America's Best & BrightestMain PageDirty Jury?Masters and Millionaires
1457 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 27, 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 1458 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 1459 1 M O R N I N G S E S S I O N 2 3 (Whereupon, the following takes place in the 4 absence of the jury.) 5 THE COURT: Mr. Trabulus, you wanted to see me? 6 MR. TRABULUS: Yes, your Honor. I wanted to 7 raise a matter that came up yesterday in the questioning 8 of Mr. Ackerman. If you remember, I sought to question
9 Mr. Ackerman on some of his grand jury testimony which I
10 regarded as inconsistent and your Honor regarded as 11 otherwise. 12 I would like to renew my application to question 13 him about it, and not on that basis. But his recollection 14 was refreshed on direct examination with that grand jury 15 testimony. And that's something which, frankly, I simply 16 forgot to mention to your Honor at the point, and that 17 appeared on page 1403. He was directed to that particular 18 grand jury testimony. He was asked to look at pages 20 to 19 23 on the grand jury testimony, and I was going to 20 question him with regard to a portion of that. 21 I think on the basis that he refreshed his 22 testimony on the witness stand on direct, and I ought to 23 be able to question him specifically as to what he said he 24 was reading. 25 THE COURT: I am lost completely.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT
REPORTER 1460 1 MR. TRABULUS: Mr. Ackerman refreshed his 2 recollection -- 3 THE COURT: What did he say that was 4 inconsistent? 5 MR. TRABULUS: He said on page 20 of his grand 6 jury testimony with his 3500-5-A, and beginning at line 7 20. 8 Question: Now, did Mr. Gordon ever tell you 9 that, for example, he owed the IRS a lot of money 10 personally? 11 Answer: He once indicated to me in a 12 conversation to my recall that he owed the IRS money from 13 prior years. 14 Question: Did he say anything else regarding 15 that? Do you recall the context in which it came up? 16 Answer: The context in which it came up was
17 because I asked him to the best of my recall, I said why 18 did you do the transfers, what was going on and was it 19 Reed. 20 He said, I wasn't scared of Reed. I never was 21 scared of Reed. I never thought that Reed was going to 22 win the judgment, and I think he mentioned that he owed 23 taxes. That's the portion that was included within what 24 he was asked to refresh his recollection with. I am not 25 saying I would necessarily question him about it today if
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1461 1 your Honor permits me, but I would like permission to do 2 so. 3 THE COURT: What is inconsistent with what he has 4 testified to yesterday at the trial? I don't understand 5 that. 6 MR. TRABULUS: When he testified at the trial, he 7 didn't say I think. The point is he was asked this in the 8 grand jury. He was asked the context in which the 9 conversation came up about owing the IRS money. And he 10 said, well, we had a conversation about the transfers, and
11 I think that's when he mentioned he owed taxes. And I 12 think he was more definite, he was more definite -- 13 THE COURT: I will let you say, didn't you say I 14 think he said that. That's what you want to bring out? 15 MR. TRABULUS: Yes. 16 THE COURT: All right. I will let you bring that 17 out. 18 I have to make a phone call, and we will start 19 shortly. 20 (Whereupon, at this time there was a pause in the 21 proceedings.) 22 THE COURT: Yes, Mr. Neville. 23 MR. NEVILLE: I wanted to ask the Court if it is 24 possible, when you speak to the jury sometimes, we can't 25 hear you too well in the back. I was wondering if you
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1462 1 could raise your voice a little or use a microphone, just 2 the moments when you speak to the jury. 3 THE COURT: I will not use the microphone. But I 4 will raise my voice.
5 MR. NEVILLE: As long as you don't yell at me 6 when you raise your voice. 7 THE COURT: I will never do that. 8 MR. NEVILLE: A little later the lawyers will 9 talk about the Friday schedule perhaps. Some of us have 10 some things. 11 THE COURT: At a break we can discuss it. 12 (Whereupon, the jury at this time entered the 13 courtroom.) 14 15 N E I L A C K E R M A N , 16 called as a witness, having been previously 17 duly sworn, was examined and testified as 18 follows: 19 20 THE COURT: Good morning, members of the jury. 21 Please be seated.
22 Again I want to thank you for your punctuality, 23 your sense of responsibility, your dedication. I am going 24 to have to look in the book and get some more words 25 because you have been doing a great job. I must apologize
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT
REPORTER 1463 1 for keeping you waiting. It was entirely my fault. I had 2 some other matters on. And at the last minute I had to 3 take care of something. 4 I want to assure you that the lawyers and the 5 parties were all here on time as you were. It was the 6 Court that caused the delay. 7 Also, I am told that occasionally, because of 8 noise in the back of the courtroom my voice is not 9 carrying to all parts of the courtroom. So I will have to 10 talk louder. Slower I always talk, but louder. 11 You may proceed.
12 You have been previously sworn and you are under 13 oath, Mr. Ackerman. You understand that? 14 THE WITNESS: Yes, I am. 15 THE COURT: How am I doing back there? You hear 16 me now. 17 MR. NEVILLE: Beautiful, Judge. 18 19 CROSS-EXAMINATION (cont'd) 20 BY MR. TRABULUS: 21 Q Good morning, Mr
. Ackerman. 22 A Good morning. 23 Q You have Exhibit 646 in front of you? 24 A Yes. 25 Q And that's the statement your firm prepared?
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1 A Rivkin Radler and Kremer, yes. 2 Q Right, your firm at the time? 3 A Yes. 4 Q And I think you testified on direct examination that 5 that covered the period June through December 30th, of 6 1994; do you recall that? 7 A Yes. 8 Q Take a look at it again, and see whether in fact it 9 covers just August through December, 1994. Some of it is 10 hard to read. Look at the first page. 11 A The first page says 8 instead of 6. 12 Q So that would be August? 13 A Yes, that's correct. 14 Q And during this time period, that's a two month time 15 period? 16 A Yes.
17 Q The bill for services, and I am leaving out the 18 disbursements or expenses, but the bill for services was 19 somewhat in excess of $51,000; was it not? 20 A Yes. 21 Q And that represented a total of 297.7 hours of time 22 spent by attorneys and paralegals at your firm, correct, 23 at the Rivkin Radler firm? 24 A As summarized on page 38, yes. 25 Q Now, just in terms of who was working on it and how
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1465 Ackerman-cross/Trabulus
1 much time they put in, you put in 50.1 hours; is that 2 correct? 3 A That's what is recorded there. 4 Q And there were two other attorneys who actually put 5 in more time than you did, in fact, three other attorneys; 6 is that correct, is that Mr. Kardisch, K A R D I S C H, he 7 put in. 8 His billing is 65.3 hours; is that correct? 9 A Yes, as recorded.
10 Q And Ms. Yehuda, Y E H U D A, 52.4 hours; is that 11 correct? 12 A Yes. 13 Q And yesterday you spoke about Mr. Catalanello? 14 A Catalanello. 15 Q Sorry if I mispronounced it, but his time is 89.4 16 hours; is that correct? 17 A Recorded, yes. 18 Q And I think you indicated that sometimes there is 19 time spent that isn't recorded; is that correct? 20 A There is always that possibility. 21 Q Always there is that. But in terms of what was 22 recorded these were recorded; is that correct? 23 A Yes. 24 Q These time records, included in Exhibit 636, contain 25 some fairly detailed indications of what the various
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1466 Ackerman-cross/Trabulus
1 people reported that they did on particular days, both the 2 number of hours, and also the description of who they
3 spoke to and what they spoke about, and so forth; is that 4 fair to say? 5 A Yes. 6 Q I would like to direct your attention to page 2 of 7 this document -- 8 THE COURT: Is this Government's Exhibit 636? 9 MR. TRABULUS: Yes. I will only be speaking 10 about that until I indicate another exhibit number. 636. 11 Q That contains entries for Mr. Kardisch? 12 A Yes. 13 Q And did Mr. Kardisch occupy a position at Rivkin 14 similar to yours? 15 A He was a partner in litigation department. 16 Q You were a partner in the bankruptcy department? 17 A The head of the bankruptcy department. 18 Q When I say -- he was comparable to you? 19 A Yes. 20 Q And you both billed at the same rate when I say 21 comparable? 22 A I wouldn't be surprised, right. 23 Q And Mr. Kardisch was involved in an adversary 24 proceeding in this particular bankruptcy; is that correct? 25 A Yes.
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1 Q And that's an adversary proceeding, which is a 2 lawsuit within the bankruptcy; is that correct? 3 A Yes. 4 Q And that was being brought on behalf of Who's Who; is 5 that correct? 6 A Yes. 7 Q Now, I think you mentioned earlier yesterday in 8 response to Mr. White that Mr. Gordon told you he never 9 had expected to lose the lawsuit that Reed had brought; is 10 that correct? 11 A Yes. 12 Q And that he never had been afraid of Reed? 13 A Yes. 14 Q Now, in the notes -- in the bill that Mr. Kardisch, 15 that portion of the bill, the entry on page 2 -- 16 THE COURT: Actually, it is page 1, isn't it? 17 MR. TRABULUS: Your Honor, I am referring to page 18 2. It has the word page 2 at the bottom. Kardisch begins 19 at page 1, but he continues. 20 THE COURT: All right. 21 MR. TRABULUS: Let me just ask the witness. 22 On this bill the time of the particular people is 23 generally indicated on -- above the first date for which 24 they put in time; is that correct? 25 A On the first line of their entry.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1468 Ackerman-cross/Trabulus
1 Q The first line? 2 A Yes. 3 Q Of their entry? 4 A Yes. 5 Q Take a look at page 2. 6 Are those also time entries for Mr. Kardisch? 7 A Those are Mr. Kardisch's time entries, yes. 8 Q Just to make sure about that. 9 A Yes. 10 Q Now, there is a reference here for August 5th, 1994, 11 where he indicates, and I will read part -- the whole 12 thing. Meet with Bruce Gordon, Marty Reffsin, Niel Flaum
13 and associates, do you have it? 14 A Yes, I have it right in front of me. 15 Q Re bankruptcy and adversary proceedings, and matter 16 before Magistrate Jordan, review all documentation from 17 trademark infringement action before Magistrate Jordan, 18 preliminary injunction and appellate matters, review 19 bankruptcy pleadings, work on engagement agreement. 20 Do you know what the reference there is to the 21 preliminary injunction and appellate matters? 22 A I think it referred to the fact they were taking the 23 appeal from Magistrate Jordan's decision, and that was 24 included in the appeal -- 25 Q How about the reference to the preliminary
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1469 Ackerman-cross/Trabulus
1 injunction? Are you familiar with a preliminary 2 injunction as it may have related to this? 3 A I am familiar with prelimina
ry injunctions in 4 general. I don't know how it related to this. 5 Q Do you recall ever having a conversation with 6 Mr. Gordon concerning whether or not there had been an 7 injunction for preliminary injunction brought by Reed? 8 A At the beginning of their lawsuit before the 9 bankruptcy? 10 Q Yes. 11 A Oh, yes. 12 Q Did Mr. Gordon explain to you that Who's Who had won 13 that? 14 A Yes, absolutely. 15 Q And that's one of the reasons he never expected to 16 lose the case ultimately? 17 A That and the fact that the denial had been appealed, 18 and they lost an appeal also. 19 Q Reed lost it on appeal? 20 A Yes. 21 Q Up to the point where the judgment had been awarded 22 against Who's Who, there had been some prior decisions 23 which Who's Who had won; is that correct? 24 A Yes. In that separate federal court litigation.
25 Q Right, it wasn't in the bankruptcy. These things
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1470 Ackerman-cross/Trabulus
1 happened before you got involved; is that correct? 2 A Before the bankruptcy was even filed, yes. 3 Q In fact, the bankruptcy was only filed because there 4 was a judgment in favor of Reed for over 1.6 million 5 dollars; is that correct? 6 A It was filed after such judgment was entered, yes. 7 Q Did Mr. Gordon explain to you that if it had not been 8 for that judgment there never would have been any 9 bankruptcy filing? 10 A That was stated to me. 11 Q Now, yesterday -- let me ask you, Mr. White asked you 12 yesterday if you ever had a conversation with Mr. Gordon, 13 in which he told you that the logs were not correct. Do 14 you recall being asked that question or something similar 15 to that by
Mr. White? 16 A I believe so, yes. 17 Q And let me ask you this: Did you ever have a 18 conversation with Mr. Gordon in which he told you that the 19 logs were correct? Yes or no. 20 A I had a conversation with him when he was preparing 21 the logs, or when we talked about the logs. 22 Q Before they were prepared? 23 A Before they were sent to my firm. 24 Q Did he tell you that he had seen them, Mr. Gordon? 25 A No. He told me that he was upset that he had
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1471 Ackerman-cross/Trabulus
1 prepared that. 2 Q Leave that aside. Did I ask you that? Did I ask you 3 whether he was upset? 4 A I can't answer yes or no to your question. I am 5 sorry. 6 Q Well, didn't I ask you whether or not you had ever 7 had a conversation with Mr. Gordon in which he told you 8 that the logs were incorrect -- excuse me, were correct? 9 Did you ever have that conversation -- did he ever have 10 that question with you? Yes or no, sir? Is that a 11 difficult question? 12 MR. WHITE: Objection. 13 THE COURT: Sustained. 14 MR. TRABULUS: Withdrawn. 15 Q Did he ever tell you that the logs were correct? 16 A I can't answer that question yes or no. 17 Q Did he ever tell you that he had seen the logs after 18 they were prepared, yes or no. 19 A After they were prepared? 20 Q Did he ever tell you, yes, that he had seen them, 21 reviewed them? 22 A On the -- it was sent to me on the 23rd. I was not 23 even in the firm. 24 Q You were out because you were sick or -- 25 A I was ill.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1472 Ackerman-cross/Trabulus
1 Q Okay. 2 MR. JENKS: Norman, he hasn't answered the 3 question. 4 MR. TRABULUS: I know. 5 MR. TRABULUS: Bear with me a moment, your 6 Honor? 7 THE COURT: Sure. 8 (Whereupon, at this time there was a pause in the 9 proceedings.) 10 (Document handed to the witness.) 11 Q Mr. Ackerman, I have shown you 640-A, which is in 12 evidence, and just to remind the jury, that's a fax that I 13 think you indicated that you had sent to Bruce Gordon and 14 Marty Reffsin; is that correct? 15 A Yes, a cover sheet, with a letter on it. 16 Q And annexed to it is a copy of the letter by which 17 you had sent the logs over to the other side; is that 18 correct? 19 A Yes. 20 Q Now, in -- so, basically you sent a fax to Bruce 21 Gordon and to Mr. Reffsin, letting them know among other 22 things that you had sent the logs over to the other side; 23 is that correct? 24 A Ye
s, cc'ing copies of the letter, yes. 25 Q And also in the fax you sent to Mr. Gordon and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1473 Ackerman-cross/Trabulus
1 Mr. Reffsin, did you not say, and I am reading the last 2 paragraph: I think it would be a good idea for Marty and 3 me to talk and possibly meet on Monday or Tuesday, and for 4 all of us, including Bruce, to talk and possibly meet on 5 Wednesday or Thursday. 6 That is in there; is that correct? 7 A Yes, it is. 8 Q Now, as you sit here today, do you recall whether any 9 of those suggested meetings or conversations ever 10 occurred? 11 A Right now, no, I do not. 12 Q Why don't you take a look at 636 and see whether or 13 not they did. They would be reflected in there, would 14 they not? 15 A They may be, if the hearing came off on the next 16 Friday. So
metimes things get adjourned and, therefore, 17 you adjourn the meetings. Let me take a look. 18 I see on 9/27/94, which is page 17 -- let me make 19 sure it is my entries. 20 Q Sure. 21 I will be asking you to look at other people's 22 entries in a moment, too. We are on 636. 23 A 9/27/94, first several lines, telephone call from 24 Bruce Gordon, conference to Marty Reffsin, scheduled 25 meeting at which we can review all. And then I continue,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1474 Ackerman-cross/Trabulus
1 telephone call to Doug Skalka, the attorney for Reed, 2 advised him that my wife was having operation on Thursday, 3 and although it is not exactly the same time as hearing on 4 Friday -- 5 THE COURT: You have to slow down, Mr. Ackerman. 6 THE WITNESS: Forgive me, sir. 7 THE COURT: You have to speak slower.
We have to 8 understand it and hear it, and the reporter has to take it 9 down. Speak slower, will you? 10 THE WITNESS: Yes, sir. 11 Let me start -- 12 THE COURT: You are not the only one who does 13 that. Everyone who reads, reads quickly. Everyone reads 14 at a faster rate than they speak. This is a phenomena 15 which I said many times when I retire I will explore 16 this. I may write a book on this some day. 17 However, since I don't intend to retire ever, I 18 don't know when I am going to write the book. 19 Go ahead. 20 THE WITNESS: I will begin again with the words 21 from the third line -- 22 Q What page are you on? 23 A Page 17, the third line, starting with the middle of 24 that third line. 25 Telephone call to Doug Skalka. I am inserting
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s/Trabulus
1 the words not written there. He was the attorney for 2 Reed. Continuing. Advised him that my wife is having 3 operation on Thursday and although is not exactly same 4 time as hearing on Friday, would be appreciated if he 5 could talk about giving adjournment. 6 Q Okay. 7 A And then it goes on and talks about the fact that 8 there was an adjournment agreed to. 9 Q Let me ask you, Mr. Ackerman, have you gone through 10 these -- this statement, 636, to see whether or not there 11 is any entry in it by anybody at the Rivkin Radler firm 12 which indicates a discussion, whether in person, by 13 telephone or however, with Mr. Gordon concerning the logs 14 after they were prepared? 15 A Have I gone through it? No. 16 Q Would you please do so now. 17 A There is an entry on 9/19/94, a telephone call with 18 Bruce Gordon, which may or may not
have pertained to that. 19 Q Were the logs completed by that day? 20 A No. They were not sent to my office until 9/23. 21 There were questions that came up in the meantime when he 22 was preparing them. 23 Q You say he prepared them, do you mean he personally 24 prepared them, Bruce Gordon? 25 A I should not have used that word. They were prepared
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1476 Ackerman-cross/Trabulus
1 by Who's Who. 2 Q Thank you. 3 9/19, that's for you? 4 A Yes. 5 Q What page? 6 A That's 9/19/94, page 15 of this exhibit. 7 I see also -- 8 Q Can you read that entry. 9 A Telephone call with Bruce Gordon. 10 Q Thank you. That's all it says? 11 A Yes. 12 Q Before going on to the next thing you were going to 13 talk about, throughout this statement there are numerous
14 references to telephone calls or conversations with Bruce 15 Gordon concerning many things; is that correct? 16 A Yes. 17 Q And there are many, many different subjects that can 18 be discussed with him; is that correct? 19 A Yes. 20 Q And so, there was nothing in the entry you just read 21 that indicated that the logs came up before that, yes or 22 no, sir? 23 A There is nothing in such entry. 24 Q And, indeed, there are pages and pages of entries 25 including conversations with Mr. Gordon and Mr. Reffsin as
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1 well, sometimes separate, which make no mention about the 2 logs; is that right? 3 A Yes, that's correct. 4 Q Continue to the next point that you were going to be 5 talking about. What were you going to point out? 6 A On 9/22/9
4, there were -- there is another entry, 7 telephone calls with Gordon, conference with Josh, and 8 telephone calls with Marty Reffsin. 9 Q Does the word "log" appear there? 10 A No, sir. 11 Q Is there any reference to the property in which the 12 logs are kept? 13 A No, there is not. 14 Q There is nothing at all there indicating there was 15 any reference to the logs? 16 A The fact that there was no entry leads me to believe 17 that there was something that we could -- I could not 18 write about because of attorney/client privilege. 19 Q I see, you are saying there was no mention in the 20 logs -- excuse me, let me see what we are talking about 21 here. 22 Are you saying that it would have been a 23 violation of the attorney/client privilege to simply refer 24 to the fact that the logs were discussed? Yes or no, sir? 25 A No, I am not sayin
g that.
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1 Q In fact, there were other entries in which the logs 2 were referred to; is that correct? 3 A Yes. 4 Q So -- but let's -- do you have a specific 5 recollection -- this is page 18? 6 A That was page 15, I believe. 7 Q I am sorry. 8 Page 15 was the one that simply said telephone 9 call with Bruce Gordon, three-tenths of an hour? 10 A 9/19/94, yes. 11 Q What is the one you are on now? 12 A Then there is 9/22 slash 94. 13 Q That's .4 hours? 14 A Yes. 15 Q Telephone call with Gordon, conference with Josh, 16 telephone calls with Marty Reffsin, etcetera? 17 A Yes. 18 Q Josh is Josh Kardisch? 19 A Yes. 20 Q Josh Kardisch is the litigation partner? 21 A Yes. 22 Q Josh Kardisch is the one involv
ed in the adversary 23 proceeding; is that correct? 24 A Yes. 25 Q And the adversary proceedings had nothing to do with
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1 the logs, did it? 2 A No, it did not. 3 Q Let's continue. Any other references to the logs? 4 A Line 23, but I was out that day. 5 Q Incidentally, Mr. Ackerman, did I ask you for -- to 6 identify entries in this statement that indicated 7 conversations with Bruce Gordon concerning the logs? Was 8 that my question to you? 9 A Yes, and I felt that it might have indicated that, 10 yes. 11 Q Did I ask you to indicate entries in the log that did 12 not indicate conversations with Bruce Gordon concerning 13 the logs, but which you now say, well maybe we didn't put 14 it down? Did I ask you that? 15 MR. WHITE: Objection
, your Honor. 16 THE COURT: Sustained as to form. 17 Q Okay. 18 Continue with trying to find an entry concerning 19 any conversation with Bruce Gordon on the logs. 20 A After 9/19/94? 21 Q Keep going. 22 A Okay. 23 Q Anywhere. 24 A I see nothing until the end of the month as to me. 25 Q As to you. So you see nothing at all as to you?
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1 A On -- from 9/23/94 on. 2 Q Okay. 3 Are there any indications here in any of the 4 entries that there was any conversation between you and 5 Bruce Gordon concerning the contents of the logs at any 6 time after they were in existence or -- withdrawn. 7 You have answered September 17th, September 22nd 8 and September 23rd and forward. 9 Are there any earlier conversations that are 10
reflected here in which the contents of the logs are 11 discussed with Bruce Gordon? 12 A I don't believe so. 13 Q Let's go to some of the other attorneys. 14 A Sure. 15 Q I would like you to look at the entries for the other 16 attorneys and see whether there is any indication whether 17 any of them spoke to Bruce Gordon concerning logs? 18 A There is nothing for Richard Weber that I could say. 19 Q Is Richard Weber the one you would logically look to 20 see what you were doing? 21 A Richard was helping me on the case, the primary 22 associates on the case was Gerard. Richard was working -- 23 Q Let's deal with Mr. Weber so we know what you are 24 talking about. 25 There is on page 31 an entry --
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1 A 31 or 21? 2 Q 31. 3 A I am sorr
y. 4 Okay. 5 Q Was that Richard Weber's? 6 A It appears to be Gerard Catalanello's. 7 Q He was the principal associate? 8 A Yes. He was doing the case on day to day. Not just 9 one matter, but day to day. 10 Q Would you look to -- again I hope I pronounce it 11 correctly, but Mr. Catalanello's entries are particularly 12 detailed? 13 A Yes. 14 Q And they are more detailed than any other attorney's 15 entries, are they not? 16 A They are very detailed. 17 Q Okay. 18 Do you find any entry by Mr. Catalanello 19 indicating he discussed the contents of the logs with 20 Mr. Gordon? 21 A On page 31? 22 Q Well, on any page. 23 A On page 31, he refers to the fact that he discussed 24 them with Maria Gaspar. Let me start again from the 25 beginning, sorry.
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R 1482 Ackerman-cross/Trabulus
1 Q By the way, there was no attorney/client privilege 2 that presented that from being included in that entry, 3 that he discussed it with Maria Gaspar? 4 A It would depend on the contents of the conversation. 5 Q The fact that the subject matter was discussed, it is 6 not privileged? 7 A The subject matter is not what I am concerned about. 8 I am concerned about revealing certain confidences on the 9 time slip -- 10 Q In this incidence, was there anything revealed by 11 saying the log was discussed? 12 A Since Gerard put it in and I did not take it out, I 13 would not think so here. 14 Q Since you discussed the logs with Mr. Gordon 15 yourself, would the fact that -- putting it in have 16 revealed any attorney/client privilege any more than 17 Mr. Catalanello would? 18 A The substance of the conver
sation would concern me, 19 not the fact that there was a conversation. 20 Q Did Mr. Catalanello indicate what the conversation 21 was? 22 A No, he said he had a discussion with respect to the 23 logs, and that it was maintained in accordance with the 24 stipulation. 25 Q Continue to look with any conversation that
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1 Mr. Catalanello indicated he had with Mr. Gordon? 2 A Okay. 3 Q If any. 4 A I see nothing else on Mr. Catalanello's time slip. 5 Q You have already looked at Mr. Weber's? 6 A Yes, I have. 7 Q Have you checked the other attorneys that would be 8 reasonable to check on to this? 9 A I don't think that Josh would have anything to do 10 with that. 11 Q Okay. 12 A And I think the rest were paralegals. Let me check.
13 (Whereupon, at this time there was a pause in the 14 proceedings.) 15 A There were some entries in Josh Kardisch's time about 16 preparing for discovery, but I believe they pertained only 17 to the adversary proceedings. 18 Q Which would not have involved the logs? 19 A Not to my belief at this point, no. 20 Q So, is it fair to say that the only entries in this 21 entire statement which indicated that the contents of the 22 logs may have been discussed would be the entry on page 23 31, Mr. Catalanello's? 24 A The only entry which specifically stated they were 25 discussed was the entry on page 31.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1484 Ackerman-cross/Trabulus
1 Q Could you read that portion of that entry. 2 A Yes. It is in the middle of the page on page 31. 3 Discussion with Maria -- M. Gaspar, controller, reg
arding 4 property user's log that was and is being maintained in 5 accordance with stipulation and order, re-faxing same, 6 M. Reffsin's comments slash suggestions thereto, etcetera. 7 Q That's the part that relates to the logs? 8 A That's the part that directly states that, yes. 9 Q It doesn't mention Mr. Gordon at all; is that 10 correct? 11 A No, it does not. 12 Q And there are other entries of Mr. Catalanello's that 13 mention Mr. Gordon, does it not? 14 A Yes. 15 Q And indeed, the very next entry on the very next page 16 mentions Mr. Gordon, does it not? The very next words? 17 A Yes, it does. 18 Q Would you read that. 19 A It says discussions with B. Gordon regarding possible 20 adjournments of the 9/30/94 hearing date until 11/4/94. 21 Q And it continues, Reed's change in position -- 22 A And decision to continue with hearing on 9/30/
94. 23 Q And Mr. Catalanello had numerous other entries in his 24 entries, with respect to conversations with Mr. Gordon, 25 for example papers, briefs being submitted and arguments,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1485 Ackerman-cross/Trabulus
1 and so forth. Would you take a look. 2 (Whereupon, at this time there was a pause in the 3 proceedings.) 4 Q Perhaps I will withdraw the word "numerous" and just 5 simply say others. 6 A There were other discussions here in the time sheets. 7 Q Nothing relating to the logs; is that correct? 8 A Correct, none that I can see. 9 Q Okay. 10 Now, yesterday I believe you indicated you heard 11 something about a partial repayment by Mr. Gordon of his 12 loan from the corporation; do you recall that? 13 A Yes. 14 MR. TRABULUS: May I have 772, please? 15 (Coun
sel confer.) 16 MR. TRABULUS: Your Honor, the parties stipulated 17 that 772 may be received in evidence. 18 THE COURT: Is that right, Mr. White? 19 MR. WHITE: Yes. 20 THE COURT: What is 772? 21 MR. TRABULUS: 772 is a check. It indicates it 22 is on the account of Bruce Gordon payable to Who's Who 23 Worldwide Registry, Inc., in the sum of $20,000. 24 THE COURT: What is the date? 25 MR. TRABULUS: The date on the check is April
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1486 Ackerman-cross/Trabulus
1 22nd, 1994, and it bears the number 1,001. 2 THE COURT: Government's Exhibit 772 in 3 evidence. 4 (Government's Exhibit 772 received in evidence.) 5 Q Now, Mr. Ackerman, have you ever seen that check 6 before? 7 A No. 8 Q Look at the entry, the memo entry on it. What does 9 it say? 10 A Par
tial payment loan. 11 Q Now, this check is dated April 22nd -- April 27th, 12 1994. Take a look at it. 13 A Yes, it is, April 27th. 14 Q And that is after the bankruptcy had been filed; is 15 that correct? 16 A I believe the bankruptcy was filed in February or 17 March of 1994. Possibly in April, I am not quite sure. 18 Q Now, seeing this check, even if you may never have 19 seen the check before, does it refresh your recollection 20 any further concerning what you may have learned about any 21 repayment by Mr. Gordon? 22 A I had heard that there had been repayments on a loan. 23 Q Repayments, more than just that one, yes? 24 A Maybe I shouldn't have used that word. There had 25 been some repayment on a loan.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1487 Ackerman-cross/Trabulus
1 Q Some repayments on a loan? That's wha
t you heard? 2 (The witness nods his head.) 3 Q You have to say yes or no. The reporter can't take 4 down a nod, even though we can all see it. 5 A Sorry, yes. 6 Q Now, this particular repayment was at a time when the 7 Who's Who was in bankruptcy; is that correct? 8 A I believe that Who's Who filed bankruptcy in April or 9 March. It might have been -- 10 Q You were not involved until August? 11 A Yes. 12 Q If I tell you there is evidence in the record that 13 the filing was filed in March, March 22nd, 1994, then this 14 was paid while they were in bankruptcy? 15 A If it was filed on that date, this was 16 post-bankruptcy. 17 Q This is an occasion where Mr. Gordon was paying money 18 to a company that was in bankruptcy out of his own pocket; 19 is that right? 20 A That's what it reflects, right. 21 Q Okay. 22 Now, not to re
visit this area overly much, but 23 yesterday we were talking about some transfers among 24 different companies that were affiliated with each other; 25 is that correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1488 Ackerman-cross/Trabulus
1 A Yes. 2 Q And sometimes -- not talking about this case -- but 3 sometimes in bankruptcy proceedings, people claim -- not 4 the bankrupt company, but creditors may claim -- that 5 before the bankruptcy was filed the debtor company 6 transferred assets away to make them less reachable by 7 creditors; is that correct? 8 A Yes. 9 Q That's a common claim? 10 A Yes. 11 Q Now, in this particular case, is it not correct -- 12 withdrawn. 13 Now, the different entities that we are talking 14 about in terms of transfers, that would include Sterling; 15 is that correct?
16 A Yes, to the best of my recollection. 17 Q And was it not correct that shortly before the 18 bankruptcy was filed in this case, Sterling repaid over 19 $580,000 it had borrowed from Who's Who? 20 A I don't remember. 21 Q Okay. 22 MR. TRABULUS: Bear with me a moment. 23 THE COURT: Yes. 24 (Whereupon, at this time there was a pause in the 25 proceedings.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1489 Ackerman-cross/Trabulus
1 MR. TRABULUS: May I have 641? 2 (Counsel confer.) 3 (Handed to the witness.) 4 Q Now, Mr. Ackerman, 641, you have seen that before, 5 haven't you? 6 A Yes, it is my letter. 7 Q It is a letter you wrote; is that right? 8 A Yes. 9 Q You wrote it on September 18th, 1994; is that 10 correct? 11 A Yes. 12 Q That's a letter you wrote to answer those la
st 13 interrogatories, the ones that hadn't been answered yet 14 relating to, you know, the different purposes of the 15 business loans and transactions, right? 16 A Yes. 17 Q Now, take a look at page 3, paragraph four at the 18 bottom. 19 A Yes. 20 Q I will read it to you. 21 It says, 4. Sterling Who's Who, up to a total of 22 1.652 million loaned to this entity, 1.25 million under 23 long term note annexed hereto, and the remainder as 24 short-term loan. Then in bold, $583,493 of this debt was 25 repaid in March of 1994, just before the bankruptcy
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1490 Ackerman-cross/Trabulus
1 filing, such that the total due was reduced to 1.105 2 million. 3 Does that refresh your recollection that right 4 before the bankruptcy filing Sterling actually paid back 5 over $580,
000 of money to Who's Who, who was about to file 6 for bankruptcy? 7 A Yes. 8 Q And this was something you didn't just put in that 9 letter, but you also put it into something that was filed 10 in the bankruptcy court, and I am looking for the 11 exhibit. Exhibit 633. 12 MR. TRABULUS: May I have that, please? 13 (Counsel confer.) 14 MR. TRABULUS: Thank you. 15 Q Mr. Ackerman, 633 is a portion of a response that you 16 put into the bankruptcy court; is that correct? And you 17 signed it? 18 A It is pages 1, 19, 20 and 21. 19 Q Right. It is a portion of it. 20 A Yes. 21 Q And on page 19, you once again referred to the fact 22 that Sterling had just paid back the money right before 23 the bankruptcy, 580,000 of its debt? 24 A Yes, in bold face. 25 Q Now, I believe yesterday you testified that you
HARRY RAPAPORT, CSR,
CP, CM OFFICIAL COURT REPORTER 1491 Ackerman-cross/Trabulus
1 didn't recall whether or not Mr. Gordon paid rent to PVI; 2 do you recall that? 3 A Yes. 4 Q PVI was the company that owned the condominium in 5 Manhasset; is that correct? 6 A Yes. 7 Q And you were read some testimony yesterday that 8 Mr. Gordon gave about the time that he spent there; is 9 that correct? 10 A I believe so. 11 Q And I called your attention to the fact that there 12 was a deposition in April of '94, where he gave that as 13 his residence address; is that correct? 14 A You told me that, yes. 15 Q Right. 16 Now, I think you said that you couldn't recall 17 one way or another, right, that he paid rent? Or you 18 didn't know it. I forget? 19 A I believe I said that he had stayed there sometimes, 20 that was the arrangement. 21 MR.
TRABULUS: May I have 759 and 770? 22 (Documents handed to Mr. Trabulus.) 23 MR. TRABULUS: Your Honor, by stipulation, 759 24 and 770 may go in evidence. Is that correct, Mr. White? 25 MR. WHITE: Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1492 Ackerman-cross/Trabulus
1 THE COURT: Government's Exhibit , 759 and 770 in 2 evidence. 3 What are they? 4 MR. TRABULUS: A group of checks drawn on the 5 account of Bruce Gordon from National Westminster Bank. 6 759. 770 is also a group of checks drawn on the account 7 of Bruce Gordon held at Sterling National Bank. . 8 THE COURT: In evidence. 9 (Government's Exhibit 759 received in evidence.) 10 (Government's Exhibit 779 received in evidence.) 11 MR. TRABULUS: Your Honor, I will state that 12 there is a break in the sequence of some of the checks. 13 Therefore, it doe
sn't necessarily appear that all the 14 checks from the accounts are in there. It is a 15 selection. 16 MR. WHITE: To clarify for the record, 759 is 43 17 checks from Mr. Gordon's personal bank account at NatWest, 18 covering the period of 1993 and 1994. 770 are 63 checks 19 from Mr. Gordon's personal bank account at Sterling 20 National Bank from 1994. 21 Q You are ahead of me, Mr. Ackerman. Which set are you 22 going through? 23 A I am going through number 759. 24 Q Good. That's the one where I want to start. I will 25 not ask about each and every check. I don't know if they
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1493 Ackerman-cross/Trabulus
1 are in the same order in which I have them here. But I 2 would like you to look at check 109, if you got it. 3 A I have it. 4 Q Okay. 5 Is that a check for $2,000 to
Publishing 6 Ventures? 7 A Yes, it is. 8 Q It is dated March 1st, 1993? 9 A Yes. 10 Q That's from Mr. Gordon? 11 A Bruce Gordon's account. 12 Q Right. 13 Do you know Bruce Gordon's signature? 14 A I don't remember it as well as I used to. 15 Q Very well, it is from his account. 16 The next one, check 115. 17 A Okay, yes. 18 Q Also to Publishing Ventures for $2,000? 19 A Yes. 20 Q Next month, April 1st, '93? 21 A Yes. 22 Q It says rent? 23 A Yes, 4/93 I think I can read it. Rent. 24 Q On my copy it is -- thank you. 25 Check 124.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1494 Ackerman-cross/Trabulus
1 A Have it. 2 Q Same thing? 3 A 4/30/93 is the date of the check. 4 Q Rent? 5 A It says the word rent. 6 Q $2,000? 7 A Yes.
8 Q Publishing Ventures the payee? 9 A Publishing Ventures, Inc. 10 Q Now, we don't have any checks in this set until 11 November; is that correct? Late November? 12 A There is a check in late November, 11/30/93, 182. 13 Q Also a rent check for $2,000? 14 A Yes. 15 Q There are no checks at all in that set of checks 16 between April and November; is that fair to say? 17 A I believe so. 18 Q Not to anybody? 19 A I don't know if it is to anybody, but I don't see any 20 to Publishing Ventures. 21 Q Just check to see if there are any in November, or 22 any checks, rather, in the intervening months on that 23 subject. 24 A They jump from 4/30/93 to 11/93. 25 Q Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1495 Ackerman-cross/Trabulus
1 Now look at check 191. 2 A I have that before me.
3 Q That's has 1994 check? 4 A Yes, it is. 5 Q January 11th, 1994? 6 A Yes, it is. 7 Q That's for rent? 8 A Yes, it is. 9 Q To Publishing Ventures? 10 A Yes, it is. 11 Q The rent went up? 12 A It is listed as being $2,500. 13 Q That's $500 more than the other one? 14 A Yes, it is. 15 MR. TRABULUS: May I have 757? 16 (Counsel confer.) 17 MR. TRABULUS: Your Honor, I would offer by 18 stipulation, it will be a Government's Exhibit, 757, which 19 consists of bank statements for the personal account of 20 Bruce Gordon at National Westminster Bank USA covering a
21 period, and perhaps all of 1993. It is very hard to read 22 some of the dates on this. 23 THE COURT: Any objection? 24 MR. WHITE: No, your Honor. 25 THE COURT: Government's Exhibit 757 in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPOR
TER 1496 Ackerman-cross/Trabulus
1 evidence. 2 (Government's Exhibit 757 received in evidence.) 3 (Handed to the witness.) 4 Q Mr. Ackerman, just take a look at some of the months 5 in there if you can read them. I know it is hard to read, 6 some of the months for which we don't have checks, such as 7 June, July, August, May, and tell me if you see in each of 8 those months an indication that -- if the check, if a 9 check was written for the amount of $2,000? 10 A On 4/2/94 -- '93, excuse me, I see a check for 11 $2,000. 12 THE COURT: You don't have to give us the dates. 13 Q As to whether it is May or June, I want to establish 14 if there are any other $2,000 payments during 1993? 15 A One in May, two in June, another in June, something 16 in August, and in 9 -- September, I see one. 17 Q How about October? 18 A 10/5. 19
Q November? 20 A I see one in November. 21 Q Okay. 22 That's enough of that. 23 Take a look at 770. 24 A Yes. 25 Q Now, on 770, take a look at check 122.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1497 Ackerman-cross/Trabulus
1 A I have it. 2 Q A check for $12,500; is that correct? 3 A Yes. 4 Q That's for rent from February of '94 to June of '94, 5 right? 6 A It is so marked. 7 Q To Publishing Ventures? 8 A Yes. 9 Q And also check 136, that's in July? 10 A Yes. 11 Q Also $2,500? 12 A Yes. 13 Q This would indicate that there was a period -- 14 withdrawn. 15 I think yesterday we had some testimony 16 concerning the penthouse apartment in New York City; is 17 that correct? 18 A Yes. 19 Q And about some correspondence that you had from
20 Mr. Gordon in 1996 -- in February of 1996, relating to 21 that. Do you recall that? 22 A Yes. 23 Q And an adversary proceeding after that? 24 A Yes. 25 Q By another law firm.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1498 Ackerman-cross/Trabulus
1 Now, in July of 1995, if you recall, what 2 happened to the premises that Who's Who had had in Lake 3 Success? 4 A I don't recall. 5 Q Did there come a point in time when the lease was 6 disavowed? 7 A Rejected? 8 Q Rejected. 9 A Perhaps by the trustee, yes. 10 Q Do you recall whether in July of 1995 the lease was 11 rejected? 12 A No, I don't recall. 13 Q Do you recall after the lease was rejected such 14 operations as there still were, were all shifted to 15 Manhattan? 16 A I didn't think any operations were going forward on
17 those premises then. 18 Q With regard to Sterling's operations. 19 A I don't think anything was happening at Lake Success. 20 Q Sterling was not in bankruptcy, was it? 21 A No, it wasn't. 22 Q After the trustee was appointed, the trustee was in 23 charge of any business operations at Who's Who; is that 24 correct? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1499 Ackerman-cross/Trabulus
1 Q And the management of Sterling still remained the 2 management of Sterling; is that correct? 3 A Yes, sure. 4 Q And was it your understanding that there was a period 5 of time when Sterling -- some operations of Sterling may 6 have been performed for it at Lake Success? 7 A I wouldn't have been surprised. 8 Q Okay. 9 And, in fact, at one point there was an 10 indication that Who's Who had been hopi
ng to get 11 management fees from Sterling; is that correct? 12 A I don't recall that. 13 Q Okay. 14 In any event, did you become aware that at some 15 point after the lease was rejected in Lake Success that 16 Mr. Gordon was working in the City? 17 A I believed that he was working from the City once 18 Who's Who was closed. 19 Q When he was working from the City, is it your 20 understanding that that's when he was starting to do more 21 work at the penthouse? 22 A It is quite possible. 23 Q Now, is it correct that it was one of the least 24 important things to you in the bankruptcy proceeding who 25 owned the stock of Who's Who?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1500 Ackerman-cross/Trabulus
1 A It is not important in a Chapter 11 case. 2 Q In fact, it doesn't really affect the Chapter 11 case
3 in a typical situation? 4 A It depends on whether it is a closed corporation. If 5 it is very small it can affect. 6 Q In this case, did it affect it in any way? 7 A Not really. 8 Q Now, did you have discussions with Mr. Gordon -- 9 withdrawn. 10 One of the exhibits there, and I think it is 11 either 633, also 641, I think you were asked about both of 12 them yesterday. And I think in both of them you 13 described -- you wrote something about the loans, and how 14 it was anticipated that it would be a wash, okay? 15 A Yes. 16 Q Now, at any point in time, and particularly before 17 that, had you discussed with Mr. Gordon whether it would 18 be possible for him to take his back salary from the 19 corporation in the bankruptcy proceeding, and use it to 20 pay back the loan? 21 A Use it to pay back the loan? 22 Q Right. Either to pay credit on
the loan, even if no 23 money changed hands, or actually draw money, pay taxes on 24 it and use that to pay on the loan. Did you discuss if 25 that would be possible during the bankruptcy proceeding?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1501 Ackerman-cross/Trabulus
1 A I don't recall such a discussion. 2 Q In the context of a bankruptcy proceeding, a Chapter 3 11, Mr. Gordon was allowed to take salary for work he was 4 doing after the filing of the petition; is that correct? 5 A Yes. 6 Q That's called a post-petition expense of the debtor; 7 is that correct? 8 A Yes. 9 Q Now, anything relating to monies that might have been 10 owed from before the filing, that would be called a 11 pre-petition debt; is that right? 12 A Yes. 13 Q And monies cannot be paid on a pre-petition debt, 14 except in the context of
the reorganization of the 15 liquidation; is that right? 16 A Or otherwise by court order. 17 Q By court order; is that correct? 18 A Yes. 19 Q And so, once the bankruptcy was filed, Mr. Gordon, or 20 anybody there, would not have been free to pay him any 21 back salary, by simply writing him a check or crediting it 22 against the -- 23 A Not without a court order or in writing. 24 Q But if they did one of those things it could have 25 happened; is that right?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1502 Ackerman-cross/Trabulus
1 A Yes. 2 Q And did they have any discussions with Mr. Gordon 3 concerning what the original plans would have been before 4 the bankruptcy -- withdrawn. 5 In your conversations with Mr. Gordon, did 6 Mr. Gordon explain to you that -- some of the consequences 7 that the bankr
uptcy had -- withdrawn. 8 Did you discuss with Mr. Gordon the effect of the 9 Reed judgment on the business of Who's Who? 10 A Yes. 11 Q Did he discuss with you among other things, Who's Who 12 had to change the cover of its book? 13 A There were certain things that were required under 14 the state court judgment, certain changes required, and he 15 was acting to them. 16 THE COURT: I don't think it was a state court. 17 You mean the federal court? 18 THE WITNESS: Forgive me. 19 MR. TRABULUS: That was my question. 20 Q Did he explain to you one of the things he had to do 21 was simply to change the cover of the book to do what was 22 decided with respect to trademark infringement? 23 A I don't recall specifics, I am sorry. 24 Q Did he explain to you as a result of changing the 25 cover of the book, the delivery of the book would be
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1503 Ackerman-cross/Trabulus
1 delayed? Do you recall that? 2 A I don't recall that. 3 Q Do you recall him telling you as a result of the 4 delay fewer members were making payments for that book? 5 A I recall talking about the harm the bankruptcy was 6 doing. I don't recall the specific statement that you are 7 making. 8 Q Okay. 9 And do you recall him saying, or anyone, whether 10 it be him or someone else in the company, telling you that 11 as a result of having to change the cover on the book, it 12 was both an expense in terms of changing the cover, and 13 also a delay? 14 A I don't recall at this point. 15 Q Did he explain to you as a result of the bankruptcy 16 that the company was suffering economic harm quite apart 17 from any prospect of having to pay any money judgment to
18 Reed? 19 A Oh, yes. 20 Q Okay. 21 Now, did it ever come up in any discussion with 22 him, with Mr. Gordon or with anybody else there what the 23 plans had been with respect to the loans if that harm had 24 not been incurred, and if the bankruptcy had not had to be 25 filed?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1504 Ackerman-cross/Trabulus
1 A The intent on the loans? 2 Q Let me rephrase it. 3 Did Mr. Gordon tell you in so many words, the 4 company was doing very well before the Reed judgment? 5 A Oh, yes. 6 Q Did he ever tell you that he was intending at a 7 certain point in 1994 or 1995, to credit monies against 8 the loans, pay the taxes and basically wipe out the loans? 9 A Not that I recall. 10 Q Did he tell you that he understood he had to pay back 11 the loans, otherwise they really w
eren't loans? 12 A No. 13 Q Did he tell you that he was hoping to repay the 14 loans, but the bankruptcy and the judgment prevented that 15 from happening? Do you recall that? 16 A Not that I recall. 17 Q Did that subject even come up? 18 A No, not that I recall. 19 Q Let me ask you this: You were familiar with the 20 raid, the execution of the search warrant and seizure by 21 the government on March 30th, 1995? 22 A Yes, I am. 23 Q And it was only after that a trustee was appointed; 24 is that correct? 25 A It was a month or two after that, yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1505 Ackerman-cross/Trabulus
1 Q Before that Reed had tried on several occasions 2 office a trustee appointed and it was not successful; is 3 that correct? 4 A That is correct. 5 Q Now, is there something in t
he bankruptcy code 6 relating to reorganization called a cram-down provision? 7 THE COURT: How do you spell that? 8 MR. TRABULUS: C R A M D O W N: 9 A Yes. 10 Q And is a cram-down provision one that permits the 11 Court to impose a reorganization even over the objection 12 of a creditor or creditors? 13 A Yes, providing it complies with certain conditions. 14 Q Now, Reed was always objecting to any reorganization, 15 even a 100 percent plan; is that correct? 16 A Yes. From the time I came into the case, we were 17 always proposing 100 percent, and they continued to 18 object. 19 Q And from the point before the raid, had there been 20 any discussions in the bankruptcy concerning applying the 21 cram-down provision to require Reed to accept such a plan 22 even against its will? 23 A Yes, and there was a second wave, possibly, to. 24 Q Tell me
what was discussed. With whom. Were these 25 the lawyers on the other side?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1506 Ackerman-cross/Trabulus
1 MR. WHITE: Objection. 2 THE COURT: To the lawyers -- 3 MR. WHITE: The whole line of the subject. 4 THE COURT: With regard to what? 5 MR. WHITE: Relevance. I don't know if you want 6 to hear it during the break or now? 7 THE COURT: We may as well hear it now. 8 Members of the jury, we will take a ten-minute 9 recess. Please do not discuss the case and keep an open 10 mind. Please recess the jury. 11 (Whereupon, at this time the jury left the 12 courtroom.) 13 THE COURT: Yes, Mr. White. 14 MR. WHITE: My objection is the conduct of the 15 bankruptcy proceeding after say, October of 1995, the time 16 period in the indictment where Mr. Gordon and Mr. Reffsin
17
allegedly tried to obstruct the proceeding, is not 18 relevant. It doesn't bear on the intent in any way. The 19 theme seems to be that Reed were the bad guys and they 20 were trying to destroy Mr. Gordon -- 21 THE COURT: Hold it a minute. 22 Do you want to step out, Mr. Ackerman, please? 23 THE WITNESS: Yes. 24 (The witness exits the courtroom.) 25 MR. WHITE: Your Honor, the theme appears to be
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1507 1 that Reed is the bad guy and they are trying to destroy 2 Mr. Gordon. That's nice, but it is not a defense to 3 obstructing to proceeding. Whether or not Reed had an 4 ulterior motive doesn't require as to whether there was a 5 court order to keeping the log. I didn't object with 6 respect to Mr. Skalka, because it was appropriate, he was 7 a representative of Reed. He was a litigation a
dversary 8 of Mr. Gordon. 9 Mr. Ackerman was Mr. Gordon's company's lawyer. 10 This has nothing to do with the conduct of the bankruptcy 11 proceeding as it relates to whether or not they obstructed 12 them. 13 MR. TRABULUS: It is relevant now, your Honor, 14 for the same reason it was relevant when it was gone into 15 with Mr. Skalka. Mr. White called Mr. Skalka as a 16 witness. His bias can be established by not merely 17 questioning Mr. Skalka, but also questioning this 18 witness. It is perfectly relevant. The area was gone 19 into before. And I have another witness I wish to 20 question about it. It is not a major air of questioning. 21 THE COURT: I will allow it. Overruled. 22 We will take a ten-minute recess. 23 24 (Whereupon, a recess is taken.) 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1508
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 You may proceed. 7 MR. TRABULUS: Thank you, your Honor. 8 With the Court's permission, may the reporter 9 re-read the pending questions. 10 THE COURT: Yes. 11 (Whereupon, the court reporter reads the 12 requested material.) 13 MR. TRABULUS: I will proceed another discussion 14 along the same lines. 15 Q Mr. Ackerman, were these discussions with the lawyers 16 for Reed? 17 A We definitely had discussions with Reed. 18 Q In those discussions did you tell them that you were 19 going to seek to apply the cram-down provision? 20 A It would have stood to reason that I did. 21 Q And you say that there was another way, what was 22 that? 23 A The second way was that the
subject had not been 24 upheld, therefore they didn't have a definitely legitimate 25 debt.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1509 1 Q Now, did you bring up the possibility of the 2 cram-down proceeding with the Court itself, the bankruptcy 3 court? 4 A I don't recall. 5 Q And that was something which was definitely within 6 the air before the raid; is that correct, the prospect of 7 seeking to use the cram-down provision? 8 A Yes. 9 Q Now, are you familiar with an auction that was held 10 at the penthouse apartment in New York City? 11 A No. 12 Q Are you familiar with what happened to various 13 property that had -- that was seized by the trustee? 14 A I don't think Bruce got it back. 15 Q Are you aware that it was sold off for the bankrupt 16 estate? 17 A You are telling me, yes.
18 Q Are you aware that some of the very same items which 19 the government is contending here were improperly 20 purchased by Bruce for himself, were sold off by the 21 bankruptcy trustee for the bankruptcy estate? 22 A Not until you told me. 23 Q You yourself serve as a bankruptcy trustee, do you 24 not? 25 A Yes, I do.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1510 1 Q And you get appointed by the bankruptcy court to 2 serve as a trustee; is that correct? 3 A I am selected by the United States Trustee's office. 4 Q I am sorry, the U.S. trustee's office will pick you 5 to be a trustee in bankruptcy cases? 6 A I am put on the panel -- 7 Q Chapter 11 and Chapter 7 cases both? 8 A Yes. 9 Q And this is a somewhat delicate situation for you 10 right here, isn't it? 11 A Yes, it is. 12 Q
There is an accusation that there was false documents 13 submitted in a bankruptcy case in which you were 14 representing a party that supposedly submitted those; is 15 that correct? 16 A I did not know of that. 17 Q I mean, are you aware that there was an accusation 18 that the logs were false? 19 A I heard some scuttlebutt about that in the last day 20 or two. 21 Q And those logs were submitted through your firm; is 22 that correct? 23 A They were sent to -- 24 Q The other side? 25 A Yes, to the other side, through my firm.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1511 1 Q And that makes this a kind of delicate situation, 2 does it not? 3 A That's not what makes it delicate to me. 4 Q What makes it delicate to you is you are testifying 5 possibly against a former client? 6 A He was not my
client. He was the principal of my 7 client. 8 Q Are you aware that Who's Who itself is on trial? 9 Who's Who itself -- 10 A I know of the case as being United States against 11 Gordon et al. Is Who's Who on trial? 12 Q Yes, it is also on trial. 13 A Okay. 14 Q While you were representing Who's Who did you tell 15 Mr. Gordon yourself that Reed was engaged in a witch 16 hunt? 17 MR. WHITE: Objection to his view, your Honor. 18 THE COURT: Sustained. 19 MR. TRABULUS: No further questions. 20 THE COURT: Mr. Jenks. 21 MR. JENKS: No questions, your Honor. 22 THE COURT: Anybody else? 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1512 Ackerman-cross/Wallenstein
1 CROSS-EXAMINATION 2 BY MR. WALLENSTEIN: 3 Q Good morning, Mr. Ackerman. 4 A Good morning, sir.
5 Q My name is John Wallenstein, and I represent Martin 6 Reffsin. 7 A Yes, sir. 8 Q Mr. Ackerman, you testified you have been in practice 9 since 1981; is that correct? 10 A I graduated in 1981. I wasn't admitted to the bar 11 until '82, I was clerking for Judge Goetz, at that time. 12 THE COURT: Goetz, G O E T Z? 13 THE WITNESS: Yes. 14 Q You have been practicing bankruptcy during that time? 15 A I have been trying to branch away, but primarily 16 bankruptcy law during the 18 years. 17 Q You testified that during this matter you were the 18 lead bankruptcy counsel; is that right? 19 A Yes. 20 Q Tell us what that means? 21 A I was the one in charge, strategizing. The others 22 were my associates. 23 Q And you were -- you also indicated you were the head 24 of the bankruptcy department at Rivkin Radler and Kremer? 25 A Yes, I w
as.
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1 Q How many attorneys was there at Rivkin Radler and 2 Kremer during that time period? 3 A It varied, but certainly to the best of my recall 4 between 150 to 200. 5 Q How many attorneys were in the bankruptcy department 6 that you headed? 7 A We had a strange bankruptcy departments. But at its 8 highest, including everybody who could be set to have been 9 in it, formally, directly in it, it would have been four. 10 And then there were certain other people, certainly toward 11 the end of 1994, who were assigned basically permanently 12 to me. 13 Q How long were you with Rivkin Radler? 14 A I was with Rivkin Radler from 10 of '92, to 1 -- 15 that's January -- of 1995. 16 Q Then you left and went to Meltzer Lippe? 17 A Yes. 18
Q And you took this case with you? 19 A Yes, I did. 20 Q Now, during the time, and we are going to talk about 21 August and September of 1994. 22 During that time period you were the head of the 23 bankruptcy department and you were if lead counsel on this 24 case and in charge of this case as far as anybody was 25 concerned?
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1 A I was in charge of the bankruptcy department in the 2 case. Josh Kardisch was doing the adversary proceeding 3 complaint against Reed. I would speak to him about it, 4 but I was not in charge of it. And since Josh had -- 5 Q Is there a question? 6 A Sorry. 7 Q Now, did you have, with respect to the associates, 8 were they responsible to report to you as to what they 9 were doing with respect to the bankruptcy portion of t
his 10 case? 11 A Yes. 12 Q And that would be Gerard, we have agreed to call him 13 Gerard? 14 A Gerard. 15 Q Is that correct? 16 Also, Richard Weber; is that right? 17 A Yes. 18 Q And there was a third associate, I believe, James 19 someone? 20 A James Weller, was a person in litigation, who was 21 beginning to work with me a lot. But I think from looking 22 at his time slips, that they in this case pertained to 23 Josh's end of the case. 24 Q And Mr. Kardisch, who was handling the litigation 25 aspect would also coordinate with you; is that correct?
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1 A To some extent, yes. 2 Q Were you equal, you and Mr. Kardisch, or was one of 3 you in overall charge? 4 A I did not deal with his end of the case that much.
I
5 would speak to him about it from time to time. 6 Q If the senior management committee, however the firm 7 was set up, would want a report on the Who's Who matter, 8 would they look to you and Mr. Kardisch for separate 9 reports, or to one of you for a single report for what had 10 happened? 11 A Given the conduct of the firm at the time, they would 12 have looked I am sure to me, but if they talked about the 13 adversary complaint, they would have looked to Josh. 14 Q Essentially you were the partner who had overall 15 responsibility for the entire matter; is that a fair 16 statement? 17 A I don't think it would be. 18 Q All right. 19 Now, you, with respect to the bankruptcy end 20 now -- 21 A Yes. 22 Q You were the one who made all the court appearances? 23 A Except for possible adjournments, I was there 24 definitely at every im
portant court hearing. 25 Q Okay.
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1 And you were the one who strategized, you said? 2 A Yes. 3 Q And would that mean that you were the one who decided 4 what points to argue, what direction the case was going to 5 take, and basically guided the case to get there? 6 A Yes. 7 Q And would it be fair to say that as the partner in 8 charge of the bankruptcy end of this case, it was your 9 responsibility to coordinate the efforts on all the 10 attorneys working on the matter as well as outside 11 professionals? 12 A All attorneys working on the matter, as well as 13 bankruptcy professionals. 14 Q Bankruptcy professionals would include accountants; 15 is that correct? 16 A Yes. 17 Q That would include Mr. Reffsin; is that true?
18 A Yes. 19 Q Did you ever have a discussion with Bruce Gordon, 20 Maria Gaspar, anybody else, indicating that Mr. Reffsin 21 was an employee of Who's Who, rather than an outside 22 professional? 23 A I never believed Mr. Reffsin to be an employee of 24 Who's Who. 25 Q It was your understanding he was an outside
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1 professional, a C.P.A. with his own firm; is that correct? 2 A Yes. 3 Q And in fact, he was retained by Who's Who and the 4 bankruptcy court in effect appointed him; is that correct? 5 A They authorized his appointment, yes. 6 Q And by authorizing his appointment, the bankruptcy 7 court was saying this is an outside professional that can 8 be paid from the estate of the debtor; is that correct? 9 A Yes, and that he was disinterested, s
uch as that he 10 was authorized to be approved. 11 Q And by disinterested, what do you mean? 12 A It means he was not representing any creditor, he did 13 not have such close affiliations with a debtor that would 14 render him to have adverse interest. He was an outside 15 person. 16 Q So, he would not have any interest in any creditor or 17 such an interest in the debtor that would compromise his 18 professional objectivity; is that correct? 19 A The Court would have to make that finding in order to 20 authorize his approval, his employment. 21 Q Judge Eisenberg in fact made such a finding; is that 22 correct? 23 A In that order that she entered, yes. 24 Q Now, would it be fair to say, by the way, that you as 25 lead counsel would be the point man, so to speak, in
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ss/Wallenstein
1 contact with the client and coordination with the client 2 and any principals or employees who were necessary to be 3 spoken with? 4 A I would delegate that a lot. A lot of times what I 5 would do would be you talk to him, get the facts, verify 6 all the facts, and then come to me, and I will edit 7 things. 8 Q But ultimately it was your decision as to whether to 9 delegate or not? 10 A Absolutely. 11 Q And when your associates came back to you and said, 12 Neil, this is what we found, you would take responsibility 13 for that finding, correct? 14 A It would be my letter, yes. 15 Q It would be your letter, your pleading, your motion, 16 anything like that? 17 A Yes. 18 Q Is that correct? 19 A I might be, write assisted by, but it would be always 20 my signing. 21 Q Okay. 22 This was a Chapter
11 bankruptcy? 23 A Yes. 24 Q And that means that there was a reorganization that 25 was going to permit Who's Who Worldwide to continue to
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1 operate and get out from under its creditors; is that 2 correct? 3 A That is what we were fervently hoping, yes. 4 Q Is it fair to say that the role of counsel, 5 specifically debtor's counsel, which you were in this 6 case, would be to advance the interests of the debtor? 7 A And I also in such capacity was a fiduciary for the 8 creditors of the case. 9 Q Well, isn't the trustee a fiduciary? 10 A Well, in a Chapter 11 case the debtor is allowed to 11 remain in charge of the case unless there is a trustee 12 appointed. And when a debtor is in Chapter 11 it operates 13 as a fiduciary to creditors. It is calle
d the debtor in 14 possession. It is allowed to remain in charge subject to 15 certain constraints. It has to file monthly financial 16 statements, etcetera. I as the attorney for this debtor 17 in possession would have fiduciary duties to creditors as 18 well. 19 Q So your fiduciary duties to the creditors would be 20 what? 21 A To insure what was going on was in the interest of 22 creditors, and to insure that the bankruptcy demands and 23 dictates, and mandates are complied with. 24 Q Okay. 25 During a course -- I am talking about August and
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1 September now of 1994, just to narrow your recollection. 2 A Yes. 3 Q During that time period how many times did you meet 4 with Martin Reffsin? 5 A Off the top of my head? 6 Q The offic
e would be a better place. 7 A I would remember one time we met at the debtor's 8 premises. We probably met three to five times. 9 Q Okay. 10 A To the best of my recall. 11 Q How many of those meetings was Bruce Gordon present 12 at? 13 A I think all or practically all. 14 Q During the course of this period you had a number of 15 telephone conversations with Mr. Reffsin as well; is that 16 correct? 17 A Yes. Did you ever have a conversation with 18 Mr. Reffsin with respect to the logs. I think I may have 19 had one conversation with him with respect to the logs. 20 Q Do you know when that conversation took place? 21 A During that general period. Certainly, I would think 22 in September. 23 Q Okay. 24 Now, let me get back to the logs in a little 25 bit.
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1 You indicated that you learned about Mr. Gordon's 2 problems with the Internal Revenue Service in a 3 conversation with Mr. Gordon? 4 A Yes. 5 Q Do you know when and where that conversation took 6 place? 7 A We were becoming much friendlier, so I would think it 8 was toward the end of September, perhaps toward October, 9 November. 10 Q So, it was not then during this particular period, 11 between August and the end of September that you learned 12 of his IRS problems? 13 A Not to the best of my recall. 14 Q Your recollection is you learned of his IRS problems 15 from Mr. Gordon; is that correct? 16 A Yes. 17 Q Do you have any recollection of ever discussing 18 Mr. Gordon's IRS problems with Mr. Reffsin? 19 A No, I did not. 20 Q Did you ever learn the extent of his IRS problems? 21 A No, I
did not. 22 Q Did you try to? Did you ask him about it? 23 A No, I did not. 24 Q Okay. 25 Now, there has been some talk here that there
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1522 Ackerman-cross/Wallenstein
1 were loans made to Mr. Gordon; is that correct? 2 A Yes. 3 Q You were aware of this; is that correct? 4 A If you are referring to the letter that was sent to 5 Reed in response to the interrogatory, the loan -- the 6 loans made by Mr. Gordon -- 7 Q I am not referring to the letter yet. But at the 8 moment I am referring to the loans themselves. At some 9 point you became aware that Mr. Gordon had claimed to have 10 borrowed money from Who's Who; is that correct? 11 A Yes. 12 Q Okay. 13 Is it fair to say that in that letter -- now we 14 can talk about it, you explained, and I believe we are
15 talking about Exhibit 641 and 641-A, do you have that in 16 front of you? 17 A 641. 18 Q In Exhibit 641, you referred to those loans; is that 19 correct? 20 A Yes. 21 Q In fact, I believe that yesterday you testified 22 about -- you put the word "loans" in quotes; is that 23 correct? 24 A The word "loans" are in quotes. 25 Q Why did you do that?
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1 A To the best of my recollection, because the context 2 was that they were alleging, they being Reed, they were 3 alleging in the context of the motion to appoint a trustee 4 in the case, that the debtor was being -- was not doing 5 his duties by suing to recover these monies. And the 6 statement was that these were not, quote, loans, really. 7 Q That was Reed's position? 8 A No
. That was the position that was being advanced in 9 this letter, that this was nothing to be sued on, and that 10 in fact was a wash. 11 Q Well, there was a watch if there was something to 12 offset the loan; is that correct? 13 A Yes. 14 Q That doesn't necessarily mean that the loan was not a 15 loan, does it? 16 A No, it does not mean that. 17 Q It still could be a legitimate loan and could be 18 repaid by an offset instead of a repayment, is that your 19 understanding? 20 A Yes. A wash is usually that kind of a thing. 21 Q The reason you put loans in quotes is because Reed 22 said they weren't really loans? 23 A No, not at all. 24 Q The reason you put loans in quotes is you were saying 25 they were not really loans?
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1 A Well,
in the context of this letter, that's what we 2 were saying, yes, in the response. 3 Q You also put the words "debt" in quotes on several 4 occasions, right? 5 Take a look at page 3, the second full 6 paragraph. 7 A I see the word several times. 8 Q Look at the second paragraph in page 3, and tell me 9 if the word "debt" appears in quotes on two occasions in 10 that paragraph? 11 A In the second full paragraph? 12 Q In the second full paragraph. 13 A Forgive me, the second full paragraph, yes, I see the 14 words debt of, yes, in quotes, yes. 15 Q Why did you put that in quotes? 16 A Because that was our response, that this was not 17 something that Who's Who should be suing Mr. Gordon on. 18 Q So, you are saying it is not a real debt? 19 A I was saying that this was not something that this 20 debtor in possession, Who's Who, should be suing
21 Mr. Gordon on. 22 Q Was it not Mr. Gordon's position that these were in 23 fact loans to him? 24 A I don't think it was explained to me. I believe it 25 was explained to me that -- yes, the first full paragraph
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1 of the third page, it is stated that -- 2 Q I didn't ask you what was in the paragraph. I asked 3 you whether or not it was Mr. Gordon's position that these 4 monies were in fact loans to him that he intended to 5 repay? Is that a fact? 6 A That was not the way it was explained to me. 7 Q That was not his position? 8 A It was not the way it was explained to me -- 9 Q Did he ever advance that position to you? 10 A Not that I recall. 11 Q Were in fact these monies carried on the books of the 12 corporation as loans? 13
A I wouldn't have the slightest idea. 14 Q Did you ever look at the books? 15 A No, it was left for my accountant. I am an 16 attorney. I don't look at the books. It was left to the 17 accountant, the professional in the case. 18 Q That was Mr. Reffsin? 19 A Yes. 20 Q Any other accountants used in this case? 21 A There could have been internal. 22 Q Were there? 23 A I believe that Maria Gaspar was either an internal or 24 an accountant. 25 Q You relied on Maria Gaspar, the employee of Who's
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1 Who, and Mr. Gaspar, the professional, and you didn't 2 bring anybody else in; is that correct? 3 A I wouldn't bring people in unless I felt there was a 4 reason to question him, and then I would have to ask the 5 client. 6 Q You had no rea
son to question Mr. Reffsin's judgment 7 or veracity, did you? 8 A No. 9 Q Now, you never examined the books of the 10 corporation. What other documents did you examine with 11 respect to the corporation of Who's Who during this time 12 period? 13 A There was a lot of legal documents coming in. I 14 examined him. Bruce would sometimes send me copies of the 15 magazines or books that were being published. I would 16 look at them. I got a lot of letters. I would look at 17 them and respond to them. 18 Q So, would it be fair to say then, that the documents 19 you reviewed and relied upon were coming primarily from 20 the debtor, Who's Who? 21 A Or from other attorneys or from the Court, or from 22 the U.S. Trustee's office. I would look at monthly 23 financial statements which I guess came from the 24 accountant. But I don't look behind them unless ther
e is 25 a reason to look behind them.
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1 Q What would be a reason to look behind them? 2 A If you look at a monthly financial statement, and 3 this happened in a recent case where I got a monthly 4 financial statement where it was glaring with errors, 5 inconsistencies, and I called up the accountant to say 6 what is going on. 7 Q That was not Mr. Reffsin? 8 A It wasn't this case whatsoever. 9 Q I wanted to make that clear. 10 A Not at all. 11 Q If you examined the statements or documents coming 12 through the -- from the debtor or through the accountant, 13 then you would make a determination that there was a 14 problem here and you would either call in the accountant 15 or call in an internal person such as the controller and 16 question
any inconsistencies you found; is that fair? I 17 am not saying you did it in this case, but that would be 18 your procedure if you saw that? 19 A If I did, I would call in the accountant, or if I 20 wasn't satisfied or thought the matter would occur again 21 in the future, I would probably call the principal and say 22 it is time to replace the accountants. 23 Q Now, you would do that as not only the counsel for 24 the debtor in possession, but also as the fiduciary for 25 the creditors; is that correct?
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1 A Absolutely. 2 Q And in this case you didn't do any of that? 3 A No, I did not. 4 Q Now, when for the first time did the subject of the 5 logs come up in any context? 6 A In the discovery which had been sent out by Reed. 7 Q At what point in
time was that? 8 A If I recall correctly, from the stuff I have been 9 looking at over the last few days, I think I looked at 10 that for the first time around August 6th or August 8th, 11 sometime around there. 12 Q Was it before or after -- withdrawn. 13 There was at some point a stipulation entered 14 into in the bankruptcy court with respect to the logs; is 15 that correct? 16 A Yes. 17 Q Was that you who entered into the stipulation or was 18 it Mr. Flaum who preceded you? 19 A No. It was my firm as well as the debtor, as well as 20 the other entity's affiliates, such as Sterling and Who's 21 Who Executive Club. And it was also entered into for the 22 other sides, quote, by the counsel for Reed, and the 23 counsel for the official committee of creditors. 24 Q Now, can you tell us the terms of that stipulation? 25 A I saw it yesterday. As I recal
l right now we agreed
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1 that there would be an adjournment of the trustee motion. 2 We definitely agreed that we would turn over discovery. 3 Q With respect to specifically to the logs, what was it 4 that they were supposed to be? 5 A I believe that it just mentioned the discovery 6 requested in the interrogatories. As to the logs it was 7 supposed to be to the best of my recall, a listing of 8 names, a person who used the premises, there were three 9 premises named, the times and dates they were being used 10 and for what purpose. 11 Q And were they supposed to be maintained 12 contemporaneously or created afterward, weekly, monthly? 13 What was the terms? 14 A It was definitely contemplated that it would be done 15 contemporaneously. It was for a very sh
ort period. It 16 was for like a month and a half, or a month and eight 17 days. 18 Q And it was supposed to be kept on a daily basis? 19 A Contemporaneously. 20 Q Was there any discussion between you and anybody 21 else, Reed's counsel or anybody else with respect to how 22 the logs were to be maintained or created in detail? 23 A Just that which I stated. 24 Q Was there any specific format that they were supposed 25 to take?
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1 A I don't recall any conversation, but -- about a 2 specific format. 3 Q Was there any indication as to how they were to be 4 maintained? And by that I mean, were they to be kept at 5 the premises so people could sign in, or was it simply 6 something that people could make a note of later? What 7 was the arrangeme
nt that you can recall? 8 A The only arrangement that I can recall is that they 9 were to be done contemporaneously. 10 Q Do you know whether or not any such log were kept 11 prior to the stipulation at the beginning of August? 12 A Not that I know of. 13 Q Did you ever have a discussion with Mr. Gordon with 14 respect to the logs? 15 A Yes, I believe I did. 16 Q He told you he didn't want to do it, right? 17 A Yes. 18 Q Did he tell you why? 19 A Yes, we were giving 100 percent to Reed. He wasn't 20 happy about that, if the judgment was upheld. And he felt 21 given he was willing to do that they shouldn't have to 22 give all this discovery. 23 Q He never said to you I don't want to keep the logs 24 because I am not using the premises for business purposes, 25 did he?
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31 Ackerman-cross/Wallenstein
1 A No, he never said that at all. 2 Q So, it was your understanding that the premises were 3 being used for business purposes; is that correct? 4 A I was told they were, yes. 5 Q And your information came from Mr. Gordon and 6 Ms. Gaspar? 7 A I don't know how often I spoke to Ms. Gaspar. It 8 came from Mr. Gordon. I didn't know that they were being 9 used for that purpose. It never occurred to me. 10 Q When you agreed on behalf of Who's Who Worldwide that 11 these logs would be provided, that was in court during a 12 conference? Is that a fair statement? 13 A I believe it was agreed to outside of court. When I 14 first came there it was at a hearing, it was probably in 15 August, August 6th or 8th. They took me outside, and I 16 said I am doing a 100 percent plan guys, your motion is 17 ridiculous. We are going to give
100 percent, which you 18 would be arguing would be gotten if there was a trustee 19 appointed, and you sued, which is what you wanted. And we 20 are giving you this discovery. That's it, no more issues. 21 Q Did you have a conference with Bruce Gordon before 22 you made those representations to the other attorneys? 23 A Oh, absolutely. 24 Q And he agreed to that? 25 A Yes.
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1 Q He agreed to a 100 percent plan? 2 A Yes. 3 Q He agreed to giving them all the discovery? 4 A I believe so. If you are asking me if I remember 5 that, no. But I believe he did, yes. 6 Q What are you basing that belief on? 7 A Because I basically was saying to Bruce I wouldn't 8 come into the case unless we did things that I believed to 9 be best, and just to disarm
this issue, I thought it was a 10 ridiculous issue to fight about. 11 Q All right. 12 Now, let's go back to the logs. 13 After you entered into this agreement that these 14 logs would be provided, and that was about the 6th of 15 August, you say? 16 A I believe it was at a hearing on August 6th. 17 Q When was the next time you had a discussion with 18 anybody with respect to the logs? 19 A Well, on the August 6th date, by the way, it was 20 whatever discovery they want. I didn't really emphasize 21 logs -- 22 Q That's nice, Mr. Ackerman. But would you answer my 23 question, please. 24 A I don't think I would have another conversation, 25 except with my associates. I don't think I did until the
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1 end -- certainly the end of August, probab
ly early 2 September. 3 Q And when you had that conversation at the end of 4 August, early September, who did you have that 5 conversation with? 6 A To the best of my recall, probably with my 7 associates. I know I had seen that I wrote two letters 8 reminding that the logs were due. 9 Q That would be September 8th, September 14th? 10 A Those are the dates of the letters, yes, that I 11 recall. 12 Q Other than those two letters -- withdrawn. 13 Writing a letter on September 8th with respect to 14 the logs was to remind Who's Who that the logs were due, 15 and that was based on a conversation with your associates? 16 A No. It was based upon that I will put things in the 17 diary. Sometimes at that time it was a written diary. 18 And I would have things highlighted that I should do. And 19 then I would see them and I would go to my secretary and I
20 would dictate letters, 20 letters in a row, do this, do 21 that, do this, do that. That's the best of my recall. 22 Q Your diary contained entries with respect to this 23 matter? 24 A My diary had matters that do. I have always diaried. 25 Q Does your diary for August and September of 1994
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1 contain entries about this matter, specifically with 2 respect to the logs? 3 A Not that I recall. It would either be Patty or me to 4 diary them, I delegate to my secretary to diary stuff. 5 Q Do you have the diary? 6 A No, I do not. In fact they may well be at Rivkin, 7 Radler and Kremer. 8 MR. WALLENSTEIN: Your Honor, I feel we are 9 entitled to the production of that diary. 10 THE COURT: You are not going to get them now. 11 No one has them. You ma
de the statement, and I will 12 consider it. 13 MR. WALLENSTEIN: Thank you. 14 Q Mr. Ackerman, when for the first time did you see the 15 completed logs? 16 A I don't believe I saw them until after the 23rd. I 17 was out sick on the 23rd. And they apparently were faxed 18 to my office on the 23rd. 19 Q Would you take a look, please at 20 Government's Exhibit 633 -- I am sorry. 21 MR. WALLENSTEIN: Bear with me a moment, please. 22 THE COURT: Yes. 23 (Whereupon, at this time there was a pause in the 24 proceedings.) 25 Q 640. Do you have 640 there?
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1 A I don't believe I do. 640-A? 2 Q No, 640. 3 A No, I don't believe I have it. 4 (Mr. Wallenstein confers with Mr. White.) 5 (Handed to the witness.) 6 A Thank you.
7 Q Would you take a look at the exhibit I just handed 8 you, which is Government's Exhibit 640. 9 A Yes. 10 Q And that's a fax cover from you directed to 11 Mr. Bailey, Mr. Kahn and Mr. Skalka; is that correct? 12 A Yes. 13 Q And it contains a letter, a transmittal letter with 14 respect to the logs, is that correct? 15 A Yes. 16 Q Now, when for the first time did you or anyone else 17 in your office see these logs? 18 A There are two different questions there. 19 Q When for the first time did you see the logs? 20 A Definitely not this date. I was not in. 21 Q So, someone else sent this letter over your 22 signature? 23 A It says dictated, but not read. 24 Q You dictated the letter; is that correct? 25 A Yes.
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1
Q You didn't see it because you were out sick? 2 A I dictated the letter and usually it is read back to 3 me over the phone. 4 Q So, you heard what was going to go out over the fax? 5 A Yes. 6 Q And they are your words and you take responsibility 7 for them. Is that correct? 8 A Yes, I do. 9 Q The fax that came out to Mr. Bailey, Mr. Kahn, 10 Mr. Skalka, included these logs; is that correct? 11 A Yes. 12 Q Now, these logs we are talking about in Exhibit 640 13 are the logs everybody has been talking about in this 14 case; is that right? 15 A The two days I have been here. 16 Q These are the logs that are supposed to be maintained 17 contemporaneously in order to demonstrate the business use 18 of the property so you could show this to the creditors; 19 is that a fair statement? 20 A Who was using it, yes. 21 Q All right. 22
You didn't see them on the 23rd because you were 23 out sick? 24 A Correct. 25 Q Do you have a fax machine at home?
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1 A No, I did not. 2 Q When for the first time then did you see them? 3 A I don't remember. 4 Q You went back to work when after the 23rd? 5 A I can look at my time slips. 6 Q You have time on the 23rd as well, don't you? 7 A Sure, but I generally would know if I was working 8 from home or if I was out sick. 9 Q Okay. 10 A And I would generally note that. 11 Q I will save you the trouble. You did note you were 12 working from home out sick that day. 13 My question is when did you go back? Did you go 14 back the next day, the day after? 15 THE COURT: When did you see the logs -- did you 16 see the logs at a
ll? 17 THE WITNESS: I believe I saw the logs. 18 THE COURT: When for the first time approximately 19 did you see them? 20 THE WITNESS: Maybe the next week, the next day. 21 I don't remember, sir. 22 THE COURT: Within a week of the time they were 23 sent out? 24 THE WITNESS: I would think so. 25 MR. WALLENSTEIN: Thank you, your Honor.
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1 Q Now, Mr. Ackerman, do you know how the logs arrived 2 in your office on the 23rd? 3 A It is shown here it came by fax. 4 Q They arrived by fax from Who's Who Worldwide; is that 5 correct? 6 A That's what it shows. 7 Q And you can tell from the fax imprint on the copies 8 we have here, right? 9 A It shows it came in at 2:42 or 2:46 on the 23rd. 10 Q And you recognize that as the imprint o
f Rivkin 11 Radler and Kremer's fax machine? 12 A This would be more -- it would have been generated by 13 Who's Who's fax machine, I would think, I think. 14 Q Well, if you look at -- there are two separate 15 imprints on here, is there? 16 A There is one at the top and one at the bottom. 17 Q They are both upside down, which would indicate the 18 fax came through just the other way; is that right? That 19 it came through the machine upside down, which doesn't 20 make any difference? 21 A I guess. 22 Q Would it be fair to say that one of those imprints 23 was your machine, and one of those imprints was Who's Who? 24 A It's possible. 25 Q Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1539 Ackerman-cross/Wallenstein
1 And that same imprint appears on every page of 2 the log; is that right? 3 A Yes.
4 Q And did you have a discussion with anyone on the 23rd 5 with respect to those logs? 6 A I definitely did. Certainly I must have had a 7 discussion that they came in. 8 Q You dictated a letter saying here are the logs 9 created according to the -- 10 A Yes. 11 Q Is that right? 12 A Yes. 13 Q And who did you talk to? 14 A As I sit here now, I think I spoke to Gerard. 15 Q Okay. 16 A And then I spoke to Patty, my secretary. 17 Q Okay. 18 Could you look at Exhibit 636, please, and those 19 are your bills. And specifically, page 15, and I would 20 like you to look at the entry for September 23rd, 1994 -- 21 I am sorry, page 16, the second part of that entry, about 22 halfway down the paragraph it says: Dictate letter and 23 instruct to send out to Tom Bailey, Bill Kahn and Doug 24 Skalka enclosing docs, D O C S, period, I beli
eve it is an 25 abbreviation for document.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1540 Ackerman-cross/Wallenstein
1 A Yes. 2 Q And these are the logs we are talking about? 3 A Yes, I take it. 4 Q Prior to that is there any indication that you spoke 5 to anybody about the logs in that particular entry on the 6 23rd? 7 A No, there is nothing prior to that. 8 Q Okay. 9 And would you look at page 31 of that Exhibit, 10 Exhibit 636. 11 A Yes. 12 Q That's Gerard's time; is that correct? 13 A I believe so. 14 Q It is not yours? 15 A Pardon? 16 Q It is not yours? 17 A I have to go back a few pages. 18 (Whereupon, at this time there was a pause in the 19 proceedings.) 20 Q Go back to page 22, if that will help you. It begins 21 Gerard's time, and it is still continuing on
page 31; is 22 that correct? 23 A Yes. 24 Q And there is an entry halfway down the page where he 25 says discussion with M. Gaspar controller regarding
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1541 Ackerman-cross/Wallenstein
1 property user's log that was and is being maintained in 2 accordance with stipulation and order, re faxing same. 3 Reffsin's comments and suggestions thereto, etcetera; is 4 that correct? 5 A Yes. 6 Q Okay. 7 Now, going back to Exhibit 640, you sent that fax 8 with the logs, or your office did, to Mr. Kahn, Mr. Skalka 9 and Mr. Bailey; is that correct? 10 A Yes. 11 Q By the way, was Mr. Bailey counsel in the bankruptcy 12 proceeding or was Mr. Skalka? 13 A Mr. Bailey was showing up at the bankruptcy 14 proceeding often times. When there were hearings on the 15 motion, M
r. Bailey would be leading them. 16 Q And Mr. Bailey was Reed's lead counsel, in the 17 litigation; is that correct? 18 A He was litigation counsel to my knowledge. 19 Q And Mr. Skalka who was a partner in Whitman Breed and 20 a bunch of other people, was the lead bankruptcy counsel 21 for Reed; is that correct? 22 A Yes. 23 Q And Mr. Bailey took the lead on occasion; is that 24 correct? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1542 Ackerman-cross/Wallenstein
1 Q Again directing your attention to 2 Government's Exhibit 640, would it be a fair statement 3 that on the 23rd of September, 1994, your office, since 4 you were out sick, your office received these logs from 5 Who's Who Worldwide and then caused them to be transmitted 6 to Mr. Bailey, Mr. Kahn and Mr. Skalka? Is that a fair 7 statement?
8 A With the cover letter, yes. 9 Q With the cover letter? 10 A Yes. 11 Q Right? 12 A Yes. 13 Q And you indicated on the cover letter that you also 14 sent a copy to Bruce Gordon and a copy to Marty Reffsin; 15 is that correct? 16 A By way of cc shown at the bottom of the letter. 17 Q Including the logs; is that correct? 18 A On this letter? 19 Q With that letter. 20 A In 640-A or on this letter? 21 Q Let me rephrase the question. 22 A Surely. 23 Q When you sent the logs to Bailey and Skalka and 24 Kahn -- 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1543 Ackerman-cross/Wallenstein
1 Q Okay. 2 You also sent the logs to Gordon and Reffsin; is 3 that correct? 4 A This letter indicates that I cc'd the letter. 5 Q Right. So you know the letter was sent. Do you
know 6 if the logs were sent? 7 A I would have to look at 640-A for that. 8 Q You have it? 9 A Yes. 10 Q It says you sent that letter with a different cover 11 letter? 12 A Yes. 13 Q It says nothing about the logs? 14 A No. It says in the fax confirmation that 11 pages 15 were sent through. 16 Q How many pages are the logs? 17 A Let me see. 18 Q While you are counting, the cover letter to Messrs. 19 Bailey, Kahn and Skalka, was only one page? 20 A Actually, the cover letter would be two pages. 21 Q The fax cover, okay? 22 A This would have been eight altogether. The log was 23 six pages, the fax cover memo was two pages. 24 Q So, would the fact that 11 pages were transmitted at 25 the same time be an indication to you that the logs were
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1544 Acker
man-cross/Wallenstein
1 sent as well? 2 A Well, eight plus three is 11. 3 Q Now, would it be fair to say that the first time that 4 the logs were produced to you was on the 23rd of 5 September, to you and your office? 6 A Yes. 7 Q And would it be fair to say that they were produced 8 by Maria Gaspar? 9 A It would be fair to say that they were produced by 10 Who's Who. 11 Q Do you know who in fact at Who's Who wrote the logs? 12 A I have zero idea. 13 Q Do you recognize Mr. Reffsin's handwriting, as a 14 general question, do you know Mr. Reffsin's handwriting? 15 Have you seen it? 16 A I have seen it. Do I remember it now? I do not. 17 Q You looked at the logs, can you tell me if those are 18 in his handwriting or not? 19 A I can't recognize his handwriting now. But there is 20 an indication that it came from Who's Who Worldwide
. 21 Q From their corporate offices, right? 22 A Yes. 23 Q And on the same day they arrived at Rivkin Radler and 24 Kremer from Who's Who's corporate offices, they were in 25 fact sent to Mr. Reffsin at his firm, correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1545 Ackerman-cross/Wallenstein
1 A Correct. 2 Q By the way, during the course of your representation, 3 did you ever learn that Mr. Reffsin maintained an office 4 at Who's Who? 5 A No. Everything that I learned during my 6 representation was that he had a separate accounting 7 firm. 8 Q Okay. 9 A In fact, he asked me to get more work to his 10 accounting firm. 11 Q Did you? 12 A I talked to him once about getting him trustee work. 13 Q And would it be a fair statement that you did that 14 because you felt he was a good accountant and
he could be 15 trusted? 16 A I liked him. 17 Q But now could you answer my question? 18 A One never knows what will happen with trustee work 19 with accountants. You usually give them one or two things 20 and see how it worked out. I liked him and I thought he 21 was okay. 22 Q Based on your experience with him in the Who's Who 23 case, you felt he was a competent accountant? 24 A I felt he was worth giving a chance to, and I liked 25 him.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1546 Ackerman-cross/Wallenstein
1 Q All right. 2 Now, would it be fair to say that in the course 3 of your representation of Who's Who, going back to the 4 beginning of August or whenever it was you began, that you 5 conducted a fairly thorough investigation of the facts 6 surrounding Who's Who, and by that I mean their financial
7 situation in conjunction with the bankruptcy? 8 A I definitely spoke to people and looked at the legal 9 papers. I did as much as I could, yes. 10 Q In fact, your office, whether it be you or your 11 associates, conducted a fairly productive review of the 12 entire situation; is that correct? 13 A They definitely reviewed all the books and records 14 turned over by prior counsel. They looked over the 15 decision of Magistrate Judge Jordan, yes. 16 Q On how many occasions were documents and other things 17 reviewed in the course of your representation in August 18 and September 1994, and by you, again, I mean you 19 personally or any associates you had working? 20 A On how many occasions? 21 Q Yes. 22 A Frequent, once we came into the case. 23 Q Would you take a look at Exhibit 636, please. That's 24 the bill in case you have not figured it out by now.
25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1547 Ackerman-cross/Wallenstein
1 Q Now, you billed -- Rivkin Radler and Kremer billed 2 Who's Who during the period for August and September of 3 1994, a total for services of a little more than $51,000; 4 is that correct? 5 A Yes. 6 Q And that was for a total of 297 hours of attorney 7 time; is that correct? Attorney and paralegal time? 8 A Yes. 9 Q Now, Mr. Kardisch was included in that time; is that 10 correct? 11 A Yes. 12 Q And that was all part of the bankruptcy proceeding; 13 is that correct? 14 A He was working on the adversary proceeding which was 15 being brought in the context of the adversary proceeding. 16 Q The adversary proceeding was being brought in the 17 context of the bankruptcy, was it not? 18 A Yes. 19 Q So th
at all of this time, this 297 hours, involved 20 some aspect of the Chapter 11 bankruptcy proceeding; is 21 that a fair statement? 22 A Yes. 23 Q Okay. 24 And take a look at page 1, and we are on 25 Mr. Kardisch's time, I believe.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1548 Ackerman-cross/Wallenstein
1 The first entry on August 1st, 1994 begins, 2 review materials, correct? 3 A Yes. 4 Q The second entry, it is a little faded here, I 5 believe it is August 2nd, it says review extensive 6 materials in connection with proceeding before Magistrate 7 Jordan, and he spent a total of six and a half hours that 8 day; is that correct? 9 A That's what he recorded. 10 Q And he spent 3.4 hours on August 1st; is that 11 correct? 12 A That's what he recorded, yes. 13 Q And that entry continues on to page
2, the August 2nd 14 entry, and at the bottom of that entry he indicates he 15 reviewed the bankruptcy court document; is that correct? 16 A Yes. 17 Q And then on August 4th, there is an entry where he 18 says reviewed documents to prepare for meeting with 19 client; is that correct? 20 A Yes. 21 Q And on August 8th, there is an entry that begins, 22 continue review materials relative to adversary and 23 bankruptcy proceeding, and underlying trademark and 24 infringement actions; is that correct? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1549 Ackerman-cross/Wallenstein
1 Q Four and a half hours or so on that day. 2 THE COURT: You are not going to go through this 3 whole bill, Mr. Wallenstein? 4 MR. WALLENSTEIN: It is a question, Judge? 5 THE COURT: Yes, definitely. It calls for a yes 6 or no
answer. 7 MR. WALLENSTEIN: I don't think I can answer that 8 question yes or no. 9 THE COURT: Very good, Mr. Wallenstein. 10 MR. WALLENSTEIN: I intend to extensively 11 cross-examine the witness with respect to entries in the 12 bill. However, in light of the Court's expression of 13 opinion I will tailor my questions somewhat. 14 THE COURT: Good thinking. 15 Q Mr. Ackerman, would you take a couple of minutes, 16 please, and review Exhibit 636. 17 THE COURT: He has memorized it by now. 18 MR. WALLENSTEIN: I hope so. 19 Q Would it be fair to say that each and every attorney 20 from Rivkin Radler and Kremer who worked on this 21 bankruptcy proceeding spent an extensive amount of time 22 reviewing materials, documents and so on? 23 A Yes, materials I discussed earlier, yes. 24 Q Okay. 25 Would it be fair to say that you would expect to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1550 Ackerman-cross/Wallenstein
1 walk in a bankruptcy court being thoroughly prepared? 2 A I would. 3 Q And you would expect your associates to be as well, 4 would you? 5 A They would be as prepared as they should be, and if 6 they were covering the hearing they would definitely be 7 very well prepared. 8 Q And if they were sitting in your office and you were 9 asking questions of them, you would expect them to have 10 the answers, wouldn't you? 11 A Absolutely. 12 Q If you asked for the backup of those answers, as to 13 what document do we find that in, you would expect them to 14 know that, too, wouldn't you? 15 A I would expect it. 16 Q And would it be fair to say that Who's Who had a 17 right to expect that Rivkin Radler and Kremer would do a 18 thorough investig
ation and be thoroughly prepared to 19 proceed in the bankruptcy? 20 A Yes. 21 Q And in fact, is it not true that one of the reasons 22 that Who's Who went to Rivkin Radler and Kremer in lieu of 23 Mr. Flaum was because Mr. Flaum did not have sufficient 24 back up to satisfy Who's Who? 25 A That may have been one of its reasons.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1551 Ackerman-cross/Wallenstein
1 Q And Rivkin Radler and Kremer was a large firm and you 2 had the resources to provide additional personnel or time 3 if it was necessary. Would that be a fair statement? 4 A We were a much larger firm than Neil Flaum's firm. 5 Q Therefore you had more resources? 6 A Much more resources. 7 Q More back up, more personnel, and so on? 8 A Yes. 9 Q And would you take a look, please, at Exhibit 633-A. 10 That's a dra
ft to a response for Reed's motion 11 for a trustee? 12 A I don't have that here. I believe it was taken back 13 down. 14 (Mr. Wallenstein confers with Mr. White.) 15 (Handed to the witness.) 16 Q Is that a document that you created? 17 A No. 18 Q Who did? 19 A Richard Weber and Gerard Catalanello, my associates. 20 Q Is it a document you edited? 21 A Not that I recall, not at this point in time. 22 Q Have you ever seen that document before? 23 A Have I ever? 24 Q Yes. 25 A As of now, yes, I have.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1552 Ackerman-cross/Wallenstein
1 Q In fact, did you see it on or about the 29th of 2 September, 1994? 3 A After. 4 Q How long after? 5 A The next month, at least. 6 Q You edited before it was submitted to the Court in 7 final versi
on, correct? 8 A Yes. 9 Q When you read through it to edit it, was there 10 anything in there that was untrue? 11 A Not that I recall. 12 Q Okay. 13 So that parts which you may have eliminated for 14 the final version were not taken out because they were 15 untrue, but taken out because -- for editorial reasons you 16 did not want it in. Is that a fair statement? 17 A It could have been taken out because there were 18 comments made by the clients. 19 With respect to how I would edit it? I would 20 edit it because I would want something expressed a little 21 differently, I had 15, 16 years more experience than them. 22 Q Specifically, would you take a look at page 6, 23 please. 24 A Yes. 25 MR. WALLENSTEIN: Your Honor, may we approach
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1553 Ackerman-cross/
Wallenstein
1 with respect to this exhibit? 2 THE COURT: Well, if you are going to do that, we 3 might as well take a recess for lunch. 4 MR. WALLENSTEIN: Fine. 5 THE COURT: Members of the jury, we will recess 6 until 1:30 for lunch. Please do not discuss the case. 7 Keep an open mind. 8 See you at 1:30. Have a nice lunch. 9 Somebody is hungry on the jury. 10 (Whereupon, at this time the jury leaves the 11 courtroom.) 12 THE COURT: Yes, Mr. Wallenstein. 13 MR. WALLENSTEIN: I would ask you at this point 14 to have the witness step out, please. 15 THE COURT: All right. 16 We are going to need you not until 1:30. 17 Mr. Ackerman, just wait outside and stick around 18 for a few minutes, and then we will let you know. 19 (Mr. Ackerman leaves the courtroom.) 20 MR. WHITE: If you recall, Mr. Ackerman had some 21 hearing this afternoon, h
e has to see if he can make it or 22 somebody would cover it for him. 23 THE COURT: He will make it. I will be glad to 24 call the judge if you want me to, Mr. Ackerman. I am not 25 guarantying any results, but it generally works.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1554 1 Yes, Mr. Wallenstein. 2 MR. WALLENSTEIN: Mr. White indicated he has no 3 objection. I intend to offer just this page. There are 4 only parts of this exhibit in evidence at this point in 5 any event. 6 I have another question. And that is that I 7 intend to question this witness with respect to his 8 knowledge of the bankruptcy rules and to call specific 9 rules to his attention. And I wanted to know what your 10 Honor's preference would be. 11 THE COURT: What rules and why? 12 MR. WALLENSTEIN: Rule 9011, specifically. 13 THE COURT: Wha
t does it say? 14 MR. WALLENSTEIN: When you certify documents, you 15 are vouching for the contents. It is similar to our 16 Rule 11 and worded slightly different, but it has the same 17 effect, I think. And I intend to question him with 18 respect to that. And I believe that your Honor must take 19 judicial notice of that rule. I just wanted to know what 20 your particular procedure would be with respect to that, 21 whether I need to introduce the rule in evidence or simply 22 read it to him after asking for judicial notice, how would 23 you prefer I proceed? 24 THE COURT: I would prefer you to ask him, are 25 you familiar with Rule 9011, which says so and so.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1555 1 MR. WALLENSTEIN: Then read the rule to him? 2 THE COURT: You will tell him what the rule is? 3 MR. WALLENSTEIN: Yes.
4 THE COURT: I see no problem with that. 5 MR. WALLENSTEIN: That's what I wanted to know. 6 THE COURT: One other thing, the diaries. First 7 of all, the diaries are not in the possession to the 8 government. So you can ask the government for the 9 diaries, and it is a nice rhetorical question, but they 10 don't have the diaries. It is not a government witness in 11 quotes -- I don't want to use quotes, after quotes have 12 been used in various context in the case. 13 You would have to serve a subpoena to get these 14 diaries, as I see it. How would the government have any 15 control over these diaries? 16 MR. WALLENSTEIN: I think his entries in the 17 diaries relate to his testimony, and that's 3500 material. 18 THE COURT: That may be. But who has the duty to 19 supply those? 20 MR. WALLENSTEIN: He does (indicating). 21 THE COURT: Do you have the duty,
Mr. White? 22 MR. WHITE: I am not sure -- I am not sure that 23 we do. First of all, I didn't know that these diaries 24 existed. If I understood Mr. Ackerman -- 25 THE COURT: Talking about diaries to defense
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1556 1 lawyers in a criminal case is like throwing shrimp to 2 sharks. 3 MR. WHITE: I know, your Honor, I can see that. 4 MR. WALLENSTEIN: Can we object to that 5 comparison. 6 THE COURT: When you mention diaries, 7 scribbling -- I don't mean sharks. The analogy to sharks 8 has nothing to do with your character or personality. It 9 has to do with the eagerness that you would leap for it. 10 They would come right out of the water to get that. 11 As soon as you mention notes, diaries, 12 scribbling, anything like that, that's automatic reflex 13 action, where are th
ey? I want them. 14 MR. WHITE: If I could just respond, your Honor? 15 THE COURT: Yes. 16 MR. WHITE: As I said, I was not aware that they 17 existed. I can tell you that the government subpoenaed 18 during the course of the grand jury investigation, 19 Mr. Ackerman's current law firm and the two prior firms he 20 was at. And we received documents from Mr. Ackerman. The 21 other two firms told us they had no responsive documents. 22 Now, Mr. Ackerman speculated that if they 23 existed -- 24 THE COURT: We will find out in a minute because 25 I will call him in and ask him. They are entitled to have
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1557 1 these diaries. The question is how can they get them? 2 I am sure Mr. Wallenstein has no objection to 3 subpoenaing them. But that would mean they would have to 4 bring the witn
ess back. 5 MR. WALLENSTEIN: What Mr. Ackerman's office is 6 in Westbury, and Rivkin Radler and Kremer is a stone's 7 throw literally. He speculated they were at Rivkin Radler 8 and Kremer. 9 THE COURT: Maybe he can pick it up during the 10 lunch hour. 11 MR. WALLENSTEIN: That was my thought. If it is 12 in one of those two offices, he could get them. 13 THE COURT: Get him in, please. 14 MR. WALLENSTEIN: And Meltzer Lippe is in 15 Westbury. 16 THE COURT: Can he have lunch in his car while he 17 is doing all these things? 18 MR. WALLENSTEIN: I do that all the time. 19 MR. SCHOER: Only criminal lawyers do that. 20 THE COURT: I didn't know criminal lawyers ate 21 lunch. 22 MR. SCHOER: Only a hot dog in the car. 23 THE COURT: How conscientious you are, Mr. Schoer, 24 I didn't know you did eat lunch. 25 MR. SCHOER: I do, Judge.
Otherwise my wife
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1558 1 would yell at me. 2 (Mr. Ackerman enters the courtroom.) 3 THE COURT: Mr. Ackerman, these diaries you 4 brought up, they are personal diaries. One is Pat 5 Bzdyk -- 6 THE COURT: You have a soft spoken voice, maybe 7 it is good in the bankruptcy court. 8 MR. ACKERMAN: They are Pat Bzdyk, my 9 secretaries. 10 THE COURT: How do you spell her last name? 11 MR. ACKERMAN: B Z D Y K. 12 And Pat I would give things to. I do this with 13 my office manager now, and I give them many things and say 14 date this up. And I write a letter and say this is to get 15 to by the 20th, and write it down. 16 THE COURT: Write it where? 17 MR. ACKERMAN: If I remember it is a red book, 18 the lawyer's diary manual. The red book. 19 THE COURT: Is that
the one you referred to? 20 MR. ACKERMAN: Yes, I had my own that was 21 littered with stuff, and mostly I kept there were court 22 appearances. 23 THE COURT: These matters that Mr. Wallenstein 24 discussed with you would not be in your personal diary? 25 MR. ACKERMAN: I don't think so.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1559 1 THE COURT: Where is your personal diary for that 2 year? 3 MR. ACKERMAN: It could have been in storage or 4 it could be left at Rivkin. When I left Rivkin they were 5 very angry. It turned into an ugly affair. It was in the 6 paper. They begrudgingly gave me documents, they were 7 angry I was taking my clients with me. 8 THE COURT: You don't know where your personal 9 diary is. 10 MR. ACKERMAN: I don't believe it is in my 11 office. 12 THE COURT: If you went to Rivkin and
said you 13 were here because a federal judge asked you to get the 14 diaries, would they give it to you? 15 MR. ACKERMAN: I had one conversation with Joseph 16 Ortego, O R T E G O. 17 THE COURT: I remember him. He tried a case 18 before me. 19 MR. ACKERMAN: Yes. He conversed with me when 20 the U.S. Attorney sent in requests for all documents. The 21 only thing I said to him is give them everything, just 22 give them everything. 23 THE COURT: If you went to Rivkin Radler and 24 Kremer -- the point is that the defendants have a right to 25 see those diaries.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1560 1 MR. ACKERMAN: Sure. 2 THE COURT: The question is, can you get them 3 during the lunch hour, or do they subpoena them and find 4 them or somebody will find them and you will have to come 5 back.
6 The point is I don't want to ruin your lunch 7 hour. But is it possible to get the diaries over the 8 lunch hour? 9 MR. ACKERMAN: I will call. But I must say that 10 I would be shocked if they were still in the firm. 11 THE COURT: Where would they be if they were not 12 in the firm? 13 MR. ACKERMAN: Storage. Rivkin was really good 14 about storage. 15 THE COURT: Where is storage? Rivkin Radler and 16 Kremer I don't know. But there was a person by the name 17 of Robert who would ferry back and forth and pick these 18 up. 19 THE COURT: Storage is not in Sioux City, Iowa? 20 MR. ACKERMAN: No, on Long Island, very close. 21 THE COURT: If it was in storage it would take a 22 day or two to get it? 23 MR. ACKERMAN: Possibly. 24 THE COURT: Can you ascertain where your 25 secretary's diary is?
HARRY RAPAPORT, CSR, CP, CM OF
FICIAL COURT REPORTER 1561 1 MR. ACKERMAN: Pat Bzdyk? 2 THE COURT: Yes. 3 MR. ACKERMAN: She has not worked for me for 4 years, but it is probably with Rivkin Radler and Kremer or 5 she would have chucked it. 6 THE COURT: Both your diary and Pat's diary would 7 be at Rivkin Radler and Kremer? 8 MR. ACKERMAN: Mine might be, Pat's if it was 9 still kept, it might be. 10 THE COURT: Where is yours if it is not at Rivkin 11 Radler and Kremer? 12 MR. ACKERMAN: It might have been taken by me to 13 my firm and that's storage in Suffolk County. 14 THE COURT: I want to know where your diary would 15 be? 16 MR. ACKERMAN: In my own personal storage place. 17 THE COURT: And where is that? 18 MR. ACKERMAN: Suffolk County somewhere. 19 THE COURT: You could not find that out during 20 the lunch hour? 21 MR. ACKERMAN: No
. 22 THE COURT: See if you can find out if Rivkin has 23 these diaries? 24 MR. ACKERMAN: I will call right now. 25 THE COURT: You let us know at 1:30. If not we
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1562 1 will worry about it at that point. 2 MR. ACKERMAN: Okay. 3 THE COURT: All right. 4 MR. WHITE: As I said before, Rivkin was 5 subpoenaed for those documents, and I spoke to Mr. Ortego 6 or somebody there, and the response to the grand jury 7 subpoena is they had no documents. 8 THE COURT: They were subpoenaed specifically and 9 expressly for diaries of the secretary and Mr. Ackerman? 10 MR. WHITE: No, your Honor. They were subpoenaed 11 for numerous categories of documents which I am looking at 12 now, which would cover such diaries. 13 THE COURT: Let's find out specifically or 14 expressly wheth
er they have these diaries. 15 Mr. Ackerman will report back. 16 MR. WHITE: Okay. 17 MR. ACKERMAN: There is one other issue, your 18 Honor. I do have a fairly significant recall, and it is 19 not always that what I do is based upon a reminder in my 20 diary. I just tend to remember things. 21 THE COURT: That's another thing. You will 22 answer the questions when Mr. Wallenstein asks you, but 23 you did mention there were diaries with entries with 24 respect to this matter. 25 MR. ACKERMAN: Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1563 1 THE COURT: See if you can't find the diaries. 2 MR. ACKERMAN: I will do that right now. 3 THE COURT: We will take a recess to 1:30. 4 MR. NEVILLE: The Friday issue, can we talk about 5 it after lunch or the end of the day today? I want to 6 bring it up early in the week.
7 THE COURT: Why not take it at the end of the day 8 today. 9 MR. NEVILLE: Thank you. 10 THE COURT: What is it? You have some things to 11 do on Friday or what? 12 MR. NEVILLE: Yes, and I think some of the other 13 lawyers do also. We are here all week and Friday we try 14 to squeeze things in. 15 THE COURT: All right, I will take it up at the 16 end of the day. 17 MR. NEVILLE: Thank you. 18 (Luncheon Recess.) 19 20 21 22 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1564 1 A F T E R N O O N S E S S I O N 2 3 (Whereupon, the jury at this time entered the 4 courtroom.) 5 THE COURT: Please be seated. 6 THE COURT: Where is Mr. Dunn, is he around? 7 MR. NELSON: I believe he was on the telephone, 8 your Honor. 9
THE COURT: Do you want to get him, please. 10 11 N E I L A C K E R M A N , 12 called as a witness, having been previously 13 duly sworn, was examined and testified as 14 follows: 15 16 (Whereupon, at this time there was a pause in the 17 proceedings.) 18 THE COURT: You may proceed. 19 MR. WALLENSTEIN: Thank you. 20 Would you ask the reporter to read the last 21 question? 22 THE COURT: No, I will not. From now on you will 23 remember. 24 MR. WALLENSTEIN: All right. 25 At this time, I will offer by stipulation with
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1565 1 Mr. White, page 6 of 636-A, in addition to the other pages 2 already introduced. 3 THE COURT: What number? 4 MR. WALLENSTEIN: Page 6 of 636-A, other portion, 5 are already introduced. 6 THE COURT: Very well.
7 8 CROSS-EXAMINATION (cont'd) 9 BY MR. WALLENSTEIN: 10 Q Do you have Exhibit 633-A there? 11 A Yes. 12 Q 636-A. 13 A Yes. 14 Q Look at page 6, specifically, paragraphs eight and 15 nine. 16 Read, please paragraph eight. 17 A From the outset when our RR&K was initially 18 approached by Gordon to, quote, get involved with, end 19 quote, this case, RR&K, short for Rivkin Radler and 20 Kremer, conducted a thorough investigation of the debtor's 21 pre petitioner and post-petitions operations, including 22 the alleged fraudulent grounds -- they were capitalized, 23 so they were defined terms, contained in the trustee 24 motion. 25 Q And paragraph 9 of that letter refers to the loans
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1566 Ackerman-cross/Wallenstein
1 and other transactions; is that
correct? 2 A Yes, it does. 3 Q And that reads: By letter dated September 8th, 1994, 4 RR&K again provided Reed's attorneys, as well as counsel 5 for the committee with comprehensive and detailed 6 explanations regarding all transactions, by and among the 7 debtor, Gordon, the Grossman's, Sterling, Who's Who 8 Executive Club and PVI as requested in Reed's 9 interrogatories; is that correct? 10 A Yes, it does. 11 Q And you indicated earlier, that although you removed 12 those two paragraphs from the final version, you did not 13 do so because of any untruth contained therein; is that 14 correct? 15 A I don't know even that I removed them from the final 16 version. 17 THE COURT: Do you know that they were removed, 18 Mr. Wallenstein? 19 MR. WALLENSTEIN: Yes, they are not in the final 20 version. 21 THE COURT: Okay. 22 Q Now, M
r. Ackerman, is it fair to say that after you 23 received the logs from Who's Who, you then transmitted 24 them to Mr. Reffsin and to Mr. Gordon, correct? 25 A When they were received in my office, they were
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1567 Ackerman-cross/Wallenstein
1 transmitted to my office under a fax where it was written 2 at the end, Neil Ackerman. 3 Q Okay. 4 It is fair to say then that your office 5 transmitted the logs to Mr. Reffsin and Mr. Gordon as well 6 as to the other counsel involved in the bankruptcy; is 7 that correct? 8 A Yes. 9 Q Do you know whether or not those logs were ever 10 submitted to the bankruptcy court? 11 A No, I do not know. 12 Q Were they ever offered in evidence at a hearing or 13 any other proceeding? 14 A I don't recall. 15 Q And were they ever, to you
r knowledge, seen by Judge 16 Eisenberg, or any other judge that may have been assigned 17 to the case? 18 A I do not recall. 19 Q Were they ever presented to the U.S. trustee? 20 A I don't believe they would have been presented to the 21 U.S. trustee. 22 Q Were they ever presented to the Chapter 7 trustee? 23 A They may have been by Reed and -- I don't think they 24 were given to the Chapter 7 trustee through my office, 25 because the Chapter 7 trustee directed my office to turn
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1568 Ackerman-cross/Wallenstein
1 over all documents to the U.S. Attorney's Office. 2 Q Did you present those logs to the attorneys for Reed 3 in the course of discovery in the bankruptcy? 4 A Yes. This was in the context of discovery, 5 responding to the discovery under the stipulation that we 6 entere
d into. 7 Q All right. 8 Is it fair to say that you or someone in your 9 office satisfied yourself that those logs were in 10 compliance with the stipulation and the order? 11 A I don't know what that means. 12 Q There was a stipulation which was so ordered which 13 required Who's Who Worldwide to provide logs demonstrating 14 the usage of the penthouse and the Hummingbird Road 15 property for August and September of 1994, correct? 16 A Yes, right. 17 Q And the logs that we have been talking about here, 18 both before the lunch break and now, are those logs, 19 correct? 20 A Yes. 21 Q And those were the logs that were received by your 22 office from Who's Who Worldwide, correct? 23 A Correct. 24 Q And those logs were presented by your office in the 25 course of your representation of Who's Who in the
HARRY RAPAPORT, CSR, C
P, CM OFFICIAL COURT REPORTER 1569 Ackerman-cross/Wallenstein
1 bankruptcy to counsel for the creditors, correct? 2 A Counsel for Reed and counsel for the official 3 committee of unsecured creditors, yes. 4 Q Those were the creditors. And they were presented to 5 them in the course of your representation of Who's Who in 6 bankruptcy, right? 7 A Yes. 8 Q Are you familiar with bankruptcy rules? 9 A Yes. 10 Q You have been practicing bankruptcy law for 18 years? 11 A At this point in time, yes. 12 Q Specifically -- withdrawn. 13 When the logs were presented, they were presented 14 to the other side over your signature; is that correct? 15 A Over a notation that it was dictated but not read, 16 yes. 17 Q Okay. 18 A But I take responsibility for that letter. 19 MR. WALLENSTEIN: May I have a moment, Judge? 20 THE COURT
: Yes. 21 (Whereupon, at this time there was a pause in the 22 proceedings.) 23 Q Would you take a look at Exhibit 633. 24 A That's the time slips? 25 Q No, the final version of the opposition to the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1570 Ackerman-cross/Wallenstein
1 trustee motion. 2 A Okay. The partial pages, I have it right here. 3 Q The partial pages, correct. 4 Take a look at page 21. 5 A Yes. 6 Q Is it fair to say that page 21 is the final page of 7 that document? 8 A Yes, of that exhibit. 9 Q Right. 10 It ends with a wherefor clause, where you ask for 11 the Court for relief? 12 A Yes. 13 Q And below that is your signature? 14 A Yes. 15 Q And I call your attention to bankruptcy Rule 9011, 16 are you familiar with that Rule? 17 A Yes. 18 Q Tell
us what that Rule is? 19 A It sets forth to any paper which is signed or any 20 pleading signed and filed by any attorney in the case, the 21 signature represents a statement that he has done good 22 faith investigation and he believes what is set forth 23 therein to be true. 24 Q Slow down. 25 A I am sorry.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1571 Ackerman-cross/Wallenstein
1 Q It also indicates your knowledge -- let me read the 2 Rule. 3 Every petition, pleading, motion and other paper 4 served or filed in a case under the Code on behalf of a 5 party represented by an attorney, with certain exceptions, 6 not pertinent, shall be signed by at least one attorney of 7 record in the attorney's individual name. The party who 8 is not represented by an attorney shall sign all papers 9 and state the party's address and
telephone number. In 10 this case -- 11 THE COURT: You have to slow it down, 12 Mr. Wallenstein. 13 MR. WALLENSTEIN: Sorry. 14 Q In this case you signed the paper; is that correct? 15 A Yes. 16 Q The signature of an attorney or party constitutes a 17 certificate that the attorney or party has read the 18 document that to the best of the attorney's or party's 19 knowledge, information, belief, formed after reasonable 20 inquiry it is well grounded in fact and is warranted by 21 existing law or a good faith argument for the extension, 22 modification or reversal of existing law, and that it is 23 not interposed for any improper purpose, such as to harass 24 or cause any unnecessary delay or needless increase in the 25 cost of the litigations or administration of the case.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1572 Ackerma
n-cross/Wallenstein
1 That's the gist of the rule, correct? 2 A Yes, that's the gist of that portion. 3 Q So, would it be fair to say then that when you 4 submitted documents to the Court, this response, Exhibit 5 633, for instance, you were certifying that you had 6 conducted a reasonable inquiry and believed the facts in 7 it to be true; is that correct? 8 A In every single paper I ever filed with any court, 9 yes. 10 Q Would that be true of the logs as well? 11 A No. 12 Q Why not? 13 A Well there are two ways of look at reasonable 14 inquiry. One is to presume your clients are telling you 15 the truth, having thoughts of no reason they were not 16 telling you the truth. Plus they weren't submitted to the 17 Court. They were presented to the other side. But I did 18 believe that my client had sent me -- what had been sent 19 to me was
the truth. There was no reason it would not be 20 the truth. In fact, it would be in their best interest to 21 tell the truth. 22 Q You didn't send it sight unseen, did you? 23 A In fact, it was, because I was not in on September 24 23. And it was sent by my office on September 23. 25 Q Someone in your office looked it over, correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1573 Ackerman-cross/Wallenstein
1 A I believe so, yes. 2 Q Ultimately after you returned from your sick leave 3 you looked it over as well, correct? 4 A Yes, I did. 5 Q At the point in time where you looked it over, did 6 you conduct any further inquiry with respect to the 7 genuineness of the logs? 8 A No, not as far as I recall. 9 Q Is that because there was no need to? 10 A It would be because I presume the validity of what is 11 sent t
o me, especially after the conversations I had. 12 Q And you had those conversations with Bruce Gordon? 13 A Yes. 14 Q And others from your office had -- specifically 15 Gerard, had that conversation with Maria Gaspar; is that 16 correct? 17 A I don't know what Gerard talked about with Maria. I 18 can say to the best of my recall what I spoke about with 19 Bruce Gordon. 20 Q You know based on Gerard's time sheets he in fact had 21 a conversation with Maria Gaspar concerning those logs, 22 correct? 23 A Clearly, years. 24 Q You indicated earlier it was your practice to edit 25 those time sheets -- your subordinate's time sheets?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1574 Ackerman-cross/Wallenstein
1 A I would look them over. I didn't edit. There would 2 be -- 3 Q Let me withdraw that question. 4 A S
ure. 5 Q Was it your practice to review their time sheets? 6 A Yes. 7 Q And to assure that everything in there was 8 appropriate and accurate so that it could be billed to the 9 client, correct? 10 A That and also, a time slip in a bankruptcy case has 11 to be presented for approval to the bankruptcy court. You 12 are in an awkward position, on the one hand you want to 13 justify every bit of time you put into the case, because 14 the Court will only award you fees for the work you did if 15 they were done reasonably, actually and necessarily. 16 But by the same token, you are filing these 17 things with the bankruptcy court so they can be seen by 18 anybody. You could be revealing strategies. You could be 19 revealing aspects which could harm. Therefore, there are 20 times where you take out certain words. 21 Q So then you are reviewing your subordinates' ti
me 22 sheets to be sure they are not revealing anything, you 23 said, and also accuracy? 24 A And mine, yes. 25 Q And obviously you would not permit someone to submit
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1575 Ackerman-cross/Wallenstein
1 a time sheet which contained inaccurate or false 2 information, correct? 3 A I wouldn't say that. People submit their own time 4 sheets at the end of the day. It goes into the computer 5 at Rivkin, at my then firm, Meltzer, and here. I review 6 them before they are submitted to the Court. Do I review 7 them each month? No. 8 Q That's not what I asked you. You did in fact review 9 these time sheets before they were submitted to the Court? 10 A I believe I reviewed these, yes. 11 Q And these time sheets, specifically Exhibit 636 were 12 submitted to the bankruptcy court? 13
A I don't believe these were. 14 Q But you reviewed them? 15 A I believe I reviewed them. See, we just came into 16 the case. 17 Q Let me ask you this: Is it your belief that the time 18 sheet submitted by Gerard in this case, and specifically 19 the information contained in Exhibit 636, now that you 20 have been looking at it for two days, is it accurate and 21 truthful to the best of your recollection? 22 A Yes. Gerard kept very good time sheets. 23 Q Would you look, please, at Exhibit 641-A. 24 A I think I don't have that. I have 641. 25 Q You have 641?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1576 Ackerman-cross/Wallenstein
1 A Yes, 641. 2 (Handed to the witness.) 3 A Thank you, sir. 4 MR. WALLENSTEIN: Your Honor, may I have one 5 moment with my client, please? 6 THE COURT: Yes. 7 (Mr. Wa
llenstein confers with Mr. Reffsin.) 8 MR. WALLENSTEIN: Thank you, Judge. 9 Q Mr. Ackerman, would you look on page 4 of the letter, 10 which I think is probably the sixth page of the exhibit. 11 A Yes. 12 Q So the record is clear, we are talking about a letter 13 you wrote on September 8th, 1994, addressed to Mr. Bailey, 14 Mr. Kahn and Mr. Skalka, correct? 15 A Yes. 16 Q On page 4, the next to the last full paragraph 17 reads: PVI, Publishing Ventures -- PVI was intended to be 18 the corporation which would be the legal owner of all real 19 estate and business facilities to be provided to the Who's 20 Who family of corporations and its members. This was done 21 for tax purposes and other reasons. 22 Can you tell me the source of that information? 23 A Conversations. 24 Q With -- 25 A I believe with Mr. Gordon and Mr. Reffsin.
HARR
Y RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1577 Ackerman-cross/Wallenstein
1 Q And do you know specifically who discussed the tax 2 purposes? 3 A No, I do not recall. 4 Q Do you know what the tax purposes were? 5 A Well, there are several different reasons. That I 6 remember discussing? 7 Q Yes. What specifically are the tax purposes which 8 you discussed in this letter? 9 A The reasons I recall discussing were, number one, 10 that if one of the other companies became liable for a 11 debt, they wouldn't -- there wouldn't be able to be an 12 attachment of the real property. 13 The second one was if there became real estate 14 taxes due from the real estate company, it wouldn't be a 15 liability of the other corporations. 16 The third one would be things, I believe that 17 pertained to just taxes and capital gains, and things of
18 that nature. 19 Q So it is capital gains taxes you are referring to and 20 real property taxes? 21 A Yes. 22 Q Not income taxes? 23 A No. That was never discussed, as far as I recall. 24 Q And certainly not any purposes to avoid payment of 25 taxes?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1578 Ackerman-cross/Wallenstein
1 A That was never discussed that I recall. 2 Q Okay. 3 Now, Mr. Ackerman, when for the first time did 4 you have contact with the government with respect to this 5 case? 6 A I think it was when I just opened up my firm in late 7 January or early February of 1996 -- 1997, forgive me. 8 Q And how did that contact come about? Did you contact 9 the government or did they contact you? 10 A Let me rephrase that. You are talking about in 11 context of this lawsuit going on now?
12 Q I am talking in the context of the criminal case, 13 yes. 14 A I believe that the first thing that happened is that 15 I received a letter from either Allan Mendelsohn, the 16 Chapter 7 trustee in the debtor's case, or his law firm, 17 Solomon Green and Ostrow. It was a very long letter and 18 waiving privilege, directing me to give over certain 19 items, certain things. 20 Q Do you remember when that was? 21 A It was definitely in either late January or early 22 February, 1997, more likely in February of 1997, because I 23 was still establishing the firm. I remember that. 24 Q And how many meetings did you have with the United 25 States Attorney's Office?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1579 Ackerman-cross/Wallenstein
1 A About that letter? 2 Q No, about this case. 3 A The first time when they came to
pick up all the 4 documents, I didn't really have a meeting with them. 5 There was someone who came in to pick up the documents, 6 and I said hello and here they are. 7 Q Do you know who that was? 8 A I think it might be one of the gentlemen sitting at 9 the table, and it might not. I don't really know. At the 10 government's table. 11 Q That narrows it down to three out of four. Was it 12 Inspector Pagano or Jordan? 13 A I believe it was Pagano. 14 Q It was not Mr. White? 15 A No, it was not Mr. White. 16 Q And since you said gentlemen, it was not Ms. Scott? 17 A It was not Ms. Scott. 18 Q And how many times after that time did you meet with 19 someone from the U.S. Attorney's Office? 20 A I believe I met with someone from the U.S. Attorney's 21 office twice, twice. 22 MR. WALLENSTEIN: I have no further questions. 23 Thank you, Jud
ge. 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1580 Ackerman-cross/Neville
1 CROSS-EXAMINATION 2 BY MR. NEVILLE: 3 Q Mr. Ackerman, my name is Jim Neville, and I represent 4 Scott Michaelson. 5 A Hi. 6 Q You testified earlier today about the bankruptcy 7 proceedings that involved Mr. Skalka. 8 A Yes. 9 Q Mr. Skalka was representing the creditor Reed Elsevir 10 in that case? 11 A Yes. He was one of the two attorneys from Whitman 12 Breed who were representing Reed. 13 Q Did you also testify, sir, that a Mr. Bailey from the 14 same law firm as Mr. Skalka also attended the important 15 proceedings during the bankruptcy case? 16 A He definitely attended and he was given copies of 17 practically everything that I sent out. 18 Q And was it your testimony that he actually lead the
19 case as you put it at certain motion arguments or 20 meetings, hearings? 21 A He was the one who was pushing for the trustee the 22 most. When Reed would push for the trustee, when it would 23 be a more war-like atmosphere, Tom would be there. 24 Q That's Tom Bailey? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1581 Ackerman-cross/Neville
1 Q So, would it be a fair characterization to say that 2 Tom Bailey was a very aggressive attorney on behalf of his 3 client? 4 A He was definitely very aggressive. When I got 5 involved I understand he got a little less aggressive 6 because I wouldn't allow it to be that way. But, yes, he 7 was aggressive. 8 Q So, you did a good job in protecting your client 9 against the aggressiveness of Mr. Bailey? Is that what 10 your testimony is? 11 A I would like to think
so. But ultimately they were 12 closed. 13 Q Now, obviously for many years now you have done a lot 14 of work in bankruptcy cases; is that right? 15 A Yes. 16 Q And my being a total ignoramus on a lot of things, 17 including bankruptcy, when a debtor proposes to settle a 18 bankruptcy case by committing to paying 100 cents on every 19 dollar that the debtor owes to the creditors, is that a 20 good deal for the creditors? 21 A Yeah, it is great. 22 Q Could it get any better for the creditors? 23 A Creditors would want to be paid immediately the 100 24 percent, and the argument was here that we couldn't do it 25 immediately, so it could get better.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1582 Ackerman-cross/Neville
1 My entire strategy and arguments was that instead 2 of fighting about transfers and all this, just give
100 3 percent. And how could they complain about that. 4 Q But they still did complain, didn't they? 5 A Yes, they did. 6 Q Do you know, or are you familiar with any of the 7 background in the trademark infringement lawsuit between 8 these two adversaries? 9 A I looked it up and also spoke to Bruce about it. 10 Q Did you ever speak to Tom Bailey about the trademark 11 case? 12 A No. He was hard to speak to about it. I would speak 13 more about it to Doug Skalka. 14 Q Why was Tom Bailey hard to speak to about the 15 trademark infringement case? 16 A He was a true believer and he was very committed to 17 his cause. 18 Q What do you mean by that, true believer and committed 19 to his cause? 20 A He was fighting hard for his client. 21 Q Now, is it fair for me to say that if a debtor who is 22 offering 100 cents on the dollar to his or
her creditors 23 and is able to make that payment immediately, that debtor 24 probably wouldn't be in bankruptcy in the first case; is 25 that right? Is that fair to say?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1583 Ackerman-cross/Neville
1 A There are questions as to why this debtor went into 2 bankruptcy. 3 Q Did you yourself, sir, have any discussions with 4 anyone, Mr. Gordon or anyone else, about the ulterior 5 motives, or the added motives of Reed Elsevir as 6 spearheaded by Mr. Aggressive Tom Bailey in this lawsuit? 7 MR. WHITE: Objection. 8 MR. NEVILLE: I object to the Mr. Aggressive, 9 just Tom Bailey. 10 MR. WHITE: Objection to the whole question. 11 THE COURT: Yes. Sustained. 12 Q Isn't it a fact, sir, that Reed Elsevir, Tom Bailey's 13 noble cause -- 14 MR. WHITE: Objection. 15 THE COURT
: He didn't finish the question. 16 MR. WHITE: I finished the objection so far. 17 THE COURT: It sounds interesting, I want to hear 18 it. We don't get questions like that all the time. Let's 19 hear it. 20 Q Reed Elsevir was looking to put Mr. Gordon out of 21 business; isn't that a fact? 22 MR. WHITE: Objection. 23 THE COURT: Sustained as to form. 24 Q Did you ever come to an opinion on your own, sir, in 25 your dealings in the bankruptcy case, the litigation, at
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1584 Ackerman-cross/Neville
1 any time, discussions with Mr. Skalka, Mr. Tom Bailey, 2 attorneys for Reed that in your mind, based on your 3 impressions and discussions that Mr. Bailey was 4 campaigning for his client to put Mr. Gordon out of 5 business and keep him out of business? 6 MR. WHITE: Objection. 7
THE COURT: Sustained. 8 Q Mr. Ackerman, you said that Mr. Bailey would come to 9 court during the bankruptcy hearings and participate 10 actively; is that right? 11 A Yes. 12 Q And Mr. Bailey from Whitman Breed Abbott and Morgan, 13 right? 14 A Yes. 15 Q And did you ever witness at any one of those sessions 16 Mr. Bailey speaking to or with Mr. Skalka? 17 MR. WHITE: Objection. 18 THE COURT: Sustained. 19 Q Do you know whether Mr. Bailey and Mr. Skalka ever 20 discussed the case? 21 MR. WHITE: Objection. 22 THE COURT: Sustained. 23 Q If you know. 24 THE COURT: Desist. 25 Q Isn't it a fact, sir, that Mr. Skalka was really of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1585 Ackerman-cross/Neville
1 counsel to Mr. Bailey in the entire case involving the 2 litigation between Mr. Gordon's com
pany and Reed Elsevir, 3 that being the entire case being the trademark 4 infringement and then the following bankruptcy 5 proceeding? 6 MR. WHITE: Objection. 7 THE COURT: Sustained. 8 You can remain standing if you like. 9 MR. WHITE: Apparently I need to, your Honor. 10 THE COURT: I don't like to see you jumping up 11 and down all the time. 12 MR. NEVILLE: I have no further questions. 13 THE COURT: Anything else? 14 MR. WHITE: I do, your Honor. 15 16 REDIRECT EXAMINATION 17 BY MR. WHITE: 18 Q Mr. Ackerman, the 100 percent plan, the first 100 19 percent plan you proposed involved Reed getting paid, you 20 proposed it in 1994; is that right? 21 A I believe so. 22 Q That involved Reed getting paid in the year 2000; is 23 that right? 24 A I don't think it was -- I don't recall it being a 25 lump sum payment,
I thought it was 100 percent all the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1586 Ackerman-redirect/White
1 time, escrow payments to be remitted as time wore on. 2 Q And is that correct ultimately they would not be paid 3 the full amount until the year 2000? 4 A And even then not if the appeal was not completed and 5 they had not prevailed on appeal. 6 Q So they might not even get it in the year 2000? 7 A If they lost the appeal and they would not get that 8 sum of money. No, they would not get any more than they 9 were owed. 10 Q The plan you filed, did it propose or did it allow 11 for certain expenses of the debtor between 1994 and the 12 year 2000? 13 A Definitely. 14 Q And were Mr. Gordon's salary among those expenses? 15 A I would imagine it would have provided for that. 16 Q And do you know -- whether Mr. Gordo
n's salary during 17 that six-year period was to increase or decrease? 18 A I don't remember the plan, sir, I am sorry. 19 Q Let me show you a copy of your disclosure statement 20 to your first plan. And if you can take a look at the 21 first exhibit to that attachment. 22 MR. WHITE: May I stand over his shoulder, it is 23 my only copy? 24 THE COURT: Yes. 25 Q If you look where it says account number 7210 payroll
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1587 Ackerman-redirect/White
1 officer. Is that Mr. Gordon? 2 A It could be other officers. If he was the officer it 3 definitely showed a 5.87 percent increase each year. 4 Q Well, if you turn back to the notes to the exhibit, 5 does it indicate there that Mr. Gordon was to receive a 6 $25,000 per year increase in his salary? 7 A Note for -- to Exhibit A says, officer'
s salary to 8 Bruce Gordon had been increased by 25,000 per year through 9 the entire projected period. 10 Q All right. 11 Now, if you look back on this schedule, does the 12 proposed salary for the officer increase $25,000 per year? 13 A Yes. 14 Q And what is he making in the last year? 15 A $632,637. 16 MR. TRABULUS: Objection, your Honor. 17 Your Honor, is this document in evidence? I am 18 not really sure what exhibit we are referring to. 19 THE COURT: I don't know, the answer is. 20 MR. WHITE: It is not in evidence. I am asking 21 him if looking at that he can tell -- 22 MR. TRABULUS: Objection, your Honor. 23 THE COURT: Again we are getting into the fine 24 distinction between looking at a document to refresh 25 recollection. But, of course, he hasn't shown that his
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
1588 Ackerman-redirect/White
1 memory needed refreshing at this point. 2 MR. TRABULUS: I would have no objection to this 3 plan being offered in evidence. I think the whole thing 4 should come in if it is going to be in evidence at all. 5 MR. WHITE: I am going to ask Mr. Ackerman a 6 question. 7 Q Mr. Ackerman, reviewing that, do you recall what 8 Mr. Gordon's salary was to be during this time period? 9 A According to the projections and budget, which -- and 10 attached, it -- 11 MR. TRABULUS: Objection. He is reading from a 12 document not in evidence again. 13 THE COURT: Yes, sustained. 14 Do you have a recollection of what his salary was 15 to be? 16 THE WITNESS: Independently without looking at 17 this, no, sir. 18 THE COURT: Do you want him to look at that? 19 MR. WHITE: Yes. 20 THE COURT: All right. 21 See
if it refreshes your recollection. Don't 22 read from it though. 23 THE WITNESS: I understand, sir. 24 THE COURT: You have to pick your head up after 25 you look at it.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1589 Ackerman-redirect/White
1 (Whereupon, at this time there was a pause in the 2 proceedings.) 3 Q Now, having done that, does that refresh your 4 recollection as to the rough salary range that Mr. Gordon 5 was to get during those years? 6 A Under the projections which were given to me, yes. 7 Q Okay. And what were they? 8 A Between 495,000 and $620,000. 9 Q Now, I will take that back. 10 (Whereupon, at this time there was a pause in the 11 proceedings.) 12 Q Now, Mr. Wallenstein asked you regarding times that 13 you met with the government. Do you recall that? 14 A Yes. 15 Q And did
you receive a subpoena in this case? 16 A Yes. 17 Q And did you testify in the grand jury? 18 A Yes. 19 Q Did you meet with the government and discuss your 20 testimony prior to the time you testified in the grand 21 jury? 22 A I think it was done by phone or by meeting. That's 23 the best of my recall. 24 Q Okay. 25 A I knew if --
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1590 Ackerman-redirect/White
1 Q That's okay. I have another question. 2 Do you recall meeting at the U.S. Attorney's 3 Office in Garden City to prepare and meet with respect to 4 your trial testimony? 5 A Definitely. 6 Q Aside from that and your grand jury testimony have 7 you ever met with the government to discuss your 8 testimony? 9 A No, not that I recall. 10 Q Now, can you describe for us whether Mr. Gordon w
as 11 an active and engaged client of yours? 12 A He was very active. 13 Q Was Mr. Gordon the type of man you would give a 14 report to regarding important developments in the case? 15 A We discussed things. I discuss with all my clients. 16 But Mr. Gordon definitely would discuss things. 17 Q Would those be simply cursory discussions or 18 discussions at length? 19 A They would be discussions at length. 20 Q From your observation, did Mr. Gordon know what was 21 going on at his company? 22 A Yes. 23 Q Now, were you present in early August when all sides 24 in the bankruptcy agreed to the stipulation to keep the 25 logs?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1591 Ackerman-redirect/White
1 A Well, the agreement was to give everything they asked 2 for in discovery. And, yes, I was present. 3 Q And th
e stipulation which you have been shown on 4 cross-examination, provided that such a log be kept, 5 correct? 6 A Yes. 7 Q Now, prior to that time had you had any discussions 8 with Mr. Gordon regarding what use those properties were 9 put to? 10 A Prior to my entering into the stipulation? 11 Q Yes. 12 A It is hard to say prior or after, but, whatever, it 13 was always that it was used for business purposes. 14 Q When you say always, what do you mean? Who told you 15 it was used for business purposes? 16 A Mr. Gordon. It was legitimate purposes. 17 Q Would you have agreed to produce the log, if you 18 believed that it was not in fact used for business 19 purposes? 20 A On that posture in the case it was really that this 21 was irrelevant. We were going to do a 100 percent plan. 22 Therefore give them what they wanted. 23 If he said
to me this was used for personal 24 purposes, I would have probably said, just say it was used 25 for personal purposes, and say you were -- show you were
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1592 Ackerman-redirect/White
1 paying rent. What is the difference? 2 Q If you thought it had only been used for personal 3 purposes, would you have agreed in light of Reed's 4 position to create a log that would document that? 5 A I didn't see any reason why the Court would deny 6 giving such a log to Reed, and since it would in no way in 7 my estimation harm the debtor, and the issue was no longer 8 going to be an issue, we were doing a 100 percent plan, I 9 would have agreed regardless. 10 Q Now, was there eventually a hearing at which the logs 11 were discussed in the bankruptcy court? 12 A There were hearings on the motion to appoint a
13 trustee. As to whether the logs were discussed in the 14 court, I don't really remember doing that. 15 Q Okay, let me show you a transcript of an October 16 12th, 1994 hearing in the bankruptcy court. 17 MR. TRABULUS: Your Honor, may we have a copy, 18 too? 19 MR. WHITE: It is my only copy. 20 THE COURT: You may take a look at it. 21 MR. TRABULUS: Do you mind if I go up there? 22 THE COURT: Sure, go ahead. 23 Mr. White will look over the witness' shoulder, 24 and you can look over Mr. White's shoulder, and the jury 25 can look over all of you, and I can look over the jury.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1593 Ackerman-redirect/White
1 Who did I leave out? 2 THE WITNESS: Yes. 3 Q Mr. Ackerman, if you can look at pages 26, 36 and 75, 4 and tell me if the logs were mentioned at the hearing, and
5 whether they were entered into evidence at the hearing. 6 A You are looking at page 26. This is direct 7 examination of James Lukenda, L U K E N D A, which was an 8 accountant being retained by Reed Elsevir. 9 THE COURT: No, the question is: Take a look at 10 that transcript. And after looking at the transcript, can 11 you answer these questions about whether the logs were 12 discussed in court in the bankruptcy court? That's the 13 question. 14 THE WITNESS: Yes, it was discussed. 15 Q Would you look at each one of the pages I mentioned. 16 A 26, 36 -- 17 Q 26, 36 and 75. 18 A 36, yes. 19 Q And 75. 20 A Yes. 75, yes. 21 Q And on any of those pages, is there an indication 22 that the logs were actually received in evidence by the 23 bankruptcy court? 24 A I see that it was assigned a number, Exhibit number 25 9. Can you show me the
page where it was admitted by the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1594 Ackerman-redirect/White
1 judge into evidence? 2 Q If you look at page 20, it indicates that an 3 Exhibit 102 was marked. 4 A That was an affidavit by Geraldine Sanchez, 5 S A N C H E Z, who was an associate at Whitman Breed 6 Abbott and Morgan. 7 Q And does it indicate earlier on that the parties were 8 going to refer to attachments of their pleadings on page 9 17 for the purposes of that hearing? 10 A Yes. 11 THE COURT: Did we ever get an answer to the 12 question as to whether the logs were admitted in evidence 13 in this hearing, or whatever it was, in the bankruptcy 14 court? 15 MR. WHITE: No, your Honor. We didn't get an 16 answer. 17 THE COURT: All right. 18 (Whereupon, at this time there was a pause in the
19 proceedings.) 20 Q Mr. Ackerman, have you figured it out, or shall I 21 move to another question? 22 A I have not seen anything so far. 23 Q Okay. 24 Let me move to another question. 25 It was referred to in the bankruptcy hearing; is
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1595 Ackerman-redirect/White
1 that right? 2 A Yes, it was. 3 Q And Mr. Lukenda, as you mentioned before, testified 4 as to its contents, didn't he? 5 A Yes, he did. 6 Q And you were present at that hearing? 7 A Yes, I cross-examined Mr. Lukenda. 8 Q Is it correct to say that Reed's position is that the 9 logs primarily reflected Mr. Gordon's use of the property? 10 A One second, please. 11 (Whereupon, at this time there was a pause in the 12 proceedings.) 13 A The position appeared to be that the debtor was not
14 receiving consideration flowing back to it by virtue of it 15 having the availability of the apartment. That appeared 16 to be the argument. 17 Q Okay. 18 You can put that aside. 19 Now, you recall being asked questions by 20 Mr. Trabulus regarding your testimony on direct that 21 Mr. Gordon had told you he had engaged in these transfers 22 and it somehow related to his personal IRS tax problems? 23 A It came up in that conversation, yes. 24 Q Now, Mr. Trabulus asked you if you could -- if you 25 could think of any way how these sorts of transfers might
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1596 Ackerman-redirect/White
1 have an impact on Mr. Gordon's personal tax obligations. 2 Do you recall that question? 3 A I think so, yes. 4 Q And you answered that, yes, you could conceive of how 5 it could have such an
impact; do you recall that? 6 A Yes. 7 Q Now, Publishing Ventures owned what asset? 8 A The Manhasset property. 9 Q And that was a residential condominium, correct? 10 A Yes. 11 Q And Mr. Trabulus showed you rent checks by Mr. Gordon 12 to Publishing Ventures; is that right? 13 A Yes. 14 Q Now, if someone searched the Nassau County property 15 records to see who owned that property, would it say that 16 Mr. Gordon resided there or owned it? 17 A No. 18 MR. JENKS: Objection. 19 MR. TRABULUS: Objection. 20 THE COURT: Overruled. 21 Q If someone searched the Nassau County property 22 records to see if Mr. Gordon owned any property, would the 23 Publishing Ventures property appear? 24 A Publishing Ventures would be listed as being the 25 owner.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1597 Ac
kerman-redirect/White
1 Q And not Mr. Gordon, correct? 2 A Correct. 3 Q And were the financial records of Sterling Who's Who 4 and Publishing Ventures and other corporations managed by 5 Mr. Gordon made available in the bankruptcy to the 6 parties? 7 A We made these documents available and we filed 8 monthly financial statements for the debtor. 9 Q Right. 10 For example, was Reed or the creditor's committee 11 provided with Sterling bank statements? 12 A I believe a portion of them, some. 13 Q Pardon? 14 A Some. 15 Q Were they provided with Publishing Ventures, Inc. 16 statement? 17 A I believe a portion. 18 Q Were they provided with registry portion bank 19 statements? 20 A I believe we gave a portion. 21 Q And who decided what portion would be given? 22 A It was related to what they asked in their 2
3 interrogatories. 24 Q Now, if money went from Who's Who Worldwide to one or 25 two or three other corporations, and then to Mr. Gordon,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1598 Ackerman-redirect/White
1 might that have an impact on his personal tax obligations? 2 A It would have to be declared someplace, but, sure. 3 Q And wouldn't it make it more difficult for someone to 4 trace as to whether he was getting such money? 5 A Well, I presume that somebody would issue a W-2 or 6 1099 or something. 7 Q You would assume that. But if the companies were 8 managed by Mr. Gordon and they would not issue a W-2, 9 isn't that an example of what you could conceive of as to 10 how it would impact his personal tax situation? 11 MR. TRABULUS: Objection, your Honor. 12 THE COURT: Sustained. 13 Q Now, Mr. Trabulus asked you about these tr
ansfers and 14 you recall he pointed out in your letter that Sterling had 15 paid something over $500,000 back to Who's Who in March of 16 '94; is that correct? 17 A Yes, and that was Exhibit 641. 18 Q And Sterling sent 500 odd thousand to Who's Who 19 Worldwide; is that correct? 20 A That's what I was advised, yes. 21 Q Now, do you know whether Who's Who in fact sent 1.2 22 million out to Sterling before that? 23 A There was a note that showed a debt due, I believe, 24 from Who's Who to Sterling. 25 Q But do you know whether in the six weeks preceding
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1599 Ackerman-redirect/White
1 the bankruptcy 1.2 million got sent out of Sterling and 2 whether only 500,000 came back? 3 MR. TRABULUS: Objection to form. 4 THE COURT: You mean sent out of Sterling? 5 MR. WHITE: I will r
ephrase it. 6 Q Do you know whether in the six years prior to the 7 bankruptcy 1.2 million was sent by Who's Who Worldwide to 8 Sterling? 9 A I don't know the note. It might be in the note, but 10 I don't know otherwise. 11 Q What you know is what Mr. Trabulus showed you, 12 showing the 500 that came back? 13 A He showed me my letter, yes. 14 Q Mr. Ackerman, Mr. Trabulus showed you Exhibit 772, 15 which is in evidence. 16 A Yes. 17 Q That's an April '94 check from Mr. Gordon to Who's 18 Who Worldwide, correct? 19 A Yes. 20 Q And that's the one that according to the memo part 21 says that it is a repayment of his loan, right? 22 A Partial payment of the loan. 23 Q And that check is written from Mr. Gordon's personal 24 account; is that correct? 25 A Labeled Bruce Gordon at the very top, typewritten,
HARRY RAPAPORT,
CSR, CP, CM OFFICIAL COURT REPORTER 1600 Ackerman-redirect/White
1 and from the bank, Sterling National Bank. 2 Q Do you know where Mr. Gordon got that $20,000 from? 3 A I have no idea. 4 MR. WHITE: Your Honor, the government offers 5 Exhibit 720 and 717. 6 720 is a check, April 22nd, 1994, from Registry 7 Publishing. And 717 is a Registry Publishing transaction 8 governing that period. 9 MR. TRABULUS: No objection. 10 THE COURT: Government's Exhibit 717 and 720 in 11 evidence. 12 (Government's Exhibit 717 received in evidence.) 13 (Government's Exhibit 720 received in evidence.) 14 Q Mr. Ackerman, take a look at Exhibit 720. 15 Now, that is a check from an entity called 16 Registry Publishing, right? 17 A Yes. 18 Q And it is made out to Mr. Gordon, correct? 19 A Yes, it is. 20 Q And what is the date of that che
ck? 21 A 4/22/94. 22 Q And that's how many days before Exhibit 772, which is 23 Mr. Gordon's repayment of the loan? 24 A Five days before. 25 Q Now back to 720, the Registry Publishing check, how
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1601 Ackerman-redirect/White
1 much is that for? 2 A $25,000. 3 Q And how much is Mr. Gordon's loan repayment for? 4 A 20,000. 5 Q Okay. 6 Take a look at 717, that's the Registry 7 Publishing check register. 8 You can take a look -- if you can take a look at 9 the entry for the same day, 4/22/94, what does it 10 indicate? 11 A Check number 101 to Bruce Gordon. 12 Q What is the amount? 13 A $25,000. 14 Q So, Mr. Gordon got the loan repayment money from 15 another company that he owned; is that right? 16 A If he owned that company. But the name
s are similar. 17 MR. WHITE: Your Honor, may I show Exhibit 720 18 and 717 to the jury? 19 THE COURT: Yes. 20 (Whereupon, the exhibit/exhibits were published 21 to the jury.) 22 Q Now, let me show you Exhibit 770, which is in 23 evidence. 24 If you can look at check number 122, which is 25 part of that packet.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1602 Ackerman-redirect/White
1 A Yes. 2 Q Mr. Trabulus asked you about that. That's a check on 3 June 9th, 1994, to Publishing Ventures; is that right? 4 A Yes, it is. 5 Q It is written out of Mr. Gordon's personal account, 6 right? 7 A Yes. 8 Q And the memo part indicates that it says rent 2/94 to 9 6/94? 10 A Yes. 11 Q The amount is how much? 12 A $12,500. 13 Q Do you know where Mr. Gordon got that 12,500 to pay
14 rent on the condominium? 15 A No. 16 MR. WHITE: The government offers 709 and 702, 17 June 9th, 1994, Registry Publishing check, 709. 702 is 18 the Registry Publishing check stubs for that period. 19 THE COURT: Any objection? 20 MR. TRABULUS: Let me look at it again. 21 Thank you, your Honor. 22 (Whereupon, at this time there was a pause in the 23 proceedings.) 24 MR. TRABULUS: No objection. 25 THE COURT: Government's Exhibits 702 and 709, in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1603 Ackerman-redirect/White
1 evidence. 2 (Government's Exhibit 702 received in evidence.) 3 (Government's Exhibit 709 received in evidence.) 4 Q Okay, Mr. Ackerman, let's look at 709. 5 The date on that is what? 6 A 6/9/94. 7 Q Can you compare that to the check, the rent check 8 that Mr. Gordon wrote, whi
ch is part of 770. 9 A Same day, same amount. 10 Q Same amount? 11 A Yeah. 12 Q And the Registry Publishing check is made out to 13 Mr. Gordon personal; is that correct? 14 A Yes, it is. 15 Q By the way, if you compare the signatures, is that 16 Mr. Gordon as a signator on the Registry Publishing 17 account as well as his own account? 18 A I can't read the signature. 19 Q Not can you read it, can you compare the two? Do 20 they appear the same? 21 A It is the same signature. 22 Q Take a look at 702. And look at the entry for 23 6/9/94, and let me read it and tell me if it is correct. 24 It says Bruce Gordon, parenthesis, a word I can't read, 25 2/94 to 6/94, parenthesis, to pay rent, Publishing
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1604 Ackerman-redirect/White
1 Ventures, and the amount is $12,500;
is that right? 2 A Yes. 3 MR. WHITE: Your Honor, may I show these exhibits 4 to the jury? 5 THE COURT: Yes. 6 (Whereupon, the exhibit/exhibits were published 7 to the jury.) 8 Q Mr. Ackerman, Mr. Gordon was apparently a signator on 9 the Registry Publishing account as well; is that correct? 10 A If this is his signature. I can't read the 11 signature. But whoever signed, it looks like the same 12 signature on both documents. 13 Q Now, the second Registry Publishing check I showed 14 you, it is the same day that the rent goes out from 15 Mr. Gordon to Publishing Ventures; is that correct? 16 A Yes. 17 Q And having seen all these documents, can you now 18 conceive of a way that transfers among companies might 19 impact Mr. Gordon's personal tax situation? 20 MR. TRABULUS: Objection. 21 THE COURT: Sustained. 22 MR. WHITE: Jus
t bear with me one moment. 23 THE COURT: Yes. 24 (Whereupon, at this time there was a pause in the 25 proceedings.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1605 Ackerman-redirect/White
1 Q Look at Exhibit 640, Mr. Ackerman. That's the log 2 you faxed to the creditor's attorneys; is that right? 3 A Yes. 4 Q And where you -- as you told us before, where you 5 signed, or where your name is typed, it doesn't just have 6 your name, but it says dictated but not read; is that 7 right? 8 A Yes. 9 Q Now, as a matter of your general practice, are you 10 careful with respect to details like that? 11 A Yes. 12 Q Now, if you look further down on that page, which is 13 page 2 of 640, it says cc Bruce Gordon, president; is that 14 correct? 15 A Yes. 16 Q It doesn't say just Bruce Gordon, it says -- has his
17 title? 18 A Yes. 19 Q It says Martin Reffsin, C.P.A.? 20 A Yes. 21 Q Not just Mr. Reffsin's name, but his position as 22 well; is that correct? 23 A Yes. 24 Q Now, have you ever heard as an attorney of the 25 practice of sending something, a letter to someone without
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1606 Ackerman-redirect/White
1 the attachments? 2 A All right. 3 Q Sometimes you do that because it is too bulky, or too 4 many pages to fax, right? 5 A Sometimes. I tried to send it out always, but I know 6 a lot of other attorneys do not cc. 7 Q Now, the cc is to Mr. Gordon and Mr. Reffsin. Do 8 they indicate cc without enclosures, or without 9 attachments? 10 A No, it doesn't say it here. 11 Q And I believe you testified in response to 12 Mr. Wallenstein's question
s, that the logs were sent on 13 that day to Mr. Gordon and Mr. Reffsin? 14 A I only know that because of the fax cover sheets, or 15 the fax confirmation sheet attached to Exhibit 641-A, 16 which is a copy of the letter sent to them. 17 Q That reflects an 11 or ten page fax was sent to each 18 of them; is that correct? 19 A That's correct. 20 Q If you can take a look at 640, and look at the actual 21 logs which were attached. And the first one is the 22 Hummingbird Road property; is that correct? 23 A Yes. 24 Q Could you go through those three pages for the 25 Hummingbird Road property, and for yourself just count off
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1607 Ackerman-redirect/White
1 as to how many times Mr. Gordon is listed as using that 2 apartment. 3 A 12 times, once or twice for somebody else, but 12
4 times -- excuse me, it might be 13 times. Two or three 5 times for somebody else. 6 Q Turn to the next one, which is the log for the 7 penthouse. Go through that and tell us how many times 8 Mr. Gordon is listed there. 9 A 12 times, with occasionally someone else. 10 Q Now, was it your understanding based on your 11 conversations with Mr. Gordon that he resided at the 12 Hummingbird Road condominium? 13 A It was not my understanding based on his 14 conversations, no. 15 Q Tell us what was your understanding? 16 A He sometimes worked there. He would work often late 17 into the night and he sometimes would stay there. 18 Q And where did you get that understanding from? 19 A From him. 20 Q So, did you ask Mr. Gordon if he was a full-time 21 resident of that condominium? 22 A I don't think the conversation came about that way. 23 I think I ju
st asked him, you know, it might have come up 24 with the context -- in the context of what were the 25 problems with the logs. Because my feeling was just
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1608 Ackerman-redirect/White
1 really give it, who cares? 2 Q Did he indicate where he really lives, what his 3 address was? 4 A I didn't ask that. I don't really send copies of 5 documents to my clients' homes. I send it to where they 6 work. I didn't ask that. Unless they were individual 7 clients, in which case I would send it to their home. But 8 a corporate client, I wouldn't send it to their home, 9 unless they asked me to. 10 MR. WHITE: Excuse me a moment, your Honor? 11 THE COURT: Yes. 12 (Whereupon, at this time there was a pause in the 13 proceedings.) 14 Q Now, Mr. Ackerman, the conversation that you 15 re
counted previously where Mr. Gordon mentioned the 16 transfers in the same time as his personal tax problems, 17 do you recall that? 18 A Yes. 19 Q At the time -- and you said in response to 20 Mr. Trabulus' question yesterday that you had a fairly 21 clear recollection of that; is that right? 22 A Yes. 23 Q Now, after Mr. Gordon said that, did you inquire any 24 further? 25 A No.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1609 Ackerman-redirect/White
1 Q And was there a reason why you didn't inquire any 2 further? 3 MR. TRABULUS: Objection, your Honor. 4 THE COURT: May I have the question before that, 5 Mr. Reporter? 6 (Whereupon, the court reporter reads the 7 requested material.) 8 THE COURT: I am sorry, I will have you go back 9 and read the ones before the ones you just read, because I
10 don't recall what they are talking about. 11 (Whereupon, the court reporter reads the 12 requested material.) 13 THE COURT: Very well. 14 Thank you. 15 Overruled. 16 Q Was there a reason why you didn't inquire further? 17 A I didn't want to. 18 Q And why didn't you want to? 19 A It was not something that was the subject for our 20 conversation. It was not directly pertinent. And it 21 would -- it just felt like something I should not pursue. 22 Q And did it concern you? 23 A I did say to him that I thought he should try to 24 resolve the tax debt. 25 Q Now, you were asked about your testimony in the grand
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1610 Ackerman-redirect/White
1 jury on this point; is that correct? 2 A Yes. 3 Q Now, prior to the time you were asked that question, 4 the
question regarding this subject in the grand jury, had 5 that ever been the subject of any discussion between you 6 and the government? 7 MR. TRABULUS: Objection, your Honor. It is 8 really as to form. 9 THE COURT: Overruled. 10 A Yes. You had asked me whether there had been any 11 conversation about back taxes or something like that. 12 Q And is it fair to say that you were reluctant to give 13 the answer that you gave? 14 A Yes. I was very reluctant to talk about that. 15 Q And why was that? 16 A Because although Mr. Gordon is the principal of my 17 client and not my client, I like Mr. Gordon and I don't 18 enjoy this experience. 19 (Whereupon, at this time there was a pause in the 20 proceedings.) 21 MR. WHITE: I am just trying to locate a 22 document, your Honor. 23 THE COURT: Yes. 24 (Whereupon, at this time there was a pause i
n the 25 proceedings.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1611 Ackerman-redirect/White
1 MR. WHITE: I know why I can't find it, it is 2 what Mr. Wallenstein showed the witness. 3 I have it, I am sorry. 4 Q Mr. Ackerman, if you can look at 633-A. 5 A Yes. 6 Q Now, that is the draft of the motion that was 7 ultimately filed in October; is that right? Is that 8 correct? 9 A Yes. 10 Q And Mr. Wallenstein asked you regarding paragraph 8 11 on page 6. Do you see that? 12 A Yes. 13 Q And that indicates that your firm had done a, quote, 14 thorough investigation, unquote of Who's Who's finances? 15 A Operations. 16 Q I am sorry, operations? 17 A Yes. 18 Q Now, in the course of your representation of Who's 19 Who Worldwide, did you rely on the information provided to 20 you by
Mr. Gordon and Mr. Reffsin? 21 A When I represent a Chapter 11 debtor I do not do a 22 thorough in depth review of their financial documents, 23 etcetera. The debtor, the principal would explain to me 24 what happened, what the background is. The accountants, 25 sometimes they knew, sometimes they had involvement with
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1612 Ackerman-redirect/White
1 the case beforehand, would review the books and records 2 and will analyze. And then I get on with the strategy. I 3 am a lawyer. I do the law end. 4 Q So, in other words, you rely on them to provide you 5 with accurate information; is that fair? 6 A Yes. 7 MR. WHITE: Your Honor, I have no further 8 questions. 9 THE COURT: Anything else? 10 MR. TRABULUS: I do, your Honor, but I would like 11 to review some of the documents that were s
hown to the 12 witness to refresh his recollection that I have not seen 13 before, such as the transcript. 14 THE COURT: Very well. 15 We will take a ten minute -- make it a fifteen 16 minute recess. Please do not discuss the case, and keep 17 an open mind. 18 Please recess yourselves. 19 (Whereupon, at this time the jury leaves the 20 courtroom.) 21 THE COURT: Mr. Neville, now is the time you can 22 discuss the Friday situation. 23 MR. NEVILLE: Your Honor, I have various things 24 and matters that I need to attend to. It is very hard 25 when we work all five days. I know we are on trial. I
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1613 1 know that your Honor has every right and privilege and 2 option to work all five days. But it is just a request. 3 It is very hard to keep my practice together,
making phone
4 calls in an hour during lunch and trying to piece things 5 together after 5:00 o'clock, and having one day during the 6 week to kind of pull together all the loose ends on 7 everything else is -- it is more than helpful. It is kind 8 of critical, your Honor. And I was just asking for that 9 reason. 10 THE COURT: Mr. Neville, for more than 25 years I 11 tried cases, both civil and criminal. I was privileged to 12 have between 200 and 250 jury verdicts myself, which 13 probably is some kind of a record. 14 MR. NEVILLE: It must be. 15 THE COURT: During that time I tried cases five 16 day as week in the state and federal court steadily. You 17 have the great opportunity to try cases four days a week 18 last time, or the last couple of weeks, as I took Fridays 19 off. Now you are going to have a half a day on Friday 20 morning. That is fortuitous, because most c
ases continue 21 five days a week. So, therefore, you are getting an 22 opportunity. 23 I know how difficult it is. Being a trial lawyer 24 is probably -- it is no doubt, while it is the elite of 25 the legal profession in my view, the very top, the best,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1614 1 the most difficult, the most tension-ridden, the most 2 preparation-necessity or needed. That's one side of the 3 coin. 4 The other side of the coin is that you have to 5 balance the rest of your career and your life, 6 notwithstanding the great pleasures and privileges you 7 have as a trial lawyer. 8 In other words, in return for the gratification 9 that you get by being a trial lawyer, you have to work 10 much harder than anybody else. You have to work in the 11 evenings. You have to work early in the morning. You
12 have to work over the weekend. And I know from personal 13 experience. 14 Now, when I was made a judge, or elected as a 15 judge, it was told to me by my colleagues, don't forget 16 when you were a lawyer. Did you ever hear a thing like 17 that, Mr. Neville? That judge doesn't remember when she 18 was a lawyer. 19 MR. NEVILLE: I never heard that, but I am sure 20 Mr. Jenks has. 21 THE COURT: Well, I remember when I was a 22 lawyer. Nevertheless, I have already told the jury. They 23 have made arrangements, and I am not going to change it 24 now, but I will keep it in mind, and sometimes you will 25 have Fridays off.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1615 1 So, right now you will have to excuse me, and I 2 think we have to keep to our schedule. 3 There is another point also. We want to move 4 t
his case as quickly as we can. We don't want to let this 5 jury wait too long. I think everybody wants that. And 6 so, I am going to have to regretfully turn you down this 7 time. But I will keep it in mind. 8 MR. NEVILLE: Thank you very much, your Honor. 9 THE COURT: We will take a ten-minute recess. 10 11 (Whereupon, a recess is taken.) 12 13 (Whereupon, the following takes place in the 14 absence of the jury.) 15 THE COURT: Mr. Ackerman, did you find anything 16 out about the diaries? 17 THE WITNESS: Yes, I called Rivkin, and there is 18 a person checking, and I called my office. We have in my 19 office a box including diaries for '92, '93, '95. We are 20 missing '94. 21 THE COURT: You will advise Mr. Trabulus with 22 respect to that. 23 THE WITNESS: Yes, may I have your card? 24 MR. TRABULUS: I believe it was Mr. Wallenstein.
25 THE COURT: Yes, I am sorry, Mr. Wallenstein.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1616 1 THE WITNESS: If I can have your card. 2 Also, I told Rivkin to call chambers. 3 THE COURT: All right. 4 (Whereupon, the jury at this time entered the 5 courtroom.) 6 THE COURT: Please be seated, members of the 7 jury, and you may proceed, Mr. Trabulus. 8 MR. TRABULUS: Thank you, your Honor. 9 10 RECROSS-EXAMINATION 11 BY MR. TRABULUS: 12 Q Good afternoon again, Mr. Ackerman. 13 Mr. Ackerman, you testified that you liked Bruce 14 Gordon a lot at the time? 15 A I like Mr. Gordon. 16 Q And I think -- is it fair to say that it was a liking 17 that took a little while to happen, but you came to grow 18 to like him? 19 A Yes. 20 Q But today during the break now, you didn't come over
21 and talk to Mr. Gordon, did you? 22 A I haven't spoken to Mr. Gordon since this matter 23 began. 24 Q But you were chatting with the people at the 25 government table, didn't you, just now?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1617 Ackerman-recross/Trabulus
1 A Yes. 2 Q Now, you were shown an October 12th, 1994 transcript 3 by Mr. White. Do you recall that, to refresh your 4 recollection as to what happened on the hearing on Reed's 5 application to have the trustee appointed? 6 A Yes. 7 Q And he directed you to some particular pages; do you 8 recall that? 9 A Yes. 10 Q Now, I don't know whether you had enough of a chance 11 to look through it, but -- to answer this question, and if 12 not I will ask you to look through it again. 13 Is it not correct that at that hearing nobody on 14 behalf
of Who's Who sought to introduce those logs into 15 evidence; is that correct? 16 A That is correct. 17 Q In fact, the only reference to those logs that was 18 made at all was by a witness who was called as a witness 19 by Reed; is that correct? 20 A Yes. 21 Q And his name was Mr. Lukenda; is that correct? 22 A Yes. 23 Q And Reed's attorney asked him questions concerning 24 the logs that he had been given; is that correct? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1618 Ackerman-recross/Trabulus
1 Q And in fact, it was Mr. Lukenda's opinion that those 2 logs supported their position that these -- that there was 3 no business purpose for these properties; is that correct? 4 A Yes. 5 Q And the only time that you spoke about them was to 6 cross-examine Mr. Lukenda and ask him some questions; is
7 that correct? 8 A And to impeach him. 9 Q Okay. 10 Now, I think you told us as far as you had been 11 concerned with regard to the logs, it made no difference 12 whether they showed a business purpose or not, because you 13 were proposing 100 percent plan and it shouldn't be of any 14 concern to the creditors; is that correct? 15 A Yes. 16 Q Now, did you tell that to Mr. Gordon? Did that come 17 up in any discussion with Mr. Gordon or Mr. Reffsin or 18 anyone else? 19 A It came up in discussions with Mr. Gordon. 20 Q And you told us -- where were those discussions? 21 A They were several-fold. Once when the logs -- when I 22 was talking about they had to be prepared and turned over. 23 Q This was before they were even prepared? This was at 24 the very beginning? 25 A They were supposed to be prepared contemporaneously.
HARRY RAPA
PORT, CSR, CP, CM OFFICIAL COURT REPORTER 1619 Ackerman-recross/Trabulus
1 It was my understanding they were supposed to be prepared 2 at the time. He didn't want to give them over -- 3 Q You told them it didn't make any difference whether 4 it showed personal or not? 5 A I said to him when one makes a motion to appoint a 6 trustee, the idea is that either the debtor is incompetent 7 or can run the business. Well, he can run the business. 8 Or the debtor could not be trusted to do those things in 9 the interest of creditors. 10 Reed argument was the debtor could not be trusted 11 because they were bringing on lawsuits. The only thing 12 that can be done with lawsuits is to get money to the 13 creditors. That was not being done here. We were giving 14 the money to the creditors. 15 Q Let me clear -- Reed was arguing the reason 16 Mr. Gordon couldn't
be trusted to run the businesses 17 because he wasn't bringing a lawsuit on behalf of Who's 18 Who or PVI, or these other companies to get the money back 19 into Who's Who; is that right? 20 A Precisely. 21 Q Your point is -- 22 THE COURT: Mr. Trabulus, you have started in 23 flank speed and you got faster as you went along. Would 24 you slow down, please. 25 MR. TRABULUS: Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1620 Ackerman-recross/Trabulus
1 THE COURT: You do want us to hear what you are 2 saying and understand it? 3 MR. TRABULUS: Of course. 4 THE COURT: Okay. 5 MR. TRABULUS: Thank you. 6 THE COURT: You better repeat the last question. 7 MR. TRABULUS: I will do so, your Honor. 8 Q Mr. Ackerman, your response to that was that there 9 was no need to commence these lawsuits to get this money
10 back since the company through its operations, even with 11 those assets out there, would have enough to pay Reed 100 12 percent? 13 A Right. And the idea was to get rid of these side 14 issues, no more fighting, no more anything, just pay. 15 Q But I would like to just clarify -- make sure I 16 understand. 17 You told Mr. Gordon that the logs, it didn't 18 really matter what they said in terms of personal use or 19 business use; is that correct? 20 A I told him to just list the truth. It can't hurt 21 you. 22 Q Either way? 23 A If there was somebody using it, they would pay rent. 24 They are paying rent. Just tell the truth. 25 Q Indeed, he was paying rent on the Manhasset
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1621 Ackerman-recross/Trabulus
1 condominium from the checks we saw; is that correct? 2
A You showed me checks that he was paying rent. 3 Q Those checks went at least as far back of March -- as 4 March 1993, before the bankruptcy and before you got 5 involved? 6 A You showed me that. 7 Q In terms of what constitutes a business use, if a 8 corporation rents space to a corporate employee who lives 9 in or spends some personal time in a place, but makes 10 money on that, receives money in terms of rent, that would 11 be a business use for the corporation, wouldn't it, just 12 as if they rented it to anybody else? 13 A I don't see why not. 14 Q And if the condominium, or the place that was 15 involved also had within it an office room that would be 16 set up, so the corporate employee would work there, could 17 work there, that would also be a business use, would it 18 not? 19 A I would think so. 20 Q And the rent, would be a value of the
person who is 21 living there and not necessarily the rent of the office? 22 Is that still consistent with a business use? 23 A I would believe so. 24 Q In fact, people who work in offices don't normally 25 pay rent for their employer, do they?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1622 Ackerman-recross/Trabulus
1 Withdrawn, I am sorry. I didn't phrase that 2 correctly. 3 Mr. Ackerman, when people normally -- normally it 4 is the employee -- the business who would pay the cost of 5 maintaining an office, would it not, not the employee? 6 A Yes, ordinarily. 7 Q Now, you were shown by Mr. White some checks which 8 indicated the money used by Mr. Gordon to pay his rent or 9 pay back Who's Who in part came from Registry Publishing 10 company; do you recall that? 11 A Yes. 12 Q Now, there would be nothing wrong
in and of itself 13 with Mr. Gordon receiving money from one company to pay 14 back a loan to another, would there? 15 A Not that I could think of. 16 Q And nothing wrong with him receiving money from one 17 company and using that to pay his rent, would there, in 18 and of itself? 19 A As long as he was entitled to such monies. 20 Q And if he had to pay taxes on the money, do you know 21 whether or not he paid -- withdrawn. 22 Do you know whether or not Mr. Gordon paid income 23 taxes on the monies he received from Registry Publishing? 24 A I have no idea. 25 Q There could be some circumstances under which he
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1623 Ackerman-recross/Trabulus
1 might and others under which he might not; is that fair to 2 say? 3 A Yes. 4 Q If it was a loan he would not, if it was
salary or
5 compensation he would? Is that fair to say? He would be 6 supposed to? 7 A Unless it was offset -- there are lot of mitigating 8 factors. 9 Q You know, I would like to go to the offsets because 10 we were talking about that, and there were questions asked 11 of you by Mr. Wallenstein and I would like to get into 12 that further. 13 You were asked some questions about your letter 14 in which you put the word "loans" or "debts" in quotes. 15 A Yes. 16 Q By the way, there were no quotes around the check 17 used to repay the loan to Who's Who, that's a real check 18 as far as you can tell? 19 A The $20,000? 20 Q Yes. There is nothing about it to indicate it wasn't 21 anything but a real check that went through a bank? 22 A There was no quotes around the words, partial payment 23 loans, as far as that. 24 Q As far as you can tell from
the endorsement and 25 stamps on it, it actually went through banks. Do you have
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1624 Ackerman-recross/Trabulus
1 it there? Take a look at it. 2 A It is over there. 3 THE COURT: Do you want to pick it up, 4 Mr. Trabulus? 5 MR. TRABULUS: I am sorry, I thought it was over 6 there. The jury has it. 7 (Whereupon, at this time there was a pause in the 8 proceedings.) 9 MR. TRABULUS: This is it, 772 in evidence, your 10 Honor. 11 A It appears to be negotiated and on the back it 12 appears to be deposited into another bank or cashed. 13 Q Now, Mr. Ackerman, isn't it true that when you put 14 quotes around the word "loans" really it was a stylistic 15 device to get it across to read that there was no occasion 16 for them to be repaid on that point, or for them to be 17
sued on? 18 A Yes. 19 Q It was really like a rhetorical device in speaking -- 20 all right, withdrawn. 21 Are you familiar with the term compensating 22 balances? 23 A No. 24 Q Well, are you familiar with the practice that banks 25 sometimes have when they loan money to big corporations,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1625 Ackerman-recross/Trabulus
1 and they require the corporation to maintain a balance in 2 a checking account that doesn't pay interest as a 3 condition of making a loan? 4 A Okay, yes. 5 Q You heard of that? 6 A Yes. 7 Q And you could have a situation -- withdrawn. 8 Do you know the percentage often required, ten or 9 fifteen percent, is that similar to you? 10 A It depends, sometimes it could be 75 percent -- 11 Q Have you heard of situations where a bank would ma
ke 12 let's say a 20 million dollar loan and require as a 13 condition of making the loan, the borrower maintain a 14 checking account at the bank with a balance of five or ten 15 million dollars? 16 A Sometimes 100 percent. 17 Q Or even higher? 18 A Yes. 19 Q And that balance in the checking account, it offsets 20 the loan; is that correct? If everybody had to sue and 21 collect, it would be an offset? 22 A Potential offset, yes. 23 Q In the example I gave with a 20 million dollar loan 24 and a four million dollar offset -- a four million dollar 25 checking account, the net result, if you washed everything
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1626 Ackerman-recross/Trabulus
1 out, the loan would only be -- you can say the loan was 2 only 16 million dollars, right? 3 A The amount due on the loan, yes.
4 Q The amount due. 5 But still the whole million dollars, 20 million 6 dollars is a real loan? 7 A Yes, and it would accrue interest, etcetera. 8 Q And you could have a situation where there was a 9 wash, a complete wash, in some cases you said it could be 10 a complete wash between a borrower and a lender, and it 11 could still be and compared a real loan; is that right? 12 A Absolutely. 13 Q Now, another document, Mr. White showed you to 14 refresh your memory related to the proposed salary that 15 Mr. Gordon would have received. And I am going to show it 16 to you -- under the plan. And I am going to show it to 17 you again and I will suggest to you that you may have 18 misread this chart in refreshing your recollection which 19 was very -- which is fairly small type. And I think you 20 indicated it to be, that the maximum salary could have 21 been so
mewhere around $500,000, or something like that? I 22 am not sure what it was. 23 I would like to show you this line, and there are 24 two lines right next to each other. 25 The top line, is that the one you believe would
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1627 Ackerman-recross/Trabulus
1 reflect the projected salary for Mr. Gordon? 2 A Yes, I think I misread this before. 3 Q The top salary projected for Mr. Gordon would have 4 been $275,000 at the end of the period of the pay out; is 5 that correct? 6 A Yes. The difficulty arises because there is an 7 entry -- the difficulty I encountered apparently arises 8 because the first entry on the page which is called G & A 9 expenses has no numbers written next to it. The next line 10 is payroll officer. I just kind of read the second line, 11 the numbers. 12 Q The seco
nd line is office instead of officer. It is 13 an easy mistake to made. I am not suggesting it was 14 deliberately made. 15 A It shows -- it began in 1995 for 150,000 a year, 16 showing a 1.78 percent increase after that year. And then 17 going up incrementally, until by the year 2000 the salary 18 I guess for remuneration, whatever would be $275,000. 19 Q Thank you. 20 Now, in your experience, even if Reed complained 21 of $275,000 down the end of the road would have been too 22 much, is that something that would ordinarily hold up a 23 100 percent plan from going through? 24 A The biggest problem with the 100 percent plan being 25 proposed is that it would have been shot right through had
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1628 Ackerman-recross/Trabulus
1 we provided for it to be paid over a period of a year or 2 less.
3 That no one can even argue about. 4 The difficulties is that it was being provided to 5 be paid over a period of time. 6 Q Mr. Ackerman, let me stop you, I think you may not 7 have heard my question. 8 My question is: Typically the dispute over the 9 salary of a president of the company hold up a 100 percent 10 plan, it is something ordinarily that would have been 11 revolved; is that right? 12 A I think the judge might have approved it and might 13 have said, I am not going to give you these raises. 14 Q And certainly no one would have expected Mr. Gordon 15 to work for nothing during the period of reorganization, 16 would you? I mean one would you -- typically someone 17 would get a salary for working, would they not? 18 A Definitely. 19 Q They might get less than they would otherwise, but 20 they would still get a salary, would they not?
21 A Yes. 22 Q Now, Mr. Wallenstein asked you about questions -- 23 withdrawn. 24 Thinking -- he asked you I believe that you 25 believed that the logs were accurate, and I believe you
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1629 Ackerman-recross/Trabulus
1 indicated that you based that on conversations you had 2 with Mr. Gordon, or at least in part? 3 A Yes. 4 Q Do you recall that? 5 A Yes. 6 Q And the conversations you had with Mr. Gordon, were 7 those conversations that you had with him before the logs 8 were prepared? 9 A Well, since I thought they were being prepared 10 contemporaneously, I thought they were being done 11 contemporaneously with them being prepared. 12 Q And was the fact -- was that something you would 13 discuss with Mr. Gordon before they were to be prepared, 14 before Septem
ber 23rd? 15 A He -- I think I testified to this earlier. He was 16 reluctant to give stuff over to Reed. He was angry, we 17 were doing 100 percent, he was not happy about that, and 18 he understood the need for it. And he felt now that we 19 were giving him 100 percent, they were just harassing, and 20 there was no need to give them documentation. And in 21 those conversations I would say just tell the truth. Just 22 write the truth. 23 Q And what did he say? That he would do it? 24 A As I recall, yes. 25 Q And that's what you based your opinion, your belief
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1630 Ackerman-recross/Trabulus
1 that these were accurate logs; is that correct? 2 A And since it would be in my opinion insane to create 3 inaccurate logs. 4 Q That's what you told him? 5 A Yes. 6 Q And you said
it would make no difference if they were 7 accurate or inaccurate? 8 A No, I didn't say that. 9 Q I am sorry, I misspoke. What I meant is, what I 10 meant to say is it made no difference -- I am sorry, I did 11 misspeak, but you meant that it would make no difference 12 if the log would show a business purpose or lack of 13 business purpose? 14 A The logs should show whatever the truth is. There is 15 nothing that can be done here, we are giving 100 percent. 16 Q Did you tell him whether or not there was a business 17 purpose or not should make no difference as to whether a 18 100 percent plan went through? 19 A In respect to the quote, business purpose, end quote, 20 question, I think he was concerned. Because I think he 21 said, I think it shows that he sleeps there a lot at night 22 because he works there so late. I said if that's what it 23 is, that's wha
t it is, that's what you are doing. 24 Q He said he would show that? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1631 Ackerman-recross/Trabulus
1 Q And in fact, I think you said with regard to one of 2 the logs, it showed 14 times, you said 12, but if you 3 count again, you will see it showed 14 times that he was 4 there. 5 A Excuse me. 6 Q Now, after the logs were prepared, and after they 7 were sent over to Reed's attorneys, did you have any other 8 discussions with Mr. Gordon where he said he reviewed the 9 logs or checked them for accuracy or looked at them? 10 A No, not that I recall. 11 Q In fact, you did cause them to be faxed back to Who's 12 Who Worldwide to show that they were also faxed back to 13 the Reed attorneys on the other side, correct? 14 A I cc everything. 15 Q Did you know as to whe
ther Mr. Gordon would read 16 everything that was addressed to him? Would you know 17 that? 18 A I wouldn't have the slight test -- I would hope he 19 did. 20 Q If a document came from his company and maybe to 21 somebody else in his company, and then came back, and 22 would you expect him to review it -- withdrawn. 23 I think you mentioned, and you were asked 24 questions by both Mr. Wallenstein and also Mr. White about 25 the conversations that you had with Mr. Gordon in which
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1632 Ackerman-recross/Trabulus
1 Mr. Gordon told you about his tax problems, his own 2 personal tax liability. 3 A He mentioned it, yes. 4 Q And all I want to ask you is: When you testified in 5 the grand jury, did you say that you just thought that 6 that conversation came up at the same time as the
7 transfers -- when you were first questioned about that in 8 the grand jury, do you recall? 9 A I believe I used the word thought there, meaning I 10 was trying to put the chronology of the conversation. I 11 always remembered the conversation took place in the 12 context of that conversation. 13 Q Okay. 14 Now, let me ask you this: You were asked some 15 questions by Mr. White about how if money was transferred 16 by Mr. Gordon -- withdrawn. 17 I think Mr. White asked you if the condominium in 18 Manhasset were owned by Mr. Gordon, his name would turn up 19 in the property search, and if it was owned by PVI it 20 wouldn't? Do you remember something like that? 21 A Yes. 22 Q And in this case there was no transfer of the 23 condominium in Manhasset that you are aware of by 24 Mr. Gordon to PVI, was there? 25 A No.
HARRY RAPAP
ORT, CSR, CP, CM OFFICIAL COURT REPORTER 1633 Ackerman-recross/Trabulus
1 Q There was no transfer of money by Mr. Gordon to PVI, 2 was there? 3 A I believe it was Who's Who who lent money to PVI. 4 Q Yes, Who's Who, I shouldn't say transfer to 5 Mr. Gordon, it certainly -- you saw the rent checks, it 6 certainly represented money going to PVI from Mr. Gordon? 7 A Yes. 8 Q And if before this transfer we are talking about, the 9 transfer from Who's Who to PVI had occurred, and if Who's 10 Who had gotten the -- bought the condominium itself, the 11 property -- a tax search wouldn't have shown any 12 connection to Mr. Gordon, would it? It would have shown 13 it was owned by Who's Who, right? 14 A No. It would have shown it was owned by Who's Who. 15 Q And in fact, none of the transfers -- the transfers 16 you were talking about were all transfers betwe
en and 17 among corporations; is that correct? Those are the 18 transfers that were shown on the -- in the bankruptcy 19 petition that was the subject of these Answers to 20 Interrogatories; is that correct? 21 A The transfers you are talking about in this 22 conversation? 23 Q Yes, those are the transfers that were among the 24 entities, were they not? 25 A There was another aspect of what I talked about
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1634 Ackerman-recross/Trabulus
1 during the conversation. 2 Q The loans to Mr. Gordon? 3 A No. 4 Q Well, the loan to Grossman? Yes or no? 5 A No. 6 Q Okay. 7 Did you feel that Mr. Gordon at that point was 8 speaking to you as an attorney -- that he was regarding 9 you as his own personal attorney? 10 A I feel at that point he was speaking to me as his
11 friend. But I was the attorney for the corporation. 12 There was no doubt. 13 Q Was he seeking legal advice from you? 14 A No. I didn't believe so. 15 Q Okay. 16 Did he indicate that he thought so? 17 A No. 18 Q Did you tell him you couldn't? 19 A I said that I thought he should try to get these 20 things straightened out. 21 Q Now, the loans to Mr. Gordon -- 22 MR. TRABULUS: Can I see Exhibit 610, please? 23 (Counsel confer.) 24 Q Mr. Ackerman, I am going to show you 610 in 25 evidence. That's the bankruptcy petition, right?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1635 Ackerman-recross/Trabulus
1 (Handed to the witness.) 2 A Yes, this is. 3 Q And I just want to clarify a couple of things here. 4 Can you find the rider to statement of financial 5 affairs, item 21? And to help yo
u find it and I will also 6 help the jury find it because I think they have a copy of 7 this, there is a document called statement of financial 8 affairs in this, and kind of interspersed within this 9 there are some riders, and there is one called rider to 10 statement of financial affairs, item 21. Do you have 11 that, Mr. Ackerman? 12 A Yes, I do. It is about eight pages from the end of 13 this exhibit. 14 Q And that lists a bunch of loans? 15 A Yes. 16 Q And that just lists the loans made in the preceding 17 year before the filing of a petition; is that correct? 18 A Yes, I think that's the question. 19 Q What I want to get across, that is all that is 20 supposed to be listed there, just those for the past year; 21 is that right? 22 A Yes, exactly. Those are the exact words. 23 Q And there is a provision of the bankruptcy law that 24 mak
es it different, can treat a transfer to somebody 25 working to a company, for a company, an insider of a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1636 Ackerman-recross/Trabulus
1 company differently if it was made during the past year? 2 You don't have to go into details. 3 A Payments. 4 Q Payments. 5 The total amount of loans shown here on this 6 rider, it is less than the total amounts of loans made to 7 Mr. Gordon; is that correct? 8 A Than shown in the letter, yes. 9 Q There was never any question but that the full amount 10 of the loans to Mr. Gordon was always disclosed in the 11 bankruptcy, as far as you know? 12 A As far as I know, yes. 13 Q And there were monthly reports filed by Who's Who 14 which showed the amount of loans outstanding to 15 Mr. Gordon; is that correct? 16 A Yes. Monthly reports wer
e definitely filed until 17 maybe '96, when we got behind. 18 Q Now, you were asked by Mr. White questions concerning 19 Sterling, a loan to Sterling. 20 Were you aware that Sterling was -- did about 21 seven to eight million dollars in sales during its first 22 year of operations? 23 A I was aware that it was doing well and Bruce expected 24 it to grow. 25 Q And it was doing well?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1637 Ackerman-recross/Trabulus
1 A Yes. 2 Q And the fact that monies were transferred to it 3 didn't put those monies at risk, that monies were loaned 4 to it, didn't put it at risk? 5 A Well, the issue -- 6 Q The question is not what the issue was. Withdrawn. 7 A I don't believe that that would put it at risk. 8 Q Were you aware that the money returned from Sterling 9 and borrowed f
rom Who's Who, those were used to pay 10 corporate income taxes of Who's Who? 11 A I am not aware. 12 MR. TRABULUS: No further questions. 13 THE COURT: Anything else? 14 MR. WALLENSTEIN: Briefly, Judge. 15 16 RECROSS-EXAMINATION 17 BY MR. WALLENSTEIN: 18 Q Mr. Ackerman. 19 A Yes, sir. 20 Q Going back to the logs that Mr. Trabulus just spoke 21 of. 22 Would it be a fair statement that the reason that 23 the logs were being created in the first place was to 24 satisfy Reed's request for those documents? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1638 Ackerman-recross/Wallenstein
1 Q And would it be fair to say that Reed wanted those 2 logs in order to demonstrate that the Manhattan penthouse 3 and the Hummingbird Road property were in fact being used 4 for personal use rather t
han business use? That was 5 Reed's position; is that correct? 6 A Reed's position, as I recall it was that the debtor 7 really owned this condominium, and that there should be a 8 lawsuit filed to bring this into the estate because that 9 would bring in money to the creditors. 10 Q And the basis of that would be that the property was 11 being used by Bruce Gordon for his personal purposes 12 rather than for business purposes; is that correct? 13 A Not that I recall. I believe that there was a 14 different basis. 15 Q Well, if the property were used for business 16 purposes, there would be no basis for a lawsuit, would 17 there? 18 A No, that's not true at all. 19 Q Well, they wanted to demonstrate that there was no 20 business purpose for this property, for the ownership of 21 this property? 22 A Actually the log thing made no sense. The real
23 argument they were making was that Who's Who had given 24 money to PVI to purchase this property, and it was to be 25 repaved, I think like ten years later under a note which
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1639 Ackerman-recross/Wallenstein
1 was not even secured by a mortgage. And what Reed was 2 arguing was that this was a fraudulent conveyance. There 3 was one or two possible outcomes to this argument. 4 Q What did the logs have to do with the issue of 5 whether or not it was a fraudulent conveyance? 6 A I couldn't figure it out. I didn't see that there 7 was any problem. I didn't see what they were asking it 8 for. 9 Q You agreed to give it? 10 A There was no way that Judge Eisenberg would rule that 11 it wasn't to be given. I wanted the side issues to stop. 12 The philosophy I was to give a 100 percent plan,
get rid
13 of the side issues, get rid of the trustee motion, and if 14 Reed did pursue it, it would expose Reed as really just 15 trying to close the debtor down. 16 Q And the basis -- withdrawn. 17 The basis of the loan was supposed to be to 18 demonstrate the use of the property; is that correct? 19 A It was to show it was being used. What their purpose 20 or their arguments were, I couldn't figure it out. When 21 they made it at the hearing I couldn't figure it out. 22 Q Is it a fair statement that the attorneys and the 23 accountant who testified for Reed at the hearing in 24 October of '94, took the logs which you provided, and 25 which you received from Who's Who and used those logs to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1640 Ackerman-recross/Wallenstein
1 advance their purposes; is that correct? 2 A It is also fair to say
that I impeached them and beat 3 them in court. 4 MR. WALLENSTEIN: I move to strike the last 5 answer as not responsive. 6 THE COURT: Motion granted. Strike it out. 7 Q It is fair to say that they used it for their 8 purposes? 9 A They tried to use it for their purposes. 10 Q They took the position that those logs actually 11 advanced their own cause, correct? Whether or not it was 12 true, that was their position? 13 A They put an accountant on the stand to so testify. 14 MR. WALLENSTEIN: I have no further questions. 15 THE COURT: Anything else? 16 MR. WHITE: Yes, I do, your Honor. 17 18 FURTHER REDIRECT EXAMINATION 19 BY MR. WHITE: 20 Q Mr. Ackerman, when you said it made no difference 21 what the log showed, isn't it correct that depending on 22 what the log said, it would either weaken or strengthen 23 Reed's argument a
gainst Who's Who? 24 A As long as the logs told the truth, I wasn't worried 25 about the logs.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1641 Ackerman-redirect/White
1 Q That's not my question. 2 If the log said for example, there was absolutely 3 no business use, and Mr. Gordon resided at the two 4 apartments, it would not help your case, would it? 5 A It wouldn't help. 6 Q That's all I am asking. 7 Q Now, Mr. Trabulus asked about the loans of Mr. Gordon 8 to the companies; is that correct? 9 A Yes. 10 Q And he asked about offsets. I will use his words, 11 even if there is an offset that doesn't mean, quote, it is 12 not a real loan, correct? 13 A Right. 14 Q Mr. Ackerman, let me show you 15 Government's Exhibit 406, which is in evidence. 16 (Handed to the witness.) 17 Q Now, that's a collection information statement filed 18 with the IRS by Mr. Gordon on December 29th, 1993. Would 19 you turn to the last page, please. 20 MR. WHITE: Your Honor, we have a chart of that I 21 would like to set up for the jury. 22 THE COURT: Yes. 23 MR. WHITE: I am placing on the easel Exhibit 24 406-B, which is the enlargement of 406. 25 A That's this last page?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1642 Ackerman-redirect/White
1 Q Page 3, beginning with asset and liability at the 2 top. Do you see that? 3 A Yes. 4 Q Do you see where it says number 29, other 5 liabilities? 6 A 28? 7 Q Maybe I read it wrong. Let me see. 8 Yes, 28, I am sorry. 9 A Okay. 10 Q Take a moment and review those liabilities there. 11 Now, do you see those, Mr. Ackerman? 12 A Yes. 13 Q Are there any real
loans from Who's Who Worldwide 14 reflected there? 15 A I don't see any loans from Who's Who Worldwide 16 reflected there. 17 Q Are there any real loans reflected from Sterling 18 Who's Who? 19 A I don't see any liabilities to Sterling reflect here. 20 Q Are there any real loans from Registry Publishing 21 reflected there? 22 A I don't see any reflected here. 23 Q Are there any real loans from Who's Who Executive 24 Club reflected there? 25 A I did not see any of same reflected here.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1643 Ackerman-redirect/White
1 Q Now, Mr. Trabulus asked you about the offsets, right? 2 A Yes. 3 Q And that would imply -- let me back up. 4 The amount of the debts -- the loans was 5 approximately 462,000; is that correct? 6 A Yes. 7 Q And the offset would mean that at l
east Mr. Gordon 8 was owed at least $462,000; is that correct? 9 A That he owed that much. 10 Q Right. And if it was to be offset as you said in 11 your letter, he would have been owed at least that much; 12 is that correct? 13 A That's what was believed at the time, yes. 14 Q And that's what he told you on September 8th; is that 15 correct? 16 A That's what I was told. 17 Q Now, if you look at page 4 of that document, look at 18 the entire page that says monthly income and expense 19 analysis, 1994. Look at the category that says income, 20 1994. Look at all those lines and tell us if anywhere 21 there it says that Mr. Gordon is entitled to $462,000 from 22 Who's Who Worldwide. 23 A No, sir. It shows his gross salary was $8,333, and 24 his net, I presume per month, was 5,5. This is dated as 25 of 12/29/93.
HARRY RAPAPORT, CSR, CP,
CM OFFICIAL COURT REPORTER 1644 Ackerman-redirect/White
1 Q So, neither the loan nor the supposed offset is 2 reflected in that document in the parts I asked you to 3 read, is it? 4 A It is not reflected here. 5 Q By the way, Mr. Ackerman, you have never seen that 6 document before, have you? 7 A No. 8 Q Mr. Gordon or Mr. Reffsin never gave you that 9 document, did they, during the course of your 10 representation of the company? 11 A I have never seen this document before. 12 Q Now, Mr. Ackerman, you got involved in the case, in 13 the bankruptcy case in August of '94; is that correct? 14 A Yes. 15 Q And you said that you were aware that Mr. Gordon had 16 given a deposition prior to that in April; is that right? 17 A I was aware he was deposed. I was not aware what was 18 stated. There was a question asked of me if I was aware
19 that he stated something. And I said I was not aware. 20 Q Okay. 21 Let me show you Government's Exhibit 800 which is 22 already in evidence, and if you can review pages 44 and 45 23 of that, and I will stand behind you since it is my only 24 copy. 25 (Whereupon, at this time there was a pause in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1645 Ackerman-redirect/White
1 proceedings.) 2 Q Have you reviewed that, Mr. Ackerman? 3 A Yes. 4 Q Does that indicate that Mr. Gordon testified that the 5 penthouse apartment was for business use? 6 MR. TRABULUS: Objection, your Honor. 7 THE COURT: On what ground? 8 MR. TRABULUS: I am sorry, I didn't read the rest 9 of it. It is okay. 10 THE COURT: All right. 11 Q Does that indicate that he has testified that the New 12 York City penthouse was for busin
ess use? 13 A 60 East 42nd Street? 14 Q It refers to an apartment they were leasing in New 15 York City, correct? 16 A Yes. 17 Q And whether or not the address was correct? 18 A Yes. 19 Q And that apartment, Mr. Gordon says is for business 20 use; is that correct? 21 A Of Sterling. 22 Q Now, in that same deposition, if you could turn to 23 page 35, putting aside the pronunciation or transcription 24 errors, is Mr. Gordon listed or asked whether he lives at 25 2 Hummingbird Road for the Manhasset condominium.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1646 Ackerman-redirect/White
1 MR. TRABULUS: Where are we? 2 THE WITNESS: Page 35. 3 MR. WHITE: Page 35 of the same exhibit. 4 MR. TRABULUS: The copy of the exhibit I have 5 which was redacted by the government doesn't have 6 exhibit -- page 35. I
was given a copy that doesn't have 7 it. 8 THE COURT: Nor does mine. 9 MR. WHITE: It must have been a copying error. 10 Do you want to look at it? 11 MR. TRABULUS: It is 801. 12 MR. WHITE: I am sorry, Exhibit 801 at page 35 13 and 36. 14 (Handed to the witness.) 15 Q Could you review that. 16 A Yes. 17 Q And review the next page, too? 18 A It does use the words, I live with my girlfriend. 19 Q He indicates he only stays at the condominium a 20 couple of days a week when he is working late; is that 21 right? 22 A He says that -- he indicates that he might sleep 23 elsewhere. 24 Q And that is September 9th, 1994, if you look at the 25 front page of that Exhibit, right?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1647 Ackerman-redirect/White
1 A I think it is 341, April 29th, 1994.
2 Q And that is also before the logs were submitted, 3 correct? 4 A Yes. 5 MR. WHITE: The government offers 812, an August 6 5th affidavit in the bankruptcy case submitted by 7 Mr. Gordon, Exhibit 812. 8 MR. TRABULUS: Your Honor, I think that that is 9 already in evidence. 10 THE COURT: Is it in evidence? 11 MR. WHITE: Your Honor, our record indicates that 12 it is not. 13 THE COURT: It is being offered, any objection? 14 MR. TRABULUS: No. 15 THE COURT: Government's Exhibit 812 in 16 evidence. 17 (Government's Exhibit 812 received in evidence.) 18 MR. WHITE: The date is August 5th, 1994. 19 Q Let me read paragraph 17. It says: Reed first urges 20 this Court to focus on loans of the debtor to PVI for the 21 acquisition, improvement and furnishing of my, quote, 22 personal residence, unquote. While I maintain the 23 property located on Hummingbird Lane, it is not my 24 personal residence. The loan to PVI is of a legitimate 25 corporate investment. It is repayable at an interest rate
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1648 Ackerman-redirect/White
1 of 7.5 percent. The property is available to the debtor 2 for use by non-residential member. The property is also 3 used for in-house training as well as a conference area 4 for executive employees. Since we have been in the 5 process of founding a west coast operation it will also be 6 used to temporarily house and train executives based in 7 California. 8 And that's from August 5th, 1994. 9 (Whereupon, at this time there was a pause in the 10 proceedings.) 11 Q Now, Mr. Ackerman, the three statements we just 12 covered of Mr. Gordon, in April of '94, in August of '94, 13 and September of '94, is
it not correct that if the logs 14 reflected no business use of the properties it would have 15 been in conflict with Mr. Gordon's prior statements? 16 MR. TRABULUS: Objection, your Honor. 17 THE COURT: Sustained. That's a matter for the 18 jury to determine. 19 MR. WHITE: No further questions, your Honor. 20 MR. TRABULUS: I do have a little bit more, your 21 Honor. And I will try to be really brief. 22 THE COURT: We are going from brief to very brief 23 to really brief. 24 MR. TRABULUS: I will do my best. 25 THE COURT: When we get to Mr. Wallenstein it is
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1649 Ackerman-redirect/White
1 going to be a streak. 2 3 FURTHER RECROSS-EXAMINATION 4 BY MR. TRABULUS: 5 Q Mr. Ackerman, you were shown 406, 406-A, the 6 statement that you have never seen before?
7 A Yes, sir. 8 Q And in the course of a bankruptcy proceeding where 9 you represented a debtor, would you ordinarily expect to 10 see a collection information statement filed by an 11 individual? 12 A No. 13 Q Okay. 14 Basically just to summarize, I think you said 15 there were two things that weren't shown on this. One 16 were loans, and the other was an asset in the terms of 17 back salaries that were receivable, and they would have 18 cancelled each other out essentially? 19 A I was asked that, yes. 20 Q Basically you have two things that would have washed 21 out to zero or probably washed out to zero not shown on 22 this, as put to you by Mr. White? 23 A As I understand it, yes. 24 Q Mr. White asked you a couple of questions about some 25 of the 800's there, that's some of the testimony that
HARRY RAPAPORT, CSR, CP, CM OFFICIA
L COURT REPORTER 1650 Ackerman-recross/Trabulus
1 Mr. Gordon gave. 2 That 801 that we have that -- Mr. Gordon did 3 sometimes say he lived at Hummingbird Road? 4 A I believe the words were he lived with his 5 girlfriend. 6 Q He was asked this question and gave this answers, you 7 lived at 203 -- 8 THE COURT: You have to slow down, Mr. Trabulus. 9 MR. TRABULUS: Sorry, trying to be brief. 10 Sometimes, only one or two days a week, I have an 11 office there, right? 12 A Yes. 13 Q He said he sometimes lived there? 14 A Yes. 15 Q And he also indicated he worked late there a lot and 16 stayed over? 17 A And he might stay elsewhere. 18 Q He might stay elsewhere with his girlfriend, right? 19 A Yes. 20 Q And you were shown a portion in April -- something 21 else in April of 1994 about Sterling, the condominium i
n 22 the city, the penthouse, I am sorry, not condominium, but 23 penthouse in the city; you remember that? 24 A Yes. 25 Q He said it was for business purposes?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1651 Ackerman-recross/Trabulus
1 A Yes. 2 Q And that was in April of 1994 that he was giving that 3 testimony; do you recall that? 4 A Yes, I believe so. 5 Q And do you have any knowledge whether in April of 6 1994 Mr. Gordon was actually living there at that point in 7 time? 8 A I don't have the slightest idea. 9 Q And if I were to tell you that there was testimony 10 that the place was still being furnished at that point in 11 time -- well, would having parties or receptions for 12 businesses, business affiliates constitute a business 13 purpose? 14 A In my eyes. 15 Q Now, you can only evalua
te the truth of that 16 particular testimony that Mr. Gordon gave at the time that 17 he gave it, right? 18 A In other words, as of the day in April, 1994, when he 19 testified? If you are asking me if the facts changed 20 later, would it be developed later? Is that what you are 21 saying? 22 Q I am getting to that. 23 If he intended in April of 1994 to use it for 24 business purposes, and if later on after the raid, and 25 after the operation, and he started working in the city
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1652 Ackerman-recross/Trabulus
1 and started living there, that doesn't mean they didn't 2 testify truthfully in April of 1994, would it? 3 A Not in my interpretation of the log. 4 Q And if he has lived there on an occasional basis or 5 stayed there on an occasional basis even before that, it 6 still wouldn't be inconsistent with being used for 7 business purposes, would it? 8 A No, I don't believe so, no. 9 Q Did you speak to Mr. Gordon at all about the west 10 coast operation he was hoping to do? 11 A I spoke to him about Russia. I don't know about west 12 coast. 13 Q Did he tell you that the fact of the bankruptcy put 14 everything like that on hold, expense on hold? 15 A He said it was harming his business. 16 Q It wouldn't surprise you if there were plans he 17 genuinely had and wanted to fulfill and it couldn't be 18 done because of the bankruptcy? 19 A Mr. Gordon was full of plans and he told me that it 20 was hurting his business, due to the bankruptcy. 21 Q He told you that. 22 Thank you. 23 Bear with me a moment. 24 (Whereupon, at this time there was a pause in the 25 proceedings.)
HARRY RAPAPORT, CSR, CP, CM OF
FICIAL COURT REPORTER 1653 Ackerman-recross/Trabulus
1 MR. TRABULUS: No further questions. 2 MR. WALLENSTEIN: I will be extremely brief. I 3 think the horse is dead. I have no further questions. 4 THE COURT: Anything else? 5 MR. WHITE: Just one point, your Honor. 6 He keeps asking. 7 8 FURTHER REDIRECT EXAMINATION 9 BY MR. WHITE: 10 Q Exhibit 800, that's Mr. Gordon's testimony from April 11 29th, 1994, correct? 12 A Right. 13 Q That's where he says the penthouse is used for 14 business purposes? 15 A Sterling, yes. 16 Q Now, what is the -- how much time -- how many weeks 17 would you say it is between April 29th, 1994, and June 18 15th, 1994? 19 A About six. 20 Q Okay. 21 Let me read from Exhibit 817, which is identified 22 previously at the log at the penthouse, from June 15th. 23 Pent
house number 3, 11:20 p.m. 24 Mr. Berlin reports a bad flood from up above. 25 PH-IV, Mr. Gordon, was told to turn off jacuzzi. Louis
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1654 Ackerman-redirect/White
1 went up to PH-III to mop up excess water and service 2 requests were filled out, JB. 3 It is about six weeks after Mr. Gordon said it 4 was being used for business purposes; is that right? 5 A The answer to the transcript that you showed me, 6 yes. 7 MR. WHITE: No further questions. 8 MR. TRABULUS: Nothing, your Honor. 9 MR. WALLENSTEIN: Nothing further. 10 THE COURT: All right, you may step down. 11 (Whereupon, at this time the witness left the 12 witness stand.) 13 THE COURT: Please call your next witness. 14 MR. WHITE: Your Honor, the government calls 15 Maria Gaspar. 16 THE COURT: Do you want to
remove the easel? 17 MR. WHITE: I will. 18 THE COURT: Raise your right hand. 19 20 M A R I A M. G A S P A R , 21 called as a witness, having been first 22 duly sworn, was examined and testified 23 as follows: 24 25 THE COURT: Please be seated.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1655 1 State your full name and spell your name. 2 THE WITNESS: Maria Manuela Gaspar, the last name 3 is spelled, G A S P A R. 4 THE COURT: You may proceed. 5 6 DIRECT EXAMINATION 7 BY MR. WHITE: 8 Q Now, Ms. Gaspar, can you tell us where you live? 9 A East Meadow. 10 Q And are you married? 11 A Yes, I am. 12 Q And how long have you been married? 13 A It will be 27 years in July. 14 Q Now, do you have any children? 15 A Yes, I do, sir.
16 Q A boy or a girl?
17 A He is a boy. He will be 18 next week. 18 Q Can you tell us what you do for a living? 19 A I am a controller. 20 Q And what does that mean? What do you do as a 21 controller? 22 A I work basically on financial activities and 23 financial statements, budgetings, and forecasts and 24 analystics (sic). Everything to do with accounting. 25 Q Now, were you previously employed at a company called
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1656 Gaspar-direct/White
1 Who's Who Worldwide Registry? 2 A Yes, I was. 3 Q Can you tell us approximately when it was that you 4 worked at Who's Who Worldwide? 5 A If I recall correct, I started sometime in December 6 of '93, and I resigned in October of '94. 7 Q And what was your position at Who's Who Worldwide?
8 A I was hired as a controller. But I really don't 9 bel
ieve I did the duties of a controller. 10 Q Tell us what you actually did at Who's Who? 11 A I performed more a bookkeeper's work than a 12 controller's work. 13 Q What kind of things did you do as a bookkeeper? 14 A I wrote checks after being told by the president of 15 the corporation to make certain payments. I used to 16 produce them a list of everything that was outstanding on 17 a daily basis. I used to give them all the bank balances 18 of all the accounts, and also a list of everything that 19 was due to be paid. And he would internally tell me which 20 checks to issue, and then give it to him with a back up 21 for payment. 22 Q Now, can you make sure to speak slowly and keep your 23 voice up? 24 THE COURT: And would you pull the microphone 25 closely, please.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1657 Gaspar-direct/White
1 When you say controller, is that spelled 2 C O N T R O L L E R? 3 THE WITNESS: That's the way I spell it, yes. 4 Q Ms. Gaspar, are you testifying today pursuant to a 5 court order granting you immunity? 6 A Yes, I am. 7 Q Can you tell us what is your understanding of what 8 that order means? 9 A My understanding is once I tell the truth, nothing 10 can be used against me, unless if I say something that is 11 not the truth, then it can be used as perjury. 12 MR. WHITE: Your Honor, just one moment, we are 13 trying to gather the correct exhibit. 14 THE COURT: Surely. 15 (Whereupon, at this time there was a pause in the 16 proceedings.) 17 Q Now, Ms. Gaspar, I put before you a binder containing 18 Exhibits 526 through 576. 19 Now, have you previously, before today reviewed 20 each of those exhibits? 21 (Handed
to the witness.) 22 A I saw them before. 23 Q Do you recognize what they are? 24 A Yes, I do. 25 Q What are they?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1658 Gaspar-direct/White
1 A They are American Express gold card statement of 2 accounts. 3 Q Now how is it that you recognize them as that? 4 A I have seen them in the company before. And it is 5 being American Express, it seems like it is a common 6 statement that everybody just about knows. 7 Q Do you recognize the names of the account holders on 8 the statements? 9 A Yes, I do. 10 Q Now, do you recognize any handwriting on those 11 exhibits? 12 A Yes, I do. 13 Q Whose handwriting do you recognize? 14 A The handwriting on one, the one I am looking at dated 15 July of 1990 is from the card holder, Elizabeth Sautter. 16 Q Sautter, S A U T T E R? 17 A That is correct. 18 Q And when you reviewed these prior to trial, you 19 looked through all of them? 20 A Uh-huh. 21 Q And did you see other instances of Ms. Sautter's 22 handwriting? 23 A Yes. Almost in every single one of them. 24 Q Did you see any of your handwriting? 25 A Yes, I did.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1659 Gaspar-direct/White
1 When the period that I worked for the company. 2 Q And were those kept by Who's Who as a regular part of 3 their business? 4 A Yes. It is part of accounts payable. 5 MR. WHITE: Your Honor, the government offers 526 6 through 576. 7 THE COURT: Any objection? 8 MR. TRABULUS: No, your Honor. 9 THE COURT: Government's Exhibits 526 through 576 10 in evidence. 11 (Government's Exhibits 526 through 576 received
12 in evidence.) 13 Q Now, while you were working at Who's Who Worldwide 14 were you involved at all in the payment of American 15 Express bills? 16 A Yes, I was. 17 Q Can you tell me what your involvement in the payment 18 of those bills was? 19 A The best of my recollection, the card holder, 20 Elizabeth Sautter used to give me the card with a 21 breakdown of the totals that were -- that she was liable 22 to, and the amount, and the totals that were liable to the 23 other card holder on the account, which was Mr. Bruce 24 Gordon. 25 She would identify the amounts that were -- that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1660 Gaspar-direct/White
1 belonged to which one of them. 2 Q How would Ms. Sautter indicate those amounts orally 3 or writing? 4 A And in writing, and she would put initials next to
5 them. I am looking at an example, for each one of the 6 transactions, she would have a B for Bruce, an L for 7 someone who used to work here -- over there, and used to 8 use the card. I guess it was Liz that used to be. There 9 was a couple of other initials that were all pertaining to 10 her personal card. 11 Q Now, when Ms. Sautter would give you those bills with 12 the writing on it, would she give you anything else? 13 A She would also give me a check for the portion that 14 she was liable to. 15 Q And what would you do with respect to Mr. Gordon's 16 portion? 17 A I would refer the bill to Mr. Gordon and tell him 18 what the amount of the bill was for that particular month 19 in respect to his personal usage. 20 Q And what if any instructions would Mr. Gordon give 21 you? 22 A He would tell me from what account to write a check 23 to pay t
he bill. 24 Q Did Mr. Gordon indicate what particular company's 25 checking account you should pay the bill from?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1661 Gaspar-direct/White
1 A Yes, that's correct. That's what I meant. 2 Q And what company's account -- let me start first: 3 When you started at the company -- 4 A Uh-huh. 5 Q -- in the first few months, what company's account 6 would Mr. Gordon instruct you to pay this out of? 7 A I believe the first couple of months that I paid the 8 bills, they were paid out of Who's Who Worldwide. 9 Q Now, did that ever change? 10 A Yes, he did. 11 Q When did it change? 12 A Right after the bankruptcy being filed. 13 Q Do you remember approximately when that was? 14 A Sometime in March of '94. 15 Q Okay. 16 And at that time, what instructions did 17 Mr. Gordon give you? 18 A That those bills could not be paid out of Who's Who 19 Worldwide because a report had to be filed with the 20 bankruptcy court, and it would have to be then paid out of 21 another company. 22 Q What were the other -- did Mr. Gordon ever ask you to 23 pay the bill out of any other specific company? 24 A He used to tell me. 25 Q Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1662 Gaspar-direct/White
1 What other -- 2 A Based on a daily card, there was a card I used to 3 give him on a daily basis which showed every company's 4 bank balance. And according to whatever the bank balances 5 were, that's the one that he indicated to me to make the 6 check out of this account or whatever the company would 7 have been that had funds available. 8 Q All right. 9 Tell us the names of these other com
panies whose 10 bank accounts you wrote American Express payments out of? 11 A I recall Sterling Who's Who as being one of them. 12 Somehow Registry Publishings seemed to be another name I 13 used. I can't recall any other ones at this time. 14 Q Okay. 15 Now, did you ever receive -- putting aside the 16 American Express statements for a moment, did you ever 17 receive any instructions from Mr. Gordon regarding how to
18 record the payment of the American Express bills in the 19 books of these various corporations? 20 A I remember the first time, because they were all 21 personal usage, questioning how -- what account to offset 22 the payment with, or which account to charge. And I was 23 instructed to charge it like a loan, like previously was 24 done. 25 Q You say you were instructed. Who gave you those
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT R
EPORTER 1663 Gaspar-direct/White
1 instructions? 2 A At the time, Mr. Gordon. That was my first contact. 3 Q Now, after Mr. Gordon gave you those instructions, 4 did you check with anyone else? 5 A Yes. I recall calling the accountant, Mr. Reffsin, 6 and confirming with him that that was indeed the proper 7 way of doing it. 8 Q Can you tell us mechanically how you would go about 9 recording these loans in the books of the corporation? 10 A I would write a check, which means you would take the 11 money out of the bank account and debit the loan account 12 to Mr. Gordon, so there would be a liability from 13 Mr. Gordon to the corporation, or corporations. 14 Q And Who's Who's books on paper or computer? 15 A They were on computer. When I joined the company 16 Mr. Reffsin used to do the books and the control of 17 everything. My understanding
is he used to get the check 18 stubs and in his computer, I think he used the computer 19 software called Apack or something. 20 Q You have to spell that. 21 A A P A C K, the best of my recollection. I am not 22 really familiar with the software. I know he brought me a 23 diskette, and installed it in the computer we had. And I 24 didn't really like the system. And I offered to bring a 25 very simple software called One Write Plus.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1664 Gaspar-direct/White
1 THE COURT: How do you spell that? 2 THE WITNESS: That's the software. 3 THE COURT: One Write? How do you spell that? 4 THE WITNESS: One, O N E, Write, W R I T E, 5 plus. That's a very simple software used for accounting 6 purposes. 7 Q Now, after you made your notations in the computer -- 8 A Uh-huh. 9 Q -- do you
know if Mr. Reffsin ever reviewed those 10 computer entries? 11 A Oh, yes, on a monthly basis. They used to have 12 reviews on a monthly basis. 13 Q And where would these reviews take place? 14 A In the office. 15 Q Now, in the course of paying these monthly American 16 Express bills, did you observe the type of charges that 17 were charged by Mr. Gordon? 18 A First I would compare the amounts as being compared 19 to the amounts of the liability of Mr. Gordon that 20 Elizabeth Sautter used to give me to make sure that the 21 amounts did conform and they were correct. So I would 22 have to go to the copies that American Express supplies to 23 you as a back up for the bills. And I did go to the 24 items. And I did see some of the items in here, of course 25 I did.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1665 Gaspar-direct/Wh
ite
1 Q And how would you characterize those items? 2 A Very much personal. Most of them clothing, jewelry, 3 and other items. 4 Q Okay. 5 Now, who would actually prepare the check to pay 6 the American Express bills? 7 A I would put the entry into a computer, and the 8 computer -- I would press one key to process a check. And 9 the computer used to generate a check from the companies 10 that had computerized checks. 11 Q Once the computer spit out the check, what would you 12 do with it? 13 A I would take the check and the backup -- that means 14 the bill of in this case the American Express, or any of 15 the bills, and take it to Mr. Gordon and have him sign it, 16 because he was the only signatory on the account. 17 Q Now, on other bills, aside from American Express, 18 would you provide Mr. Gordon with the backup, the 19 underlying
thing related to the bill? 20 A At all times. There was a rule. 21 Q And whose rule was that? 22 A Mr. Gordon's rule. 23 Q You mentioned Mr. Reffsin. Tell us who Mr. Reffsin24 is? 25 A He was the accountant from the accounting firm for
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1666 Gaspar-direct/White
1 the company. 2 Q Now, did you ever see Mr. Reffsin at Who's Who 3 Worldwide's offices? 4 A Yes. 5 Q How frequently? 6 A At least once a month. 7 Q Did you ever have conversations with Mr. Reffsin 8 regarding the company's payment of Mr. Gordon's American 9 Express bills? 10 A I remember a couple of conversations that we had, 11 that the amounts were substantial, yes. 12 Q And let's take the first conversation you had with 13 Mr. Reffsin. Tell us approximately when that was? 14 A I would say somewhere in the beginning of '94, 15 February, maybe. I am not sure of the time. 16 Q Tell us what happened in that conversation. 17 A He told me that's how they used to process the
18 records up to that point, and they would have to continue 19 that way. 20 Q Now, did you ever subsequently ask him regarding why 21 the company was paying Mr. Gordon's American Express bill? 22 A Yes. And that if it was processed the other way it 23 would have to be declared as income and he would have to 24 pay income taxes on it. 25 Q Now, in that conversation, was it discussed at all
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1667 Gaspar-direct/White
1 with Mr. Reffsin the fact that this was being booked as a 2 loan to Mr. Gordon? 3 A It was booked as a loan, otherwise it would be 4 treated as personal income. 5 Q And who said t
hat? 6 A Mr. Reffsin. 7 Q Did you ever have any discussion with Mr. Reffsin 8 regarding Mr. Gordon -- the level of Mr. Gordon's salary 9 from Who's Who Worldwide? 10 A I believe one time something came about to the fact 11 that Mr. Gordon being the president of the company, he was 12 earning less money than I was and Elizabeth Sautter was. 13 Q Did that fact make you have a conversation with 14 Mr. Reffsin? 15 A It just didn't look very normal that a CEO of a 16 company would be making less money than the employees. 17 Q And did you ask Mr. Reffsin about that? 18 A I don't remember specifically directing a question, 19 but the conversation was taking place. 20 Q Okay. 21 Did you have a conversation with him where this 22 topic came up? 23 A Yes, I did. 24 Q Tell us what was said in that conversation. 25 A He could not show more inco
me, because he had a big
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1668 Gaspar-direct/White
1 personal liability with IRS. 2 Q And that statement you just made, who said that, you 3 or Mr. Reffsin? 4 A Mr. Reffsin. I wouldn't know anything about it. 5 Q Now, as the comptroller, did you ever prepare checks 6 for the payment of leases on automobiles used by 7 Mr. Gordon? 8 A That was part of the monthly payments, yes. 9 Q And do you recall what type of cars were leased? 10 A I recall a sports car, a 24G T, something like that, 11 some kind of sports car, a Lexus, a Camray. 12 Q Now, wait. My question was: Do you recall what type 13 of car was leased and used by Mr. Gordon. 14 A I remember Mr. Gordon driving a Lexus. I believe he 15 also drove a Mercedes, but I cannot see the car in front 16 of me. 17 Q All right.
18 From what account were these car leases paid 19 from? 20 A I believe after the bankruptcy they were from 21 Sterling Who's Who. 22 Q Now, aside from what you have already described, did 23 you ever have any conversation with Mr. Reffsin regarding 24 Mr. Gordon's personal tax situation with the IRS? 25 A I remember Mr. Reffsin -- Mr. Gordon one time, I
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1669 Gaspar-direct/White
1 don't remember exactly the time, but I remember Mr. Gordon 2 mentioning to me that he was going to call Mr. Reffsin and 3 reduce his monthly payment. 4 Shortly after I recall Mr. Reffsin coming into 5 the office and going into Mr. Gordon's office. And they 6 were there for whatever amount of time. And I clearly 7 remember Mr. Reffsin coming in my office quite disturbed 8 to the fact that, listen to th
is, Maria, after all I have 9 done for him, I am trying to save him millions of dollars 10 in his personal taxes, and now he is trying to reduce my 11 monthly fee. That I remember clearly being said to me. 12 Q And did Mr. Reffsin indicate how it was that he was 13 trying to save Mr. Gordon millions from his personal tax 14 situation? 15 A He mentioned something, he was trying to do some kind 16 of arrangement with a lady in IRS. I don't recall the 17 name. But I remember this conversation going on. 18 Q Did Mr. Gordon have a compensation agreement with 19 Who's Who Worldwide? 20 A I was told there was one after the fact. 21 Q Ms. Gaspar, let me show you Exhibit 420-G, like in 22 George, which is already in evidence. 23 (Handed to the witness.) 24 Q Is that the compensation agreement between Mr. Gordon 25 and the company that you saw?
HARRY
RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1670 Gaspar-direct/White
1 A Yes, I did see this at one point or another. I don't 2 know when I saw it though. 3 Q Okay. 4 Now, if you can take a look at Exhibit 425. 5 (Handed to the witness.) 6 That's a letter to the Internal Revenue Service 7 from Mr. Reffsin; is that right? 8 A Yes, it is. 9 Q Turn to Exhibit 425-C and D. 10 Those are two letters signed by you; is that 11 correct? 12 A Yes. 13 Q And I will read the body of 425-C. It is dated March 14 3rd, 1994 to whom it may concern. Subject, compensation 15 agreements between Who's Who Worldwide Registry and Bruce 16 Gordon. 17 The compensation agreement between Who's Who 18 Worldwide Registry and Mr. Bruce Gordon became effective 19 January 1st, 1993. Truly yours Maria M. Gaspar 20 controller. 21 I wil
l not read 425-D, but it sets forth 22 Mr. Gordon's salary for 1993; is that right, Ms. Gaspar? 23 A Yes, sir. 24 Q Now, can you tell us the circumstances under which 25 you prepared these two documents?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1671 Gaspar-direct/White
1 A January letter regarding the gross income, I clearly 2 remember the whole transaction on it. I was in the 3 company just a short while, and I got instructions from 4 Mr. Reffsin that Mr. Gordon had to make additional tax 5 payments to I believe -- I know federal, state and 6 Medicare, I believe it was. Maybe not Medicare, but 7 federal and state for sure. 8 Q Ms. Gaspar, let me interrupt you. Just tell me when 9 it was and how it was that you prepared these two 10 letters. 11 A The one regarding the earnings had to be January 7, 12 it has the date on
it, January 7 of 1994. 13 Q And 425-C, the March 1994 letter. 14 A It is dated March 3rd. 15 Q Now, did anyone ask you to prepare those two letters? 16 A Yes. 17 Q Who? 18 A Mr. Reffsin. 19 Q What if anything did he tell you as to why you needed 20 to prepare those letters? 21 A He just told me on the compensation agreement, I 22 remember him telling that he needed for some reason, that 23 I don't recall which one it was, that he needed a letter 24 signed by me that there was a compensation agreement. And 25 I recall saying I never saw one. And he said, yeah, there
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1672 Gaspar-direct/White
1 is one in the file. 2 So, based on his word, and he was not my boss, 3 but, you know, a superior as far as I was concerned, I 4 just took his word. I had no reason not to trust him
. So 5 I did do what he asked me to do. 6 Q Okay. 7 Now, if you can look at the cover page of that 8 Exhibit 425. 9 A Uh-huh. 10 Q I am going to read a portion of it. From 11 Mr. Reffsin, it says to the IRS. It says dear sir: 12 Pursuant to your request I have attached the following 13 information for your file. 14 I am going to skip down to number three. 15 Letter from the controller of Who's Who Worldwide 16 Registry verifying the compensation agreement with 17 Mr. Gordon began January 1993. She verified this with the 18 shareholders of the corporation. 19 Now, Ms. Gaspar, did you ever verify the 20 existence of this agreement with Joyce Grossman? 21 A Absolutely not. I did not even know that Joyce 22 Grossman existed at that point. 23 Q Did you ever verify the existence of this 24 compensation agreement with Richard Grossman?
25 A No. I also did not know of Richard Grossman at the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1673 Gaspar-direct/White
1 time. 2 Q Did you ever verify the existence of this agreements 3 with anyone other than Mr. Gordon or Mr. Reffsin? 4 A No, I did not. 5 Q Did Mr. Reffsin ever ask you to verify this agreement 6 with the company's shareholders? 7 A No, he did not. 8 Q Did you ever for any reason tell Mr. Reffsin that you 9 had verified the existence of this agreement with the 10 company shareholders? 11 A Absolutely not. 12 Q Let me direct your attention to early 1994. 13 At that time did you ever see documents related 14 to Who's Who's credit card merchant account? 15 A Yes. 16 When some of the bills were starting to be given 17 to me, I remember seeing various credit card statements if 18
that's what you are referring to. 19 Q Did you ever see the name Grossman in connection with 20 the company's merchant accounts? 21 A Yes, I did. 22 Q Tell us what in what context you saw the name 23 Grossman? 24 A All the bills were addressed to Mr. Grossman or 25 Mr. Richard Grossman, or something to that effect.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1674 Gaspar-direct/White
1 Q Did you ask anyone regarding the name Grossman on 2 these documents? 3 A Yes. I remember asking Elizabeth Sautter who was 4 that. At the point I thought maybe there was a previous 5 employee that the correspondence was being addressed to. 6 Q And what, if anything, did Ms. Sautter tell you about 7 that? 8 A She mentioned to me that there was Bruce's -- that it 9 was Bruce's sister's husband. 10 Q Who was Bruce's sister's husband?
11 A Richard Grossman. 12 Q And what were the documents that you saw 13 Mr. Grossman's name on? 14 A On statements from American Express and from Visa, I 15 believe. 16 Q Indicating he was the responsible party at Who's Who? 17 A It just had the company name and his name underneath. 18 Q Did you ask Ms. Sautter about that fact, why 19 Dr. Grossman's name was on the paper? 20 A I remember she mentioning something that they had a 21 problem with credit cards, and the name had to be changed, 22 they had to open a new account, and Mr. Grossman was the 23 one who signed, the signatory on the account for those 24 credit cards. 25 Q And did she say anything regarding the ownership of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1675 Gaspar-direct/White
1 the company at that time? 2 A I don't recall if it was at that time
that she 3 mentioned something. But at one point or another 4 something was said that they had had a problem, and the 5 ownership had been changed to Joyce and Richard Grossman. 6 Q And changed from who to Joyce and Richard Grossman? 7 A From Bruce Gordon to them. 8 Q And she said that was because of problems? 9 A Some problem. I didn't get details, and I didn't 10 ask. 11 Q Now, have you ever been to a condominium located at 2 12 Hummingbird Road in Manhasset? 13 A Yes, I was. 14 Q And at the time you were there, who was living there? 15 A To the best of my knowledge, Mr. Bruce Gordon. 16 Q Tell us the circumstances under which you visited 17 that condominium? 18 A It was either coming out of an attorney's office or 19 going to an attorney's office, on the way to the office, 20 and Mr. Gordon mentioned something that he had something 21 he
had to pick up, and he wanted to show me the 22 condominium. And we just went in. 23 I remember him showing me the room where his son 24 used to do yoga or something; and we left. 25 Q Now, did Mr. Gordon at any time say anything to you
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1676 Gaspar-direct/White
1 about Who's Who members staying in this condominium? 2 A No. 3 Q Now, were you ever at the condominium for any other 4 occasion besides the one you just described? 5 A No. 6 Q Did you ever have to make telephone calls to anyone 7 else in connection with the condominium? 8 A Oh, yes. 9 Q Tell us who you had to make telephone calls to? 10 A Mr. Gordon -- I do speak Spanish. And I believe 11 Mr. Gordon's maid was Spanish, and he had problems 12 communicating with her. And he had given me her phone 13 number so I
could tell her what she had to clean, and 14 whatever he needed to be done in the apartment. 15 So, her name I believe was Isabel, and I spoke to 16 her quite often. 17 Q Now, have you ever been to penthouse number 4 at 250 18 East 54th in Manhattan? 19 A Yes, I was. 20 Q And at the time you were there, who lived there? 21 A When I first started going to the apartment, there 22 was no one living in there. It was just vacant walls, and 23 I was in there to receive furniture and all kinds of 24 different articles that were being -- that were purchased 25 and being delivered to the apartment.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1677 Gaspar-direct/White
1 Q Who had asked you to go there and meet the delivery 2 people? 3 A Mr. Gordon. 4 Q Tell us aside from those deliveries, were you ever in 5 the penthouse fo
r any other occasions? 6 A Yes, I remember being there invited by Mr. Gordon 7 along with a few other members of the company. I recall 8 Mr. Gordon invited my husband and my son. And we went 9 there. It was Saturday night in the summertime. I don't 10 remember the month or the date. And it was like a social 11 gathering that was in there. 12 Q And the only summer you worked for the company, was 13 the summer of 1994; is that right? 14 A That is correct. 15 Q Now, do you know who paid the rent for this 16 penthouse? 17 A Sterling Who's Who. 18 Q Is that because you drew up the checks? 19 A Yes. 20 Q There came a time that Sterling Who's Who filed for 21 bankruptcy; is that correct? 22 A Yes. 23 Q And did you attend any of the bankruptcy proceedings 24 in court? 25 A Some of them, I did.
HARRY RAPAPORT, CSR, CP, CM
OFFICIAL COURT REPORTER 1678 Gaspar-direct/White
1 Q Have you ever heard the term 341 Hearing? 2 A Yes, that was the hearings, the ones I attended. 3 Q The 341's were the ones you attended? 4 A Yes. 5 Q Now, do you recall a 341 Hearing in which the topic 6 of the penthouse and the condominium were discussed? 7 A Yes, I do. 8 Q Can you tell us just approximately when that was? 9 A Sometime in late August, November -- September, I 10 don't know exactly the date. But it was sometime in the 11 summertime. 12 Q Of what year? 13 A Of '94. 14 Q Now, who was there on behalf of Who's Who Worldwide? 15 A Mr. Gordon, myself, Mr. Reffsin, I believe the 16 attorney, and the members of the bankruptcy court. The 17 Court also where the attorneys were from the other side. 18 Q Okay. 19 Now, after -- 20 A Uh-huh. 21 Q --
what did you do after you left the courthouse? 22 A We went back to the office the same way we had got to 23 the bankruptcy in Mr. Reffsin's car. 24 Q And who was in the car with you? 25 A Mr. Reffsin was driving. Mr. Gordon was in the front
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1679 Gaspar-direct/White
1 in the passenger seat. And I was in the back seat. 2 Q Can you tell us what happened during that car ride. 3 A If I recall during the hearing, the representatives 4 of the bankruptcy court brought up the fact that they 5 needed some logs of attendance and who attended for what 6 purpose the different locations. 7 I recall when we got back in the car that both 8 Mr. Gordon and Mr. Reffsin said that we got to produce 9 those logs, that we got to make up logs. 10 Q Did they give you any instructions regarding the 11 logs?
12 A I believe the Court was asking for the logs for a 13 period of time. It was back from the time that I was at 14 that hearing, so some past, sometime in the past. And I 15 remember them telling them to get a calendar and use the 16 weekdays for, you know, to go through the calendar and use 17 weekdays from that period of time which I can recall, 18 which was now, and just make some sort of meetings. And 19 they gave me topics and a card. I remember some of the 20 topics they gave me. And use some of the employee's names 21 that would be part of the different topics and a seminar 22 that would be so-called taking place at the different 23 locations. 24 Q And did anyone say anything to you regarding making 25 the logs consistent between the penthouse and the condo
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1680 Gaspar-direct/White
1 log? 2 A Yes, I remember being clearly told not to use the 3 same people on the same location the same day. 4 Q Who told you that? 5 A I can't recall which one of them it was. But whoever 6 it was, the other one did not disagree with it. So I 7 really don't remember which one it was at the time. 8 Q Now, when it was suggested that you make up these 9 logs, what, if anything, did you say? 10 A I said how can I make the logs? I have no records of 11 who is what? And I didn't feel comfortable doing it, 12 because I knew they were going to be bogus logs to begin 13 with. 14 Q And when you said that, what, if anything, did 15 Mr. Gordon or Mr. Reffsin say? 16 A We need them anyway. We got to make them. 17 Q Did you then prepare those logs? 18 A Not right away. 19 Q Did you eventually prepare the logs? 20 A Yes, unfortunately, I did. 2
1 Q Tell us what if anything made you begin preparing 22 these logs? 23 A I remember getting a call early in the morning from 24 Mr. Reffsin's office, from himself, saying that I had to 25 get that log going today because they need it by the end
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1681 Gaspar-direct/White
1 of the day. 2 He gave me instructions to make a draft. After 3 the draft was done, to fax it back to his office so he 4 could review it. 5 Q Is that was a conversation with Mr. Reffsin? 6 A Yes. 7 Q Now, after that conversation with Mr. Reffsin, what 8 did you do? 9 A I did get a calendar. And I did work with the dates 10 I was given to work with. And I made up some dates and 11 some topics that I remember them being given to me in the 12 car. And when I faxed them back, I remember Mr. Reffsin 13 calli
ng me and telling me that I had to put a lot more 14 detail information, because what I had was nowhere near 15 sufficient. 16 Q And after that conversation with Mr. Reffsin, what 17 did you do? 18 A I started working on it. 19 I recall Mr. Gordon walking into the office and 20 asking me how I am doing with the logs. 21 I said, I really don't know what else to put on 22 them. So, I believe Mr. Gordon at the time just stayed 23 there, and that you giving me topics and names of people 24 to use for different -- for different functions, 25 so-called, in different facilities.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1682 Gaspar-direct/White
1 Q Now, Ms. Gaspar, let me show you Exhibit 643 for 2 Identification. 3 (Handed to the witness.) 4 Q If you could page through that and tell me if you 5 recognize it.
6 A Yes, that's my writing. 7 Q Are those the logs that you created? 8 A Yes, they are. 9 MR. WHITE: Your Honor, the government offers 10 Exhibit 643. 11 MR. TRABULUS: No objection. 12 THE COURT: Government's Exhibit 643 in 13 evidence. 14 (Government's Exhibit 643 received in evidence.) 15 MR. WHITE: Your Honor, so the jury can follow 16 along, the same logs are attached to Exhibit 640. 17 Q If you can take a look at the log for first the 18 Hummingbird Road property. Do you have it before you? 19 A Yes. 20 Q Can you tell us what meetings or topics were 21 suggested to you by Mr. Gordon when he was in your office? 22 A By looking, August 15th, it looks to me like it is 23 one of the topics that I was given by Mr. Gordon, because 24 definitely, this is not my terminology, new sales 25 strategies. It is definitely not something that I would
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1683 Gaspar-direct/White
1 be involved. 2 Q Okay. 3 Any others that you see that you believe that 4 Mr. Gordon suggested to you in your office? 5 A September 12th for sure, planning a reception with 6 the Russian members. 7 Q Okay. 8 Now, if you look at the penthouse condominium -- 9 I am sorry, the penthouse log, if you can review the three 10 pages of that, and if you can identify any topics that 11 Mr. Gordon suggested that you put on the log. 12 A August 13 looks like sales meeting with group 13 leaders. It is something that would not come from me. 14 August 20th, Who's Who group leaders, that would 15 be something else that I would not come up with, unless if 16 it was said at the time. 17 August 26th in which I am one of the members that 18 supposedly took part of this meeting, as a manager meeting 19 how to improve our business. None of these were correct, 20 especially the ones that I am attending to, I definitely 21 did not attend. 22 Q Now, after you received suggestions from Mr. Gordon, 23 what did you do with these logs? 24 A I re-faxed them back to Mr. Reffsin's office for his 25 review.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1684 Gaspar-direct/White
1 Q And did you have any further communications after 2 that with Mr. Reffsin? 3 A They called me back, he called me back and said it is 4 all right to fax to this person, who ever this person was 5 in the law firm. 6 Q When you say this person, who are you referring to? 7 A Gerard Catalanello in. 8 Q That's the name -- 9 A On the covering sheet, yes. 10 Q We will call him Gerard. Do you know who Gerard w
as? 11 A I have no idea. 12 Q Did you recognize the law firm name, however? 13 A Yes, I did. 14 Q Who did you recognize it to be? 15 A Rivkin and Radler. 16 Q And did you know who they represented? 17 A They represented Mr. Gordon. 18 Q Now, looking at all the meetings on all those logs on 19 Exhibit 643, to your knowledge, did any of them actually 20 take place? 21 A To my knowledge, none. 22 Q Did you simply make up all the meetings and dates and 23 topics? 24 A Absolutely. 25 Q If you look at the Hummingbird Road log for August
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1685 Gaspar-direct/White
1 10th, that indicates that you were at a meeting to review 2 payroll records? 3 A No, I was not. 4 Q Again on the same page on August 25th, it indicates 5 you were reviewing employee perform
ance with Elizabeth 6 Sautter? 7 A No, I was not. 8 Q On September 7th, there is another meeting with 9 Elizabeth Sautter. Did you attend that? 10 A Absolutely not. 11 Q Okay. 12 If you can turn to the third page of the 13 Hummingbird Road log, and the entry for 9/16/94, indicates 14 that Mr. Gordon was a guest at the condominium, correct? 15 A Yes. 16 Q But there is no occasion listed there; is that right? 17 A That's correct. 18 Q And according to this log on their face, it indicates 19 that Mr. Gordon listed the -- used the condominium on 20 September 16th, 1994; is that correct? 21 A According to the log yes. 22 Q Now, Ms. Gaspar, if you can take a look at 23 Exhibit 572, an American Express statement covering that 24 time period. 25 Now, there is 11 pages to that bill. If you can
HARRY RAPAPORT, CSR, CP, CM O
FFICIAL COURT REPORTER 1686 Gaspar-direct/White
1 look at the tenth page. 2 (Whereupon, at this time there was a pause in the 3 proceedings.) 4 Q Now, do you see that? 5 A Yes. 6 Q Let me make sure that I am on the right page. 7 A 10 of 11? 8 Q Correct. 9 If you look at the American Express receipt that 10 the reproduced there in the lower right-hand corner -- 11 A Uh-huh. 12 Q Does it indicate there that Mr. Gordon charged a 13 ticket from New York to Los Angeles on American Airlines? 14 A That's correct. 15 Q Okay, if you can flip to the next page -- I am sorry, 16 I think my pages are out of order. 17 (Counsel approaches the witness stand.) 18 Q Now, does that indicates that Mr. Gordon stayed at 19 the Regent Beverly Wilshire Hotel, W I L S H I R E, in 20 Beverly Hills, California? 21 A It shows the a
rrival date is 9/15 and departure 9/16. 22 Q And that includes September 16th, when he was 23 supposed to be at the condominium? 24 A That's correct. 25 Q And if you look at the receipt above that, that's
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1687 Gaspar-direct/White
1 from an establishment called Nissani, N I S S A N I, Men's 2 Wear in Beverly Hills. Do you see that? 3 A Yes, sir. 4 Q And the charge is for $2,725? 5 A Yes. 6 Q And does that indicate what the date to the charge 7 was? 8 A 9/15. 9 Q September 15th? 10 A Yes, sir. 11 Q If you look at the receipt to the left of the hotel 12 receipt, it is another purchase from Nissani Men's Wear? 13 A Yes. 14 Q That's for 6,500? 15 A Yes. 16 Q And what is the date of that charge? 17 A 9/17. 18 Q So the two purchases
at Nissani's Men's Wear was 19 before and after the days that Mr. Gordon was supposed to 20 have used the condominium? 21 A That's correct. 22 Q Now, these logs go up to what date? 23 A Until the date I was told to produce them, September 24 20th, I guess. 25 Q Take a look at it.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1688 Gaspar-direct/White
1 A 22nd. 2 Q So September 16th would have been less than a week 3 prior to the logs being sent to Mr. Gordon's attorney; is 4 that right? 5 A Yes. 6 Q Aside from being an employee of Who's Who Worldwide, 7 did you have any ownership or financial interest in the 8 company? 9 A Absolutely not. 10 Q Aside from being an employee of the company, did you 11 have any legal or financial interest in the outcome of the 12 Who's Who Worldwide bankruptcy proceed
ing? 13 A Absolutely not. 14 Q Did you have any reason on your own to falsify these 15 logs? 16 A No, not at all, unless I was told to do them. 17 Q And were you told to do them? 18 A I was told to produce the logs. 19 MR. WHITE: No further questions, your Honor. 20 THE COURT: All right. 21 Do you want to start your cross-examination or do 22 you want to wait until tomorrow morning? 23 MR. TRABULUS: Your Honor, I think it makes sense 24 to break at this point. If your Honor wants me to -- 25 THE COURT: It is all right. It is up to you.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1689 Gaspar-direct/White
1 MR. TRABULUS: I would just as soon break and 2 come back tomorrow. 3 THE COURT: Let it not be said that I am not easy 4 going. Five minutes to 5:00 and we are breaking? 5 Anyway, members of the jury, we
are going to 6 recess until tomorrow morning at 9:30. You have been 7 extremely diligent in coming from wherever you come, from 8 all over this district, and you know our district is from 9 Staten Island to Montauk Point, and the jurors are here on 10 time. You are to be commended. 11 Please do not discuss the case with anyone else 12 or among yourselves. Keep an open mind. Come to no 13 conclusion until you are in that jury room deliberating. 14 We will recess until 9:30. 15 Have a nice evening. 16 (Whereupon, at this time the jury leaves the 17 courtroom.) 18 THE COURT: Ms. Gaspar, you will have to be back 19 before 9:30 tomorrow morning; you understand that? 20 THE WITNESS: Yes, sir. 21 THE COURT: You may step down, Ms. Gaspar. 22 (Whereupon, at this time the witness left the 23 witness stand.) 24 THE COURT: I am missing the exhibits low
er than 25 6. Do I have a book with those exhibits or not? I have
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1690 1 6and up. 2 MR. WHITE: I will look. I think it may be in 3 the witness room. When your Honor wanted it tabbed, we 4 may have done it in stages, and I believe I might still 5 have it. 6 THE COURT: I want to have it, if you have it. 7 If you do, leave it on the ledge here. 8 MR. WHITE: Yes. 9 MR. TRABULUS: Your Honor, I would like to know 10 what additional witnesses there will be tomorrow, assuming 11 we finish with Ms. Gaspar. 12 THE COURT: Who is on for tomorrow, Mr. White? 13 Are you going to be able to conclude the government's case 14 tomorrow? 15 MR. WHITE: No, I don't believe that's possible. 16 THE COURT: How about Thursday? 17 MR. WHITE: You are talking about the tax portion
18 of the case? 19 THE COURT: I am talking about the government's 20 case in toto. 21 MR. WHITE: No. That will not be this week. 22 THE COURT: That's a surprise. 23 MR. WHITE: Your Honor, we have a number of 24 witnesses I am still trying to juggle to figure out if 25 they can come in. In addition to --
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1691 1 THE COURT: Why don't you tell counsel what 2 witnesses you are juggling. 3 MR. WHITE: There is Mr. Kevorkian, Mr. Maltz, 4 M A L T Z, Mr. Reslan, R E S L A N, Dr. Kaufman, 5 Mr. Chase, Mr. Bernstein -- 6 THE COURT: Who is that? 7 MR. WHITE: Chase, C H A S E. 8 Mr. Bernstein, Mr. Hynes, H Y N E S. 9 THE COURT: That's not the district attorney of 10 Kings County? 11 MR. WHITE: I don't have that much clout, your 12 Honor. 13 THE COURT:
He is busy running for governor. He 14 doesn't have time to come here. 15 MR. WHITE: Each of them will be relatively 16 short. I have to see what we can get in tomorrow. And 17 Mr. Rosenblatt, the summary/expert witness on the tax 18 case. 19 THE COURT: Very well. 9:30 tomorrow morning. 20 MR. TRABULUS: The Mr. Rosenblatt going to 21 testify tomorrow? 22 MR. WHITE: Depending if I can get all these 23 people in. 24 (Case on trial adjourned until 9:30 o'clock a.m., 25 Wednesday, January 28, 1998.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1692 1 I-N-D-E-X 2 W-I-T-N-E-S-S-E-S 3 PAGE LINE 4 N E I L A C K E R M A N..................... 1462 15 CROSS-EXAMINATION (cont'd)....................... 1463 19 5 CROSS-EXAMINATION................................ 1512 1 CROSS-EXAMINATION................................ 1580 1
6 REDIRECT EXAMINATION............................. 1585 16 RECROSS-EXAMINATION.............................. 1616 10 7 RECROSS-EXAMINATION.............................. 1637 16 FURTHER REDIRECT EXAMINATION..................... 1640 18 8 FURTHER RECROSS-EXAMINATION...................... 1649 3 FURTHER REDIRECT EXAMINATION..................... 1653 8 9 M A R I A M. G A S P A R ............. 1654 20 10 DIRECT EXAMINATION............................... 1655 6 11 E-X-H-I-B-I-T-S 12 13 Government's Exhibit 772 received in evidence.... 1486 4 Government's Exhibit 759 received in evidence.... 1492 9 14 Government's Exhibit 779 received in evidence.... 1492 10 Government's Exhibit 757 received in evidence.... 1496 2 15 Government's Exhibit 717 received in evidence.... 1600 12 Government's Exhibit 720 received in evidence.... 1600 13 16 Government's Exhibit 702 received in evidence.... 1603 2 Government's Exhibit 709 received in
evidence.... 1603 3 17 Government's Exhibit 812 received in evidence.... 1647 17 Government's Exhibits 526 through 576 received 18 in evidence...................................... 1659 11 Government's Exhibit 643 received in evidence.... 1682 14 19 20 21 22 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
