1205 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 26, 1998 11 - - - - - - - - - - - - - - X 9:25 o'clock a.m. 12 BEFORE: 13 HONORABLE ARTHUR D. SPATT, U.S.D.J. and a jury 14 APPEARANCES: 15 For the Government: ZACHARY W. CARTER 16 United States Attorney One Pierrepont Plaza 17 Brooklyn, New York 11201 By: RONALD G. WHITE, ESQ. 18 CECIL SCOTT, ESQ. Assistant U.S. Attorneys 19 For the Defendants: NORMAN TRABULUS, ESQ. 20 For Bruce W. Gordon 170 Old Country Road, Suite 600 21 Mineola, New York 11501 22 EDWARD P. JENKS, ESQ. For Who's Who Worldwide 23 Registry, Inc. and Sterling Who's, Who, Inc. 24 332 Willis Avenue Mineola, New York 11501 25 (cont'd)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1206 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 York, 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
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1207 1 M O R N I N G S E S S I O N 2 3 4 (Whereupon, the following takes place in the 5 absence of the jury.) 6 THE COURT: Are all the lawyers here? Are all 7 the defendants here? 8 MR. TRABULUS: Yes, here is Mr. Geduldig. 9 Mr. Reffsin just went to the bathroom -- I said Reffsin. 10 I meant Wallenstein. 11 THE COURT: So Mr. Reffsin is not here?
12 MR. DUNN: Mr. Reffsin is here, I saw him. 13 MR. NEVILLE: I saw him, your Honor. 14 THE COURT: Where is he? 15 MR. NEVILLE: He might be in the men's room. 16 THE CLERK: He said his attorney is in the men's 17 room. 18 THE COURT: All right, have a seat. 19 (Whereupon, at this time there was a pause in the 20 proceedings.) 21 THE COURT: Where is your client, 22 Mr. Wallenstein? 23 MR. WALLENSTEIN: Judge. He is here. I presume 24 that he is in the men's room. I did see him about five 25 minutes ago.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1208 1 (Whereupon, at this time there was a pause in the 2 proceedings.) 3 THE COURT: Now that everyone is here, my 4 courtroom deputy received a phone call from alternate 5 juror number one, who said that his son was ill, had 104 6 temperature,
and he was taking him to the hospital, and 7 that he will be with him in the hospital. So he asked to 8 be excused. 9 Any objection? 10 MR. DUNN: Your Honor, I didn't hear which 11 juror. 12 THE COURT: Alternate juror number one. 13 Any objection? 14 MR. DUNN: No, your Honor. 15 MR. TRABULUS: No. 16 THE COURT: All right. He is excused. 17 MR. TRABULUS: Your Honor, if I may, before the 18 jury comes in, Mr. White informed me this morning a 19 witness he was not previously going to call, was going to 20 be called today, Mr. Ackerman, and he is going to be 21 testifying immediately after the present witness. Since I 22 had not really prepared a cross-examination in detail for 23 this witness, I will ask that we have a break after his 24 direct testimony. 25 THE COURT: Very well. Just remind me.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1209 1 MR. TRABULUS: Thank you. 2 MR. WHITE: Your Honor, to make it clear, the 3 reason I had to do that, after we broke last week, I spoke 4 to Mr. Ackerman, an attorney, and I anticipated he would 5 be testifying tomorrow. His calendar is filled with court 6 appearances and other meetings, and I had to rejuggle the 7 order of witnesses. 8 9 S U Z A N N E K O N O P K A - C H O A T E , 10 called as a witness, having been previously 11 duly sworn, was examined and testified as 12 follows: 13 14 THE COURT: Were you questioning the witness, 15 Mr. Trabulus? 16 MR. TRABULUS: I think I indicated no further 17 questions, your Honor, and I am going to rest on that. 18 THE COURT: All right. 19 MR. JENKS: I will ask a few questions, your 20 Honor. 21 THE CLERK: Jury entering. 22 (Whereupon, the jury at this time entered the 23 courtroom.) 24 THE COURT: Good morning, members of the jury. 25 Please be seated.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1210 1 I see that alternate juror now number 4 finally 2 made it. Unfortunately, alternate juror number one's son 3 was very ill and had to be taken to the hospital. That's 4 why he was excused. 5 I want to thank you again for your punctuality, 6 sense of responsibility, dedication. It is certainly 7 appreciated. 8 Thanks very much. 9 Let's proceed with the cross-examination of the 10 witness Suzanne Konopka-Choate. 11 You are still under oath. You understand that? 12 THE WITNESS: Yes. 13 THE COURT: You may proceed, Mr. Jenks. 14 MR. JENKS: Thank you, your Honor. 15 16 CROSS-EXAMINATION 17 BY MR. JENKS: 18 Q
Good morning. 19 A Good morning. 20 Q You recall Mr. Trabulus asking you questions last 21 week, ma'am, about Tribute Magazine? 22 A Yes, I do. 23 Q And I think you said you joined the company Who's Who 24 Worldwide in the fall of 1993; is that correct? 25 A That's correct.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1211 Konopka-Choate-cross/Jenks
1 Q What is your educational background? 2 A I have a bachelors degree in English from Stony Brook 3 University. I have an associates degree in early child 4 education. 5 THE COURT: I don't know if that microphone is 6 on. Do you want to tap it? 7 All right, it is on, okay. 8 Q And when you joined Who's Who Worldwide, you joined 9 in the public relations department; is that right? 10 A That's correct. 11 Q And your primary function, as I understand it, was to
12 produce a magazine for the members; am I correct? 13 A That's correct. 14 Q And that magazine, would it be fair to say was a 15 benefit one would get while being a member of Who's Who? 16 A That's correct. 17 Q Now, where did you physically work? 18 A At their Lake Success office. 19 Q 1983 Marcus Avenue? 20 A Yes. 21 Q Did you at any time work at the Sterling Who's Who 22 offices at 750 Lexington Avenue? 23 A Yes, we would go in collectively, the editorial 24 staff, periodically. 25 THE COURT: Excuse me one moment.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1212 Konopka-Choate-cross/Jenks
1 (Whereupon, at this time there was a pause in the 2 proceedings.) 3 THE COURT: You may proceed. 4 Q Now, when you joined, was there a public relations 5 department already in place? 6 A Yes, there was. 7 Q And who ran the public relations department? 8 A Debra Benjamin. 9 Q And what functions did -- first of all, who is Debra 10 Benjamin? 11 A She was the executive editor of the magazine. She 12 was our boss, all of the magazine staff. 13 Q So, she was in charge, essentially, the way I 14 understand it, of the public relations departments? 15 A That's correct. 16 Q And your role in the public relations department was 17 what? 18 A Senior editor of Tribute. 19 Q All right. 20 When you had gone to work at Who's Who Worldwide 21 at 1983 Marcus Avenue, was Tribute Magazine already being 22 published, or were you involved in the first issue? 23 A It was already being published. 24 Q With respect to the magazines that Mr. Trabulus had 25 shown you, when was it that you had got there?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1213 Konopka-Choate-cross/Jenks
1 A The second issue. 2 Q Okay. 3 Would it be fair to say that a Tribute Magazine 4 was a benefit that members received for being a part of 5 the Who's Who directories? 6 A Yes, that's correct. 7 Q They were not charged for the magazine, am I correct? 8 A Not to my knowledge, no. 9 We had discussed at one point like a yearly 10 subscription fee. I don't know if that ever happened 11 though. 12 Q You are not aware -- as far as you know members were 13 not charged to receive Tribute Magazine, right? 14 A That's correct. 15 Q And it was the goal of the company to give four of 16 these magazines per year annually? 17 A That's correct. 18 Q Now, would it be fair to say that based on your 19 testimony Friday, many influential people around the world 20 were interviewed
for the magazine? 21 A That's correct. 22 Q Did every member get the magazine, ma'am? 23 A Yes, they did. 24 Q So, whether you were a one year member or a five year 25 member or a lifetime member of Who's Who, you would
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1214 Konopka-Choate-cross/Jenks
1 receive that magazine in the mail; is that correct? 2 A Yes. 3 Q As someone with experience in public relations, would 4 it be fair to say that that magazine had networking 5 benefits to members who would receive it? 6 A Yes, it did. 7 Q And in what respect would you say it had networking 8 benefits? 9 A Well, the articles that were contributed by Who's Who 10 members, they were of a benefit because they were on 11 subjects such as venture capital, or doing business in, I 12 don't know, other countries. I don't recall all the 13 articles but they were of a benefit, and that's why they 14 were written by the members to benefit other members. 15 Q There were various services provided by Who's Who 16 Worldwide that were promoted within Tribute Magazine; am I 17 correct? 18 A Yes. 19 Q Mr. Trabulus went through those with you, such as the 20 Med Jet, auto insurance, and health insurance and 21 discounted credit card; is that right? 22 A Yes. 23 Q And now, you testified about the CD-ROM that was at 24 Who's Who Worldwide; do you recall that? 25 A Uh-huh.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1215 Konopka-Choate-cross/Jenks
1 Q Tell me, what is a CD-ROM? 2 A It's a CD with a complete -- this particular CD had a 3 complete listing of our membership, sort of little 4 profiles, addresses, type of business, favorite vacation
5 place, a variety of information on each member. 6 Q Were there telephone numbers on the CD-ROM of 7 members? 8 A I don't recall. 9 Q Okay. 10 But it did have addresses and business titles? 11 A Yes. 12 Q And so forth, am I correct? 13 A Yes, it did. 14 Q By taking the CD-ROM and putting it into a computer, 15 would one member be able to contact another member? 16 A Yes. They would probably have to call information if 17 there was no phone number. But, yes, they would. 18 Q Would it be fair to say that the CD-ROM itself was a 19 valuable networking tool that a member could have access 20 to? 21 A I never used it as a networking tool, so I don't know 22 if I can say. 23 Q Well, let me ask you this: For instance, if you were 24 a member in a stockbrokerage business as a stockbroker, 25 would you be able to go through that CD-ROM and reach out
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1216 Konopka-Choate-cross/Jenks
1 to other stockbrokers? 2 A Yes. 3 Q Would you be able to reach out to certain members 4 that have a significant position in business such as vice 5 president or president? 6 A Yes, you would. 7 THE COURT: I am going to have to interrupt. 8 There is very important business going on. They are 9 building a new courthouse in Central Islip, and I have to 10 select the carpeting right now, for the courtroom and the 11 chambers. Is that right, Ms. Kelly? 12 JUDGE'S SECRETARY: That's right. 13 THE COURT: It will not take me long. 14 JUDGE'S SECRETARY: Two seconds. I like that 15 color. 16 (Whereupon, at this time there was a pause in the 17 proceedings.) 18 THE COURT: Sorry, it took longer than I thought 19 to select a carpeting for the courtroom and the chambers. 20 It took about two minutes to do it. It breaks my record, 21 normally it takes 30 seconds for me. 22 You may proceed. 23 MR. JENKS: Your Honor, may I publish these to 24 the jury? They are already in evidence, while I 25 question.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1217 Konopka-Choate-cross/Jenks
1 THE COURT: Yes. 2 (Whereupon, the exhibit/exhibits were published 3 to the jury.) 4 THE COURT: What exhibit numbers are those, 5 Mr. Jenks? 6 MR. JENKS: I will have to look at them, your 7 Honor. 8 For the record, they are 9 Defendant's Exhibits Gordon CA, Defendant's Exhibit Gordon 10 D, Defendant's Exhibit Gordon G, and 11 Defendant's Exhibit Gordon C. 12 THE COURT: Very well. 13 I think they may have seen them on Thursday, but 14 that's all right. 15 Q You testified there were two networking parties, one 16 in the summer of 1994 and one in the fall of 1994; as a 17 result? 18 A I testified I wasn't sure of the dates, but there 19 were two parties. 20 Q Those are ballpark dates when those parties took 21 place? 22 A I don't think I testified to that. I wasn't sure of 23 the dates. 24 Q But they were in 1994? 25 A I can't even be sure of that.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1218 Konopka-Choate-cross/Jenks
1 Q You don't know? 2 A Right. 3 Q You were at both of them; is that correct? 4 A Yes. 5 Q Were other members, or members of Who's Who Worldwide 6 in attendance at both of those parties? 7 A Yes. 8 Q Were they socializing at those parties? 9 A Yes, they were. 10 Q Who had planned or made arrangements for the 11 networking party? 12 A Myself, Debra Benjamin, Maggie Swendseid and Tracey 13 Colletti, at least one of them. And Tracey had left the 14 company. And she was replaced by a person by the name of 15 Linda, and I don't know her last name. 16 Q Both of those parties were held in the penthouse 17 apartment on 54th Street; is that right? 18 A That's correct. 19 Q And when you came to work at Who's Who Worldwide, you 20 said you came approximately in the fall of 1993, right? 21 A Yes. 22 Q And you strictly stayed in the public relations 23 department; am I correct? 24 A That is correct. 25 Q And you testified about the inclusion of nomination
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1219 Konopka-Choate-cross/Jenks
1 ballots inside one of the editions of Tribute Magazine? 2 A Yes. 3 Q Whose idea was it to include the nomination ballots 4 inside Tribute Magazine? 5 A I am sure Bruce's. 6 Q It was Bruce's idea? 7 A Uh-huh. 8 Q Is it true that having a nomination ballot included 9 inside Tribute Magazine, so when members received the 10 magazines they would be able to recommend and infer other 11 members for membership? 12 A Yes. 13 Q And do you know how many people responded by sending 14 back the nomination ballots? 15 A I don't know. 16 Q You have no way of knowing, correct? 17 A Correct. 18 Q Did Bruce Gordon develop the nomination ballots that 19 went inside the Tribute Magazine? 20 A He may have given us guidelines, but actually Gary 21 Kohlar and I gave us settings on that. 22 THE COURT: How do you spell Kohlar? 23 THE WITNESS: K O H L A R. 24 Q Gary Kohlar was someone who worked in the public
25 relations department; am I correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1220 Konopka-Choate-cross/Jenks
1 A No, he was the computer person. 2 Q Inside Who's Who Worldwide? 3 A That's correct. 4 Q How many people worked at the 1983 Marcus Avenue 5 Who's Who Worldwide offices while you were there from the 6 fall of 1993 up until the time that the government raided? 7 A Maybe a hundred or less. 8 Q A hundred or less? 9 A Yeah. 10 Q And when you present -- by the way, withdrawn. 11 Prior, subsequent to your testimony on Thursday 12 of last week, did you talk to anyone in the government 13 about your testimony in-between Thursday night and today? 14 A Yes, I did. 15 Q You did? And who was that? 16 A Ceci. 17 Q What was it that you and Ceci spoke about concerning 18 your testimony coming back here
on Monday? 19 A She asked me question she would potentially ask me 20 and I answered them. 21 Q Did she suggest to you anything you should say to 22 this jury? 23 A No, she did not. 24 Q Did you suggest anything you should say to the jury? 25 A I answered the questions as I will answer them today
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1221 Konopka-Choate-cross/Jenks
1 if I am asked. 2 Q Okay. 3 Were you present, ma'am, the day that the 4 government came and arrested -- 5 A Yes, I was. 6 Q -- various employees? 7 THE COURT: Excuse me. You have to wait until 8 the question is over, and then let there be a slight pause 9 before the answer. You are answering right on top of the 10 question. It makes it difficult for us to hear it and the 11 reporter to record it, so let there be a little pause.
12 Q You were present when the government had arrested 13 various individuals from Who's Who Worldwide? 14 A Yes, I was. 15 Q Where were you present, in which office? 16 A In my office. 17 Q Was it Who's Who Worldwide or Sterling Who's Who? 18 A Who's Who Worldwide. 19 Q And was that at 750 -- it was at 1983 Marcus Avenue; 20 is that correct? 21 A That's it, correct. 22 Q And the government came in and they put a lot of 23 people under arrest; is that correct? 24 A Yes. 25 Q Were you frightened when the government came?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1222 Konopka-Choate-cross/Jenks
1 A Of course. 2 Q All right. 3 Could you tell us, how did the agents behave when 4 they came to 1983 Marcus Avenue to arrest the employees? 5 A I was in my office and an agent came to the door and 6 said step away from your computer. And I really -- I 7 wasn't allowed out of the office until I was allowed to go 8 home. 9 Q And how long would you say you were there? 10 A About two hours. 11 Q In other words, you weren't free to leave; am I 12 correct? 13 A No, I wasn't free to leave. 14 Q You were not placed under arrest, am I correct? 15 A That's correct. 16 Q Were there employees taken out of the offices in 17 handcuffs by the agents? 18 A I assume they were, but I did not see it. 19 Q Was anyone in the public relations department, to 20 your knowledge, arrested? 21 A No. 22 Q Now, there came a time subsequent to this raid that 23 you testified that you went back to work at Who's Who 24 Worldwide for free, am I correct? 25 A That's correct.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1223 Konopka
-Choate-cross/Jenks
1 Q And a lot of employees went back to work at Who's Who
2 Worldwide for free, correct? 3 A Less than ten. 4 Q And these were people that you had worked with 5 before, am I correct? 6 A Correct. 7 Q How long did you go back to Who's Who Worldwide and 8 work for free? 9 A Six to eight weeks. And I don't think I was always 10 working for free. I think Mr. Gordon paid me for two 11 weeks that I was there. 12 Q Out of the six or eight weeks? 13 A Yes. 14 Q And you worked a considerable period of time without 15 any money, correct? 16 A Yes. 17 Q And would it be fair to say that you worked there 18 without any money, because you believed in what you were 19 doing at Who's Who Worldwide? 20 A Absolutely. 21 Q You felt, am I correct, that this was a legitimate 22 organization that gainfully employed some 100 people and 23 it was wrongfully put out of business, am I correct? 24 A I felt that from my -- from the knowledge that I 25 could have, we did things the way they were supposed to be
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1 done. 2 Q Okay. 3 A At that point, yes, I felt very strongly that it was 4 a good company, wrongfully charged, etcetera. 5 Q When you were working there, Mr. Gordon was the 6 president and CEO of Who's Who Worldwide, correct? 7 A That's correct. 8 Q And he was also the president and CEO of Sterling 9 Who's Who, correct? 10 A Yes. 11 Q Now, he wasn't running around from the fall of 1993 12 up until the time of the raid and thereafter with the 13 corporate purpose that members should be defrauded, was 14 he? 15 A No. 16 Q In other words, the purpose of producing Tribute 17 Magazine was to give a legitimate benefit and a book for 18 the members to use; is that correct? 19 A That's correct. 20 Q Mr. Gordon wasn't running around saying this is a 21 scam and this whole company is designed, and we intend to 22 defraud our members, was he? 23 A No. 24 Q You didn't hear people walking around in Who's Who 25 Worldwide while you were employed there saying our sole
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1225 Konopka-Choate-cross/Jenks
1 purpose here is to defraud our members who are in this 2 directory, correct? 3 A No. 4 Q And would it be fair to say that Mr. Gordon believed 5 in the directories and the membership volumes he was 6 putting out? 7 A I would guess so, yes. 8 Q Yes. 9 Tell me why you went back for free to work there
10 for a number of weeks after the raid? 11 A I am not really sure. I was very attached to the 12 magazine. I had partially created it through its 13 evolution. And I did feel at the time that the government 14 had made a mistake. 15 Q Would it be fair to say that you felt that the 16 government had overreached? 17 A Yeah. 18 Q And that the government put this corporation and this 19 business and all these people out of work. Am I correct? 20 A Yes. 21 Q And these people needed jobs who worked there, 22 including yourself? 23 A That's correct. 24 Q Now, you know the company after the raid never really 25 got off the ground again, right?
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1 A That's correct. 2 Q And you know all those people lost their jobs, right? 3 A Yes,
I do. 4 Q You know the people at Sterling Who's Who who were 5 working in Manhattan had lost their jobs as well; is that 6 right? 7 A That's correct. 8 Q They lost their job because the United States 9 government went in there and raided those companies, 10 correct, closed them down? 11 A That's true. They did close them down. But I can't 12 say that today that I believe it is the government's 13 fault. 14 Q Well, you don't know enough about it though, do you? 15 A No, I don't. 16 MR. JENKS: I have nothing further, Judge. 17 18 CROSS-EXAMINATION 19 BY MR. SCHOER: 20 Q Good morning Ms. Choate. 21 A Good morning. 22 Q Choate, right? Konopka-Choate? 23 A Whatever. 24 Q All right. 25 You indicated on direct examination that
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1 Mr. Gordon frowned upon people in different departments 2 socializing with each other; is that correct? 3 A That's correct. 4 Q And it was more than that, isn't that a fact, he 5 didn't want people in different departments to know what 6 other people were doing; is that correct? 7 A Yes. 8 Q The business was very departmentalized; is that fair 9 to say? 10 A Absolutely. Yes, it is. 11 Q All right. 12 Just so we understand, there was the department 13 that you were in; is that correct? 14 A Yes. 15 Q And I think you called that public relations; is that 16 correct? 17 A Public relations or editorial. 18 Q And at times it was called public affairs office, 19 isn't that so? 20 A I couldn't say. 21 Q Well, your boss was Debra Benjamin; is that correct? 22 A That's correct. 23 Q Do
you know what her title was? 24 A No, I don't. She was for the magazine executive 25 editor. If she had a different title beyond that I am not
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1228 Konopka-Choate-cross/Schoer
1 completely aware of it, no. 2 Q Well, let me show you just to refresh your 3 recollection -- 4 MR. SCHOER: May I, Judge? 5 THE COURT: Yes. 6 (Counsel approaches the witness stand.) 7 Q The masthead of the Tribute, I am not aware which 8 exhibit this is, but does that refresh your recollection 9 that she had another title as well? 10 A It says in the masthead, director of membership. 11 Q So, Debra Benjamin was in charge of all the 12 membership; is that correct? 13 A I don't know what her responsibilities were in 14 response to that. 15 Q Other than the Tribute Magazine, did she have any
16 other responsibilities that you are aware of? 17 A She in a large part controlled the mailings that we 18 used, the mail lists. 19 Q And when you say she controlled the lists -- 20 A Contracted with list brokers -- 21 Q Made sure the lists -- mailings went out? 22 A Yes. 23 Q Did she do statistics with respect to the mailings 24 and responses? 25 A Probably.
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1 Q Did she review the solicitation letters? 2 A Yes. 3 Q Did she change those solicitation letters? 4 A I would not know if she did. 5 Q So, she was really in charge of the whole area of 6 business that took care of mailings; is that correct? 7 A That's correct. 8 Q And when the agents came and made arrests, they 9 charged people with mail fraud; is that right?
10 A Yes. 11 Q Did they arrest Debra Benjamin? 12 A No, they did not. 13 Q Now, in addition to -- well, at times was your 14 department also called the communications department? 15 A Probably. 16 Q In fact, in Tribute, when it said to contact you, it 17 said to contact communications department for press 18 releases? 19 A We didn't tell people to contact us for press 20 releases. They were sort of filtered through the sales 21 department. If we were called communications in that 22 respect, I am not aware of it. 23 Q Were you called the communication departments with 24 respect to the Hilton Head? 25 A We may have been, yes.
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1 Q All right. 2 Now, you talked about your department, headed by 3 Debra Benjamin, in charge of membership; is that correct? 4 As well as Tribute and public relations; is that correct? 5 A Yes. 6 Q And there were other departments at Who's Who 7 Worldwide; isn't that correct? 8 A That is correct. 9 Q Can you tell us what the other departments were? 10 A There was a sales department and an administrative 11 department. 12 Q Who is the head of the administrative department? 13 A Liz Sautter, S A U T T E R. 14 Q What did the administration department do, do you 15 know? 16 A Data entry, probably invoicing, anything that had to 17 do with billings, maybe accounts payable, accounts 18 receivable at some point, I don't know. 19 Q Do you know who opened the mail when it came? 20 A Liz or Bruce. 21 Q So, was there a rule at Who's Who Worldwide that no 22 one else was supposed to open the mail other than Liz or 23 Bruce? 24 A I don't know if it was a rule, but all the mail I 25 received was unopened -- opened, excuse me.
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1 Q Previously opened by Liz or Bruce; is that correct? 2 A Yes, that's correct. 3 Q And would you say that Liz was Mr. Gordon's 4 right-hand man? 5 A Yes, I would. 6 Q And at the time that they came and did the raid was 7 Liz Sautter arrested? 8 A No. 9 Q And she was the person in charge of all the 10 invoicing; isn't that correct? 11 A Yes. 12 Q And the invoicing went out in the mail; isn't that 13 right? 14 A That's correct. 15 Q And she was in charge of mailing the directories; is 16 that right? 17 A I don't know who was responsible for that. 18 Q In any event, she collected all the mail that came in 19 and opened it? 20 A Yes. 21 Q Then you say there was a sales department; is that 22 correct? 23 A That's correct. 24 Q Did the sales department have anything to do with the 25 actual mailings of letters of solicitation?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1232 Konopka-Choate-cross/Schoer
1 A No, they didn't. 2 Q Did they have anything to do with the mailing of 3 Tribute? 4 A No. 5 Q Did they have anything to do with mailing invoices? 6 A No. 7 Q Did they have anything to do with opening the mail? 8 A Not to my knowledge, no. 9 Q Now, there were certain people at Who's Who who had 10 company cars; isn't that correct? 11 A That's correct. 12 Q And do you know who the people were who had company 13 cars? 14 A Yes. 15 Q Who is that? 16 A Liz Sautter, Debra Benjamin, Bruce Gordon. 17 Q So, Debra Benjamin had a car, and she was not 18 arrested, right? 19 A Right. 20 Q And Liz Sautter had a company car and she was not 21 arrested, right? 22 A Right. 23 Q And Mr. Gordon obviously had a company car and he was 24 arrested; isn't that so? 25 A Yes.
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1 Q And Mr. Gordon, I think you said on direct 2 examination, made decisions, the day to day decisions with 3 respect to Who's Who Worldwide; isn't that correct? 4 A Are that is correct. 5 Q And would you say that Mr. Gordon was a very hands on 6 CEO? 7 A Yes, he was. 8 Q And he made very, very -- withdrawn. 9 He made most of the decisions; isn't that 10 correct? 11 A That's correct. 12 Q As far as you know he made the decisions, or at
least 13 approved everything that went on at Who's Who Worldwide; 14 isn't that so? 15 A That's correct. 16 Q And at times Mr. Gordon became very upset; isn't that 17 so? 18 A Yes, it is. 19 Q He became upset with the sales department primarily; 20 isn't that so? 21 A I would say it was probably an equal distribution. 22 Q When you say equal distribution, equal among all the 23 different departments? 24 A Yes, in one fashion or another. 25 Q Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1234 Konopka-Choate-cross/Schoer
1 And at times did you see him get upset with the 2 salespeople because they had strayed from their 3 presentation? 4 A I don't know if I could say that. 5 Q When you did see Mr. Gordon get upset with any of the 6 people at Who's Who Worldwide, at times did he use foul
7 language? 8 A Yes. 9 Q And he got very, very mad; isn't that so? 10 A That is so. 11 Q Because he wanted things done his way; isn't that 12 right? 13 A Yes, correct. 14 Q Now, do you know Tara? 15 A Yes, I do. 16 Q And did you know Tara's last name? 17 A Garboski. 18 Q Did you know that was her last name while you were 19 working there at Who's Who? 20 A I think I did, yes. 21 Q At the office, though, she used a different name; 22 isn't that so? 23 A That is. 24 Q Do you know what that different name was? 25 A I believe it was Green.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1235 Konopka-Choate-cross/Schoer
1 Q Okay. 2 Now, when you prepared the Tribute Magazine, you 3 listed various people on the masthead, what we call the 4 masthead, right? I am not familiar with that type of 5 language, but it is a masthead, right? 6 A Yes, it is. 7 Q Perhaps I can have you look at one if one of the 8 jurors -- 9 (Magazine handed to the witness.) 10 Q Now, in the masthead, you listed Tara as Tara Green; 11 isn't that so? 12 A Yes. 13 Q You knew that was not her name, right? 14 A Yes. 15 Q And did you have any intent to deceive anyone by 16 listing her name as Tara Green on this masthead? 17 A No. 18 Q With respect to the Tribute in general, did you have 19 any intent to deceive anyone with respect to anything put 20 in this? 21 A No. 22 Q In any of the Tribute magazines? 23 A No. 24 Q You believed the things put in the Tribute magazines 25 to be true; isn't that so?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1236 Konopka-Choate-cross/Schoer
1 A Yes. 2 Q And you believed you were providing a service for the 3 members; isn't that so? 4 A Yes. 5 Q Now, in this masthead you listed Tara Green, Tara 6 Garboski as a membership group director; is that right? 7 A Yes. 8 Q There were other membership group directors; isn't 9 that so? 10 A Yes. 11 Q Four or five, depending on the time period, isn't 12 that so? 13 A Yes. 14 Q And there were group directors at Who's Who Worldwide 15 and Sterling; isn't that so? 16 A Yes. 17 Q Part of Tara's job was to listen to the salespeople; 18 is that right? 19 A I was aware of that, yes. 20 Q And you were aware that she listened, that there was 21 some sort of recording -- withdrawn. 22 You were aware there was some means 23 electronically whereby she could listen to what the 24 salespeople were saying? 25
A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1237 Konopka-Choate-cross/Schoer
1 Q And in addition, Mr. Gordon had the same ability; 2 isn't that correct? 3 A I believe so, yes. 4 Q Were you aware of the fact that Tara fired people 5 because they strayed from the presentation? 6 A I wouldn't have been aware of that, no. 7 Q Okay. 8 Were you aware of the fact that Mr. Gordon had 9 fired people because they strayed from the presentation? 10 A I wouldn't necessarily know that, unless maybe I 11 heard it. 12 Q Well, did you hear it? 13 A I couldn't really say. 14 Q Okay. 15 When members complain, what department did they 16 complain to? 17 A A few may have come across our desk. I can't really 18 say whether they did or didn't. The members we spoke to 19 really did not have complaints. They were happy members. 20 Q Okay. 21 Most of the members you spoke to were really
22 happy; is that right? 23 A Yes, most of them. 24 Q They believed they were getting something of value; 25 isn't that so?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1238 Konopka-Choate-cross/Schoer
1 A Yes. 2 Q And they wrote letters saying they were happy with 3 the benefits being provided to them. Isn't that so? 4 A Yes. 5 Q How many letters would you get on say a monthly 6 basis? 7 A I couldn't tell you. I don't know. 8 Q More than 50? 9 A Honestly, I just don't know. I don't have a 10 recollection of the number. They wouldn't have 11 necessarily all have come to me. So I couldn't be able 12 to -- they would have come to -- I guess to the office and 13 then distributed. 14 Q Okay. 15 Some of those
letters ended up in the Tribute; 16 isn't that correct? 17 A Yes. 18 Q And in the Tribute people said things like I have 19 been a member for a couple of months now, and I am 20 delighted. I spoke highly of the organization to several 21 professionals or CEOs located in my city? 22 MR. LEE: Your Honor, excuse me. May I have a 23 clarification as to which exhibit Mr. Schoer is referring 24 to when he is reading this, please? 25 THE COURT: Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1239 Konopka-Choate-cross/Schoer
1 MR. SCHOER: It is the exhibit that is in front 2 of her right now. This is my copy. 3 Q It is this one with the people on it? 4 A Yes. 5 Q Which is it? 6 A Gordon-C. 7 Q Gordon-C. Thank you. 8 In addition to the letters you received, you 9 spoke to a lot of members; is that correct? 10 A Yes. 11 Q And the members you spoke to were also happy with the 12 benefits they were receiving? 13 A Yes. 14 Q And they believed there was some value in being a 15 member of Who's Who Worldwide? 16 A Yes. 17 Q Now, these magazines, were you involved in the cost 18 and expense of preparing them? 19 A No, I am not specifically. 20 Q Do you have any idea what the cost of a magazine like 21 that would be to produce? 22 A I think we estimated at one point maybe $500,000 a 23 year, given salary and expenses. 24 Q That was a $500,000 benefit you were giving to 25 members without any cost; isn't that right?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1240 Konopka-Choate-cross/Schoer
1 A Yes. 2 Q Now, in addition to giving those magazines to 3 members, the staff received copies of them; isn't
that 4 correct? 5 A Yes, they did. 6 Q And in particular the sales staff received copies of 7 those Tributes; isn't that so? 8 A Yes. 9 Q And the things in the Tribute, which you believed to 10 be true, the sales staff read about and they believed to 11 be true; isn't that so? 12 A Yes. 13 Q Now, you indicated on direct examination that there 14 were some press releases given to members which were free; 15 is that correct? 16 A I believe it was part of their package, membership 17 package. 18 Q All right. 19 Would that be something, similar to this type of 20 document? 21 (Handed to the witness.) 22 A Yes, it would be. 23 MR. SCHOER: Does the Court wish us to mark it 24 separately with respect to each defendant? 25 THE COURT: No. Each defendant would be marked
HARRY RAPAPORT, CSR, CP, CM OFFICIAL
COURT REPORTER 1241 Konopka-Choate-cross/Schoer
1 consecutively as to each letter. 2 Do you have a sheet letting you know how I wish 3 the exhibits to be marked? 4 MR. SCHOER: No, your Honor. 5 (Sheets distributed.) 6 THE COURT: Those are the ways I wish the 7 letters -- the exhibits to be marked pursuant to the 8 alphabet. 9 MR. SCHOER: I will give it out to counsel. 10 I will offer Defendant's Exhibit I in evidence. 11 THE COURT: Any objection? 12 MR. WHITE: A brief voir dire, your Honor? 13 THE COURT: Yes. What is it? 14 MR. SCHOER: A sample press release. 15 16 VOIR DIRE EXAMINATION 17 BY MR. WHITE: 18 Q Ms. Konopka-Choate, have you seen this document 19 before? 20 A Yes. I have. 21 MR. WHITE: Then I have no objection, your 22 Honor. 23 THE COURT: Defendant's Exhibit I for Item, in
24 evidence. 25 (Defendant's Exhibit I received in evidence.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1242 Konopka-Choate-cross/Schoer
1 2 CROSS-EXAMINATION (cont'd) 3 BY MR. SCHOER: 4 Q Defendant's Exhibit I is an example of the free press 5 release sent with the packet when someone else became a 6 member; isn't that correct? 7 A I can't recall. I know we used them as an outline 8 for just a standard press release, a one time thing. And 9 that's the outline we used. I can't recall if we sent 10 them out. 11 Q I think you said something about receiving it in a 12 membership packet? 13 A No. As part of a membership -- as part of a 14 membership. 15 Q Okay. 16 A Depending on the level of membership and the level 17 purchased, they would receive some public relations type 18 purchase
-- 19 Q In addition there were public relations services 20 which could be purchased; is that correct? 21 A Yes, there were. 22 Q I show you what is marked as Defendant's Exhibit J 23 for Identification, and ask you if you are familiar with 24 that document. 25 (Handed to the witness.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1243 Konopka-Choate-cross/Schoer
1 A Yes, I am. 2 Q That's a list of the benefits that were available to 3 members; is that correct? 4 A Yes, it is. 5 Q And at some point that document was sent to members 6 with respect to their benefits; isn't that so? 7 A I didn't send it out, so I wouldn't know if it was 8 sent to them on a regular basis or anything. 9 Q On the second page there is a whole list of public 10 relations type services that were being offered; isn't 11 that correct? 12 A Yes. 13 Q And were you the -- were you one of the people 14 involved in providing those public relations services? 15 A Yes, I was. 16 MR. SCHOER: Your Honor, at this time I would 17 offer Defendant's Exhibit J. 18 MR. WHITE: Can I just look at it? 19 (Counsel confer.) 20 MR. WHITE: No objection from the government. 21 THE COURT: Defendant's Exhibit J for Jack, in 22 evidence. 23 (Defendant's Exhibit J received in evidence.) 24 Q We talked about some of the other benefits that 25 members had.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1244 Konopka-Choate-cross/Schoer
1 In the Tribute Magazine, you listed those 2 benefits; isn't that correct? 3 A Yes. 4 Q And there was a benefit that we have not discussed 5 yet, one that was called the Who's Who Worldwide Executive 6 Club Gold Portfolio. Are you familiar with that? 7 A No, not specifically. 8 Q Okay. 9 That was the benefit where members would receive 10 preferred rates in a money market account and a 11 certificate of deposit? 12 A I am not familiar with that at all. 13 Q Okay. 14 Looking at the Tribute that is in front of you 15 with respect to the benefits, do you see that listed as 16 one of the benefits? 17 A You are talking about the MBNA? 18 Q No. 19 A What page is it? 37. There is a wheel, a ferris 20 wheel? 21 Q No -- yes. 22 A Okay. 23 Q The ferris wheel. 24 A I knew this to be just a credit card account. I 25 didn't know the specifics of it.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1245 Konopka-Choate-cross/Schoer
1 Q Well, on page, looking at the same document that you 2 have in front of
you, on page 7, the third document, the 3 third column down, the third item down, I am sorry, it 4 talks about the Gold portfolio; is that correct? 5 A Yes. 6 Q And that's separate from the Gold Mastercard; is that 7 right? 8 A Listed separately, yes. 9 Q And talks about certificates of deposits and money 10 market at preferred rates; is that so? 11 A Yes, it does. 12 Q Further down in that column, there is a benefit 13 relating to people interested in doing business in Russia, 14 China or Thailand; isn't that correct? 15 A Yes. 16 Q And the contact with respect to the Russian business 17 was the Itar-Tass that you talked about? 18 A Yes. 19 Q And also, there was a contact in China called Hyde, 20 H Y D E, International; is that correct? 21 A Yes. 22 Q And there was also a Thailand Who's Who, which had 23 some affiliation with Who's Who Worldwide; isn't that 24 correct? 25 A That's what it says here, yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1246 Konopka-Choate-cross/Schoer
1 Q And when these things were placed in the Tribute, you 2 believed them to be true; is that right? 3 A Yes. 4 Q And you believed that those were in fact benefits 5 provided to members? 6 A That's correct. 7 Q That they could take advantage of if they wanted to 8 take advantage of them; is that correct? 9 A Yes. 10 Q Is it fair to say that some members would take 11 advantage of some benefits, and other members would not 12 take advantage of the same benefits; isn't that so? 13 A Yes. 14 Q And you provided the benefits to all the members; is 15 that right? 16 A Yes, that's correct. 17 Q You talked yesterday about a survey in one of the
18 Tributes; is that correct; is that correct? 19 A Yes. 20 Q And that survey was attached to the Tribute, and you 21 asked people to return it; is that correct? 22 A Yes. 23 Q In fact, it is the same Tribute that you have in 24 front of you; is that right? 25 A I am looking.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1247 Konopka-Choate-cross/Schoer
1 Q All right. 2 It is page 24: 3 A Yes. 4 Q And that survey, did you receive responses? 5 A Yes, we did. 6 Q Do you have any idea how many responses you received? 7 A I would say maybe about a thousand, maybe a little 8 more. 9 Q And the idea was to take those responses and to use 10 them to provide new benefits to members; is that so? 11 A Yes. 12 Q And to provide some direction with respect to the 13 Tribute Magazine?
14 A Yes, that's correct. 15 Q And if someone responded, it says on here that they 16 would receive a free gift; is that correct? 17 A That's correct, yes, it is. 18 Q Do you know what the gift was that they were to 19 receive? 20 A I think it may have been a leather -- something like 21 a little leather note pad. 22 Q And did people get that? 23 A Yes, they did. 24 Q And there was a whole series leather items that were 25 offered by Who's Who Worldwide; is that correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1248 Konopka-Choate-cross/Schoer
1 A That's correct. 2 Q And people purchased those; isn't that so? 3 A Yes, it is. 4 Q And there were other offers -- offers for people, a 5 car medallion to put on your car; is that right? 6 A Yes. 7 Q And members purchased those; is that right? 8 A Yes, I believe they did, but it was not a function of 9 ours. 10 Q Okay. 11 But members purchased those items because they 12 believed those items had some value to them; isn't that 13 so? 14 A I don't know why they would purchase them. 15 Q Okay. 16 MR. SCHOER: May I have a second, please, your 17 Honor? 18 THE COURT: Yes. 19 (Whereupon, at this time there was a pause in the 20 proceedings.) 21 Q Now, looking at that -- let's look at volume 2, 22 spring 1994. 23 A Okay. 24 Q Which is Exhibit -- 25 A Gordon G.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1249 Konopka-Choate-cross/Schoer
1 Q Gordon-G, thank you. 2 There is a message from Mr. Gordon, the CEO and 3 publisher; isn't that correct? 4 A Yes. 5 Q On page 2? 6 A Yes. 7 Q And at the bottom of that
message there is a P S; 8 isn't that right? 9 A Yes. 10 Q And can you read to the jury that P S. 11 A Our organization is growing rapidly both domestically 12 and internationally. Who's Who -- 13 THE COURT: You have to slow down when you read. 14 Do you want to try it again, please? 15 THE WITNESS: Our organization is growing rapidly 16 both domestically and internationally. Who's Who 17 Executive Club reflects our globalizm with expanded 18 services and privileges. 19 Q Did you believe that to be true when you sent out 20 this Tribute Magazine to members? 21 A Yes. 22 Q You weren't trying to deceive any members with 23 respect to that, were you? 24 A No. 25 Q Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1250 Konopka-Choate-cross/Schoer
1 I am looking at page 7. There is a header
2 saying, Who's Who Executive Club business center opens its 3 doors, on the second column. 4 A Yes. 5 Q Can you tell us what that is about? 6 A That's about use of the Sterling offices for its 7 conference facilities or fax facilities, general business 8 facilities. There were a lot of conference rooms on those 9 premises. 10 Q And it talks about four private meetings, 11 accommodations from two to 15 people, food services, 12 catering; is that correct? 13 A Yes. 14 Q And did you believe that that service was being 15 provided to members? 16 A Yes. 17 Q And in fact was available to members? 18 A Yes. 19 Q In fact, you had been to the Lexington Avenue 20 location; is that correct? 21 A Yes. 22 Q And you saw those facilities; is that correct? 23 A Yes. 24 Q And you were not intending to fool anyone when you
25 put that in the Tribute Magazine that something in fact
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1251 Konopka-Choate-cross/Schoer
1 available for members, were you? 2 A No. 3 Q Let's look at another one that you were looking at 4 before, Gordon-C. 5 A Thanks. 6 Q And I will ask you to look at page 22. 7 That's a member profile of a senior 8 correspondence for Hard Copy; is that correct? 9 A Yes. 10 Q And Hard Copy is one of those television 11 journalist -- journalism shows? 12 A Yes, it is. 13 Q It is called Hard Copy because they take on hard 14 things at times; is that right? 15 A Yes. 16 Q And she was a member of Who's Who Worldwide? 17 A Or Sterling. 18 Q Or Sterling. 19 You weren't trying to hide anything from Hard 20 Copy about the business of Who's Who Worldwide, were you? 21 A No. 22 Q You weren't trying to deceive that member or any 23 other member from the business of Who's Who Worldwide, 24 were you? 25 A No.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1252 Konopka-Choate-cross/Schoer
1 Q And if you were trying to deceive someone, you 2 definitely would not go out of your way to find someone 3 from hard copy, would you? 4 A No. 5 Q Looking at page 31 of the same exhibit. There is an 6 advertisement there concerning the Tribute Magazine; is 7 that right? 8 A Yes. 9 Q And they are asking for people who are interested in 10 advertising in Tribute, to contact someone called the 11 Coppola, C O P P O L A, Group; is that correct? 12 A That is. 13 Q At the beginning Who's Who Worldwide was doing -- was 14 collecting its own advertisements; is that right? 1
5 A Yes, it is. 16 Q For the Tribute Magazine? 17 A Yes. 18 Q And after a while, this Coppola Group took over that 19 function; is that correct? 20 A Yes. 21 Q And this ad, did you have any part in preparing this 22 ad? 23 A Yes. I probably typeset it. 24 Q When you typeset this and it said which quarterly 25 magazine is read only by top business leaders, did you
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1253 Konopka-Choate-cross/Schoer
1 believe that not to be true? 2 A No, I believed it was true. 3 Q And you weren't trying to deceive anyone when you put 4 that in the magazine, right? 5 A No. 6 Q By the way, the answer to that question is Tribute, 7 that's the quarterly magazine read only by top business 8 people, right? 9 A Yes. 10 Q Now, looking at page 43 of that, that's a section
11 called: Member Spotlights; is that correct? 12 A Yes, it is. 13 Q And some of those people that are spotlighted in 14 those member spotlights, are people who were not in 15 Fortune 500 companies; is that right? 16 A That's correct. 17 Q And they were people who were starting their own 18 businesses; is that right? 19 A Yes, it is. 20 Q They were presidents of their own businesses; is that 21 right? 22 A Yes. 23 Q And they provided services like design, graphic 24 design or restaurant services, right? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1254 Konopka-Choate-cross/Schoer
1 Q And gifts? 2 A Yes. 3 Q Those kind of things that executives could purchase, 4 right? 5 A Yes. 6 Q You believed those members to be qualified members of 7 Who's Who? 8 A
I didn't determine qualification. 9 Q Did you ever interview -- did you interview the 10 people to put in the spotlight? 11 A No, some of them actually by -- Vi, V I, Harrington, 12 H A R R I N G T O N, she submitted practically an entire 13 portfolio and wanted very much to be profiled. 14 Q And of these people really wanted to be profiled 15 because they saw value in being profiled; is that right? 16 A Yes. 17 Q Vi Harrington was the director of the Culinary 18 Institute of Louisiana; is that right? 19 A Yes. 20 Q And she wanted to be profiled here because she felt 21 it would be good for her business; isn't that right? 22 A I couldn't tell you why. 23 Q Okay. 24 And other people who were in the spotlight. 25 Those were people who were interviewed?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1255 Konopka-Choate-cross/Schoer
1 A They either interviewed, were interviewed, excuse me, 2 or submitted portfolios from which we wrote the 3 spotlights. 4 Q And you believed that these spotlights were of 5 interest to members and perhaps would provide some sort of 6 networking basis for the people who were profiled; isn't 7 that correct? 8 A Yes. 9 Q And you believed in all of the profiles that you did, 10 that they would provide networking for the people who were 11 profiled; is that so? 12 A I don't know if that was the intention of the 13 profiles. 14 Q Not necessarily the intention, but a result of? 15 A It could possibly be a result of the profile, yes. 16 Q In fact, you received letters from people who were 17 profiled in prior magazines, where they said as a result 18 of the profile I received one call, two calls, four calls; 19 isn't that right?
20 A Yes, that's correct. 21 Q And they were happy about being profiled and then 22 receiving calls that related to their business; is that 23 so? 24 A Yes. 25 Q Would you now look at volume number five.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1256 Konopka-Choate-cross/Schoer
1 A Gordon-D. 2 Q Yes, Gordon-D. 3 Looking at page 4, it is another ad from the 4 Coppola Group; is that correct? 5 A Yes. 6 Q And did you have any part in preparing that ad? 7 A None, other than maybe the placement of it, or the 8 choice of color that was used. 9 Q Where it says on the top, fact, Who's Who Executive 10 Club members are top CEOs, presidents, chairmen and CFOs 11 of major corporations. 12 Did you believe that to be true? 13 A I don't think I ever thought about it. 14 Q You weren't intending to deceive anyone when that was 15 placed in the Tribute Magazine, were you? 16 A No. 17 Q Now, there came a time you said you went to certain 18 cocktail parties; is that correct? 19 A Yes. 20 Q And there were two cocktail parties at the penthouse 21 for members? 22 A That's correct. 23 Q You were part of that group which chose which members 24 to invite? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1257 Konopka-Choate-cross/Schoer
1 Q And you were also present at the cocktail parties? 2 A Yes, I was. 3 Q Was Tara Garboski present at any of the cocktail 4 parties? 5 A No, she was not. 6 Q At any time while you were working at Who's Who 7 Worldwide, did you have any idea about Mr. Gordon and his 8 finances? 9 A None. 10 Q Did you have any idea about the finances of the
11 companies? 12 A None. 13 Q There came a time when, when you were in court in May 14 of 1994; is that correct, with respect to a hearing in a 15 bankruptcy proceeding? 16 A No, I wasn't present. 17 Q You weren't present in the courtroom? 18 A No, I was not. 19 Q So, you didn't hear what other people had testified 20 to with respect to that that day? 21 A I don't think so, no. 22 Q Okay. 23 Were you involved in the preparation of any 24 affidavits that Ms. Benjamin may have signed? 25 A No, I wasn't.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1258 Konopka-Choate-cross/Schoer
1 Q Or Ms. Swendseid? 2 A No. 3 Q She was in your department? 4 A The managing editor of Tribute. 5 Q You were not involved in the preparation of any 6 affidavit she may have signed? 7 A No. 8
Q Were you involved in the preparation of any 9 statistical analysis of the CD-ROM? 10 A No, I don't believe I was. 11 Q Could you have been? 12 A I believe it is possible, but I don't believe I had 13 anything to do with that. 14 Q Do you know whether there was any statistical 15 analysis done with respect to how many presidents, how 16 many vice presidents, how many CEOs were included on the 17 CD-ROM? 18 A I recall something, and probably Debra Benjamin would 19 have done that. 20 Q I am going to show you what I have marked as 21 Defendant's Exhibit K for Identification. 22 (Handed to the witness.) 23 Q Are you familiar with that document? 24 A I don't think so, no. 25 Q Let's look at this last Tribute Magazine, the one
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1259 Konopka-Choate-cross/Schoer
1 with the lady at the computer. 2 A Uh-huh. 3 Q What exhibit number is that? 4 A Gordon-F. 5 Q Thank you. 6 Looking at, I believe it is page 3. 7 (Whereupon, at this time there was a pause in the 8 proceedings.) 9 Q That's an ad for the CD-ROM? 10 A Yes, it is. 11 Q And did you have any involvement in the preparation 12 of that ad? 13 A No. We had an artist who was responsible for this 14 ad. 15 Q The ad indicates that the CD-ROM included 57,000 plus 16 membership roster of top decision makers; is that correct? 17 A Yes. 18 Q Did you believe that to be true? 19 A I don't know if I ever thought about it. 20 Q Well, when that was placed in the Tribute you didn't 21 intend to deceive anyone, did you? 22 A No. 23 Q That ad also indicates that the CD-ROM contains 24 information that is not available from any other
single 25 source. Did you believe that to be true?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1260 Konopka-Choate-cross/Schoer
1 A Yes. 2 Q You didn't intend to deceive anyone when that was 3 placed in the Tribute Magazine, did you? 4 A No. 5 Q The ad also indicates that Who's Who Executive Club 6 is executive networking at its best. Do you see that? 7 A Uh-huh. 8 Q Did you believe that to be true? 9 A Again, I don't know that I ever thought about it. 10 Q But you didn't intend to deceive anyone with respect 11 to that statement, did you? 12 A No. 13 Q Looking at the ad several pages later concerning the 14 Hilton Head conference -- 15 A Uh-huh. 16 Q -- that indicates that this is a golf or tennis 17 tournament, and you or members would be able to network 18 with other members; isn't that so?
19 A Yes. 20 Q And in fact, the weekend was called network tee and 21 tennis; is that right? 22 A Yes. 23 Q And did you believe that to be true, that members 24 would be able to network with other members if they went 25 on this trip?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1261 Konopka-Choate-cross/Schoer
1 A Yes. 2 Q You didn't intend to deceive anyone with respect to 3 that when you placed that in the Tribute, did you? 4 A No. 5 Q Looking at the ad concerning the Advantage calling 6 card. Do you have that one? 7 A Uh-huh. 8 Q That ad indicates that Who's Who Executive Club group 9 strength help control a major office expense. 10 Do you see that? 11 A Yes. 12 Q Did you believe that to be true? 13 A Yes. 14 Q You weren't trying to deceive anyone with respect to 15
that, right? 16 A No. 17 Q On the next page there is an ad for Airborne 18 Express. And that ad indicates, using the buying power of 19 all our members, we have developed a program that delivers 20 significant savings. 21 Did you believe that to be true? 22 A Yes. 23 Q You weren't trying to fool or deceive anyone with 24 respect to that statement, were you? 25 A No.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1262 Konopka-Choate-cross/Schoer
1 Q Now, go to page 33. 2 On page 33 there is a schedule of advertising 3 rates for the Tribute Magazine; isn't that correct? 4 A Uh-huh. 5 Q And that was before the Coppola Group was involved? 6 A I don't know when they became involved. 7 Q Okay. 8 But this doesn't mention the name "Coppola 9 Group?" 10 A Right. 11 Q And with respect to this ad, it indicates that you 12 were planning issues in the future; is that correct? 13 A Yes. 14 Q And as far as you were concerned, this company was 15 going to stay in business. You were going to provide the 16 Tribute as a membership benefit for many, many, many 17 years; isn't that right? 18 A Yes. 19 Q And you were planning to do that; isn't that right? 20 A Yes, that is. 21 Q And other people at Who's Who Worldwide? 22 A Yes. 23 Q And, in fact, you were taking ads for issues out into 24 1996; isn't that so? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1263 Konopka-Choate-cross/Schoer
1 Q According to this, winter of 1996. 2 A That's correct. 3 Q And you were not intending to deceive anyone by 4 placing the ad in the Tribute Magazine; it was your intent 5 to prepare a Tribute to
the future; is that correct? 6 A Yes, it was. 7 Q And looking to the back page, it is an advertisement 8 for Cadillac? 9 A Yes. 10 Q It indicates in there that Cadillac is an oasis of 11 comfort and serenity? 12 A Yes. 13 Q That's advertisement, isn't it? 14 A Yes. 15 Q It is puffing, right? 16 A Yes. 17 Q You don't believe when you read this ad for Cadillac, 18 that Cadillac is really an oasis for comfort and serenity, 19 do you? 20 A No. 21 Q That is not what causes you to purchase a Cadillac, 22 is it? 23 A I should hope not. 24 Q Okay. 25 It is advertising, right?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1264 Konopka-Choate-cross/Schoer
1 A Yes. 2 Q It is puffery, right? Okay. 3 (No response.) 4 Q Looking at one more ad, there is an ad for Who's Who 5 watches? 6 A In the same issue? 7 Q Yes. Opposite page 30, or page 30. 8 A Okay. 9 Q That ad indicates that these watches make a powerful 10 statement -- make a powerful statement with the Who's Who 11 Executive Club collection timepieces, right? 12 A Yes. 13 Q That's advertising, right? 14 A Yes. 15 Q It is puffery, right? 16 A Sure, yes. 17 Q You can't make a powerful statement by wearing a 18 watch, can you? 19 A No. 20 Q You didn't intend to deceive anyone when you put in 21 that advertising, did you? 22 A No. 23 Q You didn't intend to deceive members when you offered 24 this service; isn't that right? 25 A That's right.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1265 Konopka-Choate-cross/Schoer
1 Q The ability to buy a watch, right? 2 A Right.
3 Q Then it goes on to say that each watch is not only 4 functional, but truly a work of art. 5 Did you believe that to be true? 6 A No, not necessarily. 7 Q Okay. 8 It is puffery, right? 9 A Yes. 10 Q It is advertising, right? 11 A Yes. 12 Q It is institutionalized lying? That's what 13 advertising is in a way, right? 14 A Sure. 15 Q Okay. 16 So, when someone reads this, they don't 17 necessarily believe that this watch is truly a work of 18 art, right? 19 A I hope not. 20 Q So, you don't intend to deceive anyone when you make 21 this kind of representation; isn't that so? 22 A That is correct. 23 MR. SCHOER: I have no further questions. 24 THE COURT: Anybody else? 25 MR. NELSON: May I inquire, Judge?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1266 Konopka-Choate-cross/Schoer
1 THE COURT: Yes. 2 3 CROSS-EXAMINATION 4 BY MR. NELSON:
5 Q Good morning, Ms. Konopka-Choate. 6 A Good morning. 7 Q My name is Alan Nelson, I represent Frank Osman, I 8 believe you know him by the name of Frank Martin sitting 9 in the corner. Do you know Mr. Martin? 10 A Yes, I do. 11 Q I believe you testified that you became -- came to 12 become employed at Who's Who Worldwide in approximately 13 the fall of 1993; is that correct? 14 A Yes. 15 Q Now, when you came to work at Who's Who Worldwide, am 16 I correct that Mr. Martin was not working at Who's Who 17 Worldwide? 18 A That's correct. 19 Q And when you first came to work at Who's Who 20 Worldwide, am I correct that there was already one 21 addition of Tribute that had already been published and 22 released? 23 A Published, not released. It was in the blues, which 24 is a final proofing stage. 25 Q And that was eventually released and disseminated to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1267 Konopka-Choate-cross/Nelson
1 the various different members of the organization; is that 2 right? 3 A That's correct, uh-huh. 4 Q And you continued to work on the Tribute Magazine 5 until the company was closed down; is that correct? 6 A Yes. 7 Q In total there were five volumes of Who's Who 8 Worldwide, the Tribute Magazine which was published; is 9 that right? 10 A Yes. 11 Q And the second volume, the first one you worked on, I 12 would like you to turn your attention to that. 13 If you turn to page 2, there is a masthead there 14 listing the various different employees who are working at 15 the company? 16 A Yes. 17 Q And there is a listing there of people who would be 18 known as in the sales department, as membership group 19 leaders; is that correct? 20 A Yes. 21 Q And Mr. Martin is not listed in that section; is that 22 correct? 23 A Yes, that's correct. 24 Q Because he wasn't working at the company at that 25 point in time?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1268 Konopka-Choate-cross/Nelson
1 A That's correct. 2 Q How many other group leaders are listed in that 3 edition? 4 A Six. 5 Q And I would like to turn your attention to the next 6 volume, and I believe that is volume three. 7 A Yes. 8 Q And in the second page of the masthead, is Mr. Martin 9 there listed as a group leader? 10 A No. 11 Q How many group leaders are listed there? 12 A Four. 13 Q I would like to turn your attention
now to the third 14 edition of Who's Who. 15 A Fourth. 16 Q Fourth edition, I apologize, of the Tribute Magazine. 17 Is Mr. Martin listed in that edition? 18 A No, he is not. 19 Q How many group managers were there in the fourth 20 edition of Tribute Magazine? 21 A Four -- five, excuse me, five. 22 Q Now, the Tribute Magazine in front of you, the fourth 23 edition, that would have been the fall 1994 edition; is 24 that correct? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1269 Konopka-Choate-cross/Nelson
1 Q So as of the fall of 1994 there would have been four 2 separate editions of Tribute Magazine which had been 3 disseminated to the various different members of Who's Who 4 Worldwide; is that correct? 5 A Yes. 6 Q And Mr. Schoer and other counsel has gone over with 7 you the various different details of the contents of the 8 different Tribute magazines. I will not belabor that 9 month in any great detail at this point. 10 Do you recall when Mr. Martin first came to work 11 at Who's Who Worldwide while you are employed there? 12 A No, I am I don't recall. 13 Q I would like to turn your attention to the last 14 Tribute, the fifth edition. Was he listed in the masthead 15 in that edition? 16 A Yes, he is. 17 Q So, is it fair to say that he came to work at Who's 18 Who Worldwide sometime between the fall of 1994, and I 19 guess the winter of 1995; is that right? 20 A Yes. 21 Q Did each of the four Tribute magazines, the first 22 four Tribute magazines contain a page with a nomination 23 request that could be sent via members for other people to 24 become members of Who's Who Worldwide? 25 A I don't recall if they each did. I have seen it in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1270 Konopka-Choate-cross/Nelson
1 two, so I will just look quickly. 2 I think just two. 3 Q Approximately how many copies of the Tribute Magazine 4 were disseminated with each edition? 5 A I think about 75,000. 6 Q And am I correct that the nomination ballots ask for 7 members, or give the members the benefit of nominating at 8 least two people? 9 A Yes, I do. 10 Q And as of the time that Mr. Martin came to work at 11 Who's Who Worldwide, there at least existed the ability 12 for anywhere in excess of 150,000 ballots for nominations 13 to come in from existing members; is that correct? 14 A Yes. 15 Q Now, as of the time that Mr. Martin came to work for 16 the company, I believe it was your testimony that you felt 17 that the Tribute Magazine was a publication which 18 accurately reflected the policies and memberships of Who's 19 Who Worldwide; is that correct? 20 A Yes. 21 Q And you truly believed in the contents of the 22 publication itself; is that correct? 23 A Yes. 24 Q And once Mr. Martin came to work for Who's Who 25 Worldwide did you have any discussions with him as to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1271 Konopka-Choate-cross/Nelson
1 whether or not he had read the publication that you had 2 prepared prior to his coming to the company? 3 A No, I don't think so. 4 Q You personally felt that the magazine accurately 5 reflected all the information relative to the company in 6 an accurate matter; is that right? 7 A Uh-huh. 8 THE COURT: Do you mean yes? 9 THE WITNESS: Yes. 10 Q If Mr. Martin had read the magazine prior to his 11 return, he would have had the benefit of seeing the 12 various different membership benefits set forth in 13 policies of the company; is that correct? 14 A Yes. 15 Q Are you aware of how many nomination ballots were 16 actually received from Who's Who Worldwide -- from members 17 by Who's Who Worldwide? 18 A I am not aware. 19 Q All right. 20 Could it be fair to say that part of the reason 21 why was as a result of the policy that was implemented by 22 Mr. Gordon prohibiting fraternization of members in the 23 different departments of the company? 24 A While that may be true, I think it had more to do 25 with the fact that it wasn't really within my job
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1272 Konopka-Choate-cross/Nelson
1 responsibilities to know. 2 Q As a result of that policy did you not fraternize on 3 a regular basis with employees who worked in other 4 departments? 5 A I did not fraternize -- I personally did not 6 fraternize in the office. But I fraternized outside of 7 the office on my own time. 8 Q Did you find that other members -- other employees 9 likewise would abide by Mr. Gordon's policy of not 10 fraternizing with employees in other departments? 11 A Yes. 12 Q Would it be fair to say that as a result of this 13 policy you were unaware of what the duties and 14 responsibilities were of the different departments in the 15 company? 16 A I could speculate. But, yes, I was truly unaware of 17 what they were. 18 Q To the extent you did have any knowledge, it would be 19 based on Mr. Gordon advising you as to what the 20 responsibilities of each department was; is that correct? 21 A Yes, uh-huh. 22 Q So, would it be fair to say that the same would be so 23 as to members of other departments? 24 A Yes. 25 Q So, for example, for you to have an understanding as
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1273 Konopka-Choate-cross/Nelson
1 to what was going on in sales, you would have to rely upon 2 Mr. Gordon's representations as to what was happening in 3 sales; is that correct? 4 A Absolutely. 5 Q Similarly the sales staff would have to rely on 6 Mr. Gordon's representations as to what the duties and 7 responsibilities of your department are; is that correct? 8 A Yes. 9 Q And the same would be true as it relates to the 10 administration department and the public relations 11 department; is that correct? 12 A Yes. 13 Q As a result of this policy, would it also be fair to 14 say that it would have been impossible for you to know 15 whether or
not the employees in that department were 16 performing the functions that Mr. Gordon claimed were 17 there responsibilities to perform? 18 A Yes, it would be impossible for me to know that. 19 Q I believe you indicated there were three individuals 20 in the company allowed access to all the departments, 21 Mr. Gordon, Ms. Sautter and Debra Benjamin; is that 22 correct? 23 A I don't believe I said access. And I think that 24 they, too, probably had limited involvement in the other 25 departments.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1274 Konopka-Choate-cross/Nelson
1 Q So, the only person who would know specifically as to 2 one, whether or not -- what the specific responsibilities 3 were of each department; and, second, whether or not that 4 department was actually implementing those designated 5 responsibilities would have been Mr. Gordon; is that 6 right? 7 A That's correct. 8 MR. NELSON: Thank you. 9 THE COURT: Anyone else? 10 MR. LEE: Judge, it is 11:00 o'clock, do you want 11 me to continue? 12 THE COURT: We will take a ten-minute recess. 13 Please do not discuss the case. Keep an open 14 mind. 15 Please recess yourselves. 16 (Whereupon, at this time the jury leaves the 17 courtroom.) 18 19 (Whereupon, a recess is taken.) 20 21 22 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1275 Konopka-Choate-cross/Nelson
1 THE CLERK: Jury entering. 2 (Whereupon, the jury at this time entered the 3 courtroom.) 4 THE COURT: Please be seated, members of the 5 jury. 6 Now you are in a one-compact group. No one 7 sitting in the front here.
8 I am sorry for keeping you longer than ten 9 minutes. I am the decorating business these days. I have 10 to match up the wood with the carpeting. This took much 11 longer. It took five to ten minutes to select the wood 12 and the carpeting. They are building this huge courthouse 13 in Central Islip. That is on exit 43A of the Southern 14 State Parkway. I will have to take a helicopter to get 15 there from my house. 16 All right, Mr. Lee. 17 MR. LEE: Thank you, Judge. 18 19 CROSS-EXAMINATION 20 BY MR. LEE: 21 Q Good morning, Ms. Konopka-Choate. 22 A Good morning. 23 Q My name is Winston Lee. I represent Laura Weitz. 24 You know Laura Weitz from the time you were employed at 25 Who's Who Worldwide; is that correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1276 Konopka-Choate-cross/Lee
1 A Yes.
2 Q And you had interactions with her; is that correct, 3 on the job? 4 A Not really on the job, no. Except an occasional 5 passing of hi or good-bye. 6 THE COURT: Passing of what? 7 THE WITNESS: Hello, good-bye. 8 THE COURT: Of hi, did you say? 9 THE WITNESS: Hi. 10 Q I would like you to first look at 11 Defendant's Exhibit Gordon-C. Do you have that before 12 you? 13 A Yes. 14 Q And I direct your attention to page 8 of that. 15 Do you see that? 16 A Yes. 17 Q And on that page it begins with the word "welcome"; 18 is that correct? 19 A Yes. 20 Q And am I correct that that is a listing of new 21 members who have since the last edition of Tribute, who 22 have become members of Who's Who Worldwide; is that 23 correct? 24 A Yes. 25 Q And it is an attempt by the Who's Who organization to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1277 Konopka-Choate-cross/Lee
1 announce and to present a cross section of new members who 2 have since joined the registry; is that correct? 3 A Yes. 4 Q And I would also like to direct your attention, if 5 you have it in front of you, Defendant's Exhibit Gordon-F; 6 do you have that? 7 A Yes. 8 Q I would ask you to look at page 42. That's a section 9 entitled Member Spotlights; is that correct? 10 A Yes. 11 Q And you spoke a little with Mr. Schoer on that when 12 he was asking you questions; is that correct? 13 A Yes. 14 Q And in deciding who would be included in, for 15 example, Member Spotlights, and let me back up a little 16 bit. 17 Member Spotlights is something that was featured 18 in each and every Tribute Magazine; is that correct? 19 A With the exception of the first. 20 Q With the exception of the first? 21 A Uh-huh. 22 Q And the other section I just asked you to look at, 23 the welcome section, it was a feature in every Tribute 24 Magazine; is that correct? 25 A Again, I think with the exception of the first.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1278 Konopka-Choate-cross/Lee
1 Q With the exception of the first? 2 A Uh-huh. 3 Q Now, the sales staff, they did from time to time, it 4 was part of -- they endeavored to come to you as one of 5 the editors and recommend members that they thought were 6 deserving to be included in those sections, the Member 7 Spotlights, or the welcome section; is that correct? 8 A At times. But I think it generally came through 9 group leaders. 10 Q Yes. 11 And would it be fair to say that the sales staff, 12 Laura Weitz and others, would bring to the attention of 13 the group leaders their group leaders, and perhaps 14 directly to you, members that they knew of that they 15 thought were because of their area of expertise and their 16 prestige, they thought deserved to be included in these 17 sections; is that correct? 18 A Yes. 19 Q And in including these new members, that was 20 beneficial, of course, to the actual member who would then 21 gain the additional exposure and publicity by being 22 highlighted in these magazines; is that correct? 23 A Yes. 24 Q And it would also benefit all the members of Who's 25 Who, in that they would read about these new members, and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1279 Konopka-Choate-cross/Lee
1 learn about -- not only benefit from their expertise, but 2 learn about their new products and different ser
vices that 3 they were offering, correct? 4 A Yes. 5 Q And that was the idea behind it? 6 A Yes. 7 Q For example, I would ask you to look at, for example, 8 again, Defendant's Exhibit Gordon-F, at page 42. And just 9 the first member who is highlighted there, that's a person 10 by the name of Art, A R T, first name, last name Rothbaum, 11 R O T H B A U M. Do you see that? 12 A Uh-huh. 13 Q And in essence, it first describes him as the vice 14 president of Protex, P R O T E X, International 15 Corporation. Do you see that? 16 A Yes. 17 Q And in essence, it goes on to announce that he is -- 18 he has developed two new products in the area of 19 shoplifting deterrence; is that correct? 20 A Yes. 21 Q And is it fair to say that not only did Mr. Rothbaum 22 derive a value, and tremendous amount of benefit by having 23 70,000 people read about the new products, but also people 24 interested in that line now found out about these new 25 products, retailers, etcetera; is that correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1280 Konopka-Choate-cross/Lee
1 A It is possible, yes. 2 Q In fact, it goes further, to announce not only after 3 he announced the development of two now products, it spoke 4 of Mr. Rothbaum's next projects, his plans for future 5 security devices and what he had in the works in essence; 6 is that right? 7 A Yes. 8 Q And this is representative, is it not, of all the 9 Member Spotlights that were done on the various members? 10 A Yes. 11 Q If salespeople like Ms. Weitz, took it upon herself 12 to represent the new members, in effect they were helping 13 the new members deriving a greater benefit from their 14 membership, additional publicity, etcetera; is that 15 correct? 16 A Yes. 17 Q And Ms. Weitz, and the other salespeople, as far as 18 you know, am I correct, that they did not receive any 19 additional compensation or commissions for forwarding 20 these names to your department or to their group leaders; 21 is that correct? 22 A Not to my knowledge. 23 Q You have had an opportunity -- do you recall when 24 Ms. Weitz herself came with names of people? 25 A She probably would have gone to Debra Benjamin,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1281 Konopka-Choate-cross/Lee
1 because she was our boss. 2 Q Based on your reaction with Ms. Weitz, did she strike 3 you as someone who conducted herself in a professional and 4 a conscientious manner in the way she performed her work? 5 A I had limited interaction with Ms. Weitz and 6
everybody else, all the other salespeople, so -- 7 Q Was there anything that Ms. Weitz or any of the sales 8 staff, did they do or say anything that indicated to you 9 her belief that she was defrauding people by selling them 10 a worthless membership? 11 A No. 12 Q To the contrary, everything you know of Ms. Weitz, 13 what she said and did, indicate her belief that she was 14 selling a legitimate and a valuable product to the 15 members; is that correct? 16 A Yes. 17 MR. LEE: I have no further questions. 18 MR. GEDULDIG: One or two, Judge. 19 20 CROSS EXAMINATION 21 BY MR. GEDULDIG: 22 Q Ma'am, I represent Annette Haley, you know her? 23 A Yes. 24 Q And you know her to be a salesperson at Who's Who 25 when you were working there also?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1282 Konopka-Choate-cross/Geduldig
1 A Yes. 2 Q You have talked both on direct and cross, I believe, 3 about this policy that restricted socializing between the 4 departments of the company at Who's Who; is that right? 5 A Yes. 6 Q Can you tell us what would happen if there was an 7 infraction of that rule? 8 A There is no stated rule. There were no stated 9 repercussions, but it was the general feeling that -- and 10 it was my feeling in particular as well -- that there 11 would be repercussions in Mr. Gordon singling you out, 12 perhaps not wanting you to work there. You never really 13 wanted to fall out of favor with him. 14 Q So, it was a rule that you made sure you followed? 15 A Yes. 16 Q And the repercussions in your mind were serious ones? 17 A Again, nothing was stated or written. It was just a 18 general feeling. It was difficult to work there at times
19 because of certain policies like that. 20 Q Now, you talked also in earlier testimony regarding a 21 trip to Vietnam and Hong Kong; do you recall that? 22 A Vietnam, yes. 23 Q Okay. 24 And I think you said that that was to be a 25 seminar; is that right?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1283 Konopka-Choate-cross/Geduldig
1 A I don't know what it was to be. It was before I 2 came. And my knowledge of that was to be the intention to 3 have the trip and there was not enough member 4 participation to have it. 5 Q Okay. 6 So the trip never actually took place? 7 A That's correct. 8 Q Did you ever see any memos or any kind of a writing 9 or notification to the various departments in the company 10 that the Vietnam trip had to be called off because of a 11 shortage of members? 12 A No.
13 Q And you were there when there was an effort made to 14 have a trip or seminar at Hilton Head; is that right? 15 A Yes. 16 Q And that trip also had to be cancelled because not 17 enough members signed on? 18 A That's correct. 19 Q And after that trip was called off, or after that 20 planned seminar was called off, do you recall receiving 21 any memo or written notification that the trip had to be 22 called off because not enough members had signed on to it? 23 A No, I didn't. 24 MR. GEDULDIG: Thank you. 25 I have no other questions, Judge.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1284 Konopka-Choate-cross/Geduldig
1 2 CROSS-EXAMINATION 3 BY MR. DUNN: 4 Q Good morning, Ms. Konopka. 5 A Hi. 6 Q My name is Thomas Dunn. 7 A Hi. 8 Q Was there any discussion or plans to -- for the
9 public relations department to attempt to get advertising 10 for the magazine from Fortune 500 companies? 11 A I think it was always intended, if we could, to get 12 advertisement from such companies that were Fortune 500 13 companies, yes. 14 Q At any time to your knowledge was there any 15 consideration to bring any salespeople into the public 16 relations department? 17 A I think there may have been some discussion about 18 that. 19 Q And do you know in particular what salesperson was 20 considered for that? 21 A It may have been Laura Weitz. I don't know beyond 22 that. 23 Q And was there, to your knowledge, was there any plan 24 to publish the magazine on a more frequent basis? 25 A We may have discussed it at times, yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1285 Konopka-Choate-cross/Dunn
1 Q So, it would be fair to say that there were 2 discussions about future areas that magazine -- the 3 magazine may go into, but because of the fact that the 4 company was shut down those things did not take place? 5 A That's correct. 6 Q Was there any time that a salesperson on their own 7 would walk in with any kind of written information on a 8 particular member that might be a potential candidate for 9 the magazine? 10 A Yes, there were occasions. 11 Q And do you have any recollection -- well, withdrawn. 12 Was there a particular salesperson or salespeople 13 who would actually walk into the sales department with 14 writing on potential members? 15 A A variety of them, I am sure. 16 Q Do you have any independent recollection as you sit 17 there today? 18 A No, I do not. 19 MR. DUNN: I don't have any further questions, 20 your Honor.
21 MR. NEVILLE: A couple, your Honor. 22 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1286 Konopka-Choate-cross/Neville
1 CROSS-EXAMINATION 2 BY MR. NEVILLE: 3 Q Hi. My name is Jim Neville. I represent Scott 4 Michaelson. Do you know Scott? 5 A Yes. 6 Q Do you remember Scott when you worked back at Who's 7 Who? 8 A Yes. 9 Q He was in the sales department? 10 A Yes. 11 Q And he worked at Lake Success where you did? 12 A Yes. 13 Q And it is a fact that you maybe would say hello to 14 him in the morning and then had nothing else to do with 15 him the entire workday; is that right? 16 A Yes. 17 Q That's another example or manifestation of how the 18 different departments at Who's Who were segregated, kept 19 apart, right? 20 A Yes.
21 Q Which would be similar to the flavor that you gave us 22 as far as not doing things that would go against what 23 Mr. Gordon said to do, right? 24 A Yes. 25 Q Do you know what Scott is charged with?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1287 Konopka-Choate-cross/Neville
1 A I do not. 2 Q Do you know he is charged with mail fraud? 3 A No, I do not. 4 Q Do you, in your working at Who's Who, do you remember 5 Scott having anything to do with sending things in the 6 mail? 7 A No, I do not. 8 Q Now, you heard about the civil case, didn't you, 9 where Marqui Who's Who, or Reed Elsevir, the company who 10 owns Marqui Who's Who sued Mr. Gordon's company? 11 A Yes. 12 Q For trademark infringement, things like that? 13 A Yes. 14 Q You knew that to be a lawsuit where Marqui Who's Who 15 owned by
Reed Elsevir felt threatened by the up and coming 16 Who's Who that you were working for, right? 17 MR. WHITE: Objection to the form of the 18 question. 19 MR. NEVILLE: I will withdraw the question. 20 Q Who's Who, where you worked, had a CD-ROM with the 21 listing of the members, right? 22 A Yes. 23 Q And it had the magazine that we heard a lot about, 24 right? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1288 Konopka-Choate-cross/Neville
1 Q Now, do you know that now Marqui Who's Who, following 2 the civil case, where your company was put out of 3 business, they now have a CD-ROM with the lists of 4 members' names? 5 A No, I am not aware. 6 Q Do you know that Marqui Who's Who now have membership 7 upgrades where you can pay more money and get more 8 benefits according to how much money you paid? 9 A No, I am not aware of that either. 10 Q Do you know that Marqui Who's Who uses mailing lists 11 to get names of people and uses those mailing lists to 12 solicit more business? 13 A I think that was discussed while I was there, yes. 14 Q And that is what happened at your company Who's Who; 15 is that right? 16 A Yes. 17 Q And Marqui Who's Who is doing it right now, isn't it? 18 A I don't know. 19 Q As far as you know? 20 A Yes, if you tell me that. 21 Q It is only if you know. 22 A I don't know. 23 Q Finally, the Marqui Who's Who -- withdrawn. 24 Did you know or did you hear that Marqui Who's 25 Who actually sent Mr. Gordon a letter telling him he was
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1289 Konopka-Choate-cross/Neville
1 nominated for inclusion in their Who's Who directory? 2 A
I remember something like that, yes. 3 MR. NEVILLE: Thank you. No further questions. 4 5 CROSS-EXAMINATION 6 BY MR. WALLENSTEIN: 7 Q Good morning. 8 A Good morning. 9 Q Did you have any interaction with Martin Reffsin 10 during the time you were employed at Who's Who? 11 A Only to see him in the hall. 12 Q Were you ever introduced to him? 13 A Possibly. 14 Q How often did you see him there? 15 A I couldn't say. Maybe once a month. I don't know. 16 Q All right. 17 Did you understand him to be the outside 18 accountant for Who's Who? 19 A Yes. 20 Q In terms of the administration department you spoke 21 about earlier, you indicated was Liz Sautter and Bruce 22 Gordon. What about Maria Gaspar, was she a part of that? 23 A At some point Maria came on. I don't know what her 24 function was, if she was an accountant also,
or accounts 25 payable or receivable, something like that.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1290 Konopka-Choate-cross/Wallenstein
1 Q Did you ever hear that Maria Gaspar was the 2 controller or chief financial officer for Who's Who? 3 A Yes. I think that's how we listed her in our 4 magazine. 5 Q And she was in fact a full-time employee of Who's 6 Who; is that correct? 7 A Yes. 8 Q As was Liz Sautter? 9 A Yes. 10 Q And Mr. Reffsin was not? 11 A I believe he was not, yes. 12 Q And you indicated earlier that Ms. Sautter was 13 Mr. Gordon's right-hand person; is that correct? 14 A Yes. 15 Q Do you know who was in charge of accounts payable and 16 finances similar to that? 17 A Somewhere between Maria and Liz, I would assume. 18 THE COURT: And whom? 19 THE WITNESS: Maria and Liz
. 20 Q By Maria, you mean Ms. Gaspar? 21 A Yes. 22 Q And by Liz, you mean Liz Sautter; is that right? 23 A Yes, Liz Sautter. 24 Q On the day of the raid, Ms. Sautter was there and not 25 arrested?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1291 Konopka-Choate-cross/Wallenstein
1 A Yes. 2 Q And Maria also? 3 A I don't recall if she was arrested, I believe she 4 worked -- 5 Q She was not arrested? 6 A Not to my knowledge, no. 7 Q And Debra Benjamin was also part of the 8 administration; is that correct? 9 A No. Debra had a variety of functions. I don't know 10 that administration was part of them. 11 Q In any event, she was also not arrested; is that 12 right? 13 A That's correct. 14 Q Now, you indicated that Mr. Gordon was as what you 15 would describe as a hands on CEO; is that a fair 16 statement? 17 A Yes. 18 Q And basically anything done by any employee had to 19 ultimately have to be approved by Bruce Gordon; is that 20 correct? 21 A Yes. 22 Q Did you have authority to either spend money or incur 23 expense on behalf of the company? 24 A No. 25 Q If you needed to do that in the course of your duties
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1292 Konopka-Choate-cross/Wallenstein
1 with Tribute, what did you have to do? 2 A I don't know that I ever did. I think as I recall a 3 few times, I may have used my American Express and maybe 4 even paid back, refunded. 5 Q By whom? 6 A The company, Liz. 7 Q So, you would present the bills to Liz? 8 A Yes. 9 Q And at that time, at that point, if you had an 10 American Express bill, would you present it to her and
11 say, look, I used my American Express cards for Who's Who 12 business? 13 A Yes, I did that. But it was on a very limited 14 occasion. 15 Q If you needed to have the company obligated to 16 spending money for paper, advertising, whatever it might 17 be for Tribute, was that part of your function -- 18 A No, it was not. 19 Q -- in the running of the magazine? 20 A No, it was not. 21 Q If there were expenses associated with it, other than 22 those you described as being associated with your own 23 American Express, who would you go to for approval? 24 A Debra, who would go to Bruce. 25 Q Debra would go to Bruce, and Bruce would approve it?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1293 Konopka-Choate-cross/Wallenstein
1 A Yes. 2 Q Do you know if Maria fit into that loop any place? 3 A She may have, yes. 4 Q What about Liz? 5 A I don't think so, no. 6 MR. WALLENSTEIN: Thank you. I have no further 7 questions. 8 9 REDIRECT EXAMINATION 10 BY MS. SCOTT: 11 Q Ms. Konopka-Choate, did you ever have anything to do 12 with selling membership to members? 13 A No, I did not. 14 Q Did you ever get involved in trying to persuade 15 anybody to buy a membership? 16 A No, I did not. 17 Q Were you aware that the company was regularly 18 obtaining names of prospective members from mailing lists? 19 MR. GEDULDIG: Objection to the question. 20 THE COURT: Overruled. 21 A Yes, I was. 22 Q How were you aware of that? 23 A Debra would order mailing lists that sometimes I 24 would follow up. I knew we were using them. 25 Q Did you ever accompany her on any trips associated
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1294 Konopka-Choate-redirect/Scott
1 with these mailing lists? 2 A Not the mailing lists specifically, but I accompanied 3 her to mail houses, where the pieces were actually being 4 assembled. 5 Q Now, do you remember testifying that you didn't have 6 regular contacts with the sales force? 7 A Yes. 8 Q And approximately how often did you fraternize with 9 people on the sales force? 10 A You mean during business hours? 11 Q Yes, during business hours. 12 A If I saw them in the hall, if I was in the coffee 13 room, in the bathroom. 14 Q What about off hours when you were not at work? 15 A Usually once a week we would all go out for dinner or 16 out for drinks or something, a whole bunch of us. 17 Q Now, you remember testifying that Mr. Gordon forbade 18 you from testifying with people or fraternizing with other 19 employees of the company? 20 A Yes. 21 Q Do you remember if he said to you any reason as to 22 why that was? 23 A I don't think he gave a reason. I believe it was 24 just his edict and that was to be understood. 25 Q Where was your office in relation to the sales floor?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1295 Konopka-Choate-redirect/Scott
1 A Well, for part of the time there were actually 2 salespeople in the section of our premises, where our 3 offices surrounding the sales floor. The latter part of 4 the time there were no salespeople at all in our office, 5 in that area, because our area was broken down. 6 Administration was in one corner. The main sales floor 7 was in another corner. There were some little offices 8 in-between where Maria and Gary were placed. Bruce's 9 office was over here. And our offices were in the
back 10 room. And they circled the -- they were on the periphery 11 of the sales room. There was actually a sales room. For 12 part of the time it was empty. 13 Q So, were your offices separated from the sales floor 14 while you were there? 15 A For part of the time, yes. 16 Q How much of the time were they separated? 17 A Half the time, three-quarters of a year maybe. 18 Q Were you ever able to overhear Mr. Gordon speaking to 19 the sales force? 20 A Sometimes, yes. 21 Q And on the occasions when you did overhear, what did 22 you overhear him saying to them? 23 A Nothing specific. He could be yelling at one person 24 or another, speaking loudly. 25 We didn't overhear meetings or things like that.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1296 Konopka-Choate-redirect/Scott
1 Q Did you ever overhear Mr. Gordon
talking to the sales 2 force about bringing in money to the company? 3 A Yes.
4 Q What did you hear him say? 5 A I heard him say, make a lot of money. I am going 6 away this weekend. 7 Q Did you hear him say what that money was needed for? 8 A No. It was just a general, he was walking by, kind 9 of comment. 10 Q By the way, do you remember Mr. Schoer asking you 11 about who the head of the administrative department was? 12 A Yes. 13 Q Do you remember testifying that that person was Liz 14 Sautter? 15 A Yes. 16 Q And who was the head of the sales department? 17 A I would say Bruce Gordon. 18 Q Do you know who the supervisors were in the sales 19 department? 20 A Yes, the group leaders. 21 Q Can you remember from where you are sitting now who 22 those group leaders were? 23 MR. NELSON: Objection. 24 THE COURT: What grounds? 25 MR. NELSON: As to when, Judge. There was
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1297 Konopka-Choate-redirect/Scott
1 testimony already that the group leaders changed at 2 different points in time. 3 THE COURT: Well, do you have a particular time, 4 or do you want to ask about any time? 5 MS. SCOTT: I can rephrase the question. 6 Q During the years that you were there, 1993 to 1995, 7 was there one person who was higher up in the sales 8 department than the others? 9 A Not to my knowledge, no. 10 Q Now, at the time you were working at Who's Who 11 Worldwide, who did you believe owned Who's Who Worldwide 12 and Sterling Who's Who? 13 A I believe Bruce Gordon owned it. 14 Q Why do you believe that? 15 A He would say things like this is my company. You 16 would have to do things the way I want you to do them. 17 So, it was my general assumption that he then owned the 18 company. 19 Q Do you remember Mr. Trabulus asking you about a 20 service that Who's Who offered its members called Med Jet? 21 A Yes. 22 Q And to your knowledge did members get that service 23 automatically for the cost of the membership or was there 24 an additional charge they had to pay for that? 25 A I think there was an additional charge.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1298 Konopka-Choate-redirect/Scott
1 Q Do you remember Mr. Trabulus asking you about 2 discounts on services to members, like Airborne Express? 3 A Yes. 4 Q And do you remember you described those group 5 discounts for the jury? 6 A Yes. 7 Q Now, were these volume discounts? 8 A To my knowledge they were discounts based on our 9 buying power,
which would be a volume discount. 10 Q In other words, these discounts were available to 11 large groups of people who were interested in purchasing 12 the service? 13 A Yes. 14 Q To your knowledge, would such group discounts be 15 available to any professional organization with a large 16 group or -- 17 A Probably, yes. 18 MR. JENKS: Objection. 19 THE COURT: What ground? 20 MR. JENKS: How would she know? 21 THE COURT: Would that come in your field of 22 knowledge? 23 THE WITNESS: It would have come within my 24 relationship with the people at Transnational, whom we 25 actually bought the services from.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1299 Konopka-Choate-redirect/Scott
1 THE COURT: Overruled. 2 Q Now, turning to another aspect of your job, do you 3 remember testifying about press rel
eases? 4 A Yes. 5 Q Can you tell the jury what your responsibilities were 6 in connection with press releases? 7 A If there were press release services purchased or 8 otherwise, and you were given notification of that, we 9 would then call the person or persons, and write a press 10 release. It could be a general biography, a business 11 press release, or a whole package where there were actual 12 placements made in the person's local town, village 13 articles about their business or something. 14 Q You are saying members would contact the company and 15 say they wanted a press release written about them? 16 A I don't know how we got the information. It was 17 given to the -- through the salespeople to us. 18 Q The information that came to you, you would be asked 19 to write a press release for a member? 20 A Yes. 21 Q And is this a service offered as part of membership 22 or a separate additional charge? 23 A Both. 24 Q What do you mean when you say both? 25 A I think some memberships included the press release
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1300 Konopka-Choate-redirect/Scott
1 services, higher-end membership, higher level, and others 2 wouldn't, and they would be purchased separately for a 3 small fee. 4 Q Did you ever learn about what salespeople were 5 telling customers about the availability of this service? 6 A I typed a pitch at one point for a group leader. 7 Q When you say a pitch, what do you mean? 8 A I guess a sales pitch. It was a script that 9 salespeople used, followed. 10 Q And what -- when you were typing the sales script, 11 did you have an opportunity to read it? 12 A Yes, I did. 13 Q What did it say about the availability of
the press 14 release serviced? 15 A It said it was provided. It was a provided service 16 or benefit. 17 Q And what, if anything, did you do upon seeing it with 18 the sales pitch? 19 A I discussed it with Debra Benjamin, because how I 20 viewed it, A, is that it was more work for us when we were 21 already overworked. And, B, it could possibly be 22 confusing to the members. 23 Q What about it could be confusing to the members? 24 A Well, provided sort of connotes that it is not a paid 25 service. And I think this particular case, this
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1301 Konopka-Choate-redirect/Scott
1 particular maybe -- at this particular time we didn't 2 offer them as part of the high-end memberships, I believe 3 that came later. 4 Q In other words, it didn't state that an additional 5 charge would be paid? 6 A Right. It didn't state there would be an additional 7 charge. The that to me indicated the members would be 8 confused, and we possibly would have to write 250 press 9 releases in a week, which would be a lot or some number. 10 Q Now, did you ever discover that Bruce Gordon had 11 learned about your concern -- 12 A Yes. 13 Q And how did you learn that? 14 A He yelled at me. 15 Q What did he say to you when he yelled at you? 16 A It wasn't my business. I shouldn't have been -- I 17 guess I shouldn't have typed the pitch letter, and -- you 18 know, he was just screaming. 19 Q What did he say was the reason you shouldn't have 20 typed the pitch letter? 21 A I don't think he gave a reason. 22 Q Now, do you remember Mr. Jenks asking you as to 23 whether you spent time at Sterling Who's Who? 24 A Yes. 25 Q Do you remember
testifying that you were there
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1302 Konopka-Choate-redirect/Scott
1 periodically? 2 A Yes. 3 Q And when you went there, what was the address of the 4 location that you went to? 5 A 750 Lexington. 6 Q Did you ever go to the penthouse on those occasions 7 when you would visit Sterling? 8 A No. Not specifically. There was a time I visited 9 and went to the penthouse first, but it wasn't mutually 10 inclusive. 11 Q What did you do at the penthouse? 12 A The first party that Bruce had, prior to the two 13 cocktail parties. 14 Q This is the parties where you got sick; is that 15 correct? 16 A Yes, that's the party. 17 Q Do you remember Mr. Jenks asking you about when you 18 began working at Who's Who? 19 A Yes. 20 Q Do you remember testifying you began working there in 21 the fall of 1993? 22 A Yes. 23 Q Do you remember testifying that the first magazine 24 that you ever worked on was the second one that ever had 25 been published?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1303 Konopka-Choate-redirect/Scott
1 A Yes. 2 Q Now, to your knowledge when was the first magazine 3 published? 4 A It actually was printed right as I came, right as I 5 started, November of 1993. And it was published 6 officially, probably, within four weeks later. 7 Q And before that time, to your knowledge were any 8 magazines published by Who's Who? 9 A No, not to my knowledge. 10 Q So, in the early part of 1993, were any such 11 magazines published? 12 A Not to my knowledge, no. 13 Q In 1992, were any such magazines published? 14 A No. 15 Q In the years 1989 to 1991, were any such magazines 16 published? 17 A Not to my knowledge. 18 Q Now, do you remember Mr. Schoer asking you about the 19 use of company cars? 20 A Yes. 21 Q And do you remember testifying that Debra Benjamin, 22 Liz Sautter and Bruce Gordon all had company cars? 23 A Yes. 24 Q Can you tell the jury what Debra Benjamin drove? 25 A She drove I think a Nissan 300 XZ or ZX. It was a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1304 Konopka-Choate-redirect/Scott
1 sports model. 2 Q Can you tell us what kind of car Liz Sautter drove? 3 A A Toyota Camry. 4 Q What kind of card did Bruce Gordon drive? 5 A I think at one point he had a Lexus, and at another 6 point he had a Mercedes. 7 Q Do you remember Mr. Jenks asking you if you felt 8 Who's Who and Sterling Who's Who were conducting business
9 in a legitimate manner? 10 A Yes. 11 Q Were there ever times you had doubts about the 12 legitimacy of the companies's businesses? 13 A I didn't have doubts about how business was conducted 14 in terms of what I knew. I probably had doubts over the 15 ethical issue after the litigation with Reed Elsevir. 16 Q Did anything else give you doubts? 17 A No. 18 Q Now, when you interviewed members for articles in the 19 magazine, did you ever tell them how their names were 20 selected? 21 A No, I didn't. 22 Q Did you have knowledge as to whether salespeople were 23 actually advising members of how they were selected for 24 membership? 25 A I didn't.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1305 Konopka-Choate-redirect/Scott
1 Q To your knowledge were members ever told that their 2 names were taken from mailing lists? 3 A I wouldn't know, and I didn't know. 4 Q Did anybody ever ask you to tell a member that they 5 had been taken from a mailing lists? 6 A No. 7 Q Did you ever tell any members that their names were 8 taken from mailing lists? 9 A No. 10 (Whereupon, at this time there was a pause in the 11 proceedings.) 12 Q Ms. Konopka-Choate, you mentioned some doubts you had 13 as a result of the Reed Elsevir litigation? 14 A Yes. 15 Q Can you tell us what those doubts were? 16 A I had doubts as to the morality of another Who's Who, 17 or a Who's Who that was not the Who's Who that everybody 18 thought of. And I had discussions with a good friend of 19 mine about that on a number of occasions. In fact, she 20 provided some -- 21 MR. LEE: Objection. 22 THE COURT: Yes, discussions with friends what 23 whatever she provided, that is stricken, and the jury is 24 instructed to disregard it. 25 MS. SCOTT: I don't have any further questions.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1306 Konopka-Choate-recross/Trabulus
1 THE COURT: Anything else? 2 MR. TRABULUS: Yes. I have some, your Honor. 3 4 RECROSS-EXAMINATION 5 BY MR. TRABULUS: 6 Q Good afternoon again. 7 A Hi. 8 Q Hi. 9 I think you told Ms. Scott again that at some 10 point you had overheard Mr. Gordon telling the salespeople 11 to make a lot of money? 12 A Uh-huh. 13 Q Now, this was a business, was it not? 14 A Yes. 15 Q And it was being operated for a profit? 16 A Yes. 17 Q Indeed, the profits came through the sales? 18 A Yes. 19 Q Is that correct? 20 And one would only expect Mr. Gordon to ask his 21 salespeople to make
a lot of money, would you not? 22 A Yes. 23 Q And I think you indicated when you heard Mr. Gordon 24 speaking to the salespeople, you would hear him speaking 25 loudly?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1307 Konopka-Choate-recross/Trabulus
1 A Yes. 2 Q And that would be because when he was not speaking 3 loudly, you would not be in a position to hear it; is that 4 fair to say? 5 A Some of the time that's true. When the salespeople 6 were in the same room as the editorial staff, then we 7 could obviously hear pretty much what he said. 8 Q You mentioned Mr. Gordon had a Lexus and a Mercedes 9 at different times? 10 A Yes. 11 Q And those were described to you by Ms. Scott as 12 company cars? 13 A Yes. 14 Q When you hear the term "company car" does that mean 15 to you that the company necessarily take as tax write off 16 because of the car? 17 A Possibly, yes. 18 Q Do you know whether or not the company took a tax 19 write off with regard to the LEXUS? 20 A I have no idea. 21 Q And with regard to the Mercedes? 22 A I also have no idea. 23 Q You indicated you had some concern that members might 24 feel that press releases were provided free of charge when 25 in many instances they were not; is that correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1308 Konopka-Choate-recross/Trabulus
1 A That's correct. 2 Q You never told a member that a press release would be 3 provided free of charge to that member when in fact it 4 would not be, right? 5 A No. 6 Q And as far as you know the company never told 7 somebody that a press release would be free to that person 8 when in fact it was not?
9 A As far as I know the company never did that. 10 Q You mentioned you were aware of the purchase of 11 mailing lists through Debra Benjamin? 12 A Yes. 13 Q Are you aware whether Debra Benjamin simply purchased 14 entire lists, or placed orders for very specific types of 15 orders from the mailing lists? 16 A Probably both. 17 Q In terms of placing specific orders, it would be for 18 people with a title such as president or vice president? 19 A That's correct. 20 Q Are you aware of any specific instance where that was 21 done? 22 A Not specific, no. 23 Q But you are aware that that type of thing was 24 generally done? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1309 Konopka-Choate-recross/Trabulus
1 Q In response to various questions put to you by 2 attorneys here, you indicated basically that ultimately 3 Mr. Gordon would have to approve everything that was done, 4 something to that effect? 5 A Yes. 6 Q And you felt he was in a position more than anybody 7 else to know what was going on or had to be done? 8 A Yes. 9 Q I believe you indicated there were about 100 10 employees employed at the Lake Success facilities; is that 11 correct? 12 A Yes. 13 Q And there were also the facilities in Manhattan, the 14 Sterling facilities, do you know how many people were 15 employed there? 16 A I would say probably 50 or 60. 17 Q And certainly, Mr. Gordon could not be looking over 18 everybody's shoulder at the same time; is that correct? 19 A That's correct. 20 Q And it is fair to say, that although he had a 21 responsibility and a desire to see to it that people 22 followed his directions, he was not himself in a position
23 to tell at all times as to whether or not they had? Is 24 that fair to say? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1310 Konopka-Choate-recross/Trabulus
1 Q Were you aware that before the raid, Mr. Gordon and 2 other people from Who's Who were invited to an award 3 ceremony that was to be held in Russia related to 4 networking? 5 A No. 6 Q I think you indicated that you had not received -- 7 withdrawn. 8 Mr. Geduldig asked you whether or not you 9 received any memos indicating that the Vietnam trip or the 10 Hilton Head trip had been cancelled? 11 A That's correct. 12 Q Now, in your position, would you ordinarily receive 13 memos that were sent to the sales department? 14 MR. GEDULDIG: Objection to the form of the 15 question. 16 MR. TRABULUS: I will rephrase it. 17 Q In the ordinary course would memos sent to 18 salespeople be sent to you? 19 A No. 20 Q So, if memos to that effect were sent to the 21 salespeople, you would not be in a position ordinarily to 22 know as to whether or not they were sent; is that correct? 23 A Yes. 24 Q And you mentioned I believe after the fact that you 25 weren't working there at the time during the Vietnam
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1311 Konopka-Choate-recross/Trabulus
1 trip. 2 A That's right. 3 Q I think you said after the fact it didn't happen; is 4 that right? 5 A Yes. 6 Q And you understood that to mean that no members of 7 Who's Who actually went on the trip? 8 A That's correct. 9 Q Do you know whether or not there was a trip that 10 actually occurred that there was a trip that members could 11 have gone on, if in fact they had set -- signed up for it? 12 A I am not aware of the specifics. 13 Q You are not aware of the specifics? 14 A Right. 15 Q And with regard to the Hilton Head trip, do you know 16 if it was set up through a travel agency? 17 A I know an agency was used. I don't know if it was a 18 travel agency. 19 Q And are you aware that the members, those members who 20 wanted to book it would book it through the travel agency? 21 A I am not sure of the specifics. I didn't handle it. 22 Q After the raid, after Who's Who was shut down, did 23 you have any discussions with members concerning the 24 results of that? 25 A I had communication with members, although a lot of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1312 Konopka-Choate-recross/Trabulus
1 members were not aware of what had happened. I don't know 2 if I ever spoke to them about what had happened. 3 Q Were there any members who expressed concern to you 4 as to whether or not Who's Who would be able to continue 5 to send them Tribute Magazine or provide benefits to them 6 in the future? 7 A Perhaps. 8 Q Now, several of the attorneys asked you questions 9 concerning whether or not you believed that things that 10 were in Tribute Magazine, various things, were true; and I 11 believe you indicated that you did. 12 A Yes. 13 Q And was it not the case as far as you know those 14 things were in fact true at the time? 15 A That's correct. 16 Q So, it wasn't just a matter of believing them, but 17 they were true? 18 A Yes, that's correct. 19 Q Now, you mentioned the administration department 20 which was headed by Liz Sautter? 21 A Uh-huh. 22 Q Do you know how many people worked in that department 23 under her? 24 A Ten or twelve or so. 25 Q Earlier you mentioned the mail was opened either by
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1313 Konopka-Choate-recross/Trabulus
1 Liz or Bruce? 2 A Yes. 3 Q Did you ever see those persons opening the mail? 4 A I may have seen Liz on a few occasions opening mail, 5 although not specifically my mail. 6 Q Is it fair to say that most of the time the mail came 7 in, you wouldn't have seen it actually opened? 8 A Right. 9 Q It wasn't part of your job? 10 A Right. 11 Q Do you know if it was Liz or Bruce or some of the 12 people who worked for Liz or Bruce or opened the mail? 13 A I believe it was Liz or Bruce who opened the mail. 14 Q You yourself did not see it? 15 A I saw Liz. 16 Q In general? 17 A In general, no. 18 Q Now, Tribute Magazine was not mailed directly from 19 Who's Who? 20 A No, it was not. 21 Q It was what is called drop-shipped? 22 A Yes. 23 Q Can you explain to the jury what that was. 24 A I think we had a bulk mailing or license or 25 permission, whatever you call it, the bulk mailing rate.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1314 Konopka-Choate-recross/Trabulus
1 The magazines were created in East Greenville, 2 Pennsylvania and shipped, I don't know where, but I guess 3 various post office facilities. 4 Q Were the directories also shipped by the people who 5 put them together? 6 A I have no idea. 7 Q Okay. 8 You mentioned that after the Reed litigation, you 9 had some concerns or doubts? 10 A Yes. 11 Q Did you have any concerns about Reed's practices or 12 businesses? 13 A No.
14 Q Were they explained to you? 15 A No, they were not. 16 Q And you concerned that they used mailing lists? 17 A I heard at sometime, yes. 18 Q And were you also told that they told prospective 19 members that they were nominated? 20 A No. 21 Q You weren't told that? 22 A No. 23 Q Did you actually see the letter sent to Mr. Gordon 24 nominating him? 25 A I may have. I don't recall.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1315 Konopka-Choate-recross/Trabulus
1 Q Do you recall that it said nominated? 2 A No, I don't recall. 3 Q Okay. 4 MR. TRABULUS: No further questions. 5 MR. JENKS: I have no further questions, your 6 Honor. 7 MR. SCHOER: I have a few questions. 8 9 RECROSS-EXAMINATION 10 BY MR. SCHOER: 11 Q You indicated there came a time you typed a 1
2 presentation and you became concerned about that? 13 A Yes. 14 Q Do you know if that presentation was ever used? 15 A I don't think it was used subsequent to my 16 complaining about it. 17 Q And Ms. Scott asked you whether anyone had instructed 18 you to ever tell a member that his or her name was taken 19 from a mailing list; do you remember her asking you that 20 question? 21 A Yes. 22 Q And did anyone tell you not to tell any member that 23 their name was taken from a mailing list? 24 A No, no. 25 Q You indicated that you had some doubts with respect
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1316 Konopka-Choate-recross/Schoer
1 to using the phrase Who's Who. 2 A No, I didn't have doubts really to do that. 3 MR. LEE: Objection, your Honor. 4 THE COURT: Overruled. 5 A I had doubts relating to the company as a whole. 6 Q Well, did you know that Reed Elsevir did not have an 7 exclusive right to use the term "Who's Who?" 8 A Yes. I believe it was declared public domain. 9 Q It is public domain, right? 10 Are you aware of the fact that there are hundreds 11 of Who's Who publications? 12 A Yes. 13 MR. SCHOER: I have no further questions. 14 MR. NELSON: No questions. 15 THE COURT: Anyone else? 16 MR. LEE: I do, your Honor. 17 18 RECROSS-EXAMINATION 19 BY MR. LEE: 20 Q Ms. Konopka-Choate, as a result of the Reed Elsevir 21 litigation, did that in your mind, did that raise any 22 doubts as to the value of the Tribute Magazine? 23 A No. 24 Q Did that create any doubts as to the worth to the 25 members of having such a magazine offered to memberships?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1317
Konopka-Choate-recross/Lee
1 A No. 2 Q It didn't create doubts as to that; is that right? 3 A That is correct. 4 Q In fact, prior to learning that one company, Reed 5 Elsevir was suing Who's Who, you had no doubts based on 6 everything you saw occurring in the company, right? 7 A I am sorry, could you repeat the question? 8 Q Well, prior to the litigation -- prior to an 9 assertion by this company, Reed Elsevir in a civil action, 10 that Who's Who Worldwide was infringing on its trademark, 11 prior to that, did you on your own have any independent 12 doubts as to the legitimacy of what Who's Who was doing? 13 A No. 14 MR. LEE: I have no other questions. 15 16 RECROSS-EXAMINATION 17 BY MR. GEDULDIG: 18 Q You were asked some questions, ma'am, about the rule 19 of non-fraternization? 20 A Yes. 21 Q And you were also
asked some questions about the 22 number of people who worked in the company, and the rules 23 being set in the company. 24 A Right. 25 Q There were a number of rules that were in place other
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1318 Konopka-Choate-recross/Geduldig
1 than this one about different departments fraternizing 2 with one another; is that right? 3 A Probably, yes. 4 Q Were there rules that you were asked to comply with, 5 other than the rule not to fraternize with people in other 6 departments? 7 A You mean general office policies? 8 Q I am talking about rules that would have been set by 9 Mr. Gordon himself. 10 A I don't know. Could you give me a specific? 11 Q Did you ever hear Mr. Gordon say that he sets the 12 rules in the company? 13 A Yes. 14 Q And that you followed these rules?
15 A Yes. 16 Q Or you left? 17 A Yes. 18 Q And he was not talking about any one particular rule; 19 is that right? 20 A That is correct. 21 Q Now, when Mr. Gordon set these rules and told you or 22 other people in your presence to follow those rules, was 23 he a -- was he setting those rules in an intimidating 24 manner? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1319 Konopka-Choate-recross/Geduldig
1 Q And did you have any doubts that if you violated any 2 rule set by Mr. Gordon you might lose your job? 3 A No doubts. 4 Q You could lose your job? 5 A Absolutely. 6 Q Is it fair to say that the people within the company 7 that you were in contact with, understood that? 8 A Yes. 9 Q And would it be fair to say that the people 10 generally, or almost always tried to comply with those 11 rules, because they knew if they violated any rules set by 12 Mr. Gordon they might lose their jobs? 13 A That's right. 14 Q So, there was an intimidating factor going through 15 the company? 16 A Yes. 17 Q And people tried to comply, although they knew there 18 were all these people working in the company, some 140 or 19 more people? 20 A Yes. 21 Q You say you overheard on occasion Mr. Gordon speaking 22 with the sales force; is that right? 23 A Yes. 24 Q But you did not hear any conversation at sales 25 meetings; is that correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1320 Konopka-Choate-recross/Geduldig
1 A Yes. 2 Q When you did overhear Mr. Gordon talking with the 3 sales force, was there any particular reason you could 4 hear those conversations? 5 A He was standing a few feet away from where my office 6 was. 7 Q Was he talking in a normal tone of voice? 8 A No. He never spoke in a normal voice. 9 Q What was the voice he would use? 10 A Loud, intimidating, threatening, not pleasant. 11 Q And that was a daily occurrence? 12 A Yes. 13 Q So, if you were a salesperson confronted by the 14 company's CEO telling you what to do, it was your 15 impression that those people did what they were told or 16 got fired? 17 A Yes. 18 Q Can you tell us how you learned about the Reed 19 Elsevir case? 20 A I think it was pretty generally discussed after the 21 fact, after the judgment had been awarded to Reed. 22 Q The money judgment? 23 A Yes. 24 Q That's the first you learned about it? 25 A It may have been around that time.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
1321 Konopka-Choate-recross/Geduldig
1 Q So the details to the case to your best recollection, 2 the details of the case and the things said back and forth 3 by Reed and your company, first came to your knowledge at 4 about the time that the judgment regarding this 1.6 5 million dollars became known? 6 A Right. 7 MR. GEDULDIG: I have no other questions. 8 MS. SCOTT: I have a few. 9 10 FURTHER REDIRECT EXAMINATION 11 BY MS. SCOTT: 12 Q Ms. Konopka-Choate, going back to your testimony that 13 you have some doubts about the business. 14 What relationship, if any, did these doubts have 15 to the complaints that you saw handled? 16 MR. LEE: Objection. 17 THE COURT: Overruled. 18 A I saw a limited amount of complaints. It wasn't part 19 of my job and they didn't really relate to that at all. 20 It had no relationship to the complaints. The complaints 21 in nature were from the long distance telephone card and 22 the code not being accurate, or the operators not 23 understanding the code. 24 Q Did they relate to complaints from any 25 organizations?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1322 Konopka-Choate-redirect/Scott
1 MR. LEE: Objection. Leading. 2 THE COURT: Yes. Sustained. 3 MS. SCOTT: No further questions. 4 THE COURT: Anything else? 5 You may step down. 6 (Whereupon, at this time the witness left the 7 witness stand.) 8 THE COURT: Please call your next witness. 9 MR. JENKS: Your Honor, before the next witness 10 gets on the witness stands, may I approach with 11 Mr. Trabulus and Mr. White? 12 THE COURT: Yes. 13 14 (Whereupon, at this time the following took place 15 at the sidebar.) 16 MR. JENKS: Judge, I thought the next witness was 17 Neil Ackerman, an attorney, a bankruptcy attorney who 18 represented the corporations in the bankruptcy. 19 It is obvious that there is an attorney/client 20 privilege that runs in favor of the corporations. And as 21 the attorney for the corporations, I would have what I 22 perceive to be a valid objection to Ackerman testifying to 23 anything about the corporations, even though Ackerman's 24 testimony would be basically against Gordon, concerning 25 the loans, and so forth, in the tax case.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1323 1 I want to make clear for the record, so later 2 when someone is looking at the record, that there are two 3 exhibits that I am in possession of, one from Solomon 4 Green and Ostrow, O S T R O W, who are the attorneys for 5 the bankruptcy trustee, Allan Mendelsohn, whereby they 6 waived the attorney/client privilege on behalf of their 7 client, Allan B. Mendelsohn, concerning attorney work 8 product privileges and attorney/client privileges in 9 connection with any federal and grand jury investigation 10 of Bruce Gordon and the affiliated corporations. And they 11 list in that letter, which is six pages, and 16 12 paragraphs, all of the documents that they waive the 13 attorney/client privilege with respect to. 14 There is also a letter, Government's Exhibit 635, 15 from Mr. Ackerman, which is signed by the trustee, Allan 16 Mendelsohn, wherein Mr. Mendelsohn, the trustee, 17 unconditionally waives as the -- the attorney/client 18 privilege, and instructs Mr. Ackerman to testify without 19 reservation as to all matters addressed to him in 20 connection with the federal investigation. 21 It seems to me that both --
that Solomon Green 22 and Ostrow as counsel to the trustee and the trustee 23 himself have waived the trustee -- attorney/client 24 privilege with respect to Mr. Ackerman testifying, who as 25 I said, was the attorney for the companies in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1324 1 bankruptcy. I would have asserted the privilege. It is 2 already waived. Mr. Trabulus wants Mr. Ackerman to 3 testify and in fact has no objection to him testifying. 4 What I want you to do, your Honor, is to make 5 note that I raised this issue on the record. And I would 6 also like, if you would, to give a limiting instruction to 7 the jury when Mr. Ackerman testifies, that Mr. Ackerman's 8 testimony relates to Gordon and the tax case. That the 9 corporations themselves are not charged in any of the tax 10 counts, the evasion counts, the obstruction or perjury, 11 but are charged along with the employees only in the mail 12 fraud counts. You understand the purpose of that 13 instruction? 14 THE COURT: I don't understand all of that at 15 all. 16 First of all, how does a waiver by the trustee 17 waive the privilege of the corporation? The trustee is 18 not the corporation. 19 MR. WHITE: Your Honor, when he is appointed as 20 trustee, he is the holder of privileges, he is the 21 corporation when he is appointed. 22 THE COURT: I see. 23 MR. JENKS: I believe that's correct, your 24 Honor. 25 So the record is further clear --
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1325 1 THE COURT: I have spoken to Solomon Green and 2 Ostrow. 3 MS. SCOTT: Our next witness has to be somewhere 4 at 1:00 o'clock. He will be five minutes. 5 THE COURT: All right, put him on. 6 MR. JENKS: We will be able to resume this later 7 then. 8 THE COURT: All right. 9 10 (Whereupon, at this time the following takes 11 place in open court.) 12 THE COURT: Members of the jury, we will encroach 13 on the large hour for a few minutes, because I am told 14 this witness is five minutes and has to leave. We will 15 see. 16 Do you want to rise, please. 17 18 G A R Y S A N F O R D , 19 called as a witness, having been first 20 duly sworn, was examined and testified 21 as follows: 22 23 THE COURT: Please be seated. State your full 24 name and spell your last name. 25 THE WITNESS: Gary Sanford, S A N F O R D.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1326 Sanford-direct/Scott
1 THE COURT: You may proceed. 2 3 DIRECT EXAMINATION 4 BY MS. SCOTT: 5 Q Good afternoon, Mr. Sanford. 6 Can you tell us what you do for a living. 7 A I am the president of Jewelers of Bond Street, Inc. 8 Q Where is Jewelers of Bond Street, Inc.? 9 A In Great Neck. 10 Q And how long have you had that position? 11 A I have been the president for about eight years now. 12 Q And as president of Jewelers of Bond Street, are you 13 aware of or familiar with the procedures with which the 14 company keeps its sales records? 15 A Yes. 16 Q I am showing you Government's Exhibit 625, 625-A, 17 626, 626-A, 627, 627-A, and 628. 18 (Handed to the witness.) 19 THE COURT: For identification? 20 MS. SCOTT: For Identification. 21 Q Do you recognize those? 22 A Yes. 23 Q Government's Exhibit 625, 626 and 627, what are 24 those? 25 A I am showing here one of our notes of sales made,
on
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1327 Sanford-direct/Scott
1 one of the items sold. And there is also a photocopy of 2 the deposit slip. 3 Q For sake of clarity, 625, 626 and 627 are checks? 4 A There are checks along with the photocopies. 5 Q Are those checks endorsed by someone from Jewelers of 6 Bond Street? 7 A If I can take it out? 8 Q Yes, you can. 9 A 625 is. 626 is. Yes, 626 is as well. 10 Q Can you tell us the relating document, what they are, 11 625-A, 626, 627 and 628-A. 12 A Those are -- 13 THE COURT: Mr. Sanford, make believe this is 14 December 23rd and the store is crowded. And you have to 15 talk to somebody on the other side of the room. 16 THE WITNESS: Okay, fair enough. 17 THE COURT: You are mumbling now. Speak up. 18 THE WITNESS: Sorry. 19 625-A is a photocopy
of a note card that has 20 denoted on it an item that was purchased, and it is 21 accompanied by a photocopy of a deposit slip. 22 Q Now, these exhibits, 625-A, 626-A, 627-A, and 628, do 23 they record purchases of items from Jewelers of Bond 24 Street? 25 A Yes, they do.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1328 Sanford-direct/Scott
1 Q Were they recorded -- created at or near the time the 2 purchase was made? 3 A Yes. 4 Q And were they created by the person assisted in the 5 making of the purchases? 6 A Yes. 7 Q Were they created by people with knowledge of the 8 transaction? 9 A Yes. 10 Q Were they created by people who had the regular 11 business by Jewelers of Bond Street to make and keep these 12 records? 13 A Yes. 14 Q When the records were made and kept, was all the
15 supporting papers attached to them? 16 A The records attached here, no, they are held 17 individually. 18 Q They are supporting documents attached to the 19 receipt? 20 A Yes. 21 MR. WHITE: I offer Government's Exhibit 625, 22 625-A, 626, 626-A, 627, 627-A, and 628. 23 THE COURT: Any objection? 24 MR. TRABULUS: No. 25 THE COURT: All of those documents in evidence.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1329 Sanford-direct/Scott
1 MS. SCOTT: Thank you. 2 (Government's Exhibits 625, 625-A, 626, 626-A, 3 627, 627-A and 628 received in evidence.) 4 Q Now, Mr. Sanford, in looking at 5 Government's Exhibit 625 and 625-A, can you tell us 6 what -- about the purchase that those documents describe. 7 A 625-A describes Patek Philippe watch, a brand name. 8 THE COURT: What was that? Please spell it for
9 us. 10 THE WITNESS: P A T E K, Philippe, P H I L I P P E. 11 Q And what is the date of that purchase? 12 A 12/31/91. 13 Q How much money was spent on that watch? 14 A $3,000. 15 Q Attached to that is Government's Exhibit 625, a 16 check? 17 A Yes. 18 Q Can you tell us what that check says? 19 A The check is made out to Jewelers of Bond Street for 20 a sum total of $7,100. 21 Q What is the date on the check? 22 A 12/23/91. 23 Q What is the name of the payor on that check? 24 A Jewelers of Bond Street. 25 Q The payor.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1330 Sanford-direct/Scott
1 A It says Who's Who Worldwide Registry, Inc. 2 Q Now, turning your attention to 3 Government's Exhibit 626 and 626-A, can you tell us about 4 the purchase that those documents describe?
5 A Yes. There is actually two items photocopied here. 6 One is R A D O, a Rado wrist watch, and one is a ring. 7 THE COURT: A what? 8 THE WITNESS: Ring. 9 Q How much money was spent in the purchase of those 10 items? 11 A The Rado watch was $660 plus sales tax of $56.10. 12 The ring was $405, with sales tax of $34.43. 13 Q What is the date of that purchase? 14 A June 6th, 1992. 15 Q And looking at Government's Exhibit 626, is that a 16 check made out to Jewelers of Bond Street? 17 A Yes, it is. 18 Q What is the amount? 19 A $1,155.53. 20 Q What is the date on that check? 21 A June 30th, 1992. 22 Q And who is the payor? 23 A Who's Who Worldwide Registry, Inc. 24 Q Now, turning your attention to 25 Government's Exhibit 627 and 627-A, can you tell us about
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
1331 Sanford-direct/Scott
1 the purchases that those documents describe? 2 A This describes an 18 caret yellow gold and Pave, 3 P A V E set diamond heart. 4 Q What is the date of that purchase? 5 A December 23rd, 1992. 6 Q And what is the amount of the purchase? 7 A $3,000. 8 Q And turning your attention to 9 Government's Exhibit 627, is that a check? 10 A Yes, it is. 11 Q And what is the date on that check? 12 A December 24th, 1992. 13 Q And how much is the amount on that check? 14 A $3,225. 15 Q Who is the payor on that check? 16 A Who's Who Worldwide Registry, Inc. 17 Q Now, finally, looking at Government's Exhibit 628, 18 can you tell us about the purchases that are described on 19 that document? 20 A It shows a notation for a pair of earrings and 21 another notation for a necklace, and another notation f
or 22 I believe it is a pin. 23 Q Can you tell us the date of that purchase? 24 A November 5th, 1994. 25 Q What is the amount of money that was spent on these
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1332 Sanford-direct/Scott
1 items? 2 A The pair of earrings was $3,000. The necklace was 3 3,050, and the pin was 2200, all plus tax. 4 Q Looking at these documents, can you tell us who the 5 person was who made these purchases? 6 A Umm -- 7 Q I am talking about 625-A, 626-A, 627-A and 628. 8 A Yes. It was Mr. Gordon. 9 MS. SCOTT: No further questions. 10 THE COURT: Anything else? 11 MR. TRABULUS: Very briefly. 12 13 CROSS-EXAMINATION 14 BY MR. TRABULUS: 15 Q I am Mr. Gordon's lawyer. 16 Do you know whether or not Who's Who Worldwide 17 took a tax deduction for those purchases that were paid by 18 this check? 19 A I have no idea. 20 Q You have no idea if it was taking a tax deduction or 21 reflected it as a loan to Mr. Gordon? 22 A I have no idea. 23 Q If it was reflected as a loan to Mr. Gordon, you have 24 no idea if it was paid back in whole or in part? 25 A No idea.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1333 Sanford-cross/Trabulus
1 MR. TRABULUS: That's all. 2 THE COURT: Anything else? 3 MS. SCOTT: No, your Honor. 4 THE COURT: Members of the jury, we will take a 5 recess for lunch. Keep an open mind and do not discuss 6 the case. 7 We will recess until 1:35. Have a nice lunch. 8 (Whereupon, at this time the jury leaves the 9 courtroom.) 10 (Luncheon Recess.) 11 12 13 14 15 16 17 18 19
20 21 22 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1334 Sanford-cross/Trabulus
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 MR. TRABULUS: Your Honor, can we continue what 6 we were doing at the bench now? 7 THE COURT: At this the next witness, 8 Mr. Ackerman? 9 MR. TRABULUS: Yes. 10 THE COURT: There is another document custodian, 11 ten or fifteen minutes before Mr. Ackerman. 12 THE COURT: What is the problem with 13 Mr. Ackerman? Let's deal with it now? What is the 14 problem? 15 MR. JENKS: As you know, I put a statement on the 16 record, your Honor, and to briefly reiterate again -- 17 THE COURT: You told me that. And you said you 18 would raise the privilege, but the trustee who stood in 19 the place of the corporation, has waived the privilege? 20 MR. JENKS: Yes. He waived the attorney/client 21 privilege. 22 THE COURT: Is this being offered against the 23 corporations or against Gordon or both or what? 24 MR. WHITE: Mr. Ackerman's testimony is being 25 offered against Mr. Gordon and Mr. Reffsin.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1335 Sanford-cross/Trabulus
1 THE COURT: Okay. 2 MR. JENKS: All I will ask you to do at this 3 point, since so many documents have come in through 4 Mr. Skalka, and are going to come in again through 5 Mr. Ackerman, Who's Who Worldwide documents, that you give 6 a limiting instruction to the jury that simply says that 7 the corporations are not charged in any counts except the 8 mail fraud counts, and that the documents that are being 9 offered with respect to -- through Mr. Ackerman, are not 10 being offered against the corporations. 11 MR. TRABULUS: Your Honor, I wanted to say that I 12 would not necessarily want to accept what Mr. Jenks 13 mentioned at the bench with respect to what I want or 14 don't want. Mr. Gordon was not the client of 15 Mr. Ackerman. So we have no objection based on 16 privilege. If there was a privilege, it would be a joint 17 one waived by the corporations. 18 THE COURT: Very well. Bring in the jury. 19 MR. JENKS: Judge, I don't speak for 20 Mr. Trabulus. 21 (Whereupon, the jury at this time entered the 22 courtroom.) 23 THE COURT: Please be seated, members of the 24 jury. 25 You may proceed.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1336 Sanford-cross/Trabulus
1 MR. WHITE: Your Honor, the government calls 2 Bryce MacDonald.
3 THE COURT: Very well. 4 Remain standing. 5 Raise your right hand. 6 7 B R Y C E M A C D O N A L D , 8 called as a witness, having been first 9 duly sworn, was examined and testified 10 as follows: 11 12 THE COURT: Please state your full name and spell 13 both names for the record. 14 THE WITNESS: Bryce MacDonald, B R Y C E, 15 MacDonald, M A C D O N A L D. 16 THE COURT: You may proceed. 17 18 DIRECT EXAMINATION 19 BY MR. WHITE: 20 Q Mr. MacDonald, can you tell us how you are employed? 21 A I am the general partner of Palais Partners. 22 THE COURT: Of what? 23 THE WITNESS: P A L A I S, Palais Partners. 24 Q Can you tell us what sort of business Palais Partners 25 is?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1337 MacDonald-direct/White
1 A Palais Partners is an owner and developer of 2 Manhattan Real Estate. 3 THE COURT: Of what real estate. 4 THE WITNESS: Manhattan Real Estate. 5 THE COURT: Are you familiar with an apartment 6 building at 250 East 54th in Manhattan? 7 A Yes, it is one of Palais Partners' buildings. 8 Q Does that building have a name? 9 A The Mondrian condominium. 10 Q It is a condominium type building? 11 A Yes, it is. 12 Q Now, does the Mondrian have any penthouse apartments? 13 A Yes, it has five penthouse apartments. 14 Q And how are they numbered? 15 A P-1 through P-5. 16 Q Now, who owns -- in 1994 who owned penthouse number 17 4? 18 A Palais Partners owned penthouse number four. 19 Q Can you tell us how many rooms are in penthouse 20 number four? 21 A Living room, two bedrooms, a large kitchen, plus an 22 outside terrace. 23 Q How does a
person get to the Penthouse 4 at the 24 Mondrian? 25 A Two elevators serve Penthouse 4, and both open up to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1338 MacDonald-direct/White
1 the living room, the apartment occupies the entire four. 2 Q In 1994 did Palais Partners lease Penthouse 4? 3 A Yes, we did. 4 Q If you look in front of you I have placed Exhibit 648 5 for Identification. If you can take it out of the plastic 6 sleeve and take a look at it. 7 A Yes. 8 Q Do you recognize what that is? 9 A This is our -- 10 THE COURT: You are mumbling, sir. First of all, 11 pull the microphone closer. And we don't know much about 12 the lease. We want to hear about it. 13 THE WITNESS: This is our standard form of lease 14 we use to rent apartments at the Mondrian condominium. 15 Q And what apartment does that lease relate to? 16 A Penthouse 4. 17 Q What period of time does that lease cover? 18 A February 15th, 1994, through February 29th, 1996. 19 MR. WHITE: The government offers Exhibit 648. 20 THE COURT: Any objection? 21 MR. TRABULUS: No. 22 THE COURT: Government's Exhibit 648 in 23 evidence. 24 (Government's Exhibit 648 received in evidence.) 25 Q Mr. MacDonald, can you tell us who is listed as the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1339 MacDonald-direct/White
1 tenant on that lease? 2 A Who's Who Worldwide Registry, Inc. 3 Q And who is listed as the occupant of that apartment? 4 A Bruce Gordon. 5 Q When did you say the lease was to begin? 6 A February 15th, 1994. 7 Q And how long was the lease for? 8 A Two years, until February 29th, 1996, or two years 9 and half a month. 10 Q Can you tell us according to the lease how much is 11 the monthly rent? 12 A $8,000 per month. 13 Q What is the total annual rent? 14 A $96,000 per year. 15 THE COURT: Hold it a minute, now. 16 (Whereupon, at this time there was a pause in the 17 proceedings.) 18 THE COURT: You may proceed. 19 Q Now, Mr. MacDonald, if you can look at the last page 20 of the lease, which is page 9, could you tell us who 21 signed it on behalf of the tenant? 22 A Bruce Gordon. 23 Q And is Mr. Gordon's position listed there? 24 A President and CEO, Who's Who Worldwide Registry, Inc. 25 Q Now, if you can look back at page 2 of the lease;
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1340 MacDonald-direct/White
1 there is a paragraph that is numbered 3, and it says 2 occupancy and permitted use. Could you see that, can you 3 follow along with me as I read aloud. 4 Occupancy and permitted use. The apartment shall 5 be used for residential purposes only, and for no other 6 use. The apartment may be occupied by tenant and the 7 other occupants and by no other persons. If tenant is a 8 corporation, partnership or governmental entity. 1, the 9 apartment may be occupied only by the designated 10 occupants; and, 2, tenant shall notify owner at least ten 11 days -- ten business days in advance of any change in the 12 designated occupant. 13 Do you see that, Mr. MacDonald? 14 A Yes, I do. 15 Q In this case is the tenant listed a corporation? 16 A Yes, it is. 17 Q And who is listed on page 1 as the only designated 18 occupant? 19 A Bruce Gordon. 20 Q Okay. 21 Now, also in front of you is Exhibit 649. Could 22 you take that out of the plastic and look at those. 23 THE COURT:
For identification? 24 MR. WHITE: Sorry, your Honor. Yes, for 25 identification.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1341 MacDonald-direct/White
1 Q Now, do you recognize what those are? 2 A These are checks paid for rent and the electric 3 charges associated with the apartment, Penthouse 4. 4 MR. WHITE: Your Honor, the government offers 5 Exhibit 649. 6 THE COURT: Any objection? 7 MR. TRABULUS: No. 8 THE COURT: Government's Exhibit 649 in 9 evidence. 10 (Government's Exhibit 649 received in evidence.) 11 Q Now, Mr. MacDonald, if you can look at all the checks 12 in that exhibit, except for the last one, and tell us what 13 time period they cover. 14 A The rent for commencement of the lease in 1995, with 15 the first payment in March, through January 1996 -- I am 16 sorry, 1994 through 1995.
17 Q And those first checks -- 18 THE COURT: I didn't get that. The first was 19 from March of what? 20 THE WITNESS: March of 1994 through January of 21 '95. 22 Q And can you tell us what account upon which those 23 checks are drawn? 24 A Sterling Who's Who, Inc. the address varies. 25 Q Now, if you can look at the last check in that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1342 MacDonald-direct/White
1 group. What is the date of that check? 2 A October 5, 1995. 3 Q And on what account is that check drawn? 4 A Who's Who Executive Club. 5 Q Now, does that Palais Partners still own penthouse 6 number four at the Mondrian? 7 A No. It was sold last year. 8 Q Can you tell us how much it was sold for? 9 A A million 250 thousand dollars. 10 Q Now, did you ever have any conversations with 11 Mr. Gordon regarding penthouse number four? 12 A Yes. He came to me in December of 1994 complaining 13 that a heater in his apartment was not working and none of 14 my staff had fixed it and asked me to have it fixed before 15 he returned. 16 Q Can you tell us what specifically he said regarding 17 this problem? 18 A He said that the heater in the second bedroom which 19 he used as a study, and also to watch television was not 20 working, and it made it unpleasant to stay in the room 21 during the evenings. 22 Q And did you subsequently take any action as a result 23 of this complaint? 24 A Yes I took my building manager up to the apartment 25 within the hour, identified that the unit was broken, and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1343 MacDonald-direct/White
1 had it fixed by the end of the day. 2 Q Now, when you were in Mr. Gordon's apartment, did you 3 observe a crib? 4 A Yes. In the other bedroom there was a baby crib. 5 Q Now, can you tell us approximately what time you 6 would arrive for work in the evening? 7 A I would arrive between 8:00 and 9:00 o'clock, six 8 days a week, and generally on Sundays for the afternoon. 9 Q Now, when you would arrive in the morning, did you 10 ever have occasion to see Mr. Gordon? 11 A Yes. I passed several tenants everyday on the way in 12 and out of my office, which is in the building. 13 Q When you would pass Mr. Gordon in the mornings, what 14 would he be doing? 15 A He appeared to be leaving for work. 16 MR. WHITE: No further questions, your Honor. 17 THE COURT: Cross-examination. 18 19 CROSS-EXAMINATION 20 BY MR. TRABULUS: 21 Q Good afternoon, Mr. MacDonald. I am Mr. Gordon's 22 lawyer.
23 I think you indicated that this repair was done 24 in December of 1994; is it your testimony? 25 A Yes, it is.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1344 MacDonald-cross/Trabulus
1 Q Do you have any particular notes of that conversation 2 that reflect the day? 3 A In my briefcase in the witness room I have a letter I 4 wrote that day to Mr. Gordon apologizing for the 5 inconvenience and telling him what was prepared. 6 Q Were you -- for how long were you -- withdrawn. 7 Did you -- were you the general partner of Palais 8 Partners throughout the entire period of time of the lease 9 received in evidence as 648? 10 A Yes. 11 Q And during that time you maintained an office on the 12 sixth floor; isn't that correct? 13 A Yes. 14 Q And is that basically where you worked? 15 A Yes. 16 Q And you would
see Mr. Gordon sometimes when you would 17 go in and go out of the building generally? 18 A Yes. 19 Q And did you have any particular reason at that time 20 to keep track of Mr. Gordon's goings and comings? 21 A After he initially introduced himself and brought his 22 problem to my attention I made it a point to make sure 23 everything else was okay with him and greet him by name as 24 I did with all the tenants. 25 Q That's after the December 1994 incident you told us
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1345 MacDonald-cross/Trabulus
1 about? 2 A Yes. 3 Q And did there come a point in time when Mr. Gordon 4 was more frequently at the condominium? Do you recall a 5 change in the frequency with which he was there? 6 A No. 7 Q About how many -- how frequently would you see 8 Mr. Gordon during the time that t
his lease was in effect? 9 Once a week, twice a week, three times a week? Could you 10 say? 11 A Not with any certainty. 12 Q Could it be less frequently than once a week? 13 A Possibly. 14 Q Now, I think you mentioned -- you were asked a 15 question concerning the occupant of the apartment, and 16 that was shown on the lease as being Mr. Gordon; is that 17 correct? 18 A Yes, that's correct. 19 Q Now, you also were read a portion of the lease which 20 referred to corporations being tenants. 21 A Yes. 22 Q Is it fair to say that it is not at all uncommon for 23 a corporation to be a tenant for an apartment in the 24 apartment? 25 A Corporations often lease apartments to house their
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1346 MacDonald-cross/Trabulus
1 employees. 2 Q The real estate that your
partnership owns or 3 manages, is it fair to say that there are a fair number of 4 condominium apartments or other apartments which are 5 rented to corporations? 6 A Yes, there are. 7 Q And a fair number of those that house their own 8 employees? 9 A Yes. 10 Q Nothing unusual about that? 11 A Nothing unusual. 12 Q Now, with regard to the use exclusively by the 13 occupant, under the terms of the lease is an occupant 14 forbidden from having guests? 15 A No. 16 Q In fact, it is contemplated that occupants have 17 guests, and there is a reference to guests in the lease 18 even; is that correct? 19 A That's correct. 20 Q Now, in your experience with corporations leasing 21 apartments for the benefit of their employees, is it 22 sometimes the case that the same employee stays in the 23 apartment all the time? 24 A Yes. 25 Q Is it sometimes the case that different employees
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1347 MacDonald-cross/Trabulus
1 will come to the apartments from time to time in other 2 instances? 3 A That's rare. 4 Q So, the typical situation it would be for the 5 corporation to lease an apartment for the use of one 6 particular employee? 7 A That's correct. 8 Q Who might have guests or other employees there at 9 certain times; is that correct? 10 A He would have guests, yes. 11 Q And would it be unusual in such a situation for such 12 an employee to have within the apartment personal things, 13 such as a crib, or things for family members? 14 A Not unusual at all. 15 Q In many of these instances do the employees live in 16 the apartments all the time or just live on an occasional 17 basis?
18 A It varies. They generally live there all the time. 19 Q Are there other instances they live there only on 20 occasion? 21 A Yes. 22 Q And are you familiar with situations in which a 23 corporation leases an apartment for an employee for an 24 occasional use, where the employee may spend time, or more 25 time, at another location?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1348 MacDonald-cross/Trabulus
1 A As long as they pay the rent they can go anywhere 2 else they like. 3 Q Basically you wouldn't care as long as the rent was 4 paid and the apartment was maintained properly? 5 A That's correct. 6 Q Can you describe the size of the living room on the 7 penthouse floor? 8 A Quite large. 9 Q Suitable for entertaining? 10 A Yes. 11 Q When you say quite large, I am not going to pin you 12 down to an exact footage, but can you basically give me an 13 estimate? 14 A About half the size of this courtroom. 15 Q Okay. 16 You mentioned the kitchen was large, too. Can 17 you describe that? 18 A The kitchen is larger than the jury box. 19 Q What kind of facilities were in the kitchen? 20 A Granite counters, top of the line cabinets, GE 21 appliances, microwave, refrigerator, dishwasher, sink, 22 oven. 23 Q Would there be suitable facilities for preparing food 24 or at least keeping food warm for a lot of people? 25 A You can use it as such, but they are not catering
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1349 MacDonald-cross/Trabulus
1 great. 2 Q Okay. 3 You mentioned the terrace, does it go around the 4 entire building? 5 A No. The terrace goes off the southwestern corner of 6 the apartment, approximately 400 square feet. 7 Q Now, is it unusual for a corporation in your 8 experience to be leasing an apartment of this type? 9 A No. 10 MR. TRABULUS: No further questions. 11 THE COURT: Anything else? 12 MR. WHITE: Yes. Briefly, your Honor. 13 14 REDIRECT EXAMINATION 15 BY MR. WHITE: 16 Q Now, Mr. Trabulus asked you regarding whether the 17 lease contemplated whether the named occupant could have 18 guests; is that correct? 19 A Yes. 20 Q Did the lease contemplate that the named occupant 21 would not live there at all? 22 A No. 23 Q Did the lease contemplate that the named occupant 24 would not live there and there would be transient people 25 living there for short periods of time?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1350 MacDonald-redirect/White
1 A We generally try to prohibit that. We don't like the 2 apartments being used as hotel rooms. 3 THE COURT: You have to slow down. You have to 4 talk slower. Because I didn't comprehend what you just 5 said, and maybe the jury would have difficulty as well. 6 Now, what did you say, sir? 7 THE WITNESS: We generally try to make it 8 impossible to have tenants use apartments for multiple 9 guests as a hotel room. We don't like creating a B and 10 B. It generates lots of wear and tear on the apartments. 11 Q Now, if a proposed tenant or occupant made it shown 12 now that they intend to use the apartments in that way, 13 what would you say? 14 A We wouldn't lease the apartment to them. 15 MR. WHITE: No further questions. 16 17 RECROSS-EXAMINATION 18 BY MR. TRABULUS: 19 Q Would it be inconsistent to your understanding of the 20 lease for a tenant to use the apartments for business 21 parties, entertainment, etcetera, in which the occupant 22 was present? 23 A The apartments are leased for residential use only. 24 It is illegal under Manhattan zoning code to use it for 25 business purposes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1351 MacDonald-recross/Trabulus
1 Q To have a party in which the occupant was present in 2 which friends, people, business acquaintances, people with 3 business relationships would be invited, is it illegal? 4 A If you want to make a strict interpretation of the 5 zoning, yes. 6 Q What would that interpretation would be? 7 A We look the other way if people have a party who are 8 in control. 9 Q I am not talking about a party for which you are 10 charging, but if you invite business acquaintances, and 11 guests, It would not be illegal? 12
A As long as they are responsible for their guests. 13 MR. TRABULUS: That's all. 14 MR. WHITE: That's all. 15 THE COURT: You may step down. 16 Please call your next witness. 17 MR. WHITE: The government calls Neil Ackerman. 18 19 N E I L A C K E R M 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. State your full 25 name and spell your last name.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1352 MacDonald-recross/Trabulus
1 THE WITNESS: My name is Neil Ackerman. 2 A C K E R M A N: First name, Neal, N E I L. 3 THE COURT: Members of the jury, this witness is 4 going to testify with regard to counts in which the 5 corporation is not charged. The corporations are charged 6 with mail fraud. Also, the documents
offered with respect 7 to this witness testimony are offered against the 8 defendants Gordon and Reffsin only. 9 You may proceed. 10 11 DIRECT EXAMINATION 12 BY MR. WHITE: 13 Q Mr. Ackerman, if you can make sure to keep your voice 14 up, can you tell us what you do for a living? 15 A I am a lawyer. 16 Q How long have you been a lawyer? 17 A Since 1981. I graduated from law school. 18 Q What type of law to you practice? 19 A Primarily bankruptcy and commercial law. 20 Q Can you tell us the name of your law firm? 21 A Presently the Ackerman Law Firm LLC. 22 Q And where is your office located? 23 A We're at the old motor vehicle building, 900 Ellison 24 Avenue, Suite 304 Westbury, New York. 25 Q And were you previously, beginning in 1994 to the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1353 Ackerman-direct/White
1 present, were you previously with other law firms? 2 A Yes, I was. 3 Q Can you tell us what the names of those law firms 4 were and spell them for us. 5 A 1994 until about January 26th, 1995, I was with a law 6 firm called Rivkin, R I V K I N, Radler, R A D L E R, and 7 Kremer, K R E M E R. I was at EAB Plaza in Uniondale, New 8 York. 9 From January 27th, 1995, until approximately 10 January 30, 1997, I was with a law firm called Meltzer, 11 M E L T Z E R, Lippe, L I P P E, Goldstein, G O L D S T E I N, 12 Wolf and Schlissel, S C H L I S S E L, PC. That was at 13 190 Willis Avenue in Mineola, New York. 14 Q Mr. Ackerman, have you ever heard of a company called 15 Who's Who Worldwide Registry, Inc.? 16 A Yes. 17 Q And how have you heard of them? 18 A My law firms were counsel in bankruptcy to Who's Who, 19 starting from August or September of 1994 until they 20 converted to a Chapter 7 in 1995, I believe. 21 Q Did you in particular have any responsibilities with 22 respect to Who's Who Worldwide? 23 A I was lead bankruptcy counsel on the case. 24 Q Now, as an attorney for Who's Who Worldwide did an 25 attorney/client privilege exist between you and the
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1 corporation? 2 A Yes. 3 Q Now, first of all, can you explain briefly what the 4 attorney/client privilege is? 5 A The attorney/client privilege protects communications 6 between my firm, me and the client. 7 Q Now, has your client, Who's Who Worldwide, the 8 corporation, waived the attorney/client privilege? 9 A Yes. When Who's Who was converted to a Chapter 7 10 bankruptcy case, when it was put into a liquidation mode
11 under the order of the bankruptcy code, a trustee in 12 bankruptcy, a neutral disinterested third party was 13 appointed as trustee, and that person who owns and 14 exercises all of the rights and remedies of Who's Who 15 waived that privilege. 16 Q Now, as a result of this waiver, are you permitted to 17 reveal otherwise confidential information that you learned 18 as the corporation's lawyer? 19 A I am directed to. 20 Q Can you explain to us in litigation what an 21 interrogatory is? 22 A A question allowed to be asked to which written 23 responses are required. It is part of the discovery 24 process under which one side finds out information about 25 the other side in a lawsuit.
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1 Q Let me show you Government's Exhibit 637, which is 2 already in evidence. 3 (Handed to the witness.) 4 Q If you can take a look at that and tell me if you 5 recognize what it is? 6 A Yes, it is a first set of interrogatories that was 7 directed to Who's Who by Reed Elsevir in the context of 8 the bankruptcy case. 9 THE COURT: In other words, Reed Elsevir sent 10 these interrogatories to Who's Who to answer them? 11 THE WITNESS: Yes. Actually they sent them to 12 the prior attorney of Who's Who. My law firm came in as 13 substitute counsel. These are dated, I believe June 30, 14 1994, and they were directed -- they were sent by Reed 15 Elsevir to Flaum Basile and Verdi, F L A U M, Basile, 16 B A S I L E, and Verdi, V E R D I, which is the prior 17 counsel. 18 THE COURT: But it is part of a counsel by which 19 people ask all the parties in a lawsuit or a bankruptcy 20 proceeding, and they find out facts about each other; is 21 that correct? 22 THE WITNESS: In this case it was tied to I 23 believe a motion filed by Reed for the appointment of 24 trustee. It is used in the motion context, yes. 25 THE COURT: It is a set of questions to be
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1356 Ackerman-direct/White
1 answered by Who's Who Worldwide? 2 THE WITNESS: Yes, sir. 3 THE COURT: And those questions are answered 4 under oath? 5 THE WITNESS: Sometimes, yes. 6 THE COURT: In this case? 7 THE WITNESS: In this case not all of them were 8 answered under oath. One was answered by way of a letter. 9 THE COURT: All right. 10 Q Mr. Ackerman, if you can look on at the bottom of 11 page 2 and the top of page 3, and follow as I read 12 interrogatories that are numbered seven and eight. 13 Seven. Identify the debtor's corporate business 14 purpose or justification for lending funds at any time to 15 Bruce W. Gordon, Joyce C. Grossman, Richard Grossman, 16 Sterling Who's Who, Inc., Publishing Ventures, Inc. or any 17 other entity, actually or beneficially owned or controlled 18 by the officers and directors of the debtor. 19 Number eight. Identify the debtor's corporate 20 business purposes or justification for guarantying leases 21 or other obligations of Bruce W. Gordon, Sterling Who's 22 Who, Inc., Publishing Ventures, Inc. or any other entity 23 actually or beneficially owned or controlled by the 24 officers and directors of the debtor. 25 Mr. Ackerman, were you involved in responding to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1357 Ackerman-direct/White
1 these interrogatories? 2 A Yes. 3 Q Can you tell us approximately when it was that you
4 were involved in responding? 5 A After my law firm took over as bankruptcy counsel, 6 which was sometime in late August of 1994, about two 7 months after these were sent or early September, 1994. 8 Q In 1994, Mr. Ackerman, did you and the attorneys in 9 your law firm record the time you would spend on client 10 matters? 11 A Yes. 12 Q Tell us how you would do that? 13 A Time slips. 14 There would be entries made into a computer 15 program which would show all time spent and give a 16 description of the time spent on that date and the 17 services rendered. 18 Q Would that information be used to generate a bill to 19 a client? 20 A A statement, and we would have to apply for fees to 21 the bankruptcy court. 22 Q Let me show you Government's Exhibit 636 for 23 Identification. 24 (Handed to the witness.) 25 Q Is that
a bill from your law firm for legal services?
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1 A A statement from the law firm for legal services. 2 Q And if you can page through that and tell me what the 3 time period is that that covers? 4 A It appears to be from the period June of 1994 until 5 the end of September, 1994. 6 Q Did your firm keep such billing records in the 7 regular course of its business? 8 A Oh, yes. 9 Q Did your firm keep the records as part of the regular 10 legal business? 11 A Yes. 12 MR. WHITE: Your Honor, the government offers 13 636. 14 THE COURT: Any objection? 15 MR. TRABULUS: No. 16 THE COURT: Government's Exhibits 636 in 17 evidence. 18 (Government's Exhibit 636 received in evidence.) 19 Q Now, does Exhibit 636 reflect the time spent by you
20 and the other attorneys at your firm during this period? 21 A Yes. All recorded time. 22 Q Now, if you can turn to page 8 of the statement, the 23 bill, Exhibit 636. 24 A Yes. 25 Q About a third of the way down the page your name
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1359 Ackerman-direct/White
1 appears; is that right? 2 A Yes. 3 Q The pages that follows does that indicate the time 4 you personally spent on this matter during this period? 5 A Yes. 6 Q Now, if you could turn to page 13 of your statement. 7 And if you can look at the entry for September 5th, 1994, 8 follow along as I read the last clause for that date. 9 It says: Voice mail message to Gerard, 10 instructions to prepare draft of Answer In Re 11 justification of loans, explain background; etcetera. 12 Do you see that? 13 A
Yes. 14 Q Can you tell us what that refers to? 15 A Gerard would be Gerard Catalanello, 16 C A T A L A N E L L O, who was an associate, who was 17 working on this case with me, and who was noting that I 18 was telling Gerard to prepare a draft of an answer. 19 Q Since his name is difficult, we will refer to your 20 associate as Gerard, okay? 21 A Okay. 22 Q The answer you were asking Gerard to begin preparing 23 was an answer to what? 24 A I believe it was question number seven that you read 25 me before from the interrogatories sent by Reed.
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1 Q Now, if you can take your statement and turn to page 2 22. 3 A Yes. 4 Q Does it indicate on that page where Gerard's time 5 entry begins? 6 A Yes. 7 Q All right. 8 Now, turn to page 27, and if you can look at the 9 entry for Gerard for September 6th, 1994, do you see that? 10 A Yes. 11 Q And that's a day after the entry that you just read, 12 correct? 13 A Yes. 14 Q And if you can follow along while I read it. 15 It says reviewed promissory notes executed by 16 Publishing Ventures, Inc. and Sterling Who's Who regarding 17 loans made by the debtor to both companies, terms of the 18 notes, interest thereon and maturity dates in preparation 19 of drafting a letter explaining inter-company loans and 20 other loans made by the debtor to persons who are or could 21 be argued to be insiders as that term is defined in the 22 code; began drafting letter to D. Skalka, counsel to Reed, 23 and Bill Kahn, counsel to the committee regarding 24 explanation of all loans made by the debtor required by 25 interrogatory numbered seven in Reed's first set of
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1 discovery requests. 2 Now, Mr. Ackerman, can you tell me what all that 3 legalese means? 4 A He was doing what I told him to do. He was reviewing 5 the papers. He reviewed all the background documents. 6 And he was preparing to draft a letter which would explain 7 the loans which were made by the debtor to the persons who 8 were named off in interrogatory number seven. He began to 9 draft that letter also. 10 Q Now, if you can look at the same page, the next day, 11 September 7th, 1994, Gerard has another entry; is that 12 correct? 13 A Yes. 14 Q And I will read that. 15 Revised and reviewed letter to D. Skalka, 16 Esquire, counsel to Reed, and B. Kahn, Esquire, counsel to 17 committee, regarding explanation to all inter-company
18 loans as requested by interrogatory numbered seven as part 19 of Reed's first set of discovery demands; prepared same 20 for Neil Ackerman's review. 21 Again, can you tell us what all that refers to? 22 A He continued to edit that letter which he already 23 started preparing. And he prepared it for my review. 24 Q Now, that was on September 7th? 25 A Yes.
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1 Q Now, in connection with preparing the company's 2 response to these interrogatories, did you have occasion 3 to meet with Mr. Gordon or Mr. Reffsin? 4 A I believe I recall doing so and I think Gerard was 5 there with us. 6 Q Do you recall when it was that you met with them? 7 A I don't recall the date right now. 8 Q Okay. 9 If you can look at the entry on September 8th, 10 199
4 -- 11 A What page is that on? 12 Q The same page you are on, page 28. 13 A Okay. 14 Q I will read it and you tell me if it refreshes your 15 recollection. 16 Meeting at Rivkin Radler's office with N. 17 Ackerman, M. Reffsin accountant, B. Gordon president and 18 M. Gaspar controller regarding preparation for section 341 19 meeting scheduled to take place on 9/9/94 at U.S. 20 trustee's office, finalizing the stipulation by and 21 between Reed and the debtor regarding trustee motion, 22 discovery demand, etcetera; response to all discovery 23 demands made by Reed in the first set of discovery 24 demands; revised and reviewed letter with N. Ackerman, 25 regarding explanation of all inter-company loans and other
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1363 Ackerman-direct/White
1 loans made by the debtor; prepared same
for fax delivery 2 to D. Skalka, counsel to Reed and B. Kahn, counsel to 3 committee. 4 Now, does that refresh your recollection as to 5 when you met with Mr. Gordon and Mr. Reffsin? 6 A Yes. 7 Q When was that? 8 A September 9 -- pardon me, September 8th, 1994. 9 Q Can you tell me what you discussed at this meeting? 10 A According to these notes we reviewed what would occur 11 and examination which was scheduled to take place the next 12 day at the United States trustee's office of Who's Who, 13 the debtor. We also finalized -- 14 MR. WALLENSTEIN: Objection. 15 THE COURT: On what ground? 16 MR. WALLENSTEIN: The witness was asked what he 17 recalled from the meeting and he is reading from his 18 notes. He is not testifying from his recollection. 19 THE COURT: Well, do you have an independent 20 recollection of what occurred at this meeting?
21 THE WITNESS: Independently I can recall -- 22 THE COURT: Or do you need to refresh your 23 recollection by looking at the bill? 24 THE WITNESS: This is very much assisting me to 25 refresh my recollection.
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1 THE COURT: You go ahead and take a look at it. 2 THE WITNESS: Yes. 3 THE COURT: As a matter of fact, you can read it, 4 because it is in evidence. 5 Remember I explained the difference between a 6 document used to refresh someone's recollection, but not 7 in evidence, and a document in evidence? If it is in 8 evidence anyone can read it. If it is not in evidence and 9 used to refresh your recollection, then you have to do it 10 like this: You have to look at the document, put it down, 11 pick up your head and then remember what you just read and
12 say it. That's a sophisticated difference. You are 13 getting all of this knowledge and information. 14 Overruled. 15 Go ahead. 16 Q Now, having reviewed that, Mr. Ackerman, can you tell 17 us what was discussed at the meeting? 18 A We did discuss what would occur at the U.S. trustee 19 examination the next day. We looked over and reviewed a 20 stipulation and agreement we were entering into with Reed 21 about the various discovery demands they had made in the 22 context of a motion it had filed with the bankruptcy 23 court. And he also looked at this letter which was drawn 24 and drafted in response to this interrogatory. 25 Q Is it your recollection that a draft of the letter
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1 was discussed at this meeting? 2 A I don't know if a draft of the letter was discussed 3 so much. I do recall reviewing the facts. 4 Q The facts discussed going into the final version of 5 this letter? 6 A The background, the facts. 7 Q Let me show you Government's Exhibit 641-A for 8 Identification. 9 (Handed to the witness.) 10 You can page all the way through that, 11 Mr. Ackerman, and tell me if you recognize it. 12 A Yes, I do recognize it. 13 Q What is it? 14 A A copy of the letter which was faxed out to Reed's 15 attorneys, and the attorney for the committee in Who's 16 Who's case. 17 Q Is that answer to the interrogatory we discussed 18 before? 19 A Yes. 20 THE COURT: Is it dated September 8th, 1994? 21 THE WITNESS: Yes. 22 MR. WHITE: The government offers 641-A. 23 THE COURT: Any objection? 24 MR. TRABULUS: Is it identical to 641, I think it 25 is?
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1 MR. WHITE: It has attachments. 2 THE COURT: I don't have 641-A. But it is the 3 same as 641, but with attachments? 4 MR. WHITE: Yes. 5 THE COURT: You have that? 6 MR. TRABULUS: I am looking at the attachments. 7 I have no objection. 8 THE COURT: Government's Exhibit 641-A in 9 evidence. 10 Q The date is September 8th, 1994; is that correct? 11 A Yes. 12 Q And that's the same date you met with Mr. Gordon and 13 Mr. Reffsin? 14 A According to the time records, yes. 15 THE COURT: Government's Exhibit 641-A in 16 evidence. 17 (Government's Exhibit 641-A received in 18 evidence.) 19 Q Tell us who this letter was sent to? 20 A To two different attorneys at the law firm of Whitman 21 Breed Abbott and Morgan. That law firm was counsel for 22 Reed Elsevir, which had sent the interrogatories. It was 23 also sent to an attorney named William Kahn, K A H N, who 24 was the attorney for the official committee of creditors 25 in Who's Who's Chapter 11 case.
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1 Q Now, if you can turn to page 2 of your September 8th, 2 1994 letter? 3 A Yes. 4 Q On that page is it set forth the company's corporate 5 purpose or justification for loans to Mr. Gordon? 6 A Yes. 7 Q First of all, can you tell us what loans this letter 8 is referring to? 9 A Line 1 starts with a referral or reference to 10 approximately $462,698, which were, quote, lent, end 11 quote. 12 Q Rent to Mr. Gordon? 13 A Yes. 14 Q Now, prior to the time you drafted this letter, had 15 Reed taken any position
in the bankruptcy proceeding with 16 respect to what action Worldwide should take in connection 17 with these loans? 18 A They should sue to recover them. 19 Q That was Reed's position? 20 A Or since they didn't want the trustee, another person 21 should be appointed by the Court to do so. 22 Q You said they should sue to recover, who should sue 23 to recover them? 24 A The debtor, Who's Who Worldwide. 25 Q So, the position was that the company should sue
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1 Mr. Gordon for repayment of the loan? 2 A Yes. 3 Q When you met with Mr. Gordon on September 8th, did he 4 indicate to you that he was required to pay back these 5 loans to the company? 6 A To the best of my recall he indicated to me that he 7 thought it would be cancelled out by the amounts of monies 8 that he had advanced or let stay in for the company. 9 Q Therefore did he indicate he would not be required 10 ultimately to repay these loans? 11 MR. TRABULUS: Objection to form, your Honor, 12 objection to form. 13 THE COURT: Overruled. 14 A I think it is a long time ago, but I believe the 15 words used were offset, that there was nothing with 16 respect to the allegations made, etcetera. 17 Q Can you explain what you mean by offset. What would 18 be offset? 19 A If I owed you ten dollars and you owe me ten dollars 20 there is a draw. We don't owe each other anything. 21 Q Explain what he -- what was told to you with regard 22 to Mr. Gordon with respect to what was offset? 23 A Mr. Gordon had been entitled to receive a salary from 24 the company, and he had not taken them because he was 25 trying to grow the companies. And he was owed a
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1 significant amount of money. But his concentration 2 upon -- was upon growing the companies. 3 Q How did that affect as to whether or not he would 4 have to repay the loans? 5 A The concept is that it would be an offset a wash. If 6 anything, it might be even more the other way. 7 Q What the other way? 8 A Maybe the company owed him money. But I don't 9 think -- yes. 10 Q Now, in light of what Reed's prior position had been 11 as you had just described it, did that explanation have 12 any legal significance to you? 13 A Yes. 14 Q And tell us what that was? 15 A That the debtor should not be suing Mr. Gordon for 16 recovery of funds, for recovery of monies. 17 Q And that was because in fact the company owed him 18 even more; is that correct? 19 A Well, certainly it was thought, it was anticipated 20 that there was a wash, and that he didn't owe the company 21 money, and the company should not have to sue him. 22 Q Now, if you can turn to page 3, and if you can follow 23 along as I read the first full paragraph. 24 As the debtor was always operating at a profit, 25 it was always known that Bruce Gordon was due a
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1 significant sums such as and for additional compensation 2 under the terms of his agreement with the debtor. 3 However, given that the debtor's main emphasis was on 4 growth and expansion between 1990 and early 1994, 5 Mr. Gordon agreed to defer this additional cash 6 compensation, and instead, in an effort to assist the 7 debtor in its growth, agreed to take these monies, which
8 he was entitled to, and to label them as, quote, loans, 9 unquote. It was always assumed that these, quote, loans, 10 unquote, would be ultimately set off as interest free 11 advances against the monies he was due under the terms of 12 his agreement with the debtor. 13 Additionally, at the time of the, quote, loans, 14 unquote, the debtor always had more than sufficient cash 15 on hand to meet its operating expenses, and it was 16 anticipated that the debtor would continue its 17 profitability in the future, parens, this was also the 18 case, but all, quote, loans, unquote, to other entities 19 described below, close paren. 20 Now, Mr. Ackerman, was there a reason why you 21 placed the word "loans" in quotes in that paragraph? I 22 think because that's the way they were being characterized 23 at the time. 24 Q Characterized by whom? 25 A By Who's Who.
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1 Q Was it your understanding since they didn't have to 2 be repaid that they were not in fact loans? 3 MR. TRABULUS: Objection, your Honor. 4 THE COURT: On what ground? 5 MR. TRABULUS: His understanding is calling for a 6 conclusion on a question of law. 7 THE COURT: Sustained. 8 Q Mr. Ackerman, was it described to you in your meeting 9 with Mr. Gordon and Mr. Reffsin, that these were not truly 10 loans? 11 A To the best of my recollection it was so described 12 because of the wash idea. 13 Q So, the answer is yes? 14 A Yes. 15 Q Gain, if you follow along as I read the portion of 16 the next paragraph. 17 It is believed that, quote, all in all, unquote, 18 the, quote, debt of, unquote, Mr. Gordon is more than 19 fully cancelled by the debt owed to Mr. Gordon, and that 20 in fact after the application of such, quote, debts, 21 unquote, Mr. Gordon is owed a substantial sum of money. 22 Mr. Reffsin, the debtor's accountant is in the process of 23 attempting to calculate this amount. His determination 24 and all his allegations in respect thereof will be made 25 available to the committee counsel after it is completed.
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1 Mr. Ackerman, can you explain what you mean by 2 that paragraph? 3 A The beginning part was explaining the wash concept, 4 that the debt which Mr. Gordon allegedly owed to the 5 debtor, Who's Who, which Reed is saying should be sued on, 6 was really more than washed out by the debts that Who's 7 Who owed to Mr. Gordon. And Mr. Reffsin, who was the 8 accountant of the debtor, was
going to calculate this so 9 we can put a number to things. 10 Q Were you told in your meeting of September 8th that 11 Mr. Reffsin was preparing this calculation? 12 A I believe -- to the best of my recollection I think I 13 said this has to be done. And it was agreed that it would 14 be done. 15 Q Now, do you recall ever receiving any such 16 calculation from Mr. Reffsin? 17 A No. It has been many years. I really don't recall. 18 Q If you can look at the paragraph above that, it says 19 I am the middle of the paragraph I read previously, that 20 it was always assumed that these loans would ultimately be 21 set off as interest free advances against monies owed to 22 Mr. Gordon. 23 Who told you that? 24 A I would assume, and to the best of my recollection, 25 it was told to me by Mr. Reffsin and or Mr. Gordon.
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1 MR. WALLENSTEIN: Objection to what he assumed. 2 THE COURT: You are objecting on what grounds? 3 MR. WALLENSTEIN: What he is assuming. He knows 4 or he doesn't. 5 THE COURT: When you say you assume, is that your 6 opinion with reasonable certainty? 7 THE WITNESS: Yes. 8 THE COURT: Overruled. 9 Q In the letter you use the words, that it was always 10 assumed that these would be set off. 11 Assumed by who -- whom, I am sorry? 12 A I guess by the parties to the transaction. 13 Q Who are they? 14 A Who's Who and Bruce Gordon. 15 Q And where it says that the debt of Mr. Gordon is more 16 than fully cancelled by the debt owed to Mr. Gordon, were 17 you told that in your September 8th meeting with Gordon 18 and Reffsin? 19 A Yes. 20 Q And who were you told that by?
21 A It would have been one or the other. 22 Q Now, at the time you prepared this letter was there 23 any uncertainty or confusion in your mind regarding what 24 Mr. Gordon and Mr. Reffsin had told you in this meeting? 25 A Not that I recall.
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1 Q Does this letter accurately set forth what you were 2 told by Mr. Gordon and Mr. Reffsin in this meeting? 3 A I believe so. 4 Q Okay. 5 Now, in this letter, if you can turn to page 4 of 6 the letter, and there is a paragraph at the bottom 7 numbered five. Do you see that? 8 A Yes. 9 Q And does that respond to the interrogatory that 10 requests the justification for monies transferred to 11 Publishing Ventures? 12 A Yes. 13 Q Now, did Publishing Ventures own any assets that you 14 are aware of? 15 A It owned certain real estate. 16 Q And that was real estate at Hummingbird Road in 17 Manhasset? 18 A I believe so. 19 Q Was it a condominium there? 20 A I believe so, yes. 21 Q If you can follow along as I read that. It says PVI, 22 colon. Borrowed approximately 1.1 million dollars, used 23 for the purchase of the Hummingbird Road Manhasset 24 property, and the renovation thereof and improvements 25 thereto.
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1 PVI was intended to be the corporation which 2 would be the legal owner of all real estate and business 3 facilities to be provided to the Who's Who family of 4 corporations and its members. This was done for tax 5 purposes and other reasons. The property was purchased to 6 give executives who were employed by and/or members of 7 Who's Who and/or Sterling, parenthesis, or other future 8 members of the Who's Who family of corporations, close 9 paren, a place to reside, function and, most important, 10 network while in New York. 11 Now, Mr. Ackerman, the paragraph that I just 12 read, that the property was to be used by Who's Who 13 executives or members to reside, function or network, who 14 told you that that was the case? 15 A To the best of my recollection, Bruce. 16 Q Now, if you turn to page 5, the last page of the 17 letter, does it indicate that that letter was cc'd to 18 anyone? 19 A Yes, it does. 20 Q And to whom was it cc'd? 21 A It indicates it was cc'd to Bruce Gordon and to Marty 22 Reffsin. 23 Q Now, if you can take a look at Exhibit 633, which is 24 already in evidence. 25 (Handed to the witness.)
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1 Q First of all, Mr. Ackerman, can you tell us what that 2 is? 3 A A document filed in Who's Who's Chapter 11 case, 4 entitled response in further operation to the motion of 5 Reed Elsevir. It was filed by the debtor, Who's Who. 6 Q If you look on the last page, who is the attorney who 7 signed it on behalf of Who's Who? 8 A Rivkin Radler and Kremer by me. 9 Q And the exhibit you have in front of you is just 10 pages 1, 19, through 21; is that right? 11 A Yes. 12 Q And the document was actually considerably longer; is 13 that correct? 14 A Yes, 1, 19, 20 and 21? 15 Q Yes; that's what you have before you? 16 A Yes. 17 Q There were pages 2 through 18; is that correct? 18 A Yes. 19 Q If you look at page 20, there is a paragraph with the 20 letter E there. 21
Q Do you see that? 22 A Yes, I do. 23 Q Does that provide an explanation of the loans to 24 Mr. Gordon? 25 A Yes.
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1 Q And comparing that to Exhibit 641-A, the letter that 2 you wrote on September 8th, are the explanations virtually 3 identical? 4 A Upon my review now, yes. 5 Q If you turn back to page 19, the paragraph letter A, 6 is that substantially the same as the justification for 7 the loans to PVI contained in your September letter? 8 A Yes, they are substantially the same. 9 Q Now, when was Exhibit 633, your legal reply, filed in 10 relation to your September letter? 11 A Dated October 6th, 1994, so, it was dated less than 12 thirty days following the date of my September 8th letter. 13 Q Now, with respect to Exhibit 633, the response
filed 14 October 6th, do you know if Mr. Gordon or Mr. Reffsin 15 reviewed that document before it was filed with the 16 bankruptcy court? 17 A I can't swear to that, no. I don't recall. 18 Q You can take a look at your firm's billing statement, 19 Exhibit 636. 20 A Yes. 21 Q And if you can look at page 35. 22 Now, does that contain an entry from September 23 29th, 1994 by your associate, Gerard? 24 A Yes, it does. 25 Q All right.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1378 Ackerman-direct/White
1 If you can continue looking at that entry over to 2 the next page, and I will read a portion of it near the 3 top of page 36. 4 Drafted letter to B. Gordon and M. Reffsin 5 regarding enclosure of the draft debtor's response in 6 opposition to Reed's motion, requests for their comments 7 and/or suggestions. 8 And then further on down on the same date, it 9 says: Prepared debtor's response in opposition to Reed's 10 motion to be delivered by a fax to both B Gordon and 11 M. Reffsin. 12 Do you see that, Mr. Ackerman? 13 A Yes, I do. 14 Q And take a look at Government's Exhibit 633-A for 15 Identification. 16 A Okay. 17 (Handed to the witness.) 18 Q Do you recognize what that is, Mr. Ackerman? 19 A Yes, I do. 20 Q What is it? 21 A A fax letter from Richard Weber, W E B E R, another 22 one of my associates and Gerard to Bruce Gordon and Marty 23 Reffsin enclosing a rough draft of the response that was 24 to be filed, and stating it is only a rough draft, and it 25 is subject to Neil's, my, editing revisions.
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1 They also cc'd it by interoffice mail to me. 2 MR. WHITE: Your Honor, the government offers 3 633-A. 4 THE COURT: Any objection? 5 MR. TRABULUS: Yes, your Honor. I don't know who 6 it is supposed to be a statement of. It is a draft. It 7 wasn't adopted by anyone. 8 MR. WHITE: Your Honor, it is offered to show 9 that a document containing the same language as ultimately 10 filed was sent to Mr. Gordon and Mr. Reffsin. 11 MR. TRABULUS: For that purpose I don't object. 12 THE COURT: Pardon? 13 MR. TRABULUS: For that purpose I don't object. 14 THE COURT: Members of the jury, this is just 15 shown as a document that was sent, allegedly sent to 16 Mr. Gordon, and for that purpose. It is not 17 necessarily -- it is not for the truth of the document, 18 but as to what was sent to Mr. Gordon. 19 Government's Exhibit 633-A for Abel in evidence. 20 (Government's
Exhibit 633-A received in 21 evidence.) 22 MR. TRABULUS: If I can say, I think the page 23 that should be in would be the ones that correspond to the 24 pages of 633 that are in, and that would be 1, and I 25 think -- I don't even know about one, but for purposes of
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1 it being offered only 18, 19 and 20 should be admitted, 2 and maybe 21. That's what he is talking about. The rest 3 of it is slightly different. 4 MR. WHITE: Your Honor, all I am talking about is 5 the fax cover sheets and 18 through 21. 6 THE COURT: Well, do you want to have him redact 7 the rest of it? 8 MR. TRABULUS: Yes, let it just be the cover 9 sheet and 18 through 21. 10 THE COURT: All right, as it is to be redacted; 11 is that right? 12 MR. WHITE: Yes, your Honor.
13 THE COURT: All right. 14 Q Mr. Ackerman, if you can look at the draft, which is 15 633-A, pages 18 to 21, and if you could compare paragraph 16 A in there to paragraph A in Exhibit 633, which is the 17 document actually filed. Is it substantially the same? 18 A It apparently is, other than one sentence at the 19 end. Other than that it is exactly the same. 20 Q And if you can look at page 19 and 20 of the draft, 21 is the language there regarding the loan to Mr. Gordon 22 substantially the same as that that was in the final 23 version that was filed? 24 A Give me one second. 25 (Whereupon, at this time there was a pause in the
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1 proceedings.) 2 A It is substantially same. 3 Q Mr. Ackerman, do you know if between September 29th 4 when that fax was
sent, and October 6th, when the final 5 version was filed, if your associate, Gerard, had a 6 conversation with Mr. Gordon about the draft? 7 A At this time, no, I don't recall. 8 Q Again, if you can turn to your firm's billing 9 statement, Exhibit 636, and if you look at page 36, let me 10 read a portion from September 30th, 1994 by Gerard. 11 Conference call with Bruce Gordon regarding 12 incorporating his changes and suggestions to the debtor's 13 response in further opposition to Reed's motion seeking 14 the appointment of an operator Chapter 11 Trustee. 15 Further on down, reviewed 3/31/94 order and 16 judgment from District Court involving the trademark 17 litigation, Tribute Magazine, prior pleadings and/or 18 motions, all regarding B. Gordon's changes and/or 19 suggestions to the debtor's response in further opposition 20 to Reed's motion seeking the appointment of an operating 21 trustee. 22 Having reviewed that, Mr. Ackerman, does that 23 refresh your recollection that your associate had a 24 conversation with Mr. Ackerman regarding this report 25 before it was filed?
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1 A Yes. 2 MR. WHITE: Your Honor, one moment. I am trying 3 to find something. 4 THE COURT: Yes. 5 (Whereupon, at this time there was a pause in the 6 proceedings.) 7 Q Mr. Ackerman, let me show you Exhibit 632, which is 8 already in evidence, and if you can page through that and 9 tell me what that is. 10 (Handed to the witness.) 11 A This is a stipulation which was so ordered by the 12 bankruptcy court, entered into by Reed Elsevir through its 13 counsel, the attorney for the committee of unsecured 14 creditors
and Who's Who Publishing Ventures and other 15 members of the Who's Who member of corporations, as well 16 as my firm. This adjourned the motion which Reed Elsevir 17 had filed for the appointment of a Chapter 11 Trustee, and 18 it also gave certain further relief, including resolving 19 discovery requests which had been made by Reed of the 20 debtor, Who's Who. 21 Q Now, Mr. Ackerman, you said it was so ordered by the 22 judge. What does that mean? 23 A That means it was approved by the Court. 24 Q And this is a stipulation between the parties? 25 A Yes.
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1 Q And what effect does it have when the judge so orders 2 a stipulation like that? 3 A It makes it part of the record. It makes it formal, 4 and it becomes the law of the case. 5 Q Is it an order from the Court to comply with the 6 stipulation? 7 A Well, the Court is merely approving the agreements 8 between the parties. 9 Q Okay. 10 If you look at paragraph four of the order, 11 without reading it -- I mean, without reading it outloud, 12 can you tell us what is agreed to in that paragraph? 13 A Well, under it, Who's Who, Publishing Ventures, 14 Sterling, and Who's Who Executive Club, agree to maintain 15 a log in the ordinary course of businesses of all the 16 users at the various -- there are apparently three 17 different apartments or co-ops. One was at 200 18 Hummingbird Road in Manhasset, the second was at 250 East 19 54th, apartment Penthouse 4 in Manhattan. And the third 20 was at 750 Lexington Avenue in Manhattan. 21 Q And does the stipulation set forth what information 22 is to be contained on those logs? 23 A Yes. 24 Q What
does it say? 25 A The names and addresses of each user, commencing on
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1 the hearing date, which was defined -- let's see, defined 2 on page 2 as being August 9th, 1994, so from the hearing 3 date, August 9th, 1994, to about a month and six days 4 later, September 15th, 1994. And we were to supply that 5 on or before September 23, 1994 to Reed's counsel and to 6 counsel for the committee. 7 Q Now, if you can flip to the last two-pages of the 8 stipulation, is it signed on behalf of Who's Who 9 Worldwide? 10 A Yes. 11 Q By whom? 12 A Bruce Gordon president. 13 Q Is it signed on behalf of Publishing Ventures, Who's 14 Who Executive Club and Sterling Who's Who? 15 A Only as to certain fixed paragraphs. I guess it was 16 this paragraph, the log, Bruce Gordon president, on each 17 one of those three. 18 Q Now, did you have any conversations with Mr. Gordon 19 about the requirement to keep these logs and make them 20 available to the company's creditors? 21 A Yes. 22 Q Tell us what was said. 23 A I recall that because of -- we were agreeing to 24 provide a plan that would set forth that there would be 25 100 percent payment to creditors, Bruce felt there was no
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1 reason we should have to provide them with this 2 documentation. 3 Q Tell us specifically what Mr. Gordon told you? 4 A He just felt it was intrusive and it was wrong. Why 5 should we have to give them this? We would give them 100 6 percent. 7 Q Now, did you have any response to what he said? 8 A Yes. 9 Q What did you te
ll him? 10 A We agreed to do so. In any event, the Court would 11 require us to do so. We had to do it. 12 Q Now, after -- what date was this stipulation entered 13 into by you on behalf of the company? 14 A I signed it on September 9, 1994 as counsel for the 15 debtor. 16 Q Do you know if an oral agreement was reached prior to 17 this stipulation? 18 A I believe one was, yes. 19 Q Now, between the time of that oral agreement and 20 September 23rd, when the logs were due to the creditors, 21 did you have any communications with Mr. Gordon or 22 Mr. Reffsin regarding these logs? 23 A I remember with Mr. Gordon, just going -- I think 24 near the end, or one time around this time or a little 25 later, as to the status of the logs, and toward the end,
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1 when they were due, what is happening, when is it coming. 2 Q Mr. Ackerman, let me show you 3 Government's Exhibit 639 for Identification. 4 (Handed to the witness.) 5 Q Do you recognize Exhibit 639? 6 A Yes. 7 Q And what is it? 8 A A fax that was sent to Bruce Gordon and Marty Reffsin 9 reminding them that the logs were going to be users 10 between 8/9/94 and 9/15/94, had to be provided to read's 11 counsel and to counsel for the committee on or before 12 9/23/94 under the conditions of the stipulation. 13 MR. WHITE: Your Honor, offer Defendant's 14 Exhibit 639. 15 THE COURT: Any objection? 16 MR. TRABULUS: No objection. 17 MR. WHITE: Is it received in evidence? 18 THE COURT: I said, any objection? 19 MR. TRABULUS: I am sorry, I said no objection. 20 I swallowed my voice. 21 THE COURT: I didn't hear you. 22 Government's Exhibit 639 in evidence. 23 (Government's Exhibit 639 received in evidence.) 24 Q Mr. Ackerman, if you can look at page 2 of that 25 exhibit, is that a fax confirmation report?
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1 A Yes. 2 Q Does it indicate that this letter was faxed to 3 Mr. Gordon and Mr. Reffsin? 4 A Yes. It shows as to Marty it was incomplete, and 5 that's on page 2. But as to the 822-9008 number, which 6 was to Bruce, that it went okay. 7 Q Mr. Ackerman, if you look at page 1, the cover page 8 of the fax, doesn't it indicate that 822-9008 is 9 Mr. Reffsin's fax number? 10 A Forgive me, yes. That was incorrect, page 2 shows it 11 went to Martin Reffsin. Actually it also would show that 12 it went through to Who's Who Worldwide. It doesn't show a 13 number on the second entry t
here, on that page 2. And 14 then page 3, I guess shows another entry that it went 15 through to Who's Who. 16 Q Let me show you Exhibit 639-A for Identification. 17 (Handed to the witness.) 18 Q Tell us what that is? 19 A This is a copy of the fax I sent to Bruce and Marty 20 Reffsin, or addressed to Bruce and Marty Reffsin, dated 21 September 14, 1994, paragraph three again reminding them 22 that the logs which were required under the stipulation 23 had to be provided by stipulation no later than 9/23, 24 1994. And I also mentioned that I wanted to see the logs 25 by no later than the day before that, 9/22/94, so that I
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1 can make sure I can transmit them on time. 2 MR. WHITE: Your Honor, the government offers 3 639-A. 4 THE COURT: Any objection?
5 MR. TRABULUS: No. 6 THE COURT: Government's Exhibit 639-A in 7 evidence. 8 (Government's Exhibit 639-A received in 9 evidence.) 10 Q Now, so 639 and 639-A indicate that you reminded 11 Mr. Gordon and Mr. Reffsin on September 8th and the 14th, 12 that the logs had to be provided; is that correct? 13 A Yes. 14 MR. WHITE: Your Honor, I see it is a little time 15 after 3:00. This would be a good time to break. 16 THE COURT: Very well. 17 Ladies and gentlemen, do not discuss the case. 18 Keep an open mind. 19 Where are you going, juror number four? 20 JUROR NO. 4: You told us to get out of here. 21 THE COURT: That's all right, perfectly all 22 right. 23 Please recess yourselves. 24 (Whereupon, at this time the jury leaves the 25 courtroom.)
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Ackerman-direct/White
1 THE COURT: You can step down. 2 3 (Whereupon, a recess is taken.) 4 5 THE COURT: Mr. Ackerman. 6 Incidentally, I hear talk. I don't mind when you 7 talk to your clients, but I am hearing it up here. So 8 please make it soft. It is no good if I hear it and the 9 jury is going to hear this buzzing. It is annoying. 10 When you talk, you can certainly talk, but keep 11 it down. 12 THE CLERK: Jury entering. 13 (Whereupon, the jury at this time entered the 14 courtroom.) 15 THE COURT: Please be seated, members of the 16 jury. 17 You may proceed. 18 BY MR. WHITE: 19 Q Mr. Ackerman, have you ever heard the term, 341 20 meeting? 21 A Yes. 22 Q Tell us what a 341 meeting is. 23 A It is a meeting provided for under the bankruptcy 24 law. Examinations are allowed to take place there of the 25 debtor, if the debtor is accompanied by its principals,
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1 and it can be done by creditors. 2 In a Chapter 11 case it is led initially by the 3 office of the U.S. Trustee which supervises Chapter 11 4 cases, the administration of the case, in a Chapter 11 5 case it is led initially by the office of the U.S. Trustee 6 which supervises Chapter 11 cases, the administration of 7 the case, etcetera. And creditors are allowed to ask 8 questions. 9 Q You said examinations. You mean they can ask 10 questions? 11 A Yes. 12 Q Ask questions of whom? 13 A Of the principal, of the debtor, generally, speaking, 14 although the attorney for the debtor will come there. The 15 attorney for the debtor will sometimes come and assist and 16 ask questions, and various other professionals of the 17 debtor may come and assist and ask questions. 18 Q Did you finish your answer? 19 A Yes. 20 Q And when you say other professionals, what do you 21 mean? 22 A Accountants, sometimes appraisers. 23 Q Okay. 24 Now, after the oral agreement to keep the logs 25 that you described before, did you attend any 341
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1 meetings? 2 A There was at least one that I recall attending in 3 this case. 4 Q Let me show you Government's Exhibit 801, which is 5 already in evidence, which is in evidence. 6 That's a partial 341 meeting of September 9th, 7 1994; is that right? 8 A Yes. 9 Q If you would review pages 35 and 37 to yourself, and 10 then tell us what took place at that hearing with respect
11 to the Manhasset condominium? 12 THE COURT: What exhibit is that? 13 MR. WHITE: 801, your Honor. 14 A Douglas Skalka, S K A L K A, who was the attorney for 15 Reed asked questions of Bruce Gordon about the Manhasset 16 property. Mr. Gordon stated that he had an office there. 17 Mr. Gordon testified he works there very late, or he works 18 very late, and he works very often to 2:00 o'clock, 3:00 19 o'clock in the morning. And he may sleep there on those 20 occasions. 21 At that point I asked, was this the property 22 owned by Publishing Ventures, Inc.? 23 And then stated for the record that there was 24 going to be a log kept in accordance with an agreement 25 which had been entered into at Reed and the committee's
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1 counsel of all the people who used the premises between 2 August 9th and September 15th. 3 Q And you stated that at that hearing? 4 A Yes, I did. 5 Q If you would look at page 2 of the transcript, does 6 it indicate who was present for or on behalf of Who's Who 7 Worldwide? 8 A Well -- 9 Q In addition to the attorneys? 10 A In addition to me there was Bruce Gordon, the 11 principal of Who's Who. There was Martin Reffsin who was 12 the Court-appointed accountant for Who's Who. And there 13 was Maria Gaspar -- I think her name is Gaspard, with a D 14 at the end, who worked at Who's Who. 15 Q Do you know what Ms. Gaspar did at Who's Who? 16 A I believe to the best of my recollection her 17 functions included either being a controller or 18 bookkeeper, something like that. 19 Q Now, can you tell us again, what was the date on 20 which you were required to produce these logs to the
21 creditor's attorney? 22 A September 23, 1994. 23 Q Now, do you recollect whether or not you were in the 24 office on September 23, 1994? 25 A To the best of my recollection I was out sick and not
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1 in the office on that date. 2 Q Do you recollect where you were? 3 A I think I might have been working from home or sick 4 at home, but working from home nevertheless. 5 Q If you can look at Exhibit 636, which is your billing 6 statement. 7 A Yes. 8 Q And look at pages 15 and 16. 9 A Yes. 10 Q Look halfway down the entry for September 23rd, it 11 says -- this is your entry, correct? 12 A Yes. 13 Q It says telephone call from Gerard, parens, since I 14 am home sick while this is going on, close parens, do you 15 see that? 16 A Yes. 17 Q Now, were you in touch with your office on that day? 18 A Definitely. 19 Q For example, how many hours did you work on this 20 matter that day? 21 A I recorded 3.5 hours. 22 Q All right, if you can look at the next page, page 16, 23 this again is your time entry for that day, correct? 24 A Yes. 25 Q About ten lines from the top it says: Dictate letter
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1 and instruct to send out to Tom Bailey, Bill Kahn and Doug 2 Skalka enclosing documents, re log. Do you see that? 3 A Yes. 4 Q What logs are you referring to there? 5 A The logs that came in in respect to the Publishing 6 Ventures property. 7 Q Now, do you recall to whom you were dictating this 8 letter? 9 A Probably to my secretary, Pat Bzdyk, B Z D Y K.
10 Q Look at page 30 of the billing statement? 11 A Yes. 12 Q This is Gerard's entry, right? 13 A Yes. 14 Q About seven lines from the bottom it says, several 15 discussions with N. Ackerman, out sick, home, regarding 16 strategy in case, Reed's motion for a trustee, extension 17 of exclusivity, production of logs details use of real 18 properties, etcetera. Do you see that? 19 A Yes. 20 Q Do you recall speaking with Gerard on that day 21 regarding the logs? 22 A Yes. 23 Q On the same day, on the next page, and this is also 24 Gerard's entry, correct? 25 A Yes, it is.
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1 Q About two-thirds of the way down, the next page, page 2 31, it says: Discussion with M. Gaspar, controller, 3 regarding property user's log that was and is being 4 maintained in accordance with stipulation and order, re 5 faxing same, M. Reffsin's comments, slash suggestions 6 thereto, etcetera. Do you see that? 7 A Yes. 8 Q Mr. Ackerman, let me show you Exhibit 640, which is 9 in evidence. 10 (Handed to the witness.) 11 MR. WHITE: Your Honor, this is one of the 12 exhibits previously passed out to the jury and it should 13 be in their binders. 14 THE COURT: Very well. 15 Q What is Exhibit 640, a fax letter dated September 23, 16 1994, to two different -- actually three different 17 attorneys, the first and the third, Tom Bailey and Doug 18 Skalka, who were attorneys for Reed, and the second, 19 William Kahn, the attorney for the committee of unsecured 20 creditors in this case. It was sent to me, although it 21 was dictated but not Reed. And it sets forth that the 22 logs, which were required, about the property owned by 23 Publishing Ventures were annexed to the fax. 24 And if you page through the exhibit, are those 25 logs annexed?
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1 A Yes. 2 Q Look at page 2 of the fax cover memo? 3 A Yes. 4 Q Does it indicate that it was cc'd to anyone? 5 A It indicates it was cc'd to Bruce Gordon and to 6 Martin Reffsin. 7 Q Now, if you can take a look at Exhibit 640-A for 8 Identification. 9 A Okay. 10 (Handed to the witness.) 11 Q Do you recognize what that is, Mr. Ackerman? 12 A It is a fax from me. It does not indicate that it is 13 dictated but not Reed, but I wasn't in that day, sent to 14 Bruce Gordon and to Martin Reffsin. 15 It says that -- 16 THE COURT: No. Don't tell us what it says. 17 THE WITNESS: Sorry.
18 MR. WHITE: Your Honor, the government offers 19 640-A. 20 THE COURT: Is there a date on that? 21 MR. WHITE: September 23rd, 1994. 22 THE COURT: Any objection? 23 MR. TRABULUS: No. 24 THE COURT: Government's Exhibit 640-A for Abel, 25 in evidence.
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1 (Government's Exhibit 640-A received in 2 evidence.) 3 Q Now, Mr. Ackerman if you could, without reading it, 4 just review the fax cover page and tell us what was being 5 sent to Mr. Gordon and Mr. Reffsin? 6 A A copy of the letter being sent to Reed's attorney 7 and Bill Kahn. 8 Q And from the date and description, because they 9 appear to be referring to what was sent on that same date 10 to Bailey, Kahn and Skalka? 11 A Yes. 12 Q Now, if you look on the front page of 640-A, there is 13 a box that says on the fax cover sheet, number of pages to 14 follow. Do you see that? 15 A Yes. 16 Q And what is listed? 17 A Two. 18 Q There are two pages then attached? 19 A Yes. 20 Q And do those pages contain the actual logs or just 21 the cover memo? 22 A Just the cover sheet. 23 Q Now, if you look at the fourth page of Exhibit 24 640-A -- 25 A Okay.
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1 Q That's a fax confirmation report? 2 A Yes, it is. 3 Q Does it indicate a fax was sent on that day to Who's 4 Who Worldwide? 5 A Yes. 6 Q How many pages does it say was faxed? 7 A 11. 8 Q And you see the fax number underneath where it says 9 Who's Who Worldwide? 10 A Yes. 11 Q Do you recognize that fax number? 12 A Yes. That Martin Reffsin's fax number preceded by a 13 9, which is how they had to dial out faxes from Rivkin 14 Radler. 15 Q Okay. 16 How many pages were faxed to Mr. Reffsin? 17 A 11. 18 Q If you look at your billing statement, Exhibit 646. 19 A Yes. 20 Q Now, did your firm charge when they sent out a fax? 21 A Yes. 22 Q And look at page 41 of your bill? 23 A Okay. 24 Q Is that a list of outgoing fax transmissions? 25 A Yes.
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1 Q On September 23rd, 1994, are there any outgoing faxes 2 to Who's Who or Mr. Reffsin? 3 A Yes. Yes, I see it. 4 Q Okay. 5 If you look at the entry that says 9/23/94, the 6 number is 327? 7 A 9272. 8 Q Now, do you know whose fax number that is? 9 A That's Who's Who's. 10 Q And how much were they charging for the fax? 11 A $11. 12 Q And how much did you charge per page for a fax? 13 A I don't know, maybe 50 cents, maybe a dollar a page. 14 Rivkin had its own procedures. 15 Q And the next entry, is that Mr. Reffsin's fax number? 16 A Yes, it is. 17 Q How much was he -- how much was Who's Who charged for 18 that fax? 19 A $12. 20 Q These faxes which charged -- sent to the creditor's 21 lawyers on September 23rd; is that right? 22 A Yes. 23 Q Did you ever have a conversation with Mr. Gordon 24 after September 23rd, in which he indicated that the logs 25 were inaccurate in any way?
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1 A No. 2 Q Did you ever have a conversation after September 23rd 3 with Mr. Reffsin, where he indicated
that the logs were 4 inaccurate in any way? 5 A No. 6 Q Did you ever have any conversation at any time with 7 Mr. Gordon as to whether or not he had an ownership 8 interest in Who's Who Worldwide? 9 A He told me that he had no ownership interest in Who's 10 Who. 11 Q Did he indicate who were the owners of Who's Who 12 Worldwide? 13 A People called the Grossmans, G R O S S M A N. And I 14 believe Mrs. Grossman was his sister. I am not quite 15 sure. 16 Q Did Mr. Gordon ever tell you anything regarding his 17 personal situation with the Internal Revenue Service? 18 A He once mentioned he owed money to the IRS. 19 Q Now, besides Who's Who Worldwide, were you aware of 20 any other corporations that were controlled by Mr. Gordon? 21 A Managed? 22 Q Okay, managed by Mr. Gordon. 23 A Yes. 24 Q Tell us what those other corporations were? 25 A It was my belief that he was managing the entire
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1 family of corporations, Sterling, Who's Who Executive Club 2 and Publishing Ventures. 3 Q Now, have you ever heard of a company called Registry 4 Publishing? 5 A I might have. I don't recall it right now. 6 Q Now, did you ever, during the course of your 7 representation of Who's Who Worldwide become aware of 8 transfers of money between the various corporations 9 managed by Mr. Gordon? 10 A I believe I recall that there were loans which may 11 have been made in order to enable survival. And I know 12 for a fact that there were rents being paid. Say if an 13 entity used Publishing Ventures property, I was told that 14 Publishing Ventures would be paid by that entity for such 15 use.
16 Q Regardless of the reasons, did you become aware of 17 transfers between the corporations? 18 A I was made aware. 19 Q Now, did you question Mr. Gordon regarding the 20 transfers among these various corporations? 21 A I don't know if I would use the word "question." I 22 was certainly asked. 23 Q Did you have a conversation with him regarding these 24 transfers? 25 A I think so, yes.
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1 Q Tell us what was said in that conversation. 2 A I can't recall a specific date or time. It was just 3 that he was -- it was just a part of the family of 4 corporations. He was going to do what he could to build 5 the biggest thing. He was going to build it, and build it 6 fast. 7 Q Now, did Mr. Gordon ever tell you anything regarding 8 transfers as between his companies as it related to his 9 situation with the IRS? 10 A In terms of post bankruptcy? 11 Q At any time. 12 A There was one occasion, I don't remember when, when 13 we were talking. And to the best of my recall I asked him 14 why there had been the sort of transfers that occurred 15 here, as opposed to putting everything into one company's 16 name. And we talked about the other family corporations. 17 And I asked him, was he scared of Reed? Is that why he 18 did this? 19 And he said, no, he was never scared of Reed. He 20 didn't think that Reed was going to beat him. And that 21 was never the reason for any of the transfers. 22 Q And in that discussion did he offer any reason why he 23 had undertaken these transfers? 24 A I don't want to hedge. I don't recall if there was a 25 reason, but at that point he mentioned he owed money to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1403 Ackerman-direct/White
1 the IRS, and the conversation just left off. 2 Q Did he indicate that the transfers were related at 3 some point to his relationship with the information? 4 MR. TRABULUS: Objection, leading. 5 THE COURT: Sustained as to form. 6 Q Did he indicate anything further regarding whether -- 7 how his IRS situation related to the transfer? 8 A I don't believe he did. I think that the rest of the 9 conversation to the extent that went on, was me saying, 10 you got to resolve that, and maybe we can help to resolve 11 that. 12 MR. WHITE: Your Honor, may I have one moment to 13 get a document? 14 THE COURT: Yes. 15 (Whereupon, at this time there was a pause in the 16 proceedings.) 17 Q Mr. Ackerman, let me show you 18 Government's Exhibit 3500-5-A. 19
(Handed to the witness.) 20 Q If you can look at pages 20 to 23 to yourself. 21 A Yes. 22 Q Now, does that refresh your recollection, 23 Mr. Ackerman, that Mr. Gordon told you that one of the 24 reasons for these transfers was the fact that he owed the 25 IRS money?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1404 Ackerman-direct/White
1 A It came up in the context of this conversation, that 2 I definitely recall why he had done the transfers. 3 Q And is it your recollection, therefore, that 4 Mr. Gordon told you that one of the reasons why he did 5 those transfers was the fact that he owed the IRS money? 6 A I don't know if he used the words, one of the reasons 7 I am doing this is because I owed the IRS money. But I 8 remember it came up in the course of this conversation. I 9 do remember that I did not pursue it much.
10 Q If you look at the top of page 22 of that exhibit, do 11 you recall testifying in the grand jury that one of 12 Mr. Gordon's reasons for doing that was because he owed 13 the IRS money? 14 A I answered yes to that question, yes. What I am 15 testifying to today is what I recall. 16 Q Now, was a bankruptcy trustee ultimately appointed to 17 operate Who's Who Worldwide? 18 A Yes. 19 Q And do you remember approximately when that was? 20 A It was after the company was closed down. I would 21 say in April or May of 1996, I believe. It was '95 or 22 '96 -- I don't remember. 23 Q You don't recall? 24 A No. 25 Q Now, do you know if in January of 1996 the trustee
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1405 Ackerman-direct/White
1 took any action with respect to the penthouse on 54th 2 Street in Manhattan?
3 A There definitely came a time. From that question, I 4 guess, or from your question, that it was -- he was 5 appointed in '95. There was definitely a time that the 6 trustee took action with respect to a certain penthouse. 7 Q Can you tell us what action they took? 8 A I got a phone call from Bruce that the trustee had 9 gone to one of the penthouses and had locked him and his 10 wife out. And they had a new baby, and he was furious. 11 Q Did Mr. Gordon say anything else with regard to the 12 property located in the penthouse? 13 A Yes, he said it was his, and he can prove it through 14 invoices, that it was simply at those premises. 15 I said, get together those invoices and show it 16 to the trustee. I am sure if you can show that it is 17 yours, he will let you go. 18 Q Now, did Mr. Gordon indicate to you that he lived at 19 this penthouse? 20 A I believe he definitely indicated he was living there 21 then. 22 Q Now, did Mr. Gordon ask you to take any action in 23 this conversation? 24 A Yes. He wanted me to represent him. 25 Q In connection with what?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1406 Ackerman-direct/White
1 A He wanted to bring out a lawsuit against the trustee. 2 Q Let me show you Government's Exhibit 642 for 3 Identification. 4 (Handed to the witness.) 5 Q Now, if you can review that, Mr. Ackerman, and tell 6 me if you recognize it? 7 A Yes, I do. 8 Q What is it? 9 A A letter from Bruce to me dated January 25th, 1996. 10 I was now at the law firm of Meltzer Lippe, which I had 11 joined about a year earlier. And in it he -- 12 Q Without telling us what is in it yet -- 13 A Sorry. 14 Q Is this a follow up to your telephone
conversation? 15 A Yes. 16 MR. WHITE: The government offers Exhibit 642. 17 THE COURT: Any objection? 18 MR. TRABULUS: Your Honor, I have to find it. 19 THE COURT: Yes. 20 (Whereupon, at this time there was a pause in the 21 proceedings.) 22 MR. TRABULUS: No objection. 23 THE COURT: Government's Exhibit 642 in 24 evidence. 25 (Government's Exhibit 642 received in evidence.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1407 Ackerman-direct/White
1 THE COURT: I have not found it, what is it? 2 MR. WHITE: A letter from Mr. Gordon to -- from 3 Mr. Ackerman dated January 25th, 1996, on Sterling Who's 4 Who letter. 5 THE COURT: Very well. Government's Exhibit 642 6 in evidence. 7 Q Mr. Ackerman, if you can follow along while I read 8 the first paragraph. 9 Dear Neil. As you know, Christine Jagde, 10 J A G D E, of Solomon Green and Ostrow would not let me 11 remove personal papers and objects from the apartment on 12 54th Street. 13 Now, Mr. Ackerman, first of all, can you tell me 14 who Christine Jagde is? 15 A Solomon Green and Ostrow, the law firm she was 16 working at had been retained to be counsel for the trustee 17 in Who's Who's case, the trustee was Alan Mendelsohn, 18 M E N D E L S O H N. So that was the attorney for the 19 trustee. 20 Q I am going to read starting with the fourth 21 paragraph. 22 I demand that I be allowed to remove all personal 23 papers, personal objects and furniture from the apartment 24 immediately as the entire rent was paid by Sterling Who's 25 Who and not Who's Who Worldwide.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1408 Ackerman-direct/White
1 The lease may be in
Who's Who Worldwide's name, 2 this is because Sterling Who's Who was a brand-new entity 3 and had no credit at the time. However, all bills were 4 paid by Sterling Who's Who and not Who's Who Worldwide. 5 You have copies of the rent check. 6 I brought personal objects that I have paid for 7 to the apartment, and objects that were given to me as 8 gifts from friends, employees, relatives and my parents. 9 I want an immediate release of these objects and 10 furniture. 11 Christine would not let me remove my personal 12 camera, my stereo, my sculptures, art and furniture, that 13 does not belong to Who's Who Worldwide. These must be 14 released immediately. 15 Furthermore, the trustee's attorney has caused me 16 and the lady that I live with hardship and a tremendous 17 amount of stress because of this illegal seizure. I want 18 to sue the trustee and Reed for
ten million dollars and 19 more immediately. I cannot negotiate this to Reed's and 20 the trustee's satisfaction. 21 Again, I want an immediate release of all 22 furniture and all personal papers and property from the 23 apartment, and commence an immediate lawsuit for ten 24 million dollars or more. 25 Very truly yours, Bruce Gordon.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1409 Ackerman-direct/White
1 Mr. Ackerman, after you received this letter, did 2 you have a conversation with Mr. Gordon? 3 A Yes. 4 Q Tell us what was said in that conversation? 5 A I said I couldn't represent him personally. I 6 represented Who's Who the debtor, and it would be a 7 conflict for me to represent Bruce himself on the -- 8 against the representatives of Who's Who. 9 Q Now, do you know if such a lawsuit was ever 10 instituted
by another attorney? 11 A I think he did retain another attorney, and I believe 12 they may have followed through on this lawsuit, or at 13 least in the fight to get the objects out. 14 (Counsel confer.) 15 MR. WHITE: Your Honor, the government would 16 offer Exhibits 813 and 814, which are a complaint in an 17 order to show cause in connection with the Who's Who 18 bankruptcy proceeding. 19 MR. TRABULUS: Your Honor, I will have to look 20 through them. 21 THE COURT: Very well. 22 MR. TRABULUS: Bear with me. 23 (Whereupon, at this time there was a pause in the 24 proceedings.) 25 THE COURT: This is a complaint in what court?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1410 Ackerman-direct/White
1 MR. WHITE: An adversary proceding, your Honor, 2 filed in the bankruptcy court. 3 THE COURT: What is the date on that? 4 MR. WHITE: Your Honor, the complaint and the 5 application for an order to show cause are February 27th, 6 1996. 7 MR. TRABULUS: I have an objection, your Honor, 8 to 813. 9 THE COURT: On what ground? 10 MR. TRABULUS: I think we should approach. 11 12 (Whereupon, at this time the following took place 13 at the sidebar.) 14 MR. TRABULUS: Your Honor, with regard to 813, 15 apparently -- paragraph 13, on page 4, that's 16 prejudicial. 17 MR. WHITE: I can short circuit it. I don't want 18 to offer it for that paragraph. 19 MR. TRABULUS: It would have been great had I 20 known -- 21 MR. JENKS: Maybe I am loss. May I put in two 22 cents? Maybe I am lost, isn't this attorney/client 23 privilege, 642 which came in evidence was a personal 24 letter to Gordon -- from Gordon to Neil Ackerman, in a 25 personal capacity, not in any representation to the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1411 Ackerman-direct/White
1 corporations. This here is also attorney/client 2 privilege. 3 MR. WALLENSTEIN: This was filed in court. 4 MR. WHITE: A complete file from court, and 5 Mr. Ackerman never represented Mr. Gordon personally. In 6 fact, in order to represent the company he had to file a 7 certification with the bankruptcy court that he never 8 represented Mr. Gordon personally, so no attorney/client 9 privilege ever existed. 10 MR. JENKS: With respect to 642, Mr. White -- 11 THE COURT: Wait a moment. This document filed 12 in court couldn't have been privileged, Mr. Jenks. 13 MR. JENKS: Okay. 14 I am going back to 642, your Honor. I don't 15 represent Mr. Gordon. But 642 was a personal letter from 16 Mr. Gordon to Mr. Ackerman seeking him to institute a ten 17 million dollar lawsuit against the trustee, bankruptcy 18 trustee. 19 THE COURT: You are not Mr. Gordon's lawyer. 20 MR. JENKS: I understand, Judge. 21 THE COURT: You can put on the record anything 22 you want to be on the record. 23 What is there now about 813 and 814? 24 MR. TRABULUS: There is a whole bunch in here 25 amounting to -- wanting not to have certain briefcases
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1412 Ackerman-direct/White
1 turned over. And the suggestion that the contents of the 2 papers may have been incriminating. I find that 3 prejudicial. I don't know if at this point I can go in 4 and point to each reference. 5 THE COURT: We will wait until after today's 6 session, and you can do it then. 7 MR. WHITE: Your Honor, I would like to read from 8 certain portions of it now. 9 THE COURT: You can't. Next. 10 MR. WHITE: Can I identify the particular 11 paragraphs, maybe there is no objection to it at all? 12 THE COURT: What paragraphs? 13 MR. WHITE: On Exhibit 813, paragraphs 5 through 14 8. 15 THE COURT: This is a filed document with the 16 bankruptcy court? 17 MR. WHITE: Yes, it is, your Honor. 18 MR. TRABULUS: 5 through 8? 19 MR. WHITE: 5 through 8. 20 MR. TRABULUS: I don't have a problem with 5 21 through 8. 22 MR. WHITE: And 11. 23 THE COURT: 11, you say? 24 MR. WHITE: Right. And the first two paragraphs 25 of 12 -- I am sorry, the first two sentences of 12.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1413 Ackerman-direct/White
1 THE COURT: Any objection to that? 2 MR. TRABULUS: Again, the briefcases are in 3 there. 4 MR. WHITE: He doesn't say he is asserting a 5 privilege. He is just saying there are briefcases in 6 there. It is not incriminating. 7 THE COURT: It occurred to me this is a filed 8 document. 9 MR. TRABULUS: Yes, it is. 10 THE COURT: It is either a formal or informal 11 judicial admission. 12 MR. TRABULUS: That's not disputed. I have no 13 problems with the portions he just indicated. 14 THE COURT: All right. 15 What else? 16 MR. WHITE: That's it for that document, your 17 Honor. 18 THE COURT: What is the next one? 19 MR. WHITE: On 814, paragraphs 11 through 15, 18 20 and 19. 21 THE COURT: It says the same thing over again. 22 MR. TRABULUS: It is repetitive. 23 MR. WHITE: It says the same thing. 24 MR. TRABULUS: It seems to be cumulative. 25 In light of Mr. Jenks' comments, I would like to
HARRY RAPAPORT, CSR, CP, CM
OFFICIAL COURT REPORTER 1414 Ackerman-direct/White
1 state one thing for the record. 2 I agree with Mr. Jenks that a privilege could be 3 asserted with regard to 642. 4 THE COURT: What is 642? 5 MR. JENKS: The letter that Gordon sent to him. 6 MR. TRABULUS: Even though it wasn't -- he wasn't 7 his attorney. 8 THE COURT: The letter that Mr. Gordon sent to 9 Mr. Ackerman? 10 MR. TRABULUS: Yes, although Mr. Ackerman was not 11 his attorney, Mr. Gordon was writing a letter to him 12 seeking to use him as an attorney. 13 I would like to indicate I did not assert the 14 privilege because the fact that he was indicating to start 15 such a lawsuit was something that I knew was a matter of 16 public record and would come out. It seemed to me not to 17 be any advantage to it, and I wanted to question 18 Mr. Ackerman with respect to certain
things about it. 19 MR. JENKS: For whatever it is worth, your Honor, 20 on the record, it seems to me -- 21 THE COURT: Mr. Jenks, everything we do in this 22 case is on the record, everything. Even my ill-attempted 23 attempts at humor are on the record, everything is on the 24 record. 25 MR. WALLENSTEIN: They are not ill attempts, your
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1415 Ackerman-direct/White
1 Honor. 2 THE COURT: Very good. 3 MR. JENKS: It would make me feel better to say 4 that it seems any communications made to Ackerman that 5 have been introduced here, perhaps there is an 6 attorney/client objection, there is an attorney/client 7 privilege to those statements that Gordon personal made to 8 Ackerman in this case. 9 THE COURT: Why? Ackerman wasn't his lawyer. 10 MR. JENKS: True. He was the lawyer
for the 11 corporations. But also many of the statements Gordon made 12 to Ackerman, including that letter, 642, were made in a 13 personal capacity separate and apart from the bankruptcy 14 litigation. 15 THE COURT: Now that you said it, do you feel 16 better? 17 MR. JENKS: I feel better, Judge. 18 THE COURT: Good. I am here to make everyone 19 feel well. 20 MR. JENKS: I don't want Mr. White to take 21 advantage, as if we are asleep at the switch. 22 MR. TRABULUS: Maybe I was. 23 THE COURT: I always assume when experienced 24 counsel don't object, that there is a reason for it, 25 Mr. Jenks. I never think that the reason is they don't
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1416 Ackerman-direct/White
1 know there is an objection. Sometimes it is called 2 tactics. 3 Anything else? 4 MR. WHITE: That's it. 5 THE COURT: Let's go. 6 MR. TRABULUS: Let me state for the record if I 7 may, in light of that, that if I had thought that the bulk 8 of the communications between Mr. Ackerman and Mr. Gordon 9 had been privileged, leaving aside 642, as to which I feel 10 such an argument could have been made but deliberately not 11 raised by me, but as to the others if I thought there was 12 a privilege and a viable privilege could have been 13 asserted today, I would have done so, it is not a tactic 14 that I didn't want to raise a privilege with regard to 15 that. It is my conclusion that there was no privilege 16 originally. If he knew there was, it would have been a 17 joint privileged with the corporation that would have been 18 waived. If I am wrong, then I am wrong. 19 THE COURT: Mr. Trabulus, I am sure you are doing 20 a fine job representing your client. No one would ever 21 accuse you of doing ever single every little thing you can 22 do to represent your client, including every itty-bitty 23 thing you can do. 24 MR. TRABULUS: I am trying to say if I wasn't 25 effective, it wasn't because of a tactical choice.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1417 Ackerman-direct/White
1 THE COURT: All right. 2 3 (Whereupon, at this time the following takes 4 place in open court.) 5 THE COURT: You may proceed. 6 MR. WHITE: Thank you, your Honor. 7 Exhibits 813 and 814 are received in evidence, 8 the portions indicated? 9 THE COURT: The portions -- I hope you remember, 10 and I am sure Mr. Trabulus, and certainly Mr. Jenks will 11 remember what portions they were, that go into evidence, 12 right. 13 MR. WHITE: You want me to read them into the 14 record?
15 THE COURT: You better. 16 MR. WHITE: With respect to 813, and I guess in 17 addition to the cover page -- 18 THE COURT: I don't think you have to read it 19 into the record, because we have it in the record. 20 THE COURT: All right. 21 Those portions of Government's Exhibits 813 and 22 814 discussed at the sidebar are in evidence, and the 23 government will redact the exhibits. 24 MR. WHITE: Yes, your Honor. 25 (Government's Exhibit 813 received in evidence.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1418 Ackerman-direct/White
1 (Government's Exhibit 814 received in evidence.) 2 Q Mr. Ackerman, let me show you 3 Government's Exhibits 813 and 814. 4 Now, if you can look at 814 first. 5 A Yes. 6 Q That's what is called an adversary complaint? 7 A Yes. 8 Q Tell us what an adversary complaint
in a bankruptcy 9 action is? 10 A I might just call it complaint. It is a complaint 11 initiating an adversary proceeding in bankruptcy. It is a 12 separate case within the case. It is a lawsuit within the 13 case. 14 THE COURT: A lawsuit within a bankruptcy 15 proceeding; right? 16 THE WITNESS: Yes. 17 THE COURT: In addition to the bankruptcy 18 proceeding the affected parties can bring certain type of 19 actions within the bankruptcy proceeding themselves, and 20 don't have to go to an outside court to do it, right? 21 THE WITNESS: Correct. 22 THE COURT: That's what is called an adversary 23 proceeding? 24 THE WITNESS: Yes, sir. 25 THE COURT: All right.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1419 Ackerman-direct/White
1 Q Mr. Ackerman, who is the plaintiff in this adversary 2 complaint?
3 A Bruce Gordon. 4 Q And who are the defendants? 5 A Alan Mendelsohn, the trustee, Salmon Green and Ostrow 6 PC, counsel for the trustee, and individually named are 7 Nicholas Kajon, K A J O N, and Christine Jagde who are 8 attorneys at Solomon Green and Ostrow. 9 Q Is Christine Jagde, the Christine Jagde mentioned in 10 the letter that Mr. Gordon mentioned -- sent to you? 11 A Yes. 12 Q Is it correct that in a complaint the plaintiff sets 13 forth the basic facts that underlie his legal claim? 14 A Yes. There had to be at least notice to the other 15 side that is going on and what the claims for relief are. 16 Q If you follow along I will begin reading from 17 paragraph 11 of 814. 18 11, the debtor, in this case Who's Who Worldwide; 19 is that correct? 20 A Yes. 21 Q The debtor is the nominal tenant of a lease, 22 parenthesis, the lease, in quotes, close paren, of a 23 condominium unit located at 250 East 54th, penthouse 24 number four, New York, New York, parenthesis, the 25 penthouse, in quotes. The owner of the penthouse is
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1420 Ackerman-direct/White
1 Palais Partners, parens, the owners in quotes. 2 Paragraph 12. Gordon is listed as occupants on 3 the lease. 4 13. The penthouse was never in the exclusive 5 control and use of the debtor. 6 14. The debtor's corporation never paid rent for 7 the penthouse. 8 15. The penthouse was in part used for Gordon's 9 personal use. He often stayed at the penthouse with his 10 infant child. 11 Paragraph 18. Gordon subsequently advised the 12 trustee that he wished to remove personal effects from the 13 debtor's penthouse, which he also used as a residence.
14 The trustee agreed to have his counsel meet with and walk 15 Gordon through the debtor's penthouse. 16 19. During this walk-through, Gordon asked the 17 trustee's counsel whether he could remove personal items, 18 including a baby stroller and crib, his camera, music 19 tapes, his birth certificate, items of personal clothes 20 and his briefcases. The trustee's counsel refused to 21 allow Gordon to remove anything but the clothing and baby 22 item. 23 Mr. Ackerman, if you look at 813, that's an 24 application in support of order to show cause? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1421 Ackerman-direct/White
1 Q Can you tell us what that is? 2 A When you are asking the Court for immediate relief in 3 an adversary proceeding you will bring on an order to show 4 cause, and that will be for an expedited hearing.
5 Q Okay. 6 Let me read from paragraph of that document. 7 It says thus, although the lease was in the 8 debtor's name, the penthouse was never in the exclusive 9 control and use of the debtor. In fact, the penthouse was 10 used as Gordon's residence in New York. 11 MR. WHITE: Your Honor, may I have just one 12 moment? 13 THE COURT: Yes. 14 (Whereupon, at this time there was a pause in the 15 proceedings.) 16 Q Mr. Ackerman, if you can take a look at 17 Government's Exhibit 638 for Identification, you made 18 reference before that you had sent reminders to Mr. Gordon 19 and Mr. Reffsin about keeping the logs? 20 A Yes. 21 Q And if you look at 639, that's a reminder dated 22 September 8th; is it not? 23 A Yes, that is. 24 Q And if you take a look at 638, it is a reminder of 25 what date?
HARRY RAPAPORT, CSR,
CP, CM OFFICIAL COURT REPORTER 1422 Ackerman-direct/White
1 A September 13, 1994. 2 Q And 638, what is that? 3 A It is a letter which among other things reminds them 4 further about the requirement that the logs be turned over 5 by the end of September 23, 1994 based on the conditions 6 set forth in the stipulation that the Court had approved. 7 MR. WHITE: Your Honor, the government offers 8 638. 9 THE COURT: Any objection? 10 MR. TRABULUS: No. 11 THE COURT: Government's Exhibit 638 in 12 evidence. 13 (Government's Exhibit 638 received in evidence.) 14 MR. WHITE: Your Honor, I have no further 15 questions. 16 THE COURT: Cross-examination. 17 18 CROSS-EXAMINATION 19 BY MR. TRABULUS: 20 Q Good afternoon, Mr. Ackerman. My name is Norman 21 Trabulus, and I am Mr. Gordon's lawyer. 22 A Good afternoon. 23 Q We have never met before, have we? 24 A No. 25 Q Do you recall a telephone conversation that we had?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1423 Ackerman-cross/Trabulus
1 A Yes. 2 Q And I asked you about the location of certain 3 documents that I was looking for? 4 A Yes. 5 Q Do you remember? 6 A Yes. 7 Q And do you remember further that you told me that you 8 really didn't want to talk about the facts of the case 9 with me, unless someone from the U.S. Attorney's office 10 was present? 11 A Or at least invited to be present. 12 Q At least invited? 13 A Yes. 14 Q And we never had any such conversation? 15 A We did not. 16 Q You did tell me you were very upset about what 17 happened to Mr. Gordon's companies; is that correct? Do 18 you recall that? 19 A I don't recall that. 20 Q Were you? Were you very upset about it? 21 A Yes. 22 MR. WHITE: Objection, your Honor. 23 THE COURT: Overruled. 24 Q In representing the companies in the bankruptcy 25 proceeding, excuse me, did you on behalf of Who's Who -- I
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1424 Ackerman-cross/Trabulus
1 said the companies, but I meant Who's Who -- on behalf of 2 Who's Who did you advise the Court in writing and orally 3 that Reed was trying to shut it down? 4 A Did I advise the Court. 5 Q Was that the position you took on behalf of Who's Who 6 that Reed was attempting through the bankruptcy proceeding 7 to shut it down -- that it appeared that Reed was 8 attempting to shut down Who's Who rather than letting it 9 reorganize? 10 A That's the argument that we were making. 11 Q Did you believe it?
12 A Yes, I did. 13 Q And that was based upon the actions of Reed that you 14 were able to see over the course of the bankruptcy 15 proceedings; is that correct? 16 A It was based upon the facts we were offering a 100 17 percent plan to Reed, and Reed nevertheless continued to 18 fight the debtor at every point. 19 Q Now, let me ask you about the letter that you were 20 just asked about by Mr. White. And after that he asked 21 you about some questions, and had you read from some 22 documents prepared by another law firm involving another 23 lawsuit prepared by Mr. Gordon and the trustees and 24 others. And this letter was written to you in January of 25 1996; is that correct? We are talking about 642.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1425 Ackerman-cross/Trabulus
1 A Just one second? 2 Q Sure, take your time. I
have a bunch of papers here 3 myself to find. 4 A You are talking about 642? 5 Q Yes. 6 A The letter from Bruce to me dated January 25, yes. 7 Q After receiving that letter you had a follow-up 8 conversation or conversations with him? 9 A Yes. 10 Q And is it fair to say that in your conversations with 11 Mr. Gordon, what he explained to you is that this was not 12 Who's Who Worldwide Registry condo, but Sterling's, as 13 well as a place he was living in at the time from time to 14 time? 15 A The thing that I remember the most that he said to me 16 was that he was saying that the stuff that was in there 17 was personal stuff. 18 Q All of it or just some of it? 19 A He said he could prove that some of it was. 20 Q Now, with regard to -- did he explain to you that 21 this was a Sterling condominium, as opposed to a Who's Who 22 condominium? And in this case we have been using Who's 23 Who to refer to Who's Who Worldwide Registry? 24 A Yes, he did. 25 Q Did he explain that distinction to you?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1426 Ackerman-cross/Trabulus
1 A I don't recall. 2 Q Was it your understanding from the case itself that 3 the condominium was utilized by Sterling? 4 A As to which particular condominium that was used by 5 which didn't matter to me. I was trying to get this 6 debtor out of bankruptcy and offer a 100 percent plan. 7 Q Understood. I am talking at about one in Manhattan, 8 the penthouse? 9 A I can't say to you it was my understanding that it 10 was offered by Sterling. I can't say to you that Bruce 11 told me that. There were three condominiums we were 12 interested in, and we were giving a 100 percent plan. 13 Q Three?
14 A Three co-ops. 15 Q There was one in Manhasset? 16 A Yes. 17 Q One -- the penthouse in the city? 18 A Yes. 19 Q There were no others, were there? 20 A There was 250 East 54th Street, and also 750 21 Lexington Avenue, fourth floor -- 22 Q You didn't know anything about -- that's because it 23 was a Sterling facility and not a Who's Who facility? 24 A I just didn't know that much about it. I don't visit 25 client's premises. I did go twice to Who's Who's premises
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1427 Ackerman-cross/Trabulus
1 in Lake Success in this case. But I don't visit client's 2 premises. 3 THE COURT: Excuse me a moment. 4 Mr. Ackerman, you are going to be asked questions 5 on cross-examination that are going to be zeroed in on 6 particular subjects that the cross-examiner wants to
7 hear. He doesn't want to hear your explanations. He 8 wants to hear an answer to his question. 9 So, most of the questions call for a yes or no. 10 Please try to answer yes or no. If you can't, just say I 11 can't answer that question yes or no, or we will be here a 12 half a day longer. 13 THE WITNESS: Yes, sir. 14 THE COURT: Just listen to the question and 15 answer responsively. 16 THE WITNESS: Yes, sir. 17 MR. TRABULUS: Thank you, your Honor. 18 Q Mr. Ackerman, Sterling was not in bankruptcy, was it? 19 A No, it was not to my knowledge. 20 Q It was not the debtor? 21 A No. 22 Q Who's Who was the debtor; is that correct? 23 A Yes. 24 Q Now, if the facility at 750 Lexington Avenue or 59th 25 Street, or whatever, in Manhattan, was a Sterling facility
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1428 Ackerman-cross/Trabulus
1 then it would not have been part of the bankruptcy; is 2 that correct? 3 A If it was, then no, it would not. 4 Q In this case because Who's Who signed the lease it 5 got involved in the bankruptcy; is that correct? 6 A If it did, then, yes, it was. 7 Q You don't recall as you are here now at this point? 8 A No, I do not. 9 Q Now, you were asked some questions about Mr. White 10 about a conversation you had with Mr. Gordon concerning 11 some transfers; do you recall that? 12 A Yes. 13 Q And the transfers you were talking about were 14 transfers that were fully disclosed in the course of the 15 bankruptcy, were they not? 16 A Yes. 17 Q You have no reason to believe, do you, that they were 18 not disclosed on any tax returns in which they were 19 supposed to be disclosed, do you? 20 A No. 21 Q So, we are not talking about some kinds of transfer 22 where money is passing under the table or something of 23 that sort, are we? 24 A No. 25 Q We are not talking about any transfers out of the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1429 Ackerman-cross/Trabulus
1 country or anything of the sort, are we? 2 A Not to my knowledge. 3 Q And I think the conversation that one of the things 4 you were talking about was why was PVI set up as the 5 corporation that would own the real estate? Is that one 6 of the transfers that you were talking about? 7 A Yes. 8 Q And is it fair to say that Mr. Gordon or whoever 9 was -- withdrawn. 10 The conversation you had with Mr. Gordon about 11 that, was he the only one there or was someone there with 12 him, do you recall? 13 A I believe he was the only one there. 14 Q Did he explain to you that he understood that there 15 were tax advantages to having a corporation, a separate 16 corporation own the real estate that was utilized by other 17 corporations? 18 A I believe I recall definitely at one point there were 19 tax and other advantages to have one company hold all real 20 estate. 21 Q In your experience as an attorney, is it not unusual 22 to have one corporation of a cluster of corporations own 23 all the real estate? 24 A No, it is not. 25 Q It is not unusual at all?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1430 Ackerman-cross/Trabulus
1 A Not at all. 2 Q In fact, it is almost typical; is that fair to say? 3 A In my line of work, yes. 4 Q But when you say in your line of work, you don't just 5 mean in situations where companies have gone bankrupt, do 6 you? I mean even companies that are not in bankruptcy 7 will often have a situation where there will be one 8 company that owns all the real estate and a bunch of other 9 companies would have relationships with it? 10 A I don't have much experience in that. 11 Q All right. But it is still not an unusual situation. 12 Now, in this particular instance -- withdrawn. 13 Sorry. 14 (Whereupon, at this time there was a pause in the 15 proceedings.) 16 THE COURT: A good thing no one was underneath 17 that book when it came down. 18 MR. TRABULUS: I was underneath it when it was 19 delivered, your Honor, the cartons. 20 Q Mr. Ackerman, in particular the other situations 21 which you have dealt with in which there was a single 22 corporation which has owned real estate for a cluster of 23 corporations, it wasn't also a situation where someone 24 has -- one of the principals has owed a lot of money in 25 taxes? It has nothing to do with that?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1431 Ackerman-cross/Trabulus
1 A No. 2 Q And tax advantages that come from having a single 3 corporation own real estate for a group of corporations, 4 whatever those corporations are, they don't just arise 5 when someone personally may owe taxes; is that correct? 6 A They do not. 7 Q Now, the transfers that we talked about here were 8 transfers between and among corporations; is that correct, 9 primarily? 10 A Primarily. 11 Q And I think you testified that Mr. Gordon had given 12 you to understand that Who's Who, the debtor, was a 13 corporation in which he did not have an ownership interest 14 at that time; is that correct? 15 A Yes. 16 Q And so, to the extent there were any transfers as he 17 explained it to you, from Who's Who, they were not 18 transfers from a company in which he had any ownership 19 interest; is that correct? 20 A He did not have any ownership interest in the Who's 21 Who. 22 Q Was there any discussion with Mr. Gordon as to who 23 owned the companies to whom these transfers occurred? 24 A I don't understand the question. 25 Q Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1432 Ackerman-cross/Trabulus
1 Let's say -- first of all, let's go back to the 2 transfers. These transfers were not gifts from one 3 company to another? 4 A No. 5 Q They were gifts or loans? 6 A They were loans under notes due to be paid as loans. 7 Q They were documented? 8 A Yes. 9 Q And they were documented in a form which would be 10 typical for business transactions, maybe a little 11 informal, but still documented? 12 A They were documented. 13 Q And the type of transactions were not unusual in the 14 type of business transactions in your experience, were 15 they? 16 A They were somewhat unusual. 17 Q Okay. 18 Now, they did not constitute in any way, shape or 19 form, a gift from one entity to another, did they? 20 A They did not. 21 Q Although something would go from one entity to 22 another, something would come back, would be required to 23 come back in the future; is that correct? 24 A Yes. 25 Q Basically it was an exchange type of relationship? I
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1433 Ackerman-cross/Trabulus
1 mean -- withdrawn. 2 It was either a loan or contract or contract or 3 something of that sort; is that correct? Both sides -- 4 A It was a loan or a sale. 5
THE COURT: Why don't we have a pause after the 6 question. 7 You said it was a loan or a sale, you said? 8 THE WITNESS: Yes, sir. Generally. 9 Q Let's talk about the sales. 10 Did you have any reason to believe at the time 11 that any of the sales were on terms that were give away, 12 or anything like that? 13 A I can't answer that question, yes or no. 14 Q Did you have any reason to believe that any of the 15 loans were -- withdrawn. 16 Did you -- now, did you discuss -- did you 17 discuss with Mr. Gordon who owned PVI? 18 A I think I did. 19 Q Did you understand that it was under the same 20 ownership as Who's Who? 21 A Yes. 22 Q With regard to Sterling, did you discuss with him who 23 owned that? 24 A I believe so. 25 Q Was that the same ownership of Who's Who?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1434 Ackerman-cross/Trabulus
1 A Yes. 2 Q To the extent there were any transfers among these 3 businesses or transactions between them, it wasn't a 4 situation of taking it out of a company who has one 5 ownership and putting it into another company that had 6 another ownership was it? 7 A No, it was not. 8 Q In your experience can there be tax and/or other 9 reasons for transferring assets, or having loan 10 transactions between corporations? 11 A Especially with real estate, yes. 12 Q Now, Mr. Gordon did mention to you at one point that 13 he owed back taxes; is that correct? 14 A Yes, he did. 15 Q Mr. White asked you many questions trying to link 16 that with transfers; is that right? 17 MR. WHITE: Objection to the form of the 18 question; on what Mr. White was trying to link to what. 19 THE COURT: Overruled.
20 Q Do you have the question in mind? 21 A Mr. White asked me a lot of questions trying to link 22 the transfers? 23 Q Mr. White asked you a whole bunch of questions 24 concerning your conversations with Mr. Gordon concerning 25 the transfers, and trying to link what Mr. Gordon said
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1435 Ackerman-cross/Trabulus
1 about the reasons to the transfers to the fact that he 2 owed back taxes; is that correct? Yes or no? Would that 3 be a fair characterization as to what Mr. White was doing 4 with his questions of you? 5 A I can't answer that yes or no. 6 Q Okay. 7 Is it not at least possible -- withdrawn. 8 Is your recollection of that conversation very 9 clear, the one you had with Mr. Gordon? 10 A It is pretty clear. 11 Q Is it not true that in talking about the transfers
12 you merely think that it was at that point that he 13 mentioned that he owed taxes. 14 A It was in the context of that conversation. 15 Q Is it possible in that conversation Mr. Gordon may 16 have said there were tax reasons for the transfers, but 17 not talking about the taxes that he owed? 18 A Not to the best of my recall. 19 Q Your recollection is -- your recollection is that he 20 linked it to his own obligation? 21 A He didn't link it. He said it. 22 Q He said what? 23 A He said I have tax obligations. I was asking why he 24 had done -- why these things were done. And he said I 25 have past -- I have back due taxes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1436 Ackerman-cross/Trabulus
1 Q Did he explain to you how simply transferring from 2 Who's Who to PVI or making a loan from Who's Who to 3 Sterling would
have any impact at all on his own tax 4 obligations? 5 A I did not pursue the question other than to say 6 because of that he did not explain it to me. 7 Q Do you as an attorney and someone knowledgeable in 8 this area, can you conceive how someone making a loan from 9 one corporation to another could have an impact on 10 Mr. Gordon's own tax obligation from Who's Who to 11 Sterling? Yes or no? Does it seem to make sense? 12 A Yes, I can conceive. 13 Q And under the facts of this particular case, do you 14 see any advantage to Mr. Gordon in having a loan made from 15 Who's Who to Sterling in his taxes? Do you know his tax 16 situation? 17 A No, I do not. 18 Q Okay. 19 Now, when you testified in the grand jury, 20 Mr. Ackerman, were you not -- were you less certain than 21 you are now that the conversation concerning Mr. Gordon's 22 owing of
taxes, back taxes, came up in connection with the 23 transfers? 24 A No. I was not. 25 Q Do you remember saying that you merely -- withdrawn.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1437 Ackerman-cross/Trabulus
1 Do you remember being asked questions about 2 whether or not Mr. Gordon had told you that he owed a lot 3 of money to the IRS personally? 4 A I remember being asked if he said he owed back taxes, 5 yes. 6 Q And he told you that he did, that he owed the IRS 7 money from prior years; is that correct? 8 A Yes. He brought it up. 9 Q Now, then you were asked the context in which that 10 conversation came up; is that correct? 11 A Yes. 12 Q And at that point you said you thought it was in the 13 context of talking about the transfers; is that correct? 14 A Yes. 15 Q So, you weren't certain at that
point; is that 16 correct? 17 A I don't believe that was the case. 18 Q You don't believe that you weren't certain? 19 A I don't believe that I wasn't certain. 20 Q Well, you were asked these questions -- were you 21 asked these questions and gave these answers -- you are 22 certain now, is that fair to say? 23 A Yes. 24 Q And how many times have you discussed this with 25 Mr. White or with any IRS agents?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1438 Ackerman-cross/Trabulus
1 A He spoke to me at least once after the grand jury 2 testimony about two or three months ago, three or four 3 months ago. 4 Q When you were called to the grand jury had you spoken 5 to Mr. White before that or with any IRS agent before that 6 concerning Mr. Gordon's telling you that he owed back 7 taxes? 8 A Yes. 9 Q
Okay. 10 Do you recall in the grand jury being asked these 11 questions and giving these answers -- 12 MR. WHITE: Objection. 13 The witness can read it to himself. Mr. Trabulus 14 doesn't have to read it outloud. 15 THE COURT: If it is inconsistent he can. 16 MR. WHITE: I don't believe that it is, your 17 Honor. 18 MR. TRABULUS: Well, I do. 19 THE COURT: Can I see it, please? 20 MR. TRABULUS: Sure. 21 MR. WHITE: What page are you reading from? 22 MR. TRABULUS: Page 20, beginning line 20 for 23 context, and then from page 21. And the inconsistency is 24 at line 7. 25 (Handed to the Court.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1439 Ackerman-cross/Trabulus
1 MR. TRABULUS: It is line 7 of 21. 2 THE COURT: It is not inconsistent in my view. 3 MR. TRABULUS: He said he thinks. 4 THE COURT: Sustained. 5 Q Now, Mr. Ackerman, there is nothing unlawful about 6 structuring one's business affairs so as to minimize one's 7 tax liability or exposure, is there? 8 A Not that I am aware of. 9 Q And there is certainly nothing that Mr. Gordon told 10 you in relation to the transfers which indicated to you 11 that he was doing anything other than structuring the 12 transaction in order to minimize a tax liability; is that 13 correct, lawfully? 14 A He didn't even say that. 15 Q Okay. 16 I didn't ask you what he said. But is there 17 anything that he told you where he suggested he was doing 18 this in some way to cheat the IRS in terms of making these 19 transfers? Yes or no? 20 A Those words were never used. 21 Q Did he say anything to you which was anything other 22 than to the effect that he was simply arranging the 23 transfers as a
disclosed business transaction in a way to 24 minimize tax exposure? Yes or no, sir? 25 A I can't answer that yes or no.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1440 Ackerman-cross/Trabulus
1 Q All right. 2 Now, I would like to direct your attention to 3 Exhibit 641-A. 4 A I have it. 5 Q And to page 4, the bottom paragraph. 6 A Yes. 7 Q And this concerns the Hummingbird Road property; is 8 that correct? 9 A Yes. 10 Q And the property that was owned by PVI. 11 A Yes. 12 Q And you wrote the following: The property was 13 purchased to give executives who were employed by and/or 14 members of Who's Who and/or Sterling, or other future 15 members of the Who's Who family of corporations, a place 16 to reside, function and -- most important -- network while 17 in New York; is that correct?
18 A That's what it says. 19 Q And so, there was disclosure in this, was there not, 20 that the property was purchased in part to give executives 21 employed by the company Who's Who, a place to reside; is 22 that correct? That's one of the things listed there. 23 A Yes. 24 Q And there was nothing hidden about that, was there? 25 A There was not.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1441 Ackerman-cross/Trabulus
1 Q Now, did you become familiar with -- withdrawn. 2 After you came into the case, into the 3 bankruptcy, did you become familiar with a deposition 4 Mr. Gordon had given earlier on before your firm was 5 involved in the bankruptcy, a deposition in the 6 bankruptcy? 7 A I became familiar that there had been depositions 8 beforehand. 9 Q And did you become familiar with the fact that 10 Mr. Gordon
had at the deposition he had given in April of 11 1994, the bankruptcy, indicated his residence as being 12 Hummingbird Road? 13 A I am not aware of that. 14 Q And do you recall that Mr. Gordon paid rent at 15 Hummingbird Road? 16 A To PVI? 17 Q Yes. 18 A I don't recall that, but it could well have been the 19 case. 20 Q Is there anything that would refresh your 21 recollection? 22 A I don't see anything here. 23 Q Okay. 24 Did you -- the next page of 641-A, the top of 25 page 5.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1442 Ackerman-cross/Trabulus
1 All entities which use these premises pay rent to 2 PVI. This includes the debtor, as you will see from the 3 debtor's financial statements. 4 Now, did it ever come up that Mr. Gordon himself 5 paid rent to PVI in respect to the Hummingbird property? 6 A I don't recall. 7 Q Certainly, it is not a situation -- withdrawn. 8 Let me turn to the loans made to Mr. Gordon, I 9 believe you testified that it was your understanding that 10 you were told they were more than offset by monies which 11 were not paid in terms of deferred compensation; is that 12 correct? 13 A A wash. 14 Q A wash. 15 Indeed, you were told by Mr. Gordon according to 16 you that the monies that were deferred may even have 17 exceeded the amount of the loan; is that correct? 18 A It was so believed at that time, yes. 19 Q And in doing the work that you did and your firm did, 20 did you go back historically to look at the history of the 21 loan account of Mr. Gordon? 22 A When this was being prepared, as I recall, we met 23 with him and listened to his explanations. 24 Q My question was: In doing the work, not
just at the 25 time of this letter, did you and your firm go back and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1443 Ackerman-cross/Trabulus
1 examine historically the history to the loan account 2 between Mr. Gordon and Who's Who? 3 A No, that would be for the accountant. 4 Q Did you become familiar with whether or not there was 5 any repayments ever shown on the loan? 6 A I believe I recall that there was a statement made 7 that Bruce had once repaid a loan to the debtor. 8 Q And do you recall the amount? 9 A No, I do not. 10 Q Was that in the amount of $20,000? 11 A I don't recall. 12 Q You mentioned in your letter, the one that we were 13 just talking about, the Grossmans plowing back into the 14 corporation monies that had been given to Mr. Grossman; do 15 you recall that? And that's on page 3, paragraph 3, and I
16 am talking about 641-A. I think you wrote, in fact, 17 Richard Grossman has made guaranties of the corporation's 18 debts and has plowed back all monies received from the 19 debtor into the debtor to assist in the debtors growth? 20 A I wrote that. 21 Q And the information for that came to you from whom? 22 A Bruce Gordon and/or Martin Reffsin. 23 Q You said Bruce Gordon and/or Marty Reffsin on several 24 occasions. 25 Do you recall as you sit here today which one of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1444 Ackerman-cross/Trabulus
1 you told you which things? 2 A No, I can't differentiate in terms of the 3 conversations right now. 4 Q Okay. 5 And do you recall anything you were told about 6 Mr. Grossman plowing back money he had received? 7 A If I recall -- 8 Q Do you recall being told any specifics about that? 9 A Yes, that he plowed back money into the corporation. 10 Q Do you recall being told how that was reflected on 11 the books and records of the corporation, how he plowed it 12 back? 13 A No. 14 Q Let me see if I can refresh your recollection. 15 Were you told that it was plowed back as an 16 investment? 17 A I was not told exactly how it was characterized on 18 the books. 19 Q Were you told that it was used to pay down 20 Mr. Gordon's indebtedness to the corporation, and in 21 effect switch the loan in a certain effect from Mr. Gordon 22 to the corporation, from Mr. Grossman to the corporation; 23 do you recall that? 24 A I don't recall that at all. 25 Q Did you have anybody at your books look at the books
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1445 Ackerman-cross/Trabulus
1 and
records to see if something like that was true? 2 A No. 3 Q Did anybody check the books and records of the 4 corporation on behalf of your firm or your firm's 5 instance, to see what the past history of the loan was? 6 A No. 7 Q You basically were dealing with the situation as you 8 found it, the outstanding loan balances rather than the 9 past history; is that correct? 10 A The letter said that that would be computed by the 11 accountant. 12 Q Fair enough. 13 Is it fair to say that the concern at that 14 particular time was not the history of the entire loan 15 balance, but whether the amount of the loan that was 16 outstanding at that point equaled or was less than, or 17 more than the amounts of back salary that hadn't been paid 18 to Mr. Gordon? 19 Let me withdraw the question. 20 The issue at that point in time that prompted 21 this was whether or not Who's Who through the trustee or 22 by somebody, should sue Mr. Gordon for the amount of the 23 loans; is that right? 24 A Yes. 25 Q And the question that bore on that was whether at
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1446 Ackerman-cross/Trabulus
1 that point in time as opposed to what happened before, the 2 amount of the loans was less than what the corporation 3 itself owed Mr. Gordon by way of a salary that had been 4 withheld or deferred; is that fair to say? 5 A That helped me trace the response. 6 Q That was a question, was it not, in terms of whether 7 or not there was an offset or a wash, as you have termed 8 it? 9 A The question was whether Bruce Gordon should be sued. 10 Q Right. And the facts that bore upon that, the answer 11 to that question was whether or not, if he were sued, he
12 would be able to say, hey, you owe me at least as much as 13 you are suing me for, therefore you can't get any; is that 14 fair to say? 15 A Precisely. 16 Q In answering that question, you really don't have to 17 look back to the past transactions that happened in the 18 loan balance a year or so before that, would you? You 19 would just look at the loan balance as of that day? 20 A We would have to show the backup for the statements, 21 and that's what we needed. 22 Q And there was back up for them, was there not? 23 A We asked the accountants to en masse that information 24 and to get that work out. 25 Q And the accountant being Mr. Reffsin?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1447 Ackerman-cross/Trabulus
1 A Yes. 2 Q And you don't recall one way or another as to whether 3 he ever furnished that to you; is that fair to say? 4 A I don't recall at this time. 5 Q One way or another? 6 A I don't -- 7 Q Now, did you discuss with Mr. Gordon or Mr. Reffsin 8 what would have happened with regard to the loans that he 9 took if it turned out that the corporation, after giving 10 him a loan, hadn't done that well, and he wouldn't have 11 been entitled to as much compensation under the 12 agreement? 13 MR. WALLENSTEIN: Objection. 14 THE COURT: Can I hear that question, 15 Mr. Reporter? 16 MR. TRABULUS: I will rephrase it. I will 17 withdraw the question. 18 Q Mr. Ackerman, did you discuss with Mr. Gordon to your 19 recollection whether, if after receiving a loan -- 20 withdrawn again. 21 The back compensation that Mr. Gordon was owed, 22 as you understood it was based on a formula, was it not? 23 A Yes. 24 Q And that formula related
to the cash flow of Who's 25 Who, did it not?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1448 Ackerman-cross/Trabulus
1 A Yes. 2 Q Now, the fact that -- at least the fact that you 3 stated in the letter, that the amount that Mr. Gordon was 4 owed exceeded the amount of loans, that reflected a 5 significant cash flow; is that fair to say? 6 A Yes. 7 Q Now, if there had been a lesser cash flow, is it fair 8 to say that the amount that Mr. Gordon would have been 9 owed by the corporation would have been less under that 10 formula? 11 A Yes. 12 Q Now, did you discuss with Mr. Gordon -- withdrawn. 13 Do you know whether -- do you know how the loans 14 were made to Mr. Gordon? 15 A No. 16 Q Do you know when they were made in relation to the 17 cash flow we were just talking about? 18 A No.
19 Q Let's say a situation in which money was loaned to 20 Mr. Gordon before the total amount of cash flow 21 determining his salary had occurred. At the time that 22 that loan was made, is it fair to say that you might not 23 have known as to whether the cash flow would have been 24 enough to more than offset the amount of the loan? 25 A Can I hear the question again?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1449 Ackerman-cross/Trabulus
1 Q I am sorry. I will rephrase it. 2 Do you have any basis for knowing whether at the 3 time that the loans were made it could be foretold that 4 the cash flow would be sufficient to more than offset the 5 loans? 6 A No. 7 Q And if it wasn't more than enough to offset the 8 loans, then there would have been an obligation, and 9 Mr. Gordon would have to repay the loan; is that correct?
10 A Yes. 11 Q He wouldn't have been able to offset any monies due 12 to him -- withdrawn. 13 He wouldn't have been able to offset any salary 14 due to him in the amount equal to the loan because it 15 wouldn't have equaled, right? 16 A Yes. 17 Q So, it is your understanding that as matters worked 18 out there was an offset; is that correct? 19 A At this time, yes. 20 Q At this time? 21 A Yes. 22 Q You don't know whether at previous times there was an 23 offset, due? 24 A No idea. 25 Q You don't know if it was possible to know from the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1450 Ackerman-cross/Trabulus
1 beginning as to whether there would be a full offset, 2 right? 3 A Right. 4 Q And at which time Mr. Gordon would have had to have 5 repaid the loans? 6 A It would have been a -- I presume so. 7 Q There would have been a balance due? 8 No one, including Mr. Reffsin, ever told you that 9 in that event he wouldn't have had to pay; is that 10 correct? Nobody ever told you so? 11 A Not that I recall. 12 Q Now, just for clarification. 13 Earlier on you referred to a United States 14 trustee; do you recall that? 15 A Yes. 16 Q And the United States Trustee presides at the 341 17 Hearing? 18 A In a Chapter 11. 19 Q In a Chapter 11? 20 A Yes. 21 Q And the United States Trustee is not the same as 22 Mr. Mendelsohn, the trustee we talked about; is that 23 right? 24 A Right. 25 Q They are two different people and different titles;
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1451 Ackerman-cross/Trabulus
1 is that correct? 2 A Yes. 3 Q And the United States Trustee is actually a branch of 4 the United States government, the Justice Department? 5 A It is a branch of the United States Department of 6 Justice, yes. 7 Q And they have people there who serve in that office; 8 is that correct? 9 A Yes. 10 Q And somebody like Mr. Mendelsohn, the bankruptcy 11 trustee is not a government employee; is that right? 12 A No. He would be a member of the panel of trustees 13 established by the United States Trustee's office. 14 Q In every Chapter 11 case the United States Trustee is 15 involved; is that correct? 16 A To administer and supervise, yes. 17 Q And not in every Chapter 11 case is there a 18 bankruptcy trustee; is that correct? 19 A In relatively few. 20 MR. TRABULUS: Your Honor, would this be a good 21 time to break? Because I have some more. 22 THE COURT: Yes. 23 We have to -- you may step down. We will recess 24 to 9:30 tomorrow morning. Please be here before 9:30, 25 Mr. Ackerman.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1452 Ackerman-cross/Trabulus
1 THE WITNESS: Yes, sir. 2 THE COURT: If you have any problems in court 3 assignments or anything, I would be glad to help you. 4 THE WITNESS: Yes, sir, I do, actually. 5 THE COURT: Just wait around. 6 (Whereupon, at this time the witness left the 7 witness stand.) 8 THE COURT: Members of the jury, we will recess 9 to 9:30. Meanwhile do not discuss this case among 10 yourselves or anyone else. Keep an open mind. Come to no 11 conclusions. Don't do any research. Have a nice 12 evening. We are going to recess until 9:30. Please 13 recess yourselves. 14 Good evening. 15 (Whereupon, at this time the jury leaves the 16 courtroom.)
17 THE COURT: What is the problem, Mr. Ackerman? 18 MR. ACKERMAN: Sir, I have a 9:30 that is 19 scheduled before one of the judges in Westbury, I might be 20 able to get there by 10:30. 21 THE COURT: You will get here before 9:30 22 tomorrow morning. 23 What judge in Westbury do you have to be before? 24 MR. ACKERMAN: Judge Burns. 25 THE COURT: They were all here this morning
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1453 1 picking out the new carpeting for the new courthouse. 2 What judge are you before? 3 MR. ACKERMAN: Actually Judge Swain, S W A I N. 4 THE COURT: In what case? 5 MR. ACKERMAN: The name of the case is Kopal, 6 K O P A L. 7 THE COURT: You were supposed to be there at 8 9:30? 9 MR. ACKERMAN: Yes. 10 THE COURT: How much longer would you be with 11 Mr. Ackerman?
12 MR. TRABULUS: I would think 15 minutes to a half 13 an hour, and I know other counsel, I know Mr. Wallenstein 14 has questions. 15 THE COURT: Mr. Wallenstein, how long? 16 MR. WALLENSTEIN: Judge, a half an hour, maybe 45 17 minutes, depending on the answers. 18 THE COURT: Anybody else? 19 (No response.) 20 THE COURT: You want this matter adjourned or you 21 want to go in there later on? 22 MR. ACKERMAN: May I make a phone call to my 23 office first? 24 THE COURT: Yes, you can then let me know. 25 MR. ACKERMAN: Thank you.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1454 1 THE COURT: You want to know the names of 2 witnesses for tomorrow? 3 MR. TRABULUS: I absolutely do, your Honor. It 4 made things difficult to me knowing that -- not knowing 5 Mr. Ackerman will be here today. 6 THE COURT: Now
you know he will be here 7 tomorrow. 8 MR. TRABULUS: I know that. 9 MR. WHITE: After Mr. Ackerman, I think we may 10 have another witness, Dr. Kaufman, again, one of 11 Mr. Gordon's dentists to identify checks and then 12 Ms. Gaspar, who I assume with cross-examination will take 13 the rest of the day. 14 THE COURT: Very well. 15 See you tomorrow morning at 9:30. 16 MR. TRABULUS: Very well. 17 THE COURT: When this witness comes back, why 18 don't you let me know, Mr. White, or tell him to let me 19 know. 20 MR. WHITE: I will, your Honor. 21 (Case on trial adjourned until 9:30 o'clock, 22 a.m., Tuesday, January 27, 1997.) 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1455 1 I-N-D-E-X 2 W-I-T-N-E-S-S-E-S 3 PAGE LINE 4 S U Z A N N E K O N O P K A - C H O A
T E.... 1209 9 CROSS-EXAMINATION................................ 1210 16 5 CROSS-EXAMINATION................................ 1226 18 VOIR DIRE EXAMINATION............................ 1241 16 6 CROSS-EXAMINATION (cont'd)....................... 1242 2 CROSS-EXAMINATION................................ 1266 3 7 CROSS-EXAMINATION................................ 1275 19 CROSS EXAMINATION................................ 1281 20 8 CROSS-EXAMINATION................................ 1284 2 CROSS-EXAMINATION................................ 1286 1 9 CROSS-EXAMINATION................................ 1289 5 REDIRECT EXAMINATION............................. 1293 9 10 RECROSS-EXAMINATION.............................. 1306 4 RECROSS-EXAMINATION.............................. 1315 9 11 RECROSS-EXAMINATION.............................. 1316 18 RECROSS-EXAMINATION.............................. 1317 16 12 FURTHER REDIRECT EXAMINATION..................... 1321 10
13 G A R Y S A N F O R D......................... 1325 18 DIRECT EXAMINATION............................... 1326 2 14 CROSS-EXAMINATION................................ 1332 13 15 B R Y C E M A C D O N A L D................. 1336 7 DIRECT EXAMINATION............................... 1336 18 16 CROSS-EXAMINATION................................ 1343 19 REDIRECT EXAMINATION............................. 1349 14 17 RECROSS-EXAMINATION.............................. 1350 17 18 N E I L A C K E R M A N..................... 1351 19 DIRECT EXAMINATION............................... 1352 11 19 CROSS-EXAMINATION................................ 1422 18 20 E-X-H-I-B-I-T-S 21 (CONT'D) 22 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1456 1 E-X-H-I-B-I-T-S (cont'd) 2 Government's Exhibits 625, 625-A, 626, 626-A, 627, 627-A and 628 received in evidence.......... 1329 2 3 Government's Exhibit 648 received in evidence.... 1338 24 Government's Exhibit 649 received in evidence.... 1341 10 4 Government's Exhibit 636 received in evidence.... 1358 18 Government's Exhibit 641-A received in evidence.. 1366 17 5 Government's Exhibit 633-A received in evidence.. 1379 20 Government's Exhibit 639 received in evidence.... 1386 23 6 Government's Exhibit 639-A received in evidence.. 1388 8 Government's Exhibit 640-A received in evidence.. 1397 1 7 Government's Exhibit 642 received in evidence.... 1406 25 Government's Exhibit 813 received in evidence.... 1417 25 8 Government's Exhibit 814 received in evidence.... 1418 1 Government's Exhibit 638 received in evidence.... 1422 13 9 Defendant's Exhibit I received in evidence....... 1241 25 10 Defendant's Exhibit J received in evidence....... 1243 23 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
