241 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. :January 15, 1998 11 - - - - - - - - - - - - - - X 9:30 o'clock a.m. 12 BEFORE: 13 HONORABLE ARTHUR D. SPATT, U.S.D.J. and a jury 14 15 APPEARANCES: 16 For the Government: ZACHARY W. CARTER United States Attorney
17 One Pierrepont Plaza Brooklyn, New York 11201 18 By: RONALD G. WHITE, ESQ. CECIL SCOTT, ESQ. 19 Assistant U.S. Attorneys 20 For the Defendants: NORMAN TRABULUS, ESQ. 21 For Bruce W. Gordon 170 Old Country Road, Suite 600 22 Mineola, New York 11501 23 EDWARD P. JENKS, ESQ. For Who's Who, Sterling 24 332 Willis Avenue Mineola, New York 11501 25 (cont'd)
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242 1 APPEARANCES (cont'd): 2 GARY SCHOER, ESQ. For Tara Garboski 3 6800 Jericho Turnpike Syosset, New York 11791 4 ALAN M. NELSON, ESQ. 5 For Oral Frank Osman 3000 Marcus Avenue 6 Lake Success, New York 11042 7 WINSTON LEE, ESQ. For Laura Weitz 8 319 Broadway New York, New York 10007 9 MARTIN GEDULDIG, ESQ. 10 For Annette Haley 400 South Oyster Bay Road 11 Hicksville, New York 11801 12 JAMES C. NEVILLE, ESQ. For Scott Michaelson 13 225 Broadway New York, New York 10007 14 THOMAS F.X. DUNN, ESQ. 15 For Steve Rubin 150 Nassau Street 16 New Y
ork, New York 10038 17 JOHN S. WALLENSTEIN, ESQ. For Martin Reffsin 18 215 Hilton Avenue Hempstead, New York 11551 19 20 Court Reporter: HARRY RAPAPORT, CSR United States District Court 21 Two Uniondale Avenue Uniondale, New York 11553 22 (516) 485-6558 23 Proceedings recorded by mechanical stenography, transcript 24 produced by Computer-Assisted Transcription 25
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243 1 M O R N I N G S E S S I O N 2 3 (The following takes place in the absence of the 4 jury.) 5 THE COURT: Mr. Trabulus, you wanted to speak to 6 me? 7 MR. TRABULUS: Very briefly, your Honor. 8 THE COURT: Mr. Trabulus, before you give me your 9 brief dissertation, I don't like to keep the jury 10 waiting. Have I gotten that impression across? 11 MR. TRABULUS: Yes. 12 THE COURT:
There are 18 citizens who are giving 13 up of their time. I don't like to keep them waiting. If 14 you have anything you want to tell me, do it before 9:30. 15 MR. TRABULUS: Your Honor, at -- 16 THE COURT: Excuse me. 17 At any time you want to talk to me, I will be 18 glad to talk to you, 9:00, 8:00, 7:00 in the morning, not 19 at 9:30. Go ahead at this time because I am giving you 20 notice. 21 Mr. Neville, be on time. 22 Where is Mr. Neville? Is he here? 23 MR. DUNN: Yes. 24 THE COURT: I guess I didn't make an impression 25 with the other ten-defendant case I told you about.
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244 1 Go ahead. 2 MR. TRABULUS: Your Honor, the government now 3 furnished to me the document on which I based the 4 objection that your Honor ruled on yesterday. That 5 objection is wi
thdrawn. 6 Also, I have not had a chance to make multiple 7 copies of it, I will not have multiple copies for the 8 jury. That's all I wanted to say. 9 THE COURT: From now on I will be glad to talk to 10 you at any time. I don't want to tell you 6:00 o'clock in 11 the morning. I can talk to you at that time also. But 12 7:00 o'clock, 8:00 o'clock, 9:00 o'clock, but not 9:30. 13 Bring in the jury, please. 14 Mr. Neville, be on time from now on. 15 MR. NEVILLE: Yes, your Honor. I am sorry. 16 MR. WHITE: Your Honor, I wanted to tell you that 17 we tabbed the portions in the books with respect to 18 exhibits we expect to use today. With the Court's 19 permission, over the weekend we will take it back and have 20 it completely tabbed. 21 THE COURT: Good. 22 MR. WHITE: We aim to please, your Honor. 23 THE COURT: So do I. 24 Where is this book you
tabbed? 25 MR. WHITE: I put them on the top of the boxes
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245 1 there. 2 THE COURT: This one, you mean? 3 MR. WHITE: Yes, the exhibits we expect to use 4 today are here. 5 THE COURT: Very good. 6 MR. WHITE: These are ones, we just added, and 7 that may be referred to today. 8 THE COURT: It would be helpful if you can give 9 copies of the exhibits to the court reporter who could 10 follow better if he had copies of the exhibits. It would 11 help him. I am sure you want to do that. 12 THE CLERK: Jury entering. Please rise. 13 (Whereupon, the jury at this time entered the 14 courtroom.) 15 THE COURT: Good morning members of the punctual, 16 responsible, dedicated jury. Please be seated. 17 Thank you very much. I appreciate it that you 18 all got here on t
ime. I had to take something up with the 19 lawyers, or we would have had you in at 9:30 sharp. 20 Where is the witness? 21 MR. WHITE: Right here, your Honor. 22 23 24 25
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246 1 F R A N K G A G L I A R D I , 2 called as a witness, having been previously 3 duly sworn, was examined and testified as 4 follows: 5 6 THE COURT: You are previously sworn and you are 7 still under oath, Mr. Gagliardi. 8 You may proceed. 9 MR. WHITE: Thank you, your Honor. 10 11 DIRECT EXAMINATION (cont'd) 12 BY MR. WHITE: 13 Q Mr. Gagliardi, when we broke yesterday you told us 14 that you were assigned in 1993 to evaluate an offer in 15 compromise that was submitted by Mr. Gordon to the IRS; is 16 that correct? 17 A That's correct.
18 Q Let me show you Government's Exhibit 420, which I 19 believe you identified yesterday as that offer in 20 compromise; is that correct? 21 A That's correct. 22 MR. WHITE: With the Court's permission, I have 23 copies of this multi-page document to hand out to the jury 24 so they can follow along the testimony. 25 THE COURT: Very well.
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1 We always start on this side. Let's get the 2 protocol right. 3 MR. WHITE: This side. 4 THE COURT: Since I am old fashioned, start on 5 this side, start with juror number one and his group, and 6 then juror number seven and his group. Then we get to the 7 two gentlemen in the front. That's the way it is going to 8 be done. 9 MR. WHITE: That's fine, your Honor. 10 THE COURT: All uniform, protocol.
11 Go ahead. 12 (Whereupon, the exhibit/exhibits were published 13 to the jury.) 14 Q Mr. Gagliardi, if you can turn to the attachment of 15 this document, which is marked Exhibit 420-C. Do you have 16 that? 17 A Yes, I do. 18 Q Can you tell us what that is? 19 A It is Form 2848, power of attorney form, for 20 Mr. Bruce Gordon. 21 Q Can you tell us what a power of attorney form is? 22 A A power of attorney allows a representative on behalf 23 of the taxpayer to deal with the Internal Revenue Service, 24 an attorney or accountant or enrolled agent. 25 Q For what taxpayer is this Form 420-C?
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1 A Mr. Gordon. 2 Q Can you tell us who it is he is appointing to be his 3 representative in this case? 4 A It says Martin Reffsin.
5 Q And where is that? 6 A Section 2. 7 Q If you can look at page 2 of that document, and the 8 boxes at the bottom, can you tell us what it says there? 9 A It says delegation (sic), insert the letter A to H, 10 and then it says B, certified public accountant, and to 11 show the jurisdiction shown below. 12 Q What is the jurisdiction? 13 A New York. 14 Q Can you read the signature -- is there a signature? 15 A Yes. 16 Q Can you read it? 17 A It appears to be Martin Reffsin, December 17, 1992. 18 Q If you look over to the top page of the document, 19 now. 20 Whose letterhead is it written on, that letter? 21 A M. Reffsin and Company, certified public accountants. 22 Q Could you read the first sentence -- 23 A The first sentence? 24 Q Of the body of the letter. 25 A The above referenced taxpayer has been assessed
H
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1 Section 6672 penalties, income tax plus interest and 2 penalties and also promote penalties under Section 6700 3 and 6701. 4 Q Tell us what Section 6672 penalties are? 5 MR. TRABULUS: Objection. 6 THE COURT: What ground? 7 MR. TRABULUS: May we approach? 8 THE COURT: Relevancy? 9 MR. TRABULUS: Yes, and prejudicial grounds. 10 THE COURT: Sustained. 11 This is all before this case? 12 MR. WHITE: What gives rise to the tax liability. 13 THE COURT: We will not get into it in great 14 detail. 15 Move along. 16 Q Could you read aloud to us the second paragraph of 17 the letter? 18 THE COURT: When you read, slow down, 19 Mr. Gagliardi. 20 THE WITNESS: I am sorry. 21 THE COURT: Everybody has a tendency to read 22 faster than
they speak. They speak fast enough, when they 23 read they really speed it up, so slow down. 24 THE WITNESS: Yes, your Honor. 25 Taxpayer is presently trying to clean up his life
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1 and move forward. He is 60 years of age and he will never 2 be able to pay substantial sums of taxes, penalties and 3 interest owed to the government. In addition, he is 4 liable for substantial amounts to other parties which he 5 will not be able to pay. We have prepared a projection of 6 income for the next five years, and even if he increases 7 his earnings substantially over the next five years, he 8 won't come close to earning enough to pay all his 9 obligations. 10 Q If you can skip down to the fourth paragraph and read 11 that allowed to us. 12 A In view of the circumstances d
iscussed above, and the 13 fact that the taxpayer is over 60 years of age, he wishes 14 to file the attached offer in compromise. He has talked 15 to various relatives, and because of his age and desire to 16 clean up his situation, they have agreed to lend him some 17 money. The offer is presented -- the offer presented is 18 based on the sum of money which he feels he can borrow. 19 He has no other assets. 20 Q And could you read the top of the next page as well? 21 A I, Bruce Gordon, do hereby declare the above to be 22 true and correct to the best of my knowledge. Bruce 23 Gordon signature. 24 Q Now, if you turn to the next page, which is 25 Exhibit 420A, can you tell us what that form is?
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1 A Form 656, offer in compromise, and it says Bruce 2 Gordon, 10 Bl
uff Road, Glen Cove, New York, 11542. 3 Q Tell us in summary what is offered with respect to 4 this document? 5 A In summary he offered $150,000 to compromise the 6 total tax liability. 7 Q And on this form is there a signature line for the 8 taxpayer? 9 A Yes, there is. 10 Q And where is that? 11 A On the bottom right. 12 Q Is it signed and dated? 13 A Yes, it is. 14 Q What is the date? 15 A August 9, 1993. 16 Q Can you read what it says above the taxpayer 17 signature. 18 A It says: Under penalties of perjury, I declare that 19 I have examined this offer, including accompanying 20 schedules and statements, and to the best of my knowledge 21 and belief, it is true, correct and complete. 22 Q If you take a look at 420-D, and it is a few pages 23 beyond that? 24 A D as in David? 25 Q Yes.
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1 A Okay. 2 Q Now, what is that, 420-D? 3 A Form 433-A, collection and information statement for 4 individuals. 5 Q What does it say in box one? 6 A Bruce Gordon, 10 Bluff Road, Glen Cove, New York, 7 11768. 8 Q Look at box five, what does it say? 9 A Taxpayers employer, business name and address. 10 Q What is listed? 11 A Who's Who Worldwide Registry, Inc., 1983 Marcus 12 Avenue, Lake Success, New York, 11042. 13 Q In box F, what are the choices the box can check? 14 A As wage earner, sole proprietor or partner. 15 Q And what is checked? 16 A Wage earner. 17 Q And at the bottom of the page in box 12(b), what does 18 that ask for? 19 A Adjusted gross income. 20 Q What is listed by Mr. Gordon? 21 A 51,876 for the year 1991.
22 Q If you turn to the next page, question 14 at the top, 23 what does that ask for? 24 A Bank charge cards, credit unions, savings and loans, 25 I am sorry if I am going too fast, and lines of credit.
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1 Q Is there an American Express Gold Card listed there? 2 A No, there is not. 3 Q What is listed there? 4 A The word "none" is written there. 5 Q Look down at question 18. What kind of information 6 is in that box? 7 A Securities, stocks, bonds, mutual funds, money market 8 funds, government securities, etcetera. 9 Q Now, are there any shares of Who's Who Worldwide 10 Registry listed there? 11 A No. 12 Q Any shares of any company listed there? 13 A No. 14 Q What is listed there? 15 A It says none. 16 Q Turn to the next
page, page 3, where it says assets 17 and liability analysis, do you see that? 18 A Yes. 19 Q Can you tell us what assets Mr. Gordon lists? 20 A $500 in cash. 21 Q Any other assets? 22 A None. 23 Q Look at box number 28, where it says other 24 liabilities, including judgments, notes and other charge 25 accounts, any liabilities listed?
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1 A Yes, there are. 2 Q Among the ones listed, are any loans to Mr. Gordon 3 from Who's Who Worldwide Registry or any other companies, 4 or loans listed? 5 A No, it doesn't appear to be. 6 Q Turn to the next page, page 4, where it says monthly 7 income and expense analysis, does Mr. Gordon list his 8 monthly expenses? 9 A Yes, he does. 10 Q Tell us what he lists? 11 A He lists rent of
$2,000, utilities of $250, 12 transportation, 150, insurance 50 for home. Court ordered 13 payments, it says not able to pay. And $70 in other 14 expenses. 15 Q At the bottom, can you read the box that says 16 certification -- I am sorry, in the middle, the box that 17 says certification. 18 A It says: Under penalties of perjury, I declare that 19 to the best of my knowledge and belief this statement of 20 assets, liabilities and other information is true, correct 21 and complete. 22 Q What is the date of the signature there? 23 A July 8th, '93. 24 Q If you can turn to the next page of the document, 25 420-E.
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1 Can you tell us what that is? 2 A It is a five-year projection of income -- actual, 3 actual expenses and income, 1991 through 1996.
4 Q Now, can you tell us what it says Mr. Gordon's annual 5 salary was in '91 and '92? 6 A On the very top left, $50,000 in actual annual salary 7 in 1991 and '92. 8 Q What does it project his annual salary would be in 9 the following years? 10 A 1993, 100,000; 1994, 125 -- 125,000. 1993, 100,000, 11 1994, 125,000, 1995, 150,000, 1976, 175,000. 12 Q If you can look down at the column on the far left 13 side, does it list Mr. Gordon's expenses and debts for 14 those years also? 15 A Yes, it did. 16 Q Can you list what expenses and other debts he has. 17 A It lists rent. Do you want the amounts? 18 Q No, just categories. 19 A Rent, groceries, electric and gas, telephone, 20 insurance, which is broken into home, life, 21 hospitalization and other; travel expense, gas and 22 maintenance; other expenses, cleaning, taxes, in 23 parenthesi
s, withholding; payments to wife by court order; 24 outstanding judgments, required payments pursuant to 25 agreement with Justice Department.
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1 Q Is there a net cash flow listed for Mr. Gordon? 2 A Yes, there is. 3 Q Can you tell us what is a net cash flow? 4 A A net cash flow for purposes of statement like this 5 indicates how much a taxpayer has after paying all of his 6 expenses. 7 Q Tell us what is listed there for 1991? 8 A It shows that Mr. Gordon had a net deficit of 11,356. 9 Q What does it mean that he had a net deficit? 10 A Paying out more than he earned. I am sorry, 366. 11 Q What is the annual cash flow or deficit projected for 12 1992. 13 A It shows deficit of 15,864. 14 Q And tell us what is projected for the years '93 15 throu
gh '96? 16 THE COURT: What is the difference? Why is that 17 important? 18 MR. WHITE: Okay. 19 THE COURT: Let's move along, Mr. White. 20 Q Take a look at the same document, 420-E, does it 21 indicate on the schedule that Mr. Gordon is required to 22 repay loans from Who's Who Worldwide? 23 A No, it is not listed. 24 Q Does it indicate anywhere that any of his expenses 25 are being paid by Who's Who Worldwide?
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1 A No. 2 Q Now, if you could turn to 420-H -- I am sorry, 420-G, 3 like in George. 4 Do you have it now? 5 A Yes, I do. 6 Q Tell us what that is? 7 A It is on a Who's Who Worldwide stationery, and it is 8 compensation agreement between Bruce Gordon and the 9 shareholders of Who's Who Worldwide Registry, Inc. 1
0 Q And at the bottom, can you read what the date of it 11 is? 12 A It says agreed to by the undersigned on this 26th day 13 of January, 1993. But the 3 is either crossed out, or it 14 was written over. 15 Q Now, if you can turn to the page, the next attachment 16 is 420-H; is that correct? 17 A Yes. 18 Q What is that? 19 A An agreement, United States Department of Justice, 20 Tax Division, collateral agreement on future income. 21 Q Can you read the first paragraph for us -- I am 22 sorry, the paragraph that begins, the purpose of. 23 A Okay. 24 The purpose of this collateral agreement, 25 hereinafter referred to as this agreement, is to provide
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1 additional consideration for acceptance of the offer in 2 compromise described above. It is unde
rstood and 3 agreed -- you want me to go on? 4 Q Read the paragraph numbered one. 5 A That the taxpayer will pay out of annual income for 6 the years 1991 to 2000 inclusive, nothing on the first 7 $25,000 of annual income; 10 percent of annual income more 8 than 25,000, and not more than 35,000; 9 20 percent of annual income more than 35,000, not 10 more than 50,000. 11 D is 50 percent of annual income more than 12 $50,000. 13 Q Turn the page and look at paragraph three. 14 Without reading it, would you just review it and 15 tell us in substance what that says. 16 (Whereupon, at this time there was a pause in the 17 proceedings.) 18 A In brief, the taxpayer owns a closely held business 19 that the income from that business would be included for 20 the terms of this collateral agreement. 21 Q Okay. 22 Now, after you were assigned to
evaluate this 23 offer in compromise, tell us what you did. 24 A Okay. 25 I spoke to the power of attorney, Mr. Reffsin.
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1 We discussed the offer in compromise. And I indicated 2 that I would write to request a revised collection 3 statement and then additional information. 4 Q Let me show you Government's Exhibit 421. Do you 5 recognize that? 6 A Yes, I do. 7 Q Can you tell us what that is? 8 A It is a letter I prepared and sent to Mr. Gordon, in 9 care of Mr. Reffsin. 10 MR. WHITE: Your Honor, the government offers 11 421. 12 THE COURT: Any objection? 13 MR. TRABULUS: No, your Honor, there is no 14 objection. 15 My copy is barely readable. I don't know if the 16 other copies are more readable. 17 MR. WHITE: I have
an enlargement. 18 THE COURT: All right, Government's Exhibit 421 19 in evidence. 20 (Government's Exhibit 421 received in evidence.) 21 Q Mr. Gagliardi, let me show you 421-A, is that simply 22 an enlargement of 421? 23 A Yes, it is. 24 MR. WHITE: We offer 421-A, your Honor. 25 THE COURT: Any objection?
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1 MR. TRABULUS: No objection. 2 THE COURT: Government's Exhibit 421-A in 3 evidence. 4 (Government's Exhibit 421-A received in 5 evidence.) 6 Q Would you read the first three paragraphs of the 7 letter before us? 8 A I am writing in regard to the offer in compromise 9 which you submitted on August 9, 1993. Your offer has 10 been reviewed by IRS counsel, and they have determined 11 that it is processable, and if it is accessib
le it could 12 compromise your entire tax liability. If a recommendation 13 of acceptance is made by myself, the offer is subject to 14 review by Brooklyn district counsel and would require 15 coordination with the Department of Justice regarding your 16 previously accepted offer and settlement. I will, 17 therefore, require additional verification of your income 18 and expenses, assets and liabilities to make a 19 determination regarding the viability of your offer in 20 compromise. I have prepared a list of documents for 21 financial verification required to allow analysis of the 22 offer. The records should be provided by January 3rd, 23 1994. If you have any questions regarding the 24 documentation I can be reached at the number above, Monday 25 to Friday, 9:00 a.m. to 1:00 p.m.
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1 Q Now, the numbered paragraphs that follow, what are 2 those? 3 A The information requested in addition to verify the 4 offer in compromise. 5 Q The specific categories of information you asked for? 6 A That's correct. 7 Q Now, if you look down in the margin next to each of 8 the numbered paragraphs, there are handwritten notations. 9 Are those yours? 10 A No, they are not. 11 Q Were they on the letter when you sent them? 12 A No, they were not. 13 Q Now, what do you ask for in item number one? 14 A An updated and fully documented form 433-A, 15 collections information statement for individuals. 16 Q What do you ask for in item number three? 17 A Original cancelled checks and bank statements for all 18 accounts which you are a signator for months of April, 19 May, June, July, August, September and October, 1993. 20 Q
And what did you ask for in item -- 21 THE COURT: Do we have to go through all of this, 22 Mr. White? What is the purpose of that? 23 For example, this case will be shortened 24 considerably if you do not have these witnesses read every 25 item. The first part could have been summarized easily,
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1 we will accept your offer and compromise if you verify 2 certain things. That's all it says. Why do we need to 3 take up all this time? 4 MR. WHITE: Your Honor, on these particular 5 responses and these particular requests, Mr. Gagliardi 6 will also specify about the specific responses to each of 7 these requests. 8 THE COURT: Is that material to any of the issues 9 in the case? 10 MR. WHITE: It is directly material, your Honor. 11 THE COURT: All right.
12 From now on, try to prevent the reading from the 13 documents, unless it is absolutely necessary. 14 MR. WHITE: I will, your Honor. 15 I will finish with the items. 16 Q Number six, what do you ask for in six? 17 A Verification, full monthly payments, if not paid for 18 by your personal check. 19 Q Item nine? 20 A Copies of all motor vehicle registrations, title 21 certificates and leasing agreements for vehicles you own 22 or operate. 23 Q Did you receive any response from Mr. Reffsin for 24 this letter? 25 A Yes, I did.
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1 Q And when was that? 2 A Mr. Reffsin called in January, late January, 1994, 3 and we met at my office. 4 Q Let me show you Government's Exhibit 423. 5 (Handed to the witness.) 6 Q Can you tell us wh
at that is? 7 A They are copies of the information provided by 8 Mr. Reffsin in January of 1994. 9 Q Does that include 423 and attachments, A through L? 10 A Yes, it does. 11 Q In addition to that information did you receive 12 anything else from Mr. Reffsin? 13 A Yes. I received the cancelled checks and statements, 14 but I copied the pertinent information and returned the 15 originals. 16 Q And are the ones you copied included in 423? 17 A Yes. 18 MR. WHITE: The government offers 423. 19 THE COURT: Any objection? 20 MR. TRABULUS: No objection. 21 THE COURT: Government's Exhibit 423 in 22 evidence. 23 (Government's Exhibit 423 received in evidence.) 24 MR. WHITE: Inclusive of the attachments, 423-A 25 through L.
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1 T
HE COURT: Any objection? 2 MR. TRABULUS: I wasn't objecting to any of them. 3 THE COURT: 423-A for Abel through L for Lion, in 4 evidence. 5 (Government's Exhibits 423-A through 423-L 6 received in evidence.) 7 MR. WHITE: Your Honor, again I have copies to 8 provide to the jury to follow along. 9 THE COURT: Good thinking, Mr. White. 10 MR. WHITE: I will do it in the proper order. 11 THE COURT: Now you are getting to it. 12 MR. WHITE: I learn quickly, your Honor. 13 THE COURT: You do. 14 (Whereupon, the exhibit/exhibits were published 15 to the jury.) 16 Q Let's review the information you received from 17 Mr. Reffsin. 18 Now, the top document marked 423 what is it? 19 A Revised collection statements from individuals, form 20 433-A. 21 Q Let me ask you about a couple of quick areas about 22 that, if you look at the top of pag
e 2, question 14, for 23 bank charge cards, are any listed? 24 A No. 25 Q If you look for 18, securities, anything listed?
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1 A Nothing at all. 2 Q For question 16 above that, real property, anything 3 listed? 4 A No. 5 Q On page 3, what assets are listed by Mr. Gordon? 6 A The only asset is $1,000 in cash. 7 Q In box 28 under other liabilities, are there loans to 8 Mr. Gordon for any corporations listed there? 9 A No. 10 Q On the next page under living expenses. At the 11 bottom under other expenses, what is written there? 12 A Box 51? 13 Q Yes. 14 A Other expenses, specify, nothing. 15 Q Were bank statements among the documents you received 16 from Mr. Reffsin? 17 A Yes. 18 Q Can you tell us what statements
you received from 19 Mr. Reffsin? 20 A I will look at the attachments. 21 423-F is National Westminster Bank, statements 22 for the month of May 18th through June 16th, 1993. 23 Q Without reading each one, can you page through it and 24 tell us what you got? 25 A May 18th, through October 16th, through November
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1 16th, 1993. 2 Q Looking at one in particular, 423-H, and that's the 3 statement for July 17th through August 17th, 1993. 4 A Yes. 5 Q Any deposits to Mr. Gordon's account to that 6 statement? 7 A There are two items listed as credit memos. 8 Q And what are the amounts? 9 A August 2nd, listed at $10,000, and the word "loan" is 10 written in. On August 3rd, 1993, credit memo, $5,000. 11 Q Now, if you could turn ahead to the st
atement that is 12 marked 423-K. Any deposits to Mr. Gordon's account that 13 month? 14 A Yes, three. 15 Q Tell us what they are? 16 A October 21st, $5,000, credit memo. October 25th, 17 $613.52, deposit. And on November 2nd, $5,000, credit 18 memo. 19 Q Mr. Gagliardi, if you take a look at Exhibit 421, 20 your letter to Mr. Reffsin, and if you could compare that 21 with 423, which are the documents you received from him. 22 A Okay. 23 Q Going through the letter. Item number one, you asked 24 for a 433-A. Did you get that? 25 A Yes, I did.
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1 Q Item number two, you asked for tax returns, did you 2 get those? 3 A 1991, 1992 -- yes, we did. 4 Q The checks and bank statements, did you receive 5 those? 6 A Yes. 7
Q Item four, copies of all savings bank statements, 8 passbooks, and certificates of deposits, savings bonds, 9 stock certificates, etcetera. Did you receive any of 10 those? 11 A No. We received none. 12 Q Five is current wage or commission, income 13 statements. Did you receive any of those? 14 A Yes, the W-2 statement for 1993. 15 Q Number six, verification of all monthly payments, if 16 not paid by your personal check. Did you receive any of 17 those? 18 A No. 19 Q Seven, copies of utility bills, did you receive any 20 of those? 21 A No. 22 Q Eight, insurance policy numbers and verifications, 23 did you receive any of those? 24 A Received insurance information for homeowners 25 insurance.
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1 Q Number nine, copies of all m
otor vehicle 2 registrations, title certificates, and/or leasing 3 agreements for vehicles you own or operate. Did you 4 receive any of those? 5 A No. 6 Q Ten, dental or medical bills, did you receive any of 7 those? 8 A No. 9 Q And 11, any additional documentation which supports 10 the income and expenses claimed on your Form 433. Did you 11 receive any of those? 12 A No. 13 Q Now, Mr. Gagliardi, after you reviewed the materials 14 in Exhibit 423, what did you do? 15 A I prepared a spread sheet for certain information, 16 and I contacted Mr. Reffsin again to request additional 17 verification and information. 18 Q Let me show you Exhibit 424. 19 (Handed to the witness.) 20 Q Do you know what that is? 21 A A letter I wrote to Mr. Reffsin on February 17th, 22 1994. 23 MR. WHITE: Your Honor, the government offers
24 424. 25 THE COURT: Any objection?
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1 MR. TRABULUS: No objection. 2 THE COURT: Government's Exhibit 424 in 3 evidence. 4 (Government's Exhibit 424 received in evidence.) 5 Q Mr. Gagliardi, if you take a look at 424-A and see if 6 it is simply an enlargement of 424? 7 A Yes, it is. 8 MR. WHITE: We offer it in evidence. 9 THE COURT: Any objection? 10 MR. TRABULUS: No. 11 THE COURT: Government's Exhibit 424-A, for Abel, 12 in evidence. 13 (Government's Exhibit 424-A received in 14 evidence.) 15 Q Mr. Gagliardi, without reading it, can you tell us 16 what you asked for in that letter. 17 A Okay. 18 In a nutshell I requested additional information 19 as to the questionable items I found when I reviewed the
20 information that had arrived. 21 Q And what specific questionable items did you find? 22 A Unusual deposits out of his bank account, and the 23 service contract with Who's Who, there was that question 24 with a date that I could not determine when it began. 25 There were questions about the taxpayer's taxes, and the
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1 agreement with the Department of Justice. 2 Q Let me first direct your attention to the bank 3 deposits. Specifically what bank deposits were you asking 4 him about? 5 A The $15,000 in July and $10,613.52 in October. 6 Q What was your question with respect to the 7 compensation agreement? 8 A I wanted to fix the term. I needed to make certain 9 when it began. I wanted to -- I wanted either an 10 explanation for the date or -- 11 Q Now
, Mr. Gagliardi, did you receive a response from 12 Mr. Reffsin regarding your request? 13 A Yes, I did. 14 Q Let me show you Exhibit 425. 15 (Handed to the witness.) 16 Q Do you recognize that? 17 A Yes, I do. 18 Q What is it? 19 A A letter from Mr. Reffsin whereby he transmitted the 20 information that I requested, and the attachments. 21 MR. WHITE: Your Honor, the government offers 22 425. 23 THE COURT: Any objection? 24 MR. TRABULUS: No. 25 THE COURT: Government's Exhibit 425 in
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1 evidence. 2 (Government's Exhibit 425 received in evidence.) 3 MR. WHITE: With the Court's permission we will 4 hand out copies again to the jury? 5 THE COURT: Very well. 6 (Whereupon, the exhibit/exhibits were published 7 to t
he jury.) 8 THE COURT: Is this an undated letter, 9 Mr. Gagliardi? 10 THE WITNESS: Yes. 11 MS. SCOTT: Your Honor, I will place a sticker on 12 the last enlargement, 423-A. 13 THE COURT: Very good. 14 Now, does that include the attachments also to 15 425. 16 MR. WHITE: Yes, your Honor. 17 THE COURT: Any objection to the attachments? 18 MR. TRABULUS: No, your Honor. 19 THE COURT: They are 425-A, for Abel to, is it D 20 for Dog? 21 MR. WHITE: Yes, through D for Dog. 22 THE COURT: Those are in evidence as well. 23 MR. WHITE: Thank you. 24 (Government's Exhibits 425-A through 425-D 25 received in evidence.)
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1 Q Now, Mr. Gagliardi, in substance, can you tell us 2 what Mr. Reffsin told you in this letter regarding those
3 deposits that you requested or questioned? 4 A He indicated that they were loans to the taxpayer. 5 We had spoken about this previously. I don't know if you 6 went to bring that up. 7 Q Okay. 8 Tell us what you discussed with Mr. Reffsin prior 9 to this letter. 10 A Okay. 11 I questioned the items when we spoke on the 12 phone. I raised the issues. He gave an explanation. And 13 I told him I would want the information, and he provided 14 that to me. 15 Q And in this letter what did he tell you about those 16 bank deposits? 17 A That Mr. Gordon received loans from Joyce Grossman 18 for $15,000, and Madeline Middlemark for $10,000. 19 Q Did he explain the purposes of these loans? 20 A Yes. 21 Q Can you explain for each one what the purpose was? 22 A He indicated Mr. Gordon's son had passed away, and he 23 borrowed money to pay
for funeral expenses. 24 Q From which one of those people? 25 A In the bottom paragraph, he borrowed money from Joyce
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1 Grossman. 2 Q So, the money for the son's funeral was borrowed from 3 Joyce Grossman? 4 A Yes. 5 Q And does it indicate what the loan from Madeline 6 Middlemark was for? 7 A Yes, it does. It indicates back alimony for payment 8 to Mr. Gordon's ex-spouse. 9 Q Was any documentation of these loans provided to you? 10 A Yes. 11 Q What was provided to you? 12 A Attachments 425-A and 425-B are promissory notes for 13 $15,000 from Joyce Grossman, and $10,000 from Madeline 14 Middlemark. 15 Q Look at 425-A, if you would. 16 That indicates that it is a note from Bruce 17 Gordon to repay Joyce Grossman; is that corre
ct? 18 A Yes. 19 Q Can you tell us what the date of the promissory note 20 is? 21 A It says July 25th, 1993. 22 Q And that's the note or the loan that Mr. Reffsin told 23 you what to pay for his son's funeral expenses? 24 A Yes. 25 Q You can take a look at Government's Exhibit 499-1-A.
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1 MR. WHITE: Your Honor, I will offer it now. It 2 is a certified copy -- 3 THE COURT: What is the number? 4 MR. WHITE: 499-1-A. 5 THE COURT: It is Exhibit 499 -- 6 MR. WHITE: 499-1-A. 7 THE COURT: Any objection? 8 MR. TRABULUS: Your Honor, I have to find it. 9 THE COURT: So do I. 10 MR. TRABULUS: Your Honor, I know what it is, I 11 have soon it before, I will not object to it. 12 THE COURT: Very well. 13 Government's Exhibit
499-1-A, which is a 14 certificate of death? 15 MR. WHITE: Correct. 16 THE COURT: In evidence. 17 (Government's Exhibit 499-1-A received in 18 evidence.) 19 Q If you can take a look at that Exhibit, it is a death 20 certificate from the Florida Department of Health and 21 Rehabilitative Services; is that correct? 22 A It appears to be. 23 Q Would you read the decedent's name in the top box, 24 number one? 25 A Todd Gordon.
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1 Q If you look down to box 17, where it lists father, 2 what does it say? 3 A Bruce Gordon. 4 Q Look back down on box number three, where it says 5 date of death, what is the date? 6 A It says July 28th, 1993. 7 Q And compare that to the date of the promissory note, 8 please, 425-A? 9 A J
uly 25th, 1993. 10 Q So, Mr. Gordon's son died three days after he 11 supposedly borrowed the money for the funeral? 12 MR. JENKS: Objection. 13 THE COURT: What ground? 14 Please rise when you make an objection. 15 MR. JENKS: I am sorry, your Honor. Objection. 16 THE COURT: What ground? 17 MR. JENKS: On the grounds of the phrasing of 18 that objection. 19 THE COURT: Overruled. 20 Did you hear the question? 21 THE WITNESS: Yes, I did, sir. 22 Q What is the answer? 23 A It appears that the promissory note is three days 24 prior to the date of death. 25 Q Now, if you can look at 425-C.
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1 Is that the verification you requested with 2 respect to the compensation agreement? 3 A It is what I received, yes, from Mr. Reffsin.
4 MR. JENKS: Objection. Mr. White continually 5 keeps feeding the witness answers instead of asking him 6 questions. 7 I will ask you to instruct him not to lead the 8 witness. 9 THE COURT: Well, I don't know about 10 continuously, because no one has made an objection about 11 it before, including you. 12 Let me hear the last question, Mr. Reporter, 13 please. 14 MR. WHITE: I will rephrase it, if you like. 15 THE COURT: I don't know whether you have to or 16 not. Let's see if it is a leading question. 17 (Whereupon, the court reporter reads the 18 requested material.) 19 THE COURT: What is leading about that? 20 MR. JENKS: He can simply ask him what the 21 document is, your Honor. For ten or fifteen questions he 22 has been summarizing what is in the document and calling 23 for a yes or no answer. 24 THE COURT: Happily so.
25 MR. JENKS: I will object, your Honor.
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1 THE COURT: It would be leading if -- read it 2 again to me, I want to make a point so the lawyers know 3 what I think a leading question is. Go ahead, 4 Mr. Reporter. 5 (Whereupon, the court reporter reads the 6 requested material.) 7 THE COURT: That is not technically a leading 8 question. It would be leading if it said: That's the 9 verification you received; isn't that right? 10 Very slightly different. 11 Objection overruled. 12 I have to break this up every once in a while, 13 members of the jury. If we get a whole hour's worth of 14 this stuff, I am not going to let it go. I will even tell 15 some stories or something every once in a while. I can't 16 tell jokes. I was never able to do that, but stories
I 17 can tell. 18 Go ahead. 19 Q Now, Mr. Gagliardi, after you received this response 20 from Mr. Reffsin, did you have any additional contact with 21 him regarding this offer? 22 A I kept the chronology of the actions I took on the 23 case. To tell you the truth, as to what action I took 24 next it would be difficult to place. If I can see my 25 notes I could tell you.
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1 Q Do you recall the specific dates? 2 A Not after this time, no. 3 Q All right. 4 Let me show you Exhibit 3500-8-A, which I believe 5 are your notes. And you can see if that refreshes your 6 recollection. 7 (Handed to the witness.) 8 A I told Mr. Reffsin that I would have to review the 9 information and make a determination on the offer in 10 compromise.
11 Q Now, did you ever ask him for any additional 12 information? 13 A Yes, I did. 14 Q What did you ask him for? 15 A The taxpayer was required to make a filing with the 16 Department of Justice on an annual basis as part of that 17 agreement, a previous agreement. And he had yet to do 18 so. And I brought that issue up. 19 Q Now, did you ask him for any additional projections 20 of income? 21 A Yes, I -- the offer examination required that we 22 bring it out five years after the recommendation was 23 made. And this thing was dragging on a little longer than 24 expected, and I needed an additional year's projection. 25 Q Take a look at Exhibit 426.
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1 (Handed to the witness.) 2 What is that? 3 Q What is that? 4 A A letter from
Mr. Reffsin and attachment. To 5 summarize it, it is the extension -- 6 THE COURT: No. Just tell us what it is. It is 7 a letter and dated May 13th, 1994. 8 THE WITNESS: Sorry. 9 Q Mr. Gagliardi, did you receive this letter? 10 A Yes, I did. 11 MR. WHITE: Your Honor, the government offers 12 426. 13 THE COURT: Any objection? 14 MR. TRABULUS: No, your Honor. 15 THE COURT: Government's Exhibit 426 in evidence. 16 (Government's Exhibit 426 received in evidence.) 17 Q Mr. Gagliardi, would you look at 426-A, and tell me 18 if it is simply an enlargement of 426? 19 A Yes, it is. 20 MR. WHITE: Your Honor, we offer 426-A. 21 THE COURT: Any objection? 22 MR. TRABULUS: No. 23 THE COURT: 426-A, Government's Exhibit in 24 evidence. 25 (Government's Exhibit 426-A received in
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1 evidence.) 2 Q If you can summarize it for us what is it Mr. Reffsin 3 told you with respect to the additional year's projection 4 of income? 5 A Basically the taxpayer's employer filed for Chapter 6 11 protection, and it was impossible to provide an extra 7 year's projection. 8 Q And why was it impossible? 9 A Because it was not certain as to whether or not his 10 employment would be continued. 11 Q Now, you indicated before in addition to that you 12 asked Mr. Reffsin with respect to information about the 13 collateral agreement. 14 A Yes, I did. 15 Q Did you receive a response from Mr. Reffsin with 16 respect to that issue? 17 A I just want to make sure I properly state it. 18 No, I received the verification, for 1992. I 19 can't find it in my notes right now. 20 Q Okay.
21 Let me show you Exhibit 427. 22 (Handed to the witness.) 23 Q Tell me if you recognize that. 24 A Yes, I do. 25 Q And what is that?
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1 A It is a letter from M. Reffsin & Company signed by 2 Mr. Reffsin explaining the taxpayer's liability for the 3 future income and collateral agreement with the Department 4 of Justice. 5 MR. WHITE: The government, your Honor, would 6 offer Exhibit 427. 7 THE COURT: Any objection? 8 MR. TRABULUS: No. 9 THE COURT: Government's Exhibit 427, in 10 evidence. 11 Q Now, Mr. Gagliardi, again, look at 427-A, and tell me 12 if it is simply an enlargement of 427. 13 MR. WHITE: Your Honor, we offer 427-A. 14 MR. TRABULUS: No objection. 15 THE COURT: Government's Exhibit 427-A in 16 evi
dence. 17 Q Now, Mr. Gagliardi, can you explain for us more 18 specifically what information you asked Mr. Reffsin for 19 that this letter responds to? 20 A All right. 21 The taxpayer had previously made that agreement 22 with the Department of Justice, and it was separate and 23 distinct from the offer in compromise. He had to file 24 that with his tax return annually. And it was not 25 provided -- that information was not provided along with
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1 the offer in compromise. But it was -- I am sorry. 2 THE COURT: Mr. Gagliardi, what is this agreement 3 with the Department of Justice? What is that about? Does 4 it have anything to do with your offer in compromise? 5 THE WITNESS: With the offer in compromise -- not 6 particularly with the offer in compromise.
7 THE COURT: Well, did you know what that was, the 8 Department of Justice collateral agreement? 9 THE WITNESS: Only to the extent that the 10 taxpayer had provided copies with the information that was 11 submitted with the offer. 12 THE COURT: So, you didn't know what it was? 13 THE WITNESS: No. I didn't have a copy of the 14 agreement, no. 15 THE COURT: You still don't know what it is? 16 THE WITNESS: I have a basic idea what it is. 17 But I don't have specific knowledge. 18 MR. WHITE: Your Honor, I think I can clarify a 19 question. 20 Q Prior to receiving the offer in compromise, did you 21 have a copy of the collateral agreement? 22 A Prior to receiving the offer in compromise? No. 23 Q With the offer in compromise did you receive a copy 24 of the collateral agreement? 25 A Yes, I did.
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1 Q Was the sum -- were the sums owed by Mr. Gordon under 2 the collateral agreement, part of the liability that he 3 was trying to compromise? 4 A It indicated all taxes. I believe if you look at the 5 offer in compromise, I believe -- 6 MR. NEVILLE: Objection to what he believes, your 7 Honor. 8 THE COURT: When you say you believe, you mean 9 you understand that to be so with reasonable certainty, or 10 are you just guessing? 11 THE WITNESS: My recollection is that it was 12 included. Without looking at the document, I don't want 13 to make the guess, your Honor. 14 THE COURT: You don't know at this point? 15 THE WITNESS: No. I don't know at this point. 16 Q Look at Government's Exhibit 420-H, that you have in 17 front of you. 18 A If you give me a minute. 19 Q H should be the last
attachment to that. 20 A Okay. 21 Q Now, is that the collateral agreement? 22 A Yes, it is. 23 Q Did you receive it as part of the offer in 24 compromise? 25 A Yes, I did.
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1 Q That collateral agreement covers how much in 2 penalties? 3 A 254,781, plus interest. 4 THE COURT: I still don't understand. 5 What does the collateral agreement have to do 6 with what you were doing with respect to the offer in 7 compromise? Is it the same tax liability? Is it a 8 previous tax liability or what? 9 A It's -- it's the same tax liability. 10 THE COURT: It is the second agreement covering 11 the second tax liability? 12 THE WITNESS: The offer in compromise? 13 THE COURT: You were involved in an offer in 14 compromise. 15
THE WITNESS: Yes. 16 THE COURT: There was some three and a half 17 million dollars in taxes, penalty and interest due; is 18 that correct? 19 THE WITNESS: Correct. 20 THE COURT: There was an offer in compromise to 21 settle the whole shooting match for 150,000? 22 THE WITNESS: Rate. 23 THE COURT: You were asking for all these 24 documents to verify that the taxpayer couldn't pay more 25 than that, correct?
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1 THE WITNESS: Correct. 2 THE COURT: That's what you were doing? 3 THE WITNESS: Yes. 4 THE COURT: What does the collateral agreement 5 cover, the same three and a half million dollars? 6 THE WITNESS: The taxpayer previously agreed to 7 make these payments with the Department of Justice, the 8 information. If the offer was accepted
it had to go back 9 to Justice to be approved. 10 THE COURT: The collateral agreement covered then 11 with the Department of Justice was also involving taxes, 12 past due taxes? 13 THE WITNESS: The penalty portions of those 14 taxes. 15 THE COURT: Just the penalty portions, but the 16 same taxes that you were concerned with? 17 THE WITNESS: Well, the liability was part of the 18 offer, the taxes to be settled, yes. 19 THE COURT: So, he had already made an agreement 20 with the Department of Justice to pay, you say, the 21 penalties part; is that right? 22 THE WITNESS: Right. 23 THE COURT: And this offer in compromise was an 24 additional payment to be made? 25 THE WITNESS: Okay.
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1 The offer in compromise offered this amount to
2 pay the -- to wipe out the rest of the -- the entire tax 3 liability. 4 THE COURT: Including the collateral -- 5 THE WITNESS: Including -- I am sorry. 6 THE COURT: If the offer in compromise went 7 through, it would wipe out the collateral agreement? 8 THE WITNESS: With the approval of the Department 9 of Justice. 10 THE COURT: Yes. 11 THE WITNESS: Yes. 12 Q The $240,000 in penalties that the collateral 13 covered, was that a portion of the total three and a half 14 million liability that Mr. Gordon wanted to compromise? 15 A Yes. 16 Q So, if the offer were accepted, that debt would be 17 extinguished along with the debt for 150,000? 18 A That's correct. 19 Q Now, to go back to the collateral agreement question, 20 what specifically were you asking Mr. Reffsin about, to 21 which this letter responds? 22 THE COURT: What is this l
etter? 23 MR. WHITE: 427. 24 A The question I raised was whether Mr. Gordon met the 25 terms of the collateral agreement with the Department of
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1 Justice. This is the explanation provided by Mr. Reffsin. 2 Q What made you think he had not met the terms of the 3 agreement? 4 MR. TRABULUS: Objection to form, your Honor. 5 THE COURT: Overruled. 6 A No information was provided with the offer package to 7 indicate any payments were made. 8 Q Now, does Mr. Reffsin provide you with any 9 information regarding payments for 1993 by Mr. Gordon 10 under that agreement? 11 A Yes. He did. 12 Q What did he tell you in that letter, 427? 13 A In a nutshell, that the taxpayer had made a partial 14 payment for the amount required for 1993, and that he was
15 unable to pay the balance. 16 THE COURT: He paid $5,500? 17 THE WITNESS: Yes, sir. 18 THE COURT: Of the 14,000 -- 19 A Yes, sir. 20 Q And a little over $8,000 is what he was unable to 21 pay; is that correct? 22 A Yes, sir. 23 Q Now, if you could just read for us the two sentences 24 in the third paragraph allowed? 25 A The third paragraph?
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1 Q Yes. 2 A He is going to have to borrow the money he has 3 offered in the offer in compromise submitted. Where shall 4 he borrow this money? Perhaps he should cease eating. 5 THE COURT: E A T I N G, which we will do at 6 12:30 today. And I can't wait already. 7 Q Now, let me show you Exhibit 428. And would you take 8 a look at that. 9 (Handed to the witness.) 10 Q Would
you tell us what Exhibit 428 is? 11 A Form 656, offer in compromise, marked at the top, 12 amended offer, October 20th, 1994. And it has an 13 attachment. 14 MR. WHITE: Your Honor, the government offers 15 428. 16 THE COURT: Any objection? 17 MR. TRABULUS: No, your Honor. 18 THE COURT: Government's Exhibit 428, in 19 evidence. 20 (Government's Exhibit 428 received in evidence.) 21 Q Now, what is an amendment to an offer in compromise? 22 A A taxpayer -- an offer in compromise is basically a 23 negotiation. A taxpayer can offer an additional sum, 24 include additional periods, or change the terms of the 25 payment of the offer.
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1 Q Okay. 2 In what respects does this amended offer in 3 compromise amend the original one? 4 A The
attachment is basically similar to the original 5 offer, except for paragraph C of the attachment, which 6 indicates that there is current -- you want me to read it 7 or no? 8 Q Tell us in substance how it is different. 9 A It is basically to include the unpaid portion of the 10 agreement with the Department of Justice. 11 Q And the unpaid portion relates to that $8,000 that 12 you mentioned before? 13 A Yes. 14 Q Now, aside from reviewing the information submitted 15 to you by Mr. Gordon and Mr. Reffsin, can you tell us what 16 else you did to investigate this offer in compromise? 17 A I researched routine databases that we have, the 18 motor vehicles, real property information, records of the 19 state and the county, currency and banking records which 20 lists disbursements over $10,000 by a taxpayer. And I 21 made a visit to the taxpayer's address to dete
rmine what 22 kind of lifestyle he was living. 23 Q Now, let's take it one by one. 24 First of all, you mentioned a database with 25 respect to currency transactions?
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1 A Yes. 2 Q Tell us what that is and why you checked it? 3 A It indicates any cash transaction that is made either 4 in a deposit or withdrawal from a bank over $10,000. I 5 researched that and didn't find any for Mr. Gordon. 6 Q Did you say you reviewed real estate records as well? 7 A Yes, we did. 8 Q Why did you do that? 9 A To determine if there are any real estate holdings 10 not reported on the collection statements, and on Nassau 11 County and Suffolk records, which were researched, and 12 there were none found in Mr. Gordon's name. 13 Q Did you review motor vehicle regis
trations? 14 A Yes, we did. And, likewise, there were none found. 15 Q You mentioned also about investigating Mr. Gordon's 16 life style. Tell us what you did. 17 A I visited the address listed on the offer in 18 compromise. I found no one at home. I made note of the 19 area, the type of neighborhood it was, the value of the 20 property. I researched that particular property to see if 21 he was in the chain of title. I didn't find anything for 22 Mr. Gordon. 23 Q Okay. 24 If you can look back to Exhibit 420. 25 A Give me a clue?
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1 Q Which is the offer in compromise, the original one. 2 A Okay. 3 A lot of papers here. 4 Q Look at 420-A, the offer in compromise form. 5 A Yes. 6 Q The address listed is 10 Bluff Road in Glen Cove?
7 A Correct. 8 Q What address did you go and observe? 9 A That address. 10 Q And from looking at your notes, can you tell us when 11 you did that? 12 A December, 1993. And I believe I made another visit 13 later on, but I can't fix the date. 14 Q If I can address your attention to July of '94 in 15 your notes. 16 A Yes, I did, on July 29th, 1994, I also visited. 17 Q Let me address your attention to early April, 1995. 18 Did you learn anything in connection with this offer in 19 compromise at that time? 20 A Yes, I did. 21 Q Can you tell us what you learned? 22 A There was a newspaper published -- report regarding 23 Mr. Gordon and Who's Who Worldwide Registry, indicated 24 that he had an ownership role in the company, and that he 25 had been arrested, I believe.
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1 Q And as a result of that, what did you do? 2 A I contacted Mr. Reffsin. 3 Q And what happened? 4 A Mr. Reffsin indicated that it was an error, it would 5 be resolved, and he would get back to me shortly, and all 6 should be fine. 7 MR. TRABULUS: Your Honor, may we have a limiting 8 instruction concerning the significance of the information 9 in the newspaper article that he had, as to it being 10 admissible for his state of mind and only that? 11 THE COURT: Yes. 12 The newspaper article that the witness said that 13 he is not admissible, you are to pay no attention to the 14 fact of whatever was in that newspaper article. The only 15 reason it is allowed in is what effect it had on this 16 witness. 17 As far as whether it was true or not, that is 18 absolutely not admissible. You are to pay no attention to
19 that. 20 Q Now, Mr. Gagliardi, was there a reason why this 21 newspaper article of Mr. Gordon's ownership was 22 significant to you? 23 A Yes. 24 Up to this point in time, and as far as I know, 25 Mr. Gordon had no ownership, stock ownership, or no other
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1 role other than an employee for the corporation. It 2 raised that issue and it had to be cleared up. 3 Q From where did you obtain that impression that he had 4 no ownership interest? 5 A On every collection statement filed, it indicated he 6 was an employee, and had no ownership role. 7 Q Now, did you subsequently have any additional 8 conversation with Mr. Reffsin about this situation? 9 A Yes, we waited at least about six weeks for 10 Mr. Reffsin -- to see if the situation had resolved. I
11 contacted him again, and he indicated he could not -- and 12 I indicated he could not hold this open forever, and if 13 the taxpayer would withdraw the offer -- if the taxpayer 14 would not withdraw the offer, we have to reject it. 15 Q Okay. 16 Let me show you Exhibit 429. 17 (Handed to the witness.) 18 Q Do you recognize that? 19 A Yes, I do. 20 Q What is that? 21 A A letter dated May 10th, 1995, where Mr. Reffsin -- I 22 am sorry, from Mr. Reffsin, withdrawing the offer in 23 compromise. 24 Q To you? 25 A Yes.
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1 MR. WHITE: Your Honor, the government offers 2 Exhibit 429. 3 THE COURT: Any objection? 4 MR. TRABULUS: No, your Honor. 5 MR. WALLENSTEIN: No, your Honor. 6 THE COURT: Government's Exhibit 429 in
7 evidence. 8 (Government's Exhibit 429 received in evidence.) 9 THE COURT: What is the date on that? 10 THE WITNESS: May 10, 1995. 11 Q If you can just read the first paragraph for us. 12 A Pursuant to our telephone discussion of the other 13 day, I elect to withdraw Mr. Gordon's request for an offer 14 in compromise in view of his current legal problems -- in 15 view of the current legal problems that Mr. Gordon is 16 involved in. 17 He would prefer to re-submit when the problems 18 are resolved. 19 And it is signed by Mr. Reffsin. 20 MR. WHITE: Your Honor, may I have one moment, 21 please? 22 THE COURT: Surely. 23 (Whereupon, at this time there was a pause in the 24 proceedings.) 25 MR. WHITE: Your Honor, I have no further
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1 questions. 2 THE COURT: Cross-examination -- maybe we ought 3 to take our recess first and then start the 4 cross-examination. 5 All right. Members of the jury, we will take a 6 ten-minute recess. Please do not discuss the case. Keep 7 an open mind. 8 Madam courtroom deputy, would you please recess 9 the jury. 10 (Whereupon, at this time the jury leaves the 11 courtroom.) 12 13 (Whereupon, a recess is taken.) 14 15 THE CLERK: Jury entering. 16 (Whereupon, the jury at this time entered the 17 courtroom.) 18 THE COURT: Please be seated, members of the 19 jury. 20 You may proceed, Mr. Trabulus. 21 MR. TRABULUS: Thank you, your Honor. 22 23 CROSS-EXAMINATION 24 BY MR. TRABULUS: 25 Q Good morning, Mr. Gagliardi.
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1 A Good morning. 2 Q I am Mr. Gordon's attorney. 3 Before you came to court yesterday, had you ever 4 seen Mr. Gordon before? 5 A To the best of my recollection, no. 6 Q And did you ever speak to Mr. Gordon? 7 A No, I don't believe so. 8 Q So, is it fair to say that your entire involvement 9 with Mr. Gordon was through Mr. Reffsin? 10 A Yes, it would be. 11 Q Now, I believe you were shown Exhibit 499-1-A, which 12 showed the date of death of Mr. Gordon's son as being July 13 28th, 1993; is that correct? 14 A I believe so. 15 Q Of course, you were shown a note that had an earlier 16 date; is that correct? 17 A Yes. 18 Q Now, the inquiry that you made which resulted in you 19 being given the note was prompted by some entries on bank 20 statements; is that correct? 21 A Yes. 22
Q And I would ask you now to turn to Exhibit 423-H. 23 A I have it. 24 Q Mr. Gagliardi, some of the entries which prompted 25 your inquiry appear on this 423-H; is that correct?
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1 A Yes. 2 Q And those are the two additions, one for 10,000 and 3 one for 15,000; is that correct? 4 A Yes. 5 Q And one has the word "loan" written next to it? 6 A Yes. 7 Q They are both shown as credit memos; is that correct? 8 A Yes. 9 Q One is dated August 2nd, and the other is August 3rd; 10 is that correct? 11 A Yes. 12 Q And that's a few days after the July 28th date of the 13 debt; is that right? 14 A Yes, sir. 15 Q Now, it is not unheard of for people who receive 16 money as a loan to give a promissory note for that 17 afterwards;
is that correct? 18 A I have no particular knowledge of it. 19 Q Would it seem -- if there was an emergency situation 20 and someone got some money, they might not give a 21 promissory note for it right at that point; is that 22 correct? 23 A If you want to make that supposition. I can't. 24 Q Isn't it correct that they then prepared a promissory 25 note afterward, and in the course of dating it, they might
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1 not remember the actual date they got the money; is that 2 correct? 3 A I am rather careful in dating documents. I would 4 imagine that Mr. Gordon would be the same. 5 Q Well, when someone is upset because a close relative, 6 such as a child, had died, perhaps they might not be as 7 careful; would you agree? 8 A You can make that supposition. Ho
wever, this is 9 information he is providing to the Internal Revenue 10 Service. 11 Q In any event, there is no dispute that the money, the 12 money itself was given to -- put into Mr. Gordon's account 13 after the date that the son had died; is that correct? 14 A That is correct. 15 Q Now, Mr. Gagliardi, when you first got involved with 16 Mr. Gordon's case, information case, that was prompted by 17 the receipt of the offer in compromise; is that correct? 18 A I had previously been assigned a review of 19 Mr. Gordon's account on another matter. 20 Q Now, in connection with your assignment relating to 21 the offer in compromise, you had access to documents 22 relating to Mr. Gordon's tax filings, filings that had 23 been made before the offer in compromise itself was 24 proposed; is that correct? 25 A Do you want to restate that?
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1 Q I am sorry. I will restate it. 2 When you got involved -- at the time you received 3 the offer in compromise, did you have the prior collection 4 information statements, the forms 433-A, that had been 5 filed by or on behalf of Mr. Gordon? 6 A When I received the offer in compromise, I received a 7 package of information with that collection statement that 8 was dated, I believe it was July of '93, or September of 9 '93. I don't have it -- without looking at it I can't 10 give you the exact date. 11 Q Did you have any earlier collection information 12 statements that had been filed by Mr. Gordon? 13 A Did I -- no. I did not have any collection 14 information statements prior to receiving the offer in 15 compromise. 16 Q After receiving the offer in compromise, did there
17 come a point in time when you acquired earlier collection 18 information statements that had been filed by Mr. Gordon 19 before the offer in compromise? 20 A I don't recall so. The original -- the file with the 21 offer is dated, I think, July of '93. I don't believe 22 there was another offer -- another collection statement. 23 Q No other collection statement? 24 A I don't have any knowledge of it. 25 Q So, it is your understanding that the very first
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1 collection information statement that was ever filed by 2 Mr. Gordon was the July 8th, 1993, collection information 3 statement? 4 A When I received the offer in compromise, that's the 5 first collection statement that I had. 6 Q In the course of doing your investigation, I think 7 you mentioned that
you did some investigation, you went to 8 a condominium, you checked property records, currency and 9 banking records. 10 In the course of that investigation did you seek 11 to ascertain whether or not Mr. Gordon had previously, 12 before July 8th, 1993, filed any collection information 13 statements? 14 A I didn't have access to any other information, and I 15 don't believe I ever requested any prior filings. 16 Q When you say you didn't have any access to other 17 information, could you have access to information, had you 18 requested it? 19 A Do you want to be specific? 20 Q Yes. 21 For example, if you had wanted to see other 22 collection information statements that had been filed by 23 Mr. Gordon earlier than the July 8th, 1993 collection 24 information statement, could you have made a request and 25 gained access to it?
HARRY
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1 A It's a possibility. However, it is sometimes 2 difficult to retrieve records on previous cases. 3 Q Did you ever ask Mr. Reffsin whether Mr. Gordon had 4 previously filed any earlier collection information 5 statements? 6 A I don't believe so. 7 Q And you say it would be difficult -- it could 8 sometimes be an effort to retrieve files within the IRS to 9 get earlier collection information statements; is that 10 correct? 11 A That's correct. 12 Q Would that be more difficult than going out and 13 visiting a condominium? Would that take more of your 14 time, to make a request for a prior document? 15 A Well, we could make a request for a prior document. 16 However, this is a current offer in compromise I was 17 reviewing. There was really no reason to see prior
18 records. 19 Q Did you tell Mr. Reffsin that you were unaware of any 20 prior records, and wouldn't be considering them? 21 A It never became an issue. 22 Q So, he -- withdrawn. 23 Now, I would like to direct your attention to 24 Exhibit -- bear with me a moment. It is one of the 25 420's -- I am sorry, it is 423.
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1 Do you have that in front of you? 2 A Yes, I do. 3 Q Now, that's a collection information statement, is it 4 not? 5 A Yes, it is. 6 Q And you testified concerning it. 7 I would like you to turn to page 3. 8 A Page 3. 9 Q Under item 27 that you have been asked some questions 10 about by Mr. White -- 11 A Uh-huh. 12 Q -- is it not true that there is a listed liability of 13 $30,000 for charge ac
counts? 14 A Yes, there are. 15 Q Did you pursue that with any follow-up inquiry 16 concerning what those charge accounts were? 17 A No, I didn't. 18 Q Okay. 19 Now, let's go to the -- that was a collection 20 information statement that was filed in connection with -- 21 following the offer in compromise; is that correct? 22 A This is I believe the amended statement. 23 Q This is the one you asked for? 24 A Yes. 25 Q As part of your desire to get additional information?
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1 A That's right. Uh-huh. 2 Q Now, let's go back to the collection information you 3 received in connection with the offer in compromise, and I 4 believe that was Exhibit 420-D? 5 A I have it. 6 Q That's the one dated July 8th, 1993; is that right? 7 A Yes,
it is. 8 Q And that offer in compromise -- excuse me, that 9 collection information statement on page 3 also indicates 10 a liability for charge accounts, $32,000; is that correct? 11 A Yes, it does. 12 Q Did you pursue that to inquire as to the nature or 13 existence of that charge account? 14 A No, I didn't. 15 Q Is it fair to say that in these collection 16 information statements that were given to you in 17 connection with the offer in compromise, there was 18 disclosure of the fact that there were charge account 19 liabilities relating to Mr. Gordon? 20 A Charge account liabilities, yes. 21 Q Now, I would like to refer you to the collateral 22 agreement. And I think that is 420-H. 23 A I have it. 24 MR. TRABULUS: I will just give the jury a chance 25 to find their copy.
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1 (Whereupon, at this time there was a pause in the 2 proceedings.) 3 Q Now, Mr. Gagliardi, you were asked to read the -- I 4 think the second paragraph. 5 A Uh-huh. 6 Q Take a look at the first paragraph. And without 7 asking you to read it, is it fair to say that it refers to 8 an offer dated August 29th, 1991, as amended on September 9 19th, 1991? 10 A You want my understanding? 11 Q Yes. 12 A My understanding is that it was an offer in 13 settlement with the Department of Judges. 14 Q And the collateral agreement itself was dated was 15 dated October -- excuse me, November 20th, 1991; is that 16 correct? 17 A That's correct. 18 Q And it was prepared well, well -- well, years in 19 advance, years before the offer in compromise that you 20 have been testifying about was submitted to you;
is that 21 correct? Or submitted to the IRS? 22 A That's correct. 23 Q So, just for clarification where this document, that 24 is, 420-H refers to an offer in compromise, it is not 25 talking about something that happened years later? It is
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1 talking about the offer of settlement? 2 A It is talking about the offer in settlement, yes. 3 Q Are you familiar with the offer in settlement? Have 4 you ever seen it, the offer referred to with respect to 5 that? 6 A As to this case? 7 Q This particular case, yes, have you seen the offer 8 dated August 1991, or any document reflecting an amendment 9 on September 19th, 1991? 10 A I have seen the correspondence from the Department of 11 Justice to the taxpayer's attorneys. 12 Q Fair enough. 13
A And vice versa. 14 Q Let me go back and I think you told Mr. White, or you 15 summarized for Mr. White a provision of this collateral 16 agreement, in which you said that it includes for purposes 17 of this agreement in Mr. Gordon's income, not just his own 18 income, but income of corporations that he owned, closely 19 held corporations that he owned; is that correct? 20 A That's correct. 21 Q But does it not also include income of corporations 22 that he controls, as opposed to owned? 23 A Allow me to read it? 24 Q Please do. Look at paragraph 3: I will read the 25 first clause to you.
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1 That in the event closely held corporations are 2 directly or indirectly controlled or owned by the taxpayer 3 during the existence of this agreement, and then it
4 proceeds. 5 A Uh-huh. 6 Q Yes? 7 A Yes. 8 Q And so, for purposes of this collateral agreement, it 9 doesn't make any difference as to whether the corporation 10 is owned or controlled? It operates the same way; is that 11 right? 12 A That appears to be the intent. 13 Q Now, let's turn to the shareholder -- the 14 compensation agreement, which was disclosed to you by 15 Mr. Reffsin; is that correct? It was disclosed to you by 16 him; is that right? 17 A Right. 18 Q And the compensation agreement was -- and you will 19 forgive me, but it is 420-G. 20 (Whereupon, at this time there was a pause in the 21 proceedings.) 22 MR. TRABULUS: I am making sure the jurors all 23 have it. 24 (Whereupon, at this time there was a pause in the 25 proceedings.)
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1 Q This compensation agreement indicates, does it not, 2 that Mr. Gordon was the president of Who's Who Worldwide, 3 Inc.; is that correct? 4 A President and chief executive officer. 5 Q That's my next question, Mr. Gagliardi. 6 A I am sorry. 7 Q Chief executive officer as well. 8 And it indicates he is responsible for running 9 the day to day operations of Who's Who Worldwide, Inc.; is 10 that right? 11 A Yes, it does. 12 Q And that would certainly indicate to you, did it not, 13 that he controlled Who's Who Worldwide; is that correct? 14 A It indicated he was the managing officer. 15 Q Would being the president and chief executive officer 16 of a company indicate to you that a person was in control 17 of it, directly or indirectly? 18 A You want my understanding? 19 Q Well, what was your understa
nding at the time when 20 you read that? Did it occur to you that he might be in 21 control of it? 22 A At the time it appeared to me that he was a contract 23 employee. 24 Q Did you understand that regardless of whether he was 25 a contract employee or not that he might be in control of
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1 it? Did that even occur to you? 2 A I can't say if I can recollect whether or not. 3 Q Certainly, Mr. Reffsin on Mr. Gordon's behalf did not 4 conceal from you that Mr. Gordon was the president, chief 5 executive officer and responsible for the day to day 6 operations of Who's Who Worldwide, did he? He didn't 7 conceal that at all? 8 A No, he did not. 9 Q Now, it also indicated that he was to be a director 10 of Who's Who Worldwide; is that correct? 11 A Y
es. 12 Q And corporations are generally controlled, if by 13 nobody else, by their directors; is that correct? Did you 14 understand that? 15 A I understand that. 16 Q Did you inquire as to whether there were any other 17 directors or anybody else who might be in control? 18 A No, I didn't, because -- 19 Q So, as far as -- as far as you knew -- the only 20 director of Who's Who Worldwide that you were aware of, 21 was Mr. Gordon; is that correct? 22 A My understanding of the agreement -- 23 Q Please tell me if that's correct? 24 MR. WHITE: Objection. Let the witness finish 25 the answer.
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1 THE COURT: He can't finish the answer. The 2 answer was not responsive. If he did I would strike the 3 answer if a motion was made that it was not respons
ive. 4 As I told the first witness produced, as I will 5 tell each one, on cross-examination you will be asked 6 questions that pinpoint certain things. A cross-examiner 7 has a right to do that. 8 So, almost every question calls for a yes or no. 9 If you can't say yes or no, say so. 10 THE WITNESS: I am sorry, your Honor. 11 THE COURT: That shifts the burden back to 12 Mr. Trabulus to decide what to do. You can say I can't 13 answer the question yes or no. No explanation, if you 14 don't remember or don't know, say so. That's the way it 15 is done. 16 THE WITNESS: All right. 17 Can you repeat the question? 18 Q Is it correct that the only director of Who's Who 19 Worldwide of whom you were aware at the time was 20 Mr. Gordon? 21 A That's correct. 22 MR. TRABULUS: Your Honor, I am going to ask, 23 with your Honor's permission, if th
e government has any 24 additional copies of the documents he just provided to me 25 this morning, the October 15th, 1991 -- the
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1 correspondence, I believe, that the witness has testified 2 to. 3 Do you have any additional copies? 4 MR. WHITE: I have three extra copies, will that 5 help? 6 MR. TRABULUS: Perhaps. 7 MR. WHITE: That's the whole set. 8 (Documents handed to Mr. Trabulus.) 9 MR. TRABULUS: Thank you. 10 Your Honor, I would like to show the witness -- I 11 have given Mr. Reffsin a copy, and there are copies for 12 other counsel, if they want them. 13 (Handed to the witness.) 14 Q Mr. Gagliardi, I am showing you what is marked as 15 Gordon A, and I didn't have the right kind of stickers, so 16 I penned it in the upper right
-hand corner. 17 Is this one of the correspondence relating to the 18 collateral agreement that you were familiar with? 19 A I never received this agreement. So if you give me 20 an opportunity to review it? 21 Q Sure. 22 (Whereupon, at this time there was a pause in the 23 proceedings.) 24 A It appears to be. 25 MR. TRABULUS: Your Honor, I would offer
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1 Gordon A. 2 THE COURT: Any objection? 3 MR. WHITE: Your Honor, may I have a brief voir 4 dire of the witness? 5 THE COURT: Surely. 6 You will hear this from time to time, that the 7 lawyer not doing the cross-examination, or the examination 8 is going to ask for voir dire, which are two French words 9 meaning to see or to say. It is like when they voir dired 10 the jury. An
d these questions are designed to bring out 11 whether the document is admissible or not. It is not for 12 any other purpose. It is as to whether the document is 13 admissible. 14 Go ahead. 15 16 VOIR DIRE EXAMINATION 17 BY MR. WHITE: 18 Q Mr. Gagliardi, at any time while you were considering 19 Mr. Gordon's offer in compromise, did you see this 20 document? 21 A No, I did not. 22 Q When was the first time you saw this document? 23 A When I was shown it by you. 24 Q And when was that? 25 A This morning.
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1 MR. WHITE: No further questions, your Honor. 2 I object to the offer. 3 THE COURT: Can I see the document? 4 MR. TRABULUS: Certainly, your Honor. 5 THE COURT: No, give it to me. He is the 6 reporter. I am
the judge. 7 MR. TRABULUS: I know. I was going -- 8 THE COURT: We want to get our in-title work 9 straightened out here. 10 It is all right, because Mr. Gordon follows what 11 they do in the state court. In the state court the 12 lawyers always hand the exhibits to somebody else, not the 13 judge. Why that is, I don't know. But we stopped that 14 here. I am the one who has to look at it. 15 What happens is they give the exhibit to the 16 reporter and then he hands it to me. But we don't do that 17 here. 18 (Handed to the Court.) 19 THE COURT: Sustained. 20 This is hearsay, is it not? 21 MR. TRABULUS: No. If we can approach, I will 22 explain the basis for the offer or the relevance of it. 23 THE COURT: The relevance I am not getting to. I 24 am getting to the fact that it is the letterhead of a law 25 firm.
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, CSR, CP, CM OFFICIAL COURT REPORTER
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1 MR. TRABULUS: Your Honor, the collateral 2 agreement refers to this letter. It then refers to a 3 subsequent letter which amends it. 4 THE COURT: Show me where in the collateral 5 agreement it refers to this letter. 6 MR. TRABULUS: Sure. 7 Your Honor, that's 420-H, and it refers in the 8 first paragraph of 420-H, it refers to an offer dated 9 August 29th, 1991. And that's this letter. Indeed it is 10 really almost -- I guess the classic word for it would be 11 res gestae. It is like an offer and acceptance. It is 12 not offered for the truth. It is just for what the 13 history proposals are. 14 THE COURT: Notwithstanding your knowledge of 15 Latin, Mr. Trabulus, we don't use those terms any more. 16 As a matter of fact, the United States Supreme Court has 17 disapproved o
f the use of Latin words. We are an English 18 speaking nation, not Latin or any other language. 19 MR. TRABULUS: Mea culpa. 20 THE COURT: Very good, Mr. Trabulus. 21 First of all, we don't know that this is the 22 document. How are you going to show that. 23 MR. TRABULUS: Let me show with a few other 24 questions with your Honor's permission? 25 THE COURT: Go ahead.
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1 2 CROSS-EXAMINATION (cont'd) 3 BY MR. TRABULUS: 4 Q Mr. Gagliardi, do you recognize the received stamp 5 that appears on that? 6 A Received August 30th, 1991, Internal Revenue Service. 7 Q Does that stamp, is it in the ordinary course of the 8 Internal Revenue Service's business, is it placed upon 9 documents as it is received? 10 A Yes, it is. Tax returns, etcetera.
11 Q Is it your understanding that this is the offer dated 12 August 29th, 1991, that is referred to in the collateral 13 agreement? 14 A That's my understanding. But I can't state that 15 fact. 16 Q Well -- 17 MR. TRABULUS: Your Honor, this document was 18 originally first given to me by the government. 19 Q Mr. Trabulus, assuming it is the offer dated August 20 29th, 1991, which is set forth in 21 Government's Exhibit 420-H, the collateral agreement, what 22 relevancy does that have? Does this collateral agreement 23 confirm this offer? 24 A This collateral agreement modifies this offer. 25 What happens is that the offer -- the offer of
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1 August 29th just talks about Mr. Gordon's income, without 2 mentioning picking up any other income of
any corporations 3 he is related to. 4 The Justice Department comes back suggesting that 5 he was well aware that he controlled, and had ownership 6 agreements in corporations. They are the ones who 7 insisted on that change. 8 THE COURT: I don't see anything in this 9 document, Defendant's Exhibit Gordon A for Identification, 10 that says anything about an ownership interests. 11 MR. TRABULUS: This is a document from 12 Mr. Gordon's then attorney. It is the proposal by his 13 then attorney. They were in communications and talked 14 about discussions over the -- 15 THE COURT: What does it have to do with anything 16 involving this case now? Why is it important? 17 THE COURT: You want me to explain it at this 18 point? 19 MR. TRABULUS: You want me to explain it at this 20 point? 21 THE COURT: Yes, explain it. 22 MR. TRABULUS: It appe
ars that the government 23 contends that there was concealment from the IRS that 24 Mr. Gordon had an interest in -- 25 THE COURT: This document shows that he revealed
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1 the interest? 2 MR. TRABULUS: This document -- 3 THE COURT: This document is 4 Defendant's Exhibit Gordon A, for Abel, for 5 Identification. 6 MR. TRABULUS: Gordon A read in conjunction with 7 420-H, and also in conjunction with another document given 8 to me today memorializing the September 19th, and they 9 were then negotiations. And Mr. Gordon's then attorney 10 said we will enter into an arrangement -- 11 MR. WHITE: I sort of object to Mr. Trabulus 12 portraying all the history admissible in his best light, 13 just talking off the top of his head about this. 14 THE COUR
T: It is not evidence. The jury knows 15 that whatever the lawyers say is not evidence. But 16 instead of having 14 sidebars per hour, let's cut them 17 down. 18 MR. WHITE: That's fine with me, your Honor. 19 THE COURT: I see nothing in this agreement that 20 says that. Sustained. 21 Q I would like to show you Gordon B. 22 (Handed to the witness.) 23 Mr. Gagliardi, do you recognize Gordon B? 24 A No, I don't. 25 Q Do you recognize what it is?
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1 A Yes. 2 Q What is it? 3 A Form 433-A, collection information statement for 4 individuals. 5 Q Does it indicate that it was prepared for Bruce 6 Gordon? 7 A Yes, it does. 8 THE COURT: What is the date on it? 9 MR. TRABULUS: The date on it is 12/21, and on 10 this co
py it is a little cut off. I believe it is '91. I 11 think it is actually '91. 12 At the top it indicates as per 8/91, suggesting 13 it is '91. The copy I was given, your Honor, produced by 14 the government is itself somewhat cut off. 15 THE COURT: Okay. 16 Let's move along. It is a cut off 1991; is that 17 right? It is not to say an abbreviated 1991, just a cut 18 off 1991. 19 MR. TRABULUS: Your Honor, I would offer it in 20 evidence. 21 THE COURT: Any objection? 22 MR. WHITE: Voir dire, your Honor? 23 THE COURT: Go ahead. 24 25
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1 VOIR DIRE EXAMINATION 2 BY MR. WHITE: 3 Q Mr. Gagliardi, you said you recognize this as form 4 433-A? 5 A That's correct. 6 Q Have you ever seen this particular document before
? 7 A No, sir. 8 MR. WHITE: Objection, your Honor. 9 THE COURT: Can I see it, please? 10 (Handed to the Court.) 11 THE COURT: Is this Form 433-A an official form 12 of the United States Government? 13 THE WITNESS: It is, sir. 14 THE COURT: Is it a form made by the United 15 States Government in the regular course of its business? 16 THE WITNESS: Yes, it is. 17 THE COURT: Was it the business of the United 18 States Government to make forms such as this? 19 THE WITNESS: Yes, sir, it is. 20 THE COURT: Without stating to me what it is, 21 point out the relevancy of this. What is it in this 22 document that is relevant? 23 MR. TRABULUS: Your Honor, box 7, and it has two 24 entries. The second one is of particular relevance in 25 terms of the issues we have been talking about.
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1 The last page, it is a little hard to read, but 2 under the heading income, the column gross, what is under 3 that is also relevant. 4 I have to point something out, your Honor. The 5 indictment alleges filing three false collection 6 information statements. This is a fourth one. It doesn't 7 allege that it is false, and it was filed in the midst of 8 the other three, and there are -- 9 THE COURT: All I wanted to know is what you said 10 is relevant. 11 You are objecting to this document on what 12 ground, Mr. White? 13 MR. WHITE: Your Honor, I don't believe, or I 14 don't know if this document was ever filed with the 15 Internal Revenue Service. For all I know it may have come 16 from Mr. Gordon's files and it was never filed. 17 THE COURT: Good point. 18 Is there any way to know by looking at Gordo
n 19 Exhibit B for Identification, as to whether it was filed 20 or received by anyone in the government? 21 Before we get to that, who drew up this 22 document? 23 THE WITNESS: It is published by the federal 24 government, the Internal Revenue Service. 25 THE COURT: I mean the form is. But someone then
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1 fills it out? 2 THE WITNESS: Yes, the taxpayer or 3 representative. 4 THE COURT: The taxpayer fills it out, and then 5 delivers it, or sends it to the government? 6 THE WITNESS: Yes, sir. 7 THE COURT: Is there anything on this document 8 that would show that this was received by the government? 9 Do you have a copy in front of you? 10 THE WITNESS: No, you have the copy. 11 THE COURT: Do you want to show it? 12 MR. TRABULUS
: Yes, sir. 13 THE COURT: This is the copy he had -- excuse me 14 a minute. 15 MR. TRABULUS: Surely. 16 (Whereupon, at this time there was a pause in the 17 proceedings.) 18 THE COURT: Do you went to show it to him? 19 MR. TRABULUS: Yes. 20 (Handed to the witness.) 21 THE COURT: Is your name Gagliardi, or Galiardi? 22 THE WITNESS: Whatever you wish. 23 THE COURT: There was a prominent Judge, Joseph 24 Galiardi, administrative judge of the Ninth District. We 25 went to meetings together when I was the administrative
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1 judge. He pronounced it with a silent G. You don't care 2 which way you hear it? 3 THE WITNESS: No, sir. 4 THE COURT: All right. 5 (Whereupon, at this time there was a pause in the 6 proceedings.) 7 TH
E WITNESS: There was no way to tell if it was 8 ever received by the Internal Revenue Service. 9 10 CROSS-EXAMINATION (cont'd) 11 BY MR. TRABULUS: 12 Q Mr. Gagliardi, is there a document to indicate what 13 filings, or what dates filings were made by Mr. Gordon of 14 collection information statements? Is there a document 15 like a log or something like that that the IRS maintains? 16 A As an IRS officer, we keep notes of what we receive. 17 I kept such a log. But I never received such a statement. 18 Q Understood. But is there some record within the 19 Internal Revenue Service whereby someone familiar with 20 Internal Revenue Service procedures, would be able to, 21 even if they had not themselves received it, would be able 22 to determine if a collection statement dated 12/21/91 was 23 received? 24 A No, sir. There are not -- on most documents, such as
25 tax returns, etcetera, there are document locator
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1 numbers. But this information is for the collection of a 2 tax liability, and it is retained only in those case 3 files, and then when the case is closed it is shipped out. 4 Q Shipped out to where? 5 A Storage, and finally the federal records center. 6 Q Do you have any familiarity with how the collection 7 information statements which the government has introduced 8 in evidence in this case with respect to Mr. Gordon, how 9 they were obtained? 10 A How they were obtained? 11 It is my understanding that they were maintained 12 by the offer in compromise. There is an offer in 13 compromise unit in the Internal Revenue Service. I 14 believe that that is where they came from. I don't have 15 specific kn
owledge. 16 Q Now, you -- 17 THE COURT: Excuse me one moment, Mr. Trabulus. 18 MR. TRABULUS: Sure. 19 THE COURT: When a document like this, 20 Defendant's Exhibit B for Identification, where is it sent 21 to? What part of the government would receive this 22 document? 23 THE WITNESS: It would be received in the 24 collection of an income tax liability verification, by the 25 Internal Revenue Service collections division. And that's
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1 only an intent. It is not filed as a tax return. 2 THE COURT: But it is received by some agency in 3 the government? 4 THE WITNESS: It is received by the Internal 5 Revenue Service collections division. 6 THE COURT: Is there a custom and usage that a 7 document like that received would be stamped in any way?
8 THE WITNESS: No, sir, it is not the custom. 9 THE COURT: They don't stamp "received"? 10 THE WITNESS: No, sir. 11 MR. TRABULUS: Your Honor, this document was 12 provided by the government. 13 MR. WHITE: The government provided the defense 14 with all the documents, no matter where they got them 15 from. 16 THE COURT: In order for you to introduce this 17 document, because there is a difference in the 18 admissibility standard with respect to the government 19 introducing this, you understand that, Mr. Trabulus, such 20 as 801(d)(2). And you introducing it. 21 MR. TRABULUS: Your Honor, I think 801(d)(2) 22 doesn't come into issue here, because regardless of truth 23 or falsehood of a document, the content of it has to be 24 looked at in connection with other documents. It is to be 25 considered for issues -- other documents have to be read
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1 in light of it. 2 Your Honor, I think we should approach on this. 3 THE COURT: No reason to approach. There is no 4 proof as of now that the government received it. 5 For example, you are trying to prove that the 6 government knew that he was, whatever it says in that 7 document; is that correct? 8 MR. TRABULUS: That's correct, your Honor. 9 THE COURT: But if they didn't get it, that's not 10 proof of that. 11 MR. TRABULUS: That's true. 12 THE COURT: Okay. That's why I am keeping it 13 out. 14 Q Now, Mr. Gagliardi, with regard to Exhibit 426, that 15 was a letter, was it not, in which Mr. Reffsin disclosed 16 the fact that his employer, Mr. Gordon's employer, had 17 been bankrupt -- excuse me, filed for bankruptcy; is that 18 correct?
19 A That's correct. 20 Q And Mr. Reffsin certainly made no secret of that, did 21 he? 22 A No, he didn't. 23 Q And where he indicated that the bankruptcy could 24 affect future income projections, did you understand that 25 to mean because of the bankruptcy of the employer there
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1 might be less money available for Mr. Gordon? 2 A My understanding of it? 3 Q Yes. 4 A My understanding -- 5 THE COURT: It calls for a yes or no answer. Did 6 you understand by looking at that letter that Mr. Gordon 7 would have less money to pay the government? 8 THE WITNESS: Yes, your Honor. 9 Q Now, in the course of your investigation that you 10 indicated you did, going to different places, did you ever 11 go and take a look at the bankruptcy filings?
12 A No. 13 Q Is those -- withdrawn. 14 Where was your office located? 15 A In Garden City. 16 Q And was it your understanding that the bankruptcy 17 filings -- the bankruptcies files were located in Westbury 18 at the time? 19 A My understanding, yes. 20 Q To do that would simply have been to go from Garden 21 City to Westbury to look at the files in the bankruptcy 22 court; is that correct? 23 A If a need arose. 24 Q Did you ever advise Mr. Reffsin as to whether you 25 would or would not be doing that?
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1 A No, sir. 2 Q Did you ever, going back to -- going back to the 3 compensation agreement, 420-G, that provided, did it not 4 that Mr. Gordon's compensation would have a component that 5 would be based upon cash flow of Who's Wh
o Worldwide; is 6 that correct? 7 A Basically. 8 Q And in the course of your investigation or analysis 9 as to whether to accept the offer in compromise, did you 10 ever check the corporate tax returns of Who's Who 11 Worldwide? 12 A No, sir. 13 Q Did you ever ask for them? 14 A No, sir. 15 Q Did it occur to you that information in them might 16 bear upon were Mr. Gordon's compensation would be or 17 should have been? 18 A The only answer I can give is I had no reason to 19 obtain those tax returns, based on the information 20 provided. 21 Q Did you ever request them of Mr. Reffsin? 22 A No, sir. 23 Q Did you ever tell Mr. Reffsin that you didn't have a 24 set of them yourself? 25 A It never became an issue with Mr. Reffsin.
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bulus
1 Q You never even discussed the corporate tax returns 2 with Mr. Reffsin; is that fair to say? 3 A Never discussed them. 4 Q Mr. Gagliardi, at the time when you were reviewing 5 the collateral agreement, 420-H, the one we talked about 6 control ownership, did you in reviewing it believe -- 7 withdrawn. 8 At the time you reviewed it, you understood that 9 it contained a definition of income which was different 10 than Mr. Gordon's taxable income as it would be normally 11 defined? Did you understand that? 12 A I know I made a notation in my chronology of exactly 13 what my understanding was. If you want me to refresh my 14 memory, I will. 15 Q Was that understanding that the difference between 16 what that agreement provided and what might ordinarily be 17 understood to be his taxable income, is that the agreement 18 looked at Mr. Gordon's
adjusted gross income? 19 A Yes. 20 Q And you made no note of any understanding that it 21 picked up any income of any corporation that Mr. Gordon 22 might have had a connection with; is that correct? 23 A I don't understand the question. 24 Q You indicate a moment or two ago that you made a note 25 at the time concerning your understanding. And I was
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1 going to ask you whether in that note, besides referring 2 to the fact that the agreement, as you understood it at 3 the time looked to Mr. Gordon's adjusted gross income, did 4 you note any other differences between that -- between -- 5 withdrawn. I am sorry. 6 In your note did you make any note -- you made a 7 note of the fact that it picked up his adjusted gross 8 income; is that right? 9 A If you
allow me to look at my notes -- 10 Q You can certainly look at your note. 11 I think what you are referring to there is 12 Exhibit 3500-8-A; is that correct? 13 A Yes. 14 Q Now, without telling -- just tell me whether looking 15 at that note, as to whether you have refreshed your 16 recollection as to what you put in at the time; and look 17 at the third page. 18 MR. WHITE: Can I ask Mr. Trabulus what date he 19 is looking at? 20 MR. TRABULUS: The third page, the entry is under 21 10/11/94. And I am just trying to -- the handwriting is a 22 little small. 23 THE WITNESS: Sorry. 24 MR. TRABULUS: You should see mine. Maybe I am 25 on the wrong page.
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1 (Whereupon, at this time there was a pause in the 2 proceedings.) 3 MR. TRA
BULUS: I think it is on the third page, 4 entry for 10/11/94. 5 Q Take a look at the ninth line down, maybe the eighth 6 or the ninth line down. 7 (Whereupon, at this time there was a pause in the 8 proceedings.) 9 Q Do you see what I am referring to? 10 A Not particularly, no. 11 Q Are you able to read that portion? 12 A I am able to read it. 10/11/94 -- 13 Q Don't read it outloud. 14 The sentence, the collateral required, that 15 sentence, the eighth line down, or seventh line down, the 16 eighth line. Just read that. 17 Does it refresh your recollection that at that 18 time the collateral agreement required payment based upon 19 adjusted gross income, rather than taxable income, and 20 requires 50 percent of income over $50,000 after federal 21 taxes are paid? Was that your understanding in a nutshell 22 of what the collateral agreement r
equired at the time? 23 Yes or no, sir. 24 A Yes. 25 Q And you made no notation about it, including income
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1 of any corporations; is that correct? 2 A I made no notation, no. 3 MR. TRABULUS: Your Honor, I will just be a 4 moment longer. 5 THE COURT: Yes. 6 (Whereupon, at this time there was a pause in the 7 proceedings.) 8 Q Let me ask you, how much period of time elapsed 9 between the time that the collateral agreement was first 10 submitted, and the time that you made a recommendation 11 with respect to it? 12 A It was two separate issues, the collateral 13 agreement -- 14 Q I am sorry, I misspoke. 15 How much time went by between the time the offer 16 in compromise was submitted, and the time that you made a 17
recommendation with respect to it? 18 A Almost a year. 19 Q Now, during that time did you make any tentative 20 counter proposals to Mr. Reffsin suggesting a larger 21 amount of money? 22 A No, sir. 23 Q Would it be typical in discussions concerning an 24 offer in compromise for there to be give and take between 25 the two sides, an offer, a counter-offer, and discussions
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1 to reach some kind of understanding in-between? 2 A If there are assets being evaluated, yes. 3 MR. TRABULUS: No further questions, your Honor. 4 THE COURT: Mr. Wallenstein. 5 MR. WALLENSTEIN: Thank you, your Honor. 6 7 CROSS-EXAMINATION 8 BY MR. WALLENSTEIN: 9 Q Good morning, Mr. Gagliardi. Good afternoon. 10 A Almost. 11 Q Close. 12 My name is
John Wallenstein and I represent 13 Martin Reffsin. 14 If I understand this correctly, you first learned 15 of this when the offer in compromise was referred to you; 16 is that correct? 17 A I learned of this meeting, the tax situation? 18 Q Well, this particular tax situation. When you 19 undertook your duties in connection with collecting 20 liabilities from Mr. Gordon, the first time that that 21 occurred was in November of '93; is that correct? 22 A As to the offer in compromise? 23 Q Right. 24 A Yes. 25 Q And between then and sometime in 1995, you were the
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1 revenue officer who was in charge of this particular 2 investigation; is that correct? 3 A That's correct. 4 Q And in connection with that, you obtained substantial 5 d
ocumentation from Mr. Reffsin on Mr. Gordon's behalf? 6 A That's correct. 7 Q And you also conducted field investigations of your 8 own, you went to DMV, you went to Nassau County, and went 9 out to look at the condo and all those things; is that 10 correct? 11 A Correct. 12 Q At no time did you ask for and obtain corporate tax 13 returns from Who's Who Worldwide; is that correct? 14 A Correct. 15 Q You never asked Mr. Reffsin for them, and you never 16 requisitioned them, or whatever else you have to do to get 17 them from the IRS itself; is that correct? 18 A I would not be permitted to, no. 19 Q You had no authority to obtain those corporate tax 20 returns? 21 A Not for his employer. 22 Q Did you ever ask Mr. Reffsin or Mr. Gordon for 23 authority? 24 A It never became an issue. My understanding is he was 25 an employee.
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1 Q And you had the collateral agreement from day one? 2 That was part of the offer in compromise submitted in July 3 of 1993? 4 A Correct. 5 Q Correct? 6 A Yes. 7 Q Now, would you take a look, please at the power of 8 attorney, and that is 420-C. 9 A I have it. 10 Q You have it? 11 A Yes. 12 Q That power of attorney is signed by Mr. Gordon and 13 gives Mr. Reffsin authority to act in his behalf; is that 14 correct? 15 A Yes. 16 Q Are there limitations on what Mr. Reffsin can do 17 acting under that power of attorney? 18 A They are specified in the power of attorney. 19 Q He can't get any money if the IRS -- that he could, 20 but he couldn't have if he had? 21 Now, does the fact that Mr. Gordon signed a power
22 of attorney giving Mr. Reffsin power to act on his behalf 23 preclude Mr. Gordon from acting personally? 24 A No, it doesn't. 25 Q Okay.
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1 Now, in fact, he can revoke the power of attorney 2 at any time; is that correct? 3 A Yes, he could. 4 Q In effect then, would it be fair to say that this 5 power of attorney permits Mr. Reffsin to act as 6 Mr. Gordon's agent? 7 A It would be fair to say. 8 Q Did you at some point receive, either 1991, or 1992 9 1040s for Mr. Gordon? 10 A It is my recollection. 11 Q Were they part of the initial offer in compromise, do 12 you know? Or part of the documents received later? 13 A Part of the documentation. I am not sure of the time 14 frame without looking. 15 Q Do you recall having re
ceived schedules and 16 attachments attached to either or both of the '91 or '92 17 personal returns? 18 A I don't believe so, no. 19 Q Would you look, please, at Exhibit 420-F. 20 Would you tell me what that is? 21 A Form 1040 of 1990. 22 Q Are you looking at the same documents I am looking 23 at? 24 A Plaintiff's Exhibit F, clients copy, U.S. individual 25 income tax return, 1990.
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1 Q Take a look about six pages into that, and there is 2 another document marked 420-F. 3 A F-1, okay. 4 Q I think the 1990 return should be an E, but the 5 bottom line of the E seems to have merged with the black 6 line there. 7 A Okay. 8 Q I made the same mistake. I am looking at the '91 9 return. 10 A I have that. 11 Q T
here are attachments with that; is that correct? 12 Schedules, statement of income, and so on. 13 A The only attachment is a statement of income. 14 Q Is there a second page to that that is not here? 15 A Second page to -- 16 Q To that statement of income. 17 A I have no knowledge of that. This is the information 18 as received. 19 Q Under paragraph 2, under 2E, there is a reference to 20 a note A; is that correct? 21 A Where is that? 22 Q On that statement of income, the fourth page of 23 420-F? 24 A 420-F, I have one, two, three pages. I don't have a 25 fourth page.
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1 Q I am looking at a document headed statement of annual 2 income for the year 1991, Bruce Gordon. 3 A I am sorry. Okay, yes. 4 Q You got it? 5 A I though
t it was other document. 6 Q Item 2E, it makes reference to a note A. But there 7 is no note A on this page; is that correct? 8 A Not that I see. 9 Q And would that lead you to believe that there was in 10 fact a second page or even a third page? 11 A It would be a fair assumption. 12 Q Do you recall ever seeing a second page that 13 indicated that Mr. Gordon had a 75 percent ownership 14 interest in Who's Who Worldwide? 15 A No, sir. 16 Q Let me direct your attention now to Exhibit 425. 17 An undated letter from you to Mr. Reffsin; is 18 that correct? 19 A You have to give me a moment. 20 Q You should have had a book where they are all 21 marked. 22 A 420 -- 23 Q 425. 24 A 425. 25 (Whereupon, at this time there was a pause in the
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ss/Wallenstein
1 proceedings.) 2 THE COURT: Do you want to show him your copy to 3 save time? 4 THE WITNESS: I am sorry, it is turned in. 5 Q Now, you received that from Mr. Reffsin; is that 6 right? 7 A Yes. 8 Q That's the transmittal letter for the copies of the 9 promissory note? 10 A Correct. 11 Q Would it be fair to say when you got those promissory 12 notes, the one for $15,000 from Joyce Grossman, and 13 $10,000 to Madeline Middlemark, you examined those 14 documents and relied upon them in determining the 15 taxpayer's assets? 16 A That's correct. 17 Q And on their face they appear to be general 18 promissory notes of debts totalling $25,000; is that 19 right? 20 A Yes. 21 Q Did you do any investigation with respect to those 22 notes? 23 A No, sir. 24 Q Did you call Joyce Grossman to
ask if she really 25 loaned the $15,000?
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1 A No, sir. 2 Q Or Ms. Middlemark and ask if she loaned the 10,000? 3 A No, sir. 4 Q And you took them and felt that it looks right to me? 5 A Yes. 6 Q Is that correct? 7 A Correct. 8 Q And the same would apply to the third page of that 9 Exhibit 425C, the letter from Maria Gaspar, G A S P A R; 10 is that correct? 11 A Right. 12 Q And the same it would apply to 425-D, the letter from 13 Who's Who Worldwide; is that correct? 14 A Correct. 15 Q The 433-A collection statements, which are part of 16 Exhibit 420, I believe, specifically, 420-D. 17 You have that? 18 A Yes. 19 Q And that document is signed by Mr. Gordon and not 20 Mr. Reffsin; is that correct?
21 A Yes, sir. 22 Q And if you lack at 420-A, please, the offer in 23 compromise, that document also bears Mr. Gordon's 24 signature and not Mr. Reffsin's; is that correct? 25 A Correct.
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1 Q In fact, the transmittal letter on Exhibit 420 2 itself, dated July 27th, 1993, on the letterhead of 3 M. Reffsin & Company, that's a two-page document which is 4 also signed by Bruce Gordon and not by Martin Reffsin; is 5 that correct? 6 A Correct. 7 Q In fact, in connection with the offer in compromise 8 other than letters, there are no documents signed by 9 Mr. Reffsin; is that correct? 10 A That's correct. 11 Q And those letters advanced -- those letters referred 12 to Mr. Gordon's position with respect to certain matters 13 that you had requeste
d; is that correct? 14 A Correct. 15 Q And the financial letters you had requested and 16 received in connection with this offer in compromise were 17 Mr. Gordon's records and not Mr. Reffsin's; is that 18 correct? 19 A Correct. 20 MR. WALLENSTEIN: No further questions. 21 Thank you. 22 THE COURT: Anything else, Mr. White? 23 MR. WHITE: Yes, your Honor. There is an issue I 24 think I need to discuss with Mr. Wallenstein and 25 Mr. Trabulus, perhaps over lunch with respect to
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1 documents. 2 THE COURT: With respect to this witness? 3 MR. WHITE: Yes. 4 THE COURT: Anything else to question him on 5 besides that? 6 MR. WHITE: Yes. Shall I proceed with that? 7 THE COURT: Well, let's go. 8 9 REDIRECT EXAMINATI
ON 10 BY MR. WHITE: 11 Q Now, Mr. Gagliardi, do you recall Mr. Trabulus asked 12 you regarding whether or not you attempted to get 433-A 13 forms prepared by Mr. Gordon prior to the submission of 14 the offer in compromise? 15 A Yes, I do. 16 Q Did you try to get them? 17 A No, I didn't try. 18 Q Why not? 19 A It wasn't really pertinent. We were investigating 20 his current assets and income. 21 Q Now, do you have Exhibit 423 in front of you? 22 A Yes, I do. 23 Q Is it 423, if you look on, that's the December 1993 24 collection information statement; is that correct? 25 A That's correct.
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1 Q And look on page 3 of that. 2 Do you see on box 28, there is a liability listed 3 for $30,000, charge accounts? 4 A Yes, I do
. 5 Q And Mr. Trabulus asked you if you pursued what those 6 charge accounts were. Do you recall that? 7 A Yes, I recall it. 8 Q What is your understanding of what that term that 9 references charge accounts refer to? 10 MR. TRABULUS: Objection, your Honor. 11 THE COURT: Overruled. 12 A A past debt. 13 Q A past debt? 14 A Yes. 15 Q And why did you assume it was a past debt? 16 A Because there was no information regarding any 17 current charge cards or revolving credit. 18 Q And if you take a look at Government's Exhibit 421-A, 19 which is your letter to Mr. Reffsin from November '93. 20 A Right. 21 Q And Mr. Reffsin responded to that in early '94; is 22 that correct? 23 A Yes, sir. 24 Q And did you ask him for verification of all monthly 25 payments if not paid by your personal check?
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CP, CM OFFICIAL COURT REPORTER
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1 A Yes, I did. 2 Q Did you get any? 3 A No, sir. 4 Q And did you ask for his checks for April through 5 October of '93? 6 A Yes, I did. 7 Q Did you review them? 8 A Yes, I did. 9 Q Were there any credit card payments included there? 10 A No, sir. 11 Q Okay. 12 If you look at 420-D, like in David; that's the 13 July of 1993 collection information statement; is that 14 correct? 15 A Yes. 16 Q And that also has a reference to a $32,000 charge 17 account liability; is that right? 18 A Yes, sir. 19 Q And what did you understand that referred to? 20 A My understanding of all of those items were that they 21 were monies that he owed previously. 22 MR. WHITE: Your Honor, would you bear with us 23 one minute? I need an enlargement.
24 THE COURT: Surely. 25 (Whereupon, at this time there was a pause in the
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1 proceedings.) 2 MR. WHITE: I am sorry, your Honor, we have so 3 many charts. 4 THE COURT: That's all right. 5 (Whereupon, at this time there was a pause in the 6 proceedings.) 7 Q Now, Mr. Gagliardi, the two collection information 8 statements we just referred to, Exhibits 423 and 423-D, 9 were submitted in 1993 to you; is that correct? 10 A Yes. 11 Q And both of those submitted -- both of those 12 indicated that the liabilities were for, quote, charge 13 account, unquote; is that correct? 14 A Correct. 15 Q Let me show you what is already in evidence as 16 Government's Exhibit 404-A. 17 That's a prior collection information statement 18 fro
m September of 1991; is that right? 19 A Yes, sir. 20 Q And if you can step down here, Mr. Gagliardi, and if 21 you could look on box 35, where it says "other 22 liabilities" and could you read what line C says. 23 A It says shopper's charge, $32,000, ex-wife as 24 charges. 25 Q Ex-wife's charges?
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1 A Yes, sir. 2 Q You can be seated again. 3 Now, if you turn to -- 4 THE COURT: Have you concluded your thought on 5 that? 6 MR. WHITE: Yes. 7 THE COURT: All right. 8 We are going to take a recess now. 9 You may step down. 10 Members of the jury, we will recess for lunch. 11 Please do not discuss the case either among yourselves or 12 anyone else. Keep an open mind. Come to no conclusions. 13 We will recess until 1:30.
14 Have a nice lunch. 15 (Whereupon, at this time the jury leaves the 16 courtroom.) 17 (Luncheon Recess.) 18 19 20 21 22 23 24 25
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1 A F T E R N O O N S E S S I O N 2 3 (Whereupon, the following takes place in the 4 absence of the jury.) 5 THE COURT: Which of the defendants are not 6 here? 7 MR. SCHOER: Everybody is in the building. I 8 will go look for them by the telephones. 9 THE COURT: We have been looking for them and 10 they are not around. 11 Bring the jury in. 12 Are the defendants themselves all present? 13 MR. SCHOER: Yes. 14 THE COURT: Which lawyers are not present. 15 THE DEFENDANT RUBIN: Mr. Dunn is with the 16 investigators.
17 THE COURT: Where is the Mr. Neville? 18 (Mr. Neville enters the courtroom.) 19 THE COURT: I guess I have not made an impression 20 at all. 21 (Whereupon, at this time there was a pause in the 22 proceedings.) 23 THE COURT: You say the other attorneys are in 24 the building? 25 MR. SCHOER: Yes.
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1 THE COURT: Where are they? 2 MR. SCHOER: Upstairs using the phones probably. 3 THE CLERK: Jury entering. 4 (Whereupon, the jury at this time entered the 5 courtroom.) 6 THE COURT: Please be seated, members of the 7 jury. 8 (Whereupon Mr. Lee enters the courtroom.) 9 THE COURT: I neglected to tell you to bring your 10 notes in with you during the lunch hour also. Just put 11 them face down wherever you put them, face down on th
e 12 table. 13 (Whereupon, at this time there was a pause in the 14 proceedings.) 15 THE COURT: Are we all here? 16 (Whereupon, at this time there was a pause in the 17 proceedings.) 18 THE COURT: So I hear rumors it is going to 19 snow. 20 ALTERNATE JUROR NO. 1: It is snowing. 21 THE COURT: It is snowing now? 22 JUROR NO. 4: Up to the third floor. 23 THE COURT: There is only one comedian here. 24 (Whereupon Mr. Dunn entered the courtroom.) 25 THE COURT: There is no snow.
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1 JUROR NO. 8: Yes, there is. 2 THE COURT: There might have been. But right now 3 it is not snowing. 4 You may proceed. 5 MR. WHITE: Thank you, your Honor. 6 7 REDIRECT EXAMINATION (cont'd) 8 BY MR. WHITE: 9 Q Mr. Gaglia
rdi, if you can turn back to the collateral 10 agreement, which is Exhibit 420-H. Do you have it before 11 you? 12 A Yes. 13 Q Look on the second page, the one speaking with 14 respect to closely held corporations that are directly or 15 indirectly controlled or owned by the taxpayer; do you 16 recall that? 17 A Yes. 18 Q In the event there is such a corporation that is 19 owned or controlled by the taxpayer, what does that mean 20 under this paragraph? What are the consequences of that? 21 A My understanding is that the taxpayer should become 22 involved in the company in the future, it would become, a 23 certain portion of the income would be relevant to the 24 collateral agreement. 25 Q A certain portion's of whose income?
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1 A The corpora
tion's income. 2 Q Look at paragraph three and tell us what portion of 3 the corporation's income would be subject to the 4 agreement? 5 A In excess of $10,000. 6 Q So, any corporate income in excess of $10,000? 7 A Right. 8 Q Now, Mr. Trabulus asked you questions regarding 9 Mr. Gordon's position at the company; do you recall that? 10 A Yes. 11 Q And what was your understanding of whether or not 12 someone who was the president of a corporation, but still 13 an employee -- still just an employee, would control the 14 corporation within the meaning of this section? 15 A As to this section, unless there was some other 16 control demonstrated, that it wouldn't apply. 17 Q And why is that? 18 A You can be an officer of the corporation and not have 19 an ownership role. 20 Q And if someone were president but just an employee, 21 would h
e have any right to the corporate annual income 22 over $10,000? 23 MR. TRABULUS: Objection, your Honor. 24 THE COURT: Sustained. 25 Q What is your understanding of whether or not an
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1 employee with no ownership interest would be able to 2 subject his corporation's income to this agreement? 3 MR. TRABULUS: Objection. 4 THE COURT: Sustained. 5 Q Mr. Gagliardi, tell us what you understood regarding 6 whether or not Mr. Gordon's position as president meant 7 that he controlled the corporation? 8 MR. TRABULUS: Objection, your Honor. 9 THE COURT: What do you mean by his 10 understanding, Mr. White? He either said it or he didn't 11 say it. He put it down or didn't put it down. Or he 12 never said anything about it. What do you mean by 13 understa
nding? 14 MR. WHITE: What I meant is Mr. Gordon's 433 15 indicated he was the president. I want to find out if 16 Mr. Gagliardi interpreted that that therefore he came 17 under this section or he did not. 18 THE COURT: Sustained. 19 MR. WHITE: Okay. 20 Q Now, do you recall on cross-examination you were 21 asked whether or not you went to the bankruptcy court in 22 Westbury to review the files? 23 A Yes. 24 Q Did you do that? 25 A No, I did not.
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1 Q Why not? 2 A The information as presented in the offer in 3 compromise indicated that Mr. Gordon was a contract 4 employee, and, therefore, I saw no necessity to obtain 5 additional information regarding his employer. 6 Q And if you look back one document on Exhibit 420-G, 7 that
's the compensation agreement, do you recall being 8 asked questions that this agreement makes it clear that 9 part of Mr. Gordon's compensation is based on the 10 performance of the company? 11 A Yes. 12 Q Do you recall being asked questions on whether or not 13 you obtained the corporate returns? 14 A I recall. 15 Q Did you obtain the corporate returns? 16 A I did not. 17 Q And why not? 18 A The specific reason, if this -- if Mr. Gordon were 19 simply an employee, there are disclosure problems with 20 obtaining information on his employer. It didn't apply. 21 I simply could not obtain that information. 22 Q Did you have any other source aside from the 23 corporate returns to learn of Mr. Gordon's compensation 24 and income? 25 A Other than the income reporting documents, no.
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1 Q But you did have those 433's; is that correct? 2 A Correct. 3 MR. WHITE: At this time I would like to offer a 4 document that the parties have stipulated the 5 admissibility of. 6 THE COURT: Very well. 7 MR. WHITE: Exhibits 409-A, and the parties agree 8 that it is a business record of M. Reffsin & Company, 9 accounting firm. 10 THE COURT: 409-A for Abel? 11 MR. WHITE: Yes, and I have a copy for the Court 12 which I will hand directly to your Honor. 13 THE COURT: Government's Exhibit 409-A for Abel 14 in evidence. 15 (Government's Exhibit 409-A received in 16 evidence.) 17 Q If you can take a look at 409-A, have you ever seen 18 that before? 19 A Give me a chance? 20 Q Yes, please review it. 21 (Handed to the witness.) 22 MR. SCHOER: For the record, I didn't stipula
te 23 against anything. I don't know if it is offered against 24 my client, I assume he is not. And he is speaking only of 25 certain defendants.
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1 MR. JENKS: He is speaking of Mr. Wallenstein and 2 Mr. Gordon, I assume. 3 THE COURT: Who is it being offered against, 4 which defendant? 5 MR. WHITE: Messrs. Gordon and Reffsin. 6 THE COURT: Only? 7 MR. WHITE: Correct. 8 THE COURT: All right. 9 Members of the jury, that is important to 10 distinguish that. When a document is offered against a 11 particular defendant for a particular count, you can only 12 consider it for that purpose. Sometimes it is difficult 13 to separate it out. But we will try to help you as much 14 as possible. But it is obvious with these tax records it 15 has no
thing to do with the other defendants in the case. 16 You may proceed. 17 Q Mr. Gagliardi, have you ever seen that before? 18 A No. 19 MR. WHITE: May I read the first paragraph of it, 20 your Honor? 21 THE COURT: Yes. 22 MR. WHITE: It is addressed Bruce Gordon -- back 23 up. 24 The letterhead, M. Reffsin & Company C.P.A.s, 100 25 Jericho Quadrangle, room 339, Jericho, New York 11753,
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1 516 822-2002, dated April 8th, 1992. It is addressed to 2 Bruce Gordon, 10 Bluff Road, Glen Cove, New York 11502. 3 Dear Bruce, enclosed is your 1991 federal individual 4 income tax return, the original should be signed on the 5 bottom of page 2. No tax is payable with the filing of 6 this return. You will receive a refund of $1,239. Mail 7 your federal return
on or before April 15th, 1992, to the 8 Internal Revenue Service, Holtsville, New York. It 9 continues and I will not read it. 10 Q Mr. Gagliardi, if you can turn to the seventh and 11 eighth pages of that document. 12 Now, even if you didn't see this particular 13 document, did you see documents like this in connection 14 with the offer in compromise? 15 A Yes, I did. 16 Q And the ones you saw were for other years? 17 A To the best of my recollection, yes. 18 Q And tell us what this document is. 19 A It's a computation on the agreement with the 20 Department of Justice, the required payment on the future 21 income collateral agreement. 22 Q That was to be paid when the taxpayer filed his 23 return each year? 24 A Yes. 25 Q And is that the agreement that includes the
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3
54 Gagliardi-redirect/White
1 potentially -- potentially includes the corporation's 2 income as well? 3 A Correct. 4 Q Turn to page 2 of that agreement -- I am sorry, of 5 that document, and read where it says note A. 6 A Note A says: Taxpayer owns 75 percent of a 7 corporation named Who's Who Worldwide Registry, Inc. EIN 8 11-3029837. The taxable year -- the taxable income of the 9 corporation is $12,707 for the calendar year 1991. The 10 federal corporation income taxes are $2,206, providing an 11 additional net income of $2,501, less 12,501 exemption, of 12 which 75 percent of $1,876 is -- what is that word? 13 MR. WHITE: Allocable. 14 A Allocable to Bruce Gordon. The corporation was on 15 extension until September 15th, 1992. Therefore, I was 16 unable to obtain the final taxable income of the 17 corporation to file this statement until now.
18 Q If you can go back to the front page of that 19 document, and just page through it -- I am sorry, the 20 front page of the return there, and page through it, and 21 see if there is any indication that it was received by the 22 Internal Revenue Service? 23 A There is no indication on this copy. 24 Q What is it your understanding as to whether or not 25 there is a stamping of received on tax returns that are
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1 filed? 2 A It is my understanding that any tax returns that are 3 received is marked received and given an identifying 4 number. 5 MR. WHITE: Your Honor, I would offer 409, a 6 certified copy of the 1991 personal tax return of 7 Mr. Gordon. 8 THE COURT: The same tax return? 9 MR. WHITE: No, your Honor. It is the one that 10 was
filed, your Honor. 11 MR. TRABULUS: No objection, your Honor. 12 THE COURT: Government's Exhibit 409 in evidence. 13 What year is that for? 14 MR. WHITE: 1991 personal return. 15 (Government's Exhibit 409 received in evidence.) 16 Q Mr. Gagliardi, if you can put 409, the return filed, 17 and 409-A, the other document that didn't have a received 18 stamp on it, side by side, and compare the first page. 19 A They appear to be the same. 20 Q Does 409, the filed copy have any received stamp on 21 it? 22 A It has document locator number, and appears to be a 23 stamp in the corner. 24 Q It has a document locator number on it? 25 A Yes, the indication that it was received by the
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1 information. 2 Q Now, if you can turn the document to page 2. Do
3 those appear to be the same? 4 A The second copy is signed by Mr. Gordon. That's the 5 only difference that appears to me. 6 Q Which copy was signed by Mr. Gordon, the one filed? 7 A The filed return. 8 Q Okay. 9 Turn to the next page. 10 Is that a copy of his W-2? 11 A Yes. 12 Q On both documents? 13 A Yes. 14 Q Turn to the next page and compare them. 15 Now, on 409-A, what is the next page? 16 A On 409-A, it is wages, scheduled, Bruce Gordon, and 17 it is the same on 409. 18 Q Continue to the next page? 19 A There is no next page on 409. 20 Q That's the text of 409; is that right? 21 A Yes. 22 Q What is on 409-A that is not on 409? 23 A The copy from Mr. Reffsin had the statement of annual 24 income on the collateral agreement. 25 Q So, the filed copy does not have the document that
HA
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1 says that Mr. Gordon owns 75 percent of the corporation? 2 A Correct. 3 Q But the copy that Mr. Reffsin sent to Mr. Gordon to 4 file does? 5 A Correct. 6 MR. WHITE: Your Honor, to be sure, 409 was 7 received in evidence. 8 THE COURT: Both 409 and 409-A were received in 9 evidence. 10 MR. WHITE: Thank you. 11 THE COURT: According to my unofficial record. 12 That's correct, Mr. Trabulus? 13 MR. TRABULUS: Yes, your Honor. We stipulated to 14 409-A and did not object to 409. 15 THE COURT: Thank you. 16 I am keeping an eye out for the snow. And you 17 tell me how I can do that out here. Now I will give you a 18 clue, and the clue is how I can explain what 19 circumstantial evidence is. 20 For example, if you see somebody walking in with
21 an umbrella shaking off the snow, now, you can't see the 22 snow, right? But you can reasonably infer that it was 23 snowing outside. But I am going to keep a lookout. 24 MR. WHITE: Your Honor, we will also offer 416 25 and 417, which are certified copies of Who's Who Worldwide
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1 corporate returns. 2 THE COURT: For what number is that? 3 MR. WHITE: 416 is Worldwide corporate return for 4 1991. 5 417 is Who's Who Worldwide corporate return for 6 1992. 7 THE COURT: Does counsel have copies? 8 MR. WHITE: Yes. 9 THE COURT: Any objection? 10 MR. TRABULUS: Bear with me for a moment. I am 11 looking through my copy of 417. We discussed 416. 12 THE COURT: Surely. 13 Now, you say a very, very distinguished lawyer 14 walking in, an
d he doesn't have an umbrella. 15 JUROR NO. 4: He does. 16 THE COURT: He does. 17 Mr. Scaring, I was telling the jury something 18 about circumstantial evidence. 19 MR. SCARING: It is not wet, your Honor, 20 however. 21 THE COURT: It is not wet? All right. 22 MR. TRABULUS: No objection. 23 THE COURT: Government's Exhibit 416 and 417 in 24 evidence. 25 (Government's Exhibit 416 received in evidence.)
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1 (Government's Exhibit 417 received in evidence.) 2 Q Mr. Gagliardi, let me show you 3 Government's Exhibit 416, if I can look over your 4 shoulder. 5 If you can look at page 2, the compensation of 6 the corporation's officers are listed there; is that 7 right? 8 A Yes. 9 Q Does that indicate what percentage of the
10 corporation's stock, common stock, is owned by Mr. Gordon? 11 A Yes, it does. 12 Q What does it say? 13 A 75 percent. 14 Q And this is the 1991 return? 15 A Yes. 16 Q And when was it filed? 17 A June 26th, 1991, it appears -- 1992? 1992. 18 Q And if you look at the 1992 return, page 2, schedule 19 E, again it lists compensation of officers? 20 A Yes, it does. 21 Q Does it give a figure for the percentage of the 22 common stock that Mr. Gordon owns? 23 A 100 percent. 24 Q No. 25 A I am sorry, 100 percent -- zero percent.
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1 Q Let me ask the question again for clarification. 2 Does it indicate the percentage of the 3 corporation's common stock that Mr. Gordon owns? 4 A Yes, it does. 5 Q And what is it?
6 A Zero percent. 7 Q Does it indicate that anyone else owns common stock 8 in the company? 9 A Yes, it does. 10 Q Who? 11 A Richard Grossman. 12 Q How much does it indicate that Richard Grossman owns? 13 A Twenty percent. 14 THE COURT: Which return is that? 15 MR. WHITE: The '92 corporate return. 16 Q Mr. Gagliardi, would you look at Exhibit 423-H. 17 Do you see that, Mr. Gagliardi? 18 A Yes. 19 Q And 423-H is the bank statement that contains $15,000 20 worth of deposits to Mr. Gordon's account; is that right? 21 A That's right. 22 Q And those are in August of 1993? 23 A That's right. 24 Q Can you refresh our recollection as to what 25 Mr. Reffsin told you regarding the purpose of those
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1 transfers? 2
A He indicated that they were loans from a third party. 3 Q And are those the ones for the son's funeral 4 expenses? 5 A I believe so. 6 Q And who did he indicate the money was coming from? 7 A There were two notes. One was Joyce Grossman and the 8 other was Marilyn Middlemark. I don't have it clear in my 9 mind which was which. 10 Q Okay. 11 If you take a look at 425-A -- 12 A Do me a favor. 13 (Counsel approaches the witness stand.) 14 Q You see it now? 15 A Yes. 16 Q And the 15,000 in July of 1993 was from who? 17 MR. TRABULUS: Objection, your Honor. 18 THE COURT: On what grounds? 19 MR. TRABULUS: I think he answered that. When he 20 says from who, he has already answered it. Is he asking 21 for independent knowledge? 22 MR. WHITE: I will rephrase it. 23 MR. TRABULUS: It is repetitive. 24 THE COURT: A lot of it
has been repetitive, but 25 you have not objected.
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1 MR. TRABULUS: I will object now. 2 THE COURT: Sustained. 3 MR. WHITE: Your Honor, I have offered 4 Government's Exhibit 764 and 765, where we have reached a 5 stipulation with Mr. Trabulus and Mr. Wallenstein, are 6 corporate records of Who's Who Worldwide Registry. 7 THE COURT: Any objection? 8 MR. TRABULUS: It is not quite the objection. 9 We -- not quite the stipulation. We will stipulate it to 10 being admitted as corporate records of National 11 Westminster Bank in the possession of Who's Who, and they 12 can come in. 13 THE COURT: Is that correct, Mr. Wallenstein? 14 MR. WALLENSTEIN: Yes, and I have no objection. 15 MR. JENKS: Judge, since I represent the 16 corporation, I didn't sti
pulate to that. However, I 17 assume it is not being offered against the corporation? 18 MR. WHITE: Correct. 19 MR. JENKS: I have no objection. 20 THE COURT: Government's Exhibit 764 and 765, in 21 evidence. 22 (Government's Exhibit 764 received in evidence.) 23 (Government's Exhibit 765 received in evidence.) 24 Q Would you get out 423-H, the bank statements. 25 A Yes.
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1 MR. WHITE: Your Honor, if I can reach from a 2 portion of 764 and 765. It says debit advice. Both of 3 them say debit advice to, there is a box at the bottom, to 4 Who's Who Worldwide Registry, Inc. 5 Under the description box, it says transferred to 6 7-021-76975-7, parens, authorization letter to follow. 7 That's on 765. 8 764 reads in the description box, transferred to
9 7-021-76975-7, parens, letter to follow, close parens. 10 Q Mr. Gagliardi, where it says transferred to, can you 11 compare that number to the account number of Mr. Gordon's 12 personal account on 423-H? 13 A They are identical. 14 Q And that debit advice was debiting the account of 15 who? What does it say in the "to" box at the bottom? 16 A To Who's Who Worldwide Registry, Inc. 17 MR. WHITE: Your Honor, no further questions. 18 19 RECROSS-EXAMINATION 20 BY MR. TRABULUS: 21 Q Mr. Gagliardi, you have not examined any bank 22 statements or records of Who's Who Worldwide Registry, 23 Inc., is that correct? 24 A No, sir. 25 Q And you have no way of knowing as to whether any
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1 money came into their account and then went out to
2 Mr. Gordon's account, would you? 3 A No. 4 Q Now, you testified in respect to Exhibits 409 and 5 409-A, and I think you were asked a question by Mr. White 6 in which 409-A was described as the copy received by 7 Mr. Gordon; is that correct? 8 A Correct. 9 Q You don't know if that copy was received by 10 Mr. Gordon? 11 A I have no knowledge of it. 12 Q Is it your testimony that 409 and 409-A is identical 13 except for the fact that the pages are missing -- the 14 schedules are missing from 409? 15 A That's what it appears. 16 Q Would you take a look at the second page of 409-A -- 17 excuse me, it would be the fourth page, but the second 18 page of the 1040, that being the one that the IRS 19 indicates was actually filed. Take your time. 20 Now, these pages are both the second page of a 21 form 1040; is that correct? 22 A Yes.
23 Q And both of these documents have on them a signature 24 where it says, prepare a signature -- preparer's 25 signature; is that correct?
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1 A Yes. 2 Q Both those signatures appear to be in the same 3 handwriting, do they not? 4 A Yes. 5 Q And they are different signatures, are they not? 6 They are not copies of one another? 7 A It appears to me that the signature on 409-A is 8 darker and not dated. 9 Q Not only is it darker, but the lines are different, 10 correct? It is the same handwriting, but at a different 11 time that the person signed the document; does it appear 12 that way? 13 A They appear to be different. 14 MR. TRABULUS: Your Honor, I frankly don't 15 recall, but were copies of 409 and 409-A published to the
16 jury? 17 THE COURT: I don't believe so. 18 MR. TRABULUS: I don't believe so either. 19 I would request that copies be published to the 20 jury. 21 THE COURT: Go ahead. 22 MR. TRABULUS: Judge, I don't have multiple 23 copies, but I would ask that copies of the exhibit be 24 given to the jury and they can look at it. 25 THE COURT: Certainly. But we will continue as
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1 they look. We will continue to work. 2 MR. TRABULUS: Certainly. 3 (Whereupon, the exhibit/exhibits were published 4 to the jury.) 5 Q This would indicate to you, would it not, that the 6 person who signed the name under the tax preparer actually 7 signed twice; is that correct? 8 A Correct. 9 Q You don't know if they were signed at the same time? 10 A I hav
e no idea. 11 Q But all we know is that the copy which evidently was 12 submitted by Mr. Gordon was not the same -- did not bear 13 the same signature, although it appears the same -- to be 14 the same person, although it came from Mr. Reffsin's 15 company's file; is that correct? 16 A That's correct. 17 Q Now, you indicated earlier that there was no need to 18 check the bankruptcy file records, because the information 19 you had given to you in connection with the offer in 20 compromise was sufficient; is that correct? 21 A I found no reason to examine the bankruptcy records, 22 no. 23 Q But you did examine property tax -- excuse me, 24 property records in Nassau County, to see whether or not 25 Mr. Gordon opened any property; is that correct?
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1 A
Correct. 2 Q So, you did not regard the information given to you 3 as sufficient for that purpose; is that correct? 4 A That's correct. 5 Q And you searched other records as well; is that 6 correct? 7 A Correct. 8 Q And you had specific reason to believe, did you, that 9 he owned any property before checking the property 10 records; is that correct? 11 A I made only the routine searches that were required 12 to make. 13 Q But, you did have in the compensation agreement, 14 reason to believe that the income he was entitled to 15 receive would be based on the cash flow that the 16 corporation would have; is that correct? 17 A Yes, that's correct. 18 Q And you understood, did you not, that documents to be 19 contained within the bankruptcy filing might reflect upon 20 the cash flow of the corporation which had filed for 21 bankruptcy,
did you not? 22 A They would contain such information. 23 Q Now, I think you were questioned by Mr. White about 24 Exhibit 404. And that is probably right in front of you 25 there. And that is an earlier collection information
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1 statement. 2 A 404? 3 Q Yes. It is on the chart. I don't know if you looked 4 at the chart itself. I don't believe you were shown the 5 chart. Can you see it if it is over here? 6 A I believe so. 7 Q Now, this was not a collection information statement 8 which you had actually reviewed during the course of what 9 you did; is that correct? 10 A Correct. 11 Q You only saw that for the first time today or in the 12 last few days; is that right? 13 A I have seen this document upon reviewing the 14 information
. That's fine. 15 Q Is it fair to say, Mr. Gagliardi, that insofar as you 16 say that you assumed that the charge accounts referred to 17 on the later collection information statements, related to 18 past charges, you certainly did not in making that 19 determination rely on this document, did you? 20 A No. I didn't have that document, no. 21 Q And the later documents talk about charge accounts; 22 is that right? 23 A Yes. 24 Q And there is no mention of the ex-wife on the later 25 documents, is there?
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1 A Only for alimony payments. 2 Q But not in connection with the charge accounts? 3 A That's right. 4 Q Plural, right? 5 A Yes. 6 Q Is it this doesn't say charge accounts, but it says 7 shopper charge and ex-wife charges; is that c
orrect? 8 A Correct. 9 Q Now, Mr. White in questioning you pointed out that 10 409 as filed did not contain a document in 409-A; is that 11 correct? 12 A Yes. 13 Q And that document referred to a 75 percent share 14 ownership on the part of Mr. Gordon; is that correct? 15 A Yes. 16 Q And 409 -- excuse me. 17 416 is the corporate tax return; is that correct, 18 for Who's Who Worldwide Registry, Inc.? 19 A Yes. 20 Q And that was signed by Mr. Gordon, was it not? 21 A Yes. 22 Q And that document did indicate 75 percent ownership, 23 did it not? 24 A Yes. 25 Q And that document was filed slightly more than two
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1 months after the one that doesn't have that; is that 2 correct? 3 A This document is filed 6/22/9
2. 4 Q The other one was 4/13/92? 5 A I don't remember. 6 THE COURT: Mr. White, or Mr. Trabulus, do you 7 want to move those two exhibits to the other jurors? 8 MR. TRABULUS: Certainly, certainly. 9 Q I am going to hand you 409. 10 Can you tell us, please, when 409 was filed? 11 (Handed to the witness.) 12 A Let's see, it is dated 4/13/92. 13 Q Does it bear the stamp on it indicating it was filed? 14 A I don't see the stamp, but the document locator 15 number would indicate the date it was filed. 16 Q May 8th, 1992. 17 A The 130th day of the year, whatever it was. 18 Q When you testified earlier that whenever a return is 19 filed, it is stamped? 20 A That's my understanding. That's our practice. 21 Q And what happened here, since it wasn't stamped, this 22 would have been a deviation from that practice? 23 A I imagine so. 2
4 Q Now, I just want to see if I understand you 25 correctly.
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1 Returns are customarily stamped when filed; is 2 that your testimony? 3 A Yes. 4 Q And collection information isn't? 5 A No. 6 Q They are not? 7 A They are not. 8 Q And this particular return, apparently, was not 9 stamped? 10 A If it was stamped it was obliterated. There is some 11 stamp in the corner, that you can't really make out. 12 Q Let's turn now to 417, which Mr. White showed you. 13 That's the return for Who's Who Worldwide 14 Registry, Inc. for the following year. We have been 15 talking about the 1991 returns. Now we are switching to 16 1992; is that correct? 17 A Yes. 18 Q And that return was filed without Mr. Gordon's 19 signature on it
; is that correct? 20 A It appears so. 21 Q And it was then -- look through the document, and it 22 was then returned for this signature? 23 Withdrawn. 24 Isn't it correct that after that a form was sent 25 to Mr. Gordon to sign?
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1 A It was the general practice, and I will tell you in a 2 moment. 3 Yes, that's the case. 4 Q That form is included in the exhibit? 5 A Yes. 6 Q Do you know when that form is sent, as to whether it 7 is the practice of the information to actually physically 8 return the return to the person so they can look at it 9 again? 10 A I don't know. 11 Q You don't know the answer? 12 A I don't know. 13 Q So, it is possible that the return was returned 14 without the return and then it was signe
d and returned to 15 the IRS? 16 A An educated guess is they would just send a letter. 17 MR. TRABULUS: No further questions. 18 THE COURT: Anything else? Mr. Wallenstein? 19 20 RECROSS-EXAMINATION 21 BY MR. WALLENSTEIN: 22 Q Mr. Gagliardi, the statement attached to 409-A, the 23 statement indicating that Mr. Gordon has a 75 percent 24 ownership, that's not a statement that is required to be 25 filed with a 1040, is it?
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1 A No. 2 Q And is it your understanding, however, that this 3 document would be required to be filed, however, with the 4 Department of Justice in connection with the collateral 5 agreement? 6 A Yes. 7 Q Along with a copy of the 1040? 8 A Yes. 9 Q And the official filed version of Mr. Gordon's
1040 10 for that year would not need to contain that particular 11 statement in any form? 12 A No, it wouldn't. 13 MR. WALLENSTEIN: Thank you. I have no further 14 questions. 15 THE COURT: Anything else? 16 MR. WHITE: Yes, one brief area, your Honor. 17 18 FURTHER REDIRECT EXAMINATION 19 BY MR. WHITE: 20 Q Mr. Gagliardi, you said -- isn't it correct that 21 every return that is filed gets a document locator number? 22 A Yes. 23 Q And the issue of whether or not it gets a date -- a 24 return gets a date stamp, does whether or not a return is 25 timely filed play into that?
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1 A I can only speak to my practice. When we receive a 2 return we date stamp it. We realize that thousands 3 returns are filed with the center, it is po
ssible a date 4 stamp did not get on to one. 5 MR. WHITE: Nothing else. 6 THE COURT: Anything else? 7 MR. TRABULUS: Nothing further, your Honor. 8 MR. WALLENSTEIN: Nothing further. 9 THE COURT: You may step down. 10 (Whereupon, at this time the witness left the 11 witness stand.) 12 THE COURT: Please call your next witness. 13 MS. SCOTT: Your Honor, the government calls 14 Edmond Garabedian. 15 THE COURT: Ms. Scott, have a seat. Please. 16 MS. SCOTT: Yes. 17 THE COURT: Raise your right hand. 18 19 E D M O N D G A R A B E D I A N , 20 called as a witness, having been first 21 duly sworn, was examined and testified 22 as follows: 23 24 THE COURT: Please be seated. 25 State your full name and spell your name.
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375 1 THE
WITNESS: Edmond Garabedian, E D M O N D, 2 G A R A B E D I A N. 3 THE COURT: You may proceed. 4 5 DIRECT EXAMINATION 6 BY MS. SCOTT: 7 Q Good afternoon. 8 A Good afternoon. 9 Q What did you do for a living? 10 A Employed by the American Express Company. 11 Q What is your duties there? 12 A The records custodian for American Express. 13 Q How long have you been the records custodian? 14 A The last six years. 15 Q What are your responsibilities as the record 16 custodian for American Express? 17 A I head the subpoena compliance department. I also 18 head and oversee the production of American Expresses 19 records. And I testify whenever it is necessary in 20 different venues. 21 MS. SCOTT: Your Honor, may I have a minute? We 22 are still seeking exhibits. 23 THE COURT: Surely. 24 (Whereupon, at this time th
ere was a pause in the 25 proceedings.)
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1 Q I am showing Government's Exhibits 430 through 482. 2 Do you recognize those? 3 A Yes, ma'am, I do. 4 Q What are they? 5 A These are copies of the American Express monthly 6 statements for an American Express charge card in the name 7 of Elizabeth Sautter, S A U T T E R. 8 THE COURT: In the name of Elizabeth -- 9 THE WITNESS: Sautter, S A U T T E R. 10 Q How do you recognize them? 11 A Through my daily work I reproduce these types of 12 documents based on the American Express records. 13 Q How is American Express notified when a customer 14 makes a purchase or a charge to their American Express 15 card? 16 A American Express normally is provided with electronic 17 information from the month
of purchase by the merchant 18 processing the American Express card through an electronic 19 reader. Then the information regarding the purchase is 20 submitted to American Express and captured electronically. 21 Q And what happens to that information from there? 22 A American Express then pays the merchant pursuit to 23 the submission of a particular charge, and holds that 24 information until the next monthly statement is due. They 25 create a monthly statement for the card holder, and
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1 include that information as part of the purchase with 2 regard to that statement. 3 Q Are these statements kept in the course of regularly 4 conducted business activity of American Express? 5 A Yes. 6 Q Was it the regular business practice of American 7 Express to keep thes
e records? 8 A Absolutely. 9 Q Had these records been under your supervision and 10 control? 11 A Yes. 12 MS. SCOTT: I offer Government's Exhibits 430 13 through 482 in evidence. 14 THE COURT: Any objection? 15 MR. TRABULUS: No. 16 THE COURT: Government's Exhibits 430 through 482 17 in evidence. 18 (Government's Exhibits 430 through 482 received 19 in evidence.) 20 Q Now, Mr. Garabedian, looking through those exhibits, 21 what do they say about the number of card holders on that 22 account? 23 THE COURT: Number of what? 24 MS. SCOTT: Card holders. 25 A This account had two card holders, the basic card
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1 holder is Elizabeth Sautter, and the supplemental card 2 holder was Bruce W. Gordon. 3 Q What is a supple
mental card holder? 4 A A secondary individual who is given a card with 5 the -- under the same account. The supplemental card 6 holder's account only differs in the last four digits of 7 the account to actually note it as a supplemental under 8 that account number. 9 Q How do you know from looking at the statements that 10 the primary card holder is Elizabeth Sautter and the 11 secondary as Bruce Gordon? 12 A The primary card holder is the individual who would 13 receive the statements for the account and who is 14 responsible for the statements. 15 Elizabeth Sautter's name is on the top of each 16 statement, along with the address where the statements are 17 mailed. And in the particular Exhibit number 430, which 18 is a statement with a closing date of November 1990, there 19 is an indication of an annual membership fee for the 20 supplemental card member
of Mr. Bruce Gordon. 21 Q How do the statements show which charges were made on 22 Elizabeth Sautter's card, and which charges were made on 23 Bruce Gordon's card? 24 A The statements are always created with Elizabeth 25 Sautter's charges being listed first. After all the
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1 charges for the basic card holder are listed, they are 2 subtotaled. And a total for card 100, which is the 3 designation for the basic card holder's account, is 4 listed. Subsequent to that all the supplemental card 5 member's charges are listed below it. They are subtotaled 6 and listed as total for card 101. 7 Q I am showing you Government's Exhibit 824-A, 8 Mr. Garabedian. 9 A Yes. 10 Q Do you recognize that document? 11 A Yes. 12 Q Did you have an opportunity to exami
ne that document 13 before you came in to testify? 14 A I did. 15 Q Did you have an opportunity to compare it with the 16 information contained in those American Express statements 17 that you have in front of you? 18 A Yes. 19 Q And does this chart accurately represent the 20 information contains in the American Express statements? 21 A Absolutely. 22 MS. SCOTT: I offer Government's Exhibit 824-A. 23 MR. TRABULUS: Objection. 24 THE COURT: What ground? 25 MR. TRABULUS: If you look at the top it contains
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1 a designation inaccurate and inconsistent with the 2 testimony that was given, the very first line. It 3 designates the account as being something other than it 4 was. 5 THE COURT: It was an Elizabeth Sautter account? 6 MR.
TRABULUS: That's correct. 7 THE COURT: This says Bruce Gordon? 8 MR. TRABULUS: Yes. 9 THE COURT: Other than that? 10 MR. TRABULUS: I have no objection other than 11 that. The top part is misleading. 12 THE COURT: You will remove that name and put the 13 name of the primary card holder, which is Elizabeth 14 Sautter, S A U T T E R. 15 Let's do that. 16 MS. SCOTT: I would like to ask an additional 17 question of the witness. 18 THE COURT: Sure. 19 Q Can you identify which cards you examined when you 20 compared this chart with the documents in front of you, 21 before you? 22 A The charges which were made by Bruce Gordon, and on 23 the supplemental card were the only charges that were 24 listed on this chart. 25 So, my comparison were of all charges made by the
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3
81 Garabedian-direct/Scott
1 supplemental card member within the individual statements 2 against the chart. 3 Q And in your calculations did you include any of the 4 charges made on Elizabeth Sautter's card? 5 A No. 6 MS. SCOTT: I offer the exhibit on that basis. 7 THE COURT: We have to put a little caret between 8 Gordon and American, supplemental. Is that what it is 9 called? 10 THE WITNESS: Yes. 11 THE COURT: Supplementary or supplemental? 12 THE WITNESS: Supplemental. 13 MR. TRABULUS: Your Honor, what it should say is 14 charges made on the card issued to the name of Bruce 15 Gordon on the Liz Sautter card. That's what he testified 16 to. 17 THE COURT: This is a summary from the evidence; 18 is that correct? 19 THE WITNESS: Yes. 20 THE COURT: You have taken the document, 21 information from what is in evidence,
of the Bruce Gordon 22 charges? 23 THE WITNESS: That's correct. 24 THE COURT: You have not taken the Elizabeth 25 Sautter's cards?
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1 THE WITNESS: That's correct. 2 THE COURT: We will put down Bruce Gordon 3 supplemental or supplementary -- 4 MS. SCOTT: All right. 5 THE COURT: Do you have a magic marker? 6 MR. WHITE: I will get one. 7 THE COURT: You mean you have all these charts 8 and records and not a magic marker? 9 (Whereupon, at this time there was a pause in the 10 proceedings.) 11 MS. SCOTT: With the Court's permission I would 12 like to publish this chart to the jury. 13 THE COURT: I have not allowed it in evidence 14 yet, show it to counsel if he likes what you have there. 15 MR. TRABULUS: Fine. 16 THE COUR
T: All right, Government's Exhibit 824-A 17 in evidence. 18 (Government's Exhibit 824-A received in 19 evidence.) 20 MS. SCOTT: With the Court's permission I would 21 like to offer this chart. 22 THE COURT: Sure. 23 (Whereupon, the exhibit/exhibits were published 24 to the jury.) 25 THE COURT: Can everybody see the charts? If you
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1 can't see it, let me know. 2 We can put it in the front so you can see it. 3 I will tell you what to do, move the easel right 4 in front of the jury. Don't worry about me. Just move it 5 so it faces the jury. If I want to see it, I will take a 6 walk over. 7 Is that better? 8 A JUROR: Yes. 9 THE COURT: Now we can see it. And I will take a 10 look myself. 11 You may proceed. 12 Q
Now, Mr. Garabedian, if you wouldn't mind stepping 13 down next to the exhibit. 14 Could you please tell the jury the total amount 15 that was charged to Bruce Gordon's supplemental American 16 Express card for the year 1991. 17 A For the year of 1991, the total amount charged on 18 Bruce Gordon's supplemental account was $30,267.11. 19 Q What about the year 1992? 20 A That total was $46,051.84. 21 Q And for 1993? 22 A That was $116,503.61 in total. 23 Q And for 1994? 24 A $183,032.67. 25 Q 1995?
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1 A The 1995 total was $34,320.07. 2 Q Please tell the jury the total amount charged to 3 Bruce Gordon's supplemental American Express card for the 4 entire period, 1991 through 1995. 5 A All the way -- the total starting with November of
6 1990 through March of 1995 is a grand total of 7 $411,853.29. 8 Q Thank you, Mr. Garabedian. You can take the seat 9 again. 10 I will ask you to look at one of the statements 11 in front of you, Government's Exhibit 449. 12 THE COURT: Is this for identification or is it 13 in evidence? 14 MS. SCOTT: It is in evidence. 15 A Yes. 16 Q Could you give the date on that document? 17 A Exhibit number 449 is a copy of the monthly statement 18 with a closing date of June 19th, 1992. 19 Q Looking at item 16, can you tell the jury what that 20 says. 21 A Item 16 is a charge at Chanel. 22 THE COURT: C H A N E L? 23 THE WITNESS: That's correct. 24 THE COURT: The famous perfume, Chanel number 9? 25 THE WITNESS: Yes, Chanel Boutique, a store in
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385 Garabedian-dir
ect/Scott
1 Palm Beach, Florida. It is a charge for $5,183.40. 2 Q What is the date of the charge? 3 A May 23rd, 1992. 4 Q And, by the way, which card is that charged made to? 5 A It is made to the supplemental card of Bruce Gordon 6 Dan. 7 Q Now, item 24, is that also to the supplemental card? 8 A Yes. 9 Q What does that read? 10 A It is a charge at Ann Klein in Manhasset, New York in 11 the amount of $2,071.27. 12 Q And what is the date on that charge? 13 A The charge is dated May 31st, 1992. 14 Q I am not sure if you read the date on the Chanel 15 charge, I will ask you to repeat that. 16 A I did, it was May 23rd, 1992. 17 Q And turning now to Government's Exhibit 453 in 18 evidence. 19 A Yes. 20 Q Item number 17 which charge is that charged to? 21 A That is the first charge charged to the supplemental 22 c
ard of Bruce Gordon for this particular month. And this 23 is a charge at polo Ralph Lauren, East Hampton, New York. 24 And it is a charge for $1,003.72, dated September 20th, 25 1992.
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1 Q Look at Government's Exhibit 454 in evidence. 2 A Yes. 3 Q Item 21, what card was that charged to? 4 A It was charged to the card of Bruce Gordon, the 5 supplemental account, and it is a charge at Ann Klein at 6 Manhasset, New York. It is a charge in the amount of 7 $1,111.04. And it is dated November 1st, 1992. 8 Q Now, looking at Government's Exhibit 469 in evidence? 9 A 469. 10 Q Item 14, can you tell us which card that item was 11 charged to? 12 A That was the first charge billed to the supplemental 13 card of Mr. Gordon, and it is a charge at the Royal Palm
14 Gallery in Palm Beach, Florida. The charge is dated 15 January 27th, of 1994. And it is in the amount of $11,400 16 even. 17 Q And finally, Government's Exhibit 472 in evidence. 18 A 472. 19 Q I ask you to look at items 14 and 19 and tell us 20 which card that is charged to and what they are. 21 A Both those charges were made to the supplemental 22 card. 23 Item number 14 is a charge at the Hoya Crystal 24 Gallery in New York. It is dated April 27th, 1994, and it 25 is in the amount of $2,695.96. And item number 19 is a
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387 Garabedian-direct/Scott
1 charge, a telephone order charge from Orrefors, 2 O R R E F O R S, in New York, and it is dated May 2nd, 3 1994, and it is in the amount of $9,423.16. 4 Q I am showing you Government's Exhibit 404A and 404-B 5 in evidence, a
nd ask you to take a look at item number 63 6 on this document. 7 Is that a date? 8 A That is a -- item number 63 is a for a date, yes. 9 Q What is the date given there? 10 A September 16th, 1991. 11 Q And just above that in item number 58, do you see a 12 number given in that box? 13 A Yes. 14 Q And -- 15 A It appears to be 175. 16 MR. TRABULUS: Objection, your Honor. It is 17 repetitive of testimony elicited from another witness yes, 18 sir, from the same document. 19 THE COURT: 404-A and B? 20 MR. TRABULUS: A is the blowup of 404. 21 THE COURT: Yes. 22 MS. SCOTT: Your Honor, I am moving on. 23 THE COURT: Very well. 24 Q Now, Mr. Garabedian, I would just ask you to take a 25 look at Government's Exhibit 441 in evidence.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
388 Garabedian-direct/Scot
t
1 A Yes. 2 Q And I am showing you Government's Exhibit 441-A. 3 Is that a true and accurate enlargement of the 4 exhibit you have before you, 441? 5 A Yes. 6 MR. WHITE: I offer Government's Exhibit 441-A. 7 THE COURT: Any objection? 8 MR. TRABULUS: It is just an enlargement of 441, 9 no. No knob. 10 THE COURT: Government's Exhibit 441-A in 11 evidence. 12 (Government's Exhibit 441-A received in 13 evidence.) 14 MS. SCOTT: Now I ask the Court's permission to 15 publish it for the jury? 16 THE COURT: Surely. 17 (Whereupon, the exhibit/exhibits were published 18 to the jury.) 19 Q Now, Mr. Garabedian, I would ask you to step down and 20 stand next to the exhibit, please. 21 Now, directing your attention to items number 28, 22 29, 30, 31. 23 Can you tell the jury what you see there. 24 A Item n
umber 28 is a charge at Mansouri, 25 M A N S O U R I, men's wear in Greenvale, New York. A
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
389 Garabedian-direct/Scott
1 charge dated September 21st, 1991, in the amount of 2 $2,000. 3 Item number 29 is a charge at Thos Miller, 4 T H O S, Miller Town in Woodbury, New York. And that's a 5 charge dated September 21st, 1991, for $254.97. 6 Item number 31 is another charge at the same 7 merchant, Thos Miller in Woodbury, New York, on the same 8 date of September 21st, 1991, $238.70. 9 Q I believe you skipped item 30. 10 A Correct, I apologize. 11 Item 30 is also a charge at Thos Miller, Town and 12 Country in Woodbury, New York, again on September 21st, 13 1991, for a charge in the amount of $500 even. 14 Q And the dates given for all those charges are 15 September 21st, 1991; is th
at correct? 16 A Yes. 17 Q What is the approximate time period between the dates 18 on this document and the dates on those charges? 19 A Five days. 20 Q By this document I mean 404-B. 21 A Yes. Five days. 22 Q Now, Mr. Garabedian, I am showing you more documents 23 in evidence, 405-A and 405-B. This is 405-A, and this is 24 405-B. 25 MR. TRABULUS: Objection, your Honor, the same
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390 Garabedian-direct/Scott
1 thing, the contents of these documents were the subject of 2 other witnesses yesterday. It is repetitive. 3 MS. SCOTT: Your Honor, it is being offered for 4 comparison purposes with new evidence offered at this 5 time. 6 THE COURT: Overruled. 7 Q Mr. Garabedian, looking at item New Jersey 58, on 8 405-B, can you read that date? 9 A July 8th, 1993.
10 Q And just above that in item number 51, can you read a 11 number that is given there. 12 A 70. 13 Q Now, looking again at the summary chart, can you read 14 the amount of the charges charged to the supplemental card 15 in July of 1993? 16 A The July 1993 amount totals $8,110.50. 17 Q Did you have an opportunity to examine the amounts 18 given in that chart in the month of 1993 for the months 19 preceding July? 20 A Yes. 21 Q Did you have an opportunity to take the average of 22 those charges? 23 A Yes, I did. 24 Q And what was that average amount? 25 A It is approximately $10,000 over the prior six
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391 Garabedian-direct/Scott
1 months. 2 Q Finally I am showing you Government's Exhibit 406-A 3 and 406-B in evidence. 4 A Yes. 5 Q A
nd ask you to read item 68 on 406-B to the jury. 6 A Item number 68? 7 Q I believe that's the date. 8 A It is actually 56. 9 Q I am sorry, 56. 10 A 56 is date of December 29th, 1993. 11 Q And just above that in box 51, and the two boxes 12 below it, can you read to the jury the amounts given 13 there? 14 A 200 and 1,000. 15 Q Finally, Mr. Garabedian, I am turning your attention 16 to Government's Exhibit 467 in evidence. 17 A 467. 18 Q I am showing you 467-A. 19 Now, is this a true and accurate enlargement of 20 Government's Exhibit 467? 21 A Yes. 22 MS. SCOTT: I offer 467-A. 23 MR. TRABULUS: No objection. 24 THE COURT: 467-A, Government's Exhibit in 25 evidence.
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392 Garabedian-direct/Scott
1 (Government's Exhibit 467-A received in
2 evidence.) 3 MS. SCOTT: I request to publish it to the jury. 4 THE COURT: Yes. 5 (Whereupon, the exhibit/exhibits were published 6 to the jury.) 7 Q Looking at the document before you, 8 Government's Exhibit 467-, can you take a look at item 9 25. 10 A Yes. 11 Q What card is that item charged to? 12 A The supplement card, Mr. Gordon. 13 Q What is it? 14 A It is a charge at Wallach and Sons in Manhasset, New 15 York. It is dated November 20th, 1993. It is a charge in 16 the amount of $4,588.66. 17 Q Item number 27. Can you tell us what that is? 18 A It is a charge at Daum, D A U M, Boutique in New 19 York, dated December 4th, 1993. And it is a charge for 20 $2,004.05. 21 Q And item number 28. 22 A Item number 28 is a charge at the Sharper Image in 23 New York, dated December 5th, 1993, in the amount of 24 $
5,576.64. 25 Q Finally, item number 30.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
393 Garabedian-direct/Scott
1 A Item number 30 is a charge at Barney's New York on 2 December 4th, 1993, in the amount of $1,388.77. 3 Q Now, I will ask you again to compare the dates on 4 these documents, 406-B, which you said had a date of 5 December 29th, 1993? 6 A Yes. 7 Q And approximately how far away in time is that from 8 the charges on these other documents, 467-A? 9 A Approximately three weeks. 10 Q Mr. Garabedian, looking at Government's Exhibit 467, 11 can you tell the jury what the total amounts of charges 12 were to Bruce Gordon's supplicate card between November 13 and December 1993? 14 A $14,051.17. 15 Q Now, I am going to ask you to look at 16 Government's Exhibit 471; and I am showing you 17 Government's
Exhibit 471-A. Is that a true and accurate 18 enlargement of 471? 19 A Yes. 20 MS. SCOTT: I offer 471-A. 21 MR. TRABULUS: No objection. 22 THE COURT: Government's Exhibit 471-A, for Abel 23 in evidence. 24 MS. SCOTT: I am publishing that for the jury? 25 THE COURT: Yes.
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394 Garabedian-direct/Scott
1 (Whereupon, the exhibit/exhibits were published 2 to the jury.). 3 Q Please tell us what you see there for item 20. 4 A Item number 20 is a charge at Bergdorf Goodman in New 5 York, dated April 2nd, 1994. It is in the amount of $780. 6 Q Item 21? 7 A Another charge at Bergdorf Goodman on the same date 8 of April 2nd, 1994, in the amount of $146.14. 9 Q What is the dates given for those purchases? 10 A April 2nd, 1994. 11 Q Are those charges made to the sup
plemental cards of 12 Bruce Gordon? 13 A Yes. 14 Q I am asking you to look at Government's Exhibit 474. 15 A Yes. 16 Q And I will show you 474-A. 17 Is this a true and accurate enlargement of 18 Government's Exhibit 474? 19 A Yes, it is. 20 Q I am offering Government's Exhibit 474-A. 21 MR. TRABULUS: No objection. 22 THE COURT: Government's Exhibit 474-A in 23 evidence. 24 (Government's Exhibit 474-A received in 25 evidence.)
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395 Garabedian-direct/Scott
1 Q Now, as quickly as possible, I would just ask you to 2 look at items 25 and 26 on that exhibit. 3 A Yes. 4 Q And tell us briefly what they are. 5 A Item number 25 is a charge at a restaurant Laurant, 6 L A U R E N T, in Paris, France, in the amount of 7 $339.24. And item number 26
is a charge at Bunta, 8 B U N T A, Molino, M O L I N O, a charge from Italy, in 9 the amount of $2,505.62. 10 Q And item number 30, can you tell the jury what that 11 is. 12 A Item number 30 is a charge at L. Marciano, 13 M A R C I A N O, from Paris, France. It is in the amount 14 of $3,626, U.S. dollars. 15 Q Items 31 and 32, can you tell us what those are? 16 A Item 31 is a charge at an establishment by the name 17 of, I believe it is Jyph, J Y P H, in Paris, France. It 18 is in the amount of $730.75. 19 Item 32 is a charge at Galerie Sordello, 20 G A L E R I E, S O R D E L L O. It is a charge from 21 Paris, France. And that charge is in the amount of 22 $21,149.10. 23 Q Now, items 33 through 36, can you tell us what those 24 are. 25 A 33 is a charge at Sulka, S U L K A, in Paris,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORT
ER
396 Garabedian-direct/Scott
1 France. And in the amount of $2,070.37. 2 Item 34 is an airline ticket for Air France in 3 the amount of $5,830.35. 4 Item 35 is another airline ticket with Air France 5 for the same amount of $5,830.35, as the previous charge. 6 I am at 35 -- 7 Q 36. 8 A 36. Item number 36 is a charge at the Ritz in Paris 9 in the amount of $3,721.49. 10 Q Now, can you tell from looking at the statement when 11 those charges were made. 12 A The closing statement -- date is July 21, 1994. 13 Looking at the individual records of charges attached to 14 this statement, there is -- there are dates on the 15 individual charge slips, and, for example, item number, 16 item number 30, for example, is the charge from L. 17 Marciano in Paris, which has a date of July 5th, 1994. 18 Q Is it fair to say that these charges were
made in the 19 summer of 1994? 20 A They were made between the closing date of the prior 21 month, which was June 20th, and the closing date of this 22 statement, which was July 21st. 23 Q Thank you. 24 Now I am asking you to look at 25 Government's Exhibit 427 in evidence.
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397 Garabedian-direct/Scott
1 A Yes. 2 Q I will ask you to read aloud the third paragraph in 3 that exhibit. 4 A The third paragraph begins with: He is going to have 5 to borrow the money. He has offered, and the offer in 6 compromise submitted -- 7 MR. TRABULUS: Objection, your Honor. 8 This is again repetitive. 9 THE COURT: Overruled. 10 A Where shall he borrow this money? Perhaps he should 11 cease eating. 12 Q Finally, what is the date on that letter? 13 A September 29t
h, 1994. 14 THE COURT: How much more do you have with this 15 witness? 16 MS. SCOTT: Two or three more questions about one 17 other exhibit. 18 THE COURT: Go ahead. 19 Q Finally, Mr. Garabedian, I will ask you to take a 20 look at Government's Exhibit 475. 21 A Yes. 22 Q And I am showing you Government's Exhibit 475-A. 23 Is 475-A a true and accurate copy of 24 Government's Exhibit 475? 25 A Yes.
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398 Garabedian-direct/Scott
1 MS. SCOTT: I offer Government's Exhibit 475-A. 2 MR. TRABULUS: No objection. 3 THE COURT: Government's Exhibit 475-A in 4 evidence. 5 (Government's Exhibit 475-A received in 6 evidence.) 7 Q Now, I would ask you to take a look at item 7 and 8 8 and 12 on that exhibit, and tell the jury what those are. 9 A Item se
ven is a chart from Positano, P O S I T A N O, 10 car service, in Italy. It is in the amount of $329.97. 11 Item eight is a charge from Les Sirenuse, 12 S I R E N U S E, from Italy, in the amount of $4,405.10. 13 Item 12 is a charge from NRSC, in Washington, 14 D.C., in the amount of $2,000. 15 Q Now, going back to Government's Exhibit 824-A and 16 read to the jury the monthly charges for 1994? 17 A Could you repeat the question? 18 Q I will back up for one minute back to 475-A. 19 Item 12, you said was a charge to NRSC? 20 A Correct. 21 Q Did you have an opportunity to look at your records 22 back at your office regarding that entry? 23 A Yes. 24 Q And what did you learn is the full name of that 25 vendor, NRSC?
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399 Garabedian-direct/Scott
1 A The vendor's full name is
the National Republican 2 Senatorial Committee. 3 Q What does it say underneath that charge? 4 A It says contribution. 5 Q Contribution/donations? 6 A Donations, yes. 7 Q Going back to Government's Exhibit 824-A, if you read 8 off the monthly charges in 1994. 9 A Starting with January, the total for 1994 in January 10 was $981.08. 11 February total was $17,649.48. 12 The March total was $14,297.21. 13 The April total was $4,456.50. 14 The May total was $17,672.49. 15 The June was $3,012.91. 16 July's total was $47,392.51. 17 August was $9,614.10. 18 September was $27,215.83. 19 October was $12,270.83. 20 November was $18,042.43. 21 December was $10,427.30. 22 Q What was the year total? 23 A The year total was $183,032.67. 24 Q Now, Mr. Garabedian, I am showing you 25 Government's Exhibit 825 thro
ugh 834.
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400 Garabedian-direct/Scott
1 Do you recognize these exhibits? 2 (Handed to the witness.) 3 THE COURT: I asked you if you only had a few 4 more questions, you have more? 5 MR. WHITE: I now have three more questions 6 relating to the exhibits I just gave him. It will be 7 about two more minutes. 8 THE COURT: Okay. 9 (Handed to the witness.) 10 A I recognize these exhibits. 11 Q Can you tell us what they are? 12 A Copies of the payment checks received by American 13 Express in payment of the American Express account. 14 Q Now, how were those copies made? 15 A These copies were made pursuant to my request for 16 reproduction of the information that American Express 17 maintains electronically regarding these checks. They 18 were then, as they say digitize
d and faxed over to my 19 office. 20 Q Are these checks kept in the regularly conducted 21 business of American Express? 22 A Yes. 23 Q Was it the regular business practice of American 24 Express to make these records? 25 A Yes.
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401 Garabedian-direct/Scott
1 Q Looking at 826, 828, 830, the even numbered ones -- 2 MS. SCOTT: I am sorry, I offer the exhibits in 3 evidence. 4 THE COURT: What are the numbers again? 5 MS. SCOTT: 825 through 834. 6 THE COURT: Any objection? 7 MR. JENKS: Your Honor, presumably those checks, 8 although they are Who's Who Worldwide checks, are being 9 offered against Bruce Gordon and not against the 10 corporation? 11 MS. SCOTT: That's correct. 12 MR. JENKS: No objection. 13 MR. TRABULUS: Your Honor, there is no knob.
14 THE COURT: Very well, Government's Exhibit 825 15 through 834 in evidence. 16 (Government's Exhibits 825 through 834 received 17 in evidence.) 18 Q Pulling out the even numbered exhibits, 826, 828, 19 830, 832 and 834 -- 20 A Yes. 21 Q What is the name on those checks indicating the 22 person who paid for that part of the American Express 23 bill? 24 A Going through these checks, they were submitted 25 either by Elizabeth Sautter, Who's Who --
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402 Garabedian-direct/Scott
1 Q I am just talking about the even numbered ones. 2 A The even numbered? All right, let me just go through 3 them again. 4 826, 828, 830, 830, 834, are copies of the checks 5 submitted to American Express for payment by -- on the 6 checks from Elizabeth Sautter. 7 Q Setting those
checks aside, the even numbered checks, 8 I ask to you look at the odd numbered checks, 825, 827, 9 829, 831, and 833. 10 A Right. 11 Q And I ask you to tell the jury what those checks 12 indicate about who paid -- who was paying the money on 13 those checks to American Express? 14 A These checks were issued by Who's Who Worldwide 15 Registry, Inc., Sterling Who's Who, Inc. and I believe 16 there was one other corporate entity that submitted one 17 check that was in these files. I would have to go through 18 it individually to locate it. 19 MS. SCOTT: Your Honor, I would ask permission at 20 this time to publish the odd exhibits to the jury and the 21 even exhibits. 22 THE COURT: When we get back from our recess. 23 Have you concluded your direct examination? 24 MS. SCOTT: I have. 25 THE COURT: When we get back you can publish
HARR
Y RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
403 Garabedian-direct/Scott
1 that. 2 MS. SCOTT: I have no further questions from 3 Mr. Garabedian. 4 THE COURT: Did you find the other one? 5 THE WITNESS: I believe it is this one, your 6 Honor. 7 It appears to be Interglobal Execnet, Inc. 8 E X E C N E T, Inc. 9 THE COURT: Very well. 10 Members of the jury, we will take a ten-minute 11 recess. 12 Please do not discuss the case and keep an open 13 mind. 14 Madam deputy, you will please recess the jury. 15 16 (Whereupon, a recess is taken.) 17 18 (Whereupon, the jury at this time entered the 19 courtroom.) 20 THE COURT: Please be seated, members of the 21 jury. 22 You wanted to publish something to the jury? 23 MS. SCOTT: Yes, your Honor. I did. 24 THE COURT: What are you publishi
ng? 25 MS. SCOTT: The checks, 825 through 834.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
404 Garabedian-direct/Scott
1 You start with number one. We go in seniority 2 here. 3 MS. SCOTT: Thank you for reminding me. 4 THE COURT: Like the judiciary. Everything is in 5 seniority. We eat in order, we walk around in order. 6 Everything is in seniority. 7 We have a new courthouse being built in Central 8 Islip. Our chambers and courtrooms are being allocated, 9 by seniority, naturally. 10 (Whereupon, the exhibit/exhibits were published 11 to the jury.) 12 THE COURT: All right, cross-examination. 13 MR. TRABULUS: Thank you, your Honor. 14 15 CROSS-EXAMINATION 16 BY MR. TRABULUS: 17 Q Good afternoon. 18 A Good after, sir. 19 Q I am Mr. Gordon's lawyer, and I have relatively few 20 que
stions for you. 21 Mr. Garabedian, I want to understand the account 22 arrangements here. Mr. Gordon himself did not have an 23 account with American Express, did he? 24 A No. 25 Q The account was with Elizabeth Sautter; is that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
405 Garabedian-cross/Trabulus
1 correct? 2 A Yes. 3 Q And the billing statements were sent to Elizabeth 4 Sautter; is that correct? 5 A Yes. 6 Q And he basically had permission to charge things 7 under her account; is that correct? 8 A He had an account under her account number. 9 Q Was there actually any agreement, account agreement 10 between Mr. Gordon and American Express, anything like 11 that? 12 A There is a supplemental application which needed to 13 be submitted by the basic member and submit -- signed by 14 the supple
mental card holder. 15 Q Was he himself responsible for the charges? 16 A Under the terms and conditions of American Express, 17 yes. 18 Q And Mr. Garabedian, you have no way of knowing from 19 your records whether or not certain of the things that 20 were charged were used for Who's Who Worldwide or whether 21 used for him personally? 22 A I would have no way of knowing. 23 Q And certainly it appears that the clothing would be 24 for personal use? 25 A It would seem to be.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
406 Garabedian-cross/Trabulus
1 Q You have no way of knowing as to whether any of the 2 travel expenses would be used for business travel? 3 A No. 4 Q You have no any of knowing whether or not as to 5 whether artwork or framing or crystal was bought, as to 6 whether it was used to furnish corporate f
acilities? 7 A I have no way to know. 8 Q Similar with regard to the restaurant charges, you 9 have no way of knowing as to whether it would be business 10 lunches or dinners; is that correct? 11 A Right. 12 Q It would not be unusual for a corporate executive to 13 have a credit card account which might be reimbursed by 14 the corporation; is that an unusual arrangement? 15 A It is not an unusual arrangement. But it is normally 16 a company account. 17 Q And would the corporate -- withdrawn. 18 MR. TRABULUS: No further questions. 19 THE COURT: You may proceed. 20 21 REDIRECT EXAMINATION 22 BY MS. SCOTT: 23 Q Mr. Garabedian, did Bruce Gordon have an account in 24 his name? 25 A There was a plastic embossed with the name Bruce
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
407 Garabedian-redirect/Scott
1 Gordon and the supplemental number assigned to him, yes. 2 MS. SCOTT: Thank you, I have no further 3 questions. 4 THE COURT: Anything else? 5 MR. TRABULUS: Nothing, your Honor. 6 THE COURT: You may step down. Mr. Garabedian. 7 Call your next witness. 8 (Whereupon, at this time the witness left the 9 witness stand.) 10 MS. SCOTT: The government calls Peter 11 Hirshcleifer. 12 THE COURT: Would you stand up, and raise your 13 right hand, sir. 14 15 P A U L H I R S H C L E I F E R , 16 called as a witness, having been first 17 duly sworn, was examined and testified 18 as follows: 19 20 THE COURT: Please be seated. State your full 21 name and spell your last name. 22 THE WITNESS: First name is Paul, Hirshcleifer, 23 H I R S C L E I F E R. 24 25 DIRECT EXAMINATION
HARRY
RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
408 Hirschleifer-direct/Scott
1 BY MS. SCOTT: 2 Q Good afternoon, Mr. Hirshcleifer. 3 A Good afternoon. 4 Q What do you do for a living? 5 A Retailer, I own the Hirshcleifer stores in Manhasset. 6 Q What is the name of your stores? 7 A The names of the stores are -- 8 THE COURT: I didn't hear a thing you said. 9 First of all relax. 10 Now, pull the microphone. Pretend this is the 11 day before Christmas and you just sold out everything in 12 your store. 13 THE WITNESS: Thank you, your Honor. 14 THE COURT: All right. 15 THE WITNESS: The name of the store is 16 Hirshcleifer, in which we have the Giorgio Armani. 17 THE COURT: A R M A N I? 18 THE WITNESS: Yes. 19 THE COURT: How do you spell Giorgio? 20 THE WITNESS: G I O R G I O. 21 Q And what is your title?
22 A I am the president of the company. 23 Q And as the president of the company, are you aware of 24 the manner in which the company keeps records of sales? 25 A Yes, I am.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
409 Hirschleifer-direct/Scott
1 Q I am showing you Government's Exhibit 504, 505, 2 505-A, 506, 507, 508, 509, 510, 511, 511-A, 512, 513 and 3 514. 4 I ask you if you recognize those documents. 5 (Handed to the witness.) 6 A Yes, I do. 7 Q What are they? 8 A They are receipts. The first one is a receipt from 9 Giorgio Armani. 10 The next one, two ---I believe the next seven or 11 eight are receipts from Giorgio Armani. And there is a 12 receipt -- these were all receipts from Giorgio Armani. 13 Q Are they receipts from the company which you are the 14 president of? 15 A Yes, they are.
16 Q How were these receipts created? 17 A The client came in, purchased merchandise. Upon the 18 purchase of the merchandise, the sales associates wrote up 19 the sales slip. 20 Q And what information was entered on the sales slip? 21 A We have the manufacturer code, the style number, the 22 item number, is it the retail price. 23 Q And does it also indicate the method of payment? 24 A Yes, it does. 25 Q Now, do these receipts record charges for items
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 purchased from your stores, Giorgio Armani Boutique? 2 A Yes, it does. 3 Q And were they created at or near the time the 4 purchases were made? 5 A At the time. 6 Q Were they created by the Giorgio Armani employees 7 servicing the customer at the time they made the 8 purchases?
9 A Yes. 10 Q Were they created by people who had knowledge of the 11 transactions? 12 A Yes, they were. 13 Q Were these receipts kept in the regular conducted 14 business of Giorgio Armani? 15 A Yes, they are. 16 Q Was it the regular practice of business -- 17 THE COURT: You have to slow down a bit. You are 18 picking up speed as you go along. Pretty soon you are 19 getting to flank speed. I will describe that soon when 20 there is a lull in the action here. It has to do with the 21 motion picture called Around the World in 80 Days. That's 22 what flank speed is. I will give you that later. 23 Q Was it the regular business practice of Giorgio 24 Armani to make these records and keep them? 25 A Yes.
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411 Hirschleifer-direct/Scott
1 MS. SCOTT: I offer Government's E
xhibit 504 2 through 514, including 505-A, 511-A, and 514-A. 3 THE COURT: Any objection? 4 MR. TRABULUS: Your Honor, I don't think so. 5 Would you bear with me a moment? 6 THE COURT: Of course. 7 MR. TRABULUS: My bound set is a little out of 8 order here. 9 THE COURT: Take your time. 10 MR. TRABULUS: I don't know if I have all of them 11 in sequence here the way they were given to me. 12 Based on his testimony, no, I have no objection. 13 THE COURT: Government's Exhibits 504 through 514 14 in evidence. 15 (Government's Exhibits 504 through 514 received 16 in evidence.) 17 Q Mr. Hirshcleifer, I would ask you to go through those 18 exhibits and tell the jury what they show. 19 A 504 shows purchases from the men's Giorgio Armani 20 boutique of various items. 21 This shows for example, six ties. The other four 22 items are -- i
t does not specifically say what the item 23 is, but we can read the six ties on 504. 24 THE COURT: You want the amounts of each one? 25 MS. SCOTT: I would like to know the total.
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1 A The total on 504 with the sales tax was $4,188.10. 2 Q What was the date of that purchase? 3 A November 28th, 1992. 4 The next one I have is 505, the purchase of a 5 men's suit -- the total purchase before the sales tax was 6 $2,075. 7 THE COURT: What is the date on it? 8 THE WITNESS: I am looking. 9 The date of the sale is February 19th, 1994. 10 The next one is 506. The date of the purchase is 11 April 10th, 1993. 12 The amount of the purchase, including the sales 13 tax is $6,944. 14 Q What types of items were purchased? 15 A On this sales slip the
re are two suits, one jacket -- 16 I am sorry, three suits and one jacket. 17 Next is number 507. The date of the purchase is 18 April 10th, 1990 -- it looks like 1993. The amount is 19 $998.20. And it appears to be 11 or 12 ties. 20 508, April 17th, 1993, the amount of the purchase 21 is -- 22 Q Mr. Hirshcleifer, if you could give us the amount. 23 A Certainly. Including the sales tax, $2,793.28. And 24 it is one man's suit and three bathing suits. 25 The next is 509, the date is November 6th, 1993,
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413 Hirschleifer-direct/Scott
1 and the amount of the sale is $504.63 and it is for one 2 man's sweater. 3 The next purchase is October 6th, no year. But 4 it must be '93, because it is the next invoice number. 5 It is various merchandise that -- 6 THE COURT: What is the exhibit num
ber on that? 7 THE WITNESS: 510. 8 Various merchandise consisting of four ties and 9 three shirts, the total amount is $1,459.33. 10 Exhibit 511, dated September 13th, 1994, four 11 ties in the amount of $352.63. 12 512, August 20th, 1994, the amount of the sale is 13 $6,938.58. It is one raincoat and two men suits. 14 513, dated September 14th, 1994, $2,517.20. It 15 is for one Navy suit. And it appears to be a white 16 shirt. 17 Invoice -- I am sorry, Exhibit 514, dated 18 September 24th, 1995, the amount of the sale is $292.95. 19 And it looks to be a men's sweater. 20 Q Thank you, Mr. Hirshcleifer. 21 I have no further questions for you. 22 THE COURT: Cross-examination. 23 MR. TRABULUS: Thank you, Mr. Hirshcleifer. I 24 have no further öööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööö
öööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööööö MS. SCOTT: The government calls Lynette 5 Shultis. 6 THE COURT: Raise your right hand. 7 8 L Y N E T T E S H U L T I S , 9 called as a witness, having been first 10 duly sworn, was examined and testified 11 as follows: 12 13 THE COURT: Please be seated. 14 State your full name and spell your name. 15 THE WITNESS: S H U L T I S, first name is 16 Lynette, L Y N E T T E. 17 18 DIRECT EXAMINATION 19 BY MS. SCOTT: 20 Q Good afternoon, Ms. Shultis. 21 What do you do for a
living? 22 A Credit markets and client services operations manager 23 at Bergdorf Goodman. 24 Q How long have you had that job? 25 A With Bergdorf for seven years and with the present
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415 Shultis-direct/Scott
1 position about a year and a half. 2 THE COURT: You have to talk a little slower so 3 we can all hear what you have to say. 4 Q Directing your attention to April of 1994, what was 5 your position at that time? 6 A In April of 1994 I was credit operations manager. 7 Q And what were your responsibilities as credit 8 operations manager? 9 A Bill adjustments department, accounts receivable 10 reconciliation. 11 Q Now, I am showing you Government's Exhibits 483 and 12 484. 13 (Handed to the witness.) 14 Q You recognize the documents? 15 A Yes.
16 Q What are those? 17 A Sales receipts from Bergdorf Goodman. 18 Q How do you recognize them? 19 A They are old receipts. We just changed our registers 20 recently. But this is the original receipts we used in 21 the store for any purchase made. 22 Q How are these receipts created? 23 A This type of receipt was a piece of paper that was 24 actually slid into the register. And as the information 25 was typed in by the sales associate with the merchandise
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
416 Shultis-direct/Scott
1 that was being purchased, it printed out. 2 Q What would happen to those records after they were 3 made? 4 A After records were made a copy went to the customer. 5 Another copy goes into the drawer. At night they are 6 collected and put in a bag and brought to the sales audit 7 department, where th
ey go through to make sure everything 8 was correct on the receipts and then they are stored. 9 Q Do these receipts show charges for items purchased at 10 Bergdorf Goodman? 11 A Yes. 12 Q And were they created at or near the time the 13 purchase was made? 14 A Correct. 15 Q Were they created by the person serving the customer 16 who made the purchases? 17 A Yes. 18 Q Were they created by people with knowledge of the 19 transaction? 20 A Yes. 21 Q Are these receipts kept in the course of regularly 22 conducted business activity at Bergdorf Goodman? 23 A Yes, they are. 24 Q Was it the regular business practice of Bergdorf 25 Goodman to make these records?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
417 Shultis-direct/Scott
1 A Yes. 2 MS. SCOTT: I offer 483 and 484 in evidence. 3
THE COURT: Any objection? 4 MR. TRABULUS: No. 5 THE COURT: Government's Exhibits 483 and 484 in 6 evidence. 7 (Government's Exhibit 483 received in evidence.) 8 (Government's Exhibit 484 received in evidence.) 9 Q Taking a look at the two exhibits, can you tell us 10 what they show about the transactions that they represent? 11 A It would show the department and the class of the 12 merchandise. It gives a brief description of the 13 merchandise. It tells the individual SKU so we can go 14 back and find out specifically what the merchandise is. 15 THE COURT: The individual what? SKU did you 16 say? 17 THE WITNESS: SKU. It is a number associated 18 with everything. It tells -- gives us information as to 19 who the vendor is, what season it is from, and actually 20 what the merchandise is from. 21 THE COURT: How do you spell this? 22 THE WITNES
S: S K U. 23 THE COURT: I never heard of it before, but it is 24 all right. 25 THE WITNESS: You are not in retail.
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418 Shultis-direct/Scott
1 THE COURT: All right. 2 Q Can you tell us what those records show? 3 A This would show that -- it shows a number of 4 different purchases. It also tells the number of items of 5 each item purchased and the dollar amounts for those 6 items. 7 Q When were these items purchased? If you look at 8 Government's Exhibit 483 first. 9 A It is a subtotal, a two-page document, so it is April 10 2nd, 1994, 484 has the date on the bottom. 11 Q You say those exhibits represent a series of 12 transactions that occurred on one day? 13 A Actually, I am looking at this, and it looks like 14 these are -- there are two different sales receipts. The
15 first one, 483 is a subtotal, so there are other pages 16 that go along with that. And the one for 484 is a 17 separate document. 18 Q I am showing you another document also part of 19 Government's Exhibit 483. 20 Do you recognize that? 21 A Yes. 22 This is the entire document. Unfortunately the 23 receipt does not come out as one fold, or it didn't come 24 out as one fold -- one full receipt. It just fit whatever 25 could fit on one page, and you have to insert another page
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
419 Shultis-direct/Scott
1 to get the rest of the items printed on there and continue 2 until there is a total. So this is a multi-page receipt. 3 Q Once again, is that a document that was created and 4 kept in the regular course of business at Bergdorf 5 Goodman? 6 A Yes, it is. 7 MS. SC
OTT: Your Honor, I offer that additional 8 piece. 9 THE COURT: You will annex that to 483. 10 Any objection? 11 MR. TRABULUS: I have no objection, your Honor. 12 I just don't know if I have it. 13 THE COURT: Why don't you show it to 14 Mr. Trabulus. 15 (Whereupon, at this time there was a pause in the 16 proceedings.) 17 MR. TRABULUS: No objection. 18 THE COURT: We will attach it or annex it to 483, 19 and it becomes part of one exhibit, 483. 20 Q Now, the date you said again was April -- 21 A April 2nd, 1994. 22 Q And what items were purchased on that day? 23 A This lists -- there were four of one type of brief, 24 four of another type of brief, four of another type of 25 brief, six of another type of brief.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
420 Shultis-direct/Scott
1 THE COURT: Brief
, B R -- 2 THE WITNESS: B R I E F. 3 THE COURT: What is a brief? 4 THE WITNESS: Underwear. 5 THE COURT: Okay. 6 A One pair of socks. The second page is a 7 continuation, it shows one pair of ankle hose, one pair of 8 socks, another pair of hose, another pair of socks. On 9 the next page there are four different pairs of socks. 10 And on the last page there is one more pair of socks, and 11 then it totals. 12 Q Are you aware of the types of items these are from 13 looking at these records? 14 A Other than the brief description, I couldn't tell you 15 specifically what they were unless I was able to look up 16 the S K U number, which would tell you what the vendor 17 was, and the definite description would tell color and 18 size. 19 Q Looking at 483, can you tell us the total amount 20 spent on that day for these items you described?
21 A $780.48, total of sale. 22 Q Looking at Government's Exhibit 484, can you tell the 23 jury what that shows, what the transaction there was for? 24 A It shows one item purchased, a long sleeve polo 25 shirt, a total of $146.14.
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421 Shultis-direct/Scott
1 Q What is the date of this transaction? 2 A April 2nd, 1994 also. 3 Q Can you tell us anything else about the brand name of 4 those items? 5 A No, not from this, I would have to get the S K U 6 information. 7 MS. SCOTT: Thank you. 8 I have no further questions. 9 MR. TRABULUS: Thank you for coming. I have no 10 further questions. 11 THE COURT: Very well. 12 (Whereupon, at this time the witness left the 13 witness stand.) 14 THE COURT: Please call your next witness. 15 MR. WHITE: Your Honor, the gov
ernment calls 16 Robert King. 17 THE COURT: Raise your right hand. 18 19 R O B E R T K I N G , 20 called as a witness, having been first 21 duly sworn, was examined and testified 22 as follows: 23 24 THE COURT: Please be seated. 25 State your full name and spell you are last
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
422 1 name. 2 THE WITNESS: Robert King, K I N G. 3 THE COURT: You may proceed. 4 MR. WHITE: Thank you, your Honor. 5 6 DIRECT EXAMINATION 7 BY MR. WHITE: 8 Q Mr. King, can you tell us how you are employed. 9 A Yes. I am the director of operations for Fendi 10 Stores. 11 THE COURT: For what? 12 THE WITNESS: Fendi, F E N D I. Fendi Stores. 13 Q Can you tell us what kind of business Fendi Stores 14 is? 15 A It is a retail store.
16 Q What sort of merchandise does it sell? 17 A Collection of handbags, accessories, clothing, shoes. 18 Q What brand of merchandise does it sell? 19 A Only Fendi. Fendi is an Italian designer. 20 Q Now, are you familiar with Fendi's record keeping 21 procedures? 22 A Yes, I am. 23 Q Can you tell us, when a customer makes a purchase at 24 Fendi, is there a receipt prepared? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
423 King-direct/White
1 Q Tell us how that works. 2 A It is handwritten at first. It is a preprinted 3 form. It is then processed through a register system 4 where the register imprints sales information on it. A 5 copy of it is given to the customer, and we keep a copy. 6 Q And if the customer pays for it with a credit card, 7 is there any receipt retained by Fendi? 8 A Yes. If a
client is paying by credit card, the 9 actual credit card payment is processed separately and 10 generates a second receipt, a separate receipt for each 11 sale. 12 Q Does the store then maintain a copy of those 13 receipts? 14 A Yes. 15 Q Let me show you Government's Exhibits 521, 521-A, 16 521-B, 522 and 522-A. 17 (Handed to the witness.) 18 Q Now, Mr. King, do you recognize those exhibits? 19 A I do. 20 Q Would you tell us what they are, please. 21 A Exhibit 521 is a Fendi Store, Inc. sales slip, where 22 you see the customer's name and address written on the top 23 portion by the salesperson, and the information on the 24 sale printed on there by the register system. 25 Q And 521-A and B, what are they?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
424 King-direct/White
1 A 521-A is the second receipt
generated when the credit 2 card is used for payment. And 521-B is the back side of 3 521, which just shows the credit card imprint on the sales 4 slip, on the Fendi Store sales slip. 5 Q Is it 522? 6 A 522 is the same, a Fendi Store sales slip. And 522-A 7 shows the credit card payment. 8 Q Now, is the -- is it the regular practice of Fendi 9 Stores to make and keep such records? 10 A Yes, it is. 11 Q Do you make and keep such records in the regular 12 course of your business? 13 A Yes, we do. 14 MR. WHITE: The government would offer 15 Government's Exhibit 521, 521-A, 521-B, 522 and 522-A. 16 MR. TRABULUS: No objection. 17 THE COURT: 521 through 522-A in evidence. 18 (Government's Exhibits 521 through 522-A received 19 in evidence.) 20 Q Mr. King, if you take a look at 521, would you tell 21 us the name of the customer? 2
2 A Bruce W. Gordon. 23 Q And would you tell us what the item purchased was? 24 A It was a wool coat purchased for $1,351, plus $111.38 25 sales tax for a total of $1,461.38.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
425 King-direct/White
1 Q The date of the purchase? 2 A November 26th, 1994. 3 Q And can you tell us from the receipt as to whether 4 the coat was on sale? 5 A Yes. The original price was 2,250, 40 percent off 6 which brought it to 1,350. 7 Q Now, are there numbers on the receipt, or anything 8 else on the receipt from which you can decipher additional 9 information from the merchandise? 10 MR. TRABULUS: Objection, your Honor. It is 11 really irrelevant, this level of detail. 12 THE COURT: Sustained. 13 Q Mr. King, do you know whether the coat is a men's or 14 woman's coat? 15 A It is a wo
man's coat. 16 Q And how was this -- how did the customer pay for this 17 purchase? 18 A American Express. 19 Q Take a look at 522. Can you tell us what the date of 20 that purchase was? 21 A The same date, November 26th, 1994. 22 Q And the customer? 23 A Bruce W. Gordon. 24 Q And what was purchased? 25 A A tweed coat with Fisher trim, a fur trim coat.
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426 King-direct/White
1 Q Men's or women's coat? 2 A Woman's. 3 Q How much did it cost? 4 A It also was on sale, the original price was $7,500. 5 And the sale price is $5,000. 6 MR. WHITE: No further questions. 7 MR. TRABULUS: I have no questions, your Honor. 8 Thank you. 9 THE COURT: You may step down. Thank you. 10 (Whereupon, at this time the witness left the 11 witness stand.)
12 THE COURT: Please call your next witness. 13 MR. WHITE: The government calls Joann Dempsey, 14 your Honor. 15 THE COURT: Raise your right hand. 16 17 J O A N N D E M P S E Y , 18 called as a witness, having been first 19 duly sworn, was examined and testified 20 as follows: 21 22 THE CLERK: Please be seated. 23 State your full name and spell your name. 24 THE WITNESS: Joann Dempsey, D E M P S E Y. 25 J O A N N.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
427 Dempsey-direct/White
1 2 DIRECT EXAMINATION 3 BY MR. WHITE: 4 Q Ms. Dempsey, how are you employed? 5 A I am the manager of the general office in the New 6 York store of Saks Fifth Avenue. 7 Q And how long have you had that position? 8 A I have had the position approximately two years, 9 although I have been
with the company for 15. 10 Q Are you familiar with Saks' record keeping 11 procedures? 12 A Yes, sir. 13 Q And when a customer makes a purchase at Saks, is a 14 store receipt prepared? 15 A That's correct, sir. 16 Q And is that done at the time of the purchase? 17 A At the time of the purchase a transaction is run 18 through the register. It is our legal means of recording 19 the sale. A copy is handed to the customer, and the rest 20 is processed through our systems. 21 Q Can you briefly describe what that processing is. 22 A Normally the customer is charged at the time that the 23 transaction is made. There are instances where a deposit 24 is taken for custom made clothing, but the credit card at 25 the point where it is presented is swiped through the
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428 Dempsey-direct/White
1 register, or a cash transaction happens. It is processed 2 through our sales audit system. The copies are given to 3 the third party credit cards if they are indeed utilized. 4 And the sale is posted to the customer as charge account. 5 Q Does Saks maintain a copy of that receipt? 6 A Yes. Legally we keep it on site for 13 months. The 7 credit card companies have access to a deeper history. 8 Q Is it the regular practice of Saks to make and keep 9 such records? 10 A Yes. 11 Q And do you make it and keep them in the course of 12 your regular business? 13 A Everyday. 14 Q Let me show you Government's Exhibits 517. 15 (Handed to the witness.) 16 Q I am showing you 517 through 520, and 520-A. 17 (Handed to the witness.). 18 Q Are those Saks store receipts made in the manner in 19 which you just described? 20 A Yes. 21 MR. W
HITE: The government would offer 517 22 through 520 and 520-A. 23 THE COURT: Any objection? 24 MR. TRABULUS: Your Honor, I have not been given 25 520-A, I doubt that I would object to it, but I would like
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429 Dempsey-direct/White
1 to see it first. 2 THE COURT: Surely. 3 (Counsel confer.) 4 MR. TRABULUS: No objection. 5 THE COURT: Government's Exhibit 517 through 6 520-A in evidence. 7 (Government's Exhibit 517 through 520-A received 8 in evidence.) 9 Q Ms. Dempsey, if you take a look at 517, can you tell 10 us the date of the purchase there? 11 A I am sorry, but I don't have 517 in front of me. 12 Q It should be the backside of one of those exhibits. 13 A Yes, it is. 14 The date is August 21st, 1994 of the 15 transaction. It happens to represent a sal
e for Hugo Boss 16 cashmere overcoat. 17 THE COURT: How do you spell that? 18 THE WITNESS: B O S S, Hugo, the first name of 19 the designer. 20 It happens to be a Navy double breasted cashmere 21 overcoat for $1,295. 22 Q Can you tell from the receipt how it was paid for? 23 A On an American Express card. 24 Q Can you tell from the receipt the customer's name? 25 A It is Bruce Gordon.
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1 Q If you can look at 518. 2 A Uh-huh. 3 Q What is the date of that purchase? 4 A August 21st, 1994. 5 Q What was purchased? 6 A It happens to be a brown Raglan sleeve. 7 THE COURT: R A G L A N D? 8 THE WITNESS: R A G L A N. 9 THE COURT: L A N? 10 THE WITNESS: Yes. 11 Q How much did the jackets cost on sale for? 12 A $4
90.95. 13 Q Take a look at 519. 14 Could you tell us the date of that purchase? 15 A This was actually a deposit that we mandate on 16 custom-made clothing, processed on September 24th, 1994. 17 Normally we do request a 50 percent down payment for 18 custom clothing. 19 Q And what is the amount of the down payment on this 20 date? 21 A Before sales tax $6,080. 22 Q Now, if you can look at Exhibit 520, and 520-A, those 23 are four pages that comprise one receipt; is that correct? 24 A That's correct. 25 Q Could you tell us the date of that receipt?
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431 Dempsey-direct/White
1 A It was charged to the customer at the point where the 2 goods were available for delivery on November 12th, 1994. 3 Q Can you tell us the items purchased there. 4 A Certainly. Six custom-made suits
by a designer named 5 Alan Flusser, F L U S S E R. 6 Q How much were the Alan Flusser suits? 7 A They seemed to vary anywhere from $2,295 to $1,750. 8 Q What else was purchased besides the suits? 9 A A variety of neck wear and pocket squares, pocket 10 squares being anywhere from 20 to $55, neck wear between 11 115 or 105 dollars. 12 Q The grand total? 13 A $14,355.84. 14 Q Now, could you tell us, is there a name and address 15 listed for the customer on the receipt? 16 A Certainly, Bruce Gordon. 17 Q Can you tell us what the address is? 18 A 250 East 54th Street in Manhattan. 19 MR. WHITE: No further questions, your Honor. 20 21 CROSS-EXAMINATION 22 BY MR. TRABULUS: 23 Q Could you just tell me the date of that receipt? 24 A November 12th, 1994. 25 MR. TRABULUS: Thank you.
HARRY RAPAPORT, CSR, CP, CM OFF
ICIAL COURT REPORTER
432 Dempsey-cross/Trabulus
1 No further questions. 2 THE COURT: You may step down, Ms. Dempsey. 3 Please call your next witness. 4 (Whereupon, at this time the witness left the 5 witness stand.) 6 MS. SCOTT: The government calls Aidong, 7 A I D O N G, last name He. H E. 8 THE COURT: Raise your right hand. 9 10 A I D O N G H E , 11 called as a witness, having been first 12 duly sworn, was examined and testified 13 as follows: 14 15 THE COURT: Please be seated. 16 State your name and spell your name, please. 17 THE WITNESS: Aidong, A I D O N G, He, H E. 18 19 DIRECT EXAMINATION 20 BY MS. SCOTT: 21 Q Good afternoon, Ms. He. 22 A Hi. 23 Q Tell me where you work? 24 A Tourneau, Inc. 25 Q What do you do for them?
HARRY RAPAPORT, CSR, C
P, CM OFFICIAL COURT REPORTER
433 He-direct/Scott
1 A Work in the accounting department. 2 Q What is your position there? 3 A Accounting staff. 4 Q What are your responsibilities on the accounting 5 staff? 6 A I do basic accounting functions, like bank 7 reconciliations, credit card reconciliations and other 8 things. 9 Q Are you aware of the manner in which sales records 10 are kept at Tourneau? 11 A Yes. 12 Q Ms. He, I am showing you Government's Exhibit 523 and 13 524. 14 Do you recognize those? 15 (Handed to the witness.) 16 A Yes. 17 Q And what are those? 18 A These are sales receipts. 19 Q For -- what are those receipts for? 20 A These are proof of purchase. When a customer comes 21 in the store and they want to purchase merchandise, the 22 salespeople right up tickets like this.
23 Q And what do they do with those tickets, once they 24 have written them up? 25 A They have to be signed by the customer. Then these
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434 He-direct/Scott
1 things will be sent, say the store, after one day, the 2 store will send a whole day's ticket like this to our home 3 office to get posted to the system, computer system. And 4 then it will be stored day by day, month by month, store 5 by store. 6 Q And are these records kept in the course of regularly 7 conducted business of Tourneau? 8 A Yes. 9 Q And is it the regular business practice of Tourneau 10 to make these records and keep them? 11 A Yes. 12 MS. SCOTT: I offer Government's Exhibits 523 and 13 524. 14 THE COURT: Any objection? 15 MR. TRABULUS: No. 16 THE COURT: Government's Exhibits 523 and 524 in
17 evidence. 18 (Government's Exhibit 523 received in evidence.) 19 (Government's Exhibit 524 received in evidence.) 20 Q Ms. He, when you take a look at those two documents, 21 can you tell us what they show about the transactions that 22 they represent? 23 A Number one is the customer's name and address and the 24 item he bought. And -- 25 Q What is the name given?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
435 He-direct/Scott
1 A It looks like Bruce Gordon, or something like that. 2 Q And what is the item there on 523? 3 A I am sorry? 4 Q What is the item there on 523. 5 A It is a strap. It is a Concord strap. 6 THE COURT: Concord, C O N C O R D? 7 THE WITNESS: Yes. 8 THE COURT: Strap? 9 THE WITNESS: Yes, 523, yes, strap. 10 Q What kind of strap is that? 11 THE COURT: Is that for a
watch? 12 THE WITNESS: Yes, lady's. 13 THE COURT: Lady's watch? 14 THE WITNESS: Yes, lady's Concord watch. 15 Q What is the amount? 16 A $671.25. 17 Q What is the date that that item was purchased? 18 A March 18th, '95. 19 Q How was it paid for? 20 A By American Express card. 21 Q Now, looking at the other document, 22 Government's Exhibit 524, can you tell us the name of the 23 customer on that document? 24 A Same customer, Bruce Gordon. 25 Q What is the name of that document?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
436 He-direct/Scott
1 A March 18th, '95, same day. 2 Q What is the item that was purchased? 3 A Auders Piaget, A U D E R, or something like that, 4 P I A G E T. 5 THE COURT: Is that a watch? 6 THE WITNESS: It is a watch. 7 Q Can you tell us the amount of money
that was paid for 8 that item? 9 A The net amount is 1,500 -- I am sorry, $15,250. 10 That's the net amount. After trade in, there was a trade 11 in. The total amount should be $14,018.38. 12 Q Can you tell us how that item was paid for? 13 A By American Express card. 14 MS. SCOTT: I have no other questions. Thank 15 you, Ms. He. 16 MR. TRABULUS: I have no questions, thank you. 17 THE COURT: You may step down, Ms. He. 18 (Whereupon, at this time the witness left the 19 witness stand.) 20 THE COURT: Please call your next witness. 21 MR. WHITE: Your Honor, the government calls Fran 22 Gilberto. 23 THE COURT: Raise your right hand. 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
437 1 F R A N C I N E G I L B E R T O , 2 called as a witness, having been first 3 duly sworn, was
examined and testified 4 as follows: 5 6 THE COURT: Please be seated. 7 State your full name and spell your last name. 8 THE WITNESS: Francine Gilberto, G I L B E R T O. 9 THE COURT: You may proceed. 10 MR. WHITE: Thank you, your Honor. 11 12 DIRECT EXAMINATION 13 BY MR. WHITE: 14 Q Ms. Gilberto, can you tell us how you are employed? 15 A I am the credit manager for Tiffany & Company. 16 Q How long have you had that position? 17 A About 13 years. 18 Q Tell us what kind of merchandise Tiffany sells? 19 A Jewelry, crystal, china -- 20 THE COURT: Would you pull the microphone closer 21 to you, Ms. Gilberto. And speak up. 22 THE WITNESS: Yes. 23 Q Can you tell us what sort of merchandise Tiffany's 24 sells? 25 A Jewelry, diamonds, silver, gold, flatware, china,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL CO
URT REPORTER
438 Gilberto-direct/White
1 crystal. 2 Q Are you familiar with Tiffany's record-keeping 3 procedures? 4 A Yes. 5 Q And when a customer makes a purchase at a Tiffany 6 store is there a receipt prepared? 7 A Yes. 8 Q Tell us how that happen? 9 A A salesman on a sales terminal when the customer 10 comes in the store, they are given a receipt. We request 11 a signature on the receipt, a portion is maintained for 12 the company and given to the customer. 13 Q How is the information entered on that receipt? 14 A All the merchandise is SKU'd. And the SKU is entered 15 on the point of sale terminal, along with a dollar amounts 16 and a brief description of the merchandise, total and tax 17 is on the receipt. 18 Q Tell us what you mean by a SKU? 19 A SKU is a identification number given for all the 20 merchan
dise for back end systems to identify the piece, 21 description associated with it, the appropriate dollar 22 amount associated with that piece. 23 Q It is a numerical code identifying a particular piece 24 of merchandise? 25 A Correct.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
439 Gilberto-direct/White
1 Q Okay. 2 If you could please take a look at 3 Government's Exhibits 515 and 516. 4 (Handed to the witness.) 5 Q Do you recognize those? 6 A Yes. 7 Q Can you tell us what they are? 8 A These are Tiffany sales audit receipts. This is the 9 portion that is maintained for the company records. 10 Q And were those receipts prepared in the manner you 11 described before? 12 A Yes. 13 Q Is it the regular practice of Tiffany's to make and 14 keep such records? 15 A Yes. 16 Q Do you
do that in the course of your regular 17 business? 18 A Yes. 19 MR. WHITE: Your Honor, the government offers 20 Exhibits 515 and 516. 21 THE COURT: Any objection? 22 MR. TRABULUS: No objection. 23 THE COURT: Government's Exhibits 515 and 516 in 24 evidence. 25 (Government's Exhibit 515 received in evidence.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
440 Gilberto-direct/White
1 (Government's Exhibit 516 received in evidence.) 2 Q Now, if you would take a look, please at Exhibit 515; 3 can you tell us first of all what the name of the customer 4 is? 5 A Bruce W. Gordon. 6 Q And is there a date -- what is the date of the 7 transaction? 8 A 12/26/94. 9 Q Would you tell us the items purchased were? 10 A Fashion earrings, and five Tiffany Classics. 11 Q Do you recall what type of merchandis
e Tiffany 12 Classics are? 13 A This particular one I have looked into it as 14 earrings. 15 Q And the other item that was purchased was what kind 16 of merchandise? 17 A Fashion earrings also. 18 Q And can you tell us how much each of those costs? 19 A Fashion earrings were $1,025, Tiffany Classics was 20 $700. 21 Q Now, if you can take a look at Exhibit 516; can you 22 tell us the customer on that? 23 A Bruce W. Gordon. 24 Q And the date of that purchase? 25 A 12/26/94.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
441 Gilberto-direct/White
1 Q And what were the items purchased? 2 A This is Picasso silver. 3 Q And do you know what sort of merchandise that is? 4 A Earrings. 5 Q And how much did those earrings cost? 6 A $375. 7 Q And how were those earrings paid for? 8 A
American Express card. 9 Q And does the receipt reflect the card member name? 10 A Yes. 11 Q What does it say? 12 A Bruce W. Gordon. 13 Q Going back to 515, does it reflect how the 14 merchandise was paid for? 15 A American Express. 16 Q Again, who was the credit card account holder? 17 A Bruce W. Gordon. 18 MR. WHITE: No further questions, your Honor. 19 MR. TRABULUS: Thank you for coming. 20 No questions. 21 (Whereupon, at this time the witness left the 22 witness stand.) 23 THE COURT: Please call your next witness. 24 MR. WHITE: The government calls Ben Youdim, 25 Y O U D I M.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
442 1 THE COURT: Step up, raise your right hand. 2 3 B E H R O U Z Y O U D I M , 4 called as a witness, having been first 5 duly sworn, was examin
ed and testified 6 as follows: 7 8 THE COURT: Please be seated. State your full 9 name and spell your last name. 10 THE WITNESS: Yes. My full name is Behrouz 11 Youdim. 12 THE COURT: Spell both names. 13 THE WITNESS: B E H R O U Z, last name is 14 Y O U D I M. 15 THE COURT: N as in Negative? 16 THE WITNESS: M like Mary. 17 THE COURT: All right. 18 THE COURT: You may proceed. 19 20 DIRECT EXAMINATION 21 BY MR. WHITE: 22 Q Mr. Youdim, can you tell us what you do for a living? 23 A I own a store in Great Neck, sir. 24 Q And can you tell us the name of the store? 25 A Perucci Clothing.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
443 Youdim-direct/White
1 THE COURT: How do you spell that? 2 THE WITNESS: P E R U C C I. 3 THE COURT: Perucci Clothing? 4 THE W
ITNESS: Yes, sir. 5 THE COURT: That's the name of your store? 6 THE WITNESS: That's the store that used to 7 belong to me and a partner, which is no longer in 8 existence. 9 THE COURT: The store is no longer in existence? 10 THE WITNESS: The store was closed last 11 September. 12 Q When did you first open Perucci Clothing? 13 A In September of 1980. 14 Q Can you tell us what type of business Perucci 15 clothing was? 16 A Men's Italian clothing. 17 Q Now, are you familiar with the record keeping 18 procedures employed at Perucci Clothing? 19 A Yes, I am. 20 Q And when a customer made a purchase at Perucci 21 Clothing, was a receipt prepared? 22 A Yes. 23 Q Can you tell us how that worked? 24 A The receipt is a combination of total purchases, and 25 also it shows the way the payment was paid.
HARRY RAPAPORT
, CSR, CP, CM OFFICIAL COURT REPORTER
444 Youdim-direct/White
1 Q And who would record the information on that receipt? 2 A Whoever was waiting on a customer. 3 Q The employee? 4 A The employee or the owner, yes. 5 Q And what sort of information would be recorded? 6 A Usually first name, last name, telephone number. 7 Q And what information regarding the merchandise 8 purchased would be recorded? 9 A It would be recorded as to how it was paid. 10 Q Would the particular type of merchandise that was 11 being purchased be included on the receipt? 12 A Yes. 13 Q And after the receipt was prepared, what would 14 Perucci do with the copy of it? 15 A The copy would stay in the book. 16 Q In what book? 17 A The sales book. 18 Q Would you maintain that book with the receipts? 19 A Yes, we try to keep a good record, yes. 2
0 Q And if you can take a look at Exhibits 495, 496, 497, 21 498, 499, and 500 and 501. 22 If you can take a look at each one of those, 23 please. 24 (Handed to the witness.) 25 A Yes, sir.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
445 Youdim-direct/White
1 Q Could you tell us what those are. 2 A This is not my handwriting. It is my ex-partner's 3 handwriting. And this just says a coat -- 4 THE COURT: No, what are they? Are they letters, 5 deeds to property? What are they? 6 THE WITNESS: This is a sales receipt, sir. 7 Q From Perucci Clothing? 8 A Yes. 9 Q And if you look at the last document there, 501, do 10 you see that? 11 MR. WHITE: Your Honor, if it is all right with 12 you, I will stay here? 13 THE COURT: Sure. 14 Q Tell us what 501 is? 15 A A receipt for American Express.
16 Q For a purchase at Perucci Clothing? 17 A Correct. 18 Q Was it Perucci's regular practice to keep those types 19 of records like 495 through 501? 20 A Yes. 21 Q Did you do that as part of your regular business? 22 A Yes, I did. 23 MR. WHITE: Your Honor, the government will offer 24 495 through 501. 25 THE COURT: Is it 495 or 496?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
446 Youdim-direct/White
1 MR. WHITE: Let me check, I am sorry. 2 MR. WHITE: 495, 96, 97, 98, 99, 500 and 501. 3 THE COURT: Any objection? 4 MR. TRABULUS: No. 5 THE COURT: Government's Exhibits 495 through 501 6 in evidence. 7 (Government's Exhibits 495 through 501 received 8 in evidence.) 9 Q Mr. Youdim, if you can take the top one, 495, could 10 you tell us the date of that purchase? 11 A November 30th, of 1
990. 12 Q And can you tell us who the customer was. 13 A Again, this is not my handwriting, but it says, and 14 looks like Bruce Gordon. 15 Q And does the receipt indicate the items purchased? 16 A Yes, it does. 17 Q Can you tell us what they are? 18 A A black coat. It looks like a camel coat. 19 Q And could you tell us the cost of each of those 20 coats? 21 A The first one is 895. The second one is 850. 22 THE COURT: Do you want to pull the microphone 23 closer, Mr. Youdim. 24 Now, if you can take a look at 496, can you tell 25 us the date of that purchase.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
447 Youdim-direct/White
1 THE WITNESS: November 30th, of 1990. 2 Q And the customer? 3 A Again, not my handwriting, but it says Bruce Gordon. 4 Q And does it indicate the items purchased? 5 A Slack
s, shirts, total. 6 Q What is the total cost? 7 A 705, plus tax, 761. 8 Q Okay. 9 Take a look at 497, the date of that purchase. 10 A 12/11 of 1990. 11 Q And the customer? 12 A Bruce Gordon. 13 Q And what are the items purchased? 14 A Suit. 15 Q Can you tell us how much the suit cost? 16 A 845. 17 Q What else? 18 A Blazer and another blazer. 19 Q How much did the two blazers cost? 20 A 695 and 675. 21 Q And what is the total, the grand total? 22 A 2392. 23 Q Take a look at 498. What is the date of that 24 purchase? 25 A 10/8 of 1990.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
448 Youdim-direct/White
1 Q And the customer? 2 A Again, not my handwriting, but it says Bruce Gordon. 3 Q And the items purchased? 4 A Jackets, jacket, jacket, pants, ties.
5 Q And what time to time grand total for the purchases? 6 A 6535. 7 Q That's 6,535? 8 A Correct. 9 Q Take a look at 499. What is the date of that 10 purchase? 11 A November 17th, of 1990. 12 Q Does it indicate the customer? 13 A Not readable. 14 Q Okay. 15 Is there any indication underneath the customer 16 line for address, that indicates who the customer might 17 be? 18 A There is a note saying who is who. 19 Q Who is who? 20 A Uh-huh. 21 Q Can you tell us what the items purchased were? 22 A It looks like jackets. 23 Q Give us the grand total. 24 A 1452. 25 Q Mr. Youdim, let me show you
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
449 Youdim-direct/White
1 Government's Exhibit 499-A. 2 Would you take a look at that. 3 Would you tell us what that is?
4 A Certified check. 5 Q And if you look on the back, do you recognize 6 anything on the back? 7 A Yes, for deposit only, Perucci Clothing. 8 Q Do you recognize that as a check you received at 9 Perucci Clothing? 10 A It has our stamp on the back. 11 MR. WHITE: Your Honor, the government would 12 offer 499-A. 13 THE COURT: Any objection? 14 MR. TRABULUS: No. 15 THE COURT: Government's Exhibit 499-A in 16 evidence. 17 (Government's Exhibit 499-A received in 18 evidence.) 19 Q Could you read 499-A, and tell us what the date of a 20 the check is? 21 A 11/29 of 1990. 22 Q Could you tell us the amount? 23 A $1,458. 24 Q And who is the -- could you read the name upon whose 25 account is -- the check is written?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
450 Youdim-direct/White
1 A It says Who's Who Worldwide. 2 Q Read the whole thing? 3 A Who's Who Worldwide Registry, Inc. 4 Q Now, if you can look at Exhibit 500, and tell us what 5 that is -- what is the date of that transaction? 6 A 4/24 of '91. 7 Q And the customer? 8 A It looks like Bruce Gordon. 9 Q And what was purchased? 10 A Jackets and ties. 11 Q And what was the grand total? 12 A 1815. 13 Q $1,815? 14 A Correct. 15 Q Finally, Exhibit 501. That's two American Express 16 charge slips; is that correct? 17 A Yes. 18 Q Tell us the date that corresponds to the top one? 19 A Issued on 12/18 of '91. The next one is 12/23 of 20 '91. 21 Q Can you tell us the amounts for each of those slips. 22 A $3,466.57. The second one is also the same, 23 $3,466.57. 24 MR. WHITE: Your Honor, I have no further 25 questions.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
451 Youdim-direct/White
1 2 CROSS-EXAMINATION 3 BY MR. TRABULUS: 4 Q Hello. 5 Very quickly, the last two that you read, do you 6 know if they were the same purchase, both for the same 7 amount? 8 A It couldn't be for the same purchase, no. 9 MR. TRABULUS: No further questions. 10 THE COURT: You may step down. 11 Please call your next witness. 12 (Whereupon, at this time the witness left the 13 witness stand.) 14 MS. SCOTT: Your Honor, unfortunately our next 15 and last witness has not appeared. 16 THE COURT: Has not appeared? 17 You have no other witnesses here? 18 MR. WHITE: We do not. 19 THE COURT: How distressing. Everybody else in 20 the room is happy except for me. 21 MR. WHITE: That's what we were afraid of, your 22 Hono
r. 23 THE COURT: It is not good that I am unhappy. 24 It looks like, since I want to see everybody, 25 that we will be forced to take a half a day today.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
452 1 We are going to recess until Tuesday, because as 2 I told you, I have other matters on tomorrow. The weekend 3 will come then, and then we have a holiday on Monday. So 4 we will recess until Tuesday, which is, I believe, the 5 20th of January, 1998. Time goes by, at 9:30. 6 In the meantime, please do not discuss the case 7 either among yourselves or anyone else. Keep an open 8 mind. Come to no conclusions about anything. 9 Don't read any articles about this if there 10 should be. I have not seen any, but don't read any. 11 Because if you do I may have to call you in one by one and 12 question you about whether you read the articl
e. And if 13 you did, whether it would affect you in this case. We 14 don't want to have to go through that whole procedure. 15 If you see anything like this, just pass over 16 it. 17 When you come back, the courtroom will be 18 considerably smaller, because we are going to close that 19 wall. We are going to do it probably for tomorrow. And 20 it will be more cozy that way, you see. We don't need all 21 of that space there. 22 I want to wish everybody a happy holiday on 23 Monday. Enjoy the holiday. We will all meet on Tuesday 24 the 18th. 25 A JUROR: The 20th.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
453 1 THE COURT: The 20th, why do I slip all the 2 time? 3 Do you want to pick up this exhibit, Mr. White, 4 please. These are yours. 5 You can put them right under your chair, and 6 leave the
m there. 7 See you on Tuesday the 20th. 8 (Whereupon, at this time the jury leaves the 9 courtroom.) 10 THE COURT: Mr. White, while you put on a good 11 number of witnesses, we had 22 minutes to spare. We want 12 to get through with this case. You may not want to, but I 13 do. 14 MR. WHITE: I certainly do, your Honor. 15 THE COURT: Always consistent with a fair trial 16 and opportunity to be heard. But we have to move this 17 case along. And you have to have witnesses, extra 18 witnesses, more than you think are necessary, because 19 these things happen. We want to utilize all the time. We 20 have 18 people coming out of their life to come here, and 21 we want to get through with the case. 22 Now, also, we want to be punctual. 23 Now, there is a song I'm Old Fashioned. I don't 24 want to sing it for you. Some of you may not know the 25 song,
because you are too young. But I want to start on
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
454 1 time. I will not tolerate any lateness. And if it 2 continues, even for a short while, I am going to impose 3 fines. I don't want to do that. But we want to start on 4 time. 5 We have 30, 35 people waiting. You are not 6 keeping one person waiting, you are keeping a whole bunch 7 of people. So I want to be on time. 8 Also, we come back from lunch, I want to be here 9 on time. It shouldn't take you an hour to eat lunch. 10 MR. SCHOER: Judge, can I speak to that? You may 11 not be finished. But I believe part of the problem we are 12 having on the breaks, and lunchtime, there are only seven 13 phones in this courthouse that are working, pay phones, 14 and there are ten of us, plus 18 jurors, and during the 15 break -- we have busy p
ractices, your Honor knows that. 16 We have calls we have to make, and just to get back to our 17 offices to get messages. 18 In the ten minutes -- this morning I couldn't go 19 and get a phone during the ten minute break because it was 20 being used. In the afternoon I got two minutes on the 21 phone before I have to be back in here. 22 What we would like to ask collectively if your 23 Honor would ask the marshals to permit us to bring cell 24 phones into the courthouse to be able to use those. It 25 might facilitate us being on time.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
455 1 THE COURT: I will ask them. 2 MR. SCHOER: Thank you. 3 THE COURT: But whether the phones are busy or 4 not busy; whether you have a busy practice, and I hope all 5 of you do, or not, I want to start on time. 6 Now, do we have to take up any
thing, 7 Mr. Trabulus? 8 MR. TRABULUS: I would just ask the government to 9 identify the witnesses they will be calling on Tuesday. 10 MR. WHITE: I think we will have a couple of more 11 document custodians like these, and then Mr. Gordon's 12 sister, Joyce Grossman, and her husband, Dr. Richard 13 Grossman. 14 THE COURT: That's all? 15 MR. WHITE: They may take a while. 16 THE COURT: Suppose they don't take a while? Who 17 else do you have? I want to move the case along, the time 18 you estimated is too long. I don't think it will take too 19 long. 20 MR. WHITE: Judge, I have an outline of the order 21 of witnesses, I will speak to Mr. Trabulus and 22 Mr. Wallenstein, it only relates to them. I don't want to 23 take the Court's time in looking it up. 24 THE COURT: As I told you before, these people 25 will never testify in a case again durin
g their entire
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
456 1 life. The reasonable life expectancy is about 85 today, 2 isn't it? This is an infinitesimal time in their life. 3 Have them here, if they have to come back, I will direct 4 them to come back if you don't want to. 5 MR. WHITE: I agree, your Honor, we had these 6 seven or eight people waiting here most of the day as 7 well. 8 THE COURT: I made no complaints, because we 9 moved very rapidly. But have enough witnesses, I don't 10 want to lose any time. 11 MR. WHITE: I will do my best. 12 MS. SCOTT: It was my witness, your Honor. He 13 was supposed to be here and didn't show. Your comments 14 should be directed at me. 15 THE COURT: Comments are not directed at 16 anybody. I want to make sure we do a good job and move 17 along, always consistent with a
fair and full opportunity 18 to try your case. 19 We don't have to meet earlier than 9:30? Nobody 20 has problems? 21 See you at 9:30. 22 Have a nice weekend and holiday. 23 (Case on trial adjourned until 9:30 o'clock, 24 Monday, January 20th, 1998.) 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
457 1 I-N-D-E-X 2 W-I-T-N-E-S-S-E-S 3 PAGE LINE 4 F R A N K G A G L I A R D I.................. 246 1 DIRECT EXAMINATION (cont'd)....................... 246 11 5 CROSS-EXAMINATION................................. 295 23 VOIR DIRE EXAMINATION............................. 311 16 6 CROSS-EXAMINATION (cont'd)........................ 314 2 VOIR DIRE EXAMINATION............................. 318 1 7 CROSS-EXAMINATION (cont'd)........................ 321 10 CROSS-EXAMINATION................................. 331 7 8 REDIRECT EXAMINATION.......
....................... 340 9 REDIRECT EXAMINATION (cont'd)..................... 347 7 9 RECROSS-EXAMINATION............................... 363 19 RECROSS-EXAMINATION............................... 372 20 10 FURTHER REDIRECT EXAMINATION...................... 373 18 11 E D M O N D G A R A B E D I A N............... 374 19 DIRECT EXAMINATION................................ 375 5 12 CROSS-EXAMINATION................................. 404 15 REDIRECT EXAMINATION.............................. 406 21 13 P A U L H I R S H C L E I F E R............. 407 15 14 DIRECT EXAMINATION................................ 407 25 DIRECT EXAMINATION................................ 414 18 15 R O B E R T K I N G.......................... 421 19 16 DIRECT EXAMINATION................................ 422 6 17 J O A N N D E M P S E Y....................... 426 17 DIRECT EXAMINATION................................ 427 2 18 CROSS-EXAMINATION...................
.............. 431 21 19 A I D O N G H E............................. 432 10 DIRECT EXAMINATION................................ 432 19 20 F R A N C I N E G I L B E R T O............... 437 1 21 DIRECT EXAMINATION................................ 437 12 22 B E H R O U Z Y O U D I M................... 442 3 DIRECT EXAMINATION................................ 442 20 23 CROSS-EXAMINATION................................. 451 2 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
458 1 E-X-H-I-B-I-T-S 2 Government's Exhibit 421 received in evidence..... 259 20 Government's Exhibit 421-A received in evidence... 260 4 3 Government's Exhibit 423 received in evidence..... 263 23 Government's Exhibits 423-A through 423-L 4 received in evidence.............................. 264 5 Government's Exhibit 424 received in evidence..... 269 4 5 Government's Exhibit 424-A received in ev
idence... 269 13 Government's Exhibit 425 received in evidence..... 271 2 6 Government's Exhibits 425-A through 425-D received in evidence.............................. 271 24 7 Government's Exhibit 499-1-A received in evidence.......................................... 274 17 8 Government's Exhibit 426 received in evidence..... 279 16 Government's Exhibit 426-A received in evidence... 279 25 9 Government's Exhibit 428 received in evidence..... 288 20 Government's Exhibit 429 received in evidence..... 294 8 10 Government's Exhibit 409-A received in evidence... 351 15 Government's Exhibit 409 received in evidence..... 355 15 11 Government's Exhibit 416 received in evidence..... 358 25 Government's Exhibit 417 received in evidence..... 359 1 12 Government's Exhibit 764 received in evidence..... 362 22 Government's Exhibit 765 received in evidence..... 362 23 13 Government's Exhibits 430 through 482 received in evidence...........................
............ 377 18 14 Government's Exhibit 824-A received in evidence... 382 18 Government's Exhibit 441-A received in evidence... 388 12 15 Government's Exhibit 467-A received in evidence... 392 1 Government's Exhibit 474-A received in evidence... 394 24 16 Government's Exhibit 475-A received in evidence... 398 5 Government's Exhibits 825 through 834 received 17 in evidence....................................... 401 16 Government's Exhibits 504 through 514 received 18 in evidence....................................... 411 15 Government's Exhibit 483 received in evidence..... 417 7 19 Government's Exhibit 484 received in evidence..... 417 8 Government's Exhibits 521 through 522-A received 20 in evidence....................................... 424 18 Government's Exhibit 517 through 520-A received 21 in evidence....................................... 429 7 Government's Exhibit 523 received in evidence..... 434 18 22 Government's Exhibit 524 re
ceived in evidence..... 434 19 Government's Exhibit 515 received in evidence..... 439 25 23 Government's Exhibit 516 received in evidence..... 440 1 Government's Exhibits 495 through 501 received 24 in evidence....................................... 446 7 Government's Exhibit 499-A received in evidence... 449 17 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
