6842 1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK 2 - - - - - - - - - - - - - - X 3 UNITED STATES OF AMERICA, : CR 96 1016(S-1) 4 v. : U.S. Courthouse 5 Uniondale, New York BRUCE W. GORDON, WHO'S WHO 6 WORLD WIDE REGISTRY, INC., : STERLING WHO'S WHO, INC., 7 TARA GARBOSKI, ORAL FRANK : OSMAN, LAURA WEITZ, ANNETTE 8 HALEY, SCOTT MICHAELSON, : STEVE RUBIN, and MARTIN 9 REFFSIN, : TRANSCRIPT OF TRIAL 10 Defendants. :March 5, 1998 11 - - - - - - - - - - - - - - X 9:20 o'clock a.m. 12 13 BEFORE: 14 HONORABLE ARTHUR D. SPATT, U.S.D.J. 15 16 APPEARANCES: 17 For the Government: ZACHARY W. CARTER United States Attorney 18 One Pierrepont Plaza Brooklyn, New York 11201 19 By: RONALD G. WHITE CECIL SCOTT 20 Assistant U.S. Attorneys 21 For the Defendants: NORMAN TRABULUS, ESQ. 22 For Bruce W. Gordon 170 Old Country Road, Suite 600 23 Mineola, New York 11501 24 EDWARD P. JENKS, ESQ. For Who's Who, Sterling 25 332 Willis Avenue Mineola, New York 11501
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6843 1 GARY SCHOER, ESQ. 2 For Tara Garboski 6800 Jericho Turnpike 3 Syosset, New York 11791 4 ALAN M. NELSON, ESQ. For Oral Frank Osman 5 3000 Marcus Avenue Lake Success, New York 11042 6 WINSTON LEE, ESQ. 7 For Laura Weitz 319 Broadway 8 New York, New York 10007 9 MARTIN GEDULDIG, ESQ. For Annette Haley 10 400 South Oyster Bay Road Hicksville, New York 11801 11 JAMES C. NEVILLE, ESQ. 12 For Scott Michaelson 225 Broadway 13 New York, New York 10007 14 THOMAS F.X. DUNN, For Steve Rubin 15 150 Nassau Street New York, New York 10038 16 JOHN S. WALLENSTEIN, ESQ. 17 For Martin Reffsin 215 Hilton Avenue 18 Hempstead, New York 11551 19 Court Reporter: Owen M. Wicker, RPR 20 United States District Court Two Uniondale Avenue 21 Uniondale, New York 11553 (516) 292-6963 22 23 Proceedings recorded by mechanical stenography, transcript produced by computer-assisted transcription. 24 25 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6844 1 (Case called.) 2 THE COURT: Mr. Dunn, your client is not present. 3 MR. DUNN: That's correct, Your Honor, but I 4 believe we can go forward at least with the oral argument, 5 anything before 9:30. 6 THE COURT: I wanted to take up two things. One, 7 the outstanding records that Mr. Schoer was supposed to 8 examine. Do you have any objection to going ahead with 9 that? 10 MR. DUNN: No, Your Honor. 11 THE COURT: Would your client have any 12 objection? 13 MR. DUNN: No. 14 THE COURT: We'll repeat it when he gets in. 15 MR. DUNN: That's all right. 16 MR. SCHOER: Judge, I have no further objections 17 other than the ones that were expressed last night. 18 THE COURT: Well, then, that's the ruling. 19 I'll wait until Mr. Rubin gets here because I 20 wanted to talk to you about this Judgment of Conviction of 21 Ihlenfeldt. 22 MR. DUNN: Your Honor, you can go forward with 23 that also because I really have no more questions to ask. 24 THE COURT: I think we better wait. 25 MS. SCOTT: Your Honor, just for clarity sake, I OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6845 1 just wanted to make clear that Your Honor has just ruled 2 that list of exhibits is admissible, except those ones 3 Your Honor specifically excluded. 4 THE COURT: The checks and everything like that.
5 MS. SCOTT: We have not provided you about law 6 about the commercial paper. We will try to do it over the 7 weekend. We haven't had a chance last night. 8 THE COURT: Try. 9 MS. SCOTT: Also, Government's Exhibit 15-D which 10 is one of the exhibits I offered in this group had been 11 admitted earlier. It's an order form but I had misnamed 12 it, either Government's Exhibit 15-B or 15-C. So just for 13 the sake of clarity. 14 THE COURT: Mr. Dunn, do you want to go into this 15 without your client? 16 MR. DUNN: That's fine. Mr. Rubin is coming in 17 now. 18 MR. TRABULUS: Your Honor, the 17-D subpoena Your 19 Honor signed is an order on the second page and unless it 20 is not signed the marshal will not serve it. 21 THE COURT: I'm sorry, I didn't see it on the 22 second page. 23 MR. TRABULUS: That's all right. It's on the 24 top.
25 MR. NEVILLE: Your Honor, might I ask a quick OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6846 1 question regarding my client's request to absent himself 2 this Monday from the trial. Would Your Honor consider 3 instructing the jury in some form or fashion? 4 THE COURT: Sure, if you want me to. You compose 5 an instruction and I will give it to the jury. Make it 6 very beneficial to you. 7 MR. NEVILLE: Thank you very much, Your Honor. 8 THE COURT: I see Mr. Rubin is here. 9 MR. DUNN: Yes, Your Honor. 10 THE COURT: Did you tell Mr. Rubin about what has 11 gone on up to now, that Mr. Schoer had no objection to the 12 other document? 13 MR. DUNN: Yes, Your Honor. 14 THE COURT: And is he satisfied with us having 15 proceeded with that in his absence? 16 MR. DUNN: Yes, Your Honor. 17 THE COURT: With regard to the Judgment
of 18 Conviction of Rolf Eric Ihlenfeldt, he's the witness on 19 the stand, the Judgment of Conviction which is dated 20 August 23, 1996, provides for 13 months incarceration and 21 says the following, including the following. He's put on 22 supervised release for three years and "the defendant is 23 to pay to the United States Attorney's Office, 225 Cadman 24 Plaza East, Brooklyn, New York, 11201, the sum of $10,000 25 in monthly installments of 10 percent of his gross monthly OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6847 1 income during the three years he is on supervised 2 release. The U.S. Attorney's Office shall make a pro rata 3 distribution to the victims, if found." 4 And under a separate sheet in the judgment 5 entitled "restitution," it says the same thing. So 6 apparently from that I deduct that instead of paying it in 7 m
onthly installments he paid it in one time. He said he 8 borrowed it or his father-in-law gave it to him. 9 MR. JENKS: I'll move on, Your Honor. It speaks 10 for itself. 11 THE COURT: Right. 12 All right. Let's bring in the jury. 13 MS. SCOTT: Your Honor, I just want to clarify 14 about Government's Exhibit 15-D. That's an order form. I 15 had previously asked for it to be admitted but I had given 16 it the wrong exhibit number. I think I called it 15-B or 17 15-C and that I did with Wendi Springer. So it was 18 previously admitted into evidence under the wrong name and 19 I want to clarify for the record that the office form is 20 actually 15-D, as in Daniel. 21 Thank you. 22 THE COURT: Very well. 23 There's a request by a jury to leave at 4 o'clock 24 on March 18th. What a pessimistic approach that is. But 25 of course this juror is a shop steward
and has a meeting OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6848 1 and I'll let the juror leave at 4 o'clock at March 18th. 2 THE COURT: Where is the witness? 3 MS. SCOTT: Right here. 4 (Jury enters.) 5 THE COURT: Good morning, members of the jury. 6 Please be seated. 7 Again, I must compliment you. You are getting 8 better as time goes on. I timed your arrival, at least 9 when I heard about it, at 9:18 this morning. That's a new 10 world record. We have now exceeded the Olympic record and 11 now you're on the World record. 12 Also, I have a request from a juror and I 13 hesitate to say that we look so far ahead but perhaps it 14 is wise that the jury leave at 4 o'clock on Wednesday, 15 March 18th. I will excuse the jury on Wednesday, March 16 18th, at 4 o'clock. 17 You may proceed. 18 (Continued.) 1
9 20 21 22 23 24 25 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6849 Ihlenfeldt-cross/Jenks
1 R O L F I H L E N F E L D T , having been previously 2 sworn by the Clerk of the Court, was examined and 3 testified as follows: 4 CROSS-EXAMINATION. 5 BY MR. JENKS: 6 Q Mr. Ihlenfeldt, yesterday when Ms. Scott questioned 7 you on direct examination she had asked you a question 8 about your application about your current employer. Do 9 you recall that? 10 A Yes. 11 Q And you had indicated there was an optional section 12 on that application as to whether or not you would inform 13 the employer of your prior criminal history? 14 A Yes. 15 Q And you chose not to exercise that option and write 16 it down; am I correct? 17 A Correct. 18 Q Did the employer question you ab
out leaving that 19 section blank? 20 A No. 21 Q Now, you are on supervised release as of August 23, 22 1996; am I right? 23 A I'm not sure of the exact day. I think it would have 24 been August 28th. 25 Q The day you were sentenced before Judge Spatt, OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6850 Ihlenfeldt-cross/Jenks
1 correct? 2 A Oh, was I on supervised release? 3 Q Yes. Were you placed on supervised release for three 4 years before Judge Spatt? 5 A Yes. 6 Q The day is not important. 7 In August of 1996 you were placed on supervised 8 release, correct? 9 A Uhm, I don't know if that is the day. I was 10 sentenced that day. 11 Q After you completed your sentence, your term of 12 supervised release began, right? 13 A Yes. 14 Q So it actually began once you were done, finished
15 with the halfway house in June of 1997? 16 A Yes. 17 Q And your supervised release ends in the year 2000? 18 A Yes. 19 Q So we clear this up, the restitution that you were 20 ordered to pay by Judge Spatt was $10,000, correct? 21 A Yes. 22 Q And you paid that in a lump sum from your 23 father-in-law after you were released from the halfway 24 house? 25 A Yes. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6851 Ihlenfeldt-cross/Jenks
1 Q And you had no other financial obligations from the 2 Court to pay any further restitution; am I right? 3 A No. 4 Q All right. 5 Now, the supervised release you report in 6 Hempstead, you said? 7 A Yes. 8 Q That's where the supervised release probation 9 officers are located, correct? 10 A Yes. 11 Q On Clinton Street in Hempstead? 12 A Yes
. 13 Q Now, is it not a term and condition of your 14 supervised release that you notify your employer of the 15 fact that you're on supervised release? 16 A No. 17 Q Did you have to make any special arrangements with 18 your supervised release officer not to notify your 19 employer? 20 A No. 21 Q Did you read the terms and conditions of your 22 supervised release? 23 A Uhm, I believe I did. 24 Q Is there a term and condition which says that you 25 have to notify your employer of your status while on OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6852 Ihlenfeldt-cross/Jenks
1 supervised release? 2 A I don't believe so. 3 Q Okay. 4 Now, when Mr. Schoer was questioning you 5 yesterday, you said it took you approximately three weeks 6 while you were at Pacific Consultants to learn the entire 7 scam o
f Pacific Consultants. About three weeks? 8 A About three weeks to understand the business, yes. 9 Q To understand the business. 10 And while you were at Costa Consultants it said 11 it took you approximately three weeks or so that these 12 people were not going to get loans; am I right? 13 A It took about three weeks before we started getting 14 denials from the first lender and we had hoped to still 15 get loans from other lenders, but we knew at that point 16 that the first lender denied every loan application we put 17 in. 18 Q It took you about three weeks to learn that from 19 Mr. Donahue? 20 A Yes. 21 Q Did you personally ever deal with Mr. Donahue or John 22 Beatrice? 23 A I may have had conversations with him. But John 24 Beatrice actually submitted the applications and paid the 25 fee. OWEN M. WICKER, RPR OFFICIAL COURT R
EPORTER 6853 Ihlenfeldt-cross/Jenks
1 Q He was the -- Beatrice was the contact with Donahue, 2 correct? 3 A Yes. 4 Q Do you know for a fact whether or not Beatrice paid 5 money to Donahue to issue rejection letters or denial 6 letters? 7 A I would say that -- 8 Q Well, do you know for a fact, I asked you. Yes or 9 no? 10 A I can't answer that with a yes or no. 11 THE COURT: Hold it a minute, Mr. Jenks. 12 BY MR. JENKS: 13 Q Do you know for a fact whether or not Beatrice paid 14 money to Donahue to issue rejection letters? 15 A I don't know for a fact. 16 Q All right. 17 At these other places it took you like three or 18 four weeks, three weeks at Pacific Consultants to learn 19 the scam of the business and at Costa Consultants three 20 weeks to realize that a person wasn't going to get a 21 legitimate lo
an? 22 A From the first lender, yes. 23 Q From the first lender, okay. 24 But when you went to Sterling Who's Who, you were 25 there about what, a week, week and-a-half? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6854 Ihlenfeldt-cross/Jenks
1 A Yes. 2 Q How many full days did you work there? 3 A I'm not really sure. 4 Q About a week and-a-half? 5 A About a week and-a-half. 6 Q So seven or eight days, business days? 7 A Yes. 8 Q And yet in those seven or eight business days you 9 were able to determine that it was a script of lies and it 10 had no value to the customer. In seven or eight days you 11 were able to figure that out about this company? 12 A Based on my experience in the fact. 13 Q But in seven or eight dates you were able to figure 14 it out at this place. 15 You didn't develop a script at S
terling Who's 16 Who, did you? 17 A No. 18 Q You didn't develop the registry, did you? 19 A No. 20 Q You didn't develop the benefits package to the 21 members of the CD ROM? 22 A No. 23 Q You didn't develop anything at Sterling Who's Who? 24 A No. 25 Q You weren't privy to any inside information from the OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6855 Ihlenfeldt-cross/Jenks
1 front office from people like Debra Benjamin or Liz 2 Sautter, were you? 3 A No. 4 Q But yet it's your testimony it took you three weeks 5 at Pacific Consultants to figure out there was a scam 6 going on, but at Sterling Who's Who it took you just a 7 week and-a-half, correct? 8 A Based on my past experience, yes. 9 Q You also said you didn't want to sell any memberships 10 to anyone while you were at Sterling Who's Who,
correct? 11 A Right. 12 Q And was that the instruction of Inspector Biegelman 13 not to sell any memberships? 14 A I don't believe it was. 15 Q Are you saying when you went in there Biegelman said 16 if you have to sell a membership to a customer, sell a 17 membership, even though you were undercover and 18 investigating the organization? 19 A I don't recall those statements being made. 20 Q Were you prohibited by Biegelman from selling 21 memberships? 22 A I don't recall being prohibited. 23 Q Now, you said you didn't want to take peoples' credit 24 card numbers, correct? 25 A Yes. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6856 Ihlenfeldt-cross/Jenks
1 Q Although you had the opportunity to take several 2 credit card numbers, right? 3 A I believe I had the opportunity to take two. 4 Q At least two or
more? 5 A I would think two. 6 Q How many customers did you speak to then? 7 A Maybe 20 or 30. 8 Q 20 or 30 calls a day? 9 A Yes. I make that many calls. I left a lot of 10 messages, so I don't know exactly the number of people I 11 actually spoke to. 12 Q So all total maybe you spoke to 100, 150 people while 13 you were there? 14 A Yes. 15 Q And you didn't sell one membership, correct? 16 A No. 17 Q And then they fired you? 18 A Yes. 19 Q Because you weren't producing any sales? 20 A That was the reason they gave me, yes. 21 Q Were there people that were qualified that you spoke 22 to to become members of the Registry? 23 A I don't know. 24 Q Now, you didn't sell any memberships but you thought 25 it was okay to take some cards and printed materials from OWEN M. WICKER, RPR OFFICIAL COURT REPORTER
6857 Ihlenfeldt-cross/Trabulus
1 Sterling Who's Who? 2 A I can't answer that with a yes or no. 3 Q Well, those terms, those cards and those materials, 4 they didn't belong to you, did they? 5 A No. 6 Q They belonged to the corporation? 7 A Yes. 8 Q Did you tell Inspector Biegelman that you were going 9 to take those materials prior to taking them? 10 A I don't recall if I did or not. 11 Q But you did take them, correct? 12 A Yes. 13 Q All right. 14 MR. JENKS: I have nothing further, Your Honor. 15 CROSS-EXAMINATION 16 BY MR. TRABULUS: 17 Q Mr. Ihlenfeldt, Ms. Scott asked you whether or not it 18 made any difference, your criminal record, as to what was 19 on the tapes? 20 A Yes. 21 Q And I think the tapes are the tapes, whatever your 22 criminal record? 23 A Yes. 24 Q Did you have an
y discussions with Inspector Biegelman 25 as to why it was -- withdrawn. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6858 Ihlenfeldt-cross/Trabulus
1 How much time did you spend making the telephone 2 calls into Who's Who Worldwide and Sterling posing as a 3 customer? How many hours do you think that would be? 4 A Total, maybe five or six hours. Total. 5 Q Did you have any discussions with Inspector Biegelman 6 as to why he wanted you to do that as opposed to having a 7 postal inspector do it? 8 MS. SCOTT: Objection. 9 THE COURT: Overruled. 10 A No. 11 Q Did you ever ask him why he would want to have a 12 felon convicted of telemarketing fraud testifying about 13 that rather than a law enforcement official? 14 A No. 15 Q Did he ever indicate to you that he wanted to have 16 somebody up there who was guilty of telemarketi
ng fraud to 17 create an aura in this case? Did he ever say anything 18 like that to you? 19 A No. 20 Q Now, yesterday you told Ms. Scott that you agreed to 21 pay $300,000 as restitution. Do you recall saying that? 22 A Yes. 23 Q And in fact, the specific question to you was, page 24 6,800, line 16. 25 "Question: What amount did you agree to pay as OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6859 Ihlenfeldt-cross/Trabulus
1 restitution of your crimes? 2 "Answer: $300,000." 3 Now, after that, of course, you were sentenced 4 and the Judge for reasons that we didn't go into, may have 5 decided that you only, as part of your sentence, are going 6 to be required to pay $10,000 restitution; is that 7 correct? 8 A Yes. 9 Q But do you regard yourself as still having an 10 outstanding agreement to which you wer
e a party to pay the 11 remaining $290,000? 12 A No. 13 Q So you didn't agree to pay $300,000 at all, right? 14 A That's what the statement says. 15 Q Well, you say there was an agreement between you and 16 the government that you would pay 300,000 in restitution? 17 A That's what the statement says. 18 Q Didn't that just say that you might get up to 19 300,000, not that you necessarily would be obligated to 20 pay it? 21 A I don't know. 22 Q Can I have the statement you were referring to? I 23 think that is 24-B. 24 (Handing.) Is this where you agree to pay 25 restitution? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6860 Ihlenfeldt-cross/Trabulus
1 I'm showing you 3500 24-D. Do you recognize that 2 as your cooperation agreement? 3 A Yes. 4 Q And is there anything in there were it says that you
5 agree to pay 315, I'll point you to a reference where it 6 says 315,000. 7 You are not agreeing to pay that, right? 8 A I don't know. 9 Q Take a look. 10 Well, do you have any kind of written agreement 11 with the government that you will be paying the remaining 12 $290,000? 13 A No. 14 Q Has anyone from the government ever told you that you 15 are disobeying any agreement they had with you if you are 16 not paying more than the 10,000? 17 A No. 18 Q So there really was no agreement to pay 300,000, is 19 that correct, it was just a possibility to you that held 20 out to you that you might pay that, right? 21 A I'm not sure. 22 Q Now, I think you testified yesterday that your 23 company, Costa Consultants, paid Mr. Donahue a piece of 24 each of the $249 you took in, right? 25 A It wasn't my company. It was a company that I
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6861 Ihlenfeldt-cross/Trabulus
1 managed. 2 Q The company that you managed, right, the one that was 3 Beatrices' company but you managed? 4 A Yes. 5 Q I stand corrected. 6 You paid a piece of each of the $249 to 7 Mr. Donahue until he was out of the picture and someone 8 else came in? 9 A Yes. 10 Q Do you know how big that piece was? 11 A I believe it was somewhere in the range of $9 per 12 application. 13 Q $9. 14 And that was the fee -- the $9 was for him to 15 process a loan application; is that correct? 16 A Yes. 17 Q He was going to have to get a TRW report or something 18 like that? 19 A I don't know how he would process loans. 20 Q He would independently verify the information to see 21 whether or not he wanted to loan the money to these
22 persons? 23 A I don't know how he would process the loans. 24 Q This was all going to be for $9? 25 A That's what he was going to charge. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6862 Ihlenfeldt-cross/Trabulus
1 Q Was this a man who worked for minimum wage? 2 A I don't know. 3 Q Isn't it a fact, sir, you were paying him $9 so that 4 there would be a letter down the road that would say 5 "denied" as a cover? 6 A No. 7 Q Are you saying, sir, that you were the victim of 8 Mr. Donahue's fraud on you? 9 A I would think that the company was. 10 Q In fact -- I'm sorry, excuse me. 11 Not your company, the one you managed, the one 12 that you took three weeks to find out was a fraud, you 13 were saying that company, its service, was a victim of 14 this Mr. Donahue, right? 15 A Could you repeat the question?
16 Q You are saying that the company that you managed, 17 Costa Consultants was a victim of Mr. Donahue, correct? 18 A Uhm, Mr. Donahue promised to provide loans and did 19 not, so I would assume that, yes, we were taken by 20 Mr. Donahue. 21 Q As part of your cooperation you were hoping to do, 22 give the government as much substantial assistance as 23 possible because the more you gave the more it might inure 24 to your benefit? 25 A That was the verbiage in the cooperation agreement OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6863 Ihlenfeldt-cross/Trabulus
1 that I was to give substantial information. 2 Q Did you understand the more assistance that you gave, 3 the better it would be for you, right? 4 A Yes. 5 Q And did you offer to the government to provide 6 substantial assistance in a prosecution of Mr. Donahue for 7
defrauding Costa Consultants? 8 A No. 9 Q Did they suggest to you that you do so? 10 A No. 11 Q Now, let me see if I understand this correctly 12 because I'm a little confused here. 13 Is it your testimony that up until the point that 14 you learned that Costa Consultants was defrauded by 15 Mr. Donahue who took this $9 for each loan deliberation, 16 up until that point in time you really thought there was 17 absolutely nothing wrong at all with what Costa 18 Consultants was doing? 19 A Yes, I did think there was something wrong with it. 20 Q And what was that, sir? 21 A The fact that we were telling people that we were 22 going to a credit manager to approve their loan or get 23 them pre-approved and they were not. 24 Q That was the whole thing. That was the only thing 25 that was wrong, right? OWEN M. WICKER, RPR OFFICIAL COURT R
EPORTER 6864 Ihlenfeldt-cross/Trabulus
1 A Yes. 2 Q You were just putting a little window dressing what 3 otherwise was a totally legitimate business operation, 4 right, and that's what you thought was wrong? 5 A We had hoped -- 6 Q Yes, sir? 7 A I can't answer with a yes or no. 8 Q Isn't it a fact, sir, at the very most you were 9 promising people loans; is that correct? 10 A Yes. 11 Q And you were taking their money, you've conceived 12 that? 13 A Yes, the company was receiving money. 14 Q And at the very most you had a wing and a prayer that 15 they would get a loan, at the most? 16 A In hindsight, yes. 17 Q And that's what was wrong with it, right? 18 A Yes. 19 Q And you knew that and you even started Costa 20 Consultants with Mr. Beatrice, correct? 21 A No. 22 Q You didn't know that.
23 Isn't it true that you knew when you started the 24 business that it was not legitimate? 25 A No. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6865 Ihlenfeldt-cross/Trabulus
1 Q That's not true? 2 A I don't believe so. 3 Q Okay. 4 Well, do you recall being asked these questions 5 and giving these answers in front of Judge Spatt back on 6 March 11, 1994, in the testimony that you gave in the 7 hearing for this gentleman by the name of Brian Studley. 8 MR. TRABULUS: And we're beginning with page 50, 9 line 23. 10 "Question: Was John Beatrice an individual who 11 worked for Pacific Consultants? 12 "Answer: Yes. 13 "Question: And the two of you started this 14 business? 15 "Answer: Yes." 16 MS. SCOTT: What page? 17 MR. TRABULUS: 50, referring to Costa. 18 "Answer: Yes. 19 "Question: A
nd this business was, you knew when 20 you started this business that it was not legitimate; is 21 that correct? 22 "Answer: Yes." 23 Do you recall being asked those questions and 24 giving those answers, sir? 25 A I don't recall those questions. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6866 Ihlenfeldt-cross/Trabulus
1 Q But just yesterday you were put through those same 2 questions, among others. Do you recall that? 3 A I recall some questions yesterday. 4 Q Do you recall yesterday that Mr. Schoer read to you 5 the same portion of that transcript and then read a little 6 more when Mr. White asked him to do so and then you said 7 you recalled it? 8 A Yes. If you read the following question I suppose it 9 would clarify things. 10 Q Do you need to read the following question to recall 11 it? 12 A Excuse me?
13 Q Do you need to hear the following question in order 14 to recall it? 15 A I don't know what you mean. 16 Q Now, when you -- let me say this. You gave 17 Mr. Biegelman some cards; is that correct? 18 A Yes. 19 Q And did he specifically ask you to give him those 20 cards? 21 A I don't recall if he did or didn't. 22 Q Those cards, those were cards of your choosing; is 23 that correct -- I'll withdraw the question. 24 Were they just cards given to you to call? 25 A Yes. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6867 Ihlenfeldt-cross/Trabulus
1 Q Were they only NG cards, do you know? 2 A I believe so. 3 Q Now, did you believe those cards had any value to the 4 business? 5 A Uhm, I did not believe that they had any value to the 6 business. 7 Q So you understood that those cards were not being
8 used for the prospect of actually getting any money for 9 income for the business, but just for practice, is that 10 fair to say, for training purposes? 11 A I don't know. 12 Q Well, if they were going to have the potential for 13 getting new members, they would have value to the 14 business? 15 A As a salesperson I wouldn't think they do. Because 16 of NG written on it the numerous amount of times. 17 Q Fair enough. 18 Also, of course, those cards didn't come directly 19 from Sterling to the government, did they? They came 20 through you, is that fair to say? 21 A Yes. 22 Q And you had an opportunity to write whatever you 23 wanted on them, is that fair to say? 24 A Yes. 25 Q And you -- while you were at Sterling you had a body OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6868 Ihlenfeldt-cross/Trabulus
1
wire, right? 2 A Yes. 3 Q And you were recording what you were doing? 4 A Yes. 5 Q Do you know if you recorded yourself when you said 6 you left messages for this person who put in that bad 7 taste card? 8 A I don't know if I did or didn't. 9 Q Do you know whether you recorded yourself when you 10 turned down these people who were going to give you credit 11 cards? Do you know that? 12 A I don't know if I did or didn't. 13 Q Now, I think you told Ms. Scott and you confirmed to 14 Mrs. Jenks -- Mr. Jenks -- 15 MR. TRABULUS: Mr. Jenks, unusual slip. I'm sure 16 you won't be offended. 17 MR. JENKS: It's all right. No offense taken, 18 Mr. Trabulus. 19 BY MR. TRABULUS: 20 Q You told Mr. Jenks he had concluded after the week 21 and-a-half you were there there was a script of lies and 22 it had no value, is that right, at Sterli
ng? 23 A I can't answer that with a yes or no. 24 Q Well, I think you used the word, you told Ms. Scott 25 yesterday that you didn't want to sell something to people OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6869 Ihlenfeldt-cross/Trabulus
1 that had no value using a script of lies, is that a 2 summary of something that you told to Ms. Scott? 3 A Probably a summary. 4 Q Something like that. 5 And I think you mentioned, you learned, it took 6 you about a week and-a-half to figure that out or during 7 that week and-a-half you were able to figure that out, 8 right? 9 A Yes, based on my experience. 10 Q And your experience included the previous work that 11 you had had at the company you yourself managed where it 12 took you three weeks to figure that out, right? 13 A Yes. 14 Q In terms of this script of yours, one of the t
hings 15 you mentioned in the script was the CD ROM? 16 A One of the things were in the script. 17 Q One of the things you would talk to customers about? 18 A Yes. 19 Q You had never seen the CD ROM? 20 A No. 21 Q Never had tried to? 22 A No. 23 Q You had no reason to believe it didn't exist; is that 24 correct? 25 A Correct. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6870 Ihlenfeldt-cross/Trabulus
1 Q Had you ever seen the Tribute magazine? 2 A Yes, I did. 3 Q And did you have any reason to believe anything in it 4 was not true? 5 A No. 6 Q You saw various advertisements in Tribute magazine 7 for different member benefits; is that correct? 8 A I'm not that familiar with the content. 9 Q Well, I don't want to go through the whole thing 10 again because we've heard them so many times t
hat you're 11 probably sick of it. 12 There was a discount to Airborne Express? 13 A I recall that being in the script. 14 Q Do you have any reason it wasn't granted, given to 15 members? 16 A No. 17 Q Do you have any reason to believe it was of no value? 18 A No. 19 Q How about the other discounts, phone discounts, 20 automobile insurance discounts, I'll not list them all. 21 Do you have any reason to believe that any of the 22 things that were being offered were in fact provided? 23 A No. 24 Q Do you have any reason to believe that they weren't 25 of value? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6871 Ihlenfeldt-cross/Trabulus
1 A No. 2 Q You had seen the directory, right? 3 A Uhm, I think I did see a directory. 4 Q So you knew people were given a directory; is that 5 right? 6 A
No. 7 Q You didn't know that? 8 A I didn't know that. 9 Q But you have no reason to believe that they weren't 10 given a directory, did you? 11 A No. 12 Q Now, this is something that you came up on your own 13 decision that this was of no value, right? That was -- 14 Mr. Biegelman didn't tell you that, did he? 15 Yes or no, sir? Did Biegelman tell you that this 16 was of no value? 17 A I don't recall him saying that. 18 Q So as best you can recall, this was your own 19 conclusion; is that correct? 20 A I can't answer that with a yes or no. 21 Q And you made a decision, you were telling people 22 about benefits and so forth and these were things that as 23 far as you knew you had no reason to believe weren't being 24 given or weren't of value and you took it upon yourself to 25 make a decision that they shouldn't get them; is that
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6872 Ihlenfeldt-cross/Trabulus
1 correct? 2 A I can't answer that with a yes or no. 3 Q Now, when you first went to work at Sterling in an 4 undercover capacity, did you discuss with Mr. Biegelman 5 how long you would be working there? 6 A No. 7 Q And did he tell you that he only wanted you to work 8 there a week or a week and-a-half? 9 A No. 10 Q To the contrary he wanted you to work there as long 11 as possible and get as much as possible; is that fair to 12 say? 13 A I don't recall those conversations taking place. 14 Q Did he tell you he wanted you in there, in and out of 15 there quickly? 16 A I don't recall that being in the conversation we have 17 had. 18 Q Now, you knew when you were there, based on your 19 experience, I assume, if you didn't make sales you weren
't 20 going to last; is that fair to say? 21 A Yes. 22 Q And you, of course, when you were working there, you 23 had to work full-time there, right? 24 A Yes. 25 Q And that wasn't like when you were making the phone OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6873 Ihlenfeldt-cross/Trabulus
1 calls later on which you could do from the place you had 2 employment; is that correct? 3 A Yes. 4 Q When you were making the phone calls you were at the 5 same time pulling in a salary, right? 6 A Yes. 7 Q And the fact that you were making the phone calls 8 didn't take away from your salary, right? 9 A Yes. 10 Q When you went to Sterling, sir, every day you spent 11 there was a day you weren't earning any money, right? 12 A Yes. 13 Q You needed money, right? 14 A Yes. 15 Q Isn't it a fact, sir, th
at Inspector Biegelman told 16 you that basically what you were to do was to follow the 17 script that was being given to you, follow the 18 instructions of your supervisors and if a customer wanted 19 a purchase, make the purchase. Let them purchase it. 20 Isn't that true, sir? 21 A I don't recall that being the conditions of my 22 cooperation. 23 Q Now, you say, you took $249 repeatedly from people 24 giving them absolutely nothing, right? This was when you 25 were working at Pacific and Costa. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6874 Ihlenfeldt-cross/Trabulus
1 A Yes, the company did. 2 Q Well, you knew about it and you were managing one of 3 the companies, right? 4 A Yes. 5 Q In fact, you said yesterday, I think, that at Pacific 6 you were hoping to work there for years, right? 7 You wanted to make a career o
ut of doing that, 8 right? 9 A No. 10 Q Well, didn't you testify in response to one of the 11 cross-examination questions of one of the lawyers here 12 while you were at Pacific, I think it was Mr. Geduldig, he 13 asked you if he thought you would be expecting to stay 14 there long, and you said, no, I was hoping to be there for 15 years. 16 A With regards to setting up the business. 17 Q This was at Pacific, you wanted a career out of it? 18 A No. 19 Q You wanted a career out of the other one; is that 20 your testimony? 21 A In regards to setting up the business, it was set up 22 not necessarily with a short term projection in mind. 23 Q Anyway, when you were at Pacific, whether you wanted 24 to make a career out of it or not, you didn't have any 25 hesitation in taking $290 when you were going to get $40 OWEN M. WICKER, RPR OFFIC
IAL COURT REPORTER 6875 Ihlenfeldt-cross/Trabulus
1 out of it from people who were in desperate financial 2 condition; is that correct? 3 A No. 4 Q It's not correct. When you were -- 5 A I had hesitancy. 6 Q But you did it for the $40 a pop? 7 A Yes. 8 Q Those were the people who were probably the most 9 vulnerable set of people you could take $249 from, people 10 in desperate condition? 11 A Desperate need of money I would think. 12 Q When you were working at Sterling, sir, you had a 13 pang of consciousness? 14 A I can't answer that yes or no. 15 Q Now that you weren't getting any money out of doing 16 it, sir -- by the way, the people who you spoke to who 17 were prospective members of Sterling, they weren't in 18 desperate financial condition, were they? 19 A I wouldn't know. 20 Q Isn't it fair to say on the
whole they tended to be 21 people who had pretty -- at least middle or upper level 22 management positions? Owners of businesses and so forth? 23 A I would say on the whole, yes. 24 Q And none of them on the phone, I mean, certainly if 25 anyone on the phone said, hey, I'm having financial OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6876 Ihlenfeldt-cross/Trabulus
1 difficulties, they would hang up. So the people who were 2 talking to you apparently had money? 3 A Apparently. 4 Q Certainly the people who wanted to pay, they had 5 money. They had money because they had money to spend on 6 this, right? 7 A Apparently. 8 Q This wasn't a necessity. I mean, this wasn't like 9 food or clothing, right? 10 A Right. 11 Q But you had a pang of conscience when you weren't 12 getting any money out of it and you decided you weren't
13 going to give them what they wanted even though you had 14 absolutely no basis of any of the things they earned. 15 You had a pang of conscience, sir, right? You 16 had a pang of conscience, sir, when you weren't going to 17 get any money out of it? 18 A I can't answer that with a yes or no. 19 Q And you decided that those people weren't going to 20 get what they were asking for, right? 21 A I can't answer that with a yes or no. 22 Q And, sir, you didn't want to continue working there 23 because you wanted to be out of there so that you could be 24 working a job, right? You didn't want to be kept on at 25 Sterling? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6877 Ihlenfeldt-cross/Trabulus
1 A I can't answer that with a yes or no. 2 Q You purposely screwed up that portion of your 3 cooperation so you could get out of there and ge
t work and 4 earn some money, right? 5 A No. 6 Q You purposely didn't make sales so you could be 7 fired? 8 A No. 9 THE COURT: You are getting very rapid again, 10 Mr. Trabulus. I'm having trouble following you and the 11 jury may have the same trouble and I know the reporter is 12 having trouble. So slow down, please. 13 BY MR. TRABULUS: 14 Q You were perfectly happy to continue cooperating, 15 sir, when you were making phone calls and it didn't cost 16 you a dime, right? 17 A I was not happy. 18 MR. TRABULUS: I have no further questions. 19 THE COURT: Anything else? 20 MR. GEDULDIG: May I have just like one question, 21 please? 22 THE COURT: Yes. 23 (Continued.) 24 25 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6878 Ihlenfeldt-cross/Geduldig
1 CROSS-EXAMINATION
2 BY MR. GEDULDIG: 3 Q Mr. Ihlenfeldt, yesterday I had asked you some 4 questions regarding the mail lists. Do you recall that? 5 A Vaguely, sir. 6 Q And there was a series of questions regarding the 7 training you received while you were at Sterling? 8 A Yes. 9 Q And I asked you if you were told specifically by the 10 people that were training you that mailing lists were not 11 used at Sterling. Do you recall that? 12 A Yes, I recall. 13 Q And yesterday I think you responded by nodding your 14 head and as a result it doesn't show up in the transcript 15 of yesterday's testimony. But am I correct in saying that 16 you were told specifically while you were training at 17 Sterling that mailing lists were not used? 18 A Yes. 19 MR. GEDULDIG: That's it, Judge. 20 THE COURT: Anything else? 21 MR. NEVILLE: Yes, Your Honor. 22 (Contin
ued.) 23 24 25 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6879 Ihlenfeldt-cross/Neville
1 CROSS-EXAMINATION 2 BY MR. NEVILLE: 3 Q Good morning, Mr. Ihlenfeldt. My name is Jim 4 Neville. I represent Scott Michaelson. 5 You said you worked at Sterling for six or seven, 6 eight working days, something like that? 7 A Yes. 8 Q And the supervisors that worked with you were Tom 9 Randall, Robert Lamb and Michael Powers? 10 A Yes. 11 Q Did you hear that tape the other day where somebody 12 said to you that you're a nice guy but you think too 13 much? We don't care. 14 A Yes. 15 Q Whose voice was that? 16 A Tom Randall. 17 Q Was he the one that interviewed you for the job there 18 at Sterling? 19 A No. 20 Q He's the one that trained you? 21 A Yes. 22 Q And d
o you remember what he looks like? 23 A Yes. 24 Q Is he here in this courtroom? 25 A I don't see him. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6880 Ihlenfeldt-cross/Neville
1 Q Robert Lamb. Do you remember what he looks like? 2 A Yes. 3 Q Is he in this courtroom? 4 A I don't see him here. 5 Q Michael Powers. Do you remember what he looks like? 6 A Yes. 7 Q And do you see him here in this courtroom? 8 A No. 9 Q Tom Randall was the one that said to you, you think 10 too much, these American Mastercards, ha, ha, ha. He's 11 the one that said that, wasn't he? 12 A Yes. 13 Q The only personal physical contact you would have 14 with Who's Who Worldwide's offices was when you went in 15 for an interview with Tara Green, Tara Garboski, right? 16 A Yes. 17 Q And in that interview was where Tara Garbo
ski was 18 telling you about telling the truth and following the 19 pitch, right? 20 A I can't answer that with a yes or no. 21 Q Do you remember the taped transcript? Do you 22 remember the taped transcript that Mr. Schoer went over 23 with you? 24 A I remember it vaguely. I don't remember the part. I 25 remember the part sticking to the script. I don't OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6881 Ihlenfeldt-cross/Neville
1 remember the part where it was her saying that you had to 2 tell the truth. 3 Q I misspoke. I apologize. 4 She didn't tell you to tell the truth. What she 5 said was "it's more cost effective but by following the 6 script, first of all, you won't confuse them. You will 7 not lie to them. You will not stretch the truth, and 8 you'll close because it's all mapped out for you." 9 (Indicating) Is she
, Tara Garboski, who is 10 sitting in this courtroom -- that's not Tom Randall that 11 said that to you? Do you remember that? 12 A I don't recall the conversation exactly, but if it's 13 on the tape, then it's on the tape. 14 Q And you're the same guy who knew after a few days at 15 Who's Who Worldwide or at Sterling, wherever you worked, 16 that you knew that the pitch was a bunch of lies and 17 that's why you didn't want to take credit card numbers, 18 right? 19 A Based on my experience, portions of the scripts I 20 knew weren't true or I assumed weren't true. 21 Q Based on what Marty Biegelman said to you, that's 22 what it was, right? 23 A I can't answer that with a yes or no. 24 Q You said that you took out of Sterling about 30 25 cards? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6882 Ihlenfeldt-cross/Neville
1 A
I believe that's the amount. 2 Q Do you know that each one of those cards costs about 3 $30? Do you know that? 4 A No. 5 Q Do you have any idea that those cards represented a 6 big investment? 7 A No. 8 Q Do you realize that what you did when you walked out 9 of that office in Manhattan, not the little boiler room 10 basement operation that you were doing, but that 11 impressive office in Manhattan, that you stole about $900 12 worth of property of that company? Do you realize that? 13 MS. SCOTT: Objection. 14 THE COURT: Sustained. 15 BY MR. NEVILLE: 16 Q Do you know that those cards were worth about $900 17 bucks? 18 A No. 19 Q That's like seeing a pile of nine $100 bills and 20 putting them in your pocket and walking out. That's no 21 different. 22 A Is that a question? 23 Q Right. 24 A No. 25 Q
It's not the same. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6883 Ihlenfeldt-cross/Neville
1 A No, it's not the same. 2 Q So if you steal my car as opposed to stealing money 3 out of my bank account, you are not stealing? 4 MS. SCOTT: Objection. 5 THE COURT: You have to be quick. 6 MS. SCOTT: Objection. 7 THE COURT: Sustained. 8 See, if you stand up while the questioner -- it 9 will not distract him because he can't see you, so if you 10 stand up before the question, this is a technique I 11 learned a long time ago, get ready. You see as soon as 12 the question ends, you're in there. 13 BY MR. NEVILLE: 14 Q All I know, it's not a crime when you stole those 15 cards because you did it at the behest of the United 16 States Government, right? 17 MS. SCOTT: Objection. 18 THE COURT: Sustained. 19 Well, I
advised Ms. Scott what to do but she 20 didn't take my advise. It's okay, she has a right not 21 to. 22 BY MR. NEVILLE: 23 Q You say you walked out with one of the pitch sheets 24 too, right? 25 A I believe I did. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6884 Ihlenfeldt-cross/Neville
1 Q Do you have that with you? 2 A No. 3 Q Do you know where that is? 4 A No. 5 Q Do you have any idea what was on that? 6 A I'm familiar with the script for the associate 7 membership. 8 Q Do you have any idea that those pitches changed 9 sometimes from day-to-day or hour-to-hour? Do you have 10 any idea? 11 A I wouldn't know but it wouldn't surprise me at all. 12 Q Is there something wrong with that? 13 A I don't understand your question. 14 Q You're trying to leave this jury with the impression 15 ch
anging a pitch in a company that is selling over the 16 telephone somehow is a crime? 17 MS. SCOTT: Objection. 18 THE COURT: Sustained. 19 BY MR. NEVILLE: 20 Q Sir, do you remember if Marty Biegelman is the one 21 that told you to take those cards and that pitch sheet? 22 A I don't recall if he did or didn't. 23 Q You didn't even listen to any of these tapes until 24 just around when this trial started, right, where you're 25 talking on them? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6885 Ihlenfeldt-cross/Neville
1 A I believe I listened to the tapes, the body wire 2 tapes, not long after I made them. 3 Q How about the tapes where you called in as a 4 prospective customer of Who's Who Worldwide? 5 A I might have listened to them until about two months 6 ago or a little bit less than that. 7 Q You said that Marty Biegel
man did tell you what to 8 ask in those conversations, right, when you called in? 9 A He gave me some questions he wanted me to ask. 10 Q About nominations? 11 A Yes. 12 Q Mailing lists? 13 A Yes. 14 Q How long you've been in business? 15 A Yes. 16 Q Do you know that there was a man here that testified 17 that was doing the same thing for Marty Biegelman who said 18 Marty Biegelman said not to ask him any particular 19 questions? Do you know that? 20 MS. SCOTT: Objection. 21 THE COURT: Sustained. 22 BY MR. NEVILLE: 23 Q Steve Watstein, do you know him? 24 A No. 25 Q Do you remember the conversation with Scott OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6886 Ihlenfeldt-cross/Neville
1 Michaelson where you asked him about one of those 2 membership seminars and he told you there had been one
3 planned at Hilton Head but it never went off? Do you 4 remember that? 5 A I remember a conversation about that. 6 Q You just remember a conversation, but whether or not 7 Scott said that Hilton Head went off doesn't matter, does 8 it? 9 MS. SCOTT: Objection. 10 THE COURT: Sustained. 11 BY MR. NEVILLE: 12 Q The only experience you had was at Sterling, right, 13 working? 14 A No. 15 Q Did you ever work at Who's Who Worldwide as a 16 salesperson? 17 A The only -- you asked me if I had any experience 18 working. 19 Q Yes or no? 20 A I have plenty of experience working. 21 Q In the contention of this case as compared to 22 Sterling Who's Who and Who's Who Worldwide, which place 23 did you work in? 24 A Sterling Who's Who. 25 Q Sterling and Who's Who? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER
6887 Ihlenfeldt-cross/Neville
1 A Sterling Who's Who. 2 Q So you didn't work at Who's Who Worldwide? 3 A No. 4 Q You didn't work at Marcus Avenue in Lake Success, New 5 York? 6 A No. 7 Q And the only time you went out there was when you had 8 an interview with Tara Garboski who told you that you 9 shouldn't lie, right? 10 A Yes. 11 Q And the work you did at Sterling and at this Sterling 12 place with Tom Randall was a place where he laughed about 13 the credit card. And he isn't in this courtroom, is he? 14 THE COURT: Sustained. We've had that several 15 times. 16 MR. NEVILLE: Well, I think it is important, Your 17 Honor. 18 THE COURT: Yes, well, you've had it already and 19 within the last 15 minutes, I might add. 20 MR. NEVILLE: I'll finish up. This will be the 21 end, Your Honor. 22 THE COURT:
I'm not precluding you. I just don't 23 want you to be repetitious. 24 MR. NEVILLE: I understand, Your Honor. Thank 25 you. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6888 Ihlenfeldt-cross/Neville
1 BY MR. NEVILLE: 2 Q You said within just a few days of working at 3 Sterling, that you didn't want to make those sales on the 4 phone because based on your experience you didn't want to 5 trick those people, right? 6 A I don't believe I mentioned tricking people. 7 Q Have you ever heard of a man named Mr. Saffer? 8 A Yes. 9 Q Do you know he testified at this trial? 10 A Yes. 11 Q Do you know that he was a salesperson at Who's Who 12 Worldwide for years and years? 13 A I didn't know that. 14 Q Did you know that he worked at Who's Who Worldwide 15 almost from its very inception back in the late '80s or 16 ea
rly '90s at Port Washington? 17 A No. 18 Q Do you know that he probably made many scores of 19 thousands of more telephone calls than you ever did at 20 Sterling? 21 A No. 22 Q Do you know that Mr. Saffer who came in here and 23 testified that said for years and years as he was 24 following that script, he didn't think he was doing 25 anything wrong, and you figured this out in a couple OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6889 Ihlenfeldt-redirect/Scott
1 days? 2 MS. SCOTT: Objection. 3 THE COURT: Sustained. 4 MR. NEVILLE: Thank you. I have no further 5 questions. 6 THE COURT: Anything else? 7 MS. SCOTT: Yes, Your Honor. May I have a 8 moment? 9 THE COURT: Surely. 10 (Counsel confer.) 11 MS. SCOTT: Thank you, Your Honor. 12 REDIRECT EXAMINATION 13 BY MS. SCOTT:
14 Q You were just asked about Alan Saffer. 15 A Yes. 16 Q And whether you knew anything about him. 17 A Yes. 18 Q Before you came to court here -- withdrawn. 19 Did you meet Alan Saffer back in the witness room 20 when you came to court here? 21 A Yes. 22 Q Before that time had you ever met him before? 23 A No. 24 Q Had you ever seen him before? 25 A No. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6890 Ihlenfeldt-redirect/Scott
1 Q Had you ever heard anything about him before that 2 time? 3 A He was one of the names that Marty Biegelman gave me 4 to ask for on the phone. 5 Q And beyond that and beyond the conversation that you 6 had with him over the phone, did you ever have any other 7 knowledge about Mr. Saffer? 8 A No. 9 Q Now, you've been asked a lot of questions about how 10 lon
g it took you to figure out that there was a scam going 11 on at Sterling Who's Who. Do you remember those 12 questions? 13 A Yes. 14 Q And you answered today that based on your experience 15 you were able to figure out within about a week to a 16 little bit more that there was a scam going on there, 17 correct? 18 A Yes. 19 Q And can you tell us what you meant by that? 20 A Well, at that point not only was I involved in three 21 scams but I had worked as an informant on two other ones 22 and some of the statements in the script were inconsistent 23 with what I assumed was the nature of the sales process 24 and that was that people were denying -- 25 MR. GEDULDIG: Judge, I object to what he OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6891 Ihlenfeldt-redirect/Scott
1 assumed. It's just speculation on his part. 2 THE COURT
: Well, it's true that this was brought 3 out on cross-examination and you would normally have a 4 right to go into it, but in the exercise of my discretion 5 I'll sustain the objection. 6 BY MS. SCOTT: 7 Q Now, you've been asked a lot of questions about when 8 it was that you figured out that Costa Consultants, the 9 company you started with John Beatrice, was actually a 10 scam. Do you remember all of those questions on 11 cross-examination? 12 A Yes. 13 Q Do you remember that you testified that it took you 14 approximately three weeks to determine that there really 15 were not going to be any loans provided to people who 16 applied to Costa Consultants? 17 A Yes. 18 Q Now, by the way, you've never disputed that you did 19 eventually learn that no loans were going to be provided, 20 correct? 21 A Right. 22 Q And you've never dispu
ted that, you continued to tell 23 people loans would be available, even though you knew they 24 weren't? 25 A Yes, we did. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6892 Ihlenfeldt-redirect/Scott
1 Q And that's why you pled guilty; isn't that right? 2 A Correct. 3 Q But what the defense has been focusing on was these 4 first two weeks when you were working at Costa 5 Consultants, correct? 6 A Yes. 7 Q Do you remember that the defense has read to you some 8 of your testimony from a prior hearing in the past couple 9 days? 10 A Yes. 11 Q And do you remember that they read you that testimony 12 twice? 13 A Yes. 14 Q And do you remember that on both occasions they 15 stopped just short of reading to you the part where you've 16 testified consistently with what you've been testifying to 17 here t
oday? 18 MR. TRABULUS: Objection, Your Honor. 19 THE COURT: Sustained. 20 If you think that the testimony, the portion of 21 the testimony of the witness was not complete, you can 22 read any other portion you want to read. 23 MS. SCOTT: Yes. I would like to do that, Your 24 Honor. 25 THE COURT: Go ahead. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6893 Ihlenfeldt-redirect/Scott
1 BY MS. SCOTT: 2 Q The part that has not been read to you today is this 3 part. Page 51 of Government's Exhibit 3500-24-W. 4 "Question: And you knew that people were not 5 going to get loans, correct? 6 "Answer: Well, we hoped, we hoped that we can 7 run the business in a sense different than Howard had run 8 it to where we could find legitimate lenders and have some 9 longevity to this business rather than to run it for a 10 couple mon
ths and close it down." 11 Do you remember giving that question in response 12 to that -- I'm sorry, do you remember giving that answer 13 in response to that question? 14 A Yes. 15 Q Now, you've been asked a lot of questions about the 16 lead cards that you took out of Sterling Who's Who, 17 correct? 18 A Yes. 19 Q And you've been asked in particular about that card, 20 the pope card. Do you remember that? 21 A Yes. 22 Q Mr. Neville said when he was cross-examining you a 23 moment ago, that these cards were worth approximately 24 $900. Do you remember him saying that? 25 A Yes. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6894 Ihlenfeldt-recross/Geduldig
1 Q Do you remember when Mr. Trabulus, when he 2 cross-examined you before, said that these cards were just 3 about worthless? Do you remember him saying that?
4 MR. TRABULUS: Objection, Your Honor. 5 THE COURT: Sustained. 6 MS. SCOTT: Thank you, Mr. Ihlenfeldt. I have no 7 further questions. 8 THE COURT: Anything else? 9 MR. GEDULDIG: I have a couple. 10 RECROSS EXAMINATION 11 BY MR. GEDULDIG: 12 Q Mr. Ihlenfeldt, Ms. Scott just asked you if Alan 13 Saffer was one of the names that you had gotten from 14 Mr. Biegelman. Do you remember that? 15 A Yes. 16 Q And did you get any of these names from Mr. Biegelman 17 as well? Did you get the name Michael Maxes as an 18 individual that you should try to call at Who's Who 19 Worldwide? 20 A Yes. 21 Q Did you get the name of Marty Gross or Marty Graham 22 to call as an individual at Who's Who Worldwide? 23 A I don't recall. 24 Q Did you get the name Sue Mantell as an individual for 25 you to call at Who's Who Worldwide?
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6895 Ihlenfeldt-recross/Geduldig
1 A I believe so, but I don't recall. 2 Q Did you get the name Angela Palmer as an individual 3 to call at Who's Who Worldwide? 4 A I don't recall. 5 Q Did you get the name Carl Roper as an individual to 6 call at Who's Who Worldwide? 7 A I don't recall. 8 Q Did you get the name Marilyn Pierce as an individual 9 to call at Who's Who Worldwide? 10 A I believe so, but I can't be sure. 11 Q Did you get the name Todd -- I'm sorry, Madeline 12 Bailey as an individual to call at Who's Who Worldwide? 13 A I believe so, but I don't recall. 14 Q Did you get the name Michele Kelly as an individual 15 to call at Who's Who Worldwide? 16 A I believe so, but I don't recall. 17 Q Did you get the name Joe Parks as an individual to 18 call at Who's Who Worldwide
? 19 A I don't recall. 20 Q Did you get the name Roseanne Munch or Roseanne 21 Patton as an individual to call at Who's Who Worldwide? 22 A I believe so, but I don't recall as a fact. 23 Q Did you get the name Tina Walsh as an individual to 24 call at Who's Who Worldwide? 25 A I believe so. I don't recall as a fact. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6896 Ihlenfeldt-recross/Geduldig
1 Q Did you get the name Kenneth McCarthy as an 2 individual to call at Who's Who Worldwide? 3 A I believe so, but I don't recall as a fact. 4 Q Did you get the name Al Jenson as an individual to 5 call at Who's Who Worldwide? 6 A I don't recall. 7 Q Did you ever have a written list of the people from 8 Mr. Biegelman of the individuals you should try to call at 9 Who's Who Worldwide? 10 A I wrote the lists myself. He provided me name
s and I 11 wrote the list myself, so he didn't provide the list. 12 Q But he gave you these names? 13 A Yes. 14 Q Did he give them to you right off the top of his head 15 or was he reading them as well? 16 A I don't know. 17 Q Do you know if you were able to contact all of the 18 people that were on that list? 19 A I don't believe so, but I can't recall for a fact if 20 I did or didn't. 21 Q You certainly called more than four salespeople; 22 isn't that fair to say? 23 A Yes. 24 Q And you spoke to more than four salespeople? 25 A Yes. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6897 Ihlenfeldt-recross/Geduldig
1 Q And you recorded conversations with more than four 2 salespeople? 3 A Yes. 4 MR. GEDULDIG: I have no further questions. 5 THE COURT: Anything else? 6 MS. SCOTT: Nothing furth
er. 7 THE COURT: You may step down. 8 Please call your next witness. 9 MR. WHITE: Your Honor, we have a series of tapes 10 that we'll play now. 11 Your Honor, the first one is Exhibit 13-01. The 12 transcript is 13-01-B, for Baker. The date is August 15, 13 1994. 14 It's a call to Who's Who Worldwide, and the 15 salesperson is Madeline Bailey. 16 (Audiotape played.) 17 (Start and stop.) 18 MR. WHITE: The next one is 13-02. The 19 transcript is 13-02-A, for Able. The date is August 22, 20 1994. 21 The call is to Who's Who Worldwide, and the 22 salesperson is Jill Barnes. 23 (Audiotape played.) 24 (Start and stop.) 25 MR. WHITE: The next one is 13-03. The date is OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6898 1 August 24, 1994. 2 The call is to Who's Who Worldwide, and the 3
salesperson is Alan Davidson. 4 MR. TRABULUS: 13-03-A or B? 5 MR. WHITE: I'm sorry, 13-03-B, for Baker. 6 (Audiotape played.) 7 (Start and stop.) 8 MR. WHITE: The next one is 13-04. The 9 transcript is 13-04-B, for Baker. The date is August 29, 10 1994. 11 The call is to Who's Who Worldwide, and the 12 salesperson is Ed Schaeffer. 13 (Audiotape played.) 14 (Start and stop). 15 MR. WHITE: The next one is 13-05. The 16 transcript is 13-05-C, for Charlie. The date is September 17 6, 1994. 18 The call is to Who's Who Worldwide and Roseanne 19 Patton. 20 (Audiotape played.) 21 (Start and stop.) 22 MR. WHITE: The next one is 13-07. The 23 transcript is 13-07-C, for Charlie. The date is August -- 24 I'm sorry, October 24, 1994. 25 It's a call to Sterling Who's Who and Scott OWEN M. WICKER, RPR OFFICIAL
COURT REPORTER 6899 1 Matthews. 2 (Audiotape played.) 3 (Start and stop.) 4 MR. WHITE: The next one is 13-09. The 5 transcript is 13-09-B, for Baker. The date is October 27, 6 1994. 7 The call is to Sterling Who's Who and Andrea 8 Franklin. 9 (Audiotape played.) 10 (Start and stop.) 11 MR. WHITE: The next one is 13-10. The 12 transcript is 13-10-A, for Able. The date is October 28, 13 1994. 14 The call is to Who's Who Worldwide and Linda May, 15 M-A-Y. 16 (Audiotape played.) 17 (Start and stop.) 18 MR. WHITE: The next is Exhibit 13-11. The 19 transcript is 13-11-A, for Able. The date is October 28, 20 1994. 21 It's a call to Sterling Who's Who and Anthony 22 Myers, M-Y-E-R-S. 23 (Audiotape played.) 24 (Start and stop.) 25 MR. WHITE: They next one is 13-12. The
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6900 1 transcript is 13-12-C, for Charlie. The date is October 2 28, 1994. 3 It's a call to Sterling Who's Who and Robert 4 Stanley. 5 (Audiotape played.) 6 (Start and stop.) 7 MR. WHITE: Next, this is Exhibit 13-16. The 8 transcript is 13-16-B, for Baker. The date is November 2, 9 1994. 10 The call is from Sterling Who's Who and Anthony 11 Myer. 12 (Audiotape played.) 13 (Start and stop.) 14 MR. WHITE: The next is Exhibit 13-17. The 15 transcript is 13-17-B, for Baker. The date is November 3, 16 1994. 17 The call is to Who's Who Worldwide and Roseann 18 Patton. 19 (Audiotape played.) 20 (Start and stop.) 21 MR. WHITE: The next one is 13-19. The 22 transcript is 13-19-A, for Able. The date is November 4, 23 1994. 24 The c
all is to Who's Who Worldwide and Brian 25 Sherman. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6901 1 (Audiotape played.) 2 (Start and stop.) 3 MR. WHITE: Next is 13-21. The transcript is 4 13-21-B, for Baker. The date is November 7, 1994. 5 The call is to Sterling Who's Who and Sam 6 Christopher. 7 (Audiotape played.) 8 (Start and stop.) 9 MR. WHITE: Next is Exhibit 13-29. The 10 transcript is 13-29-A, for Able. The date is December 12, 11 1994. 12 The call is to Sterling Who's Who and Mark 13 Johnson. 14 (Audiotape played.) 15 (Start sand stop.) 16 MR. WHITE: Next is 13-31. The transcript is 17 13-31-C, for Charlie. The date is December 14, 1994. 18 The call is to Sterling Who's Who and to Scott 19 Matthews. 20 (Audiotape played.) 21 (Start and stop.) 22 MR. WHITE
: Next is 13-34. The transcript is 23 13-34-A, for Able. The date is December 19, 1994. 24 The call is to Who's Who Worldwide and Jill 25 Barnes. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6902 1 (Audiotape played.) 2 (Start and stop.) 3 MR. WHITE: The next one is 13-36. 13-36-A, for 4 Able, is the transcript. December 30, 1994. 5 The call is to Who's Who Worldwide and John 6 Stevens, S-T-E-V-E-N-S. 7 (Audiotape played.) 8 (Start and stop.) 9 MR. WHITE: The next is 13-37. The transcript is 10 13-37-A, for Able. The date is December 21, 1994. 11 The call is to Who's Who Worldwide and Alan 12 Saffer. 13 (Audiotape played.) 14 (Start and stop.) 15 MR. WHITE: The next is 13-40. The transcript is 16 13-40-C, for Charlie. The date is December 28, 1994. The 17 call is to Who's Who Worldwide and Mari
lyn Pierce. 18 (Audiotape played.) 19 (Start and stop.) 20 MR. WHITE: The next is 13-42. The transcript is 21 13-42-B, for baker. The date is January 3, 1995. 22 This is a call to Sterling Who's Who and Barbara 23 McCabe, M-C-C-A-B-E. 24 (Audiotape played.) 25 (Start and stop.) OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6903 1 MR. WHITE: Next is 13-44. The transcript is 2 13-44-A, for Able. The date is January 23, 1995. 3 The call is to Sterling and to Mark Johnson. 4 (Audiotape played.) 5 (Start and stop.) 6 MR. WHITE: And next is 13-63. The transcript is 7 13-63-C, for Charlie. The date is December 22, 1994. 8 It's a call to Sterling Who's Who and to Kathy 9 Brady, B-R-A-D-Y. 10 (Audiotape played.) 11 (Start and stop.) 12 MR. WHITE: Your Honor, that's it for the tapes 13 right now.
14 THE COURT: All right. We'll take a ten-minute 15 recess. 16 Please don't discuss the case. Keep an open 17 mind. 18 Please recess yourselves. 19 (Jury exits.) 20 (Recess taken.) 21 THE COURT: I want to advise counsel that I have 22 an Order to Show Cause that I had made returnable at 23 5 o'clock this afternoon, because it is a reasonable hour 24 to make that. Wouldn't you say that, Mr. Neville? 25 MR. NEVILLE: Absolutely. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6904 1 THE COURT: And this is to quash a subpoena in 2 this case. The person who is subpoenaed, according to the 3 information I have, and I haven't got the papers, is 4 Sandra Barnes of Marquis Who's Who who lives in Arizona 5 and who was subpoenaed by the defendant Gordon. 6 I signed the subpoena according to this report to 7 appear o
n March 9th. Her attorney, Robert Restrum, 8 R-E-S-T-R-U-M, will be here at 5 o'clock today. So I 9 suggest you stay and wait for Mr. Restrum. 10 Okay. 11 Is that all right with you, Mr. Neville? 12 MR. NEVILLE: That's perfectly fine with me. 13 MR. WHITE: We'll not have to wear bunny suits. 14 MR. JENKS: I'm willing to start at 6 o'clock, if 15 you are, Judge. 16 THE COURT: I'm glad to hear that, Mr. Jenks. 17 MR. NEVILLE: Before the break when Mr. White 18 played that series of segments of tapes, it was brought to 19 my attention and I think it is an important point. First 20 of all, none of the people that were speaking to 21 Mr. Watstein are in this room. But there is, there are 22 two if not three conversations with somebody by the name 23 of Scott Matthews. 24 THE COURT: It's not your client. 25 MR. NEVILLE: I know, but -- OW
EN M. WICKER, RPR OFFICIAL COURT REPORTER 6905 1 THE COURT: You want me -- 2 MR. NEVILLE: But on the transcripts it just says 3 Scott and I think that is confusing. 4 THE COURT: I'll tell them. All right. 5 (Jury enters.) 6 THE COURT: Members of the jury, there is a 7 tape-recording played involving a Sterling Who's Who 8 conversation with a Scott Matthews. That is not the Scott 9 Michaelson that is a defendant in this case. I assume you 10 know that but I'm telling that to you anyway. 11 All right. You may proceed. 12 MR. WHITE: Your Honor, the government calls 13 Elliot Zerring. 14 (Continued.) 15 16 17 18 19 20 21 22 23 24 25 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6906 Zerring-direct/White
1 E L L I O T Z E R R I
N G , having been first duly 2 sworn by the Clerk of the Court, was examined and 3 testified as follows: 4 THE WITNESS: Elliot Zerring, Z-E-R-R-I-N-G. 5 DIRECT EXAMINATION 6 BY MR. WHITE: /(. 7 Q Mr. Zerring, can you tell us how old you are? 8 A 50 years old. 9 Q Where do you live? 10 A Florida. 11 Q Are you married? 12 A Yes, I am. 13 Q Do you have any children? 14 A Yes, I do. 15 Q How many? 16 A Two. 17 Q Can you tell us how far you went in school? 18 A Graduated high school. 19 Q Now, are you currently employed? 20 A No, I'm not. 21 Q Now, can you tell us for most of your adult life, 22 what kind of work did you do? 23 A I was a public insurance adjuster. 24 Q And can you describe what a public insurance adjuster 25 does? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER
6907 Zerring-direct/White
1 A Yes. A public insurance adjuster is one who 2 presents, prepares and adjusts insurance claims on behalf 3 of a policyholder. 4 Q When you say he prepares, presents and adjusts a 5 claim, tell us specifically what he does? 6 A Well, as an example, if we were representing a 7 homeowner, someone who sustained a water damage or a fire 8 loss to their home, we would be called in to represent the 9 policyholder's interest. At that time we would go through 10 the process of preparing that claim with the policyholder 11 and present it ultimately to the insurance adjusters or 12 the insurance company's representatives in its entirety. 13 THE COURT: So in other words, you didn't work 14 for the insurance company. You worked for the person 15 making the claim? 16 THE WITNESS: That's correct, Your Honor. 17 THE COURT: All right.
18 BY MR. WHITE: 19 Q You represent the interests of the policyholder 20 against his insurance company? 21 A That's correct. 22 Q Now, can you describe for us how it is that a public 23 adjuster gets paid? 24 A Well, we receive at the outset, we are retained by a 25 contractual agreement for a fee of approximately 10 to 12 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6908 Zerring-direct/White
1 percent normally and at the end of that claim, when that 2 claim is adjusted, we at that point would receive our fee. 3 Q And it's 10 to 12 percent of what? 4 A 10 to 12 percent of the amount collected for the 5 policyholder. 6 THE COURT: Is that what is called a contingent 7 fee? 8 THE WITNESS: Yes, Your Honor. 9 THE COURT: Suppose there is nothing collected. 10 What happens? 11 THE WITNESS: We get zero.
12 BY MR. WHITE: 13 Q Now, are public insurance adjusters licensed by 14 anyone? 15 A Yes, they are. 16 Q By whom? 17 A We are licensed by the State of New York. 18 Q Can you tell us how long you were a public insurance 19 adjuster? 20 A From approximately 1965, 1966. 21 Q Until when? 22 A Until 1992, 1993 I was licensed. 23 Q Now, have you ever heard of a business called 24 Interstate Adjusters? 25 A Yes. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6909 Zerring-direct/White
1 Q And what was Interstate Adjusters? 2 A That was my company in which I had a 50 percent 3 interest in that company ownership. 4 Q When did you begin operations for that company? 5 A Approximately 1978. 6 Q Now, were you ever involved in submitting fraudulent 7 claims to insurance companies? 8 A Yes, I was.
9 Q Can you tell us approximately how many? 10 A Well, we handled many, many claims. Fraudulent 11 claims. I would say over my years working as a public 12 insurance adjuster, there were probably hundreds. 13 Q Can you describe for us how the typical fraudulent 14 insurance claim you were involved in would work? 15 A Once retained by the policyholder, we would then go 16 through the process of putting the claim together such as 17 if I may use as an example, if there was a homeowner who 18 suffered a fire, a water damage in their home, we would 19 then put together building estimates, inflate building 20 estimates for the structure or any improvements and 21 betterments in their home as well as prepare inventories 22 of the contents of that home such as clothing, furniture 23 and what have you, and inflate the value, meaning for 24 arguments sake, 200 garments, we would s
ay 5 or 600 25 garments, if it was $20 or $30, we would say $50 or $60. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6910 Zerring-direct/White
1 The same way it would work with the structure of 2 the building or the betterments to the building such as 3 roof damage or damage to the instruction to the interior 4 structure, wall panelling, carpeting and so on. 5 Q Would you create any phony documents in support of 6 these inflated loss figures? 7 A Well, what we would do is if the actual damage to 8 someone's home, again, to the structure, let's say 9 hypothetical the actual damage was $5,000 or $10,000, we 10 would have estimates, written estimates for greater 11 numbers, maybe 20, 30, 40, $50,000. We're talking now, 12 you know, specifically in homeowners. 13 We also handled commercial losses which are much 14 larger losses. 15 Q
Can you describe what you mean by a commercial loss? 16 A Someone who owned their own business, a manufacturer, 17 retail, store owner. 18 Q Would you take any steps to bribe insurance company 19 personnel in connection with these claims? 20 A Yes, we would. 21 Q Tell us what you would do. 22 A Well, during my long years in the -- the extensive 23 years in the business, I became friendly with the 24 representatives of the insurance company, their adjusters 25 would be assigned by the insurance companies, as well as OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6911 Zerring-direct/White
1 their experts such as builders, accountants, salvage 2 people who -- to explain what a salvage person is, someone 3 who determines what the values of certain items are such 4 as hard goods, garments, and so forth and so on. 5 Q And you were saying from your
experience in the field 6 knowing these people, what would you do? 7 A Yes. I would, over the years, I was able to bribe 8 them and pay them money in order for them to go along with 9 the inflation of the claim and thus settle the loss for a 10 much greater amount than was actually sustained by the 11 policyholder. Thus, allowing me to earn a greater fee. 12 Q Now, where would you get the money that you would use 13 to pay these bribes to experts and insurance adjusters? 14 A What I would do is, after processing the claim or 15 during the course of processing the claim I would go to 16 the person who retained me which is the policyholder and I 17 would tell him that, for example, his actual loss was 18 $50,000. I told him that I could probably get him 19 somewhere like 100, $150,000, and that I would need, and 20 this is just an example, that I would need $25,000 in cash
21 to make payoffs for all of these people I just described 22 in order for them to sign off on the claim in order for us 23 to effectuate that settlement of 150, $200,000. 24 Q Now, in the case of these fraudulent insurance 25 claims, how would you and your adjusting firm get paid? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6912 Zerring-direct/White
1 A Basically two ways. We would get paid by check, and 2 we would also get paid by U.S. currency in cash in order 3 that we may pay off the adjusters and accountants and 4 their experts. 5 Q Now, let's take those two ways separately. 6 The check that you would get, what would that 7 represent? 8 A That would represent our fee in which we would take 9 that fee and deposit it into our business, our corporate 10 business in which I owned 50 percent of. 11 Q Is that the 10 to 12 percent fe
e you described 12 before? 13 A That's correct. 14 Q And what is the cash you said you would get? How 15 much of that would stay with you and your firm? 16 A Well, whatever cash we would receive, myself 17 included, would make the payoffs to those people that I 18 bribed and the balance of that cash I would retain in my 19 office. And we had our own pool where each of the 20 adjusters in my office would get a percentage of the 21 amount of cash that we retained and spread it around in 22 that fashion. 23 Q Were you involved in a fraudulent claim by a company 24 called Rafella Sports? 25 A Yes, I was. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6913 Zerring-direct/White
1 Q Can you tell us how that claim first began? 2 A Well, it started -- I was originally contacted by an 3 insurance broker who I did business with, you k
now, some 4 years ago, and he asked me to come to his home one 5 evening. He advised me at that time that he was 6 recommending a new account, quite a large account, Rafella 7 Sportswear in the garment business and asked me my opinion 8 who I should write the insurance with. I gave him my 9 opinion. 10 He asked me at that time was National Union or 11 American International Group a good insurance company and 12 would they give me good service and I told them absolutely 13 correct. 14 Q You say American Insurance Group? 15 A American International Group. 16 Q Is that known by the initials AIG? 17 A That's correct. I believe they are the parent. 18 Q Now, what happened next in connection with this 19 claim? 20 A At sometime after having meetings with him and being 21 called to his home, he then advised me that he retained a 22 client and secur
ed the insurance for the Rafella people 23 and he had asked me at this point he would like me to meet 24 with his policyholder which I consented to do. 25 Q And what happened at that meeting? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6914 Zerring-direct/White
1 A At that meeting the policyholder, I met him in a 2 restaurant in midtown, New York, and at that meeting the 3 policyholder asked me if I'm familiar with the policy that 4 was written and I told him I was. He asked me do I know 5 the people, if I had some type of a claim or what have 6 you, would you be able to get me good service, 7 satisfactory service. I told him I would. 8 Q Did you understand that he was asking you to 9 participate in a fraudulent insurance claim? 10 A Well, I felt that that's what it was leading up to, 11 yes. 12 Q Did there come a point when you learned o
f a loss 13 sustained by Rafella Sportswear? 14 A Yes, I did. 15 Q When was that? 16 A That was in September of 1989. 17 Q And what happened after that? I'm sorry, let me ask 18 a different question. 19 What sort of loss did Rafella Sportswear sustain? 20 A They sustained a water damage actually from their 21 sprinkler system. 22 Q Where did they sustain the damage? 23 A The damage was sustained in a large warehouse 24 facility in Bayonne, New Jersey. 25 Q Tell us what sort of business Rafella Sportswear was? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6915 Zerring-direct/White
1 A Basically importer, manufacturers of ladies 2 sportswear. Actually they were specifically in the 3 coordinate business. 4 Q You mentioned water damage. 5 Can you explain a little more precisely what sort 6 of damage they sust
ained. 7 A Yes. There was water as a result of sprinkler heads 8 that discharged in their warehouse. 9 Q Now, did you then participate in a scheme to inflate 10 their insurance claim? 11 A Yes, I did. 12 Q How did you do that? 13 A Well, first, initially the loss was reported to my 14 office by their insurance broker. I received a call that 15 morning in my office in Long Island at the time and I was 16 notified that there was an insurance claim. And the 17 insurance broker who called that claim into me advised me 18 that I would be receiving a call from the policyholder 19 which I did shortly after that. 20 And he called me, I believe it was from his car 21 and advised me that he sustained a water damage loss at 22 his premises, at Bayonne, New Jersey, and asked me if I 23 would meet him at the loss premises, which I did. 24 Q What happened there?
25 A I drove out to the premises and we walked around and OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6916 Zerring-direct/White
1 he showed me the facility and what I viewed when I got 2 there was that there were sprinkler heads that had 3 discharged. Some of the sprinkler heads were on the 4 floor, there was some water on the floor and he started to 5 ask me questions and discuss the loss, what could I do for 6 him? How well could I do for him? So forth and so on, 7 and I told him at that point I really continue tell until 8 we got an adjuster assigned to the case from the insurance 9 company and I would call my office. 10 I had somebody in my office that handled that 11 function that was familiar with the insurance companies 12 and how they assigned losses and we ultimately, he 13 ultimately -- we were able to handpick the adjusters who
14 wanted to represent -- who were going to represent the 15 insurance company. 16 Q Why was it important to handpick those adjusters? 17 A Well, we wanted to have somebody, that, number one, 18 we had a prior relationship with, people that we paid off 19 in the past so we would be able to inflate the claim and 20 ultimately get a large settlement as possible. 21 Q How large did you inflate the claim that was 22 submitted? 23 A As I walked through the warehouse and viewed the 24 fact, I was told that a few sprinkler heads had 25 discharged. I was also told at that point that there were OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6917 Zerring-direct/White
1 many other sprinkler heads what he called or they called 2 leaky heads, they didn't actually discharge but just 3 leaking. 4 Q Can you explain what you mean by sprinkler heads in a
5 warehouse? 6 A A sprinkler system is basically there for if in the 7 event of a fire to basically limit the spread of that 8 fire, to contain it in the area where it started. And 9 that's what the function of a sprinkler system does. 10 Q What was the ostensible explanation as to why these 11 sprinkler heads had gone off in this warehouse? 12 A They said it was as a result of a freeze up. 13 Q Was there water damage below the water heads? 14 A Yes. 15 Q You were walking through the warehouse, continue. 16 A We were walking through the warehouse and I was 17 advised at that time there were three, four, five, six 18 sprinkler heads that actually discharged. Some of the 19 heads as I said were on the floor. I was told there were 20 other heads that were leaking that actually didn't 21 discharge and spray the water out. 22 So I suggested to the owner at th
e time who I was 23 with that he call the plumber in, call the plumber back 24 and have him replace all of those leaky heads which may 25 have been another 20 or 30 heads, and the thing and the OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6918 Zerring-direct/White
1 reason for this, this would give me a wider range of area 2 in order to make a larger claim because at that point the 3 insurance company's people were not there and they would 4 not have any idea of the scope of damage, you know. And 5 since this was a 50, 60,000, approximately, square foot 6 warehouse we then had a larger area to work with and a 7 larger area to inflate this claim. 8 THE COURT: How far would fixing leaky sprinkler 9 heads enlarge the claim? 10 THE WITNESS: Because the actual damage sustained 11 from the actual heads that went off were basically in a 12 square
foot area. By replacing sprinkler heads at the 13 other portions of the aisles of the warehouse would 14 basically, to the insurance company's representative, 15 believe there were damages there that would not -- 16 THE COURT: The replacement would be to pretend 17 they were leaking or discharged? 18 THE WITNESS: That's correct. 19 BY MR. WHITE: 20 Q In a normal circumstance when a sprinkler system goes 21 off, the heads need to be replaced because they have 22 discharged? 23 A Yes. 24 Q If an insurance adjuster came in and saw this, they 25 saw new heads? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6919 Zerring-direct/White
1 A Yes. 2 Q So you wanted to replace more? 3 A Yes. 4 Q And therefore the merchandise underneath them would 5 also theoretically potentially have been damaged? 6 A That's correct.
They would be part of my claim. 7 Q Now, was a claim submitted to AIG regarding this 8 loss? 9 A Yes, it was. 10 Q And can you give us -- what else besides inflating 11 the inventory did you do in connection with that claim? 12 A Well, the process of preparing the claim was as 13 follows: We had several meetings, because it was quite a 14 large claim, we had several meetings with the insurance 15 company's representatives. 16 The first meeting which occurred that afternoon 17 was with an adjuster and because of the size of the claim 18 the way it was reported, he called in another adjuster to 19 co-adjust with him as well as the fact that I heard that 20 one of the adjusters, one of the senior guys was going to 21 be retiring. That's the fellow that was initially called 22 in. And I had told my -- one of my employees, my adjuster 23 when I heard that to see
if he could assign another 24 adjuster in the case in the event that he was leaving to 25 co-adjust this with him, so that we had all the right OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6920 Zerring-direct/White
1 people in place to handle this loss. 2 Q Did you bribe any insurance company representatives 3 in connection with this claim? 4 A Yes, I did. 5 Q Who? 6 A Jeff Fougere. 7 Q And who is he? 8 A He was a general adjuster representing the National 9 Union Insurance Company which is part of the AIG Group. 10 Q How much did you pay that insurance company adjuster? 11 A Oh, somewhere around 75 to $100,000 in United States 12 currency. 13 Q Now, can you give us an estimate of the actual 14 damages that were sustained by Rafella Sportswear? 15 A In my opinion, when I first viewed the premises and 16 walked ar
ound with the owner, it was my opinion that there 17 could have been probably or approximately $2,000,000 in 18 damages, could have been a little more, a little less, 19 that was just an eyeball. 20 Q Is that physical damage? 21 A That's physical damage. Meaning that was the actual 22 damage sustained to the garments itself. 23 Q Did the policy cover any other sorts of damages? 24 A Yes, it did. It covered something called, which was 25 provided in the insurance policy, consequential loss OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6921 Zerring-direct/White
1 coverage. 2 Q And can you tell us just in summary in laymans terms 3 what that means? 4 A Yes. That's a coverage that provides for a loss of 5 value to the undamaged portion of the property of the 6 garments, such if there was a lady's suit and the physical 7 damage hit the
jacket, the pants were not damaged, but it 8 would have an effect on the loss of value. 9 There would be a loss of value if sold to a 10 department store what have you, as well as broken sizes, 11 lots and colors, meaning if sizes 2 and 4 were damaged, 12 that the rest of the lot or the rest of that range of 13 merchandise would lose value. 14 Q Now, adding in both of those kinds of damages, can 15 you give us a rough idea what the approximate losses 16 sustained by Rafella was? 17 A The consequential loss area wasn't really my forte. 18 I had an in-house CPA that handled that area and he worked 19 on that portion of the claim, but I would say my best 20 guess that as a result the consequential could have been a 21 couple million, possibly. 22 Q So that would make the total damage at 5 or 23 6,000,000, approximately? 24 A At most. 25 Q Can you tell u
s how much the insurance company OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6922 Zerring-direct/White
1 eventually paid on this claim to Rafella? 2 A In excess of $19,000,000. 3 Q And can you tell us how much did your firm Interstate 4 Adjusters get from that claim? 5 A We received a fee of probably close to $3,000,000. 6 Q And what was your share of that $3,000,000? 7 A Well, I was a 50 percent owner of the company, so 8 that money went into the corporation into our company 9 account. 10 Q And did you receive any cash as a result of your 11 participation in the Rafella claim? 12 A Yes. Over a period of time we told the insured or 13 the policyholder we needed cash and over a period of time 14 he gave us, and we asked him, about a half million in 15 cash. 16 Q After you paid bribes to various people, how much did 17 you
r firm pertain in cash? 18 A We retained approximately $300,000 for myself and my 19 company. 20 Q Were you involved in a fraudulent claim involving a 21 policyholder named Criterion Bead? 22 A Yes, I was. 23 Q What was Criterion Bead? 24 A They were an importer of novelty merchandise from 25 overseas, the Far East, I guess. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6923 Zerring-direct/White
1 Q Approximately when did they sustain a loss? 2 A I believe it was around April of 1991. 3 Q And where did they sustain this loss? 4 A At their warehouse facility in Woodside, Queens. 5 Q What sort of loss did they sustain? 6 A Well, the proximate cause of loss was fire, meaning 7 that the loss resulted as a fire. The fire started 8 outside their building on some wood pallets and 9 communicated into the building, thus causing spr
inkler 10 heads to discharge. 11 Q And did they have an insurance policy covering that 12 kind of loss? 13 A Yes, they did. 14 Q With what insurance company? 15 A With the Chubb Insurance Group, Chubb Insurance 16 Company. 17 Q That's C-H-U-B-B, right? 18 A Yes. 19 Q Were you retained as a public adjuster for Criterion 20 Bead? 21 A Yes, I was. 22 Q Did you inflate that claim? 23 A Grossly inflated. 24 Q Tell us again in summary how you did that. 25 A Well, as I stated, the fire occurred adjacent to the OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6924 Zerring-direct/White
1 building, I guess the heat and the fire communicated into 2 the building causing a couple sprinkler heads to activate, 3 discharge, maybe one, two, or three, approximately. What 4 we did was ultimately we did a physical inve
ntory of the 5 entire premises and stated that there was smoke throughout 6 the premises. 7 Q When there was not? 8 A When there was not. 9 Q Did you bribe any insurance company representatives 10 in connection with this claim? 11 A Well, in this particular case my partner was friendly 12 and bribed the adjuster who was representing the Chubb 13 people. 14 Q Can you give us, again, a rough estimate what the 15 actual damages sustained by Criterion Bead was? 16 A My best guess was, 100, $200,000. 17 Q Can you tell us approximately the insurance company 18 paid in this claim to Criterion Bead? 19 A In excess of $16,000,000. 20 Q What was your adjusting firm's share of that payout? 21 A The nature of the business was such where since they 22 were importers they really did not have any cash. So all 23 of my entire fee was by check. I would say r
oughly we 24 received a fee, I would approximate, somewhere between 3 25 and $400,000 or upwards. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6925 Zerring-direct/White
1 Q Mr. Zerring, did there come a time when federal 2 agents executed a search warrant at the offices of your 3 adjusting firm? 4 A Yes. 5 Q Can you tell us when that was? 6 A December 9, 1992. 7 Q And were you arrested at that time? 8 A No, I was not. 9 Q Now, after that search warrant, did you obtain an 10 attorney? 11 A Yes, I did. 12 Q Now, after you obtained an attorney, what did you do? 13 A I met with my attorney and shortly after that 14 approximately December 29, 1992, we voluntarily went into 15 the U.S. Attorney's Office and at that point we did what 16 we called a proffer. We started to give over all of the 17 information, all
of the wrongdoings -- 18 THE COURT: Do you want to pull the mike closer 19 to you, please. 20 THE WITNESS: Yes. 21 A We proffered, December 29, 1992, shortly after the 22 holidays, we came in voluntarily to meet with the U.S. 23 Attorney's Office. We met with two U.S. Assistant 24 Attorneys and an agent of the FBI, Inspector Biegelman, 25 and my attorney was present and we at the time started OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6926 Zerring-direct/White
1 what they call a proffer. We started to give information, 2 all the information of all the wrongdoings and all the 3 fraudulent schemes and what have you over to the 4 government. 5 Q Now, did you agree to cooperate with the government? 6 A Yes, I did. 7 Q And did you eventually sign a cooperation agreement? 8 A Yes, I did. 9 Q And when was that? 10 A
That was approximately April of 1993. 11 Q Now, did you eventually plead guilty? 12 A Yes, I did. 13 Q When was that? 14 A That was in August of 1993. 15 Q Can you tell us what you pled guilty to? 16 A Yes. I pled guilty to two counts of mail fraud and 17 one count of income tax evasion. 18 Q And what do the two counts of mail fraud or what did 19 the two counts of mail fraud you pled guilty to relate to? 20 A One was the Rafella Sportswear claim and one was the 21 Criterion Bead claim. 22 Q And can you tell us what the tax charge you pled 23 guilty to related to? 24 A To the Rafella Sportswear claim. 25 Q Now, are you testifying here today as part of your OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6927 Zerring-direct/White
1 agreement with the government? 2 A Yes, I am. 3 Q Tell us what your understanding is o
f what you have 4 to do under that agreement? 5 A To tell the truth. To be truthful with the 6 government. To tell the truth. To give full cooperation 7 to them. To go undercover, if need be. To be debriefed, 8 to work with the Internal Revenue Service, to pay back all 9 the taxes during the period of 1990, December 1990 that I 10 understated. 11 Q What's your understanding of what the government has 12 agreed to do if you fully cooperate? 13 A Well, if I fully cooperate and I give substantial 14 assistance, what have you, they can then at that point 15 depart from the original guidelines, I guess, and 16 recommend or write what they call a 5K letter to the 17 Judge. 18 Q And if the government writes its 5K letter, what is 19 your understanding what the Judge can do? 20 A Well, he could depart from the original guidelines. 21 Q Now, have you been sen
tenced yet? 22 A No, I have not. 23 Q Can you tell us what's your understanding of what the 24 maximum sentence you could face is? 25 A Five years per count, $250,000 fine per count, court OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6928 Zerring-direct/White
1 costs, restitution. 2 Q In terms of the jail sentence, could your sentences 3 be consecutive? What's the total amount of time you could 4 face? 5 A Fifteen years. 6 Q Now, have you repaid the IRS the taxes that you 7 evaded? 8 A Yes, I have. 9 Q Have you received any promises from the government 10 about what sentence you will receive? 11 A None whatsoever. 12 Q Have you received any promises from anyone about what 13 sentence you will receive? 14 A No. 15 Q Can you tell us who will ultimately determines what 16 your sentence will be?
17 A The Honorable Judge Wexler. 18 Q And let me draw your attention to late 1994. 19 At that time were you cooperating with the 20 government? 21 A Yes, I was. 22 Q And did you assist postal inspectors in connection 23 with an investigation of Who's Who Worldwide around that 24 time? 25 A Yes, I did. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6929 Zerring-direct/White
1 Q Can you tell us what you were asked to do at that 2 time? 3 A Yes. I was asked to, from a local newspaper, I was 4 asked to call and set up an interview with the Who's Who 5 Worldwide people, which I did. And I set up an 6 appointment. At that time I spoke to one of the people 7 from Who's Who and they advised me -- they asked me what I 8 did. They basically said to me that you need about one 9 year experience and I told them that I had no exper
ience 10 in that field and I advised them that I was in the 11 insurance field and I was basically in sales and they said 12 that would be fine. 13 Q And what sort of position were you applying for 14 there? 15 A For a sales position in telemarketing. 16 Q Who asked you, who from the postal inspectors asked 17 you to do this? 18 A Inspector Biegelman. 19 Q Did you receive any instructions from the postal 20 inspectors regarding what you were to do once you got a 21 job there? 22 A Yeah. Basically to be wearing a concealed 23 tape-recorder and I should tape, do my tape-recordings 24 throughout the day, the full day while working there. And 25 also to follow whatever, while working there, what was the OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6930 Zerring-direct/White
1 norm in their day-to-day operation. Reading the scr
ipts, 2 including whatever was the norm in their business. 3 Q Did you eventually go to work there? 4 A Yes, I did. 5 Q When was that? 6 A Well, I first had -- I first had an interview 7 approximately on November 28, 1994, with Ed Schaeffer. I 8 met with him for a short time, approximately 20 minutes, 9 and he gave me an overview of what the business was 10 about. He also gave me some materials to take home to 11 review and said to me that I could start on December 6th, 12 which I did. 13 Q And what office did you work in? 14 A The Lake Success office. 15 Q Now, did you record what took place while you worked 16 there? 17 A Yes, I did. 18 Q And what did you do with the tapes that you made? 19 A I turned them over to Inspector Biegelman. 20 Q If you could briefly take a look at Exhibits 13-87 21 through 14-03 (handing.) 22 A
13-87, to where? I'm sorry. 23 Q To the end of the book. Please page through it, if 24 you could. 25 A Okay. (Perusing.) OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6931 Zerring-direct/White
1 Q Mr. Zerring, let me stop you there. 2 In addition to paging through them there, have 3 you had an opportunity to review those transcripts and the 4 corresponding tape-recordings prior to the trial? 5 A Yes. 6 Q And the ones you've looked through, are those a 7 portion of the tape-recordings you've made while you were 8 employed at Who's Who Worldwide? 9 A Just a portion of them, yes. 10 Q While you were at Who's Who Worldwide, were you given 11 a name to use on the phone with customers? 12 A Yes, I was. 13 Q What was that? 14 A Elliot Zale, Z-A-L-E. 15 Q Who gave you that name? 16 A I believe it was one of the
managers, Ed Schaeffer, 17 Tara Green or Frank Martin. I believe one of them. 18 Q How long did you work at Who's Who Worldwide? 19 A From, I started working there, as I said, December 20 6th, and I was terminated I believe it was February 15th. 21 Q Of what year? 22 A 1995. 23 Q So approximately how many weeks did you work there? 24 A I think it was roughly 10 to 12 weeks. 25 Q And what were the circumstances of your termination? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6932 Zerring-direct/White
1 A Lack of production. 2 Q Did you receive paychecks from Who's Who Worldwide 3 while you were employed there? 4 A I believe I did receive some paychecks. 5 Q Did you cash these paychecks? 6 A No, I did not. 7 Q What did you do with them? 8 A I turned them over to Inspector Biegelman. 9 MR. WHITE: Your Honor, if I c
ould just have a 10 moment? 11 THE COURT: Yes. 12 (Counsel confer.) 13 BY MR. WHITE: 14 Q Now, Mr. Zerring, in your guilty plea have you taken 15 any steps to assist the insurance companies that you 16 defrauded in recovering the monies that they paid out? 17 A Yes, I have. 18 Q And could you tell us, please, what you've done? 19 A I've testified on their behalf, on behalf of the 20 insurance companies to recover those monies. 21 Q In what sort of proceedings have you testified? 22 A I testified under oath, you know, before the 23 insurance companies and the insurance companies' 24 representatives. 25 Q Was that in a deposition? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6933 Zerring-cross/Nelson
1 A That was in a deposition, yes. 2 Q Who was that lawsuit against? 3 A That lawsuit was against Rafella S
portswear. 4 MR. WHITE: Your Honor, I have no further 5 questions. 6 THE COURT: Cross-examination. 7 CROSS-EXAMINATION 8 BY MR. NELSON: /(. 9 Q Good afternoon, Mr. Zerring. 10 Let me ask you something. Have you spent a 11 single minute in jail? 12 A No, sir. 13 Q You pled guilty to three felony charges, right? 14 A Correct. 15 Q That was in 1993; is that right? 16 A Yes. 17 Q And in the past five years after ripping off all of 18 these companies for millions of dollars, you still haven't 19 spent a single minute in jail; is that right? 20 A Yes. 21 Q Now, two of the charges involved mail fraud; is that 22 correct? 23 A Yes. 24 Q One of the charges was filing false income tax 25 returns, correct? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6934 Zerring-cross/Nelson
1 A
Yes. 2 Q Now, when you pled guilty it was on August 26, 1993, 3 right? 4 A August of 1993. 5 Q Am I correct that the first felony charge of mail 6 fraud concerns your participation in a scheme whereby 7 water damage to Rafella Sportswear was overstated it as a 8 subsidiary of the AIG Insurance Company? 9 A Yes. 10 Q And you were employed at that time as a public 11 adjuster working for the various different claimants, but 12 you would submit the claims to the insurance carriers; is 13 that correct? 14 A Yes. 15 Q And I believe you said after an inspection of the 16 premises and your bribery of a number of different 17 individuals, the total claim for water damage to those 18 premises amounted to 19.5 million; is that correct? 19 A Approximately, that's correct. 20 Q And the total damage was approximately $4,000,000, at 21 best?
22 A Approximately. 23 Q And AIG issued a check in excess of 10.5 million 24 promised upon this fraudulently overstated claim; is that 25 correct? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6935 Zerring-cross/Nelson
1 A Partially. 2 Q Now, this crime was committed by you in 1990; is that 3 right? Rafella Sportswear. 4 A When the loss occurred. 5 Q The loss occurred in 1990; is that right? 6 A Somewhere around '89, '90, correct. 7 Q The second felony of mail fraud, that relates to your 8 participation in 1991 in this claim against Chubb 9 Insurance Company; is that correct? 10 A Yes. 11 Q And in that one you assisted in the filing of a claim 12 where you falsely overstated water damage to Criterion 13 Bead & Novelty Company? 14 A That's correct. 15 Q And that claim was for $16,000,000, right? 16 A
Yes. 17 Q And the loss was about $400,000; is that right? 18 A I don't know if it was that much. 19 Q Two or 300,000, actually? 20 A Yes. 21 Q Now, your third felony charge concerns your filing of 22 a false income tax return for 1990; is that right? 23 A Yes. 24 Q Now, am I correct that in 1978, you and an individual 25 by the name of Robert Greenberg, established and became OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6936 Zerring-cross/Nelson
1 equal partners in a company called Interstate Adjusting 2 Corporation? 3 A That's correct. 4 Q You were both 50/50 partners in that company; is that 5 right? 6 A Yes. 7 Q And as you explained, when Mr. White was questioning 8 you, you would review losses caused as a result of fire or 9 water damage or other kind of occurrence for presentation 10 of claims to i
nsurance companies, right? 11 A Yes. 12 Q And the insurance companies relied upon you to 13 accurately apprise them of the claims of damages for 14 losses? 15 A Could you repeat that, please? 16 Q The insurance companies were relying upon you to 17 provide accurate information for them to evaluate the 18 claims for payment of insurance; is that right? 19 A I guess the policyholders were relying on me to 20 present proper claims. 21 Q Let's take them one at a time. 22 You worked for the policyholder, right? 23 A Yes. 24 Q The policyholders weren't relying upon you to provide 25 accurate claims, they were hiring you for your connections OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6937 Zerring-cross/Nelson
1 with the insurance companies so you could rip off the 2 insurance companies, right? 3 A Some were and some w
ere not. 4 Q A great number of people came to you between 1978 and 5 1992 when you were finally caught for the specific purpose 6 of your connections with insurance carriers so that they 7 could acquire money for losses that grossly overstated the 8 amount of loss they had acquired; is that right? 9 A Some yes; some not. 10 Q Let's go to the other side of the coin. 11 You were licensed by the State of New York; is 12 that right? 13 A Yes. 14 Q And the State of New York, when they gave you that 15 license, expected that you were going to be providing 16 accurate and truthful information to the insurance 17 companies; is that right? 18 A Yes. 19 Q And the insurance companies were relying upon you as 20 a licensed public adjuster to provide accurate and 21 truthful information to them for the purpose of processing 22 of these claims; is that ri
ght? 23 A Yes. 24 Q Now, obviously you violated the trust of the State of 25 New York in your license and all of the insurance OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6938 Zerring-cross/Nelson
1 companies you ripped off; is that right? 2 A Yes. 3 Q Am I correct you actually never assisted any of your 4 clients in staging any claims? You didn't burn down 5 buildings yourself. You are not an arsonist, right? 6 A That's correct. 7 Q You were, however, aware as it relates to Rafella 8 Sportswear, your first felon conviction of mail fraud, 9 that the insured parties, your clients, the owners of the 10 premises, were going to stage a claim. Were going to 11 cause intentional damage to that premises before it ever 12 took place; isn't that right? 13 A Yes and no. 14 Q Yes and no. 15 You testified before a federal g
rand jury, did 16 you not? 17 A Yes. 18 Q I would like to direct your attention to 3500-23-LLL, 19 pages 26 and 27. 20 Do you recall having given this testimony on July 21 13, 1993 under questioning by an Assistant United States 22 Attorney by the name of Mark Kirsch, K-I-R-S-C-H, starting 23 on line 13. 24 "Question: So, again, what did you understand 25 all this was leading up to? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6939 Zerring-cross/Nelson
1 "Answer: To me it was leading up to that there 2 was going to be, it seemed certain, there was going to be 3 a loss occurring. 4 "Question: After that, at your home, will you 5 describe yourself as comfortable or uncomfortable? 6 "Answer: I was very uncomfortable because of my 7 20 some-odd years in the business. It is uncomfortable 8 for me to have knowledge pri
or to an actual loss 9 occurring. 10 "Question: It is uncomfortable for you to have 11 knowledge or for other people to know you have knowledge? 12 "Answer: Both. 13 "Question: Now, the loss of Rafella was reported 14 to you on or about December 21, 1989; is that correct? 15 "Answer: Yes." 16 Do you recall being asked those questions and 17 giving those answers in relation to the loss at Rafella 18 Sportswear before a federal grand jury on July 13, 1993? 19 A Yes. 20 Q So am I correct, sir, that in fact you were well 21 aware before the loss actually occurred that in fact your 22 clients, the owners of those premises were going to stage 23 a loss before it took place? 24 A It seemed that way to me. 25 Q But you swore under oath before a federal grand jury OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6940 Zerring-cross/Nelson
1 that you knew it in advance; is that right? 2 A I believe that I said that it seemed like it was 3 leading up to that. 4 Q Gee, maybe I should read it through again. "To me it 5 was leading up to that. It seemed certain there was going 6 to be a loss occurring." 7 Do you recall giving that testimony? 8 A Yes. 9 Q That means that there was going to be a loss, and you 10 knew there was going to be a loss before it happened; 11 isn't that right, sir? 12 A Yes, that's what it seemed like to me, correct. 13 Q And you agreed to participate in later filing a claim 14 for them knowing that they had intentionally caused the 15 damage at Rafella Sportswear; isn't that right? 16 A Yes, I did file the claim later. 17 Q And that was with knowledge that it seemed certain 18 that before the loss occurred that they were going to be 19 filing this clai
m; is that right? 20 A It seemed that way. 21 Q Now, am I correct you were involved in inflating many 22 claims for damage, in addition to the two that you pled 23 guilty to; is that right? 24 A Yes. 25 Q Am I correct that what you would do is you would take OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6941 Zerring-cross/Nelson
1 back money, in other words, give bribes to various 2 different insurance brokers -- excuse me, claims 3 adjusters, that you had created a relationship with over 4 the years that you had been a public adjuster; is that 5 right? 6 A Yes. 7 Q And what you would do is over the course of time, you 8 found people who were weak and susceptible and were 9 prepared to pay cash under the table in order to allow you 10 for them to be paying clients for grossly inflated claims; 11 is that right? 12
A I don't understand that question. 13 Q Let's break them down one part at a time. 14 You received a contingency fee for the work you 15 did? 16 A Yes. 17 Q The more you did, the more of a claim you got? 18 A Yes. 19 Q Over the course of claim, you, when you first started 20 in business as a licensed adjuster, licensed and bonded in 21 the state of New York, you were honest and scrupulous in 22 your business; is that right? 23 A Yes. 24 Q During the course of time you eventually started 25 forming a relationship with various different employees of OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6942 Zerring-cross/Nelson
1 insurance companies, right? 2 A Yes, but I have to retract a prior statement when you 3 mentioned when I started going into business. Prior to 4 going into business I was employed by someone else and I
5 was at that time fraudulently putting together as well. 6 Q So before 1978, somebody else had taught you the 7 business; is that right? 8 A Basically. 9 Q They had taught you how to rip off insurance 10 companies going back to before '78? 11 A Yes. 12 Q They started to introduce you to different insurance 13 company employees who were prepared to take money under 14 the table to look the other way when grossly inflated 15 claims were presented; is that right? 16 A Yes. 17 Q And so when you went into business, you were going 18 into business initially under the intention of defrauding 19 insurance companies; is that right? 20 A Not in its entirety, but yes, true. 21 Q From 1978 up to the execution of a search warrant in 22 1992, you were regularly and actively in the business of 23 defrauding insurance companies; is that right? 24 A Ye
s and no. 25 Q Well, some claims were honest, some weren't, right? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6943 Zerring-cross/Nelson
1 A That's exactly what I'm saying. 2 Q Rafella Sportswear, that is one of the many that 3 wasn't; is that right? 4 A Yes. 5 Q Now, you indicated that the way things were is that 6 since you were on a contingency, the client would receive 7 a greater sum of money for the grossly -- for an inflated 8 claim and likewise you would receive a percentage of that 9 inflated claim, right? 10 A Can you repeat that back to me? 11 Q Right. 12 You were on a contingency basis? 13 A Yes. 14 Q And on a contingency basis if a $9,000,000 loss 15 actually became $19,000,000, if you were receiving 10 16 percent, obviously you received a much greater commission 17 on it; is that right? 18
A Yes. 19 Q And the greater the inflation of the claim the 20 greater the commission you would receive; is that right? 21 A Yes. 22 Q And am I correct that you were in a pool with a 23 number of other people who inflated these claims as well? 24 A Yes. 25 Q And there were a number of different public adjusters OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6944 Zerring-cross/Nelson
1 who you worked with and who worked with these crooked 2 insurance employees in order to create this pool where 3 various different clients would come to all of you and all 4 of this kickback money would wind up going into a large 5 pool; is that right? 6 A More or less, yes. 7 Q Am I correct that what the pool reflected is the 8 money which was the difference between the actual loss and 9 the amount that was paid, less any bribes? 10 A I don't
understand that. 11 Q But what the pool consisted of was the difference 12 between the amount of commission you received for the 13 grossly inflated claim, less what the actual loss would 14 be; is that correct? 15 A No, I don't believe that you have that right. 16 Q Okay. Let's break it down then. 17 Let's say that you have a $10,000,000 loss, 18 okay. 19 A Okay. 20 Q The true loss is $1,000,000, okay. 21 A Yes. 22 Q Your commission for that would be $1,000,000 if it 23 was 10 percent, correct? 24 A Yes. 25 Q And the $1,000,000 would go into a pool. Is that the OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6945 Zerring-cross/Nelson
1 way it worked? 2 A No. 3 Q What amount would go into the pool? 4 A The amount, in addition to the fee you just stated, 5 we would ask or tell the policyholder we n
eeded X-amount 6 in order to receive that $1,000,000 and that amount of 7 money that we received in cash, part of that would go off 8 to pay the people and the balance that didn't go off to 9 pay the people would be retained in my own office which 10 was part of our pool. 11 Q So would your pool consist of less than a million or 12 more than a million? 13 A I don't understand the question. 14 Q You are getting 1,000,000 commission? 15 A The figure is $1,000,000. 16 Q Right. 17 And it should be a $100,000 fee, right? 18 A Right. 19 Q So you are getting $900,000 in unlawful money from 20 ripping off the insurance company, right? 21 A Yes. 22 Q Okay. 23 In addition to that you are receiving other 24 monies as well, is that what you are telling me? 25 A That's what I'm saying. OWEN M. WICKER, RPR OFFICIAL COURT REPORT
ER 6946 Zerring-cross/Nelson
1 Q Was that other money you receive on top of the 900 2 grand that you are getting? 3 A That's the money I stated is cash to use to bribe 4 people to pay them off in order to be able to get that 5 $10,000,000 loss paid for, or $1,000,000 loss. 6 Q So you wouldn't reach into your own pocket to pay off 7 the bribe, you had your client pay the bribe so it 8 wouldn't interfere with the amount of money in your pool, 9 right? 10 A I can't answer that question yes or no. 11 Q Now, am I correct that between 1990 and 1992, you 12 received 30 percent of this total pool? That was your 13 percentage of the pool? 14 A I believe that's approximately correct. 15 Q And between 1988 and 1990, you received 32 and-a-half 16 percent of the pooling? 17 A Yes. 18 Q Now, the total pool or the total amount that went
19 into there each year, as best as you could recall, is how 20 much money between those years? 21 A Well -- 22 Q I'll withdraw the question. 23 Am I correct that your share of the pool in 1991 24 and 1992 was computed by the government after your proffer 25 sessions with them to come out to about $37,500 per year? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6947 Zerring-cross/Nelson
1 A I believe what you are talking about is something 2 that occurred over a five or six-year period on average. 3 Q Right. 4 A Okay. 5 Q Do you recall that it was computed as about $37,500 6 per year in 1991 and 1992? 7 A No, it was more. One of those years was more. 8 Q We'll get to that year in a moment, the Rafella 9 Sportswear. 10 In '91 and '92, was it about 37,500? 11 A That was probably an average, yes. 12 Q In 1989, was it
about 40,000? 13 A Again, it was an approximate average. 14 Q And in '86-'87, a little bit earlier on, it was about 15 30,000 per year; is that right? 16 A Without seeing the paperwork, you know, just 17 estimating what I said, you know, that was an average. 18 Q In 1990, am I correct, and that's the Rafella 19 Sportswear year -- 20 A Right. 21 Q -- Your share was considerably greater; isn't that 22 right? 23 A Yes. 24 Q In that year, am I correct, it includes the Rafella 25 Sportswear loss where you were aware that the insurance OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6948 Zerring-cross/Nelson
1 company, that the insured was going to stage the loss 2 before it occurred, right? 3 A What is the question? 4 Q The question is that the year you received a greater 5 sum of money, 1990, that's the year of the Raf
ella 6 Sportswear loss; is that right? 7 A Yes. 8 Q And the Rafella Sportswear loss, that's the one where 9 you previously told us you were aware that the client was 10 going to stage the loss before it took place; is that 11 right? 12 A That's what I said before. 13 Q And your share that you received in 1990 from the 14 pool, was $90,000 in cash; is that right? 15 A Approximately, right. 16 Q And in fact, almost all of the money that you 17 received throughout this period of time from the pool was 18 in cash; isn't that right? 19 A Repeat that, please? 20 Q Almost all of the money that you received out of the 21 pool was in cash; isn't that right? 22 A Yes. 23 Q And so you received in cash from say 1986 up to 1992 24 3 or 400,000 in cash; isn't that right? 25 A How do you compute that? OWEN M. WICKER, RPR OFFICIA
L COURT REPORTER 6949 Zerring-cross/Nelson
1 Q Let's go through it one year at a time. 2 THE COURT: I'll tell you we'll go through it 3 after lunch. 4 MR. NELSON: Okay. 5 THE COURT: Members of the jury, let's take a 6 recess now. 7 Don't discuss the case. Keep an open mind. 8 We'll recess until 1:30. 9 (Luncheon recess taken.) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6950 Zerring-cross/Nelson
1 A F T E R N O O N S E S S I O N. 2 MR. WHITE: Your Honor, we have a customer who is 3 here to testify today. She wasn't here and ready to go 4 previously. 5 THE COURT: Where is she from? 6 MR. WHITE: Your Honor, she is from the Bronx,
7 but I just wondered if we could reach an appropriate time 8 today. 9 THE COURT: Well, put her on now. 10 MR. WHITE: That's okay with me. I wanted to 11 make sure it was okay with Mr. Nelson. 12 MR. NELSON: That's okay. 13 THE COURT: It gives him more time to think about 14 his cross-examination. I wish I had those opportunities. 15 Let's get rid of him or her. 16 MR. WHITE: Her, Judge. 17 THE COURT: I don't mean anything terrible by 18 that. 19 (Jury enters.) 20 THE COURT: Please be seated, members of the 21 jury. 22 Again we are interrupting the testimony of the 23 last witness, Mr. Zerring, to put on another witness. 24 You may proceed. 25 MS. SCOTT: Thank you, Your Honor. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6951 Walton-direct/Scott
1 The government calls Madeline Walton. 2 M
A D E L I N E L. W A L T O N , having been first 3 duly sworn by the Clerk of the Court, was examined and 4 testified as follows: 5 THE WITNESS: Madeline L. Walton, W-A-L-T-O-N. 6 THE COURT: Have a seat, Ms. Walton. 7 DIRECT EXAMINATION 8 BY MS. SCOTT: 9 Q Good afternoon, Ms. Walton. 10 A Good afternoon. 11 Q Can you tell us where you live? 12 A I live in the Bronx, New York, 55 Caldwell Avenue. 13 Q What do you do? 14 A I'm an assistant director and a program coordinator 15 of a senior citizen program. 16 MS. SCOTT: I think that the mike may not be on. 17 THE COURT: Okay. All right. 18 BY MS. SCOTT: 19 Q You said you are an assistant director of a senior 20 center? 21 A Of a senior citizens center. 22 Q Can you tell us the name of the center? 23 A Douglas Leon Senior Center. 24 Q What kind of center is the Dougla
s Leon Senior 25 Center? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6952 Walton-direct/Scott
1 A Douglas Leon Senior Center, we are under the 2 department for the aging, we were under a sponsor which is 3 Hunts Point Service. The Department of the Aging pays for 4 our salary, but our sponsor, we are responsible to them 5 for the running of our program. 6 Q As the assistant director of this center, what are 7 your responsibilities? 8 A My duties are day-to-day running of the center which 9 includes the cook, the maintenance men, the outreach 10 person, all the activities that take place on the grounds 11 of the center. 12 I do case management. I do outreach for the 13 seniors. 14 Q And when you say "case management," what do you mean 15 by that? 16 A Case management, that if seniors have problems, 17 irregardles
s what they pertain to, I assist them with 18 their problems, such as working with the Department of 19 Social Services, working with Social Security, working 20 with hospitals, working with MTA for half fare passes, 21 working with their primary care doctor. 22 Q How long have you been doing this with the Douglas 23 Leon Senior Center? 24 A Eleven years. This will be 12 years. 25 Q How many people do you supervise in your position? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6953 Walton-direct/Scott
1 A I have three people that I supervise because we have 2 a small staff. But we have an attendance of seniors of 3 135, 140 on a daily basis. 4 Q Now, have you had any dealings with a company called 5 Who's Who Worldwide? 6 A Yes, I did. 7 Q Did you eventually make a purchase from that company? 8 A Yes, I did. 9 Q And can y
ou tell us approximately when you first were 10 contacted by this company? 11 A In November of 1992. 12 Q How were you contacted? 13 A Through the telephone and through a letter. 14 Q Now, turning your attention to the letter. Can you 15 tell us what that letter said? 16 A The letter informed me that I was nominated for Who's 17 Who Worldwide. 18 Q And was there anything enclosed with that letter? 19 Did you fill out anything? 20 A Yes, I filled out a card. 21 Q I'm showing you Government's Exhibit 5-D, for Daniel, 22 which is in evidence. 23 Is that the form you filled out and returned to 24 Who's Who Worldwide? 25 A Yes, this is my handwriting and this is the form. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6954 Walton-direct/Scott
1 Q Now, if you flip that over, do you see a postmark on 2 that other side?
3 A November 30, 1992. 4 Q And if you flip it back over with the side of your 5 handwriting on it and look in the lower right-hand corner, 6 do you see a code there? 7 A GA Group L. 8 Q GA Group L, as in Leon; is that correct? 9 A Yes. 10 Q Turning your attention to the telephone call. Can 11 you tell us whether you spoke to a man or woman? 12 A I spoke to a man. 13 Q Can you tell us what, if anything, happened when you 14 spoke to him? 15 A Well, when I spoke to the man he was telling me I was 16 nominated to be included in the Who's Who Registry and in 17 order to do that they needed my credit card. So I told 18 them that they had to send me the information through the 19 mail and then I would, you know, proceed after that. 20 Q Now, did you eventually have a conversation with 21 somebody who told you about the company and about the
22 memberships -- withdrawn. 23 Did you eventually make a purchase over the 24 telephone? 25 A After I got the information through the mail, I sent OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6955 Walton-direct/Scott
1 a card back and then they called me and I gave them my 2 credit card number. 3 Q Now, did you have a conversation with the person 4 about the memberships? 5 A Yes, but I wasn't aware it was a membership. It was 6 supposed to be a nomination to be included in Who's Who. 7 I didn't hear anything about membership at that time. 8 Q But you discussed with the person what you had to do 9 to be included in the book; is that correct? 10 A Yes. He told me that to be included in the book -- 11 no. What he told me was that I would get a plaque, a 12 registry, a Who's Who Registry and a credit card. 13 Q And what, if anything
, did he tell you about how the 14 company selected people to put them in the book? 15 A He told me that they go through various colleges and 16 that's how the selected process was. 17 Q How were they selected? 18 A I assumed that they were selected through status of 19 your college like your grade point average or achievements 20 you had made while you were in college. 21 MR. SCHOER: Objection to what she assumes. 22 THE COURT: Objection sustained. Motion 23 granted. Strike out everything starting with "I 24 assumed." The jury is instructed to disregard it. 25 MS. SCOTT: Okay, I'll move on. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6956 Walton-direct/Scott
1 BY MS. SCOTT: 2 Q What, if anything, were you told about how the other 3 people in the book would be notified once you joined? 4 A Could you please rephrase that?
5 Q What, if anything, did they tell you about how the 6 other people whose names were in the book would be 7 notified once you joined the company? 8 A Well, they said they would do press releases. I 9 guess that's how they would tell the other people. 10 Q Now, the things that were said -- well, going back. 11 Did you agree to pay money to this company? 12 A I agreed to pay money for a plaque, the credit card 13 and the registry. 14 Q And of the things that they told you about this 15 company, what was the most important thing that lead you 16 to make this purchase? 17 A Well, I hate to say I thought, but I was in a Who's 18 Who in undergraduate school and I thought this was a 19 spin-off from a little Who's Who to a Worldwide and I 20 joined it for status reasons. 21 Q When you say you joined it for status reasons, what 22 do you mean? 23 A I belo
ng to a lot of organizations and I figured it 24 would look good on my resume, when I did my resume, they 25 see Who's Who in undergraduate. When I finished graduate OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6957 Walton-direct/Scott
1 school, I figured well maybe somebody gave me name and now 2 I'm going to another level which will be international, 3 you know, global. 4 Q How, if at all, did you hope to use this purchase 5 that you made? 6 A For networking purposes. 7 Q When you say "networking," what do you mean? 8 A I figured they would have different agencies where I 9 could get in touch with certain people doing the type of 10 work that I do. Maybe they would be instrumental in 11 helping me or giving me some insight into other agencies I 12 didn't know about as far as dealing with seniors or the 13 community as a whole. 1
4 Q If your name had been taken from a mailing list 15 rather than nomination, would you still have purchased? 16 A No. 17 Q Why is that? 18 A Because I don't have to pay money to join a 19 membership. 20 Q What, if anything -- withdrawn. 21 What would have been the effect in your mind of 22 your name coming from a mailing list? 23 MR. LEE: Objection. 24 THE COURT: Sustained. 25 BY MS. SCOTT: OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6958 Walton-direct/Scott
1 Q Why is it that you would not have made this purchase 2 if your name was taken from a mailing list? 3 A Mailing is not valid. A person could be dead or 4 homeless, and that is no special need for a person to pay 5 to join a membership if your name comes off a mailing 6 list. That's how people get junk mail through the mailing 7 list and I don't send mon
ey through a mailing list, 8 because I don't like mailing lists. 9 Q When you made your purchase from the company, how did 10 you pay for it? 11 A I paid with my credit card. 12 Q How did you give your credit card to the company? 13 A I gave it to them over the telephone. 14 Q Now, I'm showing you Government's Exhibit 5-B, as in 15 Baker, which is in evidence (handing.) 16 Do you see your name on that document? 17 A Yes, I do. 18 Q And do you see a date, a couple of dates in the 19 right-hand corner? 20 A Yes. 21 Q What are the dates? 22 A For membership is 12/8 and the invoice date was 23 12/15. 24 Q Ms. Walton, did you receive a plaque? 25 A Yes, I did. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6959 Walton-direct/Scott
1 Q Can you tell us what happened when you received the 2 plaque?
3 A When I opened the box and saw the plaque my name was 4 spelled wrong and I told them that I was sending the 5 plaque back because my name was spelled wrong. 6 Q And did you ever receive a directory from the 7 company? 8 A No, I didn't. 9 Q And can you tell us what you did when you realized 10 that you had not received the directory? 11 A I called them back again and I asked them what 12 happened to the registry and the credit card that they 13 promised to send for the money that I had sent them. 14 Q And what response did you get? 15 A The response was that I had to send some more money 16 in order to get the directory. And I went off and I told 17 them that I was going to call the Better Business Bureau 18 and I was going to call Mark Green and report them. 19 Q Did you ever have any other contacts with the company 20 after that? 21 A One mor
e time. When I called to ask them about the 22 registry again because I had sent my money and I didn't 23 think I needed a plaque for $200 and something when I have 24 plenty of plaques and this one wasn't even correct. 25 Q Ms. Walton, who is Mark Green? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6960 Walton-cross/Trabulus
1 A Mark Green is the public advocate for Manhattan, New 2 York City. 3 MS. SCOTT: Thank you. I have no further 4 questions. 5 I would like to publish the exhibits, Your Honor. 6 THE COURT: Very well. 7 MS. SCOTT: 5-B and 5-D. 8 CROSS-EXAMINATION 9 BY MR. TRABULUS: 10 Q Good afternoon, Ms. Walton. My name is Norman 11 Trabulus. It's nice to speak to somebody who is in the 12 business of helping people. 13 Let me show you something, Defendant's Exhibit 14 Q. Did anybody from the government ev
er show you this, 15 ma'am? 16 A No. 17 Q I'm just going to direct your attention to page 18 13-92, madam. 19 Is that a listing for you in this book? Can you 20 see it? 21 A (Perusing.) It's a listing but I don't know what New 22 York, New Jersey and Connecticut. I don't work in them 23 three states. I only work in New York and it's not a 24 tri-state program. 25 Q Were there any people who were in the senior center OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6961 Walton-cross/Trabulus
1 who might have been from another state? 2 A No. Only from my community. 3 Q Is your name spelled correctly? 4 A No. 5 Q It's spelled incorrectly? 6 A Yes. 7 Q There's an E left out of Madeline? 8 A Yes. 9 Q Did you, Ms. Walton, ask for another plaque when you 10 sent the other one back? 11 A Y
es. 12 Q Did you ever get it? 13 A No. 14 Q Let me ask you, I take it that you received a 15 telephone call first and then asked for literature and 16 then got that back in the mail? 17 A Yes. 18 Q And then sent it? 19 A Yes. 20 Q You were asked some questions by Ms. Scott about 21 whether how you would react if your name came from a 22 mailing list. 23 A I don't deal with mailing lists. 24 Q Excuse me. I'm just trying to set up for a question 25 I was going to ask you. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6962 Walton-cross/Trabulus
1 Ms. Scott asked you how you would feel if your 2 name would have come from a mailing list. 3 A I wouldn't have responded. 4 Q Did Ms. Scott tell you that your name came from a 5 mailing list? 6 A No. 7 Q Did anybody indicate to you that the fact th
at you 8 were telephoned first might indicate that your name didn't 9 come from a mailing list but somebody else might have 10 specifically suggested that you be a member? 11 A As I explained, I thought it came from my college. I 12 thought I was selected from my college. 13 Q And did anybody -- you met with Ms. Scott -- 14 A Today is the first day I met with Ms. Scott. 15 Q Did you speak to anyone from the postal service? 16 A Yes, I am. 17 THE COURT: Wait a minute. You have to wait 18 until Mr. Trabulus finishes his question before you 19 answer. 20 THE WITNESS: Okay. 21 THE COURT: Let there be a little pause. 22 THE WITNESS: Yes, Your Honor. 23 THE COURT: That means that both of you will not 24 talk at the same time. 25 Okay? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6963 Walton-cross/Trabulus
1 TH
E WITNESS: Yes, sir. 2 BY MR. TRABULUS: 3 Q Did any of them explain to you or tell you that the 4 fact that you were telephoned first might indicate that in 5 fact another person, whether at your college or elsewhere, 6 had given your name to Who's Who Registry Worldwide to 7 contact? 8 A No. 9 Q Do you remember the name of the salesperson that you 10 spoke to, the salesman? 11 A I thought it was Keith, but I heard it was something 12 else. 13 Q Ms. Walton, I'm sure you haven't seen this before, 14 but I'm just showing it to you. 15 Do you see your name on it and in this case your 16 first name spelled correctly? 17 A Yes. 18 Q And this is an order form, it says Who's Who 19 Worldwide Registry? 20 A Because I spelled my name over the phone. 21 Q Because the mistake was somebody else's, I'm sure. 22 It is Who's Who Registry
Inc., right? 23 A Yes. 24 Q Next to the word it says "account executive," there 25 is a number one and there is somebody's handwriting there? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6964 Walton-cross/Trabulus
1 A Yes. 2 Q And it says Mike Powers? 3 A Yes. 4 MR. TRABULUS: Your Honor, this is 5-C, if I may, 5 and may I publish it to the jury? 6 THE COURT: Very well. 7 BY MR. TRABULUS: 8 Q Now, Ms. Walton, I just want to see if I got it 9 right. You thought that this was affiliated with the 10 Who's Who -- 11 A I thought it was a spin-off from the Who's Who for 12 undergraduates. 13 Q And they didn't tell you that on the phone, did they, 14 when you spoke to them? They didn't say it was a spin-off 15 of the one that you were in when you graduated? 16 A No, they said nominated. I thought it was a
17 spin-off. 18 Q And if it was a spin-off of that Who's Who, would you 19 have been happy to be a member of it even today? 20 A I wouldn't have paid money because you don't have to 21 pay money to be in Who's Who. 22 Q In that one. 23 If in fact it was a spin-off -- well, thinking it 24 was a spin-off, you did pay money; is that fair to say? 25 A Because I thought I was getting the plaque, the OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6965 Walton-cross/Trabulus
1 Registry and the credit card. That's what I paid the 2 money for. 3 Q And in terms of that Who's Who, let's say you were a 4 member of that Who's Who, would you be happy to be a 5 member of that even if it turned out that they had 6 obtained your name from a mailing list? 7 A No. 8 MR. TRABULUS: I have no further questions. 9 THE COURT: Anything else?
10 MR. DUNN: No questions, Your Honor. 11 MR. NELSON: No questions. 12 MR. LEE: No, sir. 13 MR. JENKS: No questions. 14 THE COURT: Anything further? 15 MS. SCOTT: Yes, Your Honor. Briefly I do have 16 something. 17 Your Honor, I would just ask for the card back, 18 that would be 5-D, just for a minute, from the jury. 19 THE COURT: Very well. There's the card. 20 (Continued.) 21 22 23 24 25 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6966 Walton-redirect/Scott
1 REDIRECT EXAMINATION 2 BY MS. SCOTT: 3 Q Ms. Walton, I want to ask you to take another look at 4 Government's Exhibit 5-D, the lead card that you filled 5 out. And once again, read off that little code you see in 6 the lower right-hand corner. 7 A GA Group L. 8 Q That's L as in Leon; is that correct?
9 A Yes. 10 Q I will show you Government's Exhibit 165 which is a 11 solicitation letter from Who's Who Worldwide dated 12 November 18, 1992. 13 MR. NELSON: Objection. 14 THE COURT: What ground? 15 MR. NELSON: This is beyond the scope of what the 16 direct examination was. 17 THE COURT: Why is this gone into? 18 MS. SCOTT: Mr. Trabulus asked Ms. Walton whether 19 she knows her name was taken from a mailing list and this 20 is related to that. 21 THE COURT: Overruled. 22 BY MS. SCOTT: 23 Q Now, Ms. Walton, if you take a look at the top of 24 that solicitation letter, do you see some handwriting 25 there? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6967 Walton-redirect/Scott
1 A Yes. 2 Q At bottom of the handwriting on the left-hand side, 3 do you see the same code that appeared on your lead card
4 on 5-D? 5 I'll point you to the left-hand side of that. 6 A No, that's not the same as this. 7 Q If you read that lettering that appears right 8 underneath the Who's Who letterhead, what does that say? 9 A BRCGA. I'm sorry. BRCGA Group L. 10 Q -- GA Group L is the same code that appears at the 11 bottom left-hand corner of the lead card as well? 12 A Yes. 13 MS. SCOTT: May I publish 165 and 5-D, Your 14 Honor? 15 THE COURT: Yes. 16 MS. SCOTT: All right. I have no further 17 questions. 18 THE COURT: Thank you. 19 MR. TRABULUS: I do very briefly but I need the 20 exhibits. I'll give them back. 21 (Continued.) 22 23 24 25 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6968 Walton-recross/Trabulus
1 RECROSS-EXAMINATION 2 BY MR. TRABULUS: 3 Q Ms. Walton, I jus
t want to show you this letter that 4 has this code on the top that you were asked about. 5 This letter isn't addressed to you, is it? 6 A No. 7 Q You never saw this letter before? 8 A No. 9 Q So this is a letter that went to somebody else or is 10 addressed to somebody else that has something on it that 11 is also on this card, right? 12 A Yes. 13 Q And you don't know, as we don't know as we're here, 14 whether there's any relationship between this card and 15 this letter? 16 A I don't know. Maybe that's the symbol for my number 17 and they gave the man the same thing. 18 Q Do you know whether this letter that you got is 19 worded exactly the same -- excuse me. 20 Do you know whether this letter here, and you can 21 look at it, can you tell whether it was worded exactly the 22 same as the letter that came to you in the mail? 23 Let
me ask you before that. Do you still have 24 the letter that was sent to you? 25 A No. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6969 Walton-recross/Trabulus
1 Q And it's years ago; am I right? 2 A Eight years ago. 3 Q So you wouldn't be able to tell whether it was the 4 same text or not, maybe similar? 5 A Basically. 6 Q Could be a different variation? 7 A This part nominated for possible inclusion. 8 Q Okay. 9 You don't know whether this card that you've got 10 was mailed to you from Who's Who Worldwide from their 11 offices or from some outside place that mailed it for 12 them. You would have no way of knowing that? 13 A Yes, because it had another part attached to the top 14 and you would have to separate it. 15 Q In terms of it was actually sent from Who's Who 16 Worldwide or an outside place that had ma
iled things for 17 Who's Who Worldwide, you would have no way of knowing 18 that? 19 A Yes, because I told the guy to send me the 20 information. 21 Q So you think it came from Who's Who Worldwide itself? 22 A Yes. 23 MR. TRABULUS: I have no objection. 24 MS. SCOTT: I would ask that Mr. Trabulus just 25 return the exhibit to the jury. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6970 Zerring-cross/Nelson
1 THE COURT: Anything else? 2 MS. SCOTT: Nothing further. 3 THE COURT: You may step down. 4 (Mr. Zerring returns to the stand.) 5 THE COURT: You are still under oath. 6 E L L I O T Z E R R I N G , having been previously sworn 7 by the Clerk of the Court, was examined and testified as 8 follows: 9 CROSS-EXAMINATION 10 BY MR. NELSON: 11 Q Mr. Zerring, from 1978 to 1992, how much would you
12 estimate in cash you received as a result of your 13 participation in the pool? 14 A I couldn't guess. I really couldn't guess. 15 Q Was it more than $300,000? 16 A I really couldn't guess. 17 Q How much money did you receive per year from the 18 pool? 19 A The last five or six years, it was an average of 20 about 35 to 40,000, except for that one year where we had 21 that extremely large case, the Rafella case. 22 Q So you would say 30 times 5, that's $150,000, right? 23 A Approximately. 24 Q And you received about $90,000 from Rafella; is that 25 right? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6971 Zerring-cross/Nelson
1 A Approximately. 2 Q So that's about $250,000. 3 And the scam went back to 1978; is that right? 4 A Well, that's 1978 is when I started the business. 5 Q Right. 6 So from '78 u
p until, let's say, 1986 how much 7 did you get between '78 and '86? 8 A I couldn't give you a guess. 9 Q More than 100,000? 10 A I couldn't answer that yes or no. 11 Q Let me ask you, in 1992, where were you living? 12 A I was living in Lawrence, New York. 13 Q And did you own a house then? 14 A Yes. 15 Q How much did you pay for that house? 16 A Approximately 200 some-odd thousand dollars. 17 Q Did you pay for that house in cash? 18 A No. 19 Q Did you do some improvements on the house? 20 A Yes. 21 Q How long did you own the house for? 22 A I owned that house roughly from -- I don't recall the 23 year I purchased it. It was some time ago. 24 Q How much money in improvements do you think that you 25 put in the house from '78 to '92? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6972 Zerring-cross/Nelson
1 A If I had to take an educated guess, I would say a 2 couple hundred thousand. 3 Q How much of that couple hundred thousand was in 4 green? 5 A If I had to guess, I would say maybe 20, 30 percent, 6 tops. 7 Q Am I correct that in about 1990, 1991, you bought a 8 boat for $140,000 in cash? 9 A Those figures are not correct. 10 Q Did you remember -- did you pay for the boat in cash? 11 A Partially. 12 Q How much cash did you pay for the boat? 13 A $140,000. 14 Q How much did the boat cost? 15 A $350,000 roughly. 16 Q It was a big boat, wasn't it? 17 A It was kind of big. 18 Q How many feet was it? 19 A 58 foot. 20 Q Bigger than this courtroom, wasn't it? 21 A I really don't know. 22 Q In 1990, what kind of car were you driving? 23 A I think I believe either a Mercedes or a Rolls Royce. 24 Q Either
a Mercedes or a Rolls Royce. 25 Did you own both, a Mercedes and a Rolls Royce? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6973 Zerring-cross/Nelson
1 A At the time we had two cars, yes. 2 Q One was a Rolls Royce and the other was a Mercedes; 3 is that right? 4 A Yes. 5 Q And did you have any other cars besides the Mercedes 6 and the Rolls Royce? 7 A At the time I believe we had one other car. 8 Q What kind of car was that? 9 A BMW. 10 Q Was that the 740 BMW, the top of the line car? 11 A No. 12 Q The 318, the little one? 13 A The small one, yes. 14 Q Was that the one that you gave to your daughter to go 15 to NYU? 16 A That's the one that I gave to my daughter, not to go 17 to NYU. 18 Q Your daughter was going to NYU? 19 A I think she started NYU later on. 20 Q In 1993, 1994?
21 A Somewhere around there. 22 Q You were paying the tuition to NYU in cash? 23 A No. 24 Q Am I correct that with respect to the cash that you 25 received from '78 to '92, you weren't reporting that cash OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6974 Zerring-cross/Nelson
1 on your income tax returns; is that right? 2 A That's correct. 3 Q But when you pled guilty you only pled guilty to one 4 year's income tax evasion for 1990; is that correct? 5 A No, that's not correct. I don't believe it's 6 correct. 7 Q Did you agree to pay back the Internal Revenue 8 Service the taxes that were due and owing for the cash 9 that you never reported? 10 A Yes, I did do that. 11 Q And did you negotiate with the Internal Revenue 12 Service what the total amount of cash, interest and 13 penalties was going to be? 14 A We ag
reed to pay back the amount of monies based on I 15 think 1987 to 1992. 16 Q What about '78 to '87? Did you pay back that money? 17 A No. 18 Q And you didn't pay any of the interest or penalty 19 from '87 -- excuse me, from '78 to '86; is that correct? 20 A I don't believe so. 21 Q I believe you indicated just a few moments ago that 22 when you pled guilty to the tax charge, that related to 23 your tax charges going back to 1986; is that correct? 24 A '86 or'87. 25 Q I would like to show you at this time the information OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6975 Zerring-cross/Nelson
1 that you pled guilty to which is 3500-23-A, and I would 2 like to direct your attention to Count 3 of that 3 information. 4 If you would look at it and read it to yourself 5 and see if that refreshes your recollection that you only 6
pled guilty to income tax evasion for one year? 7 A (Perusing.) Well, they state here calendar year 1990, 8 but I believe, to the best of my recollection, that the 9 taxes were paid back for '87 to '92. 10 Q But you only pled guilty to income tax evasion for 11 1990; is that correct? 12 Is that correct? That's what the information 13 provides. 14 A Say that again? 15 Q Count 3 of the information concerns your failure to 16 file a proper tax return and the filing of a fraudulent 17 tax return on April 15, 1991 for the 1990 tax year; is 18 that correct? 19 A Right. 20 Q Doesn't deal with 1989, does it? 21 A Doesn't say that specifically here, but to the best 22 of my knowledge, it was paid for. 23 Q Does it say here in the information? 24 A In the information, I don't see it. 25 Q So you didn't plead guilty to the crime of income tax
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6976 Zerring-cross/Nelson
1 evasion for 1989, 1988, 1987 and 1986, all years for which 2 you've admitted here that you in fact defrauded the 3 Internal Revenue Service, right? 4 A I really can't answer that yes or no. 5 Q Well, you've agreed to pay them back but you didn't 6 plead guilty to it; is that right? 7 A My understanding was I would pay the taxes back from 8 the years '87 to '92. 9 Q You entered into a formal written plea agreement and 10 you pled guilty to a formal plea agreement? 11 A Yes. 12 Q And before you entered into that plea agreement you 13 met with agents of the government, your attorney and 14 yourself, right? 15 A Yes. 16 Q A number of meetings. 17 Those meetings started on December 29, 1992; is 18 that right? 19 A Yes. 20 Q Your attorney
was Dominick Amorosa? 21 A Yes. 22 Q He was a private attorney you had? 23 A Yes. 24 Q And you met with Mr. Amorosa after a search warrant 25 was executed on one of the offices that you participated OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6977 Zerring-cross/Nelson
1 with the people from the pool from? 2 A Say that again? 3 Q You hadn't been arrested when you first spoke with 4 the government? 5 A No. 6 Q But you knew that the government had already targeted 7 the operation that you had been a participant in; is that 8 right? 9 A Can you be more specific on that question, please? 10 Q Well, a search warrant was executed upon a certain 11 premises? 12 A Yes. 13 Q What was that premises? 14 A 935 Northern Boulevard, Great Neck. 15 Q What was located there? 16 A My office. 17
Q Since you were a 50 percent partner in that business 18 you knew that you were a target of a federal 19 investigation? 20 A I can only assume so, yes. 21 Q And you hired Mr. Amorosa to be your attorney; is 22 that right? 23 A Yes. 24 Q At a later point in time following discussions with 25 Mr. Amorosa, you went to the U.S. Attorney's Office with OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6978 Zerring-cross/Nelson
1 him and you met with a number of Assistant United States 2 Attorneys along with your attorney; isn't that right? 3 A Yes, sir. 4 Q And present during the course of that meeting at the 5 U.S. Attorney's Office was Postal Inspector Martin 6 Biegelman; is that correct? 7 A I believe that is correct. 8 Q He was there from the very first day you walked into 9 the United States Attorney's Office on December 29,
1992? 10 A I'm pretty sure that's the case. 11 Q From 1992 up to the time you actually entered your 12 guilty plea in August of 1993, did you continue to meet 13 with Mr. Biegelman and other representatives of the United 14 States Government to discuss the investigation that you 15 had been a participant in? 16 A Yes. 17 Q And during that same period of time, did you discuss 18 with your attorney negotiating a plea bargain on your 19 behalf? 20 A I'm not sure if I understand that last question. 21 Q During the period of time from your first visit to 22 the United States Attorney's Office to the date you 23 actually entered your guilty plea in 1993, did you have 24 discussions with your attorney about plea negotiations, 25 what you might plead guilty to? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6979 Zerring-cross/Nelson
1 A It might have come up in discussion, but he was 2 representing and he was my criminal attorney and took care 3 of that. 4 Q Based on your discussions with your attorney, did you 5 eventually enter into a cooperation agreement with the 6 government? 7 A Yes. 8 Q I would like to show you the cooperation agreement 9 which is Government's Exhibit 3500-23-B. 10 Do you recognize that document, sir? 11 A Yes. 12 Q And I would like to turn to the last page which would 13 be page 7. 14 Am I correct that the agreement is signed by you, 15 your attorney and an Assistant United States Attorney? 16 A Yes. 17 Q And this is the agreement you eventually entered; is 18 that correct? 19 A Yes. 20 Q Before you entered into that plea agreement, did you 21 review the agreement with your attorney? 22 Before you signed the agreement, did yo
u review 23 it? 24 A Yes. 25 Q And you read through it to find out what it was you OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6980 Zerring-cross/Nelson
1 were agreeing to; is that right? 2 A More or less. 3 Q When you spoke with Mr. Amorosa, did he advise you 4 that you faced a maximum sentence of 15 years 5 incarceration, five years for each of the offenses that 6 you were pleading guilty to, that could potentially be 7 consecutive; is that right? 8 A I believe that is correct. 9 Q And during the course of those discussions, did he 10 tell you that the government wouldn't prosecute you for 11 income tax evasion for the years going back before 1990? 12 A I don't remember that conversation at all. 13 Q Did you ever have any discussions with him about the 14 possibilities that you could be prosecuted for income tax
15 evasion going back as far as 1978? 16 A I don't recall at all ever having that conversation. 17 Q Did you have discussions with Mr. Amorosa about there 18 being something called federal sentencing guidelines? 19 A To some degree. 20 Q And did Mr. Amorosa explain to you that when you are 21 sentenced, separate and apart from the 15 year maximum you 22 might potentially face, the federal sentencing guidelines 23 would be used by Judge Wexler, the Judge who is eventually 24 going to sentence you, in order to impose sentence. Did 25 he explain that to you? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6981 Zerring-cross/Nelson
1 A Did he explain what? 2 Q The federal sentencing guidelines. 3 A We talked about it, I believe. 4 Q Okay. 5 Did Mr. Amorosa tell you that under the federal 6 sentencing guidelines, it was mandatory that
the Judge 7 would have to sentence you to a period of incarceration 8 based upon the amount of the fraud that you had 9 perpetrated? 10 A Well, that's the way the guidelines are set up. 11 Q And did he explain to you that you had to go to 12 jail? That if you plead guilty you had to go to jail 13 under the guidelines? Did he tell you that? 14 A I guess basically he must have. 15 Q And, well, you agreed to enter what is called a 16 cooperation agreement? 17 A Yes. 18 Q Are you telling me Mr. Amorosa, an attorney who you 19 paid money to represent you, didn't explain to you before 20 you entered the agreement that you had to go to jail under 21 these sentencing guidelines if you plead guilty? 22 A I guess he in some way tried to explain that to me. 23 Q Did you understand it? 24 A I guess at the time I did, yeah. 25 Q Well, did you understand
that he explained to you OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6982 Zerring-cross/Nelson
1 that there was only one way out of possibly going to jail, 2 of having to go to jail? Did he tell you that? 3 A I don't recall specifically him saying that. 4 Q As you sit here today, would you expect that Judge 5 Wexler will send you to prison? 6 A Do I expect him? 7 Q Yes. 8 A Well, I have a cooperation agreement which allows him 9 to depart downward from those guidelines. 10 Q And you are hoping that by cooperating you'll not go 11 to jail; is that right? 12 A Absolutely. 13 Q That's why you are sitting here today testifying, 14 isn't that right? You are hoping not to go to jail, 15 right? 16 A I'm hoping not to go to jail, right. 17 Q Now, when you sat down with Inspector Biegelman for 18 the first time on Decemb
er 29, 1992, at that time you also 19 were hoping not to go to jail; isn't that right? 20 A Yes. 21 Q And you were hoping by going in to cooperate with the 22 government in their investigation of the fraud you had 23 participated in you would potentially avoid going to jail; 24 is that right? 25 A Could you repeat that, please? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6983 Zerring-cross/Nelson
1 MR. NELSON: I'll withdraw the question and 2 rephrase it. 3 BY MR. NELSON: 4 Q When you went to see Inspector Biegelman for the 5 first time on December 29, 1992, that was with the hope 6 that you wouldn't have to go to jail, right? 7 A Well, I didn't know at that point what my situation 8 would be. If you could ask maybe a little more specific 9 question, I don't know where you're going. 10 Q Let's start with the first time y
ou decided to go to 11 the United States Attorney's Office. Did you go there 12 with the hope of avoiding going to jail? 13 Yes or no? 14 A I was going there knowing that I was going to enter 15 into a cooperation agreement and that the cooperation 16 agreement, if I give full and substantial information, 17 that -- and this would allow the Honorable Wexler to 18 depart from the guidelines. 19 Q And that meant that you were hoping that you wouldn't 20 have to go to jail by cooperating; is that correct? 21 A Correct. 22 Q Now, the initial part of your cooperation involved 23 cooperating with Mr. Biegelman against the people who you 24 had participated in this fraud with; is that right? 25 A In which fraud? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6984 Zerring-cross/Nelson
1 Q Well, that's a good question actually. 2 Th
e conspiracy to engage in mail fraud involving, 3 let's start with AIG Insurance and Rafella Sportswear. 4 A Yes. 5 Q And you agreed to participate and advise Inspector 6 Biegelman and the government about the different people 7 who you were partners with in that fraud? 8 A Yes. 9 Q And you agreed in telling him about the different 10 insurance people who you agreed to pay off; is that 11 correct? 12 A Yes. 13 Q And you did the same with respect to all the other 14 participants in the pool; is that right? 15 A Yes. 16 Q Now, from 1992 to November 1994, when you eventually 17 went to go work at Who's Who Worldwide, did you 18 participate in any other investigations at the request of 19 Inspector Biegelman? 20 A Can you be more specific? 21 Q Did you wear a wire in any other investigations that 22 Inspector Biegelman asked you to part
icipate in? 23 A Yes. 24 Q And what were those? 25 A I believe there was one other. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6985 Zerring-cross/Nelson
1 Q What was that? 2 A Can you -- 3 Q What was the other investigation that you wore a wire 4 for? 5 A It pertained to the insurance industry. 6 Q So it was a different fraudulent scheme involving the 7 insurance company, the insurance industry between '92 and 8 '94; is that right? 9 A It happened to be part of the Rafella case. 10 Q So it was still part of the same investigation; is 11 that right? 12 A Yes. 13 Q Other than the insurance fraud that you participated 14 in, did you engage in any other cooperation with Inspector 15 Biegelman between '92 and '94? 16 A Can you rephrase that question? Specifically I'm not 17 sure what you're saying.
18 Q Did you go undercover in any other investigations? 19 A No. 20 Q Did you make telephone calls at the request of the 21 government in any other investigations? 22 A No. 23 Q Did you go to work for any other companies at the 24 request of Inspector Biegelman during '92 to '94? 25 A No. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6986 Zerring-cross/Nelson
1 Q But between '92 and '94, you weren't in jail; is that 2 right? 3 A That's correct. 4 Q And you were out during that period of time; is that 5 correct? 6 A Yes. 7 Q And during that entire period of time, the 8 investigation into the various different people who you 9 had participated in the fraud with was ongoing; is that 10 right? 11 A Yes. 12 Q Now, there came a point in time in 1994 where 13 Inspector Biegelman came to you an
d asked you to go work 14 at Who's Who Worldwide, is that correct? 15 A Yes. 16 Q And did he call you in order to do that? Did he 17 bring you to his office in order to do that? I mean, how 18 did this come about initially? 19 A I believe I happened to be in his office in another 20 insurance matter or something. 21 Q At that time he asked you to participate in his 22 investigation involving a completely unrelated entity; is 23 that right? 24 A Yes. 25 Q And that would have been whether when, in October or OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6987 Zerring-cross/Nelson
1 November of 1994, as best you can recall? 2 A I believe it was in November. 3 Q Now, you went to work there at end of November of 4 1994; is that right? 5 A Correct. 6 Q Before -- 7 A I started actually, as I said earlier, I start
ed work 8 December 6th, but I actually was interviewed November 9 28th, I believe. 10 Q Now, at the time that you spoke to Inspector 11 Biegelman in his office, you hadn't been sentenced yet, 12 right? 13 A Hadn't been sentenced. 14 Q At the time you spoke with Inspector Biegelman in 15 November of 1994 at his office, you hadn't been sentenced 16 yet? 17 A I hadn't been sentenced yet. 18 Q And you knew at that time, am I correct, that 19 Inspector Biegelman was one of the people who would give 20 input to the Assistant United States Attorney who would be 21 writing a letter on your behalf to Judge Wexler in order 22 to permit Judge Wexler to depart below the mandatory 23 federal sentencing guidelines that you faced; isn't that 24 right? 25 A Yes. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6988 Zerring-cross/Nelson
1 Q And you knew that Inspector Biegelman was a person 2 who would give a tremendous amount of insight into what 3 would be included in the letter that would be given to 4 Judge Wexler in determining your sentence? 5 A I believe he was one of many, many people. 6 Q But he was the person who you first started 7 cooperating with, right? He was there the very first day, 8 December 29, 1992? 9 A Yes. 10 Q And he was the person who was present during many, 11 many, many of your meetings from 1992 to 1994, correct? 12 A As I said before, that is correct, but there were 13 also many, many, many other law enforcement people 14 involved in this case that I worked with. 15 Q Now, am I correct that Inspector Biegelman was also 16 the individual who was -- who would sign the affidavit in 17 support of the search warrant that lead to the raid on 18 your place
of business? 19 A I believe that is correct. 20 Q So you knew he was the lead agent on your case; is 21 that right? 22 A I believe that he was, yeah. He probably was. I 23 mean, I'm not in that end of the business, the law 24 enforcement business. 25 Q You were shown the affidavit in support of the search OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6989 Zerring-cross/Nelson
1 warrant by your attorney, Mr. Amorosa? 2 A Yes, some time ago. 3 Q And he showed you Inspector Biegelman had signed it, 4 didn't he? 5 A To the best of my recollection, that is probably 6 correct. 7 Q You knew when you met with Mr. Biegelman for the very 8 first time on December 29, 1992, that he was the person 9 who was the lead investigator in the investigation of you; 10 is that correct? 11 A You are using the word "lead." I can't be su
re. I'm 12 not going to guess that he was the lead, I don't know. 13 There were other agents there, FBI agents there. 14 Q How many other agents were present at the course of 15 that first meeting you had at the U.S. Attorney's Office? 16 A FBI agents, couple U.S. Attorneys and I'm not sure if 17 there was another person there. 18 Q When you were in Inspector Biegelman's office in 19 1994, am I correct that he instructed you to go in and 20 pose as an employee of Who's Who Worldwide? 21 A Yes. 22 Q And the Inspector told you that he believed that 23 Who's Who Worldwide was committing some form of mail 24 fraud; is that right? 25 A Some type of a fraud. I don't know specifically. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6990 Zerring-cross/Nelson
1 Q And you agreed to do what Inspector Biegelman asked 2 of you because you believ
ed by cooperating with him it 3 would help you in receiving a more favorable sentence 4 before Judge Wexler; is that right? 5 A It was part of my agreement to cooperate fully, 6 substantially, accurately and truthfully. 7 Q And he recruited you literally two years after you 8 decided to cooperate and a year after you pled guilty in 9 order to go work for Who's Who Worldwide; is that right? 10 A That was November 20, 1994. 11 Q And when he asked you to go do it, you agreed to meet 12 him; is that correct? 13 A That's correct. 14 Q And the insurance fraud that you perpetrated 15 certainly had absolutely nothing to do with Who's Who 16 Worldwide? 17 A I believe so. That's correct. 18 Q It had nothing to do with Bruce Gordon or any of the 19 people who were sitting here on trial right now; is that 20 correct? 21 A To the best of my knowledge.
22 Q I represent Frank Osman, Frank Martin, who is seated 23 here at the far side. He had nothing to do with the 24 insurance fraud; is that right? 25 A I don't believe so. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6991 Zerring-cross/Nelson
1 Q Now, it just so happens, though, that the agent who 2 was investigating your crimes was Inspector Biegelman; 3 isn't that right? 4 A He was one of many, I guess. 5 Q And it was Inspector Biegelman who told you that the 6 way for you to work off any possible jail sentence was to 7 help him in this investigation he was now doing; isn't 8 that right? 9 A I don't believe that's what he told me on the day 10 that he was engaged in that particular investigation, you 11 know. At that point I had been working with Inspector 12 Biegelman and many other investigative people with the 13 gove
rnment at that point in time. 14 Q And he pulled you off of that investigation and put 15 you into this one? 16 A Not really. I worked days and nights. I was still 17 involved, you know, full-time. 18 Q So you were working as a full-time informant during 19 that period of time? 20 A Sure. 21 Q So let me understand. You worked at Who's Who 22 Worldwide from the beginning of December 1994 until 23 mid-February 1995, correct? 24 A February 15, 1995, I believe. 25 Q And you were working five days a week there? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6992 Zerring-cross/Nelson
1 A Right. 2 Q So during that period of time you were also working 3 with Inspector Biegelman in the insurance fraud 4 investigation, correct? 5 A To some degree, that's what I'm saying. 6 Q So you were working sort of every day and night wi
th 7 Inspector Biegelman? 8 A And weekends. 9 Q So you were working seven days a week with Inspector 10 Biegelman? 11 A Pretty much so. 12 Q You were literally in contact with this man almost 13 nonstop during this period of time? 14 A For the most part, that is correct. 15 Q And you were keeping him up-to-date day-to-day on 16 what was happening at Who's Who Worldwide? 17 A When he would call up I would give him the 18 information. 19 Q Immediately? 20 A Yes. 21 Q Because you would do whatever it was that he would 22 ask you to do? 23 A Absolutely. It was part of my agreement. 24 Q And whatever it is that he would ask you to do, you 25 would do, right? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6993 Zerring-cross/Nelson
1 A Yes. 2 Q And it's he who told you to apply for a job at Who'
s 3 Who Worldwide, right? 4 A Yes. 5 Q And it's he who asked you to wear a body wire at 6 Who's Who Worldwide; is that right? 7 A Yes, a concealed tape-recorder. 8 Q A little Nagra tape-recorder? 9 A A little square type box. 10 Q It's he who advised you, it was he who thought there 11 was criminal conduct going on in Who's Who Worldwide; 12 isn't that right? 13 A Could you repeat that once more? 14 Q Inspector Biegelman told you to carry that little 15 tape-recorder into Who's Who Worldwide and to apply for a 16 job in Who's Who Worldwide because he thought they were 17 doing something wrong, right? 18 MR. WHITE: Objection. 19 THE COURT: Let me hear it again. 20 (Record read.) 21 THE COURT: Overruled. 22 THE WITNESS: Answer the question? 23 THE COURT: Yes. 24 THE WITNESS: Could you read it one more time,
25 please? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6994 Zerring-cross/Nelson
1 (Record read.) 2 THE COURT: See, it's something wrong, right? 3 That's bad. 4 THE WITNESS: Right. 5 THE COURT: What did Inspector Biegelman tell you 6 when he told you to go in there? 7 THE WITNESS: To wear the concealed tape-recorder 8 and tape a complete full day of work there whatever the 9 full day entailed and he told me to follow the 10 instructions of the company, whatever the normal 11 instructions for the company was. That's what he told me. 12 MR. NELSON: Thank you. 13 Q When you first went for the job interview there, that 14 was in November of 1994, correct? 15 A November 28th, I think. 16 Q Yes. 17 A Yes. 18 Q And you then started working there the first week in 19 December of 1994, right? 20 A I bel
ieve that was the 6th of December, yes. 21 Q And shortly after you first started working there, 22 you started bringing in this tape-recorder to record 23 conversations; is that right? 24 A Yes. 25 Q Now, did you wear the tape-recorder and record all of OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6995 Zerring-cross/Nelson
1 the discussions and conversations that were taking place 2 every day? 3 A I would say just about. 4 Q So you would arrive at work at about 9 o'clock in the 5 morning; is that right? 6 A Sometimes 8:30, sometimes 9. 7 Q Leave there around 4:30, 5 o'clock? 8 A Yes, sometimes there was a meeting after hours. 9 Q And you recorded the events that took place from the 10 time you arrived until the time you left? 11 A All the events. 12 Q And that was five days a week? 13 A Yes, sir. 14 Q An
d that was from the period of time from December, 15 approximately December 6th to February 15th; is that 16 correct? 17 A That's correct. 18 Q And would I be correct in stating that you made 19 literally hundreds of tape records, hundreds of tapes 20 during that period of time you were working there? 21 A Hundreds of tapes? I don't believe there were that 22 many. There were many, but I don't believe that there 23 were that many. I don't believe that is accurate. 24 Q Would I be correct that each day you worked there you 25 would call that -- a particular day's tape, you would OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6996 Zerring-cross/Nelson
1 break down all of the recordings from that one day and say 2 this is Elliot Zerring's tape number one for that day? 3 A To some degree. 4 Q And would I be correct in stating that the tape
5 didn't run for seven hours so you had to insert different 6 tapes? 7 A Oh, yes. 8 Q So each day you would have two or three or four 9 tapes; is that right? 10 A I think the maximum is maybe two, sometimes less than 11 two, you know. 12 Q Did you turn off the tape at different times during 13 the course of the day? 14 A For the most part, as I said, I left it running all 15 of the time except for the fact that when it ran out, one 16 side, I had to turn it over to the other side. 17 Q So you didn't record everything that was taking place 18 all day, every day? 19 A Most of everything. 20 Q All the recordings you eventually made you did turn 21 over eventually to the government; is that right? 22 A Yes. 23 Q Were you given any specific instructions about who to 24 report? 25 A No. OWEN M. WICKER, RPR OFFICIAL
COURT REPORTER 6997 Zerring-cross/Nelson
1 Q Were you given any specific instructions about what 2 to record? 3 A No. 4 Q Now, are you aware, sir -- withdrawn. 5 A Excuse me. 6 Q The government has shown you a series of transcripts 7 that are included in a log which I believe they numbered 8 13-89 to 14-03 that was shown to you earlier today; is 9 that correct? 10 A I don't have that in front of me, so I don't want to 11 guess. 12 Q But they showed that to you; is that right? 13 A They showed me some transcripts, yes. 14 MR. NELSON: May I see the government book of 15 transcripts? 16 BY MR. NELSON: 17 Q I would like you to look in the book from 13-87 to 18 the end which is 14-03. 19 Those are the recordings that the government has 20 shown you at this time; is that right? 21 A 13-87 is correct.
22 13-88-A is correct, I've seen that. 23 13-89-A. 24 13-90-A is included here. And I believe 13-90-B 25 looks correct. 13-90-C is correct. 13-90-D. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6998 Zerring-cross/Nelson
1 13-91-A would be part of it. 2 13-92-A is part of it. 3 13-93-A is certainly part of it. 4 13-94-A is part of it. 5 13-95-A is part of it. 6 13-96-A is part of it. 7 13-97-A looks like it's part of it. 8 13-98-A looks like part of it. 9 13-99-A, I don't believe I've seen this before. 10 I don't believe I've seen 13-99-A. 11 Q Okay. 12 A I don't believe I've seen that. 13 Q 13-99-A was not a transcript of something you 14 recorded; is that correct? 15 A That's correct. 16 Q Now, from 14-00 to 14-03. 17 A Yes, 14-00-A is something that I've seen in the 18 transcript.
19 14-01-A, yes. 20 14-02-A I've seen. 21 And 14-03-A is included in that. 22 Q Thank you, Mr. Zerring. 23 A You're welcome. 24 Q Mr. Zerring, have you reviewed all of those 25 transcripts prior to your testimony here? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 6999 Zerring-cross/Nelson
1 A Yes, I have. 2 Q And would I be correct in stating -- withdrawn. 3 Did you also review after you recorded them, the 4 vast majority of the tapes you made from the time that you 5 first started working at Who's Who until the time you were 6 terminated? 7 A Okay. Can I ask you to just be a little more 8 specific again? 9 Q Sure. 10 After you would record a tape, would you listen 11 to the tape again? 12 A After I recorded it immediately? 13 Q Yes. 14 A No, I didn't listen to it right after, no.
15 Q Between the time you were terminated in 1994 and you 16 were appearing here in court to testify, have you listened 17 through those recordings? 18 A Uhm, yeah, I've listened to the tapes. I can't 19 really say if I listened to all of them. 20 Q But you've listened to a lot of them; is that 21 correct? 22 A Yeah, yeah. Yes. 23 Q Would I be correct in stating that the transcripts 24 that are before you right here are portions of different 25 recordings that you made on different days while you were OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7000 Zerring-cross/Nelson
1 working at Who's Who Worldwide? 2 A I would say that is true. 3 Q And they certainly would reflect far less than the 4 total amount of recordings that you made while you were 5 working at Who's Who Worldwide; is that correct? 6 A Yes. 7 Q And those rec
ordings reflect portions of recordings 8 that the government has sought to introduce in evidence as 9 part of this trial; is that correct? 10 A Well, I can't tell you how they were thinking. I can 11 only tell you what I reviewed. 12 Q What you see here; is that right? 13 A Yes. 14 Q And it's those particular transcripts of portions of 15 recordings; is that correct? 16 A Yes. 17 Q If we took all the recordings that you made and made 18 transcripts out of them, would it be fair for me to state 19 that we would probably fill up about a wall of this 20 courtroom with the transcripts of all of the different 21 people who were speaking during the course of that seven 22 or eight week period of time? 23 A I don't think it would be that much. 24 Q It would be at least 10 volumes, wouldn't that be 25 correct? OWEN M. WICKER, RPR OFFICIAL
COURT REPORTER 7001 Zerring-cross/Nelson
1 A Honestly, you are asking me to guess and I don't 2 believe that would be the case. It would be more. 3 Q It would be a lot more than that? 4 A You want me to say a lot more, I think so. I can't 5 say. Everything is relative. It would be more, yes, 6 yes. Absolutely more. 7 Q Did you review with the government those portions of 8 the transcripts that are in that book? 9 Did you sit down and go over them with an agent 10 or an investigator with the government? 11 A Yes. 12 Q And did you go over the recordings in order to select 13 those portions of the recordings? 14 A I didn't select them, no. 15 Q Somebody else selected them; is that right? 16 A I guess so, yes. 17 Q Now, I represent Frank Martin, as I told you before. 18 You met Frank Martin while you were working at Who's Who
19 Worldwide? 20 A Yes. 21 Q And he was one of the group leaders while you were 22 working there; is that correct? 23 A Yes. 24 Q You advised us that you made these various different 25 recordings on a day-to-day basis. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7002 Zerring-cross/Nelson
1 Did the postal agents, particularly Inspector 2 Biegelman, go over what you had recorded on a daily basis 3 with you while you were working at Who's Who? 4 A What I would record? No. As I said earlier, I 5 recorded the complete day and days that I was there and 6 not anything specific. Anything. 7 Q Did you sit down with the various different agents -- 8 withdrawn. 9 Did you review in summary what had occurred on a 10 daily basis with the agents? 11 A I'm sorry? 12 Q On a daily basis, did you speak with Inspector 13
Biegelman? 14 A On a daily basis, yes. I made some notes basically 15 which is an overview of what happened in that 30 days 16 activity. 17 Q At any point in time, during the period you were 18 making these recordings, did Inspector Biegelman ever say 19 to you that it might be a good thing to attempt to close 20 down Who's Who Worldwide during the course of your 21 discussions with him? 22 A Never. 23 Q Did he ever tell you it might be a good idea to 24 notify the company that the inspectors felt they were 25 doing something improper? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7003 Zerring-cross/Nelson
1 A Did he ask me to tell them that? 2 Q No, did Inspector Biegelman ever say to you, you 3 know, it might be a good idea to go into Who's Who 4 Worldwide and say, you know, I think what you're saying in 5 the script do
esn't seem right. Could you stop doing 6 that. Did he ever mention that to you during the course 7 of time? 8 A Not that I recall. 9 Q Did you ever say to Inspector Biegelman, you know, 10 Inspector, why don't you go in there and tell them, could 11 you change something they're saying there, we don't think 12 that is right. Did you ever tell that to him while you 13 were working there? 14 A No. 15 Q Did you ever ask him, gee, why don't you just ask him 16 to change what they are saying in the presentation if you 17 think it is not right? 18 A No. 19 Q And they never did that, to your knowledge, during 20 the period of time that you were working there, right? 21 A As I previously stated, the answer is no. 22 Q Now, I believe you testified that there came a point 23 in time where you were terminated from your employment; is 24 that right?
25 A Yes. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7004 Zerring-cross/Nelson
1 Q And do you remember going to speak to Frank Martin 2 about that just before you left? 3 A Oh, yeah. It was Frank, I believe, that let me know 4 that I was being terminated. 5 Q And did Mr. Martin tell you that he had a friend in 6 another company and if you wanted to go work there he 7 might be able to help you work in another company? 8 A Yes, I believe he offered that to me. 9 Q Am I correct that Frank Martin wasn't very happy 10 about the fact that you had to be terminated, did he tell 11 you that? 12 A Probably did. It's been a while already, I don't 13 know exactly. 14 Q Am I correct that Mr. Martin was present during a 15 number of the different meetings while you were working at 16 Who's Who Worldwide? 17 A Yes. 18 Q
Am I correct that Mr. Martin told you at a fair 19 number of times -- withdrawn. 20 Am I correct that at these meetings Mr. Martin 21 would provide to you are what you called when you wrote 22 notes to the agent, pep rallies? 23 A Could you just run that back to me again, please? 24 Q Did Mr. Martin basically provide at the sales 25 meetings pep rallies? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7005 Zerring-cross/Nelson
1 A You are calling them "pep rallies" -- 2 Q Did you use the word "pep rallies" in the notes you 3 prepared to the agents? 4 A I can't answer that honestly, yes or no. 5 Q Mr. Martin didn't write the scripts? 6 A I don't know. 7 Q He didn't write the objection sheets? 8 A No, I don't know. 9 Q He didn't own the company? 10 A To my knowledge, I don't believe so. 11 Q You became aware shortly a
fter you went to work at 12 Who's Who Worldwide that Mr. Martin just returned to the 13 company a few weeks before you started after being away 14 for two or three years; isn't that right? 15 A I learned that he returned to the company after being 16 away, but I don't know the time-frame. 17 Q And you were aware that he was only recently back 18 with the company; is that right? 19 A Yeah. 20 Q Now, Mr. Martin's job when he spoke to you was to 21 motivate you; is that right? 22 A I guess that was the intention. 23 Q He did it by your sales lecture; is that right? 24 A Yes, sir. 25 Q And his function was to get the telemarketers, OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7006 Zerring-cross/Nelson
1 because you were a new telemarketer, to follow the 2 presentations that were being provided in order to make 3 sales; is tha
t right? 4 A Yes. 5 Q And he was telling you how you were supposed to 6 follow the script; is that right? 7 A That was one of his jobs, yes, sir. 8 Q And he was also telling you how to follow the script 9 without sounding like you were reading from a script; is 10 that right? 11 A Reasonably correct. 12 Q Would it be fair to say during these various sales 13 meetings Mr. Martin stressed to you over and over again he 14 very much believed in the product that Who's Who Worldwide 15 was putting out there? 16 A He stressed it not only to me but he was talking to a 17 whole audience, more or less. 18 Q And he stressed that he believed in the product; is 19 that right? 20 A I believe that is true. 21 MR. NELSON: Thank you. I have no other 22 questions. 23 THE WITNESS: Thank you. 24 THE COURT: Anybody else? 25 MR. DUNN: N
o questions, Your Honor. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7007 Zerring-cross/Neville
1 MR. TRABULUS: No questions, Your Honor. 2 MR. NEVILLE: I have a few, Your Honor. 3 THE COURT: Very well. 4 CROSS-EXAMINATION 5 BY MR. NEVILLE: . 6 Q Do you know somebody by the name of Sue Mantell? 7 A I met her at Who's Who. 8 Q Didn't she also live near you there in Lawrence or 9 somewhere? 10 A Yes, I believe she did. 11 Q She saw you driving your Rolls Royce? 12 A I have no idea. 13 Q What color is that Rolls Royce? 14 A White. 15 Q I have one more question. 16 Did you ever do any insurance claims on houses 17 that burned down in Mill Neck, New York, Feeks Lane? 18 A Not that I recall. I don't believe so. 19 Q How about where someone had their limousine broken 20 into and they inflated the clai
m. Anything to do with 21 that ever? 22 A I can't recall that at all, sir. 23 MR. NEVILLE: I have no further questions. 24 THE COURT: Anything else? 25 Any redirect? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7008 Zerring-redirect/White
1 MR. WHITE: Yes, Your Honor. 2 Your Honor, may I ask that we take our break now 3 because I could use a few minutes to organize my 4 thoughts. 5 THE COURT: Very well. We'll take our recess. 6 Members of the jury, keep an open mind. 7 Please recess yourselves. 8 (Jury exits.) 9 (Recess taken.) 10 (Jury enters.) 11 THE COURT: Please be seated, members of the 12 jury. 13 You may proceed, Mr. White. 14 REDIRECT EXAMINATION 15 BY MR. WHITE: 16 Q Mr. Zerring, do any of your prior crimes change 17 anything that the defendants said on the tape you ma
de? 18 MR. LEE: Objection. 19 THE COURT: Well, sustained as to form. 20 Q Did your prior crimes have any effect on the 21 tape-recordings that you made while you were at Who's Who 22 Worldwide? 23 MR. NELSON: Objection. 24 THE COURT: Overruled. 25 THE WITNESS: May I answer that? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7009 Zerring-redirect/White
1 THE COURT: Yes. 2 A No. 3 Q Did whether or not you paid your taxes have any 4 effect on whether you paid your taxes at Who's Who 5 Worldwide? 6 A No. 7 Q Whether or not you paid for your boat or Rolls Royce 8 effected what you made at Who's Who Worldwide? 9 A No. 10 Q Has anyone from the government told you who the other 11 witnesses in this case are? 12 A No. 13 Q Do you know who the other witnesses at this trial 14 are?
15 A Well, I sort of learned just by being in this witness 16 room here yesterday, I assumed that the person would have 17 to be there was a witness. 18 Q Aside from someone you saw in the witness room today 19 or yesterday, do you know who the witnesses are here? 20 A Absolutely not. 21 Q Do you know anything about the other evidence in this 22 case? 23 A No, I do not. 24 Q Aside from reviewing the tapes that you made and the 25 materials that you got when you were at Who's Who OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7010 Zerring-redirect/White
1 Worldwide, have you reviewed any of the other evidence in 2 this case? 3 A Can you repeat that again, Mr. White? 4 Q Aside from your own tapes and the other materials 5 that you got when you were at Who's Who Worldwide, have 6 you reviewed any other evidence? 7 A Oh, no.
No, sir. 8 Q Now, Mr. Nelson asked you about the home that you 9 were living in in the early 1990s. Do you remember that? 10 A Yes, I do. 11 Q Do you still have that home? 12 A No, I do not. 13 Q What happened to it? 14 A The house was foreclosed. 15 Q Now, do you own a home now? 16 A No, I do not. 17 Q Where do you live? 18 A In Florida. 19 Q Do you rent it? 20 A Yes, I'm renting right now. 21 Q Do you still have your boat? 22 A No, I do not. 23 Q Do you still have your Rolls Royce? 24 A Absolutely not. 25 Q Do you still have your public adjuster's license? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7011 Zerring-redirect/White
1 A No, I do not, sir. 2 Q What happened to your public adjuster's license? 3 A You cannot -- I don't know if the proper term is it 4 has been revoked
or never been -- I just don't have it 5 anymore. I didn't renew it. You can't practice having a 6 criminal record. 7 Q When is it that you did not renew it? 8 A I believe it was '92 or '93, I believe, to -- a best 9 guess recollection. 10 Q And did you say earlier today that you are now 11 unemployed? 12 A Yes, I am. 13 Q How long have you been unemployed for? 14 A Well, I've been unemployed, basically, for 15 approximately the last year. 16 Q And tell us how you've been supporting yourself? 17 A I've been supporting myself from the monies that I've 18 basically saved, you know, or that I have in a pension, an 19 IRA. 20 Q You mentioned on direct examination about testimony 21 you gave in connection with a lawsuit that insurance 22 companies had brought against Rafella Sportswear, right? 23 A Yes. 24 MR. NELSON: Objection.
25 THE COURT: On what ground? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7012 Zerring-redirect/White
1 MR. NELSON: I didn't ask him questions with 2 respect to a lawsuit involving Rafella Sportswear. It's 3 beyond the scope of redirect examination. 4 MR. JENKS: Just repeating it again. 5 THE COURT: On the representation that he did not 6 ask that by Mr. Nelson, that is correct. 7 MR. WHITE: I don't think that is correct, but 8 I'll move along. 9 BY MR. WHITE: 10 Q Mr. Nelson asked you while the time you were 11 cooperating if Inspector Biegelman ever said to you or 12 suggested to you that it would be a good idea for either 13 him or you to go to Who's Who Worldwide and tell them to 14 stop doing what they were doing. Do you remember that? 15 A Yes. 16 Q And in your case, did Inspector Biegelman or any law 17 enforceme
nt agent ever stop by your adjusting firm just to 18 tell you to stop doing what you're doing before they 19 served it? 20 MR. SCHOER: Objection. 21 THE COURT: Sustained. 22 BY MR. WHITE: 23 Q Before they asked you to do the search warrant, did 24 any law enforcement tell you maybe you should stop doing 25 what you were doing? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7013 Zerring-redirect/White
1 MR. SCHOER: Objection. 2 THE COURT: Sustained. 3 Q Did you have any contacts with the law enforcement 4 agents before they asked you to -- 5 MR. SCHOER: Objection. 6 THE COURT: Sustained. Desist. 7 BY MR. WHITE: 8 Q Mr. Zerring, if you could take a look at Government's 9 Exhibit 3500-23-B, for Boy. 10 Can you tell us what that is? 11 A That's my cooperation agreement. 12 MR. WHITE: Your Honor, I off
er 3500-23-B. 13 THE COURT: Any objection? 14 MR. SCHOER: No objection. 15 MR. NELSON: No objection, Your Honor. 16 THE COURT: Government's 3500-23-B in evidence. 17 (Government's Exhibit 23-B received in evidence.) 18 BY MR. WHITE: 19 Q Now, Mr. Zerring, can you explain for us what your 20 understanding is of what could happen to you if you were 21 untruthful in your trial testimony here today? 22 MR. SCHOER: Objection. 23 THE COURT: Overruled. 24 A The government, based on my contractual agreement or 25 my cooperation agreement that I made, if I'm untruthful, OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7014 Zerring-redirect/White
1 they can discard this cooperation agreement and not only 2 discard it but not only use all the evidence and all the 3 information that I've given them over the last six years 4 against me.
5 Q And what do you mean when you are referring to all 6 the evidence and information you gave them over the last 7 six years? 8 A All of the fraud and -- all the frauds that I've 9 committed for years that I've given them and cooperated 10 with them with respect to this information. 11 Q Now, do you believe it's in your own self-interest to 12 lie as you sit here today? 13 MR. SCHOER: Objection. 14 MR. LEE: Objection. 15 THE COURT: Overruled. 16 MR. WHITE: You can answer. 17 A Could you just repeat that again, Mr. White? 18 Q As you sit here today, do you believe it is in your 19 own self-interest to be unlawful in your testimony today? 20 A I'm sorry? 21 THE COURT: If you don't understand the question, 22 say so. 23 THE WITNESS: Yes, please ask it again. 24 MR. WHITE: Let me try to rephrase it. 25 BY MR. WHITE:
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7015 Zerring-redirect/White
1 Q Do you think it's in your self-interest to be 2 truthful or untruthful in your testimony today? 3 A To be absolutely truthful. 4 Q Why is it that you believe that's in your 5 self-interest? 6 A Because if I'm truthful and live up to my cooperation 7 agreement and give full cooperation, accurate information, 8 truthful, substantial information to the government, then 9 they will issue this -- their office will issue to the 10 Honorable Wexler a 5K letter which permits the Court to 11 depart from these guidelines to a minimum of zero time in 12 jail. 13 Q Now, the tape-recordings you made at Who's Who 14 Worldwide, did you turn them over to the government? 15 A Yes. 16 Q Did you turn over all the tapes you made to the 17 government? 18 A Absolutely.
19 Q Did you turn over all the tapes you made to the 20 government regardless of their content? 21 A Absolutely correct. 22 MR. WHITE: Your Honor, may I have one moment? 23 THE COURT: Yes. 24 (Counsel confer.) 25 MR. WHITE: Your Honor, I have no further OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7016 Zerring-recross/Nelson
1 questions. 2 THE COURT: Anything else? 3 MR. NELSON: Just briefly, Your Honor. 4 RECROSS EXAMINATION 5 BY MR. NELSON: 6 Q Mr. Zerring. 7 A Yes, sir. 8 Q Mr. White had asked you with respect to your boat 9 that you don't have it anymore. Did the government seek 10 to forfeit your boat? 11 A No. 12 Q Did the government seek to forfeit your Rolls Royce? 13 A No. 14 Q Did the government seek to forfeit your house? 15 A No. 16 Q And you have indicated
that you are presently living 17 on savings and pension that you presently have; is that 18 correct? 19 A Not internally. To break that question down is -- 20 Q Let's break it down. 21 A My savings is the IRA. I don't have any other 22 savings. 23 Q Would I be correct that the IRA are funds that you 24 acquired from a period of time from 1978 up to 1992? 25 A That would probably be accurate. I don't recall if I OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7017 Zerring-recross/Nelson
1 had IRAs prior to that when I was employed by another 2 public adjusting company. 3 Q And that public adjusting company you worked at 4 before 1978, you were also involved during that period of 5 time with defrauding insurance companies as well; is that 6 correct? 7 A Absolutely. 8 Q And did the government seek to forfeit your IRAs?
9 A No. 10 MR. NELSON: Thank you. 11 (Continued.) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7018 Zerring-redirect/White
1 REDIRECT EXAMINATION. 2 BY MR. WHITE: 3 Q Mr. Zerring, the money you still have -- let me back 4 up. 5 Can Judge Wexler, when he sentences you, require 6 you to make restitution? 7 A Absolutely. 8 Q If he does, will you pay the restitution out of the 9 funds you have now? 10 A I will make every attempt to. That's part of my 11 cooperation agreement, yes. 12 Q And are you liable for restitution of the millions of 13 dollars in fraud you have participated in? 14 A Absolutely. 15 MR. WHITE: I have no further questions. 16 THE
COURT: Anything else? 17 MR. NELSON: Nothing. 18 THE COURT: You may step down. 19 THE WITNESS: Thank you. 20 THE COURT: Please call your next witness. 21 MR. WHITE: Your Honor, we have some tapes next. 22 Your Honor, this is Exhibit 13-06. The 23 transcript is 13-06-A. The date is October 24, 1994. 24 The call is to Who's Who Worldwide and Jill 25 Barnes, B-A-R-N-E-S. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7019 1 (Audiotape played.) 2 (Start and stop.) 3 MR. WHITE: Your Honor, the next one is Exhibit 4 13-27. The transcript is 13-27-A, as in Able. The date 5 is November 30, 1994. 6 The call is to Who's Who Worldwide, and the 7 salesperson is Laura white or Laura Winters. 8 (Audiotape played.) 9 (Start and stop.) 10 MR. WHITE: Your Honor, the next one is Exhibit 11 13-15. And the transcrip
t is 13-15-A, like in Able. The 12 date is November 2, 1994. 13 The call is to Who's Who Worldwide, and the 14 salesperson is Shelly Posner, P-O-S-N-E-R. 15 (Audiotape played.) 16 (Stop and stop.) 17 MR. WHITE: Your Honor, next is 13-22. The 18 transcript is 13-22-A, like in Able. The date is November 19 7, 1994. 20 The call is to Who's Who Worldwide. The 21 salesperson is John Stevens, S-T-E-V-E-N-S. 22 (Audiotape played.) 23 (Start and stop.) 24 MR. WHITE: The next one is 13-23. The 25 transcript is 13-23-A, as in Able. The date is November OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7020 1 9, 1994. 2 The call is to Who's Who Worldwide, and the 3 salesperson is Michael Maxes, M-A-X-E-S. 4 (Audiotape played.) 5 (Start and stop.) 6 MR. WHITE: Next is Exhibit 13-32. The 7 transcript is
13-32-A, as in Able. The date is December 8 15, 1994. 9 The call is to Who's Who Worldwide, and the 10 salesperson is Roseanne Patton. 11 (Audiotape played.) 12 (Start and stop.) 13 MR. WHITE: Next is Exhibit 13-35. The 14 transcript is 13-35-A, like in Able. The date is December 15 19, 1994. 16 The call is to Sterling Who's Who, and the 17 salesperson is Mike Phillips, P-H-I-L-L-I-P-S. 18 (Audiotape played.) 19 (Start and stop.) 20 MR. WHITE: Next is Exhibit 13-46. The 21 transcript is 13-46-A, as in Able. The date is January 22 27, 1995. 23 The call is to Who's Who Worldwide. The 24 salesperson is Marilyn Pierce. 25 (Audiotape played.) OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7021 1 (Start and stop.) 2 MR. WHITE: Next is Exhibit 13-47. The 3 transcript is 13-47-A, like in Able.
The date is January 4 30, 1995. 5 The call is to Sterling Who's Who, and the 6 salesperson is Mark Johnson. 7 (Audiotape played.) 8 (Start and stop.) 9 MR. WHITE: Next is 13-55. The transcript is 10 13-55-A, like in Able. The date is December 2, 1994. 11 The call is to Sterling Who's Who, and the 12 salesperson is Sam Christopher. 13 (Audiotape played.) 14 (Start and stop.) 15 MR. WHITE: Next, Your Honor, is Exhibit 13-57. 16 The transcript is 13-57-A, like in Able. The date is 17 December 12, 1994. 18 The call is to Sterling Who's Who, and the 19 salesperson is Barbara McCabe, M-C-C-A-B-E. 20 (Audiotape played.) 21 (Start and stop.) 22 MR. WHITE: The next exhibit is 13-58. The 23 transcript is 13-58-A, like in Able. The date is December 24 14, 1994. 25 The call is to Sterling Who's Who. The OWEN
M. WICKER, RPR OFFICIAL COURT REPORTER 7022 1 salesperson is Richard Maltz, M-A-L-T-Z. 2 (Audiotape played.) 3 (Start and stop.) 4 MR. WHITE: Next is Exhibit 13-67. The 5 transcript is 13-67-A, like in Able. The date is January 6 24, 1995. 7 The call is to Sterling Who's Who, and the 8 salesperson is Scott Matthews. 9 THE COURT: That's not Scott Michaelson, 10 correct? 11 MR. WHITE: Scott Matthews at Sterling, who is 12 not Scott Michaelson, correct. 13 (Audiotape played.) 14 (Start and stop.) 15 MR. WHITE: Your Honor, the speed was off a 16 little but I think it was still intelligible. 17 THE COURT: All right. 18 MR. WHITE: May I just have a moment? 19 THE COURT: Yes. 20 MR. WHITE: The next one is Exhibit 13-70. 21 Transcript is 13-70-A, for Able. The date is January 31, 22 1995. 23
The call is to Sterling Who's Who, and the 24 salesperson is Michael Cain. 25 Let me see if I can adjust the speed before I OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7023 1 play it. 2 (Audiotape played.) 3 (Start and stop.) 4 MR. WHITE: Your Honor, the speed is varying a 5 little, Your Honor, but for the most part it is 6 intelligible. In other words, it's normal at one point 7 and then it speeds up and then it slows down a little 8 again. We'll try to adjust it. 9 (Audiotape played.) 10 (Start and stop.) 11 MR. WHITE: That was an unsuccessful excerpt. 12 THE COURT: That's not 13-70-A, according to my 13 transcript. 14 MR. WHITE: I'm sorry, I read the wrong one. 15 THE COURT: Do you want to start that over 16 again? 17 MR. WHITE: I think we'll do that. I'm sorry. 18 Let me start again so the
record is clear. 19 This is 13-68. The transcript is 13-68-A, for 20 Able. The date is January 26, 1995. 21 The call is to Who's Who Worldwide, and the 22 salesperson is John Stevens. And this is the one where 23 the speed varies slightly but it is still intelligible. 24 (Audiotape played.) 25 (Start and stop.) OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7024 1 MR. WHITE: Now, the next one is 13-70. The 2 transcript is 13-70-A, as in Able. The date is January 3 31, 1995. 4 The call is to Sterling Who's Who, and the 5 salesperson is Michael Cain, C-A-I-N. 6 (Audiotape played.) 7 (Start and stop.) 8 MR. WHITE: The next is 13-72. The transcript is 9 13-72-A, like in Able. The date is February 8, 1995. 10 The call is to Sterling Who's Who, and the 11 salesperson is Mike Phillips, P-H-I-L-L-I-P-S. 12 (Audi
otape played.) 13 (Start and stop.) 14 MR. WHITE: Next is 13-75. The transcript is 15 13-75-A, for Able. The date is March 9, 1995. 16 The call is to Sterling Who's Who, and the 17 salesperson is Bill Douglas, D-O-U-G-L-A-S. 18 (Audiotape played.) 19 (Start and stop.) 20 MR. WHITE: Next up is Exhibit 13-77. The 21 transcript is 13-77-A, for Able. The date is March 10, 22 1995. 23 The call is to Sterling Who's Who, and the 24 salesperson is Jim Reed, R-E-E-D. 25 (Audiotape played.) OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7025 1 (Start and stop.) 2 MR. WHITE: Next up is Exhibit 13-78. The 3 transcript is 13-78-A, for Able. The date is March 27, 4 1995. 5 It's a call to Who's Who Worldwide, and the 6 salesperson is Alan Saffer. 7 (Audiotape played.) 8 (Start and stop.) 9 MR.
WHITE: Your Honor, the next one is Exhibit 10 13-08. The transcript is 13-08-A, for Able. This is a 11 full call, not just an excerpt. The date is October 27, 12 1994. 13 The call is to Who's Who Worldwide, and the 14 salesperson is Scott Michaelson. 15 (Audiotape played.) 16 (Start and stop). 17 MR. WHITE: This is Scott Michaelson, not Scott 18 Matthews. 19 MR. TRABULUS: Your Honor, I believe we've heard 20 this entire tape before, if I'm not mistaken. 21 MR. WHITE: I think it was referred to in 22 testimony but we haven't played it. 23 MR. TRABULUS: All right. 24 MR. WHITE: It was referred to in the 25 cross-examination. We didn't actually play it. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7026 1 (Audiotape played.) 2 (Start and stop.) 3 MR. WHITE: Your Honor, that's the extent of the 4 t
apes we had cued up. We would have to switch recorders 5 and it would take us about ten minutes. 6 THE COURT: Do you have a witness in lieu of 7 waiting ten minutes? 8 MR. WHITE: No. 9 THE COURT: Somehow I didn't think you did. 10 MR. WHITE: And you're right. 11 THE COURT: So you want to recess for the 12 evening, then? 13 MR. WHITE: Yes, please. I mean, we'll set up 14 the tape. 15 THE COURT: It takes ten minutes to set up the 16 tape. We'll not wait ten minutes for you to do it. 17 MR. WHITE: All right. 18 THE COURT: All right. Members of the jury, 19 we'll recess until Monday. Monday is the 9th of March. 20 How time goes by. 21 In the meantime, please don't discuss the case 22 among yourselves or with anyone else. Keep an open mind. 23 Come to no conclusions. 24 Those of you who are employed, go to work. I'm 25 not direc
ting you to go to work but that would be a good OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7027 1 idea, I think. People in your place of employment might 2 like to see you from time to time. 3 Have a very nice weekend and we'll see you at 4 9:30 on Monday, March 9th. 5 Have a nice weekend. 6 (Jury exits.) 7 THE COURT: How much more of these 8 tape-recordings do you have? I suspect you keep them for 9 times like this afternoon when you don't have a witness. 10 MR. WHITE: I've done that so we don't keep any 11 witnesses overnight when we don't have to. 12 THE COURT: Perfectly all right. How much more 13 of these tape-recordings will you have? 14 MR. WHITE: Not much, Your Honor. We are down to 15 the last small amount. 16 THE COURT: Who will be your witnesses on 17 Monday? 18 MR. WHITE: On Monday the possible wit
ness are 19 Mr. Tardera, T-A-R-D-E-R-A. Mr. William Smith, and 20 Mr. Sainte, S-A-I-N-T-E. 21 THE COURT: That will last the entire day? 22 MR. WHITE: I hope so. 23 THE COURT: Well, it better. I want witnesses 24 here. Let them come back the next day. I don't want to 25 wait. I want to use all the time. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7028 1 MR. WHITE: I understand. We'll try to line up 2 additional people and if we have people lined up I'll try 3 to notify defense counsel about that. 4 MR. TRABULUS: Your Honor, I was just giving you 5 my estimate. Two of those people are members. I don't 6 think they will take very long in terms of cross and one 7 of the attorneys for Reed I'm not sure that will be long. 8 THE COURT: That doesn't sound like it will take 9 up the whole day. Better get two or three more witnesses
10 on Monday. 11 MR. WHITE: Your Honor, I'll try that. I'm glad 12 that Mr. Tardera will take that long. When Mr. Skalka 13 came it was three days. 14 MR. TRABULUS: I'm not sure, Your Honor. 15 THE COURT: Have some more witnesses available. 16 MR. WHITE: I'll try. 17 THE COURT: If they have to come back the next 18 day, so be it. 19 MS. SCOTT: Your Honor, may I just raise a boring 20 issue. Going back to that long list of exhibits Your 21 Honor admitted this morning, for the sake of clarity, 22 shall I give the list to Mr. Wicker to work into the trial 23 transcripts? Would that be helpful? 24 THE COURT: How will the defendants know what you 25 are doing? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7029 1 MS. SCOTT: I could mark it as an exhibit and 2 pass it around to them. 3 THE COURT: All right.
4 Do we have a motion on for 5 o'clock? 5 MR. TRABULUS: The order to show cause, Your 6 Honor. 7 THE COURT: That's for tomorrow. 8 MR. JENKS: No, that's for today. You told us 9 today. 10 MR. TRABULUS: You told us there was a motion to 11 quash the subpoena or Sandy Barnes. 12 THE COURT: I thought it was tomorrow. You're 13 right. 14 MR. WHITE: Your Honor, while we're on the topic 15 of Sandra Barnes, I thought it was last Thursday that it 16 was some of her testimony and other testimony from the 17 Reed v. Who's Who Worldwide case that Mr. Trabulus was 18 considering introducing in the defense case. I'm still 19 waiting to get copies of that material and the other 20 materials that the defense attorneys said they would be 21 using. 22 MR. TRABULUS: Your Honor, I think Mr. White has 23 a complete set of her testimony. 24 MR. WHITE:
Why do you say that? 25 MR. TRABULUS: You don't. OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7030 1 MR. WHITE: Well, I'm asking you for it. I don't 2 know that I do. But I want to know what you want 3 introduced. 4 MR. TRABULUS: I thought from previous 5 discussions. I don't know if I'll introduce anything. If 6 there are things that she says she doesn't recall, I may 7 use testimony and utilize it. 8 MR. WHITE: If you expect to use it I expect a 9 copy as I asked from you last week and pretrial. 10 MR. TRABULUS: Hang on a second. 11 MR. WHITE: I don't know if I have everything and 12 I don't know what portions he wants to have introduced. 13 (Recess taken.) 14 THE CLERK: Criminal cause for Order to Show 15 Cause. 16 MR. BAILEY: Your Honor, I'm Thomas Bailey for 17 Reed Elsevier and Sandra Barnes who was serve
d an against 18 subpoena for this matter. 19 THE COURT: I know who the other lawyers are 20 here. They are still here I suppose. What is the nature 21 of your application, Mr. Bailey? 22 MR. BAILEY: Twofold, Your Honor. 23 First of all, I apologize for holding up all the 24 counsel in the room for being late. 25 Secondly, Mr. Trabulus and I have spoken and OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7031 1 there is some hope we can work this out. The first issue 2 is Ms. Barnes' attending to a family emergency involving 3 her daughter who is being operated during the day in the 4 Phoenix area. The subpoena was returnable on Monday the 5 9th. She is planning on being there and looking after her 6 20 month old and five month old grandchild until the 7 19th. But I now understand from Mr. Trabulus and might 8 have been able to under
stand earlier had I been able to 9 figure out how to get into her voice mail in her absence, 10 I was given instructions but I didn't do it, is that she 11 may be appearing towards the end of the defense case 12 anyway and we may be able to work out her availability. 13 She is not seeking to block her appearance inasmuch as to 14 accommodate the needs of her grandchildren and daughter. 15 MR. TRABULUS: Your Honor, if I may interject. 16 When the government -- when this was prepared, the 17 government gave a statement that it was ending today. I 18 made the subpoena returnable on Monday, March 9th. It 19 appears that the government's case will not end next week, 20 sometime the end of next week, and there apparently will 21 be other defense witnesses and Ms. Barnes could come 22 towards the end. So this might enable her to complete her 23 obligations to her family member who is
sick and come 24 here. 25 THE COURT: So you want to put her on call then? OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7032 1 MR. TRABULUS: I think that's what we would 2 logically do, Your Honor. 3 THE COURT: Would she consent to be on call, 4 Mr. Bailey? 5 MR. BAILEY: I'm sure she would consent to 6 anything that would allow her to stay each day, one day 7 longer at a time in Arizona where she is. 8 THE COURT: Are you acting on her behalf? 9 MR. BAILEY: I have to, Your Honor, but I've been 10 unable to contact her because of her absence. 11 THE COURT: If you will give a statement in 12 writing to Mr. Trabulus that she is on call, then she will 13 be called, given notice prior to the time she is needed 14 and you just heard Mr. Trabulus say she will not have to 15 come in on March 9th or the entire week of the 9th.
16 MR. TRABULUS: So long as Your Honor has no 17 problem with that, Your Honor. I think the government -- 18 THE COURT: I have no problem. What do I have 19 got to do with it? If the government's case ends on 20 Monday and all the defendants rest, then that's the end of 21 that. It's moot. 22 MR. TRABULUS: I wouldn't rest, Your Honor, but 23 Ms. Barnes wouldn't be there. That's my concern. 24 THE COURT: I cannot do anything. That's your 25 concern, not mine. If you are willing to put her on call OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7033 1 and she agrees to be on call, she has to be here within 24 2 hours or something like that. 3 MR. TRABULUS: I would agree to that under the 4 circumstances. 5 THE COURT: That seems to me to be the most 6 reasonably approach but you will, with authority, have to 7 commit her to that
or else she will have to be here on 8 Monday, I suppose if she doesn't want to do that. 9 Was she personally served, Mr. Trabulus? 10 MR. TRABULUS: Yes. 11 THE COURT: Then she has to be here. Unless she 12 agrees to be on call and you, with authority, put on the 13 record in writing that she agrees to be on call, subject 14 to call. 15 MR. BAILEY: My only question, Your Honor, is the 16 ability for her to get someone to cover for the daughter, 17 two grandchildren and I'm not sure, 24 hours is quite long 18 enough for her. I didn't have that in mind. What I was 19 asking for was some relief to allow her to look after her 20 daughter. 21 THE COURT: Mr. Bailey, I'm very appreciative, 22 I'm sorry about her daughter. But she has been under 23 subpoena. She has been subpoenaed to be a witness in a 24 criminal trial and she will be here on Monday unless she
25 agrees to be subject to call. And I cannot concern myself OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7034 1 with her problems. 2 MR. BAILEY: Then I have no alternative, I will 3 arrange in writing with Mr. Trabulus. 4 THE COURT: Okay, if you do that she will be 5 subject to call. It looks like she will have another 6 week, at least. And since Mr. Trabulus was nice enough to 7 say he would call her at the end of the case, if they put 8 a case in, she has probably more than that. I don't know 9 what else we can do. 10 MR. BAILEY: That is sufficient, Your Honor. I 11 think that is the best under the circumstances. 12 THE COURT: Very well. 13 Anything else on that? 14 MR. BAILEY: The second half of the request had 15 to do with trying to cut down the scope, the document 16 request accompanying her subpoena which Reed has hono
red 17 and looked through her offices for her and all of these 18 places which they might be. There are a lot of 19 documents. They are still piling up from our warehouse 20 and Reed's warehouse. One of the problems is there is no 21 time-frame on this. The documents at Reed that we found 22 from 1994 to 1998 are up-to-date, Your Honor. 23 THE COURT: Well, I think the lawyers for the 24 defense are very, very well acquainted with the facts of 25 this case. They know the strengths and weaknesses of the OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7035 1 government's case and their own positions so they ought to 2 be able to tell you precisely what they want. 3 MR. TRABULUS: I think we can cut that down a 4 lot. I think we can cut down the documents a lot. 5 THE COURT: Why don't you sit down with 6 Mr. Bailey, Mr. Jenks knows about it, Mr.
Schoer, and 7 anybody else. I'm not excluding anyone. Mr. Nelson, 8 we'll include you, you are in the front. But anybody else 9 who wants to stay around and help. But I think they know 10 precisely, really, what they want and they will be able to 11 cut that down, I feel for sure. And since they are fair 12 and reasonable lawyers, you will have no problem. 13 Now, if you were dealing with Mr. White, that's 14 another matter. 15 I'm only kidding. 16 Put than that on the record. 17 MR. TRABULUS: Speaking of the record -- 18 THE COURT: Ms. Scott, she is reasonable. 19 MR. TRABULUS: I'm handing Mr. White. 20 THE COURT: Put down on the record that I was 21 only kidding, Mr. White. He knows that he's done an 22 admirable job of supplying discovery and representing the 23 government here, because I think he has. 24 MR. TRABULUS: Your Honor, I'm going to han
d 25 Mr. White such former testimony of Sandra Barnes as I have OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7036 1 in my position that in any way relates to it. So he has 2 it now. 3 THE COURT: You are delivering it in person right 4 now? 5 MR. TRABULUS: Right, because he raised this 6 before. There is testimony in the Reed Elsevier against 7 Who's Who Worldwide litigation, February 14th. 8 THE COURT: Slower. 9 MR. TRABULUS: It's testimony in the Reed 10 Elsevier against Who's Who Worldwide Registry, Inc., 11 litigation, February 14, 1994, February 16, 1994, November 12 5, 1992, November 4, 1992. 13 THE COURT: Probably deposition. 14 MR. TRABULUS: There was a preliminary injunction 15 hearing in '92 and a trial in '94. 16 THE COURT: All right. 17 MR. WHITE: Mr. Trabulus and I discussed, 18 apparently,
there are some other exhibits from this 19 litigation. He will try to give copies to someone else to 20 the U.S. Attorney's Office whom he will see tomorrow. 21 THE COURT: You mean Ms. Lum. 22 MR. TRABULUS: I think I have the extra set on 23 the record on appeal from that, the addendum and the 24 exhibits. 25 THE COURT: I have full confidence with you, OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7037 1 Mr. Trabulus, and if you don't have it, Mr. Schoer has it, 2 and if Mr. Schoer doesn't have it, Mr. Neville has it. 3 You didn't expect that one, did you? 4 MR. WALLENSTEIN: While we are on the record, 5 with respect to 3500 material I discussed with Mr. White 6 some 3500 material which I don't yet have in my possession 7 but which relates to the possible testimony of 8 Mr. Reffsin, that decision hadn't been made. In the 9 interes
t of fairness if he does testify, Mr. Reffsin 10 testified at a trial, United States v. Evangelista. 11 THE COURT: Evangelista. 12 MR. WALLENSTEIN: -- Before Judge Wexler, I 13 believe, and at that time Mr. Reffsin testified as a 14 defense witness. Mr. White is aware of that. He will 15 search his files for the testimony. I'm going to do the 16 same and try to locate the testimony and one way or 17 another we'll both have sets of it. 18 THE COURT: Very well. 19 Anything else? 20 MR. BAILEY: No, Your Honor, just that I'll 21 volunteer. We should add, our warehouse of files complete 22 records from the trademark litigation that Mr. White and 23 Trabulus were referring to. If you end up short we'll 24 supply you with the copies. 25 THE COURT: I would suggest that you sit down OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7038
1 with defense counsel. 2 MR. WHITE: Your Honor, one other thing. 3 THE COURT: Yes. 4 MR. WHITE: There are a couple legal issues that 5 may come up next week that I want to work on, spend some 6 time on over the weekend which I might want to raise on 7 Monday morning. 8 Can we agree to be here like 9:20? 9 THE COURT: That's not enough time if you want to 10 raise legal issues. I think you ought to be here at 11 9 o'clock. 12 What are the legal issues, Mr. White? 13 MR. WHITE: Well, I wanted to do some research to 14 find out if I'm even going to -- 15 THE COURT: Well, I suggest you tell us about 16 them on Monday and do the talking on Tuesday or Monday 17 afternoon. 18 MR. WHITE: Okay, I'll do that. 19 THE COURT: Then we'll see you at the regular 20 time, 9:30. Thank you. 21 (Proceedings adjourned.) 22 23
24 25 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 7039 1 INDEX 2 3 R O L F I H L E N F E L D T...................... 6849 CROSS-EXAMINATION.................................... 6849 4 CROSS-EXAMINATION.................................... 6857 CROSS-EXAMINATION.................................... 6878 5 CROSS-EXAMINATION.................................... 6879 REDIRECT EXAMINATION................................. 6889 6 RECROSS EXAMINATION.................................. 6894 7 E L L I O T Z E R R I N G......................... 6906 DIRECT EXAMINATION................................... 6906 8 CROSS-EXAMINATION.................................... 6933 9 M A D E L I N E L. W A L T O N................... 6951 DIRECT EXAMINATION................................... 6951 10 CROSS-EXAMINATION.................................... 6960 REDIRECT EXAMINATION.........................
........ 6966 11 RECROSS-EXAMINATION.................................. 6968 12 E L L I O T Z E R R I N G.......................... 6970 CROSS-EXAMINATION.................................... 6970 13 CROSS-EXAMINATION.................................... 7007 REDIRECT EXAMINATION................................. 7008 14 RECROSS EXAMINATION.................................. 7016 REDIRECT EXAMINATION................................. 7018 15 16 EXHIBITS 17 Government's Exhibit 23-B received in evidence....... 7013 18 19 20 21 22 23 24 25 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER Built by Text2Html
