
24 MR. TRABULUS: Bear with me a moment, your Honor.
25 THE COURT: Yes.
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1 (Whereupon, at this time there was a pause in the
2 proceedings.)
3 MR. TRABULUS: Your Honor, may I have a brief
4 voir dire?
5 THE COURT: Sure.
6
7 VOIR DIRE EXAMINATION
8 BY MR. TRABULUS:
9 Q Good afternoon, Mr. Skalka. My name is Norman
10 Trabulus. I am Mr. Gordon's lawyer.
11 A Good afternoon.
12 Q Have you looked through this transcript?
13 A I have previously to today.
14 Q Now, if you note on the first page there are what we
15 lawyers call appearances.
16 A Yes.
17 Q And the appearances there do not include Mr. Gordon;
18 is that correct?
19 A That's correct.
20 Q Now, there are also other transcripts in this
21 bankruptcy proceeding in which Mr. Gordon's presence is
22 noted; is that not correct? Have you seen such?
23 A Yes,
I have.
24 Q Is it your testimony that Mr. Gordon was present when
25 the particular things that were being said that are
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1 reflected in this portion of the transcript here were
2 said?
3 A To the best of my recollection he was.
4 Q Are you certain of that?
5 A No.
6 Q And are there sometimes instances that the parties to
7 a lawsuit may not be in the courtroom when things are
8 said? They may have meetings outside and subsequently the
9 lawyers go in the courtroom and put things on the record
10 in front of the judge?
11 A That happens.
12 Q Do you know for sure as to whether or not that
13 happened in this case?
14 A I don't know for sure.
15 This as you can see says calendar time in front
16 of the document. This is what is called a short calendar
17 date in the bankruptcy court. The judge had numerous
18 matters on that day. It is extremely possible we waited
19 until other matters were over until we came up front to
20 report our agreement. I may not have been looking to see
21 if Mr. Gordon was still in the courtroom when we were
22 called up.
23 MR. TRABULUS: Your Honor, I object.
24 THE COURT: Sustained.
25 There was a stipulation entered into finally; is
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1 that right?
2 THE WITNESS: Yes.
3 THE COURT: This transcript, when the lawyers
4 agree or stipulated on the conditions you just told to
5 this jury at length, they went up to the judge and said,
6 Judge, this is what we have agreed upon, to be confirmed
7 by a written stipulation; is that correct?
8 THE WITNESS: That's correct.
9 THE COURT: There was a written stipulation
10 signed by all the parties?
11 THE WITNESS: That's correct.
12 THE COURT: That sets forth in detail exactly
13 what was agreed upon?
14 THE WITNESS: That's correct.
15 THE COURT: Why not get to that.
16
17 DIRECT EXAMINATION (cont'd)
18 BY MS. SCOTT:
19 Q When was that agreement actually signed?
20 A September 9th, 1994.
21 Q And what happened during that month in-between August
22 9th and September 9th before the agreement was actually
23 signed?
24 A The parties, as I mentioned, drafted up the written
25 stipulation. It took a month for it to be signed, but I
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1 believe most of the parties -- I believe the parties
2 abided by the terms as reported to the Court on August
3 9th. It just took a minute for it to be signed. There
4 was some disagreement about specific language. I also
5 frankly think that there was some summer vacations
6 interrupting people's ability to review things. And there
7 was a meeting also on September 9th, so it made it
8 convenient for everybody to get together and sign it on
9 September 9th.
10 Q I am showing you Government's Exhibit 632 for
11 Identification.
12 (Handed to the witness.)
13 Q Do you recognize that?
14 A Yes.
15 Q What is it?
16 A It is a copy of the written stipulation or agreement
17 that we had first put on the court records on August 9th,
18 and finally had all -- all the parties had signed on
19 September 9th. And I believe the bankruptcy judge signed,
20 although it says the 14th day of August, it must have been
21 the 14th day of September, because I am sure it wasn't
22 presented to her until after September 9th.
23 MS. SCOTT: Your Honor, I offer
24 Government's Exhibit 632.
25 THE COURT: Any objection?
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1 MR. TRABULUS: No.
2 MS. SCOTT: I request the Court's permission --
3 THE COURT: First of all, I will say
4 Government's Exhibit 632 in evidence. You have to give me
5 a chance to get into this occasionally, although I do
6 manage to do so from time to time.
7 (Government's Exhibit 632 received in evidence.)
8 THE COURT: What did you want now?
9 MS. SCOTT: I would request the Court's
10 permission to publish this Exhibit 632 to the jury.
11 THE COURT: Definitely. I would want them to
12 read every word of it.
13 (Whereupon, the exhibit/exhibits were published
14 to the jury.)
15 Q Now, Mr. Skalka, turning to paragraph four of that
16 exhibit, would you please explain to the jury what that
17 paragraph provides?
18 A This is the paragraph referring to the maintenance of
19 log at two properties, the one at 200 Hummingbird Road in
20 Manhasset -- excuse me, three properties, 200 Hummingbird
21 Road in Manhasset, 250 East 54th, apartment Penthouse 4 in
22 New York City, and 750 Lexington Avenue, fourth floor, New
23 York City.
24 This is the paragraph in which Publishing
25 Ventures Inc., Who's Who Executive Club, Sterling Who's
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1 Who and the debtor, known as Who's Who Worldwide Registry,
2 Inc. agreed to maintain these logs so that Reed and the
3 creditor's committee could determine how these properties
4 are being used.
5 Q Now, turning to the last two pages of the exhibit
6 which have signatures.
7 Now, next to all the signatures there is a date;
8 is that correct?
9 A That's correct.
10 Q And what is that date?
11 A It is September 9th, 1994.
12 Q Now, on that signature pages, who signed the
13 agreement on behalf of Who's Who Worldwide?
14 A Attorney Neil Ackerman signed as counsel for Who's
15 Who Worldwide, and Bruce Gordon signed as president.
16 Q Who does it show signing on behalf of PVI, Publishing
17 Ventures, Inc.?
18 A Bruce Gordon.
19 Q And who does it show signing on behalf of Who's Who
20 Executive Club?
21 A Bruce Gordon.
22 Q Who does it show signing on behalf of Sterling Who's
23 Who?
24 A Bruce Gordon.
25 Q Who signed that agreement on behalf of Who's Who
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1 Worldwide?
2 A I did.
3 Q And finally, there is another signature on there
4 before the judge's signature. Who is that?
5 A That William Kahn, the attorney for the creditor's
6 committee.
7 Q And what is the creditor's committee again?
8 A In a Chapter 11 bankruptcy case the Court has the
9 power to appoint a committee of creditors to represent the
10 interest of the body of creditors. Usually there are so
11 many creditors in a Chapter 11 case it is a little
12 unwieldy to have their interests represented, so the Court
13 appoint as group of them to serve as a committee. They
14 can play an active role in formulating a plan, to
15 determine if a company's business is doing well, and
16 making the positions clear to the bankruptcy court.
17 Q So, Mr. Kahn signed on behalf of the creditor's
18 committee?
19 A Yes, he did.
20 Q Now, under where it says "so ordered" the judge's
21 signature appears there; is that correct?
22 A Yes.
23 Q What is the effect of the judge's signature on that
24 document, in that place on the document?
25 A It becomes a court order.
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1 Q You mentioned that there was a meeting of the parties
2 that day?
3 A Yes.
4 Q Can you tell us who attended that meeting?
5 A You are referring to the meeting on September 9th?
6 Q Yes, that's correct.
7 Is that the meeting where this document was
8 signed?
9 A Yes.
10 Q And who attended that meeting?
11 A Neil Ackerman on behalf of -- as the attorney for
12 Who's Who Worldwide; Bruce Gordon, myself, William Kahn
13 for the creditor's committee; Mr. Reffsin as the
14 accountant
for Who's Who Worldwide; I believe Maria
15 Gaspar, an employee of Who's Who Worldwide Registry, and
16 there were, I believe two officials from the United States
17 trustee's office, Stan Yang, Y A N G, and Ms. O'Toole, her
18 first name escapes me now.
19 MR. WHITE: Your Honor, may we have a moment?
20 THE COURT: Surely.
21 (Whereupon, at this time there was a pause in the
22 proceedings.)
23 MR. WHITE: Thank you, your Honor. We are back.
24 Q I am showing you Government's Exhibit 801 in
25 evidence, which represents segments of that meeting that
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1 you described as taking place on September 9th, 1994.
2 Now, in the course of that meeting was there a
3 discussion about the condominium at 200 Hummingbird Lane?
4 A Yes.
5 Q And looking at page 35 of the transcript you are
6 going through now, can you read to the jury what Bruce
7 Gordon said there?
8 A Well, I was questioning Mr. Gordon at this meeting,
9 and I posed the question: Mr. Gordon, do you live at --
10 this transcript says 203, I am sure I said 200 Hummingbird
11 Road in Manhasset.
12 Mr. Gordon's answer was sometimes, only one or
13 two days a week. I have an office there.
14 Then I asked him, who lives there when you are
15 not there?
16 Mr. Gordon said, we have meetings there very
17 often, and I live with my girlfriend. But when I work
18 late on the computer until 2:00 or 3:00 in the morning,
19 that is where I am.
20 Q Now, also in the course of that meeting did
21 Mr. Gordon say anything about whether or not he had any
22 ownership in the companies, at Who's Who Worldwide in
23 particular?
24 A Yes.
25 Q Turning to
page 52 of the transcript, can you tell us
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1 what Mr. Gordon said there?
2 MR. TRABULUS: The objection is not to it being
3 read, but in light of the question being asked, I think
4 the questions there relate to other entities.
5 THE COURT: Pardon?
6 MR. TRABULUS: They relate to other entities
7 other than the debtor, if you read the contents of the
8 entire testimony.
9 THE COURT: What is this Exhibit number?
10 MS. SCOTT: 801.
11 THE COURT: This is in evidence?
12 MS. SCOTT: Yes.
13 (Whereupon, at this time there was a pause in the
14 proceedings.)
15 MS. SCOTT: To save time this has already been
16 read into the record. We can skip over that.
17 THE COURT: Very well.
18 Q Why is the question of who owns a company that is
19 relevant with respect to a bankruptcy proceeding?
20 A Shareholders have an interest in a bankruptcy
21 proceeding. They have the right to make a claim. But
22 also they may also be liable for certain obligations of
23 the company just by being a shareholder. And also, their
24 status as a shareholder under the bankruptcy laws will
25 also mean that they will be treated as what is called an
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1 insider for bankruptcy law purposes, and it also gives
2 rise to different types of treatments with respect to
3 potential claims.
4 Q Now, turning to the subject of the loans to Bruce
5 Gordon, did you ever receive an answer to the questions
6 that you raised on behalf of Who's Who Worldwide about the
7 loans that Who's Who Worldwide made to Bruce Gordon and to
8 other members of his
family?
9 MR. TRABULUS: Objection to form, your Honor.
10 THE COURT: Yes. Sustained.
11 Q What if anything was said in response to the
12 questions you raised about loans that Who's Who Worldwide
13 made to Bruce Gordon and to members of his family?
14 MR. TRABULUS: Objection, your Honor. Can we
15 have by whom and what the questions were, and what
16 occasion the answers were made?
17 THE COURT: Yes.
18 Did you receive something in writing? Was it
19 orally, and if so, who told you?
20 THE WITNESS: Shall I respond?
21 THE COURT: Yes.
22 THE WITNESS: I received an answer in writing in
23 I believe September of 1994 as to the specific question of
24 the loans made to the company by Bruce Gordon. And I
25 received them from the company's attorneys.
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1 Q I am showing you Government's Exhibit 631 for
2 Identification.
3 (Handed to the witness.)
4 Q Do you recognize that?
5 A Yes, I do.
6 Q What is it?
7 A This is a letter from Neil Ackerman, who at this time
8 was the bankruptcy attorney for Who's Who Worldwide
9 Registry. And it is an answer to one of the
10 interrogatories that Reed had posed. It is a question
11 directly related to what is the basis for and the nature
12 of the loans to Bruce Gordon? And this is the response
13 that I questioned.
14 Q And you say the letter was written by Neil Ackerman?
15 A Yes.
16 Q And he was acting on behalf of Who's Who at that
17 time?
18 A He was their bankruptcy attorney, yes.
19 Q Looking at the letter, what was the explanation given
20 in the letter to the attorney and the Grossmans?
21 MR. TRABULUS: Objection.
22
Q What was the explanation of the letter given to Bruce
23 Gordon.
24 MR. TRABULUS: Objection.
25 THE COURT: Can I hear the question.
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1 (Whereupon, the court reporter reads the
2 requested material.)
3 Q What was the explanation in the letter for the loans
4 made to Bruce Gordon for the company, Who's Who
5 Worldwide?
6 MR. TRABULUS: Objection, your Honor.
7 THE COURT: I sustained that objection.
8 MS. SCOTT: I am sorry.
9 I offer Defendant's Exhibit 641.
10 THE COURT: Any objection?
11 THE COURT: Government's Exhibit 641 in
12 evidence.
13 (Government's Exhibit 641 received in evidence.)
14 Q Now, can you tell the jury what the explanation was
15 given in this letter for the loans that the company made
16 to Bruce Gordon?
17 MR. TRABULUS: Your Honor, objection.
18 I know it is in evidence now. I didn't object to
19 it. But frankly, if she is asking him to read it, I have
20 no objection. But just to characterize it --
21 THE COURT: Let me take a look, let me take a
22 look at it.
23 (Whereupon, at this time there was a pause in the
24 proceedings.)
25 THE COURT: Yes, you will have to. It is lengthy
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1 and involved, but I think you will have to read it. You
2 can read it yourself, if you want. Because in
3 Government's Exhibit 641 in evidence, which is a letter on
4 a lawyer's letterhead, the law firm is Rivkin Radler and
5 Kremer, signed by Neal H. Ackerman, dated September 8th,
6 1994. And in there on page 2 of this 5-page letter it
7 says, quote, debtor's corporate purposes and/or
8 justification for loans and/or guaranties. Is that the
9 portion you were talking about?
10 MS. SCOTT: I was going to direct his attention
11 to page 3, the first full paragraph.
12 THE COURT: All right; and have him read that
13 paragraph.
14 THE COURT: That is even faster. Very good.
15 MR. TRABULUS: Nevertheless, under the rule of
16 completeness, we should hear the entire section relating
17 to the loans. It begins on the preceding page. It is
18 under the heading, paragraph one, Bruce Gordon.
19 THE COURT: No. There is no rule of
20 completeness. The document is in evidence. The attorney
21 can read any part of it.
22 If you think you want her to read another part,
23 ask her. If she doesn't want to, then you can read it on
24 cross-examination. That's the procedure.
25 MR. TRABULUS: I just think it would be better
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1 for the jury to hear the entire thing at one point.
2 THE COURT: It might be. But the prosecutor is
3 trying this case in her and his own way and I am going to
4 let him do it, within certain bounds, of course.
5 Do you have another copy of that letter?
6 MS. SCOTT: We do.
7 THE COURT: Now, what are you going to read
8 from?
9 MS. SCOTT: The first full paragraph on page 3.
10 THE COURT: Go ahead.
11 THE WITNESS: As the debtor was always operating
12 at a profit, it was always known that Bruce Gordon was due
13 a significant sum as and for additional compensation,
14 under the terms of his agreement with the debtor.
15 THE COURT: You have to slow down because the
16 jury has to digest this, we all have to hear it, and it is
17 not easy to understand, Mr. Skalka. It is
difficult to
18 understand. And the faster you read it, the less we are
19 going to understand. You do want us to understand this?
20 THE WITNESS: I do, your Honor.
21 THE COURT: Okay. Then slow down. Start all
22 over again.
23 THE WITNESS: All right.
24 As the debtor was always operating at a profit,
25 it was always known that Bruce Gordon was due a
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1 significant sum as and for additional compensation, under
2 the terms of his agreement with the debtor. However,
3 given that the debtor's main emphasis was on growth and
4 expansion between 1990 and early 1994, Mr. Gordon agreed
5 to defer this additional cash compensation, and instead,
6 in an effort to assist the debtor in its growth, agreed to
7 take these monies which he was entitled to, and to label
8 them as, quote, loans, unquote. It was always assumed
9 that these, quote, loans, unquote, would be ultimately set
10 off as interest-free advances against the monies he was
11 due under the terms of his agreement with the debt to be.
12 Additionally -- excuse me. Additionally, at the time of
13 the, quote, loans, unquote, the debtor always had more
14 than sufficient cash on hand to meet its operating
15 expenses, and it was anticipated that the debtor would
16 continue its profitability in the future. Open
17 parenthesis, this was also the case with all, quote,
18 loans, unquote, to other entities described below. Close
19 parenthesis.
20 Q Now, could you read the paragraph that begins with
21 the words, it is believed.
22 A It is believed that, quote, all in all, unquote, the
23 quote, debt of, unquote, of Mr. Gordon is more than fully
24 cancelled by the debt owed to Mr. Gordon, and that in
25 fact, after the application of such, quotes, debts,
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1 unquote, Mr. Gordon is owed a substantial sum of money.
2 Mr. Reffsin, the debtor's accountant, is in the process of
3 attempting to calculate this amount. His determination,
4 and all his calculations in respect thereof, will be made
5 available to the committee counsel, after it is completed.
6 Q Now turn to page 4 of the letter and please read
7 paragraph five to the jury.
8 A Paragraph five is entitled PVI. It says PVI, colon.
9 PVI, colon, borrowed approximately 1.1 million
10 dollars, used for the purchase of the Hummingbird Road
11 Manhasset property, and the innovation thereof and
12 improvements there on.
13 MS. SCOTT: May I take a look at the court
14 reporter's copy
for a moment?
15 (Whereupon, at this time there was a pause in the
16 proceedings.)
17 Q Mr. Skalka, I would ask you to read the remaining
18 paragraphs under number five.
19 A PVI was intended to be the corporation which would be
20 the legal owner of all real estate and business facilities
21 to be provided to the, quote, Who's Who family of
22 corporations, unquote, and its members. This was done for
23 tax purposes and other reasons.
24 New paragraph: The property was purchased to
25 give executives who were employed by and/or members of
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1 Who's Who and/or Sterling, open parenthesis, or other
2 future members of the quote Who's Who family of
3 corporations, close quote, close paren, a place to reside,
4 function, and, most important, network while in New York.
5 Q Please read the remaining paragraphs. There are
6 about two more.
7 A All entities which use these premises pay rent to
8 PVI. This includes the debtor, as you will see from the
9 debtor's financial statements. PVI is to repay this debt
10 under the terms of the quote, annexed, unquote, note.
11 Q Now, if you take a look at the bankruptcy petition,
12 the list of unsecured creditors on that petition?
13 THE COURT: What number is that exhibit?
14 MS. SCOTT: 610 in evidence.
15 (Whereupon, at this time there was a pause in the
16 proceedings.)
17 MS. SCOTT: I believe it is schedule F.
18 THE WITNESS: Yes.
19 Q Does Bruce Gordon's name appear on that list of
20 creditors?
21 A No, it does not.
22 Q What is the significance of that?
23 A Well, according to the representation made by Who's
24 Who's attorney, Mr. Gordon was owed hundreds of thousands
25 of dollars in back compensation. If he was really owed
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1 that money he should have been listed as a creditor in the
2 bankruptcy proceedings, and on the bankruptcy schedule as
3 a creditor owed several thousands for back compensation,
4 and he was not listed there.
5 Q Now, just turning back to the issue of the usage logs
6 for the condominium and the penthouse.
7 What was the agreement about how long Who's Who
8 Worldwide would have to keep these usage logs, documenting
9 its use of those properties?
10 A The stipulation which is also a court order provided
11 that those usage logs would be kept until -- or turned
12 over, excuse me, to Reed's attorneys, and also to the
13 creditor's committee attorney by, I believe, late
14 September, 1994.
15 There is nothing in the court order which says
16 when those usage logs should stop being kept. It was
17 Reed's position that those logs should have been kept on
18 going, but I don't believe that they were kept after the
19 initial usage logs were turned over in late September,
20 1994.
21 Q And when did the period -- when did the period begin
22 in which the usage logs had to be kept?
23 A From the date of the Court hearing in which everyone
24 reached the agreement under the terms of the stipulation,
25 which was approximately August 9th, 1994.
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1 Q Did you receive the log on September 23rd?
2 A Yes.
3 Q Did they document the usage of the condominium and
4 penthouse in August and September of 1994?
5 A Yes.
6 Q How did you receive them?
7 A I believe they were at least originally sent to me by
8 fax from attorney Neil Ackerman's office.
9 Q I will show you Government's Exhibit 640 for
10 Identification.
11 (Handed to the witness.)
12 Q What is that?
13 A This is a fax cover sheet from attorney Ackerman's
14 law firm addressed to my office and several other offices.
15 Annexed to that is a short letter from attorney
16 Ackerman.
17 Attached to that is a copy of the usage logs,
18 first for 200 Hummingbird Road, and the penthouse
19 apartment at 250 --
20 Q Is that the fax you received on September 23rd?
21 A Yes, it is.
22 MS. SCOTT: I offer Government's Exhibit 640.
23 THE COURT: Any objection?
24 MR. TRABULUS: No.
25 THE COURT: Government's Exhibit 640 in
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1 evidence.
2 (Government's Exhibit 640 received in evidence.)
3 MS. SCOTT: I request the Court's permission to
4 publish it to the jury.
5 THE COURT: Yes.
6 (Whereupon, the exhibit/exhibits were published
7 to the jury.)
8 MR. JENKS: I would like to get an understanding
9 that all the documents introduced through Mr. Skalka, were
10 not introduced against the corporations; is that correct?
11 MS. SCOTT: That's correct.
12 Q Taking a look at the front page of that fax, can you
13 read off the names of the people who received copy of that
14 document, of those logs.
15 A It was sent to Thomas G. Bailey, B A I L E Y, Jr. in
16 New York City.
17 Q And who is Mr. Bailey?
18 A Mr. Bailey was my partner at Whitman Breed Abbott and
19 Morgan. He was in our New York City office on this date.
20 He was the attorney responsible for the trademark
21 litigation on behalf of Who's Who Worldwide.
22 Q Who else's name appears there showing that the logs
23 were sent to them?
24 A William Kahn, who I mentioned earlier was the
25 creditor's committee attorney, and then my name.
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1 Q Now, on the next page there is a note from Neil
2 Ackerman.
3 Underneath that there is a CC mark indicating to
4 whom the logs -- who else received copies of this
5 communication.
6 A That's correct.
7 Q Who are the people listed there?
8 A Bruce Gordon and Martin Reffsin.
9 Q Looking at the log that covers 200 Hummingbird Road,
10 it is approximately three pages?
11 A Yes.
12 Q What time period does that log cover?
13 A It indicates that it covers from August 8th, 1994,
14 through September 22nd, 199
4.
15 Q And the next three pages refer to 250 East 54th.
16 Can you tell the jury the time period covered by
17 those pages, by those logs?
18 A August 8th, 1994 it begins, and goes through
19 September 17th, 1994.
20 Q Now, once these logs were turned over to you and the
21 creditors, what was the result in the bankruptcy
22 proceeding? What did the bankruptcy judge do?
23 A Well, these were turned over shortly before the
24 hearing on Reed's motion for the appointment of a Chapter
25 11 Trustee. They were discussed and used in that hearing.
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1 Q And what did the bankruptcy judge do?
2 A Initially on this motion, the Court did not appoint
3 the Chapter 11 Trustee. Rather, she asked the creditor's
4 committee to have its accountant review the company's
5 books and records and determine -- and make a
6 recommendation back to the bankruptcy court as to what
7 should be done with this company.
8 Q Did Who's Who Worldwide continue to oppose the motion
9 for the trustee?
10 A Yes.
11 Q Did Who's Who file additional papers in opposition to
12 the motion?
13 A Yes.
14 Q I am showing you Government's Exhibit 633 for
15 Identification.
16 What is that?
17 A This is a copy of the further opposition, or
18 additional opposition papers that were filed by Who's Who
19 Worldwide Registry to the motion by Reed for the
20 appointment of a Chapter 11 Trustee.
21 MS. SCOTT: I offer Government's Exhibit 633.
22 MR. TRABULUS: Would your Honor please bear with
23 me a moment? I am still looking for it.
24 THE COURT: I have not found it either.
25 (Whereupon, at this time there was a pause in the
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1 proceedings.)
2 MR. TRABULUS: Objection, your Honor, and I think
3 we should approach to discuss this document.
4 THE COURT: Come up.
5
6 (Whereupon, at this time the following took place
7 at the sidebar.)
8 THE COURT: I have not found this document.
9 MR. WHITE: Do you wish to look on mine?
10 THE COURT: I believe so.
11 MR. TRABULUS: Your Honor, this document refers
12 to your Honor, and --
13 THE COURT: I hope in a complimentary fashion.
14 MR. TRABULUS: It recites things you did in the
15 litigation, striking out a temporary restraining order and
16 so forth.
17 This is a document, to the extent it is
18 admissible will have to be gone through carefully.
19 THE COURT: Let's find out why it is relevant.
20 MR. WHITE: Your
Honor, I can show you.
21 On pages 19 and 20, an explanation is provided by
22 Mr. Ackerman, the company's lawyer, with respect to some
23 of the same subject with respect to the prior letter
24 Mr. Skalka read aloud, the corporate justification for the
25 loans to Mr. Gordon, and the use of the publishing
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1 venture's condominium.
2 Mr. Gordon is charged with obstruction not just
3 for submitting false logs, but by making false and
4 misleading testimony in the bankruptcy proceeding.
5 Mr. Ackerman will testify that he got all this
6 information personally from Mr. Gordon or Mr. Reffsin.
7 THE COURT: It would appear that this part of it,
8 pages 19, 20 and 21 are relevant. They do not say
9 anything about what I did, happily.
10 MR. TRABULUS: I have no problem with 19, 20 and
11 21.
12 THE COURT: Anything else you want to put in?
13 MR. WHITE: I don't think so.
14 Let me take a look at it.
15 THE COURT: Surely.
16 MR. TRABULUS: I guess the cover page as well.
17 THE COURT: And the cover page. Thank you.
18 MR. WALLENSTEIN: How late do you plan to go?
19 Because this witness will be a while.
20 THE COURT: I will not go past 5:00 o'clock,
21 unless you want to stay past 5:00 o'clock? Do you like to
22 stay to 6:00, 7:00?
23 MR. WALLENSTEIN: I appreciate the offer. No
24 thanks.
25 MR. JENKS: I will stay, Judge.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
911
Skalka-direct/Scott
1 THE COURT: Shucks.
2 MR. WHITE: I propose the first two-pages, your
3 Honor, plus the other pages to be offered.
4 THE COURT: Any objection?
5 MR. TRABULUS: Yes. The second page simply
6 restates the allegations by the trustees.
7 THE COURT: You object to that?
8 MR. TRABULUS: Yes.
9 THE COURT: The first page plus those other
10 pages.
11 All right.
12
13 (Whereupon, at this time the following takes
14 place in open court.)
15 THE COURT: As redacted, Government's Exhibit 633
16 in evidence.
17 (Government's Exhibit 633 received in evidence.)
18 Q Now, looking through the opposition paper that was
19 written on behalf of Who's Who, does it state
20 substantially the same justification for the PVI loan that
21 was made to purchase the condominium -- does it state
22 substantially the same explanation for that as appeared in
23 the letter that Neil Ackerman wrote that you just read
24 from, the letter dated September 8th?
25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
912
Skalka-direct/Scott
1 Q And in addition, does it also state substantially the
2 same explanation for the loan to Bruce Gordon, that was
3 also stated in Mr. Ackerman's letter that you just read
4 from?
5 A Yes.
6 MR. WHITE: Your Honor, could we just have one
7 moment?
8 THE COURT: Surely.
9 (Whereupon, at this time there was a pause in the
10 proceedings.)
11 Q Now, Mr. Skalka, in your testimony about the
12 proceedings after the logs were submitted, you mentioned
13 that the logs were discussed and used, and immediately
14 after that the judge determined not to grant a trustee; is
15 that correct?
16 A Yes.
17 Q And who discussed and used the logs at that time?
18 A They were one of the issues, or one of the documents
19 referred to during the hearing on the motion for the
20 appointment of a trustee, which
was in October of 1994.
21 At that point Mr. Ackerman was serving as counsel
22 for Who's Who. I was at that hearing, I believe
23 Mr. Bailey was there, attorney Kahn. I don't recall which
24 of the four of us, and perhaps there may have been other
25 counsel there, too, specifically referred to the logs.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
913
Skalka-direct/Scott
1 But I know they were addressed at that hearing.
2 Q Were they used by the bankruptcy judge?
3 A I don't recall if they actually came in evidence
4 during that hearing.
5 Q In reading from the letter that Mr. Ackerman wrote
6 explaining the loan to Bruce Gordon and the loan by PVI to
7 the condominium, you read a portion that described that
8 Martin Reffsin would provide additional information.
9 Would you turn to that portion of the letter
10 again.
1
1 THE COURT: What exhibit is that?
12 MS. SCOTT: This is Exhibit 641.
13 A Yes, I see that reference.
14 Q It says there that Mr. Reffsin was to supply
15 additional information about what?
16 A Calculating the amount of money owed to Mr. Gordon
17 from Who's Who Worldwide Registry.
18 Q Now, was that information ever submitted to you?
19 A Not to me, no.
20 MS. SCOTT: Thank you.
21 Thank you, your Honor. I have no further
22 questions from Mr. Skalka.
23 THE COURT: Cross-examination; you want me to go
24 first?
25 MR. JENKS: You want me to go first?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
914
Skalka-direct/Scott
1 MR. TRABULUS: Yes, why don't you go first.
2 MR. JENKS: I will ask some questions for now,
3 your Honor.
4
5 CROSS-EXAMINATION
6 BY MR. JENKS:
7 Q Mr. Skalka, were you subpoenaed to testify here today
8 by the government?
9 A No, I was not.
10 Q You are here voluntarily?
11 A Yes, I am.
12 Q How many times have you met with the United States
13 Government, specifically Mr. White and Ms. Scott, prior to
14 your testifying here today?
15 A I met with Ms. Scott briefly yesterday, because I was
16 told I might testify today, and one other time several
17 weeks ago when I was asked to testify. And I believe I
18 met with Mr. White one other time, approximately a year, a
19 year and a half ago, after the trustee had been appointed
20 in the bankruptcy, and the arrest had taken place at Who's
21 Who Worldwide.
22 Q When was the trustee appointed, the Chapter 11
23 Trustee?
24 A In the fall of 1995.
25 Q And then ultimately after the Chapter 11 Trustee was
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
915
Skalka-cross/Jenks
1 appointed, Who's Who Worldwide filed for Chapter 7
2 liquidation; is that correct?
3 A That Chapter 11 trustee filed a motion to convert it
4 to a Chapter 7, which was granted.
5 Q Which was granted?
6 A Yes.
7 Q And have you continued to represent Reed from the
8 initial filing of the petition in March of 1994 to the
9 present?
10 A I represent him in connection with the bankruptcy
11 proceedings. As I mentioned the first months or so after
12 the petition I was not involved. I was brought in late
13 April, early May, 1994, and continue to this date to
14 represent him in the bankruptcy proceeding.
15 Q As you testify here today, are you being paid for
16 Reed to testify?
17 A I have been billing Reed all the time in connection
18 with the bankruptcy proceeding and all the --
19 Q Not
my question. The question is: Are you being
20 paid by Reed to testify here today?
21 A Yes.
22 Q How much are you getting paid per hour, sir?
23 A My hourly rate is $225 an hour.
24 Q You are no longer a member of the Whitman firm that
25 initially represented Reed; is that correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
916
Skalka-cross/Jenks
1 A Yes.
2 Q When did you leave the Whitman firm?
3 A June of 1995.
4 Q And you became a partner in another firm?
5 A I am a partner in the firm of Neubert, N E U B E R T,
6 Pepe, P E P E, and Monteith, M O N T E I T H.
7 Q And where are they located?
8 A Our main office is in New Haven, Connecticut, and a
9 branch office in Southport, Connecticut.
10 Q When you left in June of 1995, the Whitman firm, did
11 you take Reed as a client with you, specifically, the
12 bankruptcy?
13 A I continued as the bankruptcy counsel for Reed.
14 Whitman Reed Abbott and Morgan continued to represent Reed
15 in connection with any trademark issues.
16 Q Let's talk about that for a minute.
17 It is clear that Reed is an adversary of Who's
18 Who Worldwide?
19 A They were an adversary, yes.
20 Q And you represent Reed; is that correct?
21 A Yes.
22 Q In the bankruptcy portion of the litigation
23 concerning Who's Who Worldwide?
24 A Yes.
25 Q And Mr. Bailey from your firm, your former firm,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
917
Skalka-cross/Jenks
1 represented Reed in the action against Who's Who Worldwide
2 for trademark infringement, right?
3 A That's correct.
4 Q And that action, am I correct, was instituted by Reed
5 against Who's Who Worldwide in 1992, correct?
6 A That is correct.
7 Q And were you a partner of the Whitman firm at the
8 time in 1992?
9 A No.
10 Q You ultimately became a partner, correct?
11 A Yes.
12 Q And were you involved in the trademark infringement
13 litigation by Reed against Who's Who Worldwide?
14 A No.
15 Q You didn't participate with Mr. Bailey at all; am I
16 correct?
17 A Not in the trademark litigation.
18 Q Bailey was Reed's lawyer from the Whitman firm; am I
19 right?
20 A With the trademark litigation, yes.
21 Q And he is a partner in the Whitman firm, right?
22 A Yes.
23 Q Back to you, Mr. Skalka, when did Who's Who Worldwide
24 first come to your attention?
25 A Late April, early May of 1994.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
918
Skalka-cross/Jenks
1 Q And that's the first time you got involved in any
2 litigation concerning Who's Who Worldwide, right?
3 A The first time I ever heard of the company.
4 Q By the way, you testified concerning a lot of motions
5 that were made by Reed in opposition to the appointment of
6 a Chapter 11 Trustee; is that correct?
7 THE COURT: By worldwide?
8 MR. JENKS: Yes. I will repeat the question.
9 Q You testified to various motions made by Who's Who
10 Worldwide in opposition to the appointment made for a
11 Chapter 11 motion?
12 A Motions, but pleadings in opposition to it.
13 Q Affidavits in response to Reed's motion for the
14 appointment of a trustee; is that right?
15 A Yes.
16 Q There is nothing unethical being done by Who's Who
17 Worldwide in opposing those motions, was there?
18 A No, there weren't.
19 Q In fact, a debtor in possession in a Chapter 11 has a
20 right to have counsel just as the creditors do, am I
21 right?
22 A Yes.
23 Q There is nothing improper about a company retaining
24 an attorney in a Chapter 11, and opposing motions made by
25 the creditors?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
919
Skalka-cross/Jenks
1 A Nope.
2 Q Okay.
3 Now, could you tell us what the market
4 capitalization is of Who's Who Worldwide?
5 A I do not know.
6 Q Is it a billion dollar company?
7 A I do not know.
8 Q You don't have any idea at all?
9 A No.
10 Q Would it be fair to say that a million seven in a
11 judgment against Who's Who Worldwide is like a drop of
12 water in the bank account of Reed?
13 A I don't know. I would be speculating as to the
14 size. I testified earlier it is an international
15 publishing company, numerous divisions, publishes lots of
16 different trade journals. I know nothing about the
17 finances.
18 Q Do you know who would know about their finances?
19 A Some officials of Reed, I assume.
20 Q How about Mr. Bailey, would he know?
21 A I don't know.
22 Q How much did you bill Who's Who Worldwide for your
23 services in the bankruptcy collectively?
24 A I was not responsible for billing this. I was not
25 the billing attorney responsible for billing this matter
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
920
Skalka-cross/Jenks
1 while I was over at Whitman Breed Abbott and Morgan. I
2 know from June of 1995.
3 Q From then.
4 A Once I joined Neubert Pepe and Monteith, I have
5 billed approximately $40,000 to Reed over the last two and
6 a half years.
7 THE COURT: Will you pull the microphone closer
8 to you, Mr. Skalka.
9 THE WITNESS: Sorry.
10 Approximately $40,000 over the last two and a
11 half years.
12 Q You billed them any time you had any involvement in
13 this case with the United States Government; is that
14 right?
15 A Meetings and discussions, yes.
16 Q You billed them for yesterday, $225 an hour?
17 A I have not been able to get back to my office to do
18 anything yet.
19 Q You will bill them?
20 A Yes.
21 Q You will not do it for free, will you?
22 A I anticipate it, yes.
23 Q It is fair to say that you will bill them $225 an
24 hour as you testify here today?
25 A Yes. But I don't know what the accommodation may be
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
921
Skalka-cross/Jenks
1 asked to me by Reed.
2 Q Let me ask you these questions, Mr. Skalka: You say
3 you got involved in the bankruptcy four weeks,
4 approximately, after the filing of the petition; is that
5 correct?
6 A Yes.
7 Q And the original petition, Government's Exhibit 610
8 in evidence was filed March 21st, 1994; am I right?
9 A I believe the actual petition dates was March 22nd.
10 Q 1994?
11 A Yes.
12 Q And you got involved approximately a month later?
13 A Yes.
14 Q So, sometime toward the end of April?
15 A Yes.
16 Q Am I correct?
17 A Yes.
18 Q Now, when you got involved in this bankruptcy, the
19 petition itself, Reed was the largest unsecured creditor,
20 am I correct?
21 A It was our position we are the largest unsecured
22 creditor. The company listed us as a disputed creditor,
23 because they were appealing our trademark judgment.
24 Q On the schedule, without going to 610, the petition
25 itself, on the schedule itself listing all the unsecured
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
922
Skalka-cross/Jenks
1 creditors, the largest unsecured creditor on that schedule
2 in the petition is Who's Who Worldwide; is that right?
3 A Yes.
4 Q And Who's Who Worldwide was on that petition stating
5 that they have a claim against Who's Who Worldwide for
6 approximately 1.7 million dollars?
7 A That's correct.
8 Q Now, were you aware after the bankruptcy petition was
9 filed, certain members of your firm, Whitman, Ransom,
10 Breed and Morgan -- correct me if I am wrong.
11 A At that time I was Whitman Breed Abbott and Morgan.
12 Q Fine.
13 Were you aware that members of that firm had gone
14 to the United States government and suggested to a postal
15 inspector, Biegelman, that an investigation should be
16 conducted to determine the activities of Who's Who
17 Worldwide?
18 A I am not aware of that.
19 Q Were you involved in any you discussions with the
20 United States Government or Inspector Biegelman,
21 concerning what you determined to be any kind of
22 fraudulent conveyances?
23 A No.
24 Q Do you know whether Mr. Bailey went to the United
25 States Government and instigated a criminal investigation
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
923
Skalka-cross/Jenks
1 against Who's Who Worldwide?
2 A I do not know.
3 Q Did you ever speak to Mr. Bailey about it?
4 A Whether he went to the government?
5 Q Yes.
6 In other words, let me back up a moment and
7 withdraw the question.
8 Let's talk about the trademark infringement suit
9 a little bit, all right?
10 Who's Who Worldwide published a book called Who's
11 Who in America; is that right?
12 A Yes.
13 Q And that was published by a subsidiary of Reed called
14 Marqui's Publishing Company; is that right?
15 A I believe the actual company Reed Reference
16 Publishing. And I believe the doing business as or the
17 tradename was Marqui Who's Who.
18 Q Okay.
19 They published a book, Who's Who in America; is
20 that right?
21 A Yes.
22 Q Gordon's company, Who's Who Worldwide published
23 various Who's Who directories, did they not?
24 A I don't know if I would characterize it as a Who's
25 Who directory. They published a membership book.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
924
Skalka-cross/Jenks
1 Q Using the name Who's Who; is that right?
2 A That's correct.
3 Q And in 1992, so we understand the history of this
4 thing, Reed brings an action for trademark infringement in
5 a federal court; is that correct?
6 A Yes.
7 Q And your firm, Whitman Breed Abbott and Morgan
8 represents Reed; is that correct?
9 A Yes.
10 Q And that litigation lingers on for a year and a half
11 or some two years; is that correct?
12 A Until the decision -- the judgment came down in March
13 of 1994.
14 Q And your firm, Mr. Bailey, represented Reed when that
15 judgment came down; is that correct?
16 A Yes.
17 Q And several weeks after the judgment Who's Who
18 Worldwide files for Chapter 11 reorganization?
19 A Approximately two weeks.
20 Q And so I am clear, I am not a bankruptcy attorney,
21 but Chapter 11 reorganization means that the company will
22 operate, right, and maintain its assets, but they have to
23 propose a plan to pay their creditors?
24 A Yes.
25 Q And Who's Who Worldwide ultimately proposed a plan,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
925
Skalka-cross/Jenks
1 did they not?
2 A They proposed several plans.
3 Q All right.
4 Did they propose a hundred percent plan
5 initially?
6 A I am not sure what you mean by initially.
7 Q At any time did they propose a hundred percent
8 repayment plan to their creditors?
9 A Yes.
10 Q And was that prior to your firm filing a motion for
11 the appointment of a trustee?
12 A No.
13 Q It was subsequent to that?
14 A Yes.
15 Q And when in relation to your firm filing a notice of
16 motion for the appointment of a trustee?
17 A The plan was filed just before that August 9th
18 meeting that I testified to.
19 Q Would it be fair to say that Reed Elsevier viewed
20 Who's Who Worldwide not only as a as a debtor, or someone
21 who owed him a judgment,
but also a competitor in a
22 similar type of business?
23 A No, that's not how I believe they treated it.
24 Q Well, you know more about bankruptcy than I do, but
25 wouldn't the appointment of a Chapter 11 Trustee in a case
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
926
Skalka-cross/Jenks
1 ultimately hinder the reorganization efforts of Who's Who
2 Worldwide to get back on their feet and pay off their
3 creditors?
4 A No. That was not our position. It was our
5 position -- it would enable the company to more quickly
6 recover and collect on those loans that had been
7 outstanding and have a fund of money to be able to pay out
8 to creditors.
9 Q But it would take the ultimate control of the
10 corporation away from the principals that were in fact
11 running the corporation, correct? Would it do that?
12 A It would take it away from some of the principals,
13 yes.
14 Q And it would place it in the hands of a third party,
15 a trustee, right?
16 A Yes.
17 Q And then the trustee would call all the shots for the
18 corporation, is that right?
19 A That's correct.
20 Q Are you testifying that it would not have been
21 advantageous for Reed to have a trustee appointed since
22 they were a competitor of Who's Who Worldwide?
23 A No. It was advantageous because it would enable us
24 to get some money to pay our judgment.
25 Q But Who's Who Worldwide was proposing a hundred
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
927
Skalka-cross/Jenks
1 percent repayment plan to their creditors, right?
2 A The plan that had been proposed was a ten-year pay
3 out with most of the payments to be made in the last three
4 years with Mr. Gordon increasing his salary by $25,000 a
5 year during the repayment period.
6 So, all the creditors, including Reed and the
7 other creditors in the committee didn't like the plan,
8 which was understandable, because it basically said we are
9 not going to pay you for ten years and Mr. Gordon is going
10 to take a higher salary. It also failed to meet
11 bankruptcy code --
12 THE COURT: You are picking up speed as you go
13 along.
14 THE WITNESS: I realized it, your Honor.
15 THE COURT: So you want to say what, did you get
16 up to that, Mr. Reporter?
17 THE WITNESS: The original plan never had a
18 disclosure statement filed with it, as required by the
19 bankruptcy rules and code, the original statement didn't
20 have the financial information required, and the
21 bankruptcy court never even scheduled a hearing on the
22 first plan because it was so deficient.
23 Q Would it have been advantageous to Reed's interest to
24 have a Chapter 11 Trustee appointed, yes or no?
25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
928
Skalka-cross/Jenks
1 Q And Who's Who Worldwide opposed the appointment of a
2 trustee, am I correct?
3 A Yes.
4 Q And they did nothing unethical in opposing the
5 appointment of a trustee, did they?
6 A No.
7 Q In fact, just so I understand, this Reed judgment for
8 a million seven that was obtained in March of 1994 in the
9 federal court was on appeal to a higher federal court; is
10 that correct.
11 The actual trademark infringement was on appeal
12 to a federal court; is that correct?
13 A Which time are you referring to?
14 Q Subsequent to the entry of the judgment in March of
15 1994?
16 A Yes.
17 Q While the bankruptcy proceeding was going on, while
18 the petition was filed, while you were having these
19 meetings in August and September of 1994, that case was on
20 appeal to the Second Circuit; is that correct?
21 A Yes.
22 Q So, in other words, Who's Who Worldwide was saying to
23 you to you as Reed's attorney that we are fighting the
24 million seven judgment; is that correct?
25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
929
Skalka-cross/Jenks
1 Q So,, obviously you would be opposed as Reed's counsel
2 to any Chapter 11 reorganization that Who's Who would want
3 to do; am I right?
4 A No.
5 Q Well, by agreeing to a reorganization plan, and a
6 payment plan, it wouldn't help you if they were appealing
7 the judgment, would it?
8 A They could have continued -- we were actually having
9 settlement discussions to
settle that case on appeal, and
10 for some treatment under a plan of reorganization. So it
11 was all trying to be wrapped into an overall settlement.
12 Q Let me ask you this: Did Reed collect any money on
13 the judgment?
14 A It has not to date.
15 Q As of today, the answer is no; is that correct?
16 A That's correct.
17 Q All right.
18 Do you know what the status is as of today of
19 Who's Who Worldwide?
20 A I have been in contact with the bankruptcy trustee
21 and his attorneys, and I have some sense of what is going
22 on.
23 Q Why don't you tell us what your sense is of what is
24 going on? What is the status of Who's Who Worldwide?
25 A The trustee is still trying to recover assets and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
930
Skalka-cross/Jenks
1 liquidate, or sell assets of the debtor. He is trying
2 to --
3 Q Let me stop you for a moment.
4 There are no other assets?
5 A No, there is still the condominium on Hummingbird
6 Road in Manhasset.
7 Q Which the trustee has a lien on?
8 A I don't know if it is a lien, but somebody made a
9 claim for it.
10 Q And the trustee is trying to get the condominium on
11 Hummingbird Lane away; is that correct?
12 A Yes.
13 Q Any other assets you are aware of that can make the
14 trustees whole or partially whole?
15 A There are potential claims of third parties the
16 trustee is talking about proceeding against, but not yet.
17 Q The company Who's Who Worldwide is not up and
18 running; is that correct?
19 A No.
20 Q There are no corporate offices any more?
21 A Once you have a Chapter 7 in place it is shut down.
22 Q It is liquidated?
23 A In the process.
24 Q
It is in the process, close to liquidation, if not
25 already liquidated; is that right?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
931
Skalka-cross/Jenks
1 A That's right.
2 MR. JENKS: Your Honor, I have no further
3 questions at this time.
4 THE COURT: All right. You may proceed.
5
6 CROSS-EXAMINATION
7 BY MR. TRABULUS:
8 Q Good afternoon again, Mr. Skalka.
9 A Good afternoon.
10 Q You just told Mr. Jenks that there is nothing at all
11 improper about a Chapter 11 debtor opposing motions made
12 by the creditors; is that right?
13 A That's my living, what I do all the time.
14 Q Your bread and butter, right?
15 A Yes.
16 Q And you mentioned also about interrogatories or
17 questions put by you, or Whitman Breed Morgan, whatever
18 the particular form was at the time, put to Who's Who
19 Worldwide; is that right?
20 A Yes.
21 Q You indicated you didn't get answers right away; is
22 that right?
23 A Yes.
24 Q And that also is not unusual in litigation, either in
25 the bankruptcy court or in civil cases in general; is that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
932
Skalka-cross/Trabulus
1 true?
2 A Bankruptcy cases tend to move a little quicker, so
3 you do get things a little quicker than general civil
4 litigation.
5 Q It is not at all unusual that sometimes you don't get
6 an answer right away to document requests and
7 interrogatories, and objections are made to them; is that
8 correct?
9 A Yes.
10 Q And sometimes the way that is -- if it can't be
11 resolved is to make a motion and have the Court resolve
12 it; is that correct?
13 A Yes.
14 Q Or at least raise the possibility that the Court
15 would resolve it?
16 A Yes.
17 Q In this particular case the bankruptcy case didn't
18 have to resolve it, did it?
19 A No.
20 Q Because once the issue of confidentiality and
21 disclosure of things that Who's Who felt might be
22 injurious to its businesses if the world at large found
23 out about it, once that issue is resolved you were able to
24 get Who's Who to answer most of the questions; is that
25 correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
933
Skalka-cross/Trabulus
1 A Yes.
2 Q It is not an unusual situation either in a lawsuit or
3 bankruptcy; is that correct?
4 A What is not unusual?
5 Q That there would be a set of objections made to
6 questions, or interrogatories, once they were resolved
7 there would be an agreement to answer some or most of
the
8 them?
9 A Yes.
10 Q And what happened there is nothing untoward or --
11 withdrawn.
12 What happened there is nothing out of the
13 ordinary in the type of work that you do; is that correct,
14 in that respect?
15 A In that respect, yes.
16 Q Now, you had mentioned that the initial form of plan
17 that was submitted on behalf of Who's Who Worldwide, a
18 plan by which everybody would be paid off 100 percent was
19 deficient in some regard; is that correct?
20 A Yes.
21 Q Now, those deficiencies, or some of what you regard
22 as deficiencies were addressed, were they not, in an
23 amended plan?
24 A Some of them were.
25 Q And it was after that initial plan that was put in,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
934
Skalka-cross/Trabulus
1 an amended plan was put in that contains some
what
2 different terms; is that correct?
3 A Yes, instead of a ten-year pay out, it is a six-year
4 pay out to creditors.
5 Q It is still proposed that 100 cents on the dollar be
6 paid to the creditors; is that correct?
7 A Yes.
8 Q You testified to questions put to you by Ms. Scott
9 that Who's Who opposed the appointment of a Chapter 11
10 Trustee; is that correct?
11 A Yes.
12 Q And let's just talk a little bit more about Chapter
13 11 for a second.
14 Basically in a Chapter 11 case you have two
15 possibilities. Either the debtor in possession that you
16 told us about before, where there is no trustee, or else a
17 Chapter 11 Trustee; is that right?
18 A As far as how the company is going to be managed or
19 operated, yes.
20 Q Right.
21 And after Chapter 11 case starts as a debtor in
22 possession case; is that correct?
23 A Yes.
24 Q There is no such thing as starting out with a
25 trustee?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
935
Skalka-cross/Trabulus
1 A That's correct. You will have a -- you can have a
2 bankruptcy trustee appointed within a few days of a
3 filing, but that is pretty rare.
4 Q Now, in your experience in Chapter 11 cases, are you
5 aware of any instances in which you have been involved, in
6 which the Chapter 11 corporation, the debtor, has
7 requested that a trustee be filed -- be appointed for it,
8 is it common?
9 A Not common, but I have seen it.
10 Q It would be most unusual, would it not?
11 A I wouldn't say most unusual. I would say it is
12 uncommon.
13 Q It is not at all unusual in any event, for a debtor
14 corporation, which has filed a Chapter 11 petition to
15 oppose the appointment of a Chapter 11 Trustee?
16 A No.
17 Q When you say, no, it is not unusual, correct?
18 A That's right.
19 THE COURT: I think we will take a break.
20 Did you want to ask anything more on this
21 particular subject?
22 MR. TRABULUS: I have lots of questions. I can
23 continue tomorrow.
24 THE COURT: All right.
25 You may step down, Mr. Skalka. We will ask you
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
936
Skalka-cross/Trabulus
1 to come back by 9:30 tomorrow.
2 (Whereupon, at this time the witness left the
3 witness stand.)
4 THE COURT: Members of the jury, we will recess
5 until 9:30 tomorrow morning.
6 Please do not discuss this case, either among
7 yourselves or with anyone else. Keep an open mind and
8 come no to conclusions.
9 Do not start looking up any terms in what used to
10 be called the Encyclopedia of Britanica, or a World Book,
11 or even more so, on a computer Internet. Don't punch it
12 into the computer and look for answers. Leave it alone.
13 Enjoy the evening.
14 We will recess until 9:30 tomorrow morning.
15 Have a nice evening.
16 (Whereupon, at this time the jury left the
17 courtroom.)
18 THE COURT: Tomorrow morning.
19 MR. TRABULUS: Can the government tell us the
20 witnesses they will have tomorrow? Can they be as
21 complete as possible? Mr. Skalka's name was not mentioned
22 yesterday.
23 THE COURT: Yes.
24 MR. WHITE: Mr. Skalka will continue,
25 Mr. Colletti, C O L L E T T I, Konopka, K O N O P K A,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
937
1 possibly Mr. Irwin who is waiting outside, I have to wait
2 and see his schedule for tomorrow, I R W I N.
3 MR. TRABULUS: The name Gaspar?
4 MR. WHITE: Ms. Gaspar, if we get that far
5 tomorrow.
6 THE COURT: If you want any help from the
7 witnesses, I can direct them to come back if there are any
8 problems.
9 MR. WHITE: So far we have had to deal with an
10 angry mob, but I can deal with it.
11 THE COURT: All right.
12 MR. WHITE: I have another issue, your Honor.
13 There was Exhibit 629-A, the one your Honor
14 sustained an objection and I proposed that we redact it
15 appropriately.
16 Subsequent to your Honor's ruling then 630 was
17 admitted. 630, that's the one that Mr. Jenks didn't want
18 in, Mr. Trabulus wanted the whole thing in. That is
19 Mr. Gordon's affidavit in response to this motion, 629-A.
20 So, in light of that -- and Mr. Gordon's affidavit
21 responds directly to the affidavits -- I am sorry, the
22 charges or contentions in 629 A. I would suggest then
23 that 629-A, which Mr. Skalka already identified, and which
24 is a certified copy, should be admitted in its entirety.
25 MR. TRABULUS: Your Honor, I think the government
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
938
1 can't open the door to itself. That's what he is saying.
2 They introduced the affidavit of Mr. Gordon which
3 clearly can come in as an admission insofar as it is
4 relevant. By doing that they can't open the door to the
5 thing it responds to, containing all the allegations which
6 are prejudicial and hearsay by Mr. Bailey. That's what
7 they are trying to do, and it is wrong.
8 THE COURT: In addition to which we don't need
9 it. His statements stand by themselves, and they very
10 clearly say what he wants them to say. We don't want to
11 have all these assertions by Mr. Bailey.
12 MR. WHITE: Okay.
13 I think that that argument seems to me to ring a
14 little hollow, because it is clear from the
15 cross-examination, and the jury is certainly going to get
16 the idea that obviously Mr. Skalka represented someone
17 whose interest was adverse to Who's Who Worldwide. They
18 are not going to be instantly prejudiced by reading this.
19 They are going to take it in the manner in which it is
20 offered, that this is the statement of the attorneys for
21 the other side in the bankruptcy case.
22 THE COURT: I think you are mixing up the right
23 of cross-examination and what they bring out. I don't
24 think anything on cross-examination opens the door for an
25 attorney's assertion as to all these matters. That is not
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
939
1 relevant in this case, and I will not allow it in, unless
2 you show me some sections that I feel are relevant and not
3 prejudicial.
4 By prejudicial, I mean unduly prejudicial.
5 Everything is prejudicial.
6 MR. WHITE: Let me then move to my fall-back
7 position, your Honor.
8 What we specifically wanted to offer it for is to
9 show that the trustee had raised questions about certain
10 specific area, areas, thus giving Mr. Gordon a motive to
11 misrepresent the facts relating to those areas.
12 On 629-A on page 3, the motion says the
13 particular transactions that Reed urges the Court to focus
14 upon are, and then a number are listed.
15 So, I would ask that that part of pages three and
16 four be included.
17 MR. TRABULUS: Where are we? Pages three and
18 four?
19 THE COURT: No. I will sustain the objection.
20 There are statements in there that are totally
21 unnecessary.
They are speculative contentions by a
22 lawyer. For example, quote, it is virtually impossible to
23 imagine that the maintenance of a penthouse apartment is a
24 legitimate, ordinary or necessary expense of either
25 Sterling or the debtor.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
940
1 MR. WHITE: Your Honor, we don't have to have
2 that part.
3 What I am suggesting is on page 3, it starts with
4 the particular transactions that Reed urges the Court to
5 focus upon are, and then paragraph one, and the first
6 sentence of paragraph three. Those are the two specific
7 areas.
8 THE COURT: I have no objection to that.
9 Do you, Mr. Trabulus?
10 MR. TRABULUS: Paragraph one?
11 THE COURT: Two, and the first sentence of
12 three.
13 MR. WHITE: Your Honor, not even two. Just
14 paragraphs one and the first
sentence of three.
15 THE COURT: Okay.
16 MR. TRABULUS: Your Honor, I find it a little
17 hard to talk about a redaction without seeing lines on the
18 paper. I am looking at it now. Bear with me a moment.
19 THE COURT: It says the particular transactions
20 that Reed urges --
21 MR. TRABULUS: I see it.
22 (Whereupon, at this time there was a pause in the
23 proceedings.)
24 MR. TRABULUS: There is more?
25 MR. WHITE: And the first sentence of paragraph
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
941
1 eight referring to the loan.
2 MR. TRABULUS: I have no problem with paragraph
3 eight. I do have a problem with the first line of
4 paragraph eight.
5 The other phrase says loans and quotes, we
6 suggest they are not loans --
7 MR. WHITE: Mr. Ackerman's letter in response to
8 this puts the word
"loans" in quotes as well, it is not
9 pejorative, your Honor. Mr. Gordon's own lawyer responds
10 to it that way.
11 THE COURT: I am inclined to let it in.
12 MR. TRABULUS: The first sentence in three and
13 the first sentence in eight.
14 THE COURT: That's it.
15 MR. WHITE: All right.
16 THE COURT: You want to redact it and produce it
17 that way.
18 MR. WHITE: I will.
19 THE COURT: Okay.
20 MR. WALLENSTEIN: Judge, did you any 9:30?
21 THE COURT: 9:30.
22 (Case on trial adjourned until 9:30 o'clock a.m.,
23 Thursday, January 22, 1998.)
24
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
942
1 I-N-D-E-X
2
W-I-T-N-E-S-S-E-S
3
PAGE LINE
4 B R A D L E Y F I S C H M A N................. 694 21
DIRECT EXAMINATION................................ 695 6
5 CROSS-EXAMINATION.......
.......................... 697 7
6 J O Y C E G R O S S M A N.................... 698 8
DIRECT EXAMINATION................................ 699 3
7 VOIR DIRE EXAMINATION............................. 712 17
DIRECT EXAMINATION (cont'd)....................... 713 15
8 CROSS-EXAMINATION................................. 716 12
CROSS-EXAMINATION................................. 735 20
9 CROSS-EXAMINATION................................. 747 8
CROSS-EXAMINATION................................. 749 9
10 REDIRECT EXAMINATION.............................. 755 16
RECROSS-EXAMINATION............................... 756 8
11
J E A N N E D I E T R I C H................. 758 1
12 DIRECT EXAMINATION................................ 758 11
CROSS-EXAMINATION................................. 774 15
13
S T E V E N A D L E R........................ 777 1
14 DIRECT EXAMINATION................................ 777 13
CROSS-EXAMINATION...........................
...... 785 18
15 CROSS-EXAMINATION................................. 788 1
REDIRECT EXAMINATION.............................. 796 21
16 RECROSS-EXAMINATION............................... 798 9
RECROSS-EXAMINATION............................... 801 4
17 FURTHER RECROSS-EXAMINATION....................... 802 1
18 J O H A N S T R O M........................ 802 19
DIRECT EXAMINATION................................ 803 10
19 CROSS-EXAMINATION................................. 819 4
REDIRECT EXAMINATION.............................. 828 10
20
D O U G L A S S K A L K A ................. 830 1
21 DIRECT EXAMINATION................................ 830 13
VOIR DIRE EXAMINATION............................. 886 7
22 DIRECT EXAMINATION (cont'd)....................... 888 17
CROSS-EXAMINATION................................. 914 5
23 CROSS-EXAMINATION................................. 931 6
24
25
HARRY RAPAPORT, CSR, CP,
CM OFFICIAL COURT REPORTER
943
1 E-X-H-I-B-I-T-S
2 Government's Exhibit 622 received in evidence..... 696 20
Government's Exhibit 582 received in evidence..... 702 20
3 Government's Exhibit 582-A received in evidence... 703 17
Government's Exhibits 600 through 609 received
4 in evidence....................................... 713 12
Government's Exhibit 587 received in evidence..... 761 25
5 Government's Exhibit 588 received in evidence..... 762 1
Government's Exhibit 583-A received in evidence... 763 22
6 Government's Exhibit 584-A received in evidence... 763 24
Government's Exhibit 585-B received in evidence... 766 21
7 Government's Exhibit 582-B received in evidence... 770 18
Government's Exhibit 584-B received in evidence... 772 8
8 Government's Exhibit 671 received in evidence..... 780 20
Government's Exhibit 671-A received in evidence... 783 23
9 Government's Exhibits 817 through 822 received
in evidence..
..................................... 808 10
10 Government's Exhibit 637 received in evidence..... 861 14
Government's Exhibit 630 received in evidence..... 878 2
11 Government's Exhibit 632 received in evidence..... 890 7
Government's Exhibit 641 received in evidence..... 898 13
12 Government's Exhibit 640 received in evidence..... 906 2
Government's Exhibit 633 received in evidence..... 911 17
13
14 Defendant's Exhibit D received in evidence........ 827 10
15
16
17
18
19
20
21
22
23
24
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
This site is concerned with Gemiome Miscarriage of Justice, and the double scandal of government and judical corruption in one of the Genuine Miscarriages Of Justice and the concomitant news media blackout regarding this incredible story.
Sixteen weeks of oft-explosive testimony, yet not a word in any of 1200 news archives. This alone supports the claim that this was a genuinely dirty trial; in fact, one of the dirtiest federal trials of the 20th century.
Show your support for justice, for exoneration of the innocent, and for that all-important government accountability, by urgently contacting your Senator, the White House, and the U.S. Department of Justice.
Gemiome Miscarriage of Justice
How Thomas FX Dunn proved himself the most egregiously incompetent lawyer in America
Corruption in Federal Judiciary
That's the least of descriptions not bending into the expletively expressed, pardon the twist.
Arthur Spatt showed up literally one week after putatively final resolution driving, get this,
not merely a car that cost more than any others he had previously owned, no, no:
He was seen driving to court in a vehicle costing more than ALL combinaed!
More expensive than all the autos he had previously owned. Such audacity.
At the very least, one of the most corrupt federal proceedings seen to date.
Again and again, objective observers see reasons to form that opinion. Dirtiest, indeed.