1951 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 29, 1998 11 - - - - - - - - - - - - - - X 9:30 o'clock a.m. 12 13 BEFORE: 14 HONORABLE ARTHUR D. SPATT, U.S.D.J. 15 16 APPEARANCES: 17 For the Government: ZACHARY W. CARTER United States Attorney
18 One Pierrepont Plaza Brooklyn, New York 11201 19 By: RONALD G. WHITE CECI SCOTT 20 Assistant U.S. Attorneys 21 For the Defendants: NORMAN TRABULUS, ESQ. 22 For Bruce W. Gordon 170 Old Country Road, Suite 600 23 Mineola, New York 11501 24 EDWARD P. JENKS, ESQ. For Who's Who, Sterling 25 332 Willis Avenue Mineola, New York 11501
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1952 1 GARY SCHOER, ESQ. 2 For Tara Garboski 6800 Jericho Turnpike 3 Syosset, New York 11791 4 ALAN M. NELSON, ESQ. For Oral Frank Osman 5 3000 Marcus Avenue Lake Success, New York 11042 6 WINSTON LEE, ESQ. 7 For Laura Weitz 319 Broadway 8 New York, New York 10007 9 MARTIN GEDULDIG, ESQ. For Annette Haley 10 400 South Oyster Bay Road Hicksville, New York 11801 11 JAMES C. NEVILLE, ESQ. 12 For Scott Michaelson 225 Broadway 13 New York, New York 10007 14 THOMAS F.X. DUNN, For Steve Rubin 15 150 Nassau Street New York, New York 10038 16 JOHN S. WALLENSTEIN, ESQ. 17
For Martin Reffsin 215 Hilton Avenue 18 Hempstead, New York 11551 19 Court Reporter: Owen M. Wicker, RPR 20 United States District Court Two Uniondale Avenue 21 Uniondale, New York 11553 (516) 292-6963 22 23 Proceedings recorded by mechanical stenography, transcript produced by Computer-Assisted Transcript. 24 25
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1 (Case called.) 2 THE COURT: Good morning. 3 Where is the witness? 4 (Jury enters.) 5 THE COURT: Good morning, members of the jury. 6 Please be seated. 7 Again, I want to thank you very much for your 8 diligence and punctuality. I'm sorry I kept you waiting. 9 I had two other matters on this morning, which I'm still 10 discussing with the lawyers and that is the reason for the 11 delay. 12 You may proceed.
13 A N D R E W R O S E N B L A T T , having been 14 previously sworn by the Clerk of the Court, was examined 15 and testified as follows: 16 Mr. Rosenblatt, you are still under oath. Do you 17 understand that? 18 THE WITNESS: Yes, I do. 19 DIRECT EXAMINATION 20 BY MR. WHITE: (Continued.) 21 Q When we broke yesterday we were discussing the loan 22 account for Who's Who Worldwide for Mr. Gordon for the 23 year 1991. Do you recall that? 24 A Yes, I do. 25 Q And we were looking at Exhibit 655 which was the
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1 Who's Who general ledger for that period. Do you remember 2 that? 3 A I don't remember the exhibit number, but yes. 4 Q And that only went to July of 1991; is that correct? 5 A That's correct. 6 Q Now, let me show you Exhibit
1004-A. 7 Have you prepared an analysis of the taxable 8 income -- 9 MR. TRABULUS: Objection, Your Honor. 10 THE COURT: I didn't hear the question. 11 MR. TRABULUS: I'm sorry. 12 BY MR. WHITE: 13 Q Have you prepared an analysis of the taxable income 14 to Mr. Gordon for the years 1991 through 1994? 15 MR. TRABULUS: Objection, Your Honor. 16 THE COURT: On what grounds? 17 MR. TRABULUS: On the grounds it calls for 18 testimony relating to a legal conclusion, relating what 19 the income is and not taxable. 20 THE COURT: That's not necessarily a legal 21 conclusion. While it's true, this witness as an expert 22 cannot give legal conclusions most of the time. That's a 23 very interesting issue. Where you have ultimate 24 conclusions and legal conclusions are two different 25 things. But with respect to what is taxable from an IRS
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1 point of view, he certainly can testify as to that. 2 MR. TRABULUS: Your Honor, I would like to 3 approach with a further discussion because I believe in 4 this particular instance you should not. 5 THE COURT: All right. Come up. 6 MR. WHITE: Your Honor, maybe I can move things 7 along. I don't want to move the exhibit, I want the 8 witness to refer to it for the purposes of its 9 calculations, not whether or not it is taxable income but 10 the numbers as it relates to companies and years. 11 MR. TRABULUS: Well, the jury already heard the 12 answer or having heard the question, it will be clear to 13 them that any testimony that he gives with regard to those 14 numbers is going to be interpreted that way and I think 15 the issue I'm bringing up at this point will recur
16 throughout the testimony of this witness. I think we 17 ought to address it at this point. 18 THE COURT: Come up. 19 (Side bar.) 20 THE COURT: Yes. 21 MR. TRABULUS: Your Honor, with regard to the 22 Federal Rules of Evidence not changing the prior law that 23 a witness cannot give a legal conclusion, I would cite 24 U.S. v. Scop, 846 F.2d at 135. It was a subsequent 25 opinion but it didn't change the reasoning of that.
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1 THE COURT: What does that say? 2 MR. TRABULUS: Basically the old rule that an 3 expert cannot give a legal conclusion still applies. 4 THE COURT: Is that a tax case? 5 MR. TRABULUS: That one was a securities and mail 6 fraud case. 7 THE COURT: Well, that was apparently prior to 8 1994. Certainly -- 9 MR.
TRABULUS: It was '88. 10 THE COURT: There were a couple of changes since 11 then that have refined that. 12 MR. TRABULUS: I know that. Let me get to the 13 particular reason that Scop would govern. 14 Based upon the government's disclosure as to the 15 basis of the expert's opinion, he testified that the basis 16 for the inclusion of the loans as income was based on the 17 lack of good faith intent to repay, among other things. 18 Now, the lack of good faith intent to repay, as I 19 understand the case law, is indeed the sine qua non 20 whether or not a loan is a loan or is to be treated as 21 income. But intent and good faith are issues of mental 22 state and Rule 704(b) would preclude testimony concerning 23 that. So what he has done is couched in terms of 24 testimony as to whether income is taxable or not an 25 opinion as to whether or not there was good faith intent
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1 to repay a loan at the time it was made. 2 I would submit it was not admissible under Scop 3 and under 704(b). 4 MR. WALLENSTEIN: I would join in Mr. Trabulus' 5 application. 6 THE COURT: Yes, Mr. White. 7 MR. WHITE: Your Honor, Rule 704(b) prohibits an 8 expert offering testimony on the defendant's mental state 9 to commit the offense that he's charged with. That's 10 quite different than what Mr. Rosenblatt will testify 11 about. If that were the test that you can't say anything 12 at all about intent, then -- I'm sorry, if the test where 13 you could never talk about the law, legal conclusions no 14 expert could testify. Every determination of taxable 15 income involves applying the tax code and the regulations 16 to the facts and number at
issue. Scop, that case is 17 entirely different. That was a securities fraud case 18 whether the government put on an expert who said that 19 these acts that the defendants on trial did, in his 20 opinion, constituted a scheme to commit securities fraud. 21 That is entirely different than this. 22 THE COURT: What is this expert going to say? He 23 will say that assuming these matters are not loans, they 24 would be taxable income? 25 MR. WHITE: Correct. And the test --
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1 THE COURT: What's wrong with that? He's not 2 saying -- he's not getting into the intent of the 3 defendant. He's saying that assuming that they were not 4 loans they would be taxable income and isn't that what you 5 are saying? 6 MR. WHITE: Well, yes and no, Your Honor. The 7 tests as I understand it under the tax code and 8 regulations in terms of deciding whether something is 9 income or loans, involves whether there was the intent to 10 repay the loans at the time they were taken out. 11 Therefore -- and there's a series of factors in the cases 12 about specific concrete factors that Agent Rosenblatt will 13 apply to determine whether or not these were in fact loans 14 or whether they should be considered income. That is 15 entirely different then the mental state required for 16 conviction. He will not testify that Mr. Gordon willfully 17 conspire with Mr. Reffsin, he will not testify that he 18 submitted false tax returns, his determination is not at 19 all inconsistent with an acquittal. He could say look 20 under IRS regulations and cases this is income, but they 21 could still say, which they apparently will say, 22 Mr. Gordon didn't know that, it was an honest mistake, a 23 lack of evil intent. 24 THE COURT: Wait a minute. What will he say? 25 Tell me.
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1 MR. WHITE: He's going to say -- well, there's 2 two parts to it. With respect to the loans, he will say 3 his opinion is that they were not bonafide loans and they 4 therefore should be considered income. 5 THE COURT: And give the factors for that. 6 MR. WHITE: And among those reasons are the 7 failure -- the lack of any notes or written documentation, 8 the failure to repay any significant portion of the debt 9 and a series of other factors. Those are the factors that 10 are identified in the cases. 11 MR. TRABULUS: May I be heard further? 12 THE COURT: Yes. 13 MR. TRABULUS: The testimony supposedly will be 14 -- this is a disclosure I was given. With the Court's 15 permission I would like to read from the letter that 16 Mr. White wrote to me in connection with discovery here 17 "as set forth in the government's October 28, 1997 letter 18 to Mr. Carman," who of course was my predecessor, 19 "Mr. Rosenblatt's opinion is based on the lack of any 20 pattern of legitimate repayments of these loans. 21 "Most or all of such payments were not bonafide 22 in that the funds used to make such repayments were simply 23 obtained from the same corporations as to whom repayment 24 was made." 25 Now, bonafide is simply Latin for good faith and
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1 there is a good faith defense in this case and under the 2 case law good faith is a complete defense. And that 3 relates to the mental state of the defendant and he's 4 attempting to negate it through the testimony of an expert 5 and I believe that is in violation of 404(b). 6 However, he dresses up the testimony concerning 7 it was taxable or not, it negates the good faith as 8 opposed to income. We are not talking about the situation 9 where the witness will testify as to monies that were not 10 reported but simply the characterization of them. As to 11 good faith, I think 704(b) includes it. 12 MR. WHITE: There's not been a tax case invented, 13 yet when an agent testifies yes, this constitutes 14 income -- 15 THE COURT: Well, one of the most interesting 16 cases on expert testimony is United States v. Duncan, 42 17 F.3d 97, (2d Cir. 1994). It was an excellent discussion 18 of expert testimony. It happened to be not a tax case, it 19 was a conspiracy bank fraud and making corrupt payments to 20 public officials. But in this it goes -- the basic rules 21 of expert testimony in a criminal case "expert testimony 22 may be admissible if it is helpful to the trier of fact. 23 That's the starting point. Expert witnesses are often 24 uniquely qualified in guiding the trier of fact through a 25 complicated morass of obscure terms and concepts, because
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1 of their specialized knowledge there testimony can be 2 extremely valuable and probative." 3 Couldn't be more applicable to this case. 4 "However, expert testimony is not permitted to 5 usurp either the role of the trial judge in instructing 6 the jury as to the applicable law or the role of the jury 7 in applying that law to the facts before it. When an 8 expert undertakes to tell the jury what result to reach, 9 that does not aid the jury in making the decision but 10 rather attempts to substitute the expert's judgment for
11 the jury. 12 When this occurs, the expert acts outside of his 13 limited role of providing the groundwork in the form of an 14 opinion to enable the jury to make its own informed 15 determination. In evaluating the admissibility of expert 16 testimony the Court requires the exclusion of testimony 17 which states a legal conclusion." 18 Then they go into certain things involving tax 19 cases. 20 "Appellant takes exception to a number of 21 questions which the government was permitted to ask the 22 agent concerning the proper function of the tax system and 23 the importance of filing tax returns accurately. These 24 questions, however, did not ask the witness to express 25 legal conclusions but --" this is key to this case "but
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1 only to explain sophisticated aspects of a regulatory 2 system for which the witness had expertise." 3 Now, I'm departing from the text, that's exactly 4 what this will do. We've generally permitted the 5 elicitation of testimony from expert witnesses that shed 6 light not within the activity of the common knowledge of 7 the average juror. 8 In this particular case there was a defense that 9 since taxes were paid on the property, the government did 10 not lose anything by inaccurate tax filings and the Court 11 of Appeals held it was proper for the tax expert to 12 explain why this is not good, even though the taxes were 13 paid. 14 MR. WALLENSTEIN: That's not this case. 15 THE COURT: I know it's not this case, but it 16 provides guidance for the Court, a lot of guidance. 17 Agent Mulligan testified based on his own 18 investigation of the facts and review of the records. The 19 testimony he presented did not rely on the credibility of 20 other witnesses. 21 MR. WALLENSTEIN: Your Honor, doesn't an 22 explanation of the legal explanations of the tax code 23 differ from an expert witness attempting to assert the 24 defendant's intent? 25 MR. TRABULUS: And here the legal conclusion is
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1 premised upon a finding of lack of good faith which is the 2 heart of the jury's province. 3 THE COURT: No, in this case one of the issues 4 for the jury will be whether these were bonafide loans or 5 whether these were paid for personal expenses which should 6 have been reported as income. That's one of the issues, 7 correct? 8 MR. TRABULUS: No. 9
THE COURT: It's not? 10 MR. TRABULUS: No, there's no dispute most of 11 them were paid for personal expenses. 12 You can have a loan made for personal expense, 13 the issue is whether they were bonafide loans and the 14 issue as to whether the loans were truly loans which is 15 also separate from the issue of defendant's good faith. 16 The issue whether they were truly loans and properly 17 characterized as loans depends upon whether at the time 18 the loans were disbursed there was good faith intent to 19 repay the loans. That's the case law. That seems to be 20 what the case law uniformly says. There were many civil 21 cases, tax court cases that addressed the factors. I know 22 of no criminal case that ever addressed this. 23 THE COURT: First of all, I agree with you, good 24 faith is a good defense in all of these tax cases and I 25 will charge the jury the government has a burden of proof
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1 beyond a reasonable doubt for lack of good faith, in the 2 Cheek case. And as far as explaining to the jury these 3 concepts, I'll explain to the jury -- now you will explain 4 -- well, I'm going to play it by ear as it goes along, 5 but you understand that this witness can't give a legal 6 conclusion. 7 What will he say -- what's the end result going 8 to be? 9 MR. WHITE: Let me tell you what I was leading up 10 to. Right at this moment that chart he prepared is just 11 the simplest way he has of the figures he calculated. In 12 other words, when he left off we were going through the 13 loan account each year for each company. 14 THE COURT: And he's summarizing it. 15 MR. WHITE: It's an hour or two hours by the time 16
we get to the expert part of his testimony. I just want 17 to get a year-end figure with the chart. 18 THE COURT: The compilation figures, of course 19 you can do that, but what about the expert testimony? 20 MR. WHITE: What he's going to say, Your Honor, 21 since we seem to be focusing -- there's a snub of issues 22 he will say based on the cases to warrant the conclusion 23 there should be income and not loans. One is that 24 Mr. Gordon was asked on other IRS forms contemporaneously 25 whether he had any loans, these loans were not listed.
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1 Number two, there's no documentation, no written 2 notes, no repayment schedule, no set interest rates for 3 repayments. 4 THE COURT: He will bring out there are certain 5 factors that the IRS within the regulations used to
6 determine whether there were loans, correct? 7 MR. WHITE: Yes, except I believe they are not in 8 the regulations, they are in the case law. 9 THE COURT: Well, all right, then that's a 10 problem. 11 MR. TRABULUS: Case law. Civil cases. 12 THE COURT: Well, he can bring out, in my 13 opinion, that as an IRS act what the custom and usage is 14 in determining whether something is a loan, without him 15 saying whether he thinks it's a loan or not. He can bring 16 out the factors that are determined that the IRS uses to 17 determine this, period. I will let him do that. 18 MR. WALLENSTEIN: There's one other thing -- 19 THE COURT: I will not let him give the 20 conclusion that it's a loan or not a loan. 21 MR. WHITE: He can't render his opinion then? 22 THE COURT: That's correct. 23 MR. WHITE: But he's an expert. I thought the 24 reason we had him here was to render his opinion. 25 THE COURT: He's usurping the function of the
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1 jury by rendering an opinion. That's the end of the case 2 in that event. 3 MR. WHITE: I don't think it is. There's sort of 4 a two step process. One is is it a loan or income to 5 begin with? Even if it is in his opinion income, that 6 doesn't mean that Mr. Gordon willfully left it off. 7 Mr. -- His defense apparently is he didn't think he had 8 to put it on. That is not usurping the jury's function. 9 THE COURT: What is the end result? What will he 10 say? 11 MR. WHITE: He will say the following things 12 should be considered taxable income. All the items that 13 are in the so-called loan account because the loan 14 accounts should be income, right, and his conclusion for
15 that is as I said based on the factors. There's no 16 repayment schedule, it wasn't disclosed on other forms. 17 The alleged repayments -- 18 THE COURT: He will say it is taxable. 19 MR. WHITE: Yes. 20 THE COURT: In his opinion. 21 MR. WHITE: Yes. 22 MR. TRABULUS: That conclusion is predicated upon 23 case law. The case law all originated in tax court. All 24 of it originated in cases in which the taxpayer bore the 25 burden of proof of determining that the commissioner's
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1 assessment was incorrect. 2 THE COURT: Well, at this point I will not let 3 him give his opinion. I will let him give the facts that 4 the IRS takes into consideration in determining whether or 5 not it is taxable income and go through those factors but 6 not his ultimate opinion. 7 MR. WHITE: That's down the line. Right now can 8 he simply refer to the numbers on the chart to tell us the 9 ending balance for each account. 10 THE COURT: Sure. 11 MR. WALLENSTEIN: Judge Spatt, there is one 12 number on that chart, and I don't have it in front of me. 13 MR. TRABULUS: I have it. 14 MR. WALLENSTEIN: But there are numbers on here 15 particularly for the year 1993 which show where he's 16 saying that payments to purchase lease, improve, furnish 17 and maintain the condo and penthouse were in fact income. 18 But he has a number here of $942,000 and some other for 19 the purchase of the Manhasset condo which I presume 20 Mr. Rosenblatt will say was income to Mr. Gordon because 21 they were corporate funds. 22 But the fact is that that condo was purchased and 23 improved and maintained with corporate funds and is still 24 titled
in the corporation, still owned by the corporation 25 and is still an asset of the corporation as we speak.
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1 THE COURT: All he's doing is listing what he 2 says is -- could be a loan. 3 MR. WALLENSTEIN: Those numbers were not in the 4 loan account. 5 MR. WHITE: Your Honor, one in the loan account 6 is really income. The second is other monies expended for 7 the corporation were the two residences, the penthouse and 8 condominium also should constitute income to Mr. Gordon. 9 Anything an employer provides you, a benefit like that 10 should be income. So those figures are all the figures 11 for the monies expended for those years on those items. 12 MR. WALLENSTEIN: If that is the case and if 13 Mr. White is correct that anything the employer provides 14 you is income to you, the only part of this 900 some-odd 15 thousand that should be income to Mr. Gordon is the 16 present value of the unit because is it an asset of the 17 corporation purchased with the corporate funds. If he 18 used it then the fair rental value might be income. 19 MR. WHITE: That's cross-examination of the 20 expert. He has a reason for his calculations. And you 21 have a reason for yours. 22 MR. TRABULUS: Your Honor, I join in what 23 Mr. Wallenstein says but if Your Honor will permit 24 testimony from there I would like some kind of limiting 25 instruction they should disregard anything they've heard
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1 before. 2 THE COURT: I haven't seen this document. 3 MR. TRABULUS: I'm sorry, there was testimony 4 that this was taxable. 5 THE COURT: What is that? 6 MR. TRABULUS: 1404-A. 7 MR. WHITE: It is just the simplest way he can 8 refer to the numbers. 9 MR. TRABULUS: Your Honor, the lead into these 10 numbers, have you prepared a chart showing additional 11 taxation? 12 THE COURT: No, I will not let that in. If you 13 want to prepare a chart with the figures about what you 14 say is ultimately what you will say to the jury is no 15 taxable income, I will not let that in in that fashion 16 because that is a fait accompli. 17 MR. TRABULUS: May I make a suggestion and that 18 is you take that exhibit back, make him cross out the 19 words "additional tax income," re-number it, give it to 20 the witness and let him help them so the jury sees it is 21 an additional income. 22 MR. WHITE: Why don't you hand him another copy 23 of this and ask him to look on it and we don't have to 24
make any reference to it, they will think it is a
25 completely new document.
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1 MR. TRABULUS: As long as it is a new number. 2 THE COURT: Will you be offering it in evidence? 3 MR. WHITE: No. 4 MR. TRABULUS: They already heard what it is. 5 THE COURT: I don't know if they heard what it 6 is. 7 MR. TRABULUS: I think they did. 8 MR. WALLENSTEIN: White it out and call it 9 1404-B. 10 MR. WHITE: I can submit it to him under another 11 form if that's what you want. 12 THE COURT: Hand it to him under another form. 13 MR. TRABULUS: Thank you, Your Honor. 14 (End side bar.) 15 THE COURT: Are you withdrawing that document? 16 MR. WHITE: Yes, Your Honor. 17 BY MR. WHITE: 18 Q Okay, Mr. Rosenblatt, let me give you Exhibit 1404-C
19 which you can keep there for your reference. 20 Now, when we left off you told us that the 21 general ledger for Who's Who Worldwide for 1991 ended in 22 the month of July; is that right? 23 A Yes. 24 Q From the other books and records of the company for 25 that year, were you able to calculate a total amount of
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1 expenses that were charged to that loan account for 1991? 2 A Yes. 3 Q Can you tell us what that was? 4 A $145,499. 5 Q Now, if you could take a look at 658-B, what is that? 6 A The general ledger as of December 31, 1992 for Who's 7 Who Worldwide Registry, Inc. 8 THE COURT: Just one minute now. 9 This is the general ledger of Who's Who Worldwide 10 for what? 11 MR. WHITE: For 1992. 12 THE COURT: All right. You may proceed. 13 MR. WHITE: Your Honor, I have copies of the 14 relevant pages to hand to the jury. 15 THE COURT: It's in evidence, correct? 16 MR. WHITE: Yes. 17 THE COURT: Yes. 18 BY MR. WHITE: 19 Q Now, Mr. Rosenblatt, can you first tell us what 20 page -- 21 THE COURT: Well, let's just wait for a couple of 22 minutes and let them get these things in their books, if 23 they want to do it. 24 Okay, you can proceed. 25 MR. WHITE: Thank you.
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1 BY MR. WHITE: 2 Q Mr. Rosenblatt, can you tell us what page the loan 3 account is on that document? 4 A It starts on page 3 near the bottom. It is shown as 5 account number 1200. It should be all the way on the left 6 toward the bottom of the page. 7 Q And it's entitled "loans and
exchanges, BG." 8 A That's correct. 9 Q Have you done an analysis of the total expenses 10 charged to Mr. Gordon's loan account for that year? 11 A Yes, I have. 12 Q Can you tell us what that total is? 13 A The net increase in the account is $237,078. 14 Q Can you tell us what appeared in the credit column 15 for that year? 16 A On page 4 there is a couple of reclassification 17 entries. 18 Q And again tell us what a reclassification is? 19 A Where they took it out of the loan account and 20 charged it to something else, a different category of 21 expense, possibly. 22 Q Aside from reclassification, are there any other 23 credits to the loan account for this year? 24 A Yes. On August 31st, $1,992, there appears to be a 25 100 credit, cash received. It appears to be a health
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1973 Rosenblatt-direct/White
1 insurance reimbursement, I imagine. That is on page 5, 2 about a third of the way down. 3 Q The date is August 31, 1992? 4 A Yes. 5 Q Aside from reclassifications, are there any other 6 credits for that year? 7 A On page 6, November 30, 1992, there's another 8 insurance refund of 1,037.25, about a third of the way 9 down, page 6, under the credit column. On December 31, 10 1992, on the same page 6, there's a reduction of 11 313,086.20. And right below that also on December 31st 12 there appears to be another medical reimbursement of $148. 13 Q Now, let's focus for a moment on that $313,000 14 credit. Have you done an analysis of what constituted 15 that $313,000 credit? 16 A Yes. 17 Q Could you tell us what made up that credit? 18 A These were the two checks issued to Dr. Richard 19 Grossman for,
I believe, $156,500 and something, totaled 20 $313,086.20. 21 Q Can you explain how that transaction worked? 22 A Well, basically the loan account of Bruce Gordon is 23 being reduced by this amount that was paid to Dr. Grossman 24 and as I recall Dr. Grossman's testimony he indicate that 25 he loaned the money back to Who's Who to publish, I
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1 believe it was a new book or the magazine. I don't 2 exactly recall. 3 Q And when does that reflect that that entry was made? 4 A December 31, 1992. 5 Q And the total amount is $313,000? 6 A Right, yes. 7 Q Approximately. 8 Let me show you Exhibit 597 and 598-A which are 9 in evidence. Those are the checks from Dr. Grossman back 10 to Who's Who Worldwide, right? 11 A Yes, that's correct. 12 Q
And approximately how much do those add up to? 13 A 235,911.20. 14 Q When were those checks sent back to Who's Who 15 Worldwide? 16 A One check dated January 5th of 1993 for $200,000, 17 that's check number 3195. And there's a second check 18 dated January 25th of 1993, number 723, for $35,911.20. 19 Q So based on the documents and the testimony in the 20 checks, can you explain the transfers of money out to the 21 Grossmans and back to Who's Who and how that was treated 22 on the books? 23 A On the books of Who's Who? 24 Q Yes. 25 A $400,000 salary was paid to Dr. Grossman. Two checks
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1 are issued which was net of taxes of, I believe, federal 2 income taxes were withheld on it. They totaled $313,086. 3 Dr. Grossman, I believe, testified that he had
to 4 -- he was asked by Mr. Gordon to return the money to 5 assist in the publication of the Who's Who book and Mr. -- 6 and Dr. Grossman prior to sending the money back had his 7 accountant figure out how much additional taxes were owed 8 on the money. And it turned out that he just returned the 9 239 -- $235,000 back to Who's Who. 10 Q And the 313 that was credited to the loan account, 11 was that done before or after Dr. Grossman sent back the 12 $235? 13 MR. TRABULUS: Objection to form, Your Honor. 14 THE COURT: Overruled. 15 A According to the general ledger it was credited to 16 Mr. Gordon's loan account, December 31, 1992 which would 17 be prior to the checks coming back. 18 Q Now, look at Exhibit 660. 19 What is 660? 20 A It's the general ledger for Who's Who Worldwide 21 Registry, Inc., as of December 31, 1993. 22 Q And can you tell
us what page Mr. Gordon's loan 23 account is on? 24 A It starts at the very bottom of page 3. It's 25 indicated as account number 1200, all the way on the
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1 left-most column. 2 MR. WHITE: Okay. Your Honor, I'll hand out the 3 relevant pages to the jury. 4 THE COURT: Yes. 5 You say it starts at page 3? 6 THE WITNESS: Very bottom, about the fifth line 7 up from the bottom. 8 BY MR. WHITE: 9 Q So on page 3 where it says "loans and exchanges, BG," 10 is that where it begins? 11 A Yes. 12 Q Now, have you calculated what the total amount of 13 expenses charged to Mr. Gordon's personal loan account for 14 1993 was? 15 A Yes, I have. 16 Q Can you tell us what that is? 17 A $132,865. 18 Q Now, if you could look at
the last entry for the loan 19 account dated December 31, 1993. Do you see that? 20 A Yes, I do. 21 Q Could you tell us -- and that's a credit; is that 22 correct? 23 A That's correct. 24 Q Tell us what that is? 25 A There's a credit amount of $22,920.69 which the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1977 Rosenblatt-direct/White
1 description of the entry is "partial payment of loan for 2 M. Reffsin, from PR BG." 3 Q Now, can you tell us what that refers to? 4 A That would indicate an amount being taken out of the 5 loan account being charged to his payroll to his salary. 6 Q So in other words, money that went to Mr. Gordon and 7 rather than calling it a loan, they are calling it a 8 salary? 9 A That's correct. 10 THE COURT: Hold it a minute, please. 11 Excuse me a minute. Come up, Counsel.
12 (An unrelated matter was taken by the Court.) 13 THE COURT: You may proceed, Mr. White. 14 BY MR. WHITE: 15 Q Now, Mr. Rosenblatt, if you could turn to page 27 of 16 that which is not in the jurors' handout -- 17 A Yes. 18 Q -- And if you look under account 7210, it's entitled 19 "payroll officer." Do you see that? 20 A Yes, I do. 21 Q If you look at the last entry for December 31, 1993, 22 can you tell us what that is? 23 A A deduction is taken for -- the account of the 24 payroll to officer account is increased by 41,430.30. 25 Q And in layman's terms, what does that mean?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1978 Rosenblatt-direct/White
1 A Salary to the officer. 2 Q And that increase is on what date? 3 A December 31, 1993. 4 Q Let me show you Exhibit 796-A through H. 5 Now, what are those? 6 A (Perusing.) 796-A is the cash disbursements journal 7 for Who's Who Worldwide Registry for the month of January 8 of 1994. 9 796-B is the cash disbursement journal for Who's 10 Who Worldwide Registry for the month of February of 1994. 11 Q Without going through all of them, if you could page 12 through them all and tell us what period it covers. 13 A (Perusing.) It starts on January 1, 1994 on Exhibit 14 796-A and goes through August 31, 1994 on 796-H. 15 Q Do the books on Who's Who Worldwide reflect the loan 16 accounts for Mr. Gordon in 1994? 17 A Yes. 18 Q Have you made -- are the credits and debits to the 19 loan account all located in one document for that year for 20 that company? 21 A No, they are not. 22 Q Have you prepared or reviewed a summary of all the 23 various accounting entries related to that loan account 24 for that
year? 25 A Yes, I have.
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1 Q Let me show you Government's Exhibit 1500 for 2 Identification. 3 What is that? 4 A This is a summary of the loan account at Who's Who 5 Worldwide for Bruce Gordon for the 1994 year. 6 MR. WHITE: Your Honor, the government offers 7 Exhibit 1500. 8 THE COURT: Any objection? 9 MR. TRABULUS: Bear with me for a moment. This 10 was just given to me this morning, Your Honor, and I would 11 just like to check through this one. 12 THE COURT: Very well. 13 MR. TRABULUS: No, I have no objection. 14 THE COURT: Government's Exhibit 1500 in 15 evidence. 16 (Government's Exhibit 1500 received in evidence.) 17 MR. WHITE: Your Honor, I don't mean to delay 18 things but there is an issue we need to discuss briefly at 19 the side bar, just a follow-up to what we discussed 20 previously. 21 THE COURT: Very well. Come up. 22 (Side bar.) 23 MR. WHITE: Your Honor, the issue is 1500 is 24 first in a packet of charts and summaries that we have and 25 in light of our discussion before some of them contain the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1980 Rosenblatt-direct/White
1 language "taxable income," so I just wanted some guidance 2 how you want me to handle it. 3 THE COURT: Well, take them off. Remove it, 4 delete it. 5 MR. WHITE: I'll have to cross them out. 6 THE COURT: Cross them out, make sure they are 7 not legible. 8 MR. WALLENSTEIN: Are these published to the 9 jury? 10 THE COURT: Not yet. 11 MR. WHITE: Okay. I will have to sit down and 12 cross them out. 13 THE COURT: Have somebody else do it. You have 14 all of these people there. 15 MR. WHITE: Okay. 16 (End side bar.) 17 MR. WHITE: Okay. 18 Your Honor, may I hand out Exhibit 1500 to the 19 jury? 20 THE COURT: Yes. 21 BY MR. WHITE: 22 Q Now, can you tell us what sort of items were charged 23 to Mr. Gordon's loan account for 1992 Who's Who Worldwide 24 for 1984? 25 A Some insurance policies, American Express bills, car
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1981 Rosenblatt-direct/White
1 payments for 1994. 2 Q Now, have you calculated the total amount of expenses 3 charged to this account for 1994? 4 A Yes. 5 Q Can you tell us what that is? 6 A $141,025. 7 Q Can you tell us what is the last date on which 8 something is charged to the loan account for Worldwide in 9 this year? 10 A 6/30/94. Actually that is a journal entry. Do you 11 mean the last item specifically that was paid? 12 Q Yes. 13 A March 31, 1994. 14 Q Now, for this year 1994, were there any repayments of 15 the loan showed on the books? 16 A Yes. 17 Q When was that? 18 A On April 30th of 1994 there is a repayment of 19 $20,000. 20 Q Now, at the time that the $20,000 was repaid, can you 21 tell us approximately how much was owed? 22 A The balance of the account appears to have been in 23 the area of $300,000. 24 Q Now, let me show you Exhibit 772 -- 25 THE COURT: Let me ask you this, Mr. Rosenblatt,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1982 Rosenblatt-direct/White
1 these amounts that were in the Bruce Gordon loan account 2 for the various years, are they cumulative? 3 THE WITNESS: Yes. 4 THE COURT: So if in 1992
it is 237,000 and in 5 1993 it is 132,000, the loan would be 132,000? 6 THE WITNESS: No, in 1992, I added back the 7 313,000 loan account because that was not a repayment by 8 Mr. Gordon. 9 THE COURT: However, leaving the credits or 10 repayments out of this discussion, in these books is it 11 cumulative? 12 THE WITNESS: Yes. 13 THE COURT: I mean, it is not $100,000, for 14 example, in 1992 and another $100,000 in 1993, that would 15 be 200,000. 16 THE WITNESS: You don't start from zero each 17 year, it's a running balance. 18 THE COURT: All right. Okay. 19 BY MR. WHITE: 20 Q Well, just to clarify that point. Can you tell us 21 year-by-year what the expenses were charged in that year, 22 starting in 1991 through 1994. 23 A In 1991 it was $145,499. In 1992, $237,078. 24 Q Let me stop you there. 25 So to get the cumulative figure would you add the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
1983 Rosenblatt-direct/White
1 '92 figure to the '91 figure? 2 A That's correct. 3 THE COURT: Well, I don't understand that. 4 In 1991, the loans were 145,000, I'm rounding 5 them off. 6 THE WITNESS: Right. 7 MR. WALLENSTEIN: I'm sorry, Your Honor, I can't 8 hear you. 9 THE COURT: In 1991 the loans were $145,000, 10 approximately; is that correct? 11 THE WITNESS: That's correct. 12 THE COURT: In 1992 the loans were 237,000 13 approximately, correct? 14 THE WITNESS: Yes. 15 THE COURT: Is that 145,000 plus another $237,00? 16 THE WITNESS: The balance at the end would be the 17 total of the two. 18 THE COURT: I don't understand. 19 THE WITNESS: They would be added together, yes. 20 At the end of '92 the loans were a total of 145,000 and 21 $237,000. 22 THE COURT: So that each year's loans are 23 separate and independent, additional monies? 24 THE WITNESS: Additional monies that came out in 25 that year through Bruce Gordon.
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1 THE COURT: So it would be $145,000 loaned in 2 1991, and another $237,000 loan in 1992? 3 THE WITNESS: Correct. 4 THE COURT: And another 232,000 loan in 1993, and 5 another 141,000 loaned in 1994? 6 THE WITNESS: That's correct. 7 MR. WHITE: Thank you, Your Honor. 8 BY MR. WHITE: 9 Q Now, we were discussing the April 30, 1994 10 repayment. Let me show you Exhibit 772. 11 What is that? 12 A That's a check from Bruce Gordon date April 27, 1994 13 to Who's Who Worldwide Registry, Inc. for $20,000, and it 14 is drawn on his account at Sterling National Bank. 15 Q Now, let me show you the following Government's 16 Exhibit, 716, 720, 768 and 715, which are bank records. 17 Now, have you analyzed from where the money for 18 that loan repayment came from? 19 A Yes, I have. 20 Q And can you tell us where it came from? 21 A The check was drawn on the Registry Publishing 22 account at Sterling National Bank on April 25th -- I'm 23 sorry, April 22nd is the date of the check of 1994 in the 24 amount of $25,000 to Bruce Gordon. 25 Q So $25,000 from Registry Publishing to Mr. Gordon?
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1 A That's correct. 2 Q What happens after that? 3 A That $25,000 check was deposited into Bruce Gordon's 4 account at Sterling National Bank, account number 5 0357971607. 6 Q And what happened to it after that? 7 A After that Mr. Gordon drew the check for $20,000 to 8 repay Who's Who Worldwide. 9 MR. WHITE: Your Honor, we are just trying to fix 10 the problem that we mentioned before. 11 THE COURT: Very well. 12 BY MR. WHITE: 13 Q Now, besides Who's Who Worldwide, did any other 14 corporations pay expenses of Mr. Gordon's? 15 A Yes, they did. 16 Q When did this begin? 17 A It began in 1994. 18 Q Now, did Mr. Gordon -- have you reviewed the books 19 and records of Sterling Who's Who? 20 A Yes. 21 Q Did Mr. Gordon have a loan account at Sterling Who's 22 Who for 1994? 23 A Yes, he did. 24 Q Now, again, are all the accounting entries for that 25 loan account contained in just one document?
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1 A No, they were not. 2 Q Have you prepared an analysis of all the accounting 3 entries related to the loan account for Sterling for 1994? 4 A Yes. 5 Q Let me show you Government's Exhibit 1501, and what 6 is that? 7 A This is an analysis of the loan account to Bruce 8 Gordon and Sterling Who's Who for the period January 1, 9 1994 through November 30, 1994. 10 MR. WHITE: Your Honor, if I can just speak to 11 counsel for a minute. 12 THE COURT: Yes. 13 (Counsel confer.) 14 MR. WHITE: Your Honor, the government would 15 offer Exhibit 1501. 16 THE COURT: Any objection? 17 MR. WALLENSTEIN: No, Your Honor. 18 MR. TRABULUS: No, Your Honor. 19 THE COURT: Government's Exhibit 1501 in 20 evidence. 21 (Government's Exhibit 1501 received in evidence.) 22 MR. WHITE: Your Honor, I would like to hand out 23 not just 1501 but the series of charts that are to come 24 for the jury to look at. At this point we'll just look at 25 1501.
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1 THE COURT: These are not in evidence? 2 MR. WHITE: Not yet. 3 THE COURT: Well, how can you give them to the 4 jury unless there is a consent by counsel. 5 MR. WHITE: Do you want me to do it one by one? 6 THE COURT: Yes. Unless counsel consent to save 7 time. 8 Mr. White, do you want to speak to Mr. Trabulus 9 and Mr. Wallenstein? 10 (Counsel confer.) 11 MR. TRABULUS: Your Honor, if we can just have a 12 couple minutes, we might be able to expedite this. 13 THE COURT: Why don't we take a recess. How long 14 will it take? 15 MR. TRABULUS: Two minutes, maybe less. 16 THE COURT: We'll go with two minutes. I want to 17 tell you that I think the jury is very patient and you've 18 been following the testimony with close attention, even 19 though it is not easy and it is not very -- and sometimes 20 it is complex and involves terms you are not used to 21 dealing with, nor am I. But I've noticed that all of you 22 are listening extremely carefully and I'm very 23 appreciative of that because that's your role. That's 24 what you have to do even if all of it isn't as exciting 25 you see in the movies or on television, especially what's
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1988 Rosenblatt-direct/White
1 going on today -- that's another matter altogether I mean. 2 MR. TRABULUS: No objection. 3 MR. WALLENSTEIN: I have no objection, Your 4 Honor. 5 THE COURT: Thank you very much. You may give 6 out all the exhibits to the jury. 7 All right, it looks like you can proceed. 8 BY MR. WHITE: 9 Q Now, is 1501 the summary of your Sterling loan 10 account for 1994; is that right? 11 A Yes, it is. 12 Q Tell us first the total amount of expenses charged to 13 the loan accounts for that company for 1994? 14 A In round numbers, $106,846. 15 Q And can you tell us what month of 1994 those expenses 16 were first charged? What's the earliest one? 17 A The earliest item is March 12, 1994. 18 Q And can you tell us just in brief summary what sort 19 of expenses were paid out of that loan account? 20 A A lot of American Express, NY Star Leasing and 21 payments to Bruce Gordon. 22 Q Now, if you could look at the entry for November 29, 23 1994, a check to American Express. 24 Do you see that? 25 A Yes, I do.
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1 Q If you look at the description there, can you tell us 2 how that check was treated in the books of the 3 corporation? 4 A The actual check amount was $11,670.83. Of that 5 amount $10,207.78 were charged to Bruce Gordon's loan 6 account. 364.33 was charged to entertainment expense, and 7 $1,098.45 were charged to travel expense. 8 Q And in layman's terms, what does that mean? 9 A In effect the American Express bill was part business 10 and part personal. 11 Q And the personal part was put in what account? 12 A The personal part was put in Bruce Gordon's loan 13 account. The expenses were put in their appropriate 14 categories. 15 Q Have you reviewed the books of a company called Who's 16 Who Executive Club? 17 A Yes. 18 Q Did Mr. Gordon have a loan account with that company 19 for 1994? 20 A I believe all I remember seeing from Who's Who 21 Executive Club were bank records and there were notations 22 on the check register and/or the checks of moneys that 23 were considered loans. 24 Q Let me show you Exhibit 1502. 25 Is that a summary of the expenses paid to the
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1 Executive Club for that year? 2 A Yes. 3 MR. WHITE: The government offers 1502. 4 THE COURT: Any objection? 5 MR. TRABULUS: No objection. 6 THE COURT: Government's Exhibit 1502 in 7 evidence. 8 (Government's Exhibit 1502 received in evidence.) 9 BY MR. WHITE: 10 Q Now, can you tell us what items were paid for by 11 Who's Who Executive Club for Mr. Gordon in 1994? 12 A There's a large payment to American Express and there 13 are two checks drawn to Bruce Gordon. 14 Q And if you look at the entry
for 8/23/94, what is 15 that amount? 16 A $47,487.83. 17 Q And that is made payable to who? 18 A American Express. 19 Q And do you recollect from the testimony what sort of 20 charges were on the American Express bill at that time? 21 A That was the trip to Europe to I believe it was 22 France and Italy. 23 Q Now, if you look at the top entry for 8/16/94 in the 24 description column, can you tell us what that check said 25 on it?
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1 A That check was payable to Bruce Gordon. It was 2 cashed and it was exchanged for a money order payable to 3 the IRS. 4 Q Now, does the IRS accept checks in payment of taxes? 5 A Yes. 6 Q Does it accept corporate checks in payment of taxes? 7 A Yes. 8 Q Tell us the total amount of expenses paid
for 9 Mr. Gordon by Who's Who Executive Club in 1994? 10 A $5,498,783. 11 Q Have you analyzed the bank records and books of a 12 company called Registry Publishing? 13 A Yes. 14 Q Did Registry Publishing pay expenses of Mr. Gordon in 15 1994? 16 A Yes, they did. 17 Q Take a look at Exhibit 1503 and tell me what that is 18 (handing)? 19 A This is a schedule of monies paid to or on behalf of 20 Bruce Gordon out of Registry Publishing. 21 MR. WHITE: Your Honor, we offer the Government's 22 Exhibit 1503. 23 THE COURT: Any objection. 24 MR. WALLENSTEIN: No objection. 25 THE COURT: Mr. Trabulus?
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1 MR. TRABULUS: I said no objection. I'm sorry, 2 Your Honor. 3 THE COURT: Government's Exhibit 1503 in 4 evidence.
5 (Government's Exhibit 1503 received in evidence.) 6 BY MR. WHITE: 7 Q Mr. Rosenblatt, can you tell us what is the earliest 8 entry charged to the loan account for this year? 9 A March 25, 1994. 10 Q Now, if you look at the entry for 7/25/95 -- 11 A Yes. 12 Q -- And the description, could you tell us what that 13 entry means? 14 A That should be 7/25/94. 15 Q Okay. And tell us what it refers to? 16 A It is a $4,000 check issued to Bruce Gordon. 17 Q And do the bank records indicate what it was for? 18 A Yes. I believe it was the check stub indicated that 19 it was to pay rent, April 1994. 20 Q And if you look down two entries to the one on June 21 1, 1994, what is that check for? 22 A You mean June 10, 1994? 23 Q I'm sorry, yes. 24 A Yes, that's the payment of $12,500 to Bruce Gordon 25 and that was to pay rent to Publishing Ventures.
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1 Q And the October 17, 1994 entry? 2 A That's a $27,000 check to American Express. 3 Q And what does the check stub say it is for? 4 A It's for Bruce Gordon, personal. 5 Q Tell us the total amount of expenses Mr. Gordon's 6 paid by Registry Publishing in 1994? 7 A $74,815.83. 8 Q Now, have you calculated what the total amount of 9 personal expenses paid by all of these corporations for 10 Mr. Gordon in 1994 was? 11 A Yes. 12 Q What was it? 13 A $373,675. 14 Q Now, have you calculated the total amount of personal 15 expenses paid by all of these corporations for Mr. Gordon 16 between 1991 and 1994? 17 A I could add them up. 18 Q If you can give us a rough figure. 19 A Close to $900,000. 20 THE COURT: That's 1991 through 1993? 21 THE WITNESS: 1994. 22 THE COURT: Including 1994? 23 THE WITNESS: Right, four years. 24 THE COURT: The four years is what approximate 25 total?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1994 Rosenblatt-direct/White
1 THE WITNESS: Approximately $900,000. 2 BY MR. WHITE: 3 Q And putting aside the $313,000 credit related to the 4 Dr. Grossman money, putting that aside, could you tell us 5 how much Mr. Gordon repaid to any of these corporations 6 between 1991 and 1994? 7 A Well, there was a one entry of $20,000, however, we 8 saw that came from another corporation. But we are giving 9 him credit for it because we are charging it as a loan 10 from the other corporation as income. 11 Q Mr. Rosenblatt, let me show you Exhibit 430 through 12 482 in evidence which are American Express receipts for 13 Mr. Gordon between 1990 and 1995. 14 Have you reviewed those exhibits? 15 A Yes, I have. 16 Q And have you prepared a summary of the expenses and 17 the payments of that American Express account? 18 A Yes. 19 Q Let me show you Exhibit 1504-A through F and 1507-A 20 through G? 21 MR. WHITE: Your Honor, I misspoke before, it's 22 1507-A through H. 23 Q Now, have you reviewed that, Mr. Rosenblatt? 24 A Yes. 25 Q Let's start with 1504 and the letters following it.
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1 What is 1504? 2 A 1504 is a summary of all the charges on the American 3 Express card from November of 1990 through March 21st of 4 1995. 5 Q And the first page of 1504 is a cumulative summary; 6 is that correct? 7 A A summary, yes. 8 Q And the letters that follow are for each year? 9 A That's correct. 10 Q And 1507 is what? 11 A 1507 are the payments that were made to American 12 Express. 13 Q And is there one for each year and company? 14 A Yes, there is. 15 MR. WHITE: Your Honor, the government offers 16 1504 inclusive and 1507 inclusive. 17 THE COURT: Any objection? 18 MR. TRABULUS: No. 19 MR. WALLENSTEIN: No. 20 THE COURT: 1504-A through F. 1507-A through H, 21 in evidence. 22 (Government's Exhibits 1504-A through F received 23 in evidence.) 24 (Government's Exhibits 1507-A through H received 25 in evidence.).
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1 BY MR. WHITE: 2 Q Now, if you can look at 1504 -- well, first of all, 3 the time periods by which you calculated the expenses are
4 not the calendar years; is that correct? 5 A That's correct. 6 Q Why did you do it that way? 7 A They go by the statement date so they would be easier 8 to follow. 9 Q Looking at 1504, have you categorized the various 10 types of expenses charged on the American Express card? 11 A Yes. 12 Q What different categories do you have there? 13 A We broke it up into restaurants is one. The second 14 one was clothing, jewelry and gifts. Third was artwork, 15 home furnishings, general merchandise, and the fourth 16 category was hotel and travel. 17 Q Tell us what the grand total of purchases on this 18 card from November of '90 through March of 1995 was. 19 A $411,853.29. 20 Q And can you tell us how much was charged in each of 21 those categories that you just described? 22 A Restaurants was $17,868.71. 23 Clothing, jewelry and gifts, $188,219.59. 24 The artwork category was $110,408.14. 25 Hotel and travel, $95,356.85.
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1 Q Now, if you could go to 1507-A. And you said that 2 was the summary of how those bills were paid; is that 3 correct? 4 A That's correct. 5 Q Tell us for 1990 how was Mr. Gordon's American 6 Express paid? 7 A It was paid out of Who's Who Worldwide Registry and 8 it was charged to his loan account. 9 Q And if you look at 1507-B, and tell us from 1991 how 10 was Mr. Gordon's American Express paid? 11 A Also out of Who's Who Worldwide Registry and again 12 charged to his loan account. 13 Q Looking at 1507-C, can you tell us who paid 14 Mr. Gordon's American Express bill in 1992? 15 A It was again Who's Who Worldwide Registry, and of the 16 total, of the total of $52,552.91 in payments, $52,027.63 17 were charged to loan accounts, and $525.28 were charged to 18 another account we couldn't identify. 19 Q And 1507-D, that's the payment summary for 1993. 20 Can you tell us how much or how that was paid? 21 A It was also paid out of Who's Who Worldwide 22 Registry. The total of 119,314.36 was paid. Of that 23 amount $65,976.91 were charged to his loan account, 24 $41,184.60 were charged to travel expense, $11,993.85 was 25 charged to American Express expense, and $159 was charged
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 1998 Rosenblatt-direct/White
1 to computer supplies expense. 2 Q Now, the last three categories you mentioned, what 3 type of expenses are those -- what type of accounts are 4 those? 5 A Those are expenses claimed by the corporation to 6 reduce its income. 7
Q Now, if you look at 1507-E through H, does that cover 8 the payments for 1994? 9 A Yes, they do. 10 Q Now, why is it broken up into four pages? 11 A Well, because different companies were paying the 12 American Express bills in 1994. 13 Q Let's start with 1507-E. 14 How much -- what is the total charges paid by 15 Who's Who Worldwide to American Express in 1994? 16 A $18,003.83. 17 Q How much of that was charged to Mr. Gordon's loan 18 account? 19 A $4,462.98. 20 Q What is the date of the payment by Who's Who 21 Worldwide to American Express? 22 A February 28th of 1994. 23 Q Now, did Sterling Who's Who pay any of his Amex bills 24 in 1994? 25 A Sterling Who's Who, yes, that would be Exhibit
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1 1507-F. 2 Q How much
did they pay? 3 A $61,481.74. 4 Q How much was charged to his loan account? 5 A $60,018.69. 6 Q Now, look at 1507-G. 7 Did Who's Who Executive Club pay his American 8 Express bills in '94? 9 A Yes, they paid one bill. 10 Q How much was it? 11 A $47,487.83. 12 Q And what part of that was charged as a loan to 13 Mr. Gordon? 14 A The entire amount. 15 Q And look at 1507-H. 16 Did Registry Publishing pay any of his American 17 Express bills in '94? 18 A Yes. 19 Q How much? 20 A $27,315.83. 21 Q How much of it was charged as a loan to Mr. Gordon? 22 A The entire amount. 23 MR. WHITE: Your Honor, this would be a 24 convenient time to break if you want. 25 THE COURT: Members of the jury, we'll take a
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1 ten-minute recess. Please don't discuss the case. Please 2 keep an open mind. 3 Please recess yourselves. 4 (Jury exits.) 5 (Recess taken.) 6 (Jury enters.) 7 BY MR. WHITE: 8 Q Mr. Rosenblatt, could you go back to 1504-B, as in 9 Boy, and those are the charges to the American Express 10 account for December 1990 through December of 1991, right? 11 A Yes. 12 Q And if you look on the second and third pages of that 13 exhibit, there are certain entries that are shaded. Can 14 you tell us why they are shaded? 15 A They were shaded to highlight them because that is 16 around on or about the time that one of the Form 433s was 17 submitted to the collection division. 18 Q Of the IRS? 19 A Of the IRS. 20 Q Let me show you Government's Exhibit 404 which is in 21 evidence. 22 THE COURT: Just one minute now, please.
23 MR. TRABULUS: Your Honor, may I just have a 24 moment? 25 THE COURT: Yes. I've asked for the same moment,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2001 Rosenblatt-direct/White
1 so it's all right. 2 MR. TRABULUS: That's Exhibit 404? 3 MR. WHITE: Yes, 404. 4 THE COURT: You may proceed. 5 MR. WHITE: If I may put up the enlargement of 6 Exhibit 404 for the jury to read. 7 THE COURT: Now, what is 404 again? 8 MR. WHITE: It is the September 16, 1991 9 collection information statement filed by Mr. Gordon. 10 BY MR. WHITE: 11 Q Now, the Form 433 is September 16, 1991, so the 12 shaded period covers what time period in relation to the 13 form? 14 A From approximately a month before to a month after. 15 Q Now, if you could look at box 22 which is on page 2 16 of the form, does it disclose there that Mr. Gordon had an 17 American Express card? 18 A No. 19 Q From your review of the records in evidence in the 20 case, did he have an American Express card at that time? 21 A Yes, he did. 22 Q And if you look at page 3, are there liabilities 23 listed there for Mr. Gordon? 24 A Yes, there are. You are referring to line 35? 25 Q Yes.
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1 A Yes. 2 Q Are any of the loans from Who's Who Worldwide that 3 you've discussed this morning listed on that form? 4 A Yes. 5 Q Now, at this point in time in September of 1991, can 6 you compare the size of his debt of his loan to the 7 company Who's Who relative to the debts that are listed on 8 this form? 9 A (Perusing.) I don't know what exhibit it is for the 10 loan account for 1991.
11 Q (Handing.) It should be on the summary chart you are 12 using for your reference to 1404-C; is that correct? 13 A Well, the total amount of payments made in 1991 is on 14 that form. 15 Q Tell us what that is. 16 A Approximately $145,000. 17 Q And would that be more or less than all but one of 18 the liabilities listed on this form? 19 A It would be all but one. The only larger would be a 20 Bank of New York for $275,000. 21 Q Look at page 4 where it says necessary living 22 expenses, lines 49 through 59. 23 A Yes. 24 Q Tell us what Mr. Gordon said his total monthly 25 expenses were.
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1 MR. TRABULUS: Objection, Your Honor. It says 2 "necessary living expenses." He's characterizing it as 3 to total monthly expenses. 4 THE COURT: Yes, sustained. 5 BY MR. WHITE: 6 Q Tell us what Mr. Gordon lists there under necessary 7 monthly expenses? 8 A To break it up or just the total? 9 Q Just the total. 10 A $3,385. 11 Q And that's in lines 49 through 57, it is broken down 12 into categories, is that right, of types of expenses? 13 A Yes. 14 Q And line 58 which reads "other expenses," can you 15 tell us what that total is? 16 A $175. 17 Q Now, go back to Exhibit 1504-B, just a summary of 18 American Express charges. Tell us what or how much 19 Mr. Gordon charges on his American Express between August 20 and October of 1991. 21 A Approximately $9,000 is in the shaded area. 22 Q Let me show you Exhibit 402 in evidence, that is an 23 installment agreement between Mr. Gordon and the IRS. 24 What is the date of that agreement? 25 A September 24, 1991.
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1 Q And how many days after this collection information 2 statement is that? 3 A Eight days. 4 Q Now, take a look at 1504-B and tell us in those days 5 between September 16th and September 24th how much 6 Mr. Gordon spent on clothing? 7 A Approximately $3,500. 8 Q That's in eight days, correct? 9 A Well, the American Express charges are all on 10 September 20th and 21st. 11 Q And how does that compare -- that's just for 12 clothing, correct? 13 A That's correct. 14 Q How does that compare to the total necessary living 15 expenses for the entire month listed on this form? 16 A It's higher. 17 Q Let me show you Exhibit 405. 18 Now, 405 is the collection information statement? 19 A Yes. 20 Q And what is it dated? 21 A
July 8, 1993. 22 Q And if you could look at the top of page 2, box 14, 23 is there an American Express gold card account listed 24 there? 25 A No.
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1 Q From your review of the exhibits in evidence, did 2 Mr. Gordon have an American Express gold account in July 3 of 1993? 4 A Yes, he did. 5 Q If you take a look at box 28 where it says 6 liabilities, are any loans from Who's Who Worldwide listed 7 there? 8 A No. 9 Q From your review of the exhibits in evidence, were -- 10 did Mr. Gordon have a loan account with Who's Who 11 Worldwide at this time? 12 A Yes, he did. 13 Q Can you give us an approximate figure of how much in 14 expenses had been charged to the loan account by that 15 time? 16 A Just in that year?
17 Q No, cumulative. 18 A I would have to see the loan account for 1993. 19 Q Well, let me show you Exhibit 660 which I think is 20 what you're looking for for 1993. 21 A Yes. (Perusing.) The balance in the loan account as 22 of July 19, 1993, according to Exhibit 660, is 23 $200,395.65. 24 Q And that is not listed on this form, is it? 25 A No.
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1 Q Now, if you look at the last page where it says 2 "necessary living expenses," could you tell us what the 3 total monthly necessary living expenses listed there is? 4 A $2,520. 5 Q And if you could turn to Exhibit 1504-D, and look on 6 page 2, the shaded portion. The shaded portion covers 7 what time period relative to July of 1993? 8 A It starts May 22nd which would be approximately six 9 weeks before and goes through September 19th which is 10 approximately two months after. 11 Q Okay. 12 And tell us approximately how much was charged on 13 Mr. Gordon's American Express account for that period? 14 A Approximately $36,000. 15 Q Let me show you Exhibit 420. That's an offer and 16 compromise submitted by Mr. Gordon and Mr. Reffsin in July 17 of 1993, correct? 18 A It looks like it is dated August 9th of 1993. 19 Q Would you look on the top of page 420. The date on 20 the cover letter says what? 21 A July 27, 1993. 22 Q Now, if you can follow along while I read from the 23 last two lines of page 1. It says "the offer presented is 24 based on the sum of money which he feels he can borrow. 25 He has no other assets."
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1 Now, if you turn two pages onto 420-A, can you 2 tell us what the sum of money offered is? 3 A $150,000. 4 Q Now, in July of 1993, can you tell us how much 5 Mr. Gordon had actually borrowed from Who's Who Worldwide? 6 A It was approximately 200,000, I think it is. 7 Q Now, if you can turn to 420-E. That's a projection 8 of income and expenses, correct? 9 A Yes. 10 Q And are any loans from Who's Who Worldwide listed 11 there? 12 A No. 13 Q And for the income portion, does it indicate anywhere 14 that Mr. Gordon would be receiving sufficient amounts to 15 offset the amounts in his loan account? 16 A No. 17 Q Based upon this schedule 420-E, is the amount of 18 money that Mr. Gordon projects he will earn sufficient to 19 cover his then disclosed liability? 20 A Are you talking about the three-and-a-half million? 21 Q No. Let me rephrase the question.
22 On this schedule based on the projected income, 23 is that going to be sufficient to pay the liabilities that 24 are listed here? 25 MR. TRABULUS: Objection, Your Honor.
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1 THE COURT: Overruled. 2 A The liabilities listed on this form? 3 Q Yes. 4 A On this -- (perusing.) I don't know if I understand 5 your question. 6 Q Then I'll rephrase it. 7 Let's move onto something else. 8 Take a look at Exhibit 406. That's a December 9 1993 collection information statement. 10 Again, if you look at page 2, box 14, is there an 11 American Express gold card listed there? 12 A No. 13 Q From your review of the exhibits in evidence, did 14 Mr. Gordon have an American Express gold card at this 15 time? 16 A Yes. 17 Q And box 28 on page 3, are any loans from Who's Who 18 Worldwide listed on that form? 19 A No. 20 Q And the necessary living expenses for 1994, can you 21 tell us what those approximately add up to? 22 A About $5,200. 23 Q And if you could look at the last one, I'll read it, 24 it says box 51 "other expenses, specify." "Clothes, 25 cleaning, etcetera, $200 per month." Is that right?
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1 A Yes. 2 Q Let me show you Exhibit 824 which is already in 3 evidence. For 1994 -- and if you can't see that you may 4 step down -- starting with the month of June 1994, one 5 month prior to the filling out of this collection 6 information statement, could you just read the monthly 7 charges for us. 8 A Starting with June? 9 Q Yes. 10 A June is $3,012.91.
11 July is $47,392.51. 12 August, $9,614.10. 13 September, $27,215.83. 14 October, $12,270.83. 15 November, $18,042.43. 16 And December, $10,427.30. 17 Q Tell us the total amount charged in 1994 on the 18 chart? 19 A Approximately $183,000. 20 Q If you can look at the binder at Exhibits 474 and 475 21 in front of you. 22 A I have it. 23 Q And if you could just review the expenses charged to 24 Mr. Gordon's portion of this account for this time period, 25 and tell us what they reflect?
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1 A (Perusing.) They reflect the expenses in Paris, 2 Italy, there's Bloomingdale's, New York, in Manhattan, I 3 guess, Park Avenue Cafe in New York, and then it appears 4 to be all other charges in Paris and in Italy. 5 Q And if you
could look on page 2 of that, the entry 6 for -- entry number 36. Does that indicate a charge at 7 the Ritz in Paris? 8 A Yes, it does. 9 Q And if you look on 475, where are the charges 10 originating from in that month? 11 A Starts off in Italy and then there's a couple of 12 restaurants in Manhattan, and other items in the local 13 area. 14 Q Now, Mr. Rosenblatt, let me show you Exhibit 421. 15 Now, 421 is a letter from Frank Gagliardi, IRS 16 revenue officer to Mr. Gordon in care of Mr. Reffsin on 17 November 24, 1993. 18 Do you see that, Mr. Rosenblatt? 19 A Yes, I do. 20 Q And from reviewing the letter, does it request 21 certain categories of information? 22 A Yes, it does. 23 Q And let me also show you Exhibit 423 which were the 24 documents provided in response to 421. 25 Now, Mr. Rosenblatt --
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1 MR. WHITE: Actually, Your Honor, I apologize, 2 there was an exhibit I didn't mark which I should have 3 which would not be comprehendible to the jury unless we do 4 that. 5 THE COURT: Go ahead. 6 MR. WHITE: But I have to make a copy. I have 7 one unfortunately. I apologize. I got mixed up with the 8 changing of all the other exhibits. 9 Can we take five minutes to do that? 10 THE COURT: Yes. 11 MR. WHITE: Thank you, Judge. 12 THE COURT: All right. Members of the jury, 13 we'll take a five-minute recess. 14 Please don't discuss the case. Keep an open 15 mind. 16 (Recess taken.) 17 THE COURT: You may proceed. 18 MR. WHITE: Your Honor, I believe there's an 19 issue with respect to the document that we want to offer. 20 MR. TRABULUS: Yes, there
is, Your Honor, we 21 object to 1508. 22 THE COURT: May I see it? 23 MR. TRABULUS: May we approach, Your Honor? 24 THE COURT: All right. Come up. 25 (Side bar.)
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1 MR. TRABULUS: The objection I have is "response 2 of Bruce Gordon and Martin Reffsin." It simply should say 3 "response." This was submitted by Mr. Reffsin. It's 4 true it is admissible against Mr. Gordon in several 5 different aspects because Mr. Reffsin signed the power of 6 attorneys, the exception could be it is admissible. But 7 to say it is responsive to Bruce Gordon to call it a 8 "response" suggests that Mr. Gordon saw it or was 9 involved in its preparation. There is no evidence that he 10 was, and the solution is to simply call it the response to 11 IRS revenue officer.
12 MR. WALLENSTEIN: My objection is the converse of 13 that. Mr. Reffsin acted as Mr. Gordon's attorney in fact 14 under the circumstances, it's not attributable to him, but 15 to Mr. Gordon. I agree with Mr. Trabulus we should take 16 out the names and simply label it "response." 17 THE COURT: Is this of the collection statement 18 sent in response to the letter? 19 MR. WALLENSTEIN: This is something that 20 Mr. Rosenblatt sent. 21 MR. WHITE: This response en toto included the 22 last collection information statement we just looked at. 23 THE COURT: What else did it include? 24 MR. WHITE: I think it is in Exhibit 425, bank 25 statements and various other things.
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1 MR. TRABULUS: This is a summary. 2 MR. WALLENSTEIN: Mr. Gagliardi sent a letter. 3 This is what we got and didn't get. 4 THE COURT: Excuse me. Take out "Bruce Gordon 5 and Martin Reffsin, response to IRS revenue officer". 6 MR. WHITE: We already redacted it that way. 7 THE COURT: Good thinking. 8 MR. TRABULUS: At our suggestion. 9 (End side bar.) 10 THE COURT: You may proceed in the short time we 11 have before lunch. 12 MR. WHITE: I'm sorry, Your Honor. 13 BY MR. WHITE: 14 Q Mr. Rosenblatt, let me show you Exhibit 1508. 15 Did you prepare an analysis of some of the items 16 that were provided to Mr. Gagliardi in response to this 17 letter? 18 A I compared the items that were requested, the items 19 that were provided. 20 Q And does Exhibit 1508 summarize the response with 21 respect to certain item numbers on Mr. Gagliardi's letter? 22 A Yes. 23 MR. WHITE: Your Honor, the Government offers 24 Exhibit 1508.
25 THE COURT: Any objection?
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1 MR. TRABULUS: No, based on our conference, no. 2 MR. WALLENSTEIN: No, Your Honor. 3 THE COURT: Exhibit 1508 in evidence. 4 (Government's Exhibit 1508 received in evidence.) 5 MR. WHITE: If I may hand it up to the jury, Your 6 Honor. 7 THE COURT: Yes. 8 BY MR. WHITE: 9 Q Now, Mr. Rosenblatt, I'll read from Exhibit 421 which 10 is the request by Mr. Gagliardi and it begins with number 11 3. 12 "Original cancelled checks and bank statements 13 for all accounts which you are a signatory for the months 14 of April, May, June, July, August, September and October 15 of 1993." 16 Now, can you tell us what items were provided in 17 response to that request? 18 A That would basically be Exhibit 423-F which were 19 checking account statements -- actually F through L. 20 Q And what are those exhibits? 21 A Which are checking account statements and cancelled 22 checks for Bruce Gordon's account for National Westminster 23 Bank. 24 Q Have you reviewed bank records of other corporations 25 in connection with this case?
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1 A Yes, I have. 2 Q Now, were there other accounts upon which -- for 3 which Mr. Gordon was a signatory at this time period, 4 after November of 1993? 5 A Yes. 6 Q Could you tell us what they were? 7 A They were the Who's Who Worldwide Registry account at 8 European American Bank, NatWest bank account for Registry 9 Publishing, and a NatWest bank account for Publishing 10 Ventures, Inc. 11 Q Now, were the statements and
checks for the accounts 12 of Who's Who Worldwide that Mr. Gordon was a signatory on 13 provided to Mr. Gagliardi in response to this letter? 14 A No. 15 Q Were the checks and statements for Registry 16 Publishing account for which he was a signatory provided 17 to Mr. Gagliardi in response to this letter? 18 A No. 19 Q Were the checks and the statements for the Publishing 20 Ventures account on which he was a signatory provided to 21 Mr. Gagliardi in response to this letter? 22 A No. 23 Q Let me read item six that Mr. Gagliardi requests. 24 "Verification of all monthly payments if not 25 paid by your personal check."
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1 Now, did you review the response to see if there 2 was anything responsive to that request? 3 A There was nothing provided
with reference to that 4 question. 5 Q And from your review of the exhibits at the trial, 6 were there other monthly payments of Mr. Gordon's that 7 were not paid by his personal check? 8 Yes? 9 A Yes. 10 Q Tell us what some of those were? 11 A Payments out of Who's Who Worldwide Registry and by 12 Publishing Ventures, Inc. 13 Q And for what kind of things? 14 A All personal items. 15 Q Let me read request number nine from Mr. Gagliardi's 16 letter. 17 "Copies of all motor vehicle registrations, 18 title certificates or leasing agreements for vehicles you 19 own or operate." 20 Now, reviewing the response, did Mr. Gordon or 21 Mr. Reffsin provide any information with respect to that 22 request? 23 A No, nothing was provided. 24 Q And from your review of the documents in connection 25 with this case, were there any
documents that would fit
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1 that request? 2 A Yes. 3 Q And tell us what they were? 4 A They were car leases. At least one car lease. 5 Q For what kind of car? 6 A A BMW. 7 Q And were any documents with respect to the leasing of 8 that BMW provided provided to Mr. Gagliardi in response to 9 this letter? 10 A No. 11 Q Let me read from request number ten of 12 Mr. Gagliardi's letter. 13 "All medical and dental bills you have paid 14 during the past six months." 15 Now, were any medical or dental bills provided in 16 response to Mr. Gagliardi's letter? 17 A No. 18 Q And from your review of the documents in this case, 19 were there medical and dental bills paid for Mr. Gordon 20 that were responsive to this request?
21 A Yes. 22 Q And tell us what they were? 23 A They were payments out of Who's Who Worldwide 24 Registry to Dr. Fishman and Dr. Kaufman for dental 25 expenses.
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1 Q Now, Mr. Rosenblatt, let me show you 424 and 425. 2 And let me read from a portion of 424. 3 This is a letter from Frank Gagliardi, Internal 4 Revenue Service, revenue officer, on February 17, 1994, 5 addressed to Bruce Gordon, care of Martin Reffsin. 6 The second paragraph indicates "my review of your 7 checking records discovered several unexplained items, 8 including abnormal deposits totaling $15,000 in July of 9 1993 and $10,613.52 in October of 1993. Please explain 10 the source of these funds. In addition, there are 11 likewise abnormal debits during these periods. Please 12
explain these expenditures." 13 Now, Mr. Rosenblatt, if you would look at 425.
14 I'll read a portion of that. 15 That's a letter from Mr. Reffsin to Mr. Gagliardi 16 which is undated. 17 It says "pursuant to your request I have attached 18 the following information for your file. 19 One, copy of note that Mr. Gordon signed to Joyce 20 Grossman for $15,000. Copy of note signed to Madeline 21 Middlemark for $10,000." 22 And then I'll skip down to the next paragraph. 23 "You indicated that you wanted an explanation of 24 extra checks that were disbursed by Mr. Gordon in July and 25 October 1993. Unfortunately, Mr. Gordon's son died
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1 unexpectedly in July of 1993 and the checks you saw were 2 payments for the funeral. The son died while he was 3 residing in Florida and Mr. Gordon had to pay for the body 4 to be flown up from New York as well as the funeral 5 costs. He borrowed the money from Joyce Grossman. 6 The checks in October were to pay for medical 7 costs incurred by Mr. Gordon's wife. He owes his wife 8 substantial back alimony and he borrowed the money in 9 October from Madeline Middlemark to pay his wife." 10 Then you see Exhibit 425-A, Mr. Rosenblatt. What 11 is that? 12 A It's a promissory note for $15,000 between Bruce 13 Gordon and Joyce Grossman. 14 Q And can you tell us what Ms. Grossman's testimony was 15 with respect to that promissory note? 16 A She said she never made such a loan. 17 Q Now, looking at the bank records that reflect the 18 income that Mr. Gagliardi questioned, have you analyzed 19 where that $15,000 came from? 20 A Yes. 21 Q Where did it come from? 22 A It came from Who's Who Worldwide Registry. 23 Q Let me show you Government's Exhibit 764 and 765. 24 Can you tell me what those are? 25 A They are debit advices from National Westminster
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1 Bank. 2 764 is for $10,000, dated July 30, 1993. And 765 3 is $5,000, dated August 3, 1993. 4 Q And explain for us what a debit advice is? 5 A A debit advice shows that instead of issuing a check, 6 the bank is taking money out of one account and they are 7 telling you where it's going. 8 Q And in this case who are they telling where it is 9 going? Whose account is the money coming out of? 10 A It's coming out of Who's Who Worldwide Registry, Inc. 11 Q And have you reviewed Mr. Gordon's personal bank 12 statements for the relevant period? 13 A Yes. 14 Q And
what do they reflect? 15 A They reflect deposits for the same amounts. 16 THE COURT: All right. Is this a good time to 17 take a break, Mr. White? 18 MR. WHITE: Yes, Your Honor. 19 THE COURT: Members of the jury, we'll recess for 20 lunch. Please don't discuss the case. Keep an open 21 mind. Come to no conclusions. 22 We'll recess until 1:30. 23 Have a nice lunch. 24 (Luncheon recess taken.) 25
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1 A F T E R N O O N S E S S I O N 2 3 (Whereupon, the following takes place in the 4 absence of the jury.) 5 THE COURT: Is this witness leaving at 3:00 6 o'clock? 7 THE WITNESS: Yes. 8 THE COURT: What are you doing after 3:00? 9 MR. WHITE: We are calling another witness, one 10 of the people I mentioned yesterday.
11 THE CLERK: Jury entering. 12 (Whereupon, the jury at this time entered the 13 courtroom.) 14 THE COURT: Please be seated, members of the 15 jury. 16 You may proceed, Mr. White. 17 MR. WHITE: Thank you. 18 19 DIRECT EXAMINATION (cont'd) 20 BY MR. WHITE: 21 Q Mr. Rosenblatt, before we broke for lunch, we were 22 looking at Exhibit 425-A, a promissory note from 23 Mr. Gordon to Joyce Grossman for $15,000, on July 25th, 24 1993; do you see that? 25 A Yes.
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1 Q Now, take a look at Government's Exhibit 499-1-A. 2 Tell us what 499-1-A is? 3 A It is a certificate of death regarding Todd Gordon. 4 Q And if you can look at box 3, could you tell us what 5 the date of death is for Todd Gordon? 6 A July 28th, 1993.
7 Q Could you compare that to the date on the promissory 8 note, Exhibit 425-A. 9 A The promissory note is July 25th, 1993. 10 Q What does Exhibit 425 say the purpose of the 11 promissory note was? 12 A To pay for the burial expenses, I believe. 13 Q According to the death certificate was Mr. Gordon's 14 son dead on July 25th? 15 A No. 16 Q Now, Exhibit 764 and 765 are the wire transfers that 17 you described for us before; is that correct? 18 A That's correct. 19 Q And you said that they were from Who's Who Worldwide 20 for Mr. Gordon? 21 A Yes. 22 Q Do you know from your review of the books and records 23 of Who's Who Worldwide how that expense was treated by 24 Who's Who Worldwide? 25 A Yes.
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1 Q And how was it treated? 2 A They were charged to the loan account. 3 Q Okay. 4 Now, if you look at Exhibit 425-B, what is that? 5 A A promissory note for $10,000 dated October 1st, 1993 6 between Bruce Gordon and Madeline Middlemark. 7 Q And the cover letter, Exhibit 425, says that that 8 loan was for what purpose? 9 A To pay for medical costs incurred by Mr. Gordon's 10 wife. He owes his wife substantial back alimony. And he 11 borrowed the money in October from Madeline Middlemark to 12 pay his wife. 13 Q Now, were you present for Ms. Middlemark's testimony 14 earlier in this trial? 15 A Yes, I was. 16 Q Can you tell us what Ms. Middlemark said regarding 17 this loan, this alleged loan? 18 A Ms. Middlemark had no recollection of ever loaning 19 Mr. Gordon money to pay for Mr. Gordon's wife's alimony or 20 medical expenses. 21 Q Tell us what she said with regard to this note, 22 425-B? 23 A She had never seen this. 24 Q Now, from your review of the Who's Who Worldwide 25 Bruce Gordon bank records, have you reached any conclusion
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1 as to where that money actually came from? 2 A The 10,000 -- with regard to Madeline Middlemark? 3 Q The $10,000 in October of 1993 out of Mr. Gordon's 4 account? 5 A It came out of Who's Who Worldwide Registry. 6 Q Let me show you Exhibit 766. 7 (Handed to the witness.) 8 Q What is that? 9 A It is a debit advice on National Westminster Bank. 10 Q Do you recognize the account number? 11 A Yes. It is Bruce Gordon's account. 12 Q And what sort of transfer does that debit advice 13 reflect? 14 A It reflects a transfer from Who's Who Worldwide
15 Registry to Bruce Gordon. 16 Q For how much? 17 A $5,000. 18 Q And what is the date? 19 A It looks like October 20th, 1993. 20 Q Now, Mr. Rosenblatt, let me show you Exhibit 427; and 21 I will put the enlargement up to the jury. 22 (Handed to the witness.) 23 Let me read a portion of it. 24 It is dated September 29th, 1994. It is from 25 Mr. Reffsin to Frank Gagliardi of the IRS.
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1 Dear sir: You requested information as to the 2 status of payments by Mr. Bruce Gordon to -- of his 3 obligation to the Department of Justice for the year 4 1993. The total amount due for 1993 is $14,025. He has 5 paid to date $5,500. 6 Q Mr. Rosenblatt, can you tell us given what he has 7 paid and what he owes, what is the amount that he still 8 owes here? 9 A Approximately $8,500. 10 Q I will skip down to the third paragraph. 11 He is going to have to borrow the money he 12 offered in the offer and compromise submitted. Where 13 shall he borrow this money? Perhaps he should cease 14 eating. 15 Q Mr. Rosenblatt, if you could turn to 1504-E, the 16 schedule of the American Express charges. 17 A Yes. 18 Q Now, the date -- if you can turn to page 4 of that 19 Exhibit? 20 THE COURT: What is the number of that exhibit 21 again? 22 MR. WHITE: 1504-E, like in Edward. 23 Q The date of this letter is September 29th, 1994. 24 Could you look for the month, approximately the 25 month period, beginning with August 20th, the month period
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1 prior to the writing of this letter, and tell us how much 2 Mr. Gordon spent on restaurants on his American Express 3 card? 4 A $935.71. 5 The following period $364.60. 6 Q And this letter says, perhaps he should cease eating; 7 is that right? 8 A Yes, that's what it says. 9 Q Prior to that it says where shall he borrow this 10 money. Do you see that? 11 A Yes. 12 Q Can you give us a rough approximation of how much 13 money Who's Who Worldwide and Mr. Gordon's other 14 corporations had loaned him up to this point in September 15 of '94? 16 A It was approximately $900,000. 17 Q And that's from '91 -- 18 A From '91 through '94. 19 Q If you take a look at 1507-H. 20 A Yes. 21 Q And the 900 some odd dollars of restaurant bills you 22 mentioned before, looking at 1507-H, can you tell us if 23 that money was charged to Mr. Gordon's loan account or 24 business account? 25 A Yes, charged to his loan account from Registry
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1 Publishing. 2 Q You mentioned Registry Publishing and Executive Club 3 prior in his testimony. Did they pay other expenses of 4 Mr. Gordon besides Who's Who Worldwide? 5 A I don't understand your question. 6 Q In addition to Who's Who Worldwide did Registry 7 Publishing and Who's Who Executive Club pay expenses of 8 Mr. Gordon? 9 A Yes. 10 Q Have you done an analysis of where those corporations 11 got that money from? 12 A Yes. 13 (Whereupon, at this time there was a pause in the 14 proceedings.) 15 Q Let me show you Government's Exhibit 837, which is in 16 two pages. 17 (Handed to the witness.) 18 Now, Mr. Rosenblatt, what is Exhibit 837? 19 A It is an analysis of transfers of money from Who's 20 Who Worldwide Registry to other related corporations, from 21 February through December of 1994. 22 Q On what records was this summary prepared? 23 A Based on bank records. 24 MR. WHITE: Your Honor, the government offers 25 837.
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1 THE COURT: Any objection? 2 MR. TRABULUS: Still looking at it, your Honor. 3 THE COURT: All right. 4 (Whereupon, at this time there was a pause in the 5 proceedings.) 6 MR. TRABULUS: No. 7 MR. WALLENSTEIN: No objection either. 8 THE COURT: Government's Exhibit 837 in 9 evidence. 10 (Government's Exhibit 837 received in evidence.) 11 MR. WHITE: Your Honor, here is a copy for the 12 Court. 13 (Handed to the Court.) 14 Q On the left-hand side there are three boxes that 15 state Who's Who Worldwide Registry that are shaded. 16 A Yes. 17 Q What do they represent? 18 A They represent three different bank accounts in the 19 name of Who's Who Worldwide Registry. One at NatWest 20 Bank, another at European American Bank, and the third is 21 Republic Bank for Savings. 22 Q Now, in February and March of 1995 were there -- I am 23 sorry, 1994, were there transfers of funds out of those 24 Who's Who Worldwide accounts? 25 A Out of two of them, yes.
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1 Q Okay. 2 Can you explain for us where that money went? 3 A Approximately 700,000 went from the Who's Who 4 Worldwide Registry NatWest Bank, and was deposited to 5 Sterling Who's Who at Marine Midland Bank. 6 Q Let me just stop you there. That's this
transfer 7 that has 150,000 on February 4th, and 550,000 on March 8 11th; is that right? 9 A Yes. 10 Q And what other transfers are there? 11 A A transfer of $500,000 from the account at European 12 American Bank in the name of Who's Who Worldwide Registry, 13 and that went into Sterling Who's Who at Marine Midland 14 Bank. 15 Q So, tell us roughly what the total going from Who's 16 Who Worldwide to Sterling was? 17 A 1.2 million dollars. 18 Q Did any money go from Worldwide to any other 19 corporations? 20 A Yes. 21 Q Tell us where that appears on the chart? 22 A Right above where I was just reading from, you have 23 an amount of $45,000 going from Who's Who Worldwide 24 Registry at NatWest Bank and that goes into Registry 25 Publishing, Inc., the NatWest Bank account.
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1 Q Does any money go from Worldwide to Who's Who 2 Executive Club? 3 A Yes, $20,000. 4 Q And where does that appear? 5 A That's the arrow that goes down the left side of the 6 page and across at the bottom. 7 Q Now, there are dotted lines on this chart. Can you 8 tell us what the dotted lines represent? 9 A They represent monies going back to Who's Who 10 Worldwide Registry. 11 Q And tell us what monies are going back to Who's Who 12 Worldwide? 13 A Right at the top of the chart, there is 65,000 that 14 goes from Registry Publishing, NatWest Bank and is put 15 back to Who's Who Worldwide Registry, NatWest Bank. There 16 is also a transfer from Sterling Who's Who at Marine 17 Midland Bank, $560,000, and it goes back to Who's Who 18 Worldwide Registry at Republic Bank for Savings. 19 Q Can you
tell us an approximate number? What is the 20 net effect? What is the total that went out and the total 21 that came back? 22 A Approximately a million 245 thousand went out from 23 Who's Who, and approximately 625,000 went back. 24 Q Of the money that went from Worldwide to Sterling, 25 did it go anywhere else after it arrived at Sterling?
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1 A Yes. 2 Q Where did it go? 3 A $500,000 was transferred from Sterling Who's Who 4 Marine Midland Bank, into Registry Publishing, Inc., 5 NatWest Bank. 6 Q Tell us how many days after Sterling received this 7 money it got sent to Registry Publishing? 8 A Within the next week. 9 Q Now, how many different Registry Publishing accounts, 10 bank accounts are represented on this chart? 11 A Four. 12
Q How many different banks? 13 A For different banks. 14 Q Now, once Registry Publishing got this money, did it 15 go to any corporations? 16 A It stayed within Registry Publishing. It was 17 transferred to different accounts of Registry Publishing. 18 Q Did Registry Publishing transfer to any other 19 corporations? 20 A Yes. 21 Q Where does that appear on the chart? 22 A Just to the right of the middle of the chart, there 23 is Registry Publishing, Inc., Marine Midland Bank. And 24 from that 100,000 is transferred into Who's Who Executive 25 Club, Inc. at Sterling National Bank, and $55,000 is
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2032 Rosenblatt-direct/White
1 transferred to Publishing Ventures, Inc. at National 2 Westminster Bank. 3 Q And how many different Who's Who Executive Club 4 accountings are depicted on this chart? 5 A Two. 6 Q And at how many different banks? 7 A Two different banks, all the way on the left toward 8 the bottom, you have Who's Who Executive Club, Inc. at 9 National Westminster Bank, and the right of the middle of 10 the chart you have Who's Who Executive Club at Sterling 11 National Bank. 12 Q Let me show you Exhibits 783, 786, 787, 784, 691, 13 692, 695, 696, 707 and 708, 710, 711 and 701. 14 Would you just take a moment and review them. 15 THE COURT: Are they all in evidence? 16 MR. WHITE: Yes, they are, your Honor. 17 (Handed to the witness.) 18 (Whereupon, at this time there was a pause in the 19 proceedings.) 20 Q Just tell me when you are finished reviewing them. 21 (A further pause in the proceedings.) 22 A Yes. 23 Q Are they some of the bank records reflecting the 24 transactions set forth on this chart, 837? 25 A Yes, they are.
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1 MR. WHITE: Your Honor, may I show it to the 2 jury? 3 THE COURT: Yes. 4 (Whereupon, the exhibit/exhibits were published 5 to the jury.) 6 Q Going back to the chart, 837, can you tell us if 7 Mr. Gordon received any funds from these other 8 corporations? 9 A Yes, he did. 10 Q Tell us starting the left side of the chart, tell us 11 of any funds Mr. Gordon received. 12 A They are reflected on the bottom of the chart. You 13 can see from Who's Who Executive Club at National 14 Westminster Bank, Mr. Gordon received $3,500. 15 Q And from Sterling Who's Who? 16 A From Sterling Who's Who at Marine Midland Bank, 17 Mr. Gordon received either directly or indirectly 18 $106,845.96. 19 Q When you say directly or indirectly, what do you 20 mean? 21 A Either checks to him or to pay his expenses, such as 22 American Express and auto expenses. 23 Out of Registry Publishing at National 24 Westminster Bank, Mr. Gordon received a thousand dollars. 25 Right in the middle out of Registry Publishing,
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1 Marine Midland Bank, Mr. Gordon received 12,000, plus his 2 American Express bill of $27,315.83, for a total of 3 $39,815.83. 4 Out of Who's Who Executive Club, Sterling 5 National Bank, Mr. Gordon received 4,000, plus an American 6 Express bill paid of $47,487.83, for a total of 7 $51,487.83. 8 Q By the way, do you know what American Express bill 9 that was that cost $47,000? 10 A Yes. That was the trip to Europe. 11 Q Continue. 12 A Out of Registry Publishing, Inc., Sterling National 13 Bank, Mr. Gordon received $32,000. 14 Out of Registry Publishing, Inc. at Republic Bank 15 for Savings, Mr. Gordon received $2,000. 16 Q Now, can you tell us total, what is the total amount 17 of funds received by Mr. Gordon from these corporations 18 reflected on this chart? 19 A It looks like about $235,000. 20 Q Approximately? 21 A Approximately. 22 Q Mr. Rosenblatt, can you tell us how those monies 23 transferred to Mr. Gordon were treated on the respective 24 books of the respective corporations? 25 A These amounts were all treated as loans.
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1 Q Were any of them reported by these corporations to 2 the IRS as compensation to Mr. Gordon? 3 A No. 4 Q What is the earliest transfer reflected on this 5 chart? 6 A February 4th, 1994. It should be a transfer of 7 $150,000 from Who's Who Worldwide Registry at National 8 Westminster Bank to Sterling Who's Who at Marine Midland 9 Bank. It is to the left near the top. 10 Q And is there another transfer in February of 1994? 11 A Yes, there is, all way at the bottom, all the way at 12 the bottom you have $20,000 on February 24th, 1994 from 13 Who's Who Worldwide Registry at National Westminster Bank 14 to Who's Who Executive Club at National Westminster Bank. 15 Q Do you know, aside from those two February 1s, what 16 is the next earliest transfer? 17 A There are two transfers on March 11th of '94. 18 Q Now, do you know what month Who's Who Worldwide filed 19 the bankruptcy petition? 20 A I believe it was March of 1994. 21 Q Let me show you Exhibit 649. 22 Now, what is Exhibit 649?
23 (Handed to the witness.) 24 A They are copies of checks payable out of the account 25 of Sterling Who's Who to the Mondrian.
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1 Q Can you tell us what the Mondrian is? 2 A The penthouse apartment on I believe it is East 54th. 3 Q And for 1994, if you can look at Exhibit 1404-C, 4 which is the document you have been using for your 5 reference, can you tell us what was the total amount paid 6 for the Mondrian in 1994? 7 A $72,963. 8 Q And by what company was that paid? 9 A By Sterling Who's Who. 10 MR. WHITE: Your Honor, I would like to pass out 11 at this time the photographs entered in evidence of the 12 penthouse, 842 inclusive and 843 inclusive. 13 THE COURT: Yes. 14 (Whereupon, the exhibit/exhibits were published 15 to the jury.)
16 Q Let me show you 611, 12, 13 and 15, which are in 17 evidence. 18 (Handed to the witness.) 19 Now, start with 611. 20 What is that? 21 A 611 is a contract of sale for a condominium unit 22 between Gerald Keller and Barbara Keller and Publishing 23 Ventures, Inc. the property at 2 Hummingbird Road. 24 Q Look at Exhibit 612, and tell us what that is? 25 A It is a record of the Nassau County clerk recording a
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1 mortgage for $200,000 on that property. 2 Q Okay. 3 Look at 613. 4 What is that? 5 A A record of the Nassau County clerk recording a deed 6 on that property in the amount of $600,000. 7 Q Finally, 615, labeled closing statement; is that 8 right? 9 A Yes. 10 Q What kind of document is it? 11 A It is a c
losing statement reflecting the closing of 12 the document, the transaction is between Gerald and 13 Barbara Keller and Publishing Ventures, Inc. 14 Q On the first page where it says purchaser, what is 15 listed? 16 A Publishing Ventures, Inc., by Bruce Gordon, 17 president. 18 Q And if you can flip to page 3 of that document, what 19 is the purchase price for the condominium? 20 A I am looking at the top of page 2, it is $600,000. 21 Q Okay. 22 You said before there was a mortgage on the 23 property? 24 A That's correct. 25 Q For how many?
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1 A $200,000. 2 Q Now, have you prepared an analysis of deposits to the 3 Publishing Ventures account? 4 A Yes, I have. 5 Q Let me show you Exhibits 1505-A through D, and 1506-A
6 through D. 7 Can you look at those and tell us what those 8 are. 9 (Handed to the witness.) 10 A 1505-A through D are the analysis of disbursements of 11 Publishing Ventures, Inc. 12 Q What do you mean by disbursements? 13 A Monies spent by Publishing Ventures for the years 14 1992, 1505-A, 1993 is 1505-B, 1994 is 1505-C, and 1995 is 15 1505-D. 16 Q That's the money spent by PVI? 17 A That's correct. 18 Q What is Exhibit 1506? 19 A That represents an analysis of deposits. To 20 Publishing Ventures account at National Westminster Bank. 21 1506-A is for the year 1992. 1506-B is for 1993. 1506-C 22 is for 1994, and 1506-D is for 1995. But I believe it was 23 only up until March 31st of 1995. 24 MR. WHITE: Your Honor, the government offers 25 Exhibits 1505-A through D, and 1506-A through D.
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1 THE COURT: Any objection? 2 MR. WALLENSTEIN: No, your Honor. 3 MR. TRABULUS: No. 4 THE COURT: Government's Exhibits 1505-A through 5 1505-D for Dog, and 1506-A for Abel through 1506-D for 6 dog, in evidence. 7 (Government's Exhibits 1505-D received in 8 evidence.) 9 (Government's Exhibits 1506-A through 1506-D 10 received in evidence.) 11 Q Mr. Rosenblatt, have you prepared charts showing the 12 flow of money into and out of Publishing Ventures? 13 A Yes. 14 (Counsel confer.) 15 Q Mr. Rosenblatt, let me show you 16 Government's Exhibit 1510. 17 What is that? 18 (Handed to the witness.) 19 A That's the chart for the 1992 year. It shows on the 20 left source of funds going to Publishing Ventures, and on 21 the right, disposition of funds. 22 MR. WHITE: Your Honor, the government offers 23 1510. 24 THE COURT: That's just for 1992? 25 MR. WHITE: Yes.
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1 THE COURT: Any objection? 2 MR. TRABULUS: No, your Honor. If there is a 3 small version that can be made available at some point I 4 would appreciate that. 5 MR. WALLENSTEIN: No objection, your Honor. 6 THE COURT: Government's Exhibit 1510 in 7 evidence. 8 (Government's Exhibit 1510 received in evidence.) 9 Q Mr. Rosenblatt, can you step down and explain what 10 this chart shows. 11 A This shows that $70,000 is going from Who's Who 12 Worldwide Registry was deposited into Publishing Ventures' 13 account in the center where it says total deposits of 14 $70,000. And out of that account of Publishing Ventures, 15 $60,000 went to, it
should be Sale Groothius and Hirsch. 16 Q And from the documents you reviewed before with 17 respect to the closing on the home, who were Sale 18 Groothius and Hirsch? 19 A They were the attorneys, and I believe this was the 20 deposit on the purchase. 21 THE COURT: Attorneys for the seller of the 22 condominium, correct? 23 THE WITNESS: Correct. 24 THE COURT: Correct? 25 THE WITNESS: Correct.
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1 THE COURT: We want to make sure we get the 2 lawyers right. It is important. 3 Q So, how much went into PVI and how much went out in 4 '92? 5 A 70,000 went in and 60,000 came out. 6 Q Let me show you Government's Exhibit 1511. 7 (Handed to the witness.) 8 Q What is that? 9 A That's an analysis again of the monies going into
10 Publishing Ventures, Inc. and being taken out of 11 Publishing Ventures, Inc. for the year 1993. 12 MR. WHITE: Your Honor, the government offers 13 1511. 14 THE COURT: Any objection? 15 MR. WALLENSTEIN: No, your Honor. 16 MR. TRABULUS: No objection. 17 THE COURT: Government's Exhibit 1511 in 18 evidence. 19 (Government's Exhibit 1511 received in evidence.) 20 Q And let's start on the left side of the chart, 21 Mr. Rosenblatt. With the box that says Who's Who 22 Worldwide Registry, Inc. are there transfers out of there 23 to Publishing Ventures? 24 A Yes. 25 Q How much?
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1 A $945,000. 2 Q And are there any other transfers out of Who's Who 3 Worldwide Registry? 4 A Yes, $53,000 transferred to Bruce Gordon. 5 Q Any money transferred from Mr. Gordon to Publishing 6 Ventures? 7 A Yes, $22,000. 8 Q So, what are the total deposits to Publishing 9 Ventures in 1993? 10 A $967,000. 11 Q Now, can you go box by box and tell us what, or how 12 those funds were used? 13 A In the top box there are payments regarding the 14 purchase of the property going to Astoria Federal Savings 15 and Loan, Gerald and Barbara Keller, Advance Abstract 16 Corporation, Sale Groothius and Hirsch. And that totals 17 $346,855. 18 Q And the next box? 19 A The next box is payment to Barbara Keller regarding 20 the mortgage in the amount of $57,250. 21 Q And the next box? 22 A The next box is a payment to Ann Galante for real 23 estate tax in the amount of $10,161 and change, and a 24 payment to the Nassau County Treasurer, also for real 25 estate tax, which is in the amount of $4,225.
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Rosenblatt-direct/White
1 Q And what is represented in the next box? 2 A The next box is various improvements to the property. 3 The next box refers to improvements made to the 4 property. It is payments to Matchless Construction, 5 approximately $216,000; to Joyce Grossman Interiors 6 approximately $176,000; to Lifestyles, which was 43,000 7 approximately; to St. Charles Kitchens $16,275; to Marble 8 Modes $4,000, Kolson, K O L S O N, Korlenge, K O R E N G E, 9 Inc., $4,300; Home Sped Window approximately $2,700; 10 Amaru, A M A R U, Tile Studio, approximately $14,000; ADT 11 Security Systems $500, and All Pro Painting for $8,665. 12 All of those announced a total of approximately $487,000. 13 Q Now, without reading all the items in the next box, 14 tell us the amounts and what sort of expenditures they 15 were? 16 A For furnishings, carpets, I guess artwork, and some 17 electronic equipment. And it totals approximately 18 $31,000. 19 Q And the next box? 20 A Payments to either maintenance or common charges of 21 the's -- to the Estates of North Hills, $7,834. 22 Q And the final box. 23 A The final box includes various other items, such as 24 insurance, a moving company, All-Fitness, I believe is a 25 gym, LILCO, and two other items that I don't actually
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1 recall what they were for, totalling close to $20,000. 2 Q And what is the total disbursements of PVI for that 3 year? 4 A Approximately $965,000. 5 Q Mr. Rosenblatt, let me show you 1512. What is that? 6 A A schedule of the 1994 year of the monies going into
7 and being disbursed by Publishing Ventures, Inc. 8 MR. WHITE: The government offers 1512. 9 MR. TRABULUS: No objection. 10 MR. WALLENSTEIN: No objection. 11 THE COURT: Government's Exhibit 1512 in 12 evidence. 13 (Government's Exhibit 1512 received in evidence.) 14 Q Start on the left side of the chart again with source 15 of funds, starting with the box that says Who's Who 16 Worldwide. 17 Did Who's Who Worldwide transfer any funds 18 directly to Publishing Ventures? 19 A Yes, $82,000. 20 Q Would you point that out on the chart? 21 A It is right at the top. 22 Q Now, did it transfer any funds to Bruce Gordon? 23 A Yes, $5,000. 24 Q And did Mr. Gordon make any transfers to Publishing 25 Ventures?
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1 A Yes, Mr. Gordon transferred $17,500 to Publishing 2 Ventures. 3 Q And did Mr. Gordon receive funds from any other 4 corporations? 5 A Yes, he did. 6 Q And where did he receive it from? 7 A Mr. Gordon received $12,500 from Registry Publishing. 8 Q Now, the amounts transferred by Who's Who Worldwide 9 and Registry Publishing to Mr. Gordon was what? 10 A $17,500. 11 Q How much has Mr. Gordon paid or transferred to 12 Publishing Ventures? 13 MR. WALLENSTEIN: Objection. Asked and answered. 14 THE COURT: Overruled. 15 A $17,500. 16 Q Does Who's Who transfer money to Sterling? 17 A Yes. 18 Q How much? 19 A Who's Who transfers approximately $831,000 to 20 Sterling. 21 Q And does Sterling then transfer any money to PVI? 22 A Yes, $27,000 to PVI. 23 Q Does Sterling transfer money to any other 24 corporation? 25 A Yes. Sterling transfers $513,000 to Registry
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1 Publishing. 2 Q Now, does Registry Publishing send anything to PVI 3 directly? 4 A Yes, $55,000 to Publishing Ventures. 5 Q Now, tell us what the total deposits to Publishing 6 Ventures are for that year? 7 A $181,562.25. 8 Q Okay. 9 Now, if you look on the right side under 10 disposition of funds, what does it say in the first box? 11 A $7,500 went to Bruce Gordon. 12 Q And how much is that relative to what was paid to 13 Publishing Ventures by Mr. Gordon? 14 A A little less than half. 15 Q And the next box reflects what? 16 A $109,062.50 went to Barbara Keller for the mortgage 17 payments. 18 Q And if you could just tell us what each box 19 represents, and the amount, without reading all the 20 indifferent items. 21 A $12,673 approximately to Ann Galante for real estate 22 tax. Then there were payments for improvements to 23 Matchless Construction, for electric, ADT Security, Joyce 24 Grossman Interiors and Pro Display for approximately 25 $16,000.
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1 The next box would show payments for furnishings 2 to Cliff Young Ltd., Harvey Electronics and Telefayan, 3 T E L F A Y A N, Carpets for approximately $8,800. 4 Common charges or maintenance at the Estates at 5 North Hills, $5,913. 6 Other expenses for All-For Fitness, LILCO, 7 insurance company, and for I guess a water bill for 8 approximately $3,200. 9 The last box shows miscellaneous payments of 10 $20,000 to Registry Publishing, to the IRS of corporate 11 tax of approximately a thousand dollars, and to the New 12 York State Department of Finance corporate tax of also 13 approximately a thousand dollars. 14 The total of the miscellaneous is approximately 15 $22,000. 16 Q What is the total disbursements of the year, 17 $185,668.79. 18 Take a look at Exhibits 1513, Mr. Rosenblatt, and 19 tell me what that is? 20 A It is the same as the charts we have just been 21 showing for the Manhasset condominium, showing the source 22 of funds going into Publishing Ventures and the 23 disposition of funds coming out of Publishing Ventures. 24 Q For what year? 25 A For the period January 1st to March 31st, 1995.
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1 MR. WHITE: Your Honor, the government offers 2 Exhibit 1513. 3 THE COURT: Any objection? 4 MR. TRABULUS: No. 5 MR. WALLENSTEIN: No, your Honor. 6 THE COURT: Government's Exhibit 1513 in 7 evidence. 8 (Government's Exhibit 1513 received in evidence.) 9 Q Start with the source of funds. Where are the funds 10 coming from going into Publishing Ventures? 11 A In the top box, Registry Publishing transfers $52,000 12 into Publishing Ventures. 13 The bottom box, we were unable to obtain the 14 underlying documents for $6,000 of unknown funds that went 15 into Publishing Ventures. 16 Q So, the total deposits into Publishing Ventures are 17 what? 18 A 58,000. 19 Q Tell us how that was spent by PVI. 20 A In the top box approximately $51,000 went to Barbara 21 Keller for the mortgage. 22 In the second box around $2,200 went to Ann 23 Galante for real estate tax. 24 Then there was a payment of about $71 for ADT 25 Security Systems.
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1 $2,011 paid for the common charges or maintenance 2 at the Estates at North Hills. And approximately $1,700 3 went to pay Royal Insurance. 4 Q What was the total amounts spent by PVI for this 5 period through March 31st, '95? 6 A $57,944.72. 7 Q Now, the charts you just reviewed for the years '92, 8 through '95, reflected deposits by Mr. Gordon to 9 Publishing Ventures; is that right? 10 A That's correct. I believe in only two of the years. 11 Q Now, if you can take a look at Exhibit 1506-B, like 12 in Boy. 13 First of all, tell us what that exhibit is? 14 A An analysis of deposits for Publishing Ventures to 15 NatWest Bank for the year 1993. 16 Q Does it have a column for deposits for Mr. Gordon? 17 A Yes, it does. 18 Q How much did
Mr. Gordon give to Publishing Ventures 19 in that year? 20 A $22,000. 21 Q Now, have you performed an analysis of where 22 Mr. Gordon got that $22,000? 23 A Yes, I did. 24 Q Tell us where? 25 A It came out of his account at National Westminster
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1 Bank. 2 Q Now, have you performed any analysis of where the 3 money came from that went into Mr. Gordon's account to pay 4 that rent? 5 A Yes. 6 Q And where did it come from? 7 A It came out of Who's Who Worldwide Registry. 8 Q And how was it accounted for on the books of Who's 9 Who Worldwide? 10 A It was charged to the loan account. 11 Q So, the money was borrowed from Who's Who Worldwide 12 to pay Publishing Ventures? 13 A That's correct. 14 Q Now, take a look
at 1506-C. That's the deposits for 15 the next year, 1994; is that correct? 16 A That's correct. 17 Q And how much does Mr. Gordon put in on that year? 18 A He puts in $17,500. 19 Q Let me show you Exhibit 770, which is a series of 20 checks from Mr. Gordon's personal account and refer you to 21 check number 122, and also Exhibit 709, which is a check 22 from Registry Publishing. 23 (Handed to the witness.) 24 Q Now, look at those two checks and tell us what they 25 reflect?
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1 A Check number 709 is a check from Registry Publishing, 2 Inc. It is a check number 1002, dated June 9th of 1994, 3 payable to Bruce Gordon in the amount of $12,500. 4 Exhibit 770 is a check on Bruce Gordon's account 5 at Sterling National Bank. Check number 122, dated June
6 9th, 1994, payable to Publishing Ventures in the amount of 7 $12,500. 8 Q And can you tell us, how the dates on the two checks 9 compare? 10 A It is the same date. 11 MR. WHITE: Your Honor, may I pass them out to 12 the jury? 13 THE COURT: Yes. 14 (Whereupon, the exhibit/exhibits were published 15 to the jury.) 16 Q Now, the 12,500 that went from Registry Publishing to 17 Mr. Gordon, the check you just identified, do you know how 18 it was treated on Registry Publishing's books? 19 A Yes, recorded as a loan. 20 Q A loan from Registry Publishing to Mr. Gordon to pay 21 PVI? 22 A That's correct. 23 Q Now, of the 17,500 that Mr. Gordon gave PVI in '94, 24 how much of it did he get back? 25 A He got back 7,500.
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1 Q Now, can you tell us the factors that the IRS uses in 2 determining whether money received by an individual 3 taxpayer constitutes a loan or income? 4 MR. TRABULUS: Objection, your Honor. 5 THE COURT: What ground? 6 MR. TRABULUS: I thought it was discussed 7 previously. 8 THE COURT: It was, and this is what I 9 permitted. 10 MR. TRABULUS: I misunderstood, your Honor. The 11 objection is still there. 12 THE COURT: The objection is overruled. 13 When you say used by the IRS, where did you get 14 these factors from, Mr. Rosenblatt? 15 THE WITNESS: Based on case law and experience. 16 MR. TRABULUS: Your Honor, may we approach 17 again? 18 THE COURT: All right. Come up. 19 20 (Whereupon, at this time the following took place 21 at the sidebar.) 22 MR. TRABULUS: I had thought, your Honor, 23 sincerely when we last
left it, this is what was excluded, 24 and specifically based on case law, there was a mention of 25 several factors where -- cases where these factors come
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1 from. 2 THE COURT: I will let the witness testify that 3 the IRS in the usual course of their business -- do they 4 make determinations as to whether some things are a loan 5 or not a loan? 6 MR. WHITE: Yes, that's what this revenue agent 7 does. 8 THE COURT: That he uses certain factors -- that 9 the IRS -- it is as if the IRS has a custom and usage in 10 determining. I will instruct the jury that this is the 11 IRS's determination and it is not necessarily my 12 determination or the law of the United States. But I will 13 certainly let them make a determination, if it is the 14 usual, customary method to make a determination by the 15 IRS, and he knows it, I will let him testify, even if it 16 is based on case law. Yes, I will let him do that. 17 MR. TRABULUS: I am still objecting. 18 THE COURT: Overruled. 19 MR. WALLENSTEIN: As to the factors used. 20 THE COURT: Yes. 21 MR. WALLENSTEIN: Not the ultimate conclusion. 22 THE COURT: What I told you I will not let he 23 will say is that I am now declaring that it is not a 24 loan. I will not let him say that. 25 He can say what the factors are involved in the
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1 IRS's determination. I will let him say that. But not 2 the ultimate question. 3 MR. WHITE: Not his conclusion. 4 THE COURT: That's right. The factors. 5 MR. TRABULUS: Just for the record, I note I am 6 still objecting.
7 MR. WHITE: This point I think is clear. But as 8 we go along Mr. Gordon is charged with filing false tax 9 returns and Mr. Reffsin is charged with the assisting of 10 filing the false returns. 11 THE COURT: Yes. 12 MR. WHITE: Mr. Rosenblatt has to be able to 13 testify that if these other terms were included as income, 14 the amounts would be higher, and those are not reflected 15 on the return. 16 THE COURT: Yes. 17 MR. WHITE: He can do that, but he can't say that 18 it is my conclusion that they should be on there. 19 THE COURT: Yes, he will say under IRS factors 20 that they use, this is what we do. 21 MR. TRABULUS: Is it necessary for me to preserve 22 the point to make an objection on each point. 23 THE COURT: No. I will give you a continuing 24 objection which I rarely do, and that's because I am in a 25 good mood today.
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1 MR. WALLENSTEIN: In that case I will join in as 2 well. 3 THE COURT: You, too. 4 5 (Whereupon, at this time the following takes 6 place in open court.) 7 THE COURT: Before you do that, I want to tell 8 the jury that the government has the -- 9 MR. WALLENSTEIN: I am sorry, your Honor, I can't 10 hear you. 11 THE COURT: Before you go ahead, I am going to 12 tell the jury that in every respect in all the elements of 13 these counts, the government has the burden of proving 14 beyond a reasonable doubt not only the guilt of the 15 defendants, but all the elements involved. 16 In the tax count the government has the burden of 17 proving beyond a reasonable doubt what it says it is going 18 to prove. And if the government says that some of these
19 things are not loans, the government has the burden to 20 prove this beyond a reasonable doubt. 21 What you are going to hear from this witness is 22 the IRS's version of the factors that they use. That is 23 to be considered by you, but it is not conclusive or 24 determinative. The ultimate burden, based on all the 25 evidence, is on the government to prove beyond a
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1 reasonable doubt what they say is their contention. 2 In this case, one of the contentions is that 3 these loans were not loans. That's their burden to prove 4 beyond a reasonable doubt. 5 What I am permitting now is the IRS version as to 6 what they consider to be loans, or the factors to be 7 considered in whether some things are loans or income to 8 be reported. It is not conclusive. It is their
version. 9 The ultimate burden is for the government to 10 prove it beyond a reasonable doubt. 11 Go ahead. 12 And I will give you the law on what a loan is, on 13 what is not a loan, in due time. 14 Q Now, Mr. Rosenblatt, before we get to the factors, 15 let me ask, in general, if someone is loaned money, is 16 that income to him? 17 A Not taxable income, no. 18 Q Why is that? 19 A Because it is excluded, specifically excluded. 20 Q Excluded by what? 21 A It is not taxable as income, as a loan. 22 Q And that's because you have to pay it back, right? 23 A Right. 24 Q Now, in your years as an IRS revenue agent, have you 25 been called upon to determine whether transfers of money
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1 to an individual taxpayer constitutes a loan or inco
me? 2 A Yes. 3 Q And are there established factors that the IRS uses 4 in making that analysis? 5 A Yes. 6 Q Can you tell us what those factors are? 7 A You would look to see the degree of corporate control 8 the individual has. You would look to see -- 9 THE COURT: When you say the individual has, you 10 mean the individual who receives the loan? 11 THE WITNESS: Yes, the individual who received 12 the money. 13 You would look to see what the repayment history 14 is. You would look to see if there are any loan documents 15 or other formalized recordings of the amount owed and what 16 the terms are to repay it, if there is a maturity date, if 17 there is interest being charged. 18 You would look at the nature of the expenses, the 19 frequency of the expenses, the amount of the expenses. 20 You would look at how long they are outstanding.
21 In other words, if the loan was made in year one, when was 22 it repaid, or when was any effort made to repay it. 23 You would also look at the ability to repay. If 24 the individual is loaned the money -- can I use an example 25 of this case?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2058 Rosenblatt-direct/White
1 THE COURT: No, I would rather you did not. 2 THE WITNESS: If the individual doesn't have the 3 ability to repay it, then it is really not a 11. 4 Q Let's take the ones you have listed so far. 5 The first thing you cited was the degree of 6 corporate control of the person receiving the loan. 7 Explain what you mean by that. 8 A Does the individual receiving the money have control 9 of where the money goes, how often it comes out, how much 10 he takes? Or are there like any road blocks to that? Are 11 there any
restrictions on that. 12 Q And the greater degree of corporate control, the more 13 likely to what confusion? 14 MR. WALLENSTEIN: Objection to the form of the 15 question. 16 THE COURT: Overruled. 17 A The greater amount of the corporate control the more 18 suspicious the transaction becomes. 19 MR. TRABULUS: Objection, your Honor. 20 MR. WALLENSTEIN: Objection. Move to strike. 21 THE COURT: Yes. Motion granted. Strike it out. 22 The IRS has these established factors, right? 23 THE WITNESS: Yes. 24 THE COURT: And one of them is the degree of 25 control?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2059 Rosenblatt-direct/White
1 THE WITNESS: Yes. 2 THE COURT: The more control that the borrower 3 has, that becomes a factor in determining whether it is a 4 loan? It tends to prove a loan more than not a loan,
5 together with the other factors. 6 THE WITNESS: The more control would prove the
7 more not a loan. 8 THE COURT: Not a loan? 9 THE WITNESS: Yes. 10 THE COURT: That's one of the factors? 11 THE WITNESS: Yes. 12 THE COURT: Is there one factor more important 13 than another factor? 14 THE WITNESS: I think they have to be taken in 15 total. 16 THE COURT: Is the ability to repay one of the 17 most important factors? 18 THE WITNESS: Absolutely. 19 THE COURT: How about an agreement to repay? 20 THE WITNESS: An agreement to repay because of 21 the amount of control, sometimes the documents can become 22 meaningless. 23 THE COURT: Okay. 24 Q Another factor you mentioned were loan documents, 25 what do you mean by that?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2060 Rosenblatt-direct/White
1 A Promissory note, a repayment schedule, maybe some 2 kind of security agreement. 3 Q And let's say the absence of loan documents would 4 tend to indicate what, it was a loan or not a loan? 5 MR. WALLENSTEIN: Objection. 6 THE COURT: Overruled. 7 A It would tend to indicate it was not a loan. 8 THE COURT: Although some loans are made without 9 any documents, right? 10 THE WITNESS: That's true. 11 Q You mentioned the nature, frequency and amount of the 12 loan as a fact. 13 Explain what you mean by that. 14 A Generally loans are not made to pay everyday 15 expenses. 16 Usually you get loans which might be in a lump 17 sum, and generally in that stipulation there are terms in 18 which it has to be paid. 19 If it is paid out on what seems to be a daily, 20 weekly basis, it just have more characteristic of not a 21 loan than a loan. 22 Q You mentioned repayment history as another factor. 23 What do you mean by that? 24 A Well, that goes hand in hand with the length of time 25 that the loan has been outstanding, if a loan is made and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2061 Rosenblatt-direct/White
1 then a week later it is repaid, then there is no problem. 2 If a loan is made and you go four years later and 3 there has been one repayment or no repayments, it would 4 tend to show that it wasn't really a loan. 5 Q Now, do the factors that the IRS relies upon in this 6 context, include the evaluation of the motive of the 7 taxpayer? 8 A Yes. You look at all factors that are available to 9 you. 10 Q Tell me what you mean by the motive of the taxpayer. 11 A You would want to know why they would take it as a 12 loan and not for instance, a salary. 13 Q How would that impact as to whether or not you would 14 consider compensation a loan or income, if you can give us 15 an example? 16 A Someone might want, because they owe a lot of money 17 to other people, and if their repayment of those debts is 18 based on what their income is, they might want to show it 19 as a loan and not income. 20 Q Now, if a taxpayer has made any statements indicating 21 that the money received is not a loan but is income, is 22 that a factor? 23 A Can you repeat that, please? 24 Q If a taxpayer has made statements that certain monies 25 are not a loan, but income, would that be a factor?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2062 Rosenblatt-direct/White
1 A Absolutely. 2 Well, it shows what the party really intended it 3 to be. If they say income and not a loan, it is in
come. 4 MR. TRABULUS: Objection. 5 THE COURT: You are objecting to that? 6 MR. TRABULUS: Yes, move to strike. 7 THE COURT: No. Motion denied. 8 By statements you mean written or oral 9 statements, saying I know it is not a loan, it is income; 10 is that right? 11 THE WITNESS: Yes. 12 THE COURT: You have that, and that you can 13 consider, too, by the borrower? 14 THE WITNESS: Yes. 15 THE COURT: All right. 16 On the other hand, if there are no such 17 statements, that indicates more likely that it is a loan, 18 correct? 19 THE WITNESS: That would be true. 20 Q Now, have you prepared an analysis of Mr. Gordon's 21 income for the years 1991 through 1994? 22 A Yes. 23 Q Mr. Rosenblatt, let me show you 24 Government's Exhibit 1404; do you recognize that? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL
COURT REPORTER 2063 Rosenblatt-direct/White
1 Q What is it? 2 A A schedule I have prepared for Mr. Gordon's 3 additional taxable income for the years 1991 through 4 1994. 5 MR. TRABULUS: Objection. 6 MR. WHITE: The government offers 1404. 7 MR. TRABULUS: Objection, your Honor, we 8 addressed this earlier. 9 THE COURT: We did? 10 MR. TRABULUS: Yes. 11 May we approach? 12 THE COURT: Yes. 13 14 (Whereupon, at this time the following takes 15 place in open court.) 16 MR. TRABULUS: Your Honor, I would hope that it 17 is just that Mr. White has forgotten, but this is the very 18 first document we talked about today. This is the 19 document we took out the words "additional taxable 20 income." And here we have it -- 21 MR. WHITE: I thought -- 22 MR. TRABULUS: It was changed to 1404-C to look 2
3 at it and not to bring it to the jury's attention. 24 MR. WHITE: I thought we just said if that would 25 be income here is what it would be. And these numbers
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2064 Rosenblatt-direct/White
1 would correspond to a chart comparing it to the tax 2 returns. We have to be able to do that otherwise we can't 3 present our theory. 4 THE COURT: What is this supposed to be? I 5 thought you were offering a table of what an income was. 6 MR. WHITE: This is Mr. Rosenblatt's analysis. 7 THE COURT: Is it Mr. Rosenblatt's analysis -- 8 MR. WHITE: If the loans are income, and if he is 9 charged as income with expenditures of the penthouse and 10 condominium, this would be what his income would be. 11 THE COURT: I don't think we discussed that. 12 MR. TRABULUS: This particular document was 13 brought to
your Honor, it was called 1404-A, it is the 14 very first document we talk about today. When I first 15 raised the objection and we first came up and raised the 16 objection of legal conclusions, it was the document 17 presented to you. This is the document -- that's the 18 document 1404-C, so the jury would not realize he was 19 being questioned about the additional income chart that 20 was prepared. 21 MR. WHITE: He is not going to give his 22 conclusion as a legal matter. But he has to be able to 23 explain if these matters were income, here are the 24 numbers. 25 THE COURT: How can't he say something like
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2065 Rosenblatt-direct/White
1 that? This is a case involving tax evasion. It is a tax 2 evasion case, isn't it? 3 MR. WHITE: Yes. 4 The evasion of payment, your Honor --
5 THE COURT: One minute. 6 Which count is that? 61? 7 MR. WHITE: I believe 60 is the conspiracy, and 8 61 is tax evasion. 9 THE COURT: In this case those two counts, the 10 government charges that he concealed income during those 11 years by calling them loans and not paying taxes on them. 12 It is very simple. 13 All they are doing here is showing if this is 14 income, this is what would be. How can I prevent the 15 government from showing that? 16 MR. TRABULUS: Well, it is more than loans. 17 First of all, this document includes the purchase price of 18 a condominium. If he wants to talk about the loans, 19 that's up here, and they can indicate it is the loan. 20 THE COURT: This is the first part here, the top 21 part -- what is the number of this exhibit? 22 MR. WHITE: It is 1404, your Honor. 23 THE COURT: All right. 24 Go ahead.
That's the alleged taxable income 25 called loans, right?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2066 Rosenblatt-direct/White
1 MR. WHITE: Correct. 2 MR. WALLENSTEIN: It was pointed out this 3 morning, that the $942,000 item in 1993 for the purchase 4 of the Manhasset condo is monies spent for the purchase of 5 real property, an asset which that corporation still 6 owns. 7 So, at the very least all that could be 8 attributable to Mr. Gordon there is the rental and not the 9 asset. 10 MR. WHITE: That's your theory. The government's 11 theory is PVI was a shell corporation. It did no 12 business. Mr. Gordon controlled it. And the fact that he 13 used a corporate shell to buy a personal residence means 14 nothing. 15 And also, Mr. Chase who was here yesterday who 16 paid rent, paid rent to PVI. We have the check stubs in 17 evidence to show that the rent money went from PVI right 18 into Mr. Gordon's pockets. So after Mr. Gordon moves out, 19 it shows he is collecting the money personally. It shows 20 he has all the incidents of ownership in the condominium 21 and is collecting the rents. 22 MR. TRABULUS: He doesn't have title to it. 23 MR. WHITE: That doesn't mean anything. 24 THE COURT: You are putting in here the purchase 25 price of the condominium or the amount spent?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2067 Rosenblatt-direct/White
1 MR. WHITE: The purchase price. 2 The government's theory is Publishing Ventures 3 bought and furnished to Mr. Gordon a house. 4 MR. TRABULUS: This is the same government which 5 is seeking to present the theory that he doesn't own it, 6 and it is PVI's -- I have to put it this way, the
7 government at the same time is maintaining a civil action 8 against among others Mr. Gordon. In that civil action the 9 government maintains that there is no question that this 10 house, this condominium, belongs to PVI, and there is 11 further no question that PVI is going to have to give it 12 over, because either it is going to go to the trustee in 13 bankruptcy, its settlement for the trustee in bankruptcy, 14 or to the government in a forfeiture. 15 They are speaking out of two sides of their 16 mouth. In a civil case they are saying one thing, and 17 here they are saying it is his house. 18 MR. WHITE: They are quarreling with the 19 government's legal theory. They can cross-examine the 20 witness if they wish. 21 MR. TRABULUS: There is something here known as 22 estoppel. 23 THE COURT: I have a problem with the government 24 charging the full amount of this property and saying it is 25 income to Mr. Gordon.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2068 Rosenblatt-direct/White
1 I have less of a problem of the monies that were 2 actually paid, the theory of the government being that it 3 is taxable income to Mr. Gordon. After all, PVI still has 4 title to this property. What is going to happen to that 5 we don't know yet. 6 MR. TRABULUS: Your Honor, without backtracking 7 the position I took earlier where I made the objection 8 which is continuing. It seems to me consistent with your 9 Honor's ruling he should be allowed to say the total 10 amount of loans which the IRS -- the total -- I mean all 11 he can say is the total amount of loans. 12 THE COURT: The monies paid out. 13 MR. TRABULUS: The total amount is the amount. 14 And then it is up to the government to argue to the jury 15 under the law you instructed that it constitutes income. 16 THE COURT: The government's theory is that the 17 monies paid out to maintain and improve the condominium is 18 all income to Mr. Gordon. And I think they should have a 19 right to show that. But not the purchase price of the 20 property. That was not paid out. 21 MR. TRABULUS: And even the improvements, your 22 Honor, capital expenditures. They put in a new bathroom 23 or a shower. 24 MR. WHITE: That's your theory. Argue it to the 25 jury and cross-examine Rosenblatt about it.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2069 Rosenblatt-direct/White
1 MR. TRABULUS: Not just my theory. It is the 2 same government -- 3 MR. WHITE: The government is not saying that. 4 They have a criminal forfeiture count in this 5 indictment -- 6 THE COURT: I will recess the jury. We have to 7 let him go in any event. 8 By the way, when is he coming back? 9 MR. WHITE: Tomorrow afternoon, your Honor when 10 we start. 11 THE COURT: All right. 12 13 (Whereupon, at this time the following takes 14 place in open court.) 15 THE COURT: Members of the jury, it is going to 16 take a little while. We might as well have a recess. 17 Please do not discuss the case. And keep an open mind. 18 (Whereupon, at this time the jury leaves the 19 courtroom.) 20 THE COURT: Mr. Rosenblatt, you can be excused. 21 You will be back tomorrow afternoon by 1:30. 22 THE WITNESS: Yes, your Honor. Thank you. 23 (Whereupon, at this time the witness left the 24 witness stand.) 25 MR. WHITE: Your Honor was asking me the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2070 1 government's theory. And the theory on the condominium 2 part is that if a corporation said to an employee, here, 3 we are giving you a condominium. It is yours. You live 4 there. We will pay for it. You do what you want with it, 5 it is yours that would clearly be income if they gave 6 someone a house, the entire value of the house, including 7 what they paid for it. 8 The government's theory is that this is no 9 different. The difference is rather than giving to it 10 Mr. Gordon in his name, they used a subterfuge of 11 establishing a corporation that only existed on paper, did 12 no business whatsoever. The only business was to hold 13 this condominium and be a conduit for funds from Who's Who 14 Worldwide to purchase, furnish, maintain this condominium. 15 They may disagree with the theory, but it is 16 certainly not something that the jury should be barred 17 from hearing. 18 THE COURT: Your theory is that the entire price 19 of the condominium should be charged as income even though 20 whoever bought it -- was it PVI? 21 MR. WHITE: Yes. 22 THE COURT: Only paid so much down on it and owns 23 the rest? 24 MR. WHITE: Your Honor, during the course of the 25 intervening years the mortgage was paid off, Publishing
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2071 1 Ventures owns the property free and clear. 2 THE COURT: So there is no more mortgage? 3 MR. WHITE: Correct. 4 One of the reasons, your Honor, that bolsters 5 that is Mr. Gordon is exercising what we call the 6 incidences of ownership. Namely, once he moves out of the 7 so-called corporate property, and tenants move in, namely, 8 Mr. Chase, who testified here yesterday, Mr. Chase fills 9 out his rent check in name to Publishing Ventures. But 10 when you look at the Publishing Ventures check stub which 11 go right through 1997, and Mr. Chase's checks go in. It 12 says on the stub, S Chase rent to B G. It goes right out 13 the door to Mr. Gordon's pocket. 14 When Mr. Gordon was arraigned on this indictment 15 in November of 1997, he had to fill out a financial 16 affidavit to get court appointed counsel. He included 17 that rental income as his income on that form. So he is 18 exercising the incidences of ownership, although it is 19 held in PVI's name. He lived there. When he moved out, 20 he gets the payments from the tenant. 21 THE COURT: It is the government's contention 22 that the property was purchased for him? 23 MR. WHITE: Yes. 24 THE COURT: As additional income? 25 MR. WHITE: Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2072
1 THE COURT: Taxable income? 2 MR. WHITE: Yes. 3 MR. TRABULUS: I don't know how the government 4 with a straight face, without conceding anything, that the 5 they showed the income he received shows the value of the 6 income from the property during the time he used it, or 7 going forward if you include the rental payments that 8 Mr. Chase is paying, which would also constitute the value 9 of the income of the property, and you have to give 10 credits against what rent he paid. We have testimony he 11 paid represent. We don't know if there is any difference 12 between the fair market value of the property and the rent 13 he paid. But to say he was actually given this when there 14 is no indication under the law of any state, he would be 15 able to assert against any judgment creditor or tax 16 creditor of PVI, that no, you can't reach this asset. It 17 is mine. 18 It is nonsense, Judge, complete nonsense. PVI 19 has title. There is a proceeding in the bankruptcy court, 20 an adversary proceeding where the trustee basically got a 21 default judgment against PVI for the property. 22 The government maintains in civil litigation 23 before your Honor, and Mr. Government will be here 24 tomorrow on it, that the only question in this is whether 25 the bankruptcy trustee's claim to this under his
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2073 1 settlement with PVI, not Mr. Gordon, takes precedence over 2 its claim as to the forfeiture. 3 It is saying meanwhile while we sort out who owns 4 it, the assets should be held in escrow, and Mr. Gordon 5 should continue to get a portion of the rental, and that 6 portion, by the way, after expenses, which apparently are 7 paid, a portion of the rental which he is an officer of 8 PVI and might be regarded as salary to him.
9 Leaving that aside, they are claiming it is his 10 property, it is his, given to him. He has the usage and 11 ownership of it. 12 In other litigation they are taking the 13 opposites. There is a principle known as judicial 14 estoppel. They can't have it both ways. They can't say 15 out of the criminal side of their mouth that this is 16 Mr. Gordon's property, he owns it, he should have paid 17 taxes on it, and out of the civil side of their mouth, 18 say, hey, it is just a question of who is entitled to get 19 it from PVI, which is the owner of it. 20 MR. WHITE: Your Honor, it is not what the 21 government is saying in the civil case as I understand 22 it. The government is saying there that the government 23 has a lien on it because there is a forfeiture count on 24 this indictment.
25 All we are saying is the income stream from the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2074 1 current tenant should be held by the Court at a minimum, 2 because the government, that's the proceeds from this 3 criminal activity. If the condominium itself is 4 forfeitable property, so is the income stream coming from 5 it. 6 With respect to what Mr. Trabulus said before 7 about ownership, the government in Mr. Rosenblatt's 8 calculations was going to credit Mr. Gordon for the rent 9 that he paid, give him various deductions for mortgage 10 interest payments and everything else. We were going to 11 do those calculations. Some was calculated as income, and 12 he would get certain attendant deductions. 13 If they want to dispute our theory, fine. They 14 must direct it to the jury in summation. They can't bar 15 us now because they disagree with our legal theory. 16 THE COURT: It is more than that, Mr. White. 17 They say it would be improper as a matter of law to 18 present to the jury this condominium as an asset of 19 Mr. Gordon when it went to PVI, and he used it. They say 20 that, therefore, to charge this asset as a matter of law 21 it could not be taxable income. 22 MR. WHITE: Your Honor, I disagree. I feel there 23 is certainly enough here -- first of all, it is codified 24 in the tax code that transactions have to be analyzed for 25 their substance and not their form. And here I feel there
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2075 1 is certainly enough evidence from which the jury could 2 conclude that this was essentially a gift to Mr. Gordon. 3 Because he controlled both the companies, PVI just existed 4 on paper and all the reasons
I mentioned before. Again, 5 once he moves out, he is collecting the rent. 6 THE COURT: Do you have any authority as to 7 that? What you are doing is almost like piercing the 8 corporate veil here. Do you have any authority as to 9 other cases that held that giving pieces of property to a 10 corporation controlled by the taxpayer would be taxable 11 income to the taxpayer? 12 MR. WHITE: Something that specific, the answer 13 is no, your Honor. 14 THE COURT: That's what we are talking about 15 though. I can't believe this has not occurred before. 16 MR. WHITE: It may have in tax court decisions 17 and what not. It did not occur to me that -- 18 THE COURT: Well, between now and 1:30 tomorrow I 19 am going to have to decide whether to do it. Any help I 20 can get on the law I would appreciate. 21 MR. WHITE: I will be hitting the books tonight, 22 your Honor. 23 If I can clarify what we are arguing about, so it 24 is clear -- 25 THE COURT: I haven't got a copy of that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2076 1 document. 2 MR. WHITE: The loan issue I believe is settled. 3 The condominium issue is open. 4 THE COURT: When you say the loan issue, you mean 5 the personal expenses paid, and the alleged loans to Bruce 6 Gordon by the corporations? 7 MR. WHITE: Correct, the top half of this case. 8 THE COURT: We are now talking about the condo in 9 Manhasset? 10 MR. WHITE: If you skip the condominium, the next 11 is Manhattan penthouse Sterling Who's Who. There he is 12 being charged with income as the rent that Sterling paid 13 for the penthouse. That's the theory that Mr. Wallenstein 14 is saying we should apply to the condominium, too. So I 15 am assuming there is no argument about that, namely that 16 Sterling provide 8,000 a month to the -- 17 THE COURT: I assume they will not object to 18 that -- I mean your objection to you claiming it. 19 MR. WALLENSTEIN: I don't agree that it is 20 income. But I think it is admissible. 21 MR. WHITE: They don't object to my inclusion of 22 this on the chart. 23 THE COURT: We are talking now about the 24 condominium in Manhasset. And that's a big chunk. 25 MR. WHITE: Correct.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2077 1 MR. WALLENSTEIN: Half his number. 2 MR. WHITE: If we can't impute the entire amount, 3 we certainly can establish some sort of -- 4 THE COURT: Reasonable use. 5 MR. WHITE: Correct. 6 THE COURT: Which is what the defendants have 7 said. 8 MR. TRABULUS: That's the most they could argue.
9 THE COURT: I don't know whether that is so. But 10 we have this corporation to overcome. It is a 11 corporate -- the gift or the money was paid for by a 12 corporation. Now you have shown that monies come from 13 Who's Who Worldwide Registry into this corporation, 14 Publishing Ventures. But I am not convinced that you can 15 assess the entire value of this condominium to the 16 individual who isn't living there and who controls the 17 corporation, a different corporation. 18 MR. WHITE: I understand that, your Honor. I 19 guess what I don't understand -- and I don't have cases to 20 cite to your Honor, but it doesn't seem to me -- it seems 21 to me that their argument goes to the weight of this. It 22 is not -- the government's theory is not so far out that 23 as a matter of law it is preposterous. 24 THE COURT: I don't know, I don't know. I am not 25 sure about it, and I am certainly not an expert on the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2078 1 subject. And that why I say I will have to do some 2 research. And whatever help you can afford, all sides, I 3 would appreciate it. 4 MR. WHITE: Okay. 5 MR. WALLENSTEIN: It doesn't have to be 6 preposterous for you to preclude them. It could be 7 somewhat less and still admissible. 8 THE COURT: Of course. 9 THE COURT: We will take a brief recess and we 10 will get back. 11 You will have another witness, I assume. 12 13 (Whereupon, a recess is taken.) 14 15 (In the absence of the jury.) 16 THE COURT: Mr. White, in the event I only permit 17 the reasonable rental value to Mr. Gordon on the use of 18 the condominium, and I may very well restrict it to that, 19 you better prepare a new sheet.
20 MR. WHITE: It is not the only chart that will 21 have to be reworked. 22 THE COURT: I am giving you advance notice. I 23 have not made a decision yet, but I may prohibit you from 24 bringing that to the jury's attention. 25 MR. WHITE: Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2079 1 MR. WALLENSTEIN: The numbers are already there 2 by virtue of all the charts there, the numbers I don't 3 know. But all the float charts have all those numbers on 4 it already. 5 THE COURT: Yes. 6 MR. WALLENSTEIN: The numbers are before the 7 jury. The charts are in evidence. 8 THE COURT: What is your point? You don't need 9 this, you mean? 10 MR. WALLENSTEIN: I feel we need to rework it, 11 but we need a limited instruction to use the numbers on 12 the money laundering count, I presume. 13 THE COURT: The jury --
no, I am not sure. I 14 don't think we need a limiting instruction, if you feel we 15 do, type one out and give it to me. How could this jury 16 not be somewhat confused about this? They have to be. 17 MR. WALLENSTEIN: The rest of us are. 18 THE COURT: If we are having trouble, they are 19 having more trouble, I believe. You can give them a 20 limiting instruction which may only confuse them more, 21 which is what you might want. 22 MR. WALLENSTEIN: What we get paid for. 23 THE CLERK: Jury entering. 24 (Whereupon, the jury at this time entered the 25 courtroom.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2080 1 THE COURT: Please be seated, members of the 2 jury. 3 I must apologize for keeping you waiting beyond 4 the ten minutes. I say ten minutes, and most of the time 5 it is longer than that. I do not do it
-- have a seat, 6 ma'am. 7 I do not do it intentionally. There are issues, 8 some of them complex that we have to discuss. When you 9 discuss issues, sometimes you have to deliberate a bit, 10 look up law from time to time, and that's why you are kept 11 waiting occasionally. 12 I do not like to keep you waiting, especially in 13 a small room like this. When the jury rooms were given 14 out, they decided since I got the biggest courtroom, I 15 will get the smallest jury room. That's the quid pro 16 quo. But when we move to Central Islip, which I hope you 17 all join us in three or four years, we will have plenty of 18 room. 19 You may proceed. 20 MR. WHITE: Your Honor, we have a new witness. 21 THE COURT: All right. 22 By the way, we are interrupting the testimony of 23 Mr. Rosenblatt. We will resume that tomorrow at 1:30. 24 You can take a
deep breath between now and 1:30 tomorrow. 25 THE CLERK: Will the witness please rise and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2081 1 raise your right hand. 2 3 T R A C E Y C O L L E T T I , 4 called as a witness, having been first 5 duly sworn, was examined and testified 6 as follows: 7 8 THE CLERK: Please state your name and spell your 9 last name slowly for the record. 10 THE WITNESS: Tracey Colletti, C O L L E T T I. 11 THE COURT: Have a seat, Ms. Colletti. 12 13 DIRECT EXAMINATION 14 BY MS. SCOTT: 15 Q Good afternoon, Ms. Colletti. 16 A Hi. 17 Q Can you tell us where you live. 18 A Queens. 19 THE COURT: Hold it one minute, please, 20 Ms. Scott. 21 (Whereupon, at this time there was a pause in the 22 proceedings.) 23 THE COURT: The jurors
asked my courtroom deputy 24 who the man was sitting next to Mr. Trabulus. Very 25 observant.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2082 Colletti-direct/Scott
1 Would you like to introduce -- where is the 2 gentleman? 3 MR. TRABULUS: He left, Mr. Rosenblatt isn't 4 here. 5 THE COURT: Would you explain to the jury, 6 Mr. Trabulus. We talked about it and we decided it wasn't 7 necessary, but you are ahead of us as usual. 8 MR. TRABULUS: As an attorney specializing in tax 9 matters and he is here to assist me. 10 JUROR NO. 5: What is his name? 11 MR. TRABULUS: May I? 12 THE COURT: Sure. 13 MR. TRABULUS: His name is Jeffrey O'Connor. 14 THE COURT: Very well. You may proceed. 15 Q Ms. Colletti, what do you do for a living? 16 A Public relations work. 17 Q Have you ever worked at a company called Who's Who 18 Worldwide Registry? 19 A Yes. 20 Q When did you begin working there? 21 A Middle of January, 1994. 22 Q How long did you work there for? 23 A Until late December of the same year. 24 Q Now, while you were there, where were you located? 25 Where were you physically working?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2083 Colletti-direct/Scott
1 A In Lake Success. 2 Q What position did you have? 3 A My title was senior editor of Tribute Magazine. 4 Q What were your responsibilities as senior editor? 5 A Developing the magazine from the beginning to the 6 end, writing the articles, interviewing members, doing 7 layout, going to -- on press when it was being printed, 8 pretty much from the beginning to the end. 9 Q Now, while you were at Who's Who Worldwide who was in 10 charge of the company? 11 A Bruce Gordon. 12 Q And how did you discover that -- withdrawn. 13 Who owned the company while you were there? 14 A I guess I just assumed it was Bruce Gordon. 15 Q Where did you get that information? 16 A He was pretty much the top person there when I was 17 there at the time. 18 Q And to your knowledge where did Mr. Gordon live while 19 you were at Who's Who Worldwide? 20 A I believe I had heard that he lived in Manhasset. 21 Q What kind of residence did he have there to your 22 knowledge? 23 A I heard someone say it was a townhouse. 24 Q Have you ever visited Mr. Gordon's residence in 25 Manhasset?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2084 Colletti-direct/Scott
1 A No. 2 Q Now, Ms. Colletti, I am showing you 3 Government's Exhibit 640 in evidence. 4 (Handed to the witness.)
5 Q I would ask you to look at the third page of that 6 document. The top there has 2 Hummingbird Road; is that 7 correct? 8 A Yes. 9 Q And take a look at the entry for August 9th, 1994, 10 would you read that aloud? 11 A Date, 8/9, guest Suzanne Konopka and then my name, 12 Tracey Colletti is under it, and then it says occasion, 13 discuss public relations events. 14 Q Now, did you ever attend such a meeting at the 15 residence in Manhasset? 16 A No. 17 Q Take a look at the entry on page two of that same 18 exhibit, the page following, which really should be page 4 19 of the exhibit. 20 A Okay. 21 Q The entry for September 12th, 1994, can you read that 22 aloud for the jury, please. 23 A The date is 9/12/94, guests name, Debra B, Suzanne K 24 and Tracey Colletti. Occasion, planning reception, 25 Russian members.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2085 Colletti-direct/Scott
1 Q Did you ever attend such a meeting on September 12th? 2 A No, I did not. 3 Q Did you have any involvement with Russian members at 4 that time? 5 A I believe they came to our offices once for a 6 meeting. 7 Q Now, turning to the next page of that document, the 8 entry for September 19th, 1994, would you please read that 9 aloud to the jury? 10 A 9/9/94, guest, Suzanne K, Tracey Colletti, Debra 11 Benjamin. Occasion, review members. 12 Q And did you ever attempt such a meeting on September 13 19th at the condominium? 14 A No, I did not. 15 Q And what if any involvement did you have with 16 memberships at the company? 17 A I would select members to interview for profiles in 18 the magazine, and deal with them on the phone. 19 Occasionally a member may call to have a press 20 release written for him or herself for the local paper or 21 for a resume attachment. And that was it. 22 Q Now, what other residences did Mr. Gordon maintain 23 while you were at Who's Who Worldwide? 24 A I believe there was a penthouse in Manhattan. 25 Q And what was your understanding as to what Mr. Gordon
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2086 Colletti-direct/Scott
1 used that penthouse for? 2 A I was never -- it was never told to us. I assumed it 3 was another apartment, a location in the city. 4 Q Did you ever visit that location? 5 A Once. 6 Q And when did you visit it? 7 A I believe it was in the middle of August of 1994. 8 Q And what was your visit for? 9 A It was described as a cocktail party. 10 Q Were there other employees present at that event? 11 A Yes.
12 Q Were any members of the company present there? 13 A No. 14 Q Now, before you went to this party, what were you 15 told was the purpose of the party? 16 A Just a gathering of the employees, maybe to kind of 17 see his new penthouse, I guess. 18 Q And before that time what had Mr. Gordon said to you 19 and the other employees about socializing with each other? 20 A It wasn't looked highly upon. We were all there to 21 do a job and not socialize. So we really weren't 22 encouraged to socialize during the workday. 23 Q On this summer night in 1994, who was present at this 24 gathering? 25 A Do you want the names?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2087 Colletti-direct/Scott
1 Q Indicate which departments they were from? 2 A The Tribute Magazine, there were four of us on staff 3 who worked on the magazine, as well as some salespeople. 4 Q Now, turning back to Government's Exhibit 641, if you 5 could turn to the page, the first page listing entry for 6 250 East 54th, and take a look at the entry for September 7 9th, 1994. 8 Can you read that aloud for the jury, please. 9 A September 9th? 10 Q 6th, 1994. 11 A 9/6/94, guest, Tracey Colletti, Suzanne and Debra 12 Benjamin. Occasion, review mailings and analyze. 13 Q Did you attend such a meeting on September 6th, 1994? 14 A No. 15 Q Did your job involve working with the mailings? 16 A I think once we were asked to go to one of the 17 mailing houses out on Long Island to oversee a mailing, 18 that a mailing went smoothly. 19 Q Now, aside from the cocktail party you told us about 20 did you ever attend any other business type meetings at 21 this penthouse in Manhattan? 22 A No. 23 MS. SCOTT: I have no further questions. Thank 24 you. 25 THE COURT: Cross-examination.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2088 Colletti-cross/Trabulus
1 MR. TRABULUS: Thank you, your Honor. 2 3 CROSS-EXAMINATION 4 BY MR. TRABULUS: 5 Q Good afternoon, Mrs. Colletti, I am Norman Trabulus, 6 and I am Mr. Gordon's lawyer. 7 Just a couple of questions to begin. 8 When you worked at Who's Who Worldwide did you 9 work at the Lake Success location? 10 A Yes. 11 Q Was there ever any period of time when you worked at 12 the Sterling offices on 59th Street in Manhattan? 13 A I would occasionally go there for a meeting or to 14 discuss the magazine. 15 Q But that was not your regular place where you worked? 16 A No. 17 Q You mentioned that there was one occasion when 18 Russian members came to the offices for a meeting; is that 19 right? 20 A Yes. 21 Q That was on Long Island; is that right? 22 A No. I believe it was the Manhattan office. 23 Q And would you be aware as to whether there were other 24 meetings that the Russians attended in Manhattan that you 25 may not have been invited to?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2089 Colletti-cross/Trabulus
1 A It's possible. 2 Q With regard to the cocktail party that you went to at 3 the penthouse, was that the only time you were at the 4 penthouse? 5 A Yes. 6 Q I think you said it was a guess to see the apartment, 7 is that what you were told? 8 A We were never told. It was Saturday night, you are 9 invited to the penthouse. 10 Q Okay. 11 You mentioned that you had been told that 12 socializing was not encouraged during business
hours. And 13 I want to ask, was that something told to you at the 14 penthouse or something told to you other times? 15 A No, at the Lake Success office, not at the penthouse. 16 Q All right, that makes sense, all right. 17 Now, when you worked for Who's Who Worldwide can 18 you tell us the general types of things that you did. 19 A Basically the main focus of my work was on the 20 Tribute Magazine, again, developing the magazine, having 21 meetings to decide who we would profile, which members we 22 thought were worthy of being profiled in the magazine, and 23 the process of getting in touch with them, which could 24 take weeks, to set up an interview; actually interviewing 25 them; writing the profile, the feature on them; having it
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2090 Colletti-cross/Trabulus
1 approved; finalizing the copy,
and sending it to a layout 2 person who would then design the magazine for us,
3 proofread the magazine and sending it to the printer. 4 Q Did you work with Suzanne Konopka? 5 A Yes. 6 Q Can you tell us some of the members you recall 7 interviewing for being profiled. If you need a magazine, 8 I can show you. 9 A Linda Sweeney, a vice president at HBO, Home Box 10 Office. 11 I don't recall her name, but she was one of the 12 founders of Lowe's theaters, L O W E S. 13 Another woman from the Foundation of Legal 14 Blindness. I don't recall their names, just the 15 organization. 16 Mario Argenti, A R G E N T I, president of WELLA, 17 W E L L A. 18 Q And was this just some of the ones you interviewed? 19 A These were the ones that I had an interest in the 20 interviewing -- that I conducted the interview and wrote 21 the article.
22 Q Were there others besides the ones you just 23 mentioned? 24 A That I wrote? 25 Q Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2091 Colletti-cross/Trabulus
1 A Oh, sure. 2 Q Do you recall approximately how many there were? 3 A I believe we had 12 to 15 profiles per issue. I did 4 about four or five for each issue, per issue. 5 Q Did you have occasion to speak to members who were 6 not being profiled in Who's Who -- excuse me, in Tribute? 7 A Occasionally. 8 Q What would be the circumstances of that? 9 A The calls would be forwarded to my line. Maybe they 10 wanted to have a press release written about them. It was 11 a basic introduction release, saying their name, the 12 company they were with have been inducted into Who's Who 13 Worldwide. Some of them wanted it for local newspapers or 14 their resume or portfolio, I guess. 15 MR. TRABULUS: Just bear with me a minute. 16 THE COURT: Yes. 17 (Whereupon, at this time there was a pause in the 18 proceedings.) 19 Q Did you ever have occasion to speak to members who 20 would call up hoping to be profiled in Tribute or 21 spotlighted in Tribute? 22 A We would get feedback on the magazine, some members 23 would call requesting additional issues. 24 No members had ever called me requesting to be 25 profiled.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2092 Colletti-cross/Trabulus
1 Q Did you ever get correspondence from members you 2 would recall asking to be included in Tribute or 3 suggesting they could be? 4 A No. But I received some letters of people I profiled 5 thanking me or thanking the magazine for their profile. 6 But no one requested being profiled.
7 Q Is it fair to say that the members you spoke to were 8 pleased? 9 A The members I interviewed? 10 Q In general, the members you spoke to, if you have to 11 separate the ones you interviewed from the ones who may 12 have called you on other occasions. 13 A The people I interviewed were quite pleased. The 14 press releases weren't many, but they were pleased. 15 MR. TRABULUS: No further questions. 16 THE COURT: Anything else? 17 MR. SCHOER: I have a few questions, Judge. 18 19 CROSS-EXAMINATION 20 BY MR. SCHOER: 21 Q Good afternoon, Ms. Colletti. 22 A Hello. 23 Q You indicated on direct examination that there were 24 some Russian members who came to the office for a meeting? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2093 Colletti-cross/Schoer
1 Q Do you remember when that occurred? 2 A I would have to guess it was sometime in the summer. 3 I think it was warm weather. It wasn't cold, that's the 4 best I could do. 5 Q That's in the Lake Success office? 6 A No, that was in Manhattan. 7 Q You also indicated on direct examination that after 8 you would prepare the profiles you submitted them for 9 approval? 10 A Yes. 11 Q Who did you submit them for approval to? 12 A Margaret Swendseid. 13 Q Do you know whether she submitted them for approval 14 to anyone else? 15 A She may have shared them I think with Debra Benjamin. 16 Q Those were people who were above you in the hierarchy 17 of the Tribute Magazine? 18 A Yes, Margaret was the managing editor. And Debra 19 just oversaw the magazine. 20 Q Now, those press releases that you prepared, were 21 those very simple type press releases? 22 A Very simple.
It was all pretty much written 23 already. All we had to do was to insert their name and 24 company and their location in the country. 25 Q Did you charge for that, do you know? Or was that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2094 Colletti-cross/Schoer
1 part of the membership? 2 A I didn't charge for it. I just did it. 3 Q You didn't prepare any sort of an invoice for the 4 administration department to charge for something like 5 that, did you? 6 A No. 7 Q I will show you what is marked in evidence as 8 Defendant's Exhibit I. 9 Is that the kind of press release you would fill 10 in and then send out to the members? 11 (Handed to the witness.) 12 A Yes, uh-huh. 13 Q Thank you. 14 Now, in addition to interviewing the members in 15 the Tribute Magazine, there were letters from members. 16
Did you have anything to do with receiving or 17 reviewing those members for entry into the publication? 18 A The letters didn't come to me. 19 Q Did you review them at any time before the 20 publication was actually sent to members? 21 A Sure. We would proofread them once they were input 22 by our designer. 23 Q And those letters indicated generally that members 24 were happy with the product, with their membership; isn't 25 that so?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2095 Colletti-cross/Schoer
1 A The letters we published in Tribute, yes. 2 Q And those letters indicate that the people at least 3 who wrote those letters at least received some value for 4 being members of Who's Who Worldwide; isn't that so? 5 A The letters would thank us for the magazine. That 6 was really what they were -- what they were about.
7 Q And they would also say I have been to, I have been 8 able to network as being a, as a result of being a member, 9 or as a result of preparing my profile in the Tribute 10 Magazine; is that correct? 11 A I don't remember what the letters said exactly, but 12 it was probably along those lines. 13 Q Okay. 14 Now, you indicated that Bruce Gordon was in 15 charge; is that right? 16 A Right. 17 Q And -- 18 A At least of me. 19 Q Okay. 20 And as far as you, you were there on a daily 21 basis at Lake Success; is that right? 22 A Yes. 23 Q He was in charge of everyone, wasn't he? 24 A Sure. 25 Q He was -- would you say he was a real hands on CEO?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2096 Colletti-cross/Schoer
1 A He was visible there. 2 Q And he was the decision-maker, isn't that so? 3 A Any decisions that involved my job there, he would 4 make the ultimate decision, sure. 5 Q And he had to approve even some very little minute 6 details of your job and other people in your department, 7 it was a requirement that Bruce Gordon approve what was 8 being done; is that so? 9 A I would have direct dealings with Debra Benjamin, who 10 would have more dealings with Bruce directly. But there 11 were times when I did have to deal with Bruce. 12 Q And based on what you observed at Who's Who 13 Worldwide, would you say that the people in the 14 administration department had a similar experience with 15 Bruce Gordon, that he was the one who ultimately made all 16 the decisions? 17 A That's what I believed at the time. 18 Q And would you say that was true also of the people in 19 the sales department? 20 MR. TRABULUS: Objection, your Honor.
21 Foundation. 22 THE COURT: Do you know what the people in the 23 sales department felt about Mr. Gordon? 24 MR. SCHOER: Judge, I didn't really ask what they 25 felt.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2097 Colletti-cross/Schoer
1 THE COURT: What did you ask? 2 MR. SCHOER: I am sorry. I didn't mean to 3 interrupt your Honor. 4 Q I asked, based on what you observed being there on a 5 daily basis, would you say that Mr. Gordon was the one 6 that was making the decisions with respect to the sales 7 department as he was with respect to your department? 8 A Yes. 9 Q Is it fair to say that not only did he not 10 particularly like people to socialize, but he kept the 11 departments departmentalized, you were not supposed to 12 know what was going on in administration; is that fair to 13 say? 14 A I am not saying we weren't really supposed to know. 15 We had nice offices there. I had my own office that was 16 pretty much in the corner with a door. And my back -- 17 when I would type my back was to the door because my 18 computer was facing that way. So I was kind of in my own 19 little world for most of the day. 20 Q But were there directions for Mr. Gordon really not 21 to have you go into the administration area? Did you ever 22 hear a direction like that? 23 A There were times when we needed to go there for 24 various paperwork. 25 The administration area was where the mailing
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2098 Colletti-cross/Schoer
1 bins were. We needed to go there on occasion. We weren't 2 there to socialize. 3 Q Okay. 4 Did you know the kind of work that Liz Sautter 5 was doing? 6
A Liz was Bruce's administrative assistant, I assumed. 7 Q She was his right-hand man? 8 A Sure. 9 Q Or right-hand woman? 10 A Person. 11 Q Person. 12 Did you know the kind of work or duties exactly 13 she had? 14 A No. 15 Q Did you know the duties that other people in 16 administration had? 17 A No. 18 Q Do you know -- did you open mail at any time while 19 you worked at Who's Who Worldwide? 20 A Just anything that was addressed to me. 21 Q But you actually opened mail addressed to you, or was 22 that mail opened by administration first? 23 A Sometimes if it was a package it would be slit open 24 to save us, like any other company does, usually opens 25 packages for you.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2099 Colletti-cross/Schoer
1 Q Do you remember that there was a rule at
Who's Who 2 Worldwide that only the people at administration opened 3 mail? 4 A I didn't know about that, no. 5 Q Did you have access to the computers at Who's Who 6 Worldwide? 7 A Just my own. 8 Q Okay. 9 Not access to any of the other computer systems 10 that were there, right? 11 A No. If we needed information on a member, as far as 12 their location or their phone number, we would go to 13 administration, and they would provide us with that 14 information. 15 Q You couldn't do that yourself, you had to go to 16 someone in administration to do that? 17 A Right. 18 Q That material was not accessed to you; isn't that 19 correct? 20 A Right. 21 Q So, is it fair to say that each part -- each 22 department at Who's Who Worldwide was sort of 23 self-contained, and the other departments really weren't 24 allowed to go and access the materials in that other 25 particular departments?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2100 Colletti-cross/Schoer
1 A That would be correct. 2 Q Now, did there come a time that a CD-ROM was 3 prepared? 4 A Yes. 5 Q And once you had the CD-ROM, then you had access to 6 more membership information; isn't that so? 7 A Yes. 8 Q And could you use that CD-ROM to focus on that 9 particular type of person and try to focus on people in 10 particular categories? 11 A There was a search option on it. For example if I 12 went to interview someone in the entertainment field, I 13 would type the word, entertainment or movie or film, and I 14 would get a listing of their names and maybe city, state, 15 maybe interest in books or career goals, and things like 16 that. 17 Q And you would use that to determine who to talk to, 18 to see if they wanted profiles written about them; is that 19 correct? 20 A Yes. 21 Q And you would think of some interesting business like 22 you said, the film industry, and you would get a list of 23 people and you would call them to see if they wanted to be 24 profiled members; isn't that so? 25 A Right.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2101 Colletti-cross/Schoer
1 Q So, you used that CD-ROM to contact people, right? 2 A To find out who were members, yes. 3 Q Contact members? 4 A Yes. 5 Q You networked with those members based on the uses of 6 the CD-ROM; isn't that so? 7 A They would provide information for who was a member 8 of Who's Who Worldwide. 9 Q And you would be able to take that information and 10 call them and make contact with them, network with them, 11 right? 12 A Yes. 13 Q Okay. 14 Now, did you have any knowledge of Mr. Gordon's 15 finances? 16 A No. 17 Q It wasn't any of your witness, right? 18 A No. 19 Q The Tribute Magazine in general, the things contained 20 in there, you believed them to be true, right? 21 A Yes. 22 Q And you had no intent to deceive anyone with respect 23 to anything in the Tribute Magazine, did you? 24 A No. 25 Q When you sent it to members, you did that in good
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2102 Colletti-cross/Schoer
1 faith, right? 2 A Right. 3 MR. SCHOER: No further questions. Thank you. 4 THE COURT: Anybody else? 5 6 CROSS-EXAMINATION 7 BY MR. GEDULDIG: 8 Q Ms. Colletti, there was a time while you were running 9 this magazine for Who's Who
that some information or 10 notices appeared in the magazine regarding a seminar or 11 conference that Who's Who was planning to run in Hilton 12 Head. Do you recall that? 13 A Yes. 14 Q And that did appear in the magazine; is that right? 15 A Yes. 16 Q That seminar or conference at Hilton Head never came 17 off; is that right? 18 A Right. 19 Q Can you tell us whether or not the magazine ever 20 published a notice to the membership that the conference 21 could not be held because of lack of interest or whatever 22 reason? 23 A I don't recall ever putting anything in the magazine 24 like that. 25 Q Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2103 Colletti-cross/Geduldig
1 The salespeople at Who's Who, do you know whether 2 or not they received copies of the magazine, the Tribute 3 Magazine?
4 A Sure, yes. 5 Q And after the Hilton Head was cancelled, did there 6 come a time that either you, Ms. Konopka or anyone from 7 the magazine sat down with the salespeople to tell them 8 the Hilton Head had not been held? 9 A I never did that, no. 10 Q Do you know if anybody did that? 11 A I don't know. 12 Q Do you know if there was ever a time, or were there 13 times when you would sit down with the salespeople to 14 discuss information that you were putting into the 15 magazine? 16 A No. 17 Q Did you ever have meetings with the salespeople to 18 ask them for information that they thought should go into 19 the magazine? 20 A They would come probably of their own, you know, free 21 will to me or I guess Suzanne. You know, I just spoke to 22 a member. This sounds great. This is what he does. He 23 sounds very interesting. You might
want to keep him on 24 file to maybe profile him in the future. 25 Q Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2104 Colletti-cross/Geduldig
1 But there was no policy or an ongoing program 2 where salespeople would come to you or you would go to 3 salespeople; is that right? 4 A Nothing standard. 5 Q There was also I believe some information run in the 6 magazine regarding a seminar or conference to be held in 7 either Hong Kong or Vietnam. Do you recall that at all? 8 A No. 9 Q Did you ever hear about a conference or a seminar to 10 be run in Hong Kong and/or Vietnam? 11 A No. We had done business profiles of those 12 countries, how business is run there. But nothing about a 13 seminar. 14 Q Okay. 15 So, I would be correct in saying that there never 16 was an occasion where you explained, for instance, to 17 salespeople that there was not going to be a seminar or 18 conference in Hong Kong or Vietnam? 19 A No. 20 Q Now, you testified several times I think that 21 Mr. Gordon was a so-called, hands-on CEO; is that right? 22 A Yes. 23 Q And could you ever hear Mr. Gordon talking to the 24 salespeople? 25 A Sure.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2105 Colletti-cross/Geduldig
1 Q Would it be fair to say that Mr. Gordon had a temper? 2 A There would be days, sure. 3 Q When you heard him talking to the salespeople, was it 4 because he was talking very loudly? Did you hear him 5 yelling at salespeople on occasion? 6 A I would say yes. 7 Q And that was while you were in your office? 8 A Yes. 9 Q Even if you were typing at your machine? 10 A Right. 11 Q Even with the door closed? 12 A Sometimes. 13 Q So, would I be correct in saying or characterizing 14 Mr. Gordon as an intimidating person? 15 A I was never intimidated by him. But I understand how 16 people could be. 17 Q And you would want to follow instructions that he 18 gave you to the letter; is that fair to say? 19 A Yes. 20 MR. GEDULDIG: I have no other questions. 21 Judge, there is a book here and I will take a 22 flying leap over it. 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2106 Colletti-cross/Dunn
1 CROSS-EXAMINATION 2 BY MR. DUNN: 3 Q Good afternoon, Ms. Colletti, my name is Thomas 4 Dunn. 5 A Good afternoon. 6 Q You mentioned at a time that salespeople would come 7 in and recommend certain people to be included in Tribute; 8 is that correct? 9 A Yes.
10 Q And do you have knowledge if a salesperson would 11 receive any benefit for that? 12 A I didn't -- no, I wouldn't think so. 13 Q The only benefits they would receive was through the 14 sales, correct? 15 A To my knowledge. 16 Q And if they came in with someone's name recommending 17 them for the Tribute, the sale would have been already 18 completed at that point, as far as you know? 19 A As far as I know. 20 Q And do you recall -- do you have any independent 21 recollection as you sit there now, how many different 22 salespeople would come in on occasion recommending people? 23 A I would say three or four, pretty much consistent the 24 same three or four. 25 Q And as you sit there now, do you have any independent
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2107 Colletti-cross/Dunn
1 recollection as to who those three or four people are? 2 A Yes. 3 Q Who were they? 4 A Annette Haley, Laura Winters and Scott Michaelson. 5 Q And do you have any independent recollection of 6 anyone else coming in? 7 A It is so hard to say. Maybe one or two here or there 8 in the course of a day, it's possible. 9 Q But as you sit there now you just don't remember? 10 A I don't remember. I couldn't tell you for sure. 11 MR. DUNN: No further questions. 12 13 CROSS-EXAMINATION 14 BY MR. LEE: 15 Q Good afternoon. 16 A Hi. 17 Q My name is Winston Lee. I represent Laura Weitz, do 18 you know her as Laura Winters? 19 A Yes. 20 Q And how did these people appear to you, these people 21 who came in and recommended certain members that they knew 22 to the magazine, how did they interest you? 23 A Well, I found the ones who recommended people were
24 the ones sitting right outside my door. They were 25 probably more apt to come in since they were a couple of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2108 Colletti-cross/Lee
1 feet away to walk in to let me know who they got off the 2 phone in to walk in. They would knock on the door with 3 the sheet in hand who they just got off the phone with and 4 made a copy of the information for me. 5 Q Now, in your mind, these people were not motivated 6 from all appearances by a design or procedure for 7 additional compensation for recommending members that they 8 were impressed with? In your mind what appeared to be the 9 motivation for them taking it upon themselves to come and 10 recommend certain people that they felt strongly about? 11 What did you think was their motivation? 12 A At the time I thought it was just to the make my job 13
a little easier. 14 Q What about on their part? Was it just to help -- you 15 mean to help you find good -- 16 A For the magazine. 17 Q -- to make your job to find good members to present 18 to the other members of the registry? Is that what you 19 are saying? 20 A Correct. 21 Q And thereby increase the value or the worth of that 22 magazine to all the members who would be reading it? 23 A Yes. 24 Q Is that fair to say? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2109 Colletti-cross/Neville
1 MR. LEE: Thank you. 2 3 CROSS-EXAMINATION 4 BY MR. NEVILLE: 5 Q Hi. I am Jim Neville representing Scott Michaelson, 6 you know Scott? 7 A Yes. 8 Q You said Scott was one of the salespeople who would 9 come and suggest possible interviewees for you in the 10 Tribute Magazine? 11 A Yes, he wouldn't sit far from my office and would 12 come in on occasion with a couple of members. 13 Q He was a good salesman, wasn't he? 14 A I suppose. 15 Q Friendly guy? 16 A Sure. 17 Q It seems the impression you gave is that you were 18 also quite approachable and friendly. Did you enjoy your 19 job at Tribute? 20 A I enjoyed it. It was interesting. I learned a lot
21 about writing. 22 Q The people you worked with, did you enjoy working 23 with, your co-workers? 24 A Sure. 25 Q You were proud of the magazine you were helping to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2110 Colletti-cross/Neville
1 put out? 2 A It was my first job out of college basically. And it 3 was a great start to build a portfolio and start my 4 career. 5 Q I bet you put your experience at Who's
Who on your 6 resume now, don't you? 7 A Yes. 8 Q Scott Michaelson and others, you said Annette Haley 9 and other salespeople came to you because they were eager 10 to share with you something that they thought would be 11 good for the magazine, right? 12 A Right. 13 Q And they did that because they felt proud of what 14 they were doing, and they believed in what they were 15 doing, right? 16 A I would say -- I would say yes. 17 MR. NEVILLE: Thank you. 18 No further questions. 19 20 CROSS-EXAMINATION 21 BY MR. WALLENSTEIN: 22 Q Good afternoon, Ms. Colletti. 23 A Good afternoon. 24 Q Unlike my colleagues, I will not ask you about 25 Tribute Magazine.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2111 Colletti-cross/Wallenstein
1 Do you know a man named Martin Reffsin? 2 A
No. 3 Q Have you ever heard that name before? 4 A No. 5 Q You were asked by Ms. Scott on direct examination 6 some questions about an exhibit, 7 Government's Exhibit 640. Do you still have that in front 8 of you? 9 A Yes. 10 Q Can I ask you, when for the first time did you see 11 that exhibit? 12 A At the grand jury hearing. 13 Q And that would be February of 1997; is that correct? 14 A Yes. 15 Q And prior to that time you had never seen that 16 document before; is that right? 17 A Just in review with the DA, with Ron White. 18 Q And that's -- 19 A That's the first time. 20 Q And that's in preparation for your testimony before 21 the grand jury; is that right? 22 A Correct. 23 Q You testified although your name appears on these 24 documents as having been to certain meetings at the 25 penthouse or condo in Manhasset, that you never attended
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2112 Colletti-cross/Wallenstein
1 those meetings; is that correct? 2 A That's correct. 3 Q Is it fair to say that when Mr. White showed you the 4 logs in February of 1997, that that's the first time that 5 you knew that your name was in them? 6 A That's right. 7 Q Had anyone prior to your discussion with Mr. White, 8 had anyone told you that your name appeared in these logs? 9 A No. 10 Q Do you know a woman named Maria Gaspar? 11 A Yes. 12 Q Who is Maria Gaspar? 13 A She was the controller. I don't remember her exact 14 title, but I think that was her duty at Who's Who at the 15 time I was there. 16 Q And the dates of your employment were -- 17 A January of 1994 to December of 1994. 18 Q And she was already there when you arrived in 19 January? 20 A Yes. 21 Q And do you recall sometime in September of 1994 22 having a conversation with Ms. Gaspar with respect to your 23 name appearing in these logs? 24 A No. 25 Q Did she ever tell you that your name was in these
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2113 Colletti-cross/Wallenstein
1 logs, or that you were alleged to have attended certain 2 meetings? 3 A Not that I recall, no. 4 MR. WALLENSTEIN: Thank you very much. I have no 5 further questions. 6 MR. NELSON: Your Honor, if I might briefly? 7 8 CROSS-EXAMINATION 9 BY MR. NELSON: 10 Q Good afternoon, my name is Alan Nelson. 11 I believe you answered in response to a question 12 Mr. Neville asked that your employment at Tribute Magazine 13 at Who's Who Worldwide was your first job out of college;
14 is that correct? 15 A Yes. 16 Q And you worked at Who's Who Worldwide for about ten 17 months I believe? 18 A January to December. 19 Q And that was December of 1994? 20 A The same year, right. 21 Q And what was your second job? Where did you go to 22 work from Who's Who Worldwide? 23 A It was a health care company, actually in Lake 24 Success also, not far from Who's Who. 25 Q Was it in a public relations position?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2114 Colletti-cross/Nelson
1 A Yes. 2 Q Did you find that your employment and the experience 3 you acquired from working at Tribute Magazine allowed you 4 to move on to a more rewarding position that gave you more 5 responsibility and was a more rewarding job? 6 A Sure. It was experience. 7 Q And you were able to move on based upon the
8 experience you had at Tribute Magazine; is that correct? 9 A I am sure it helped. 10 Q Did you find that Tribute Magazine was a magazine 11 that you enjoyed working with? 12 A Yes. 13 Q Did you find that it was a quality magazine you were 14 working with during that period of time? 15 A I have found what I was doing interesting. 16 Q Did you find that the people you interviewed were 17 people that were qualified individuals who belonged in the 18 magazine? 19 A Yes. 20 Q And you were asked by a number of other attorneys 21 about other sales staff personnel who would come to you 22 with recommendations of people to place in the magazine. 23 Do you find that each of those individuals who 24 they suggested to you were certainly qualified individuals 25 who belonged in the Registry or the magazine itself?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2115 Colletti-cross/Nelson
1 A On paper, sure. 2 Q Did you come to interview any of those people? 3 A I don't recall. It's possible. 4 Q I represent an individual by the name of Frank 5 Osman. You might know him as Frank Martin. He is seated 6 there with the white hair and glasses. Do you recognize 7 that gentleman? 8 A Yes. 9 Q Am I correct in stating that you overlapped in terms 10 of employment approximately a month, he came to work for 11 the company right around the time you left; is that 12 correct? 13 A Toward the end, yes. 14 Q Did you have any real interactions with him during 15 the time that he was at the company? 16 A Nothing that I recall other than just passing in the 17 hall. 18 Q Would it be fair to say that part of the reason you 19 didn't have as much contact with Mr. Martin is the rules 20 implemented by Mr. Gordon that frowned upon socialization 21 between the different departments in the company? 22 A It was probably part of it. 23 Q Were you ever aware of any situation or any time 24 while you were working at the company where Mr. Gordon 25 would either chastise an employee or discipline an
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2116 Colletti-cross/Nelson
1 employee for breaching his rule against fraternization? 2 A I was never involved in anything like that, so I 3 couldn't say. 4 Q Did you choose to not fraternize with people from 5 other units, because you were concerned about potentially 6 angering Mr. Gordon? 7 A I guess I didn't think about it that way. You know, 8 my day was extremely busy from beginning to end, and I 9 didn't have time to really fraternize with anyone. 10 Q And would it
be fair to say that as it related to the 11 different departments within the company, you saw during 12 the ten-month period of time that you were employed there, 13 that there was in general a little fraternization between 14 the employees in the different departments? 15 A From what I could see that would be correct. 16 Q Were there some employees such as Liz Sautter who did 17 have contact on a regular basis with all the departments? 18 A I think her job lended for that to happen. 19 Q Were there any other employees you were able to 20 observe such as Debra Benjamin, who had contact with all 21 the different departments within the company on some 22 regular basis? 23 A I would think so. 24 Q But other than that would it be fair to say that at 25 least from your observations the majority of the employees
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
2117 Colletti-cross/Nelson
1 remained within their various departments? 2 A That would be true. 3 MR. NELSON: Thank you. 4 I have no further questions. 5 MR. JENKS: Judge, can I ask one? 6 THE COURT: Surely. 7 MR. JENKS: I will ask from here. 8 9 CROSS-EXAMINATION 10 BY MR. JENKS: 11 Q Did you work at Sterling at all in the city? 12 A I would go there half a dozen to a dozen times for 13 meetings. 14 Q Who did you get your paychecks from, Who's Who 15 Worldwide? 16 A Who's Who Worldwide Registry. 17 Q But you didn't work in the corporate offices at 18 Sterling, did you? 19 A No. 20 MR. JENKS: Thank you, Judge. 21 22 REDIRECT EXAMINATION 23 BY MS. SCOTT: 24 Q Ms. Colletti, did you ever have anything to do with 25 the actual selling of memberships?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2118 Colletti-redirect/Scott
1 A No. 2 Q So, you never took part in persuading people to buy 3 memberships of Who's Who? 4 MR. LEE: Objection. 5 MR. GEDULDIG: Objection. 6 MR. JENKS: Objection. 7 THE COURT: Overruled. 8 MR. NEVILLE: Your Honor, I do not object to the 9 word persuading. 10 THE COURT: Very well. 11 A Could you repeat the question? 12 Q Did you ever take part in attempting to persuade 13 people to buy memberships in Who's Who Worldwide? 14 A No. 15 Q And were you aware that the company regularly 16 obtained names of prospective members from mailing lists? 17 A Yes. 18 Q And how were you aware of that? 19 A Through Debra Benjamin's dealings with various 20 companies. 21 Q Can you describe these dealings as you had knowledge 22 of them? 23 A They were just various companies that we would just 24 purchase mailing lists from. That's basically all I know. 25 Q Did you ever assist Debra Benjamin in anything to do
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2119 Colletti-redirect/Scott
1 with mailings? 2 A Just one where we had mailed like a color brochure 3 out, and I was asked to go to the mailing house, 4 warehouse, and oversee the mailing, that it went smoothly 5 and there were no glitches. 6 Q Do you remember the approximate size of that mailing? 7 A It was probably tens of thousands. 8 Q And do you remember approximately when that was? 9 A Probably mid-1994. 10 Q Were you aware of how often mailing lists were 11 purchased? 12 A No. 13 Q Now, are you aware of whether members were accurately 14 advised about how they were selected for membership? 15 MR. JENKS: Objection. Beyond the scope. 16 THE COURT: Yes. Sustained. 17 Q When you interviewed members for articles in the 18 magazine, did you ever tell them anything about how they 19 were selected for names in membership? 20 MR. TRABULUS: Objection, your Honor. 21 THE COURT: Overruled. 22 A No. 23 Q To your knowledge was this ever disclosed to 24 members? 25 MR. JENKS: Objection.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2120 Colletti-redirect/Scott
1 MR. SCHOER: Objection. 2 THE COURT: Sustained. 3 Q Did anyone ever instruct you to tell members that 4 their names were selected from mailing lists? 5 A No. 6 Q Did you ever on any occasion ever tell members that 7 their names were selected from mailing lists? 8 A No. 9 Q Now, do you remember testifying about a CD-ROM that
10 became available? 11 A Testifying today? 12 Q Today, yes. 13 A Yes.
14 Q Do you remember when that CD-ROM first became 15 available? 16 A Probably the end of '94, maybe September, October. 17 Q So, that was toward the end of your time at Who's Who 18 Worldwide? 19 A Yes. Part of my job was editing it, proofreading 20 it. 21 Q And what were you using in the course of editing and 22 proofreading the CD-ROM? 23 A Basically it was proofing and editing for 24 typographical errors, spelling, missing information, 25 incorrect information.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2121 Colletti-redirect/Scott
1 Q What were you comparing that information to? 2 A Basically it was typographical and spelling, that was 3 pretty basic. One of the questions is what is your 4 favorite book or favorite movie. If I caught something 5 that was incorrect, an incorrect title of a movie or 6 incorrect author of a book, I would correct it if I knew 7 the correct way of doing it. 8 Q Now, who were the people you worked with most closely 9 in your office? 10 A Suzanne Konopka, Debra Benjamin and Maggie Swendseid. 11 Q And were there ever times when you would have lunch 12 with these people that you worked with? 13 A Sure. 14 Q And do you remember ever eating lunch with Maria 15 Gaspar? 16 A It's possible. Probably, she might have come once or 17 twice. 18 Q And during these lunches was it typical to talk about 19 events that had occurred at work? 20 MR. JENKS: Objection. 21 THE COURT: Sustained. 22 Q What kinds of things would you talk about during 23 these lunches? 24 A Just basic, you know, what did you do over the 25 weekend? Did you see any good movies. It was very light
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2122 Colletti-redirect/Scott
1 kind of conversations. 2 Q Did it ever involve work? 3 A I am sure it came up, work. 4 Q Are you able to remember every detail of every one of 5 those conversations that you had during your lunch breaks? 6 A No. 7 MS. SCOTT: I have no further questions, thank 8 you. 9 THE COURT: Anything else? 10 MR. TRABULUS: Yes, I do. 11 12 RECROSS-EXAMINATION 13 BY MR. TRABULUS: 14 Q You think you would have remembered if Maria Gaspar 15 would have told you she phonied something up and put your 16 name in it? 17 A I think I would remember that. 18 Q Now, you were asked by Mr. Geduldig about Vietnam, 19 Hong Kong trip. 20 When did you start at Who's Who, January of 1994?
21 A Yes, that's correct. 22 Q So, if that trip was originally scheduled to have 23 happened before then and called off before then, you would 24 have no occasion to tell anybody it was being called off, 25 right?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2123 Colletti-recross/Trabulus
1 A Right. 2 Q Now, you mentioned you had heard Mr. Gordon yelling 3 to salespeople from time to time? 4 A Yes. 5 Q Fair enough? 6 A Yes. 7 Q Is that true? 8 A Yes. 9 Q He wasn't always yelling when he spoke to 10 salespeople, was he? 11 A No. 12 Q Sometimes he would speak in a normal tone of voice? 13 A Sometimes. 14 Q Sometimes. 15 Did you ever hear what he was telling them when 16 he was yelling at them? 17 A No. 18 Q You mentioned the CD-ROM. Do you remember when a 19 CD-ROM unit was first installed in your computer, was it 20 toward the end also? 21 A I would say it was closer to the end than the 22 beginning. 23 Q So, until that period of time you wouldn't have been 24 able to use a CD-ROM, right? 25 A Right.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2124 Colletti-recross/Trabulus
1 Q And that's when you were first given the CD-ROM you 2 talked about? 3 A Right. 4 Q You don't know if a CD-ROM was available to other 5 people, such as members before then, would you? 6 A I wouldn't know. 7 Q So, do you remember whether -- I don't know if you 8 can remember this at all, but sometimes CD-ROMs and 9 computer programs have a release number on them, like 10 release 1.2 or 2.0, do you remember that? 11 A No. 12 Q All right, never mind. 13 Now, when you would speak to a member it would be 14 generally with respect to a CD-ROM or press release; is 15 that right? 16 A Yes. 17 Q Would you have any recollection as to whether a -- 18 recollection telling a member that the name was coming 19 from a mailing list? 20 A No. 21 Q Did anybody tell you not to instruct them that the 22 name came from a mailing list? 23 A No. 24 Q It is just that it never came up; is that right? 25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2125 Colletti-recross/Trabulus
1 Q You were asked with respect to the policies of not 2 encouraging fraternization during business hours. 3 Is it fair to say that that was just a policy to 4 keep a tight ship so the business was running and people 5 wouldn't be running around socializing? 6 A It was never explained why. It was requested of us.
7 Q The atmosphere there wasn't like a military camp, was 8 it? 9 A No. 10 Q Was it a fairly normal office atmosphere? 11 A I thought it was. 12 Q With regard to the mailing lists do you know what 13 type of mailing lists they were? 14 A No. 15 Q Do you know whether entire mailing lists were 16 purchased, or sometimes selections of lists? Did you get 17 involved in that detail? 18 A I was never involved in that, no. 19 MR. TRABULUS: No further questions, thank you. 20 21 RECROSS-EXAMINATION 22 BY MR. SCHOER: 23 Q This mailing that you did, or you supervised in 24 mid-1994, was that a mailing to members, or to prospective 25 members?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2126 Colletti-recross/Schoer
1 A I don't know. 2 Q You said that it was a color brochure; is that right?
3 A Yes. 4 Q And would that normally be the type of material that 5 would be sent to people who are already members? 6 A I didn't know what it was. 7 Q Okay. 8 Can I show you what we have marked as 9 Defendant's Exhibit K for Identification? 10 (Handed to the witness.) 11 Q Do you know if that's the document that was mailed 12 out that you were talking about? 13 A This doesn't look familiar to me. 14 Q One last question. 15 When you didn't tell people that you interviewed 16 that their names came from mailing lists, you didn't try 17 to deceive them, were you? 18 A No. 19 MR. SCHOER: No further questions. 20 MR. JENKS: One question, your Honor. 21 22 RECROSS-EXAMINATION 23 BY MR. JENKS: 24 Q Did anyone at Who's Who Worldwide instruct you to 25 tell members specifically that their names did not come
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2127 Colletti-recross/Lee
1 from mailing lists? 2 A No. 3 4 RECROSS-EXAMINATION 5 BY MR. LEE: 6 Q Ms. Colletti, during the many interviews that you 7 conducted of members who were being considered to be 8 included in the magazine, did any -- do you recall any of 9 these members ever asking you specifically, did they come 10 from mailing lists? 11 A No. 12 Q No one even asked? 13 A No. 14 Q Would I be fair -- would it be a fair statement by me 15 that it appeared to be something that they weren't even 16 concerned or cared about? Would that be a fair statement? 17 A Yes. 18 Q And in your mind it didn't seem to be relevant to 19 your interview; am I correct? 20 A Correct. 21 Q It wasn't something you thought was of concern to 22 anyone during the interview? 23 A It had no relevance to the interview. 24 Q And I have one last -- I want to go on to something 25 else.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2128 Colletti-recross/Lee
1 Now, I assume that your work generated paperwork, 2 files, all sorts of memos, correct? 3 A Sure. 4 Q And were there strict rules for the handling and 5 maintaining of paperwork that had to do with Who's Who 6 Worldwide Registry business? 7 A I was never instructed of any kind of rules. 8 Q For example, were there strict rules about no 9 paperwork generated from the business was allowed to be 10 removed from the business premises? 11 A I was never told of that. 12 Q What about your observation -- well, keeping to your 13 specific area, were there rules about -- were there file 14 cabinets in your office? 15 A
I had a file cabinet, yes. 16 Q Did you lock your file cabinet and the paperwork you 17 generated every evening when you went home? 18 A My paperwork was very basic. It was just my own 19 notes from interviews, or background, media kits I had 20 been given of the prospective interviewees. 21 Q So, as far as your particular area, there were no 22 strict rules, no directives from Mr. Gordon about keeping 23 papers locked up or anything like that? 24 A No. 25 Q Do you have knowledge of other areas of Who's Who
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2129 Colletti-recross/Lee
1 Worldwide, the business, were there strict rules about no 2 one being allowed to remove papers from the offices that 3 you know of? 4 A I wouldn't know. 5 MR. LEE: Nothing else. 6 THE COURT: Anything else? 7 MS. SCOTT: Yes, your Honor.
8 9 FURTHER REDIRECT EXAMINATION 10 BY MS. SCOTT: 11 Q Do you remember being asked questions, Ms. Colletti, 12 as to whether you were instructed to tell people that they 13 were taken from mailing lists? 14 A I am sorry, I don't understand. 15 Q Actually let me rephrase the question. 16 Do you remember being asked questions about 17 whether you were specifically instructed not to inform 18 people that their names were being taken from mailing 19 lists? 20 A Today? 21 Q Yes. 22 A Yes. 23 Q And you remember also testifying about that you were 24 never in the position to actually persuade people to buy 25 memberships; is that right?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2130 Colletti-redirect/Scott
1 A Yes. 2 Q And so, the people you were dealing with were 3 actually already members at the time you began to deal 4 with them; is that correct? 5 A Correct. 6 MS. SCOTT: Thank you. 7 No further questions. 8 THE COURT: Anything else? 9 MR. TRABULUS: Not from me. 10 MR. JENKS: Nothing. 11 MR. SCHOER: No questions. 12 THE COURT: You may step down. 13 (Whereupon, at this time the witness left the 14 witness stand.) 15 THE COURT: Please call your next witness. 16 MR. WHITE: Your Honor, I am afraid to tell you 17 this, but we have temporarily run out of witnesses. 18 THE COURT: Patience and moderation. 19 So be it, Mr. White. I will talk to you later. 20 MR. WHITE: I am sure you will. 21 THE COURT: I am only kidding. 22 Members of the jury, it looks like you have a 23 half a day off. 24 JUROR NO. 4: 25 minutes. 25 THE COURT: A half a day.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2131 1 Meanwhile we will recess until 1:30. I told you 2 we will work from 1:30 to 5:30. Please do not discuss the 3 case, keep an open mind, come to no conclusions. Enjoy 4 the 22, 23 minutes you have off. We will see you tomorrow 5 at 1:30. 6 Have a nice evening. 7 (Whereupon, at this time the jury leaves the 8 courtroom.) 9 THE COURT: Mr. White, you were doing very well 10 until now. Let's not do this. Have the witnesses here. 11 We need all the time, all the time we can get. This case 12 will take long enough. 13 MR. WHITE: Your Honor, I am making my best 14 efforts. As you know last night we got caught short 15 because Mr. Rosenblatt couldn't come back. 16 Ms. Colletti, frankly I thought would take 17 longer. The most comparable witness was Ms. Konopka who 18 took four hours. Ms. Colletti is about an hour.
19 THE COURT: My view is this: These witnesses 20 have never testified before, and they will never testify 21 again. If they have to come back twice, so be it. In the 22 long run it doesn't mean anything. But it does mean 23 something to have 16 jurors, and a flock of other people 24 here wasting time, especially in a case of this length. 25 It is important.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2132 1 I know it occurred, please try not to have it 2 happen again. 3 MR. WHITE: I will try. 4 THE COURT: See you at 1:30 tomorrow. 5 MR. TRABULUS: The witnesses for tomorrow? 6 MR. WHITE: Mr. Rosenblatt will continue from 7 1:30 to 5:30 at minimum. 8 THE COURT: How much longer do you have on direct 9 examination? 10 MR. WHITE: Part of it depends on your Honor's 11 ruling on the condominium. 12 THE COURT: I think you better come in at 1:15 13 tomorrow, so I can make that ruling. 14 MR. WHITE: All right. 15 I think probably there are some charts, and 16 whether or not we have to change the charts, and we have 17 to go over them. 18 THE COURT: I would start changing them. 19 MR. WHITE: It doesn't sound promising to me, 20 your Honor. 21 MR. WALLENSTEIN: Sure it does. 22 THE COURT: It doesn't. 23 MR. WHITE: I would guess about an hour on 24 direct. 25 THE COURT: Cross will take a long time,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2133 1 Mr. Trabulus? 2 MR. TRABULUS: Well, I think so, your Honor. 3 THE COURT: I would have another witness here. 4 MR. TRABULUS: We have two of us here. 5 MR. WALLENSTEIN: I have quite a bit for 6 Mr. Rosenblatt, too. 7 THE COURT: I will leave it to your discretion, 8 but I don't want to have any time that we will be losing. 9 So you should have someone else here or at least on phone 10 call. 11 MR. WHITE: I will do what I can. 12 THE COURT: 1:15 tomorrow. 13 (Case on trial adjourned until 1:15 p.m., Friday, 14 January 30, 1998.) 15 16 17 18 19 20 21 22 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 2134 1 I-N-D-E-X 2 W-I-T-N-E-S-S-E-S 3 PAGE LINE 4 A N D R E W R O S E N B L A T T.................. 1953 DIRECT EXAMINATION................................... 1953 5 T R A C E Y C O L L E T T I.................... 2081 6 DIRECT EXAMINATION................................... 2081 CROSS-EXAMINATION.................................... 2088 7 CROSS-EXAMINATION....................................
2092 CROSS-EXAMINATION.................................... 2102 8 CROSS-EXAMINATION.................................... 2106 CROSS-EXAMINATION.................................... 2107 9 CROSS-EXAMINATION.................................... 2109 CROSS-EXAMINATION.................................... 2110 10 CROSS-EXAMINATION.................................... 2113 CROSS-EXAMINATION.................................... 2117 11 REDIRECT EXAMINATION................................. 2117 RECROSS-EXAMINATION.................................. 2122 12 RECROSS-EXAMINATION.................................. 2125 RECROSS-EXAMINATION.................................. 2126 13 RECROSS-EXAMINATION.................................. 2127 FURTHER REDIRECT EXAMINATION......................... 2129 14 15 E-X-H-I-B-I-T-S 16 Government's Exhibit 1500 received in evidence....... 1979 17 Government's Exhibit 1501 received in evidence....... 1986 Government's Exhibit 1502 received in evidence....... 1990 18 Government's Exhibit 1503 received in evidence....... 1992 Government's Exhibits 1504-A through F received in 19 evidence............................................. 1995 Government's Exhibits 1507-A through H received in 20 evidence............................................. 1995 Government's Exhibit 1508 received in evidence....... 2014 21 Government's Exhibit 837 received in evidence........ 2028 Government's Exhibits 1505-D received in evidence.... 2039 22 Government's Exhibits 1506-A through 1506-D received in evidence.......................................... 2039 23 Government's Exhibit 1510 received in evidence....... 2040 Government's Exhibit 1511 received in evidence....... 2041 24 Government's Exhibit 1512 received in evidence....... 2044 Government's Exhibit 1513 received in evidence....... 2048 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
