1 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 21 22 23 24 25 d9ugunic Conference UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA Plaintiff,

v. DISTRICT COUNSIL, et al. Defendants. ------------------------------x New York, N.Y. September 30, 2013 11:00 a.m. Before: HON. RICHARD M. BERMAN, District Judge APPEARANCES USAO SDNY Attorney for Plaintiff United States BY: TARA LAMORTE SPIVAK LIPTON Attorney for Defendant District Council BY: JAMES MURPHY ZUCKERMAN SPAEDER Attorney for Defendant District Council BY: MITRA HORMOZI ALSO PRESENT: DENNIS WALSH, BRIDGET ROHDE, Review Officers 90 CV 522 (RMB)

SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

2 d9ugunic 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Conference (Case called) THE COURT: As you know, this hearing today is occasioned by the submission by the review officer of his September 16, 2013, petition to require the District Council to implement a business operations and IT modernization plan. We have obviously the review officer, we have the government, and we have the District Council. Are you both for the District Council? MR. MURPHY: Yes. James M. Murphy and Mitra Hormozi for the District Council. THE COURT: Is there somebody from the Union here? MR. CLARK: I just came to see the proceedings and what's going on. THE COURT: You're more than welcome. MR. CLARK: Just a fan of your Court. THE COURT: Come up; you'll get a better view. MS. HORMOZI: Your Honor, Mitra Hormozi with Zuckerman Spaeder. We were just retained on Friday. Actually, the District Council's office retained specifically Barbara Jones from our office to try to resolve this issue without a hearing. We're hoping to have a 30-day adjournment of this hearing in the hopes that we can resolve it. THE COURT: That was going to be, incidentally, my suggestion because I had read the materials and that is the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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3 d9ugunic Conference first thing I was going to say. It seems to me that the submission by the review officer and, in which, by the way, he included submissions to him by you, Mr. Murphy, and maybe I didn't read it with the diligence I should have, but it almost looked to me like the same thing. Your submission was a little bit more open-ended timewise, but almost topic-for-topic. So, I was having a little trouble figuring out what the dispute here was. If you can't do it yourselves, I'm sure Judge Jones could help you out and get to a speedy resolution. Did you want to say anything for the record today, Mr. Walsh? MR. WALSH: No, your Honor. Thank you. THE COURT: Incidentally, I also played the cassettes that you submitted, along with the audio cassettes. MR. WALSH: I thought they might be helpful to the Court to at least hear some of the responses that I got in my attempts to explain basically where I was coming from with this whole initiative. I'm actually very much looking forward to working with Judge Jones and Ms. Hormozi and the Zuckerman Spaeder firm and Jim Murphy to try to resolve this intelligently and expeditiously. And I will actually be sitting down with Judge Jones this afternoon at the Union. THE COURT: Give her my regards. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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4 Conference MR. WALSH: I certainly have no objection to what I understand the Union's request is for a 30-day adjournment on this issue. THE COURT: Mr. Murphy, do you want to add anything? MR. MURPHY: No, sir. THE COURT: I'm happy to put it over, but as I said, it doesn't seem very complicated to me. And it doesn't seem even -- well, from any perspective, that anybody would disagree that it would be helpful from an anticorruption perspective and from a business perspective to come into the 21st century a little bit more, including having an independent IT system that doesn't necessarily rely on one of two things, either the benefit funds' IT technology or on very expensive outside consultants. As to the substance, as I say, of your -- I don't know if there are proposals and Mr. Murphy has a counterproposal, but they seem very close topic-wise. I would urge that the dates be sped up, actually. What I was going to do, which I won't do now, I was going to ask actually for some financial information from the District Council as to what the District Council currently spends on outside consultants, et cetera. Back in the envelope and listening to the cassette of the delegate body meeting, there's one outside consultant to whom at the time that cassette was made had been paid $56,000 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 d9ugunic

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5 d9ugunic Conference for the preceding month. Quick math tells you that you're at $1.5 million. You could take this project pretty far for a million and-a-half dollars, it seems to me, and then have a permanent infrastructure at the end of the day. Let me tell you what my expectation is: In 30 days, I think you should be able to tell me it's a go or it's a no-go. I don't think you need more than 30 days. It's a very simple -- well, if it was so simple, I guess it would have happened by now, but it strikes me as a very simple process. Even, incidentally, listening to the people who spoke at the delegate meeting, with the exception of somebody who made some analogies which I didn't understand to Russia, but that happens when we have people who make comments, I didn't hear really any substantive disagreement with the kinds of things that are being proposed. I can't figure out where the problem lies, but I'm sure Judge Jones will be able to both figure it out and help me solve it. Why don't we put the matter over for 30 days from today for 10/29 at 10:00 a.m. If you resolve it by that time, just let me know. Perhaps there will be no need for that conference, as well. MR. WALSH: We certainly will, Judge. THE COURT: Great. Nice to see you all. (Adjourned) SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300