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UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

UNITED STATES OF AMERICA

v.

GREGORY P. LOLES



CRIMINAL NO. 3:10 CR 237 (AWT)

December 31, 2013

FILED UNDER SEAL

GOVERNMENT=S SUPPLEMENTAL SENTENCING MEMORANDUM
SEEKING OBSTRUCTION OF JUSTICE AND DENIAL OF ACCEPTANCE

This memorandum is submitted in further aid of the sentencing of Defendant Gregory P.
Loles, who – as is now apparent – stole more that $27 million from friends, clients, the endowment
fund and building fund of a church in Orange, Connecticut, St. Barbara=s Greek Orthodox Church
(Athe Church@ or ASt. Barbara=s@), and as recently corroborated, from a Greek family overseas.
In particular, this memorandum is submitted in support of the Government=s adjusted
Guidelines= calculation which now seeks an additional two levels for amount of loss, provides
additional evidence and argument for the number of victims being greater than 250, and seeks an
enhancement for obstruction of justice based on the Defendant’s lying under oath to the Court and
the corresponding denial of the adjustment for acceptance of responsibility.
For the reasons set forth in the Government=s Original Sentencing Memorandum (Dkt. No.
80), those set forth in the Government’s Reply Memorandum (Dkt. No. 89), those set forth in open
Court at the multi-day hearing, and those set forth below, the Government asserts that the
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Defendant=s Guidelines= range should also include a two-point enhancement for obstruction of
justice and he should be denied acceptance of responsibility.
I. Guideline Calculation
A. Burden of Proof
The parties agree that the Defendant’s base offense level pursuant to the United States
Sentencing Guidelines is a base of 7 as the offense charged has a statutory maximum of 20 years or
more. See U.S.S.G. ' 2B1.1(a)(1). The remaining factors, about which the parties do not agree,
need only be established by a preponderance of the evidence.
As the court explained in United States v. Salim, 287 F.Supp.2d 250, 305-06 (S.D.N.Y.
2003) “[a]lthough the Sentencing Guidelines do not specify a burden of proof to govern the
resolution of disputed sentencing factors, the Second Circuit has held that the preponderance of the
evidence standard satisfies the requirements of due process in determining conduct relevant to
sentencing issues under the Guidelines—even for the determination of ‘unconvicted conduct.’”
(citing United States v. Gigante, 94 F.3d 53, 55 (2d Cir. 1996) ( “[U]nconvicted conduct may be
relied upon to adjust a defendant's sentence level as contemplated by the Guidelines based on
proof by a preponderance of the evidence.”); United States v. Guerra, 888 F.2d 247, 251 (2d Cir.
1989) ( “[T]he preponderance of the evidence standard satisfies the requisite due process in
determining relevant conduct pursuant to the Sentencing Guidelines” in the calculation of offense
level based on defendant's possession of uncharged narcotics).
Additionally, the Second Circuit has found that in making factual findings in determining
the Guidelines, a “sentencing court remains entitled to rely on any type of information known to
it.” United States v. Concepcion, 983 F.2d 369, 388 (2d Cir.1992) (upholding sentence where court
referred at sentencing to conduct for which the defendant was acquitted) (citing United States v.
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Carmona, 873 F.2d 569, 574 (2d Cir. 1989)); see also United States v. Franklyn, 157 F.3d 90, 97
(2d Cir. 1998) (“Disputed facts relevant to sentencing must be established by a preponderance of
the evidence, and the sentencing court may rely upon any information known to it”).
A. The Amount of Loss is Over $20 million
The amount of loss suffered as a result of the fraud now is calculated above $20,000,000.
Therefore, the offense level is increased by 22 pursuant to U.S.S.G ' 2B1.1(b)(1)(L).
As established in the Government=s Sentencing Memorandum and as established by
witness testimony at the Defendant=s sentencing hearing, the Defendant stole over $12 million
from St. Barbara’sChurch, his friends and investor-clients in the United States, and individuals he
met through his Farnbacher-Loles car businesses and subsequently defrauded.
However, as established in more detail below, after the Defendant testified under oath that
$14 million from Milbury Holdings was “his money” purportedly from a combination of profitable
trades in the Greek stock exchange and twelve years of “compounding” from an initial investment
of “amillion Euro” or “a little bit more than a million Euro,” originally made in the late 1980s, the
Government investigated and has established that the money was not the Defendant’s money.
Moreover, thisfurther investigation revealed that the over $14 million at issue were investment
funds of the familyinvested with Loles’ fraudulent entity Apeiron. (See Attachments
I and J ).
Accordingly, while in an earlier sentencing memorandum (Dkt. No. 80)) the Government
argued that, were the Court to take an aggressive posture the Court could include in the reasonable
estimate of loss the additional $14 million taken in by the Defendant, from Milbury Holdings
(Gov. Mem. (Dkt. No. 80) at Attachment 2), the Government now asserts that the Court should
include the money that the Family invested via Milbury Holdings in its loss
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calculation. See Attachment “A” (Government Exhibit 1C). Loles’ theft and fraudulent taking
of the additional $14 million was part of the same fraudscheme and, as explained in detail by
counsel for the victim family, Loles used the same motis operandi and same manner and means in
defrauding the Family as he did with all the other victims. He pretended to befriend
them, gained their confidence – even attending a family funeral in Greece, told them he had
millions of dollars under management, told them he had investments for them that would pay a
certain steady percentage, provided them corresponding account statements, impressed them with
his luxury car businesses, and eventually stole their money. (See Attachments F, G, H, I, J , and
K).
Accordingly, the loss amount for the Guidelines calculation should be found to be well
above $20,000, 000. Thus, resulting in an increase of 22-levels for the amount of loss.
B. Determination of the Number of Victims
As set forth in the Government=s Sentencing Memorandum (Gov. Mem. (Dkt. No. 80) at
29-33) and the Reply Sentencing Memorandum (Dkt. No. 89) as well as the additional arguments
made before the Court, in determining the specific offense characteristic for the number of victims,
the Court should count as victims the hundreds of parishioners who donated to the endowment
fund and the building fund and who were relying on the safety and security of the investments
made with the Defendant in the so-called bonds. The Guidelines define a victim as Aany person
who sustained any part of the actual loss . . .@ U.S.S.G. ' 2B1.1, App. Note 1.
Attached to this Memorandum at Attachment “B” are the names of parishioners,
individuals, families and parish organizations who made donations to the Building Fund prior to
December 2009 and attached at Attachment “C” are the names of Sunday School children and
Greek School children who collected coins and donated portions of their allowance and donated to
the Family as he did with all the other victims. the Family as he did with all the other victims.
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the Church’s Building Fund prior to December 2009. These are 327 specific identified
individuals and families and 86 specific school children who gave their money to the St. Barbara
Building funds before the discovery of the fraud in December 2009 (a few were anonymous).
These specific identified donors, many of whom were families and couples, resulting in over 700
in total, should be included in the Court’s calculation of the number of victims. This is not an
unidentified amorphous group of donors but, to the contrary, comprise a specific identified list of
donors who were victimized.
The inclusion of these individuals as victims for Guidelines’ purposes is clearly supported
by controlling case law. In United States v. Gonzalez, 641 F.3d 41 (2d Cir 2011) the Second
Circuit reached this conclusion regarding donors to a charity, a holding that is clearly on point here
and should be followed as controlling precedent. In Gonzalez, the Second Circuit found that the
individuals who made charitable contributions were properly considered victims pursuant to
U.S.S.G. § 2B1.1(b)(2) and held as follows: “[a] donor whose charitable contribution was included
in the district court’s finding of actual loss under § 2B1.1(b)(1) is thus, by definition, a victim
within the meaning of § 2B1.1(b)(2). There is no suggestion in this definition or any other part of
the Guidelines that the victim must be linked with a specific part of the loss.” Gonzalez, 641 F.3d
at 63. In rejecting the contention raised by defendant Gonzalez, the Second Circuit reasoned:
“[a]s Guidelines commentary observes elsewhere, ‘defendants who exploit victims’ charitable
impulses or trust in government create particular social harm.’ Guidelines § 2B1.1 Application
Note 19(D). We see no intent in the multiple-victim-enhancement provision of the Guidelines to
exacerbate societal harm by rewarding a defendant who simply commingles fraudulently obtained
charitable contributions before spending them.” Id. at 63-64.
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The Eleventh Circuit reached the same conclusion in United States v. Longo, 184 Fed.
Appx. 910, 2006 WL 1674267 (11th Cir. 2006) (unpublished per curiam). In Longo, the Eleventh
Circuit held that the district court did not err in counting as victims all 110 individual members of
an employee benefit plan from which the defendant embezzled. See Longo, 184 Fed. Appx. 910,
970 n.1 (noting that “the record showed that Longo’s fraud and theft diminished the total plan
assets”). As the Government has argued previously in this case, the Eleventh Circuit's analysis in
Longo applies here. In Longo, each participant in the employee benefit plan put money into the
plan and sought to draw on it in the future. When the plans’ funds were diminished by the fraud
each employee who had contributed was determined to be a victim. Here, as the money was
going to the St. Barbara Endowment fund and Building fund, each parishioner, including the 86
school children, relied on the fact that they believed the money would be there in the future to
support the Church and its programs. Similarly in United States v. Ellisor, 522 F.3d 1255, 1275
(11th Cir. 2008) the Court found that where money belonging to multiple individuals has been
aggregated by a school for the production of a Christmas pageant (not too different from pooling
funds for the construction of a building) and each individual maintained his or her interest in
seeing the show (or enjoying the building), each individual may be counted as a victim. In
Ellisor, 522 F.3d at 1275, the Court held that where thousands of parents and students each paid
money for tickets to a sham Christmas pageant, it did not matter that the schools had aggregated
the money; each child or parent who had paid was considered a victim. The same logic holds
here.
As the Court need only find by a preponderance of the evidence that the approximately
$1.9 million that the Defendant took from St. Barbara=s can be attributed to more than 250 victims,
the government asserts that the Court should make this finding.
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Finally, as previously argued, if the Court determines that a mere four-level increase is
appropriate based on the discrete victims, the Government will argue for an upward departure so
that the losses suffered by the parishioners B as members of the church who donated to the building
fund and the school children who collected coins and donated portions of their allowances B are
considered by the Court.
C. Obstruction of Justice
a. Legal Standards
The U.S. Sentencing Guidelines direct that:
If (A) the defendant willfully obstructed or impeded, or attempted to
obstruct or impede, the administration of justice during the course of
the investigation, prosecution, or sentencing of the instant offense of
conviction, and (B) the obstructive conduct related to (i) the
defendant's offense of conviction and any relevant conduct; or (ii) a
closely related offense, increase the offense level by 2 levels.

U.S.S.G. § 3C1.1 (emphasis added). The Guidelines provide that the “conduct to which this
adjustment applies is not subject to precise definition,” U.S.S.G. § 3C1.1, Application Note 3, and
provide a “non-exhaustive” list of conduct to which the adjustment is intended to apply, U.S.S.G. §
3C1.1, Application Note 4, including, inter alia, “providing materially false information to a judge
or magistrate,” U.S.S.G. § 3C1.1, Application Note 4(F); “providing materially false information
to a law enforcement officer that significantly obstructed or impeded the official investigation or
prosecution of the instant offense; ” U.S.S.G. § 3C1.1, Application Note 4(G); and “providing
materially false information to a probation officer in respect to a pre-sentence or other
investigation for the court.” U.S.S.G. § 3C1.1, Application Note 4(H).
In connection with an enhancement for obstruction of justice pursuant to U.S.S.G. § 3C1.1
the misrepresentations must be “material.” U.S.S.G. § 3C1.1, Application Notes 4(F), 4(G) and
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4(H). For the false statements to be “material,” they must be information that, “if believed, would
tend to influence or affect the issue under determination.” U.S.S.G. § 3C1.1, Application Note 6;
see also United States v. McKay, 183 F.3d 89, 93 (2d Cir.1999) (defendant's statement in
pre-sentence interview that he was a peripheral participant—when in fact he was the leader of a
narcotics ring, which resulted in an erroneous Probation report—was material because it could
have impeded imposition of an appropriate sentence); United States v. Johns, 27 F.3d 31, 34 (2d
Cir.1994) (“Under the law of this Circuit ... we look to the defendant's representations in deciding
the issue of materiality. If those representations could affect the sentence (if believed), then it is
irrelevant that the government has possession of other information that rebuts the defendant's
representations.”); United States v. Rodriguez, 943 F.2d 215, 218 (2d Cir.1991) (“The definition of
a ‘material’ statement embraces all false statements that would tend to affect a defendant's
sentence, whether or not discovery of the falsity of the statement is inevitable.”).
As the Salim court discussed, “in Second Circuit cases upholding application of U.S.S.G. §
3C1.1 wherein a defendant made false statements, it is apparent that the defendant's false
statements would have improved the defendant's position with respect to the proceeding—either
by minimizing or mitigating the defendant's potential sentence.” United States v. Salim, 287
F.Supp.2d at 312 (collecting cases at note 83 including inter alia: United States v. McLeod, 251
F.3d 78, 82 (2d Cir. 2001) (defendant repeatedly lied at sentencing after fraud conviction “in his
attempts to disclaim responsibility” for fraudulent documents); United States v. Lincecum, 220
F.3d 77, 80–81 (2d Cir. 2000) (Defendant's false representations in affidavit in support of motion
to suppress post-arrest statements would have resulted in granting of defendant's motion to
suppress); United States v. Kelly, 147 F.3d 172, 179 (2d Cir.1998) (district court found defendant's
false testimony at trial for tax fraud was given “to confuse the jury” and “to prevent the jury from
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finding him guilty concerning the charges in the indictment”); United States v. Ventura, 146 F.3d
91, 98 (2d Cir.1998) (Defendant's false statements about his age, accompanied by fraudulent or
forged documents, were made “in order to secure a more favorable sentence,” “caused
considerable delay” in sentencing, “and required investigation by a number of officials of the
United States and Honduran governments.”); United States v. Rodriguez, 943 F.2d 215, 218 (2d
Cir. 1991) (Defendant stated falsely to probation officer that he had no prior record, when in fact
he had been arrested and convicted six times previously)).
b. Defendant Provided False Testimony Regarding $14 million in Losses
It is clear based on the entirety of the evidence, including his own statements, documents
previously collected by the Government, and the information discovered through the
Government’s additional investigation, that Loles provided material false testimony to the Court
during his re-direct and re-cross examination on November 25, 2013, (see Attachment E) and also
provided materially false information to the Federal Bureau of Investigation during the course of
numerous interviews. (See Attachments L-P). These false statements – if believed – would have
influenced the Court’s determination of the estimated loss amount, and ultimately the seriousness
of the crime.
Defendant Loles gave the following materially false testimony during his re-direct
examination on November 25, 2013. (Attachment E at pages 6-10.)
Q. The money that came over from Milbury Holdings, I mean, it belonged to
Milbury Holdings, but who owned Milbury Holdings?
A. Milbury Holdings, upon his passing, was was the owner of
Milbury Holdings.
Q. Did that money really belong to ?
A. No.
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Q. Who did it belong to?
A. The money that came is money that I earned with J ohn over the years
primarily in trading over the Greekstock.
Q. Essentially, it was you're money?
A. Well, yeah. That's why it came in the fashion it came. It was just sort
of on demand.
THE COURT: Can you explain that a littlemore?
BY MR. DONOVAN:
Q. Why don't you explain that a little bit more. Tell us how that money was
earned?
THE COURT: How it's his money if it's Milbury Holdings money?
BY MR. DONOVAN:
Q. Why was Milbury Holdings money really yours?
A. Milbury Holdings was the investor for most of the investing that he and I
did in the Greek -- Greece was an emerging market in the early '90s and so
forth. Sothere was huge interest and appreciation in the market.
Q. Remind us who "he" was?
A. He was Mr. who passed away, who was a friend and lawyer that
represented -- because we lived in Greece, as you know, for a number of years
and that's where I met him. So when the Greek markets started doing well and
therewas a lot of investing, I was sort of already in the investment business and
here we had a emerging market at our feet. A lot of new capitalization and so
forth. So a lot of money was made. And the investment vehicle in the Greek
markets, he chose for it to be Milbury Holdings. So we both put some seed
money and then just started trading, mostly in new capitalizations. And it just
-- and it grew substantially as the whole market grew.
Q. What was Milbury Holdings? Was it a company or anLLC?
A. It was -- I believe it was Panamanian. It was acompany that he basically
was running his finances through. So the way these capitalizations were
working inthe Greek market system is an entity would actually askfor a certain
amount of stock, let's say, in an offeringand then it would be granted. And if it
was over-subscribed, everything would be prorated. It wasunlike here where
the stock is given to individuals. There you actually -- there was a proration
done.
And then there's a lot of secondary trading that we did. I mean, I lived in
Greece.
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Q. You don't have to go through all the details.
THE COURT: I guess I'm getting the impressionfrom what your client is saying
is that he's saying he put money into Milbury Holdings, Mr. put
money in, and that money was invested and he subsequently got a return of his
investment withearnings. I guess what I'm interested in is when did he put
money in and how much? Does that come out? Is that somewhere in the
record?
BY MR. DONOVAN:
Q. Could you tell us that?
A. Let's see. My contributions would have been – now we're talking in the
late '80s. I can go to the bank records and probably try to -- well, not bank
recordshere.
Q. J ust roughly?
A. I would say a total of a million euro, a littlemore than a million euro.
Q. And that was an investment made in the late '80s?
A. Yeah. That's way, way early. My dad had some property. We had sold
some things. And everybody in Greece was investing in the market. And we
had done -- and that was sort my contribution. And then he kept his ledger
about sort of what was mine, what was his. I was, if you will, the more market
knowledgeable person. But again, it was a roaring bull market. So it was
morejust being in the right place at the right time.
Q. And what period of time did the trading take place, the initial public offerings
and the investment in companies?
A. Well, when Greece was granted the Olympics for 2004, it was the 10 years, if
you will, before that was the big sort of financial boom. And Greece had just
entered into the European community. So suddenly, borrowing in Greece went
from 8, 9 percent to 4 percent, overnight literally, which is what's created
obviously the huge financial problems that Greece has now. But yeah, it was in
that period sort of from thelate '80s it started as Greece was sort of an emerging
market and then it became a developed market. And then obviously came the
huge crash like all the emerging markets in I think the early 2000s.
Q. Where were you living when you were doing this trading?
A. Well, we were living mostly in Greece. And that'swhere he and I sort of met
and solidified our relationship. And then we continued, even when I cameback
to the U.S. in -- came back -- I'm sorry – came back to the U.S. in '91 we
obviously continued. There was no need for me to be there. Through various
sort of computer systems, I was able to see the Greek market live. So I was able
to continue doing whatever trading we needed to do.
put money into Milbury Holdings, Mr. put put money into Milbury Holdings, Mr. put
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(Attachment E Re-direct Testimony of Loles at 6-10.)
Then, on cross examination, and in response to questions from the Court, itself, Defendant
Loles gave the further following materially false testimony also on November 25, 2013.
(Attachment E at 26-33).
Q. Do you remember telling the FBI that the intent wasthat Loles was growing
the Farnbacher Loles business andhe would reconcile with George later? Do
you remember telling the FBI that, that youwould pay George his money back
later?
A. Well, I think reconcile with George -- it wasn't George's money. It was
sitting in Milbury Holdings.
Q. It was the family's money, correct?
A. No, it was not. Not what came here. If there was more money in
Milbury Holdings, that could be theirs, but that's not accurate what
you're saying.
Q. I'm just quoting you back to you. So if it's not accurate, which time were
you not accurate? When youtalked to the FBI for four hours in 2010, or when
youtalked to this judge for two hours today? Which timewas it not accurate?
A. Mr. McGarry, George was afraid that the $14 million would be seized.
Medtronic --
Q. Let me put it this way: George would have noreason to worry about the $14
million if it was your money, would he? But he was worried about it being
seized because it was not your money, correct?
A. Because it was in their family entity. I didn't have direct link. He
knew his father and I had dealings, but I didn't have -- I couldn't go and
physically takethe money out. So obviously I assumed that in this context
we're talking about -- because George was very worried and that's how I even
heard about all this Karayanis stuff because he brought me in and he said
Medtronic is being investigated, Smith & Nephew is being investigated.
Eventually are they going to try to implicate my father? We sort of pieced
together what exactly was going on. I mean, I'm sorry that I'm confused.
Q. Let me direct your attention to page 2. Do youremember telling the FBI
Milbury Holdings is a Panamanian company and is personal
company comprised of his personal money?
A. The most -- most of the money in Milbury Holdings was his, but what
we did in trading together and was therefore then allowed to come to me
was obviously my part of profits with George's father.
Panamanian company and is personal Panamanian company and is personal
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* * *

THE COURT: I guess I'd like to understand something.
THE WITNESS: Yes.

THE COURT: We're talking about $14 million. You say you put in, I think, a
million euros originally back in 19 –
THE WITNESS: In the '80s.

THE COURT: So just explain to me --
THE WITNESS: The growth --

THE COURT: -- what happened to that money and how much was in at
the time we're talking about when we're talking about the $14 million?
How much was in Milbury Holdings and who did it come from?
THE WITNESS: I only knew what I had an interest in. So I don't know
the total balance of Milbury Holdings.

THE COURT: Okay.
THE WITNESS: Because again --

THE COURT: So just give me a rough approximation over the years, so far as
you can, from the 1980s to the point in time we're talking about, about how
much money you had in Milbury Holdings?
THE WITNESS: Well, eventually it grew to that full amount.

THE COURT: What full amount?
THE WITNESS: The 14.

THE COURT: Okay.
THE WITNESS: There was over, I would say, 12 years of active trading.
And then there was a period where the Greek market was not doing anything.
And then obviously, unfortunately J ohn just passed away all of a sudden and it
created the confusion. George sees all these investigations and his father's
name being mentioned and so forth. As you can see, if there was a fear that
something was happening.

THE COURT: I'm not -- I'm just interested in the amounts of money and when.
That's all I want to know.
THE WITNESS: Yes. So that would be the total. And I would draw in –

THE COURT: And you don't have any recollection as to the growth from a
million euros to $14 million?
THE WITNESS: Oh, no. There was 12 years. I could sit and sort of put
something to show you, but there was years and years of investing. And
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obviously, with the big capitalizations, just like when the market was growing
here, these things were coming public at 120 percent. Big increases as new
companies were being capitalized. And we, like everyone –

THE COURT: I guess what I'm trying to get a sense for is at what rate did the
value of your investment in Milbury Holdings grow?
THE WITNESS: I guess it was compounding – we can sit and calculate. I
think it was about 12 years of active trading. So it was compounding at 25
percent.

THE COURT: 25 percent a year on average?
THE WITNESS: Maybe a bit more. Obviously, by leaving the money in and
taking bigger and bigger allocations, I mean, some of these --

THE COURT: I'm only interested in numbers.
THE WITNESS: Yes.

THE COURT: I think you're supposed to be financially astute. 25 percent a
year or more compounding?
THE WITNESS: Right.

THE COURT: That answers my question. And then at the end of this
time period your total -- the total value of your investment was $14
million?
THE WITNESS: Thereabouts.

THE COURT: That was everything?
THE WITNESS: That was everything. And obviously, when it was all
brought

THE COURT: That answers my question.

* * *

Q. And in fact, I believe you told the FBI that it was comprised of his personal
money.
A. That's just not accurate. What can I tell you?

Q. So when you told that to the FBI you were not being accurate?
A. No. Milbury Holdings, obviously I described Milbury Holdings, which
was the company that J ohn would do a lot of his personal finances through,
including our mutual trading.


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c. Defendant’s Testimony Regarding $14 Million is Demonstrably False
The testimony Loles provided the Court is demonstrably false for a number of reasons,
most importantly it is directly contradicted by information and documentary evidence provided by
an attorney for the victim-family.
After Loles provided the new and wholly incredible testimony to the Court, the
government reinitiated the investigation into the source of the $14 million, about which the
Government had been aware but had not previously focusedon. As background, on May 21,
2010, Loles had been specifically asked about Milbury Holdings and the approximately $14
million wire transfers into his accounts. (Attachment M). Loles gave a detailed answer to
questions about Milbury Holdings and never mentioned or alluded tothe funds being “his money”
or “his share of the trading profits.” He never mentioned his being entitled to trading profits, or a
million Euros invested in the late 1980’s, or any portion of the Milbury money being “his money.”
Loles told the government that Milbury Holdings was “ personal company comprised
of his personal money.” (Attachment M at 2). Loles provided a lengthy and complex
explanation that included statements regarding: how was only getting 1%
-1.5% interest on the money in London (Id. at 4), and how Loles would reconcile with George
later. (Id.). Loles stated that the purpose of transferring the money to Loles was to get the money
out of London. (Id.). Loles further stated that he did not have any agreement as to how the
money would be returned to George. Loles clearly stated that George and his mother “still think
their $14 million is still there, but it was already spent by Loles.” (Id. at 5).
In J une of 2010, Loles was again asked about Milbury holdings and the $14 million
Milbury had placed with him. Loles told the FBI that he is waiting to see what Milbury Holdings
is going tosay. Because as he stated, “there is no money.” (Attachment N at 7). Loles told the
Holdings was “ personal company comprised Holdings was “ personal company comprised
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FBI that the approximate $14 million received from MilburyHoldings went into Farnbacher Loles
and for other general purposes. Milbury Holdings was not going to give Lolesmoney to build his
business or to make investments like the church or other individuals. Milbury Holdings was
giving the money to Loles to “park” it. (Attachment N at 7). As discussed more below, the
family didin fact believe that they had invested with Apeiron and produced account
statements, and an account questionnaire, as well as photographs taken at Loles’ home, in New
York City and at his garage, to support their belief that he was their investment advisor and they
had invested with Apeiron and Somerset Partners. (Attachments I, J , at K).
Also during the May 21, 2010 interview, Loles told the FBI that George [and the
family] was not a “ ” who invested his money with Loles.
(Attachment M at 4). This was not true. (See Attachments F, G, I, J and K). Loles stated that
there was no formal agreement from George to invest in Farnbacher Loles but to simply take the
money off his hands, but it was the family's money. Loles also stated that George
was afraid the $14 million would be seized by the authorities in the United Kingdom.
(Attachment M at 4). When confronted on re-cross examination with the direct contradiction
between his re-direct testimony that it was “his money” and this statement previously given to the
FBI, Lolesprovided no explanation and attempted to side-step thequestion. (Attachment E at 27,
re-cross examination 11/25/13).
Also during the May 21, 2010 interview, Loles told the FBI that he received a visitor at
Wyatt from an “unknown man” regarding Milbury Holdings. (Attachment M at 1). In an
August 2010 interview (Attachment P) Loles disclosed the name of the visitor as Ian Cook.
(Attachment P at 3). Also during the August 2010 interview, the Government was provided a
letter that had been sent to Loles’ defense counsel from HCLS LLP, Solicitors, a law firm in
” who invested
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17
London, referencing Mr. Cook and their client (the family) and the significant sums
that had been sent to Loles for investment purposes. (Attachment R).
After Loles provided the Court sworn testimony that directly and materially contradicted
his earlier statements regarding the ownership of the $14 million and the documents provided by
his own counsel, the prosecution team, in coordination with the Department of J ustice’sOffice of
International Affairs and the Federal Bureau of Investigation’s London LEGAT, reached out to the
London Solicitors and spoke to Mr. Cook. After a brief conversation with Mr. Cook and a
subsequent phone call, the Government was contacted by Attorney Frederick Kessler on behalf of
the family.
Attorney Kessler provided a detailed history of the family relationship with
Loles and also provided documents that establishedthat the family, like the scores of
other individuals and families that dealt with Defendant Loles, were victims of his fraud.
Attorney Kessler provided an Apeiron account statement that is precisely the same type of
fraudulent account statement provided to the other victims. (Attachment I). Attorney Kessler
also provided, from the family, what appearedto be – at least to the family
– an account opening questionnaire for an account purportedly in Bermuda and purportedly
opened in the name of Somerset Associates Limited. (Attachment J ). This document clearly
lists Gregory P. Loles and his home address as the “Client Contact” and describes the intended
type of business as “Hold Family Assets and Estate Planning.” (Attachment J ). This account
questionnaire contained the same company name as in the earlier document provided by counsel
from the London solicitors (Attachment R) yet it proved to be merely a further element or ‘prop’ of
the fraud perpetrated on this Greek family.
the family. the family.
ttorney Kessler provided a detailed history of the family relationship with ttorney Kessler provided a detailed history of the family relationship with
that the family that the family
at least to the family at least to the family
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Attorney Kessler told the FBI that Loles abused the trust placed in him by the
family. Kessler stated the family was the biggest victim of his Loles scheme.
(Attachment F at 1). Attorney Kessler explained to the FBI that Milbury Holdings was an entity
of the family. The money sent from Milbury holdings was not Loles’ money. The
money belonged to the family. Milbury Holdings is the family’s
investment vehicle and it included three victims. Kessler primarily dealt with George .
(Id. at 1).
Attorney Kessler explained how Loles had nurtured the trust of the family just as he had
done with so many parishioners at St. Barbara’s. Attorney Kessler explained that George had
been hosted by Loles at his home when his kids went tothe Hopkins School, back in 2002. (Id. at
1) and Attachment S). This apparently was the nurturing of the relationship of trust that Loles
later usedto steal the millions of dollars. After the death of George’s father, the family sent
millions of dollars toLoles. Approximately three months or so after George’sfather passed
away, Loles contacted George and told him that he had a $300 million fundwhich was how he was
able to get 7 to 7.5% returns on investments. (Attachment F at 1).
Attorney Kessler met with the FBI on December 20, 2013 and provided additional detail of
this part of the fraud. Attorney Kessler explained to the FBI how the relationship between the
family and Loleswas initially furthered in the summer of 2002, when George went to
Connecticut to participate in asummer school programat the Hopkins School in New Haven with
the Loles children. George spent six weeks living with the Loles family while heattended the
program. (Attachment G). While visiting Connecticut, George observed firsthand how Loles
livedthe high life in his home, that George described as a mansion, and wherehe saw nice cars
including a Range Rover and BMW during his six week visit. Over the years contact between
stated the family was the biggest victim of stated the family was the biggest victim of
of the family. of the family.
family. Milbury Holdings is the family family. Milbury Holdings is the family
Case 3:10-cr-00237-AWT Document 163 Filed 02/20/14 Page 18 of 30
19
George and the Loles family was sporadic. In J une of 2007, George’s father passed away. The
next day Loles flewto Greece to attend the funeral. This gesture was much appreciated by the
family at that time. Loles stayed for several days and said he would return to Greece
at some point. (Attachment G at 2).
Later in the summer of 2007, Loles did return to Greece and told George, George’s mother,
and George’s sister that he, Loles, had a $300 million fund that got modest returns of about 7 to
7.5%. Loles explained his fee for managing this money was 1.5% of the assets under
management, but since the family was like family to him, Loles would not charge a fee.
Later in 2007, more wire transfers came from the family account in London to Loles.
In the later part of 2007, when the wires continued George explained that Loles played the role of
second father to George. Loles and George spokeon the phone and discussed George’s education
and his girlfriends and Loles bragged about his Porsche dealership and investments. (Id.). This
discussion of the “courting” of the family is remarkably (and predictably) similar to the
experiences provided to the Court by the and other parishioners who were told by
Loles that they were “like family” or “like a father to him.” This is even more despicable when
one considers that George was only about 19 years of age or so at the time of his father’s passing.
Attorney Kessler also explained to the FBI that around Christmas time of 2007 into 2008
the family decidedto visit the Loles family in Connecticut for a 10 day trip.
(Attachment G at 2). During this trip, Loles paid for everything. Loles wined and dined the
family and took them on a trip to New York City where they stayed at the Carlisle
Hotel and visited the famed Rainbow Room. (Id.) Kessler provided to the FBI the photographs
(attached as Attachment K) of this trip. While staying at the Loles mansion, Georgeobserved art
he believed to be of significant value as well as a newgarage structure that had beenbuilt by Loles
transfers came from the family account in London to Loles. transfers came from the family account in London to Loles.
e family is remarkably (and predictably) similar to the e family is remarkably (and predictably) similar to the
experiences provided to the Court by the and other parishioners who were told by experiences provided to the Court by the and other parishioners who were told by
he family decided he family decided
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since George’s original 2002 visit. (Id. at 2; Attachment K). George observed fancy cars
including a Porsche, Mercedes, BMW and a Range Rover. Many of the rooms inside the Loles
house had plasma televisions which was rare at this time. (Id. at 3). On New Year’s Eve George
observed Loles book their dinner reservations using an American Express Black card which was
an exclusive credit card. They enjoyed fancy dinners at this time. During this visit the
family also visited Loles’ race car business. (A photograph is attached at Attachment
K depicting the visit to the car racing facility). Clearly Loles was using the racing car business to
establish his bona fides as a wealthy successful money manager. As has been stated by other
victim-witnesses, George observed a Bloomberg terminal in Loles’ office in the car racing facility
which gave George’s family the impression that he was an Investment Advisor. (Attachment G at
3). At this time the family did not live a wealthy lifestyle like the Loles family. It
was during this Christmas visit that Loles gave the family the investment statements
from Apeiron Capital Management. (Attachment G at 3; Attachment I).
In the springof 2009, Loles asked George to sendmoney to Knightsbridge which served as
Loles’ investment vehicle. (Attachment G at 4). At that time wire transfers were sent to
Knightsbridge. Again, this is the precise conduct and precise experience suffered by many of
Loles’ other victims. Some of the family wires weresent from Space Trading, which
was another investment vehicle owned by the family. In addition George had a
telephone call with Loles in approximately J une of 2009 where Loles asked if George could send
money to his car racing business partner Farnbacher to whom Loles owed money. Loles told
George he would credit the family account. Again this is consistent with things Loles
told other victim-investors, such as the . The wiretransfers sent by the
family from Milbury Holdings in 2009effectively emptied their account in London. (Attachment
At this time the family did not live a wealthy lifestyle like the Loles family. At this time the family did not live a wealthy lifestyle like the Loles family.
was during this Christmas visit that Loles gave the family the investment statements was during this Christmas visit that Loles gave the family the investment statements
George he would credit the family account. George he would credit the family account.
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21
G at 4). Accordingly, statements to the Court that Loles took his “share” of the Milbury money
and there is other money there, while wholly incredible on its face, is further belied by his greed in
which he took all of the money in the Milbury Holdings London account.
In J anuary of 2010 after Loles was arrested, George reached out to theBermudan law firm
to inquire about his investment. It was then that he learned the Bermuda entity (Attachment J )
had never heard of Loles and the forms Loles had filled out on their behalf could have been
obtained by simply going to their website. (Attachment G at 4). Loles was supposed to have
establishedSomerset as an investment funds or account for the family which George
now knows never existed. (Attachment G at 4).
In a follow-up discussion, Attorney Kessler explained to the FBI that the family
had no knowledge of any partnership agreement between Ioannis (the father) and Loles for
investment purposes. (Attachment H). The family had no knowledge of any
involvement with investments in Smith and Nephew or Medtronic. Loles never told the
family that he, Loles, andtheir father Ioannis had a partnership of any kind. (Id.).
Their father also never mentioned that he had a partnership with Loles when he was alive. (Id.).
d. Loles’ Testimony is itself Incredible
Were the information, account statements, and photographs provided by counsel for the
family not sufficient to convince the Court that Loles lied to the Court and obstructed
justice, the Court could also look at the statements themselves to establish their falsehood.
The statements themselves simply do not make sense and are not consistent. As detailed
above they are contradicted by numerous earlier statements by Loles. However, they are also
illogical and not credible. First, Loles told the Court directly that he invested a million Euro or “a
little more than a million Euro” in the late 1980’s. This was under scored by the Court itself and
The family The family
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22
Government counsel during re-cross examination. However, as the Court is presumably aware,
the Euro as a currency was not in existence in the late 1980’s nor was the European Union. The
Euro itself was introduced J anuary 1, 2002. (See Attachment T). Thus, typical of a con-man’s
effort to deflect and distract, Loles was clearly just using the Euro to sound international and
making up figures and numbers out of thin air.
Second, Loles also told the Court that he turned one million “Euro” into $14 million by
investing in the bull market, and being in the right place at the right time. However, upon inquiry,
Loles could not give a single concrete example of a company he invested in or an investment he
made, an IPO he participated in, or a trade that he engaged in on behalf of Milbury Holdings. As
the Court observed, he is supposed to be financially astute, having held a broker’s license and
having passed the Series 7, Series 63, and Series 65 exams. (Attachment U at 6). In fact, Loles
scored a 96 on the series 7 exam and an 88 on the series 63 exam. (Id.) Yet, while under oath he
could not explain to the Court what he invested in, what IPOs he had purchased, or how the money
“grew.”
Typical of a con-man, Loles was long on generalities, spoke about the market, even
mentioned the fact that Greece hosted the 2004 Olympics, but did not mention one company by
name that he had invested the Milbury Holding money into. In fact, he even at one point, when
questioned by the Court, attempted to explain the significant growth as the result of
“compounding,” a term generally used for interest being accrued and re-invested and earning more
steady interest. Loles estimated this compounding at a steady rate of 25% per year, every year,
for more than 12 years. But again could give no specifics as how he achieved this return. He
also described seeing the Greek markets “live” on his computer here in the United States, but did
not explain what or how he was trading half a world away, who his executing broker was, who
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23
confirmed the trades, which firm he used as a settlement agent, why the money was in a London
account, or why a 19 year-old in Greece and his mother had control of the funds as compared to
Loles himself. As he said in his own words, “Because it was in their family entity. I didn’t
have direct link. He knew his father and I had dealings, but I didn't have -- I couldn't go
and physically take the money out.” (Attachment E at 27). It simply makes no sense, that a
sophisticated licensed investment professional would have $14 million and have no direct link and
couldn’t go and take the money out. That is not a credible story – because it is false. What rings
true is that he had no direct link and could not go and directly take the money out because it was
not his money and thus he had to fool the family into giving him the money as he did with
everyone else.
Third, Loles did not and simply could not explain on re-cross examination why he had
entirely failed to mention in the hours and hours of interviews that the $14 million was his own
money, including when he was asked by the FBI specifically about Milbury Holdings.
Additionally, on direct examination that had occurred a few weeks prior (Attachment D), Loles did
not mention that he had made $14 million in trading, yet he painstakingly took the Court and the
victims through much smaller transactions in an attempt to shave a few thousand dollars off the
Guidelines loss calculation. On its face, the testimony was not credible, was filled with
double-speak, and as is typical of Loles’ constant attempts to cloud the issue, was replete with
claims of grandeur.
e. Loles’ Testimony is Belied by the Entirety of the Record
Loles’ testimony, that the $14 million was “his money,” is demonstrably false based on
all the other documents, evidence, and circumstances surrounding this matter. In this regard,
Loles provided the FBI, in an initial interview, a somewhat detailed work history (Attachment L)
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24
and never mentioned that he had done significant trading in the Greek market. As pointed out in
Court and addressed above, Loles spoke to the FBI for hours including specific questions about
Milbury Holdings and never mentioned that it was “his money.” (Attachments M, N, O, P).
The interview Loles gave to Probation, as set forth in the PSR, does not mention anywhere
his purported prolific trading and the millions of dollars of profit he made with Milbury Holdings
in the Greek markets. Paragraphs 113, 114, 115, 116, 117, and 118 describe his work history and
he plainly did not tell the U.S. Probation Officer about Milbury Holdings or his business dealings
overseas. In fact, paragraph 115 describes him taking a job as a stockbroker “trainee at Investors
Associates, Inc. in New York City,” in 1992. The Court may wonder why Loles would need to be
a mere “trainee” in New York City if he were in the midst of a 12 year run, begun in the late
1980’s, of generating returns through compounding of 25% per year – every year. As reflected in
paragraph 117 of the PSR, Loles told Probation he earned approximately $350,000 per year as an
investment advisor from 1995-2002. This clearly does not include any of the $14 million made
from Milbury Holdings, presumably because he made no such money. His work history reflects
that of a failed broker who turned to a Ponzi scheme to support his lifestyle, not that of a
multi-millionaire.
Similarly, other portions of the PSR also tend to undermine his testimony that he was a
multi-millionaire. In paragraph 99 and 100 of the PSR he states that his wife’s family contributed
significantly to the purchase of their home and that his wife worked as a sales information analyst
at Virgin Atlantic Airlines. These facts are not consistent with someone who is a millionaire 14
times over and who can achieve remarkable rates of return of 25 % consistently for more than a
decade.
Case 3:10-cr-00237-AWT Document 163 Filed 02/20/14 Page 24 of 30
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Similarly, with regards to New Haven Savings Bank, Loles described for the Court at great
detail how he was able to secure money from a man named Gus Boosalis but at incredibly high
rates for the parishioners to participate in the mutual bank conversion. Had Loles actually been
entitled to the $14 million in the spring of 2004, before the death of Mr. would not this
money have been used to help the church and parishioners rather than pay the extortionist rates
Boosalis was charging the St Barbara’s parishioners? Obviously Loles had no rights to the
Milbury Holdings money until he took it from the family by fraudafter the father’s
passing.
Additionally, in connection with the New Haven Savings Bank transactions, Loles
provided sworn testimony to the United States Securities and Exchange Commission (“SEC”) on
March 23, 2006. This sworn SEC testimony has been previously provided to the Court. In that
testimony, sworn and under oath, Loles was asked what he had been doing in terms of employment
for the last 10 years, which would cover back to at least March 1996. Loles gave various answers,
memorialized on pages 7 through 10, and at no point did Loles mention trading in the Greek
markets and making millions of dollars through Milbury Holdings. Such information, if true
would have been responsive to the questions posed by the SEC and the Connecticut Department of
Banking.
In addition to statements made in Court and to the United States Probation Officer, Loles
also provided his work history when he applied for a license to be an investment professional.
This information is retained by FINRA and included at Attachment U. As memorialized in the
FINRA documents, Loles gave his work history from 1982 up through 1997. In connection with
applying to be an investment professional Loles indicated that his positions up to and before 1993
were NOT investment related. (Attachment U at 5). This work history is consistent with what
entitled to the $14 million in the spring of 2004, before the death of Mr. would not this entitled to the $14 million in the spring of 2004, before the death of Mr. would not this
Milbury Holdings money until he took it from the family by fraud Milbury Holdings money until he took it from the family by fraud
Case 3:10-cr-00237-AWT Document 163 Filed 02/20/14 Page 25 of 30
26
he told Probation and what he originally told the FBI, but is not consistent with his sworn
testimony to the Court that he was trading in the Greek markets from the late 1980’s – again
trading a million Euros which did not yet exist – and earning approximately 25 %.
In summary, prior to taking the stand and seeking to mislead the Court, Loles had spoken
with the FBI on numerous occasions and never mentioned trading in the Greek markets and
making $14 million in the Greek stock market. He gave a Pre-Sentence Interview to U.S.
Probation and never mentioned making $14 million in the Greek stock market. He gave sworn
testimony to the SEC, who asked about his investment and investment advisor history and work
history, and he never mentionedtrading in and making $14 million in the Greek stock market. He
applied for and received a Series 7, a Series 63, and a Series 65 license and never mentioned to
FINRA that he had engaged in trading in the Greek stock market, and in fact, to the contrary
indicated that his work was not investment related. In fact, he even testified on direct
examination on November 7, 2013 and even addressed Milbury Holdings specifically (Attachment
D at 68-70) and mentioned that he wanted “whistle blower protection” related to Milbury Holdings
and Smith and Nephew, but never mentioned that it was a trading vehicle that he had an ownership
interest or a personal financial interest in.
It was only later, when hefor some reason thought he could influence the Court and limit
his Guidelines’ exposure that he decidedhe would make the material misstatement and claim that
the $14 million that he had previously described to the FBI as family money was
somehow his. Loles has now placed himself in the precarious position of either: (i) having lied to
the FBI and U.S. Probation by making false statements about Milbury Holdings, and failing to
disclose his Greek trading to the FBI and U.S. Probation (as well as FINRA and the SEC) or (ii)
having lied to the Court. Clearly both versions cannot be true.
described to the FBI as family described to the FBI as family
Case 3:10-cr-00237-AWT Document 163 Filed 02/20/14 Page 26 of 30
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D. Loles’ Alternative Version of the Facts
It is commonly said that one is entitled to one’s own opinion but not entitled to one’s own
version of the facts. Loles seems to want multiple versions of the facts depending on his
predicament. In that regard, the Government contends that the facts are as presented by the
Government both in Court and set forth above and in the cited attachments. That is, that Loles
made materially false statements to the Court.
However, it bears mention that if Loles’ version of the facts were to be true – which they
are not – and if he did in fact have $14 million in Milbury Holdings upon which he could draw but
which he did not call upon until approximately 2007, then he stands before the Court as an
individual who was amillionaire 14 times over but still chose to run a Ponzi scheme and defraud
his friends andfellow Parishioners. He stands before the Court a multi-millionaire14 times over
who still chose to steal the money from the St. Barbara Church Endowment fund and Building
fund, including stealing scholarship money and money donated by hundreds of families
(Attachment B) and collected by school children. (Attchment C). He would stand before the
Court a millionaire 14 times over who stole the retirement money, college tuition money, life
insurance proceeds, and devastated an entire community simply so that he could run astreet
performance race car business and race Porschesaround in a circle, live like a kingin a huge home
with tennis courts, a pool and a multi-car garage, and travel internationally, all while leaving his
$14 million untouched in an account in London until 2007.
Were this the version of the facts, the Government would then contend that the nature and
characteristics of Loles as a person and the utter soullessness of the crime would be that much
more egregious. That he could steal from , , , , ,
Case 3:10-cr-00237-AWT Document 163 Filed 02/20/14 Page 27 of 30
28
himself, the Endowment Fund, the Building Fund, all while having a $14 million nest
egg in London at Milbury Holdings. Frankly, this newest version is simply not believable.
What is believable and what is the true version of the facts is that even after four years of
incarcerationLoles has still not yet learned any lessons, that he still seeks to deceive, mislead and
outright lie if he perceives it will benefit him in some way. Now Loles has succeeded in adding
the Court itself to the list of those to whom he has lied and should be found to have obstructed
justice.
Thus, no matter which version of the facts the Defendant choses to advance, and as a
con-man he has advanced many versions, he must still be sentenced to a remarkably long term of
imprisonment.
Accordingly, the Government now calculates the Guidelines range as follows:
Base Offense Level 7
Loss Greater than $20,000,000 +22
More than 250 Victims + 6
Charitable Misrepresentation + 2
Sophisticated Means + 2
Violation of Securities Law while acting as Investment Advisor + 4
Money Laundering in Violation of § 1956 + 2
Obstruction of J ustice + 2
Adjustment for Acceptance of Responsibility Zero
Total 49
If the Court were to decline to find obstruction of justice and decide, even given the
Defendant’s false testimony, to award a three level adjustment for acceptance of responsibility, the
Defendant’sAdjusted Offense level would still be a level 44, placing him literally above the
Guidelines. Given the incredibly serious nature of the crime and the utter contempt that he has
shown the Court and the process, a sentence of 360 months would not be inappropriate.
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II. CONCLUSION
For the foregoing reasons, those set forth in the prior Government=s Sentencing
Memoranda, and those advanced in open Court, the Government respectfully submits that, under
the circumstances of this case the Defendant’s Offense level is a level 49. Moreover, under either
calculation, the Court should not hesitate to give Defendant Loles a remarkably long period of
incarceration and an order of restitution of over $26 million to the victims of his crimes.

Respectfully submitted,
DEIRDRE M. DALY
UNITED STATES ATTORNEY

/S/
MICHAEL S. MCGARRY
ASSISTANT U.S. ATTORNEY
Federal Bar No. CT25713
157 Church Street, 23rd Floor
New Haven, CT 06510
Tel.: (203) 821-3751
Fax: (203) 773-5378
Michael.McGarry@usdoj.gov


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CERTIFICATION
I hereby certify that on December 31, 2013 a copy of foregoing Government=s Sentencing
Memorandum was filed electronically and served by hand on anyone unable to accept electronic
filing. Notice of this filing will be sent by e-mail to all parties by operation of the Court=s
electronic filing system or by mail to anyone unable to accept electronic filing as indicated on the
Notice of Electronic Filing. Parties may access this filing through the Court=s CM/ECF System.


/S/
MICHAEL S. McGARRY
ASSISTANT U.S. ATTORNEY
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ATTACHMENT A
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ATTACHMENT B
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Individuals, Families and Parish Organizations who made donations
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ATTACHMENT C
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ATTACHMENT D
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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF CONNECTICUT


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UNITED STATES OF AMERICA 3:10CR00237(AWT)

vs.

GREGORY P. LOLES
HARTFORD, CONNECTICUT
Defendant NOVEMBER 7 , 2013

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EXCERPT OF SENTENCING HEARING - VOLUME II
DIRECT EXAMINATION OF GREGORY LOLES

BEFORE:

HON. ALVIN W. THOMPSON, U.S.D.J.


APPEARANCES:


FOR THE GOVERNMENT:

OFFICE OF THE UNITED STATES ATTORNEY
157 Church Street, 23rd Floor
New Haven, Connecticut 06510
BY: MICHAEL S. MCGARRY, AUSA

FOR THE DEFENDANT:

LAW OFFICE OF JEREMIAH F. DONOVAN
P. O. bOX 554
Old Saybrook, Connecticut 06854
BY: JEREMIAH DONOVAN, ESQ.

Corinna F. Thompson, RPR
Official Court Reporter
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TABLE OF CONTENTS

WITNESS DIRECT CROSS REDIRECT RECROSS
GREGORY LOLES
BY MR. DONOVAN: 3
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(Transcript excerpt follows.)
MR. DONOVAN: May I call Mr. Loles, please.
THE COURT: Yes.
GREGORY LOLES,
called as a witness, having been first duly
sworn or affirmed, was examined and testified
as follows:

THE CLERK: Please state your name and spell
your last name for the record.
THE WITNESS: My name is Gregory Peter Loles.
Last name is L-O-L-E-S.
THE CLERK: Thank you, sir.

DIRECT EXAMINATION
BY MR. DONOVAN:
Q. Mr. Loles, are you the defendant in this case?
A. Yes, I am.
Q. And you understand we're here for the first part of
a sentencing hearing?
A. Yes, I understand.
Q. And you understand on the last part of the
sentencing hearing you'll be able to talk directly to
the Judge and to people who may or -- who may be here
about a variety of different things. You understand
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that, don't you?
A. Yes, I do.
Q. And today we're only concerned about kind of
technical and specific aspects of the amount of loss?
A. I understand.
Q. Although I know there are a lot of things you want
to explain and talk about, I'm going to be asking you
some specific questions about the events and how they
led to loss. You understand?
A. Yes.
Q. Do you know St. Barbara's Church?
A. Yes, I do.
Q. Where is it located?
A. In Orange, Connecticut.
Q. What was your relationship to St. Barbara's?
A. I believe in about 1994, '95, my wife and I were
trying to --
Q. Just quickly.
A. I became a parishioner.
Q. Did you ever sit on any of the boards of St.
Barbara's?
A. I was invited to sit on the board of the Endowment
Fund.
Q. And did you sit?
A. Yes, I did.
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Q. Do you remember when you began on the Endowment
Fund?
A. I believe it was around or about 1995.
Q. How many members sit on the Endowment Fund?
A. The charter, it had to be between I think nine and
13.
Q. Did it vary during the course of your time there?
A. Sometimes.
Q. Did you sit on the Endowment Fund until the time of
your arrest?
A. Yes.
Q. When you began at the Endowment Fund, where were
the endowment fund's assets kept?
A. They were kept at a local branch of a brokerage
firm named Tucker Anthony.
Q. Did there come a time when those Endowment Fund
assets were moved?
A. Yes.
Q. Where were they moved to?
A. They were moved to the company that was providing
custody for me.
Q. What was the name of that company?
A. DLJ Pershing.
Q. Very briefly, was that a decision of the Endowment
Fund board?
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A. Yes, it was.
Q. Was it taken after some discussion?
A. Yes.
Q. Can you tell the Court why it was decided to move
the assets of the Endowment Fund to I'll call it
Pershing?
A. After seeing some of the transaction statements
from Tucker Anthony, I noticed that the Endowment Fund
was paying full retail commission for every transaction.
Q. Would they have to do that if they moved to
Pershing?
A. At Pershing, because I was an institutional client,
the transaction cost was almost nothing. Very small.
Q. All right. Now, are you familiar with -- have you
ever heard the term "day trade"?
A. Yes.
Q. And have you yourself acted as a day trader?
A. Yes, I have.
Q. And what does a day trader trade?
A. He can trade all sorts of different instruments.
Q. Financial instruments?
A. Financial instruments.
Q. Why do they call it day trading?
A. Because by the end of the trading day at 4:00, his
positions are typically all closed.
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Q. Now, you said that you have worked as a day trader;
is that right?
A. I day traded for myself. I never was employed as a
day trader.
Q. Did there come a time when you began assigning
certain day trades to the church?
A. Yes.
Q. And about when was that?
A. I believe, from the church statements, the first
appearance of day trade entries were in 1995. '96 for
sure.
Q. I want to explain mechanically to the Court how
this would work.
First of all, just give me an example of a day
trade, a fictitious day trade.
A. Well, on a given day through the day, let's, as an
example, say I am trading IBM stock. So I may do 20
transactions during the day, buying 5,000 shares,
selling 5,000, then buying 15, selling five. All sorts
of transactions around one instrument.
Now, at the end of the day, the custodian, DLJ in
this case, would then add up all the buys and come up
with a price. Then they would add up all the sells and
come up with a price. So I would then be informed at
the end of the day that I bought, through the day,
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100,000 shares of IBM, average price $100. And then
they would say to me, your 100,000 shares you have also
sold today at an average price of, let's say, $101, for
example.
Q. Did your day trading suggest to you a way to make
contributions to the church without actually giving
money from your own account to the church?
A. Yes.
Q. And tell us about that?
A. Well, because now we're in the bull market of late
'96 and I'm getting more and more active in day trading,
there were many days that I had, let's say, a good day.
Q. If you had a good day, was there something that you
wanted to do?
A. When I had a good day, I decided that I would like
to put some of these completed trades into the Endowment
Fund.
Q. And the Endowment Fund's account was also at the
same firm where Apeiron's account was?
A. The Endowment Fund had decided by then to move into
DLJ. And that was key, that they both had to be in the
same place so then I can do this transfer, in essence,
after the fact.
Q. Got you. I'll call the firm then DLJ.
A. DLJ.
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Q. What would you do at the end of the day in order to
assign certain of the sales to the church?
A. Well, at the end of the day, I had to complete what
was called a blotter. And the blotter --
Q. Really briefly.
A. I would basically, if during the day there was
100,000 shares bought and 100,000 shares sold, I would
then tell DLJ, 2,000 shares, put them in the St. Barbara
account and put the 98 in my account.
Q. And was St. Barbara's endowment account ever on the
line for those trades?
A. No. The whole concept was that it was after the
trades were opened and closed that the assignment would
be made. And this is something that obviously I asked
permission from the Endowment Fund to do. I couldn't
just do it.
Q. And the Endowment board agreed that that should be
done?
A. They agreed. In the beginning it was a little odd
to them because they said, So this is like free? I
said, yes. And I said this is something I would like to
do.
Q. Hold on. 13 words or less. 12 words or less.
They agreed?
A. They agreed.
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Q. I want to talk about how that was accounted for.
The Endowment Fund you said was a separate fund at DLJ;
is that right?
A. Well, the Endowment Fund initially had one account
at DLJ and then at some point it became two. But that
one account would get statements every month.
Q. That's the next question. Who would those
statements be sent to?
A. I would get a statement.
Q. Would anybody else?
A. And the second one would go to the then treasurer,
Peter Anastasion.
Q. Is he in court today, Peter Anastasion?
A. I believe he was here yesterday.
Q. Did St. Barbara's Endowment Fund have any kind of
financial -- well, yearly financial reporting?
A. Peter Anastasion at the end of the year would do a
comprehensive annual report that would then be presented
to the General Assembly of the parish.
Q. And that was Peter Anastasion's responsibility?
A. For a very long time, and the last few years he
passed the torch on to another lady.
Q. Now, did your day trades that were assigned to the
church appear in those financial reports?
A. He did break out the day trades on his statements.
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Q. Did the day trades -- did the statements have an
income and expenditure section?
A. Yes.
Q. And were the day trades listed there?
A. They were listed under the income section.
Q. Now, while we were preparing for this sentencing
proceeding, did we request of the Court its annual
statements -- not the Court -- the church?
A. Yes.
Q. Was the church good enough to provide those for us?
A. We did get them about three months ago, I believe.
Q. And did you yourself go through the statements to
see that each year -- or most years, some years not --
most years there was listed income to the church from
your day trading?
A. Yes.
Q. And did anybody else do that day trading that might
have been in that figure?
A. Anybody else from the Endowment Fund?
Q. Anybody else from anywhere.
A. No.
Q. So when you look at the financial reports and see
in a particular year the church made a certain amount
from day trades, that's your day trading that you
assigned to the church?
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A. Yes.
Q. All right. Were you in court yesterday when we
agreed with the church that we wouldn't introduce their
financial documents because they are kind of
confidential?
A. As they wish, yes.
Q. And you're also aware that we've gone through the
financial reports that just summarized each year that
indicates that the day trades were made; is that right?
A. Yes, I think we've tallied.
Q. I'm going to direct your attention to
Defendant's Exhibit 1 and 2. Is a portion of those
documents a listing of the day trades year by year?
A. Yes, it is.
Q. Does it appear to be accurate to you?
A. It appears to be accurate.
MR.McGARRY: May I have a minute, Your Honor?
What's 2?
MR. DONOVAN: Sorry.
THE COURT: Do you have extra copies,
Mr. Donovan?
MR. DONOVAN: I'm not offering it yet, Your
Honor.
THE COURT: Okay.
MR. DONOVAN: And may it please the Court,
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just so the Court knows, this is really a summary of our
contentions.
THE COURT: I figured.
MR. DONOVAN: And at the end, after I've tried
to establish it.
BY MR. DONOVAN:
Q. I just want to make sure concerning the information
that was contained in the church reports and whether it
was accurate.
Each year, once the church began investing in
Apeiron's bond activities, would you provide a number to
the church concerning its Apeiron account?
A. Yes.
Q. And that would appear in the church financial
statements?
A. In the consolidated statement that Mr. Anastasion
would put together, yes.
Q. And he would base that amount on what you told --
on documents that you provided?
A. Yes, he would.
Q. And those amounts would be false?
A. Yes.
Q. How about with respect to the day trades; how did
the person who prepared the financial reports determine
how much in day trading was made?
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A. The confirmations for the day trades came directly
to him from DLJ.
Q. So that was based on the account statements of DLJ?
A. Yes.
Q. Not on anything you told him?
A. Nothing I told him.
Q. So that's with respect to the day trades.
I want to ask you a little bit later about
Mr. Nicholson's $700,000 and its relation to the day
trades, but I'll come back to that in a minute.
What I want to move on to now is, do you know
someone named Gus Boosalis?
A. Yes, I do.
Q. Do you remember when you first spoke with Gus
Boosalis, what year was it, roughly?
A. I know very well. It was in 2004.
Q. And the first time you spoke with him, how did you
speak with him?
A. I was informed --
Q. What method?
A. By phone.
Q. By phone. Prior to speaking to him, was it a
surprise that he called you?
A. I was alerted by Father Peter that I would receive
a call from a gentleman named Gus Boosalis.
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Q. Tell the Judge what Father Peter told you?
A. Father Peter told me that he received a call from
him and that this man started explaining some financial
opportunity that he wanted to offer to people in the
community based on the fact that New Haven Savings Bank
was going public. And Father Peter said, and somewhere
in there he offered me that I could make money. And
then Father Peter sort of giggled because he says, I
don't know what he's talking about, but I gave him your
name.
Q. So Father Peter told you he had spoken with him and
he would be calling you?
A. Yes.
Q. And it's fair to say, is it not, that Father
Peter's virtues are spiritual and inspirational rather
than financial?
A. That's very true.
Q. When you received a call from Boosalis, you were
not surprised?
A. I expected a call from a person about something,
yes.
Q. Okay. At the time you received the call from
Boosalis -- I've missed this in talking previously. At
the time that you received the call from Boosalis, was
the New Haven Savings Bank undergoing a transformation?
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A. Yes.
Q. Can you, in a few words, describe what that
transformation was?
A. New Haven Savings Bank decided to go public.
Q. Okay. Was it going to go public by means of one of
these initial public offerings, IPO?
A. An initial public offering.
Q. Just to jump back a second. Sorry to be
disjointed. In addition to the day trades, would you
also trade in initial public offerings?
A. Because of my trading activity, one form of
compensation a trader gets from brokerage firms that he
trades with is IPOs.
Q. What does IPO stand for?
A. Initial public offerings.
Q. What is offered in an initial public offerings?
A. It is an initial or sometimes a follow-on sale of
stock.
Q. And is the stock sold at a certain price?
A. There's a price set and then trading beginnings.
Q. What's the hope of the trader if he purchases the
set price stock?
A. Certain stocks, because of their nature and the
economy or the success of the company, immediately will
trade at a substantial premium.
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Q. Ironically, I think today Twitter went public and
its stock is up 77 percent, but that has nothing to do
with this.
THE COURT: I thought you were going to tell
me you were well invested and you were leaving us.
BY MR. DONOVAN:
Q. Did you do IPO trades on behalf of the church as
well?
A. I was given IPOs by my brokers as, if you will,
compensation, and a number of those IPOs I assigned to
our church account.
Q. And were those also listed on the financial firm's
statements?
A. Peter actually broke those out, I think, in most
years as sort of day trades and then IPO trades.
Q. And again, the information concerning the IPO
trades came from?
A. Confirmations produced by DLJ sent directly to him.
Q. Let me get back to the New Haven Savings Bank IPO.
Do you know what kind of an institution the New
Haven Savings Bank was before the IPO?
A. I believe the term is a mutual bank.
Q. And do you know who owned it?
A. Well, the shareholders own it.
Q. So when the IPO takes place, who gets to buy the
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shares of the bank?
A. The board of the bank, once it makes a decision to
go public, sets a date and shareholders as of that
date -- or I should say account holders, who are the
shareholders, as of that date are then offered the
opportunity to invest in the public offering of the
bank.
Q. What is the hope of a depositor who invests in the
IPO?
A. Well, the hope of any investor would be to have a
profit on his investment.
Q. And with respect to the New Haven Savings Bank IPO,
was it widely believed that the shares on the open
market would be considerably more expensive than the
price that a depositor could buy them?
A. There was very good reason to believe that, yes.
Q. If a depositor qualified, do you know how many
shares he could buy or how much worth of stock he could
buy?
A. I forget what the amount of deposit required was,
but if -- it was not a very high threshold. I would
guess it was about $10,000.
Q. Not so much concerned about qualified, but how much
they could buy?
A. The maximum amount that they can buy if they
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qualified would be 70,000 shares at $10 a share.
Q. So if they wanted to stay to the maximum, they
would have to come up with how much?
A. $700,000.
Q. Were you yourself a depositor?
A. Unfortunately not.
Q. Was Father Peter a depositor?
A. Yes, he was.
Q. To your knowledge, did he participate in this IPO?
A. He did.
Q. Was the church a depositor?
A. Yes, it was.
Q. Did the church have many accounts at New Haven
Savings Bank?
A. Although we had many accounts, unfortunately they
were all under the same tax ID so we only had one
participation.
Q. In the course of your conversation with Gus
Boosalis, did he talk to you about the New Haven IPO?
A. After he inquired on who I was and why I was
being -- or he was being told to talk to me, he
explained what we already knew. We knew that the bank
was coming public. He explained that he has this
company that makes these loans available.
Q. Did he tell you what the name of the company was?
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A. Yes.
Q. What was it?
A. Old Financial.
Q. Where was Old Financial located?
A. It was based in Fargo.
Q. And Fargo is in South Dakota?
A. I think it's south. South or north.
Q. One of the?
MR.McGARRY: Want to take judicial notice that
it's North Dakota, Your Honor.
BY MR. DONOVAN:
Q. And during the course of your dealings with
Mr. Boosalis and with Old Financial, did it turn out
there was a reason for it to be in that particular
state?
A. Yes, there was.
Q. And what was the reason?
A. The reason was that apparently that state allows
what was explained to me as negotiated interest rates.
Q. Essentially, they didn't have usury limits, right?
A. Correct.
Q. And so what was the deal that Old Financial was
offering?
A. Old Financial was interested in financing these
purchases for people that had the ability to buy shares
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but did not have the money to buy those shares.
Q. Let's give an example. I had $15,000 in New Haven
Savings Bank on the day that was the cut-off date and I
want to participate in the IPO as much as I can, but I
don't have any ready cash. What was the deal that would
be offered to me?
A. What Old Financial in that situation would then be
willing to lend you up to the $700,000, assuming you
qualified for $700,000 of the stock.
Q. And what would Old Financial's -- how would it make
money?
A. They're initial documents that were presented to me
were that their compensation for this loan would be
75 percent of the profit generated by -- at the sale of
the securities.
Q. Would a person who purchased the IPO be required to
sell the stock immediately after the IPO if it were
profitable or could he make a different decision?
A. Actually, no, they didn't have to sell the stock.
Q. But when they sold the stock, Old Financial
would -- initially it would get 75 percent of the
profit?
A. If they decided to hold the stock for long term,
they would have to put up some security. I believe it
was half of the money. And then they can hold and do
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whatever they want.
Q. And was the stock also to be a security for the
loan, the stock itself?
A. And the two documents that were sent to us that a
borrower had to execute, one was, I believe it was
called a securitization document that basically said if
they default in their loan obligation, the shares can
be, I guess, the collateral. And then there was the
loan document. There were two documents that they in
ordered.
Q. All right. So in the hypothetical of impoverished
Jeremiah buying as much as he can, I would sign those
two documents and then what would happen?
A. You would sign those two documents. You would then
give them a bank account and they would send the
$700,000.
Q. And then what would happen to the $700,000?
A. Well, then you would -- ideally, you would
participate in the IPO.
Q. I would get as many shares as I could, right?
A. If you qualified for 70,000 and you had the
$700,000, you can obviously buy the 70 shares.
Q. What would I do with the shares?
A. You then, at your own discretion, would sell them.
Q. And most people would sell them, right?
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A. Most people didn't sell at the first moment, but in
the first week or 10 days eventually people sold their
stock.
Q. What would happen with the money that was made on
the sale of the stock?
A. Once the stock was sold, then one can do the
calculation as per the loan document, and most people
then returned in two transactions or two, let's say,
checks. First they returned the principal, i.e.,
$700,000, or some lesser amount if that's what they
borrowed. And then another check would be, if you will,
this negotiated interest.
Q. Now you said that originally the amount was 75/25
with Old Financial getting 75 percent?
A. Yes.
Q. Did you negotiate with them in order to try to get
a better deal for the depositors?
A. Yes. Obviously we were shocked at what the deal
was, but that was the deal. And based on Connecticut
state tax, that was the argument that I gave; that
there's going to be a cost to the borrower and
eventually the lawyer for Old Financial conceded to 72
versus 75 percent.
Q. All right. Now, I'm going back to when you talked
to Gus Boosalis. What was it that he wanted you to do?
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A. His interest was to find people that had these
accounts.
Q. All right. And eventually what -- tell me the
activities that you engaged on behalf of Old Financial?
A. The main activity was to identify these people.
Q. After you had identified those people, how was the
proposition presented to them?
A. Well, what they were told is that -- what I would
tell them is, Number 1, if you have money, go do this
for yourself. That was my advice to everybody.
Q. Let me stop you right there. You said that the
bank was a depositor; is that right?
A. You mean the church?
Q. I'm sorry. The church was a depositor, right?
A. Yes.
Q. And the church had the money to do it itself,
right?
A. Yes.
Q. And it did?
A. Absolutely.
Q. We're not claiming any subtraction as a result of
the amount of loss from that transaction?
A. No, no.
Q. Did you talk only to people inside the church?
A. No.
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Q. Let me take that away. Did you talk only to church
parishioners?
A. No.
Q. Who did you talk to?
A. Well, it started with church parishioners because
that's where we would have the information that they
have an account at New Haven Savings, and then word of
mouth, other people got involved.
Q. Now, eventually do you know the total number of
people who participated?
A. Twenty-one.
Q. Twenty-one.
A. I would say 21 entities. One or two were entities
versus physical people.
Q. Now, you said that when you found out that somebody
had a New Haven Savings Bank account you would go and
present the proposition to them; is that right?
A. I felt -- yes.
Q. And if the person were interested, what would you
do then?
A. If the person was interested, and obviously I was
comfortable, because I also felt that it had to be
somebody that I was comfortable who's not going to run
away with the this money, which they obviously could.
There was no way that you can force them to go do the
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IPO once this loan was consummated. I would submit the
name of the person and his banking information to Lawyer
Frisk in Fargo.
Q. Let's stop there for one second before we move on.
Your initial conversation was Mr. Boosalis; is that
right?
A. Yes.
Q. And during the course of the month -- was it a
couple of months before the --
A. Not even. About a month and change.
Q. Did Boosalis continue to be your point person with
Old Financial?
A. There was communication with Gus Boosalis, but the
point person was clearly Attorney Frisk.
Q. About how often would you speak with him during
this period?
A. In the period before the closing date, several
times a day.
Q. And did any of the depositors who wanted to take
part in the transaction speak with Frisk?
A. Interestingly, both Frisk and Boosalis said that
that is not an option for anybody to speak to them.
Q. So you were to be the contact for anybody in
Connecticut?
A. They only wanted me to be the contact.
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Q. Did they do anything in order to check you out to
make sure that you were legitimate?
A. Yes.
Q. What did they do?
A. They came to my home.
Q. And who came?
A. I believe it was the father-in-law of Mr. Boosalis
who also, I believe, was affiliated with Old Financial.
And another gentleman.
Q. And the reason -- would it be fair to say that the
reason that they are contacting the Greek church here in
Milford is because they themselves were Greeks and
members of a Greek church in California?
A. I think that was one of the links, absolutely.
Q. There was some security in dealing with a
close-knit community that tended to be trustworthy?
A. I believe that's one of the their reasons.
Q. So now in addition to being the point person who
acted as the liaison between Old Financial in North
Dakota and the depositors here, did you perform any
functions once the IPO actually took place?
A. Well, quite a few of the people that invested were
not people that are sort of market investor types. So
not wanting to be sort of personally involved, I found a
local brokerage firm actually in Westport, Connecticut
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and that I just knew someone at and I said we're going
to need someone to sell all this stock for us. I went,
and because there was going to be a lot of stock, I was
able to get a very small rate for the people as the
commission paid. That was used for the great majority
of the sales of the various people's stock.
Q. Now, you testified that you tried to identify New
Haven Savings Bank depositors who might qualify. You
spoke with them and presented the proposition to them.
If they accepted, you arranged for the documents to be
sent out. Afterwards you helped them with the sale of
the stock?
A. The ones that wanted to.
Q. And did you perform any other functions with
respect to Old Financial?
A. With respect to Old Financial, obviously before
they wired this money, these two documents were
executed.
Q. You had to make sure they were executed properly?
A. And I held the originals. And then at a given
point the originals were forwarded to Fargo.
Q. So it sounds to me you were acting kind of like a
loan facilitator in real estate transactions with
respect to banks; is that right?
A. Yeah, I would say so.
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Q. I mean, did the people who participated in end up
making money?
A. Yes.
Q. About how much did they make on the average?
A. A person that had to borrow the full amount,
meaning they didn't have any of their own money to
participate, after all taxes paid made approximately 40
to $42,000.
Q. And this was money that they wouldn't have made if
they hadn't gotten a loan to buy the full amount?
A. Yes.
Q. What was in this for you?
A. From that first phone call, Boosalis made it clear
that, Number 1, he's done this in multiple conversions
as these are called across the country.
Q. And did he say that when he did this in various
other places he worked with some kind of liaison person
such as yourself?
A. Sometimes. Other times he would physically go
there himself.
Q. And this time he was going to work with a liaison
person?
A. This is -- yes.
Q. What did he say that the liaison person would
receive?
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A. What he called the flat rate would be 15 percent.
Q. 15 percent of what?
A. Of the 75 percent, if you will.
Q. Of the transaction?
A. Which became 72 percent.
Q. Now, eventually was this 15-percent commission
calculated?
A. Yes.
Q. And how much did it come to? Well, the amount that
went to the church is not actually the amount that it
came to, right?
A. Yes. There was a couple of adjustments that had to
be made.
Q. We'll talk about those adjustments in just one
second.
How much was the amount that eventually went to the
church?
A. I believe it was $987,000 and change.
Q. Could you tell the Court why it went to the church
instead of to you?
A. Upon the final calculation with Frisk, he called me
to confirm the number with me and he said to me, Where
do you want me to send this? And he was implying did I
want it to go to my DLJ or my Citibank account. He was
aware of both. I said, Why not just send it directly to
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the church. It was no secret to him or to anyone that I
wasn't interested in this money. I was running around
because we obviously needed money for our projects.
Q. When you were explaining the deal to various New
Haven Savings Bank depositors who might participate, did
you tell them that you were entitled to a commission or
what you were planning to do with it?
A. Absolutely.
Q. That was actually a selling point?
A. It was, because I said that money will come of
this. Because they would scratch their heads, 70-some
percent. And I said, Well, but here's the good news. A
certain amount is coming from that and I will forward
that to the church.
Q. So the people who participated thought not only
would they make a certain amount of money but their
activities might result in the church getting some money
from you?
A. They knew it would.
Q. Okay. Now, we talked about some adjustments,
right? I think you testified that you knew that Father
Peter was a depositor at New Haven Savings Bank?
A. Yes, he was.
Q. Was he entitled to the full amount of shares?
A. No, he wasn't.
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Q. As a result, did you advise Father Peter that he
should participate in this program?
A. Absolutely.
Q. And did he?
A. Yes, he did.
Q. And do you know the total amount of gain -- we see
a $100,000 deposit with Apeiron. Was that the gain that
he enjoyed on the sale of the stock?
A. It resulted from the gain of the stock. I don't
know if there was a bit more gain. It would be odd for
it to be exactly a $100,000.
Q. Father Peter was required, was he not, to pay the
73 percent -- 72 percent?
A. All people had to pay that. Father Peter doesn't
get involved in these things, as from the beginning he
didn't.
Q. But he had to pay that interest payment?
A. All the money had that obligation.
Q. And did you do something in order to relieve him
from that obligation?
A. When we did our netting out with Mr. Frisk, I
basically said, Well, don't worry about that, just
absorb it.
Q. Was your commission and the commission that went to
the church then reduced by that number?
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A. By that and one other small transaction.
Q. And do you remember what the number was, that is
the amount of Father Peter's interest that you -- that
you took care of by reducing the amount of your
commission and the amount that would then go to the
church, roughly?
A. I don't know the exact amount, but by definition it
would be 72 percent of whatever profit was made.
Q. Can you make just a rough estimate?
A. If the profit was $100,000 then it would be
$72,000.
Q. And Father Peter then didn't have to pay that?
A. Father Peter didn't pay that.
Q. You said there was another small adjustment. What
was that?
A. There was the daughter of another parishioner who
was in a hard-time situation and I made the decision
that she didn't have to pay interest either.
Q. All right. Now, I want to talk about Nelson
Nicholson and Fantasma.
We've been talking about a $700,000 amount of money
that Nelson Nicholson placed into the -- in some way
into the church's endowment. Can you explain that
$700,000 separate amount?
A. As the day trading started getting more frequent
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and bigger, "bigger" meaning bigger size transactions, I
brought to the attention of the board that I am being
limited by the fact that I can't put a trade of a bigger
size based on what the Endowment Fund was worth, that
they had to understand that that will limit on how much
I can do.
After that meeting, Nelson said, Hum, we've got
money sitting in Pershing. Why don't you just have me
transfer money into the church's name and then you will
have what I call the band width or the capacity to put
more trades.
Q. Now, as an accounting matter, was that Nelson
Nicholson's -- was the amount $700,000?
A. It wasn't exactly 700. I don't recall. But it was
very close to $700,000.
Q. And as a matter of accounting, was that $700,000
kept separately from the Endowment Fund itself?
A. Eventually, to facilitate Peter Anastasion, who had
to do all this nonsense accounting, we opened a second
account so he would get confirmations that were just the
day trades, and then the regular long-term stuff.
Q. So the $700,000 that Nelson Nicholson provided to
the church, that wasn't being used actually in the day
trades?
A. No. What was required -- the day trades were
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always complete before they were logged. But the way --
Q. Fair enough. And that money was also not being
used for the initial public offering trading that you
did, some of which resulted to the benefit of the
church?
A. The money simply allowed bigger transactions to
fit.
Q. So the answer is? The answer to the question is
that money wasn't being used to actually trade with?
A. No, no, no. No trades initiated in that account.
Q. Did there come a time when you had some
conversation with Boosalis -- I'm sorry -- with Frisk,
the attorney for Old Financial, concerning the number of
people that you had found who wanted to participate in
the Old Financial loan?
A. When the loan amount reached $6 million, which
$700,000 at a time was not that many people, he
basically said to me, I think we're done.
Q. And why -- did he explain why he wanted to be done
at that point?
A. Well, I think he felt exposure of $6 million to
someone that he met -- he personally hadn't met, his
people came to visit -- was enough of a risk to this
person's judgment.
Q. When he said that, did you have some other people
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who were interested in participating in that loan
program?
A. As you can imagine, once the word got out, yes,
there were more people.
Q. Did you do something in order to persuade him to
increase the number and the amount of loans?
A. When he cited security as his issue, I came up with
the idea of just sort off the top of my head, I said,
Well, suppose I send you some money to hold?
Q. As security for the other people?
A. As if people run off with your loan money because I
gave it to the wrong people, I would suffer.
Q. Did you have some talk with Nelson Nicholson about
it?
A. Well, I told Nelson that I need to put up money.
And since we weren't trading, it was now '04 and that
that money is sitting there, would he let me borrow it,
because, in essence, it was his money. Everybody knew
it was his money. It was never on the books at the
church. Would he let me borrow it for a month and a
half, because this whole period was only a month and a
half.
Q. It was on the books but it was separately
identified?
A. It was never -- we referred to it as a loan, but it
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wasn't not -- it wasn't on the balance sheet, let's say.
It was something known in the Endowment Fund.
Q. And everyone knew that that was just money that was
there so you could do larger day trades?
A. Yes.
Q. And larger IPOs?
A. They were asked their permission to allow it, yes.
Q. What was Nelson's response to your suggestion that
he let you use that money for a different purpose?
A. As Nelson referred to me yesterday as his son,
there was no way he would say no.
Q. He agreed that you'd be able to send that money?
A. He said do whatever you can do.
Q. And did you send Nelson Nicholson's $700,000
somewhere?
A. Actually, I had no power to do that, but he
authorized Peter Anastasion, because, mind you, the
money is at Pershing. He authorized Peter Anastasion to
give an authorization request to Pershing, which usually
was via fax, to then wire the money to this bank in
North Dakota, wherever Frisk told us. And then I wired,
obviously, money from my trading account.
Q. That was your Apeiron account?
A. Yes. I actually had to stop trading because this
was obviously more important.
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Q. How much money did Apeiron wire?
A. I had told Frisk that I will send you a million
four, which is obviously two people's worth of money.
And he was sort of surprised and he says, So you're
confident? I said, Yeah, obviously I'm confident. No
one is going to run away with your money.
Q. So you used Apeiron sent $700,000?
A. Yes.
Q. And Nicholson's $700,000 was also sent or wired?
A. Yes, the one that was in the trading account.
Q. And as a result of that, were additional persons
allowed to get loans from Old Financial?
A. We got another $7 million for a total of 13.
Q. Even more than the $1.4 million that you had
secured?
A. The 1.4 he treated as a security deposit. They had
no problem of having money to lend people.
Q. Now, after the New Haven Savings Bank initial
public offering took place, what happened to the
$700,000 that you had -- that Apeiron had sent?
A. Once everything netted out, and obviously they --
we calculated the amount, they got all their money back.
Actually, even before they got all their money back, I
made sure the last million four was still in friendly
hands. I said to Frisk, I would like the money back,
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obviously. And he wired the million four to Apeiron's,
I believe either Citibank -- to an Apeiron account.
Q. And how about Nelson Nicholson's $700,000?
A. It was all sent together.
Q. So following some time after the closing of the New
Haven Savings Bank IPO, Nelson Nicholson's $700,000 is
now sitting in the Apeiron account?
A. Obviously, with his knowledge, it is now sitting in
the Apeiron account.
Q. All right. So I want to get on to the toy company
in just a second, but let's just make sure that I've
established the numbers that I need to.
The St. Barbara's Building Fund financial statement
indicates an increase of $975,000 which it attributes to
New Haven Savings Bank stock. That's the statement
January through December of 2004.
What's that $975,000?
A. Actually, that number is a little inaccurate. It
was 987, or whatever that number was. That was, I
believe it was a check. I don't think it was a wire.
Q. But what is it?
A. That is the commission, if you will. The
commission, compensation, from all the people that
borrowed money from Old Financial.
Q. And then we have to add to that Father Peter's
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roughly $70,000?
A. If the profit was $100,000, it was 70. And the
other person was the numbers were even smaller. So
roughly about a $100,000 I would say.
Q. Okay. Now let's talk a little bit about the toy
company.
When Nelson Nicholson first began discussing with
you the toy company, where was his $700,000 at that
point?
A. When he first introduced me to Dwyer, the owner of
the toy company, I think it was '02, '03, so it was
sitting in that trading account. We were trading at St.
Barbara.
Q. Okay. Eventually Mr. Nicholson discussed with you
making an investment with respect to the toy company?
A. Yes.
Q. Tell me how it developed, briefly?
A. The -- I was present at a lunch in New York where
he wanted to introduce me to his friend, Mr. Dwyer. The
result of that lunch was what Nelson described him
giving a $100,000 check for a napkin receipt from
Mr. Dwyer who explained how he's getting these nice
orders from these big companies, i.e., FAO Schwartz. He
needed the money to produce the product in China to be
able to fill his orders. And that's where, at that
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moment, that's where Nelson would come in.
Q. So that $100,000 was a loan from Nelson to the
person who started the toy company?
A. It started as a loan. I think Dwyer offered I
think it was 10 percent just to make things easy. And
Nelson said okay.
Q. And you could see from their dealings that Nelson
and he had been friends from childhood?
A. Yes, yes.
Q. Was there an event that had a sort of traumatic
business experience upon the toy company?
A. Eventually the toy company needed more money,
substantially more money, Nelson, thinking he was doing
me a favor, said, Why don't do you come in, too?
Q. Did the toy company need substantially more money
because of something that had happened to one of its
customers?
A. No. Initially they needed more money because they
had bigger orders.
Q. Eventually did they suffer some losses?
A. Unfortunately, eventually the money that we
financed orders with was for a big order for FAO
Schwartz.
Q. What did FAO Schwartz do?
A. After the holiday season they went bankrupt.
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Q. Let's talk about how it was that you came about to
invest in the toy company. Was it a conversation you
had with Nelson?
A. It was just Nelson saying 10 percent. We've got
these orders. I know this guy. And it was clear that I
think he wanted me to get involved and I said okay.
Q. How much was Nelson going to invest?
A. Well, it was sort of like a demand from Dwyer.
It's what he needed. So it wasn't an investment. It
was almost -- we were lending against, in essence,
orders that Dwyer would get from the marketplace. So he
would call and say, I need 150, I need 100, I need 200.
I forget. I want to say we put initially -- and again,
the first couple of transactions was all Nelson and
eventually, because of our relationship and he wanted me
sort of around, because he liked Dwyer but he also sort
of I think appreciated me, my business sense, eventually
got to a point where I said, Okay. Well then let me put
some money, too. You don't have to do all of it.
Q. When we talk about money going to the toy company,
was this prior to the founding of -- to the
establishment of this limited partnership?
A. Yes. That came towards the end.
Q. Now, when money was given to the toy company, what
was the deal with the toy company?
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A. Again, it was somewhat informal. The deal was that
obviously we kept tally of what they were given and I
believe the interest was 10 percent.
Q. And was there any limit on how long the loan would
be, when they had to repay it?
A. Well, typically these big department stores would
have 120-, 180-day payables, so it would take a while.
Q. But he was going to pay it back to you when he
could?
A. He was going to pay it back, yeah. Or if things
went well, he would have to keep it because he would
have new orders.
Q. How did the payments -- how were the payments made
to the toy company?
A. I want to say -- obviously I'm not talking from
documents so this may not be perfectly accurate -- but
the payments were made to this corporation. I think it
was a corporation in New York. Fantasma Toys, we called
it, New York. Checks would be written. Wires would
be -- I think Mrs. McCartney probably has a better idea
if they were checks, wires, whatever.
Q. Ms. McCartney has given a total of the amount of
money that came out of Apeiron accounts to the toy
company. Did that sound about right to you?
A. I believe the number was $740,000? That sounds
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about right.
Q. That sounds about right?
A. This is to New York.
Q. Apeiron sent to the toy company in New York
$740,000.
Now, how much of that was your money and how much
of that was some of the $700,000 that was sitting there
that was Nelson's money?
A. The $700,000 that was sitting there, keep in mind,
that happened in the middle of '04. That happened after
the bank IPO. So monies started flowing to Fantasma, I
believe, and -- and the wires would be a better -- in
'02, '03. And then when the bankruptcy happened, that
was the big problem for us because we had to either just
walk away, or what Dwyer said to us, Now you got to, in
essence, give me more even more money, a lot more money
because they've wiped me out. I can't do anything.
I've lost all my receivables. And the decision was made
to stick it out.
Q. Would it be fair to describe this relationship
between you and Nicholson and Dwyer as kind of a
gentleman's agreement kind of a relationship in which
there really were no documents produced?
A. Eventually when it got really hairy, to a million
five, I think Nelson started getting some documents from
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him. But from our standpoint -- and obviously, Nelson
felt horrible. And one of the reasons that the 700 was
left in Apeiron was because he felt horrible. Because
now it was clear that we had a very high probability of
this wasn't going to work.
Q. Now, of the $740,000 that Apeiron sent to Dwyer,
sent to the toy company, how much do you think was yours
and how much was Nelson's?
A. Of the money that came out of -- that's a tough
question because I don't have any documents. But the
money that came out of Apeiron accounts I believe was
primarily my money because it was coming out of -- and
again, did you find it mostly coming out of Pershing?
Q. That's not the way things work here.
A. I'm sorry. I don't have the documents. I don't
want to just guess.
Q. So, in your view, that was essentially mostly your
money?
A. Initially it was, yes.
Q. So of the $740,000, give me a number that you think
was yours.
A. I would be guessing.
Q. When you say "you're guessing," there's no document
that tells us this money is your yours, this money is
mine?
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A. But the origin of where it came from I believe
exists.
Q. We know it came from the Apeiron account. So the
$740,000 that came from Apeiron to that company, part of
it is your investment and part of it is Mr. Nicholson's
investment; is that fair to say?
A. Potentially some of it was his. I can't say with
certainty.
Q. So would it be fair to say then that you and he
never really talked about how much of this is mine, how
much of this is yours?
A. I think you established that, or he established our
finances were very informal.
Q. All right. Now, did there come a time when he
instructed you with respect to your investment in the
toy company, Mr. Nicholson?
A. It was clear that -- now we're approaching the
middle of '04 -- and Farnbacher Loles is starting to get
much more serious. And at that point I think he felt
that he got us into, if you will, his words, that mess,
that he felt that initially just keep the 700 there so
you're safe. And then he said, I understand you need to
go do things. Go do what you need to do.
Q. What about your deal with respect to the toy
company?
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A. Well, he basically was taking --
Q. What did he say? He didn't say, Go do what you got
to do?
A. No. He basically said, I want to have the full
exposure. If it works out, I will do real well. If it
doesn't work out, that's my problem.
Q. How were you to be repaid for whatever that portion
of that 740 that you had invested of Apeiron's money?
A. Well, he obviously had $700,000 sitting in Apeiron.
Q. So did he tell you that that was going to be your
payment?
A. He said that you're out of the investment. And his
motive was --
Q. I don't care what his motive was. I care what he
said.
A. He said, You're out of the investment, yes.
Q. What were you supposed to get from that? Did he
tell you you were to keep the $700,000?
A. Yes.
Q. He said that explicitly?
A. He said that this is what you put in, roughly
$700,000. We're not going to argue if it's a little bit
more or a little bit less. Obviously, it was a
positive.
Q. Now, in the government's calculation of loss, is
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that $700,000, when it comes into the Apeiron account
from North Dakota, is that counted as money that should
be included in the amount of loss?
A. Yes, it is.
Q. Does the government give you credit for a $700,000
payment to Mr. Nicholson after Mr. Nicholson told you,
Look, keep the money and you're out of the deal?
A. They weren't aware of that.
Q. And you feel as though the amount of loss to
Nicholson should be decreased by that amount?
A. Yes. It should be accounted in that way.
Q. Okay. Now, there are a few miscellaneous points I
want to make, but before we get to those I want to
direct your attention to Defendant's Exhibit 1.
Would you agree with me that on
Defendant's Exhibit 1 are listed capital gains from IPOs
and day trades?
A. Yes.
Q. And those seem -- those seem to be accurate numbers
that were taken out of the church's financial reports?
A. I believe these are Peter Anastasion's numbers,
yes.
Q. And those numbers, so far as you can recall, were
accurate? That's how much you made for the church in
day trades on the years indicated?
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A. Peter was very accurate.
Q. But that's not the question. Do you think the
numbers are accurate?
A. Yes, yes, absolutely.
Q. In addition to that there is listed a figure of
$975,000; is that right?
A. Yes, that's what's listed.
Q. What is that?
A. Well, it's been -- you're titling it New Haven
Savings stock, meaning from the stock offering. I
believe that number should be a little bit higher.
Q. And that's the commission that you told Old
Financial you should be paying to the church?
A. I told Frisk. He was the only person at Old -- I
don't think he was part. He was the lawyer for Old
Financial. He's the person I spoke.
Q. And this sum does not include -- this sum obviously
has to do with St. Barbara's loss, but in addition, you
think that Mr. Nicholson's loss should be diminished by
that $700,000 that involved the toy company?
A. Well, that $700,000 has to go on one ledger or the
other.
Q. And that should be either the $700,000 in shouldn't
be counted, or if it is counted, you should be given a
credit for the $700,000 out when he told you, Let's end
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your involvement?
A. The $700,000 that's listed as what was the trading
account money was Nelson Nicholson's money. I don't
think that's in dispute. And that's, I believe, the
item that should not be included in the loss.
Q. And directing your attention to
Defendant's Exhibit 2, is that again the same figures
calculated in a slightly different way; that is,
Defendant's 1 shows the net gain to St. Barbara's, if we
consider all of these factors, and Number 2 indicates
the total monies that really should be subtracted from
the government's amount?
A. Yes, I mean --
MR. DONOVAN: This will be much more clear to
the Court when I offer the exhibit and I hand it up to
the Court.
MR.McGARRY: Your Honor, is this the time
where I object and you say it goes to the weight and it
we talk about the various factors?
THE COURT: Yes, it is.
MR. McGARRY: Well, I would object. I know
the Court can consider anything in sentencing, so I'm
objecting to protect the record.
But specifically, the number of these day
trades are '97, '98 -- I'm looking at Defendant's 1 if
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you have a copy of it.
THE COURT: I don't. I think I know what
you're alluding to because I've seen references to these
things.
MR.McGARRY: '97, '98, '99, 2000 are all
before the fraud to which Mr. Loles has pled guilty. So
I would argue that is irrelevant.
The objection is to relevance. It's before
the fraud. I don't think he can claim credit for money
that he may have -- if he could even claim credit for
money on day trades against the money he stole, then he
certainly shouldn't be allowed to claim beforehand.
That would be my first objection as to those.
As for the 2002, I have less of an objection.
It's also a small number.
As to 2008, I think it goes to the weight. We
do have time before the actual date of sentencing, but
it's not clear to me where the church was getting the
numbers for their profit. It's my understanding that
Pershing had been effectively emptied, at least some of
the Pershing accounts. So I'm concerned that
Mr. Anastasion, who was here yesterday and who is in his
90s now, was probably in his 80s then, may have gotten
the information from Mr. Loles. In that case it really
goes to the weight because I wouldn't want the Court to
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credit if it's another made-up document like some of the
other documents that we saw.
Similarly, the $17,000 under St. Barbara's
Endowment Fund IPOs for '96 and '97, I think we're
getting pretty far afield from the fraud that started in
2001. That would be the objection to that.
And the New Haven Savings Bank stock, leaving
aside that' it's, as Mr. Loles testified and I believe
Ms. McCartney testified, 987, not 975, we will argue
that since the church got it, had it in their account
and gave it to him, as a legal matter he shouldn't claim
credit for that.
So that again, I think, goes to the weight.
And the numbers are similar on Defendant's Exhibit 2.
So that would be my objection. But again, in
sentencing, since the Court can consider almost
anything, with that I certainly expect the Court to look
at it and give it what weight the Court wants to give
it.
THE COURT: Okay. I'm just trying to follow
along on Defendant's 1 versus 2.
MR. McGARRY: I think -- I'll leave it to the
defendant's counsel.
I think Defendant's 1 he takes the
government's number, puts it on top, and then subtracts
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his numbers from, ending in a negative number basically,
with the conclusion that thanks to Mr. Loles, the church
is up $6,900 if we go back to 1996.
Defendant's 2 is just the purported gains that
Mr. Loles is claiming credit for.
MR. DONOVAN: I think that's right.
THE COURT: I follow it now.
MR. DONOVAN: Can I assume that Mr. McGarry
predicted correctly and that you're admitting this?
THE COURT: Just like everything else.
MR. McGARRY: Amazing that Mr. McGarry has
such prescience, Your Honor.
BY MR.DONOVAN:
Q. Just with respect to Mr. McGarry's last objection
concerning that last trade year, 2008, again, was -- to
the best of your recollection, that number comes off of
the financial reports of the church; is that right?
A. I believe, I'm not sure -- but I'll have a better
idea if I look at statements -- I believe he's correct
that that one may not be accurate. But I know where to
look and I'll be able to answer that question.
Q. What do you need to look at in order to answer it?
A. I need to look at -- I believe it's $28,000?
MR. McGARRY: That's what the document says.
A. That's what the document says. I recall that there
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was a need for that amount, and I believe that $28,000
was wired. We did not have any money at DLJ by 2008.
So it clearly was not accounted as the way everything
else was.
BY MR.DONOVAN:
Q. I'm having a hard time following this.
For some reason the Endowment Fund needed to have
$28,000 in it?
A. And I believe it was wired to them. I think, if
I'm given access to the CDs that I have at the Wyatt, I
may be able to establish that and give a specific
transaction that is that $28,000.
Q. Suppose that's true. What's the affect on the
amount of loss? Does the $28,000 come out of Apeiron?
A. I believe the $28,000 came out of Apeiron, yes.
Q. Is that $28,000 accounted for in the accountings of
the government, do you know?
A. I believe not.
Q. So in either case, it's either a credit to you or
a -- in either case, it's a credit to you?
A. I don't want to say something and then make it seem
like I'm trying to mislead. I'd rather see.
Q. There's a few other points I think you wanted me to
make. I'm sorry. There is one other thing.
Last night when you were returned to Wyatt, did you
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find some additional payments that you made that you
think that you should get credit for?
A. Yes.
Q. And could you tell us where you found those
payments?
A. Those payments were found in the documents that
Peter Anastasion was presenting on an annual basis to
the General Assembly.
Q. The church financial reports?
A. Yes.
Q. And directing your attention to -- Sandy has been
nice enough to mark these. This should be Defendant's 3
also.
Directing your attention to Defendant's 3, can you
tell me what that is?
A. Yes. The Endowment Fund.
Q. No. What is the document?
A. It's an accounting of some additional monies that I
believe should be credited.
Q. And explain to the Court how that document was
produced?
A. These amounts appear on Peter Anastasian's section
called Distributions. And I -- when I saw the
distributions, I recalled that I was paying these
amounts directly from my Apeiron Citibank account. And
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therefore, it was Apeiron paying on behalf of the
Endowment Fund.
Q. And because of the names, it might not have been
immediately obvious to the government that these were
payments --
A. They would have no way of knowing.
Q. And then in addition to the listing of payments to
individuals, is there also a listing of a transfer to
another account?
A. I did find something that may -- that I don't think
is accounted, and that is a contribution that I made to
the Endowment Fund to establish what I think was
referred to as the Building Maintenance Fund. I know
the amount was $15,000.
Q. And that also appears on the financial statements
of the church?
A. My memory was jogged by Peter Anastasion's
documents, yes.
MR.McGARRY: Your Honor, I'm not trying to
interrupt Mr. Donovan, though I guess that's exactly
what I did.
Just to kind of speed things along, the FBI
financial analyst just told me she's already taken into
consideration the $15,000. We are checking with the
church to see if these individuals are scholarship
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people that may have gotten money from the Endowment
Fund. We're talking about $34,000. Just in the
interest of cooperation, to move things along, if she
can find these and if we can credit them as people who
received scholarships directly from Apeiron as opposed
to running it through the Endowment Fund, then I think
we would agree that Mr. Loles would get credit for the
return of principal under Guideline Application Note for
this $34,000.
MR.DONOVAN: And with a few questions I can
clarify that.
BY MR. DONOVAN:
Q. First of all, would you cross off the $15,000 on
that list?
A. Yes.
Q. Now, next, who are the two people named as
recipients?
A. The two people are people that worked for the
community.
Q. What are their names?
A. Simos and Dembakelis.
Q. What were their jobs?
A. Simos was a cantor and Mrs. Dembakelis helped in
the church office.
Q. The financial documents indicate that those
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payments are coming from the Nelson Nicholson Fund. Why
do you say you deserve credit for it?
A. Within the Endowment Fund there are what we call
named funds. And Nelson had the discretion to pay
people out of his named fund within the Endowment Fund.
And then, given his instruction, the Endowment Fund had
to disburse what he wanted. And that was the case with
these and some other. I don't remember that other
payments were made by Apeiron. Now I have something to
look for. But these were absolutely made by Apeiron.
Q. Even though it says it coming from the Nelson
Nicholson Fund --
A. Yes.
Q. -- Apeiron was paying them?
A. Yes.
Q. And did the payments come out of an Apeiron account
or the Knights Bridge account?
A. Well, again, I don't have the document, but I know
I made the payments. So it's one or the other. I don't
remember which account.
MS. McCARTNEY: (Interruption.)
A. It was basically is an obligation of the Endowment
Fund. These people had to get this money on a monthly
basis and obviously, I -- I had to do that.
MR. DONOVAN: Your Honor is actually getting a
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glimpse into the discussions that we've been having back
and forth.
THE COURT: I think we're driving the court
reporter nuts with people who are not supposed to be
talking, but --
BY MR. DONOVAN:
Q. There are a couple of other points you wanted me to
make and question me about.
MR. DONOVAN: If you give me one second, Your
Honor?
THE COURT: Yes.
BY MR. DONOVAN:
Q. Just a few little questions -- a few questions
about the agent's testimony this morning and what some
people told him.
Do you remember he testified that Mr. Goebbel had
in his statement told him about amounts under management
at various brokerage firms with whom you dealt, right?
A. Yes.
Q. Was there a time when you did have those amounts
under management?
A. Yes, absolutely.
Q. And when was that?
A. It was in the late '90s when the broker/dealer and
the RIA was operating.
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Q. So you may well have made those statements to
Goebbel at that time?
A. I would assume he heard those in conversations with
other market people; that that was definitely in my
past, yes.
Q. Now, we heard some testimony about Luk Oil and I
want to go through this really briefly. Luk Oil was a
Russian oil company?
A. Luk Oil is a Russian oil company.
Q. And you learned somehow that Luk Oil might be
interested in paying a large amount of money to sponsor
the Farnbacher Loles racing team?
A. Yes.
Q. Who did you learn that from?
A. An individual contacted Roger Garbow.
Q. Who's Roger Garbow?
A. He was one of our marketing people at the time.
Q. And he gave you that information?
A. Via e-mail.
Q. Who did you deal with with respect to Luk Oil?
A. I forget the name, but there was a representative
that wanted to go into a relationship with us.
Q. Did he seem legitimate at first?
A. Well, he clearly seemed legitimate to Roger, and
then upon my conversation he invited me to actually to
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go to Milan to meet with him. He wanted to see a
package of what we can do in sponsorship for Luk Oil.
Q. How many times did you go to Milan to meet with
this fellow?
A. I ended up going three times.
Q. Would it be fair to say that at this point you were
somewhat desperate to get financing for Farnbacher
Loles?
A. It wasn't at time that we were desperate. It was a
time that we had success, and hopefully success in
racing so as to build my relationship with Porsche, I
would want to have sponsorship to do more racing.
Q. Did you tell other people about the possibility
that Luk Oil was going to sponsor your racing team?
A. After my first meeting in Milan where we presented
what we can do as a company, he was very convincing that
he was going to be able to broker a transaction.
Obviously, this person knew that Luk Oil was already
sponsoring racing in Europe so it was easy to believe.
And I, unfortunately, made the mistake that I ran to
Porsche to say that I have good news, I can do a higher
level program. I was granted the program. Why not,
since somebody was going to pay for it? And then after
the second meeting it started becoming obvious that this
was not going to pan out.
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Q. Did this guy then begin talking to you about you
paying him money in order to get this deal under way?
A. It kept on getting more and more complicated and
obviously more and more embarrassing. And having -- if
I hadn't gone to Porsche, it would have been one thing,
but because I had announced it to Germany, I put myself
in yet another ridiculous position.
Q. Eventually you decided this guy must be a con man
and you broke off contact?
A. Eventually it came to the time where he had to
consummate a deal, and I did everything that made sense
that he was asking, and then their requests obviously
got to where it was obvious he knew some people at Luk
Oil, he had some influence, but he was not able to
deliver a sponsorship.
Q. Now I want to talk to you about Lacey. We had
testimony this morning that Lacey said and presented
documents that indicated that you had given security
interests in the same car; is that right?
A. Yes.
Q. Could you tell the Court how that happened?
A. There's two documents that I believe the government
has. If you look at the bottom of the two documents --
MR. McGARRY: I believe
Government's Exhibits 5 and 6, for the record.
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BY MR. DONOVAN:
Q. I don't think we need the documents.
A. Let me explain what I saw in those documents. And
for the longest time, this is my first time of seeing
those documents and now I sort of understand something
that was being said.
Every year the race --
Q. Let's make the explanation short, okay?
A. But I have to give a little background.
Q. Let me ask you this question --
A. Yes.
Q. -- did you give a security interest to Lacey?
A. Yes.
Q. And did you also give a security interest to
someone else on the same car?
A. Inadvertently it showed up as the same car, but --
Q. Those are with respect to contractual relationships
with Lacey and who was the other person?
A. With Lux.
Q. With Lux. Okay. And without going into greet
detail about the contracts themselves, because that's
not important, tell the Court how it was that you ended
up putting a security interest on the same car, two
security interests?
A. If you notice it says 86 car, 2009 86 car. Every
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team has a series of numbers that are the same every
year. So there's a 2007 86 car, there's an '08, '09 and
so forth 86 car.
At the time that those contracts happened,
Farnbacher Loles was in possession of five cars, its
'09 cars, its '08 cars and one '07 car. There was no
reason to put that one '09 car on both. However, the
VIN number used is the same on the one car. And that
was obviously in October. The other document doesn't
have a date, but in October of '09, obviously my world
is crashing. So that was a mistake. But it's clear we
had five cars. There would be no reason for me to give
the same car. Why? I mean, they were sitting in the
garage in Atlanta.
Q. Fair enough. In preparing this, which ever was the
second of the security interests, you just didn't have
the first one in front of you probably?
A. It's actually not even dated. I don't remember
what the date -- I don't see a date on the Lux
transaction, yes.
Q. So is it your testimony that that was inadvertent
mistake?
A. Absolutely was, because the collateral existed and
there would be no reason.
Q. Okay. Now, we had a number of -- a lot of
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testimony about persons --
THE COURT: Can you excuse me for one second?
(Pause.)
THE COURT: Thank you.
BY MR. DONOVAN:
Q. And just briefly. You said you had those other
cars that you could have put a security interest on.
Were those cars -- did those cars already have security
interests on them?
A. No.
Q. With respect to -- we had a number of reported
statements in which people said they either wanted to
buy cars from you or you were arranging for the
manufacture of cars and that they made you money, right?
A. Yes.
Q. And that did happen?
A. That's how it would always happen in that industry,
always, because they are obviously very specialized
cars. Always the money is collected up front and then
in the spring typically the cars are delivered. And
unfortunately, several people got caught where they
ordered a car and obviously we never made it to the
February/March window where those cars typically arrive
from Europe, or in the case of Pratt and Miller, the
production -- and there was various delays there that we
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can get into if you want -- but those cars did not even
start.
Q. But in any case, those people -- those people lost
money because Farnbacher Loles failed?
A. Absolutely.
Q. When you took the money from them, did you have any
sense that you were defrauding them? Did you intend
to --
A. No.
Q. -- keep the money without providing the cars?
A. No.
Q. We had some testimony concerning Mr. Carlisle --
A. Yes.
Q. -- and the statement he made.
Can you remind us who Carlisle is?
A. Darrell Carlisle became a client. I'm not sure
what year. But the incident where unfortunately he
ended up losing some money had to do with a car that he
wanted to sell that was in our possession, as many
client cars were in our possession. We had already done
a loan that he described for $200,000. So he knew that
I was having some short-term financial need. However,
he wanted me to sell his old car so he could buy a new
one.
Q. Did you find a buyer for that car?
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A. I found a buyer for a car.
Q. Did you have cars that you yourself could have sold
to the buyer?
A. I also needed to sell a car at the time.
Q. Why didn't you sell your car to that buyer?
A. Well, because his car was a better fit.
Q. To the demands of the buyer?
A. For the new buyer who eventually you hope will
become a client of the firm.
Q. Did you have any conversation with Carlisle about
the way that you might do the deal but you would get
access to the money?
A. Yes.
Q. What did you tell him?
A. I told Darrell that his car would be a better fit
but I definitely need to sell a car. However, if he'd
like me to sell his car, I would have to keep the money.
And then in the spring, when it's time for him to pay
for a new car, that would be bought again through us,
Porsche Motorsports, I would be able to do that for him.
Q. And he'd get credit for the money you had received?
A. Yes. And he was nice enough to say fine. And then
obviously we never got to that spring.
Q. All right. We had some conversation about Grossman
I think. Grossman's investment?
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A. Marya. My point was that Marya was a long-term
friend of Mr. Nicholson. That's the point.
Q. That's how you were introduced to him?
A. Yes. I didn't know Mrs. Grossman.
Q. The agent has testified about how you told him
concerning a scheme that was eventually resulted in a
SEC investigation and a plea involving Greek medical
devices; is that right?
A. Involving medical device sales in Greece, yes.
Q. Sales to Greece. Fair enough. And this came out
of your working with Milbury Holdings, right?
A. It came out actually with the death of my friend
and lawyer in Greece.
Q. Explain to the Court what Milbury Holdings had to
do with all this?
A. Milbury Holdings belonged to my Greek lawyer. It
was a vehicle that was used for a lot of trading in the
Greek stock market when the Greek market was an emerging
market.
Q. How did you find out about this medical device
scheme?
A. So upon his sort of sudden death, one of his
clients, this Mr. Karayanis (phonetic) individual,
contacted his son, and were very friendly obviously with
the Mislidis family, and started describing things that
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his father was helping him with. And the son had just
lost his father -- I think he was 20 at the time --
reached out to me and said, I don't know what dad was
doing. So he says would you mind talking to this guy?
So there was a trip to Greece.
I sat down with this Karayanis guy and he described
to me what I then described to the special agent with
great detail of how they were -- they had created a
scheme actually with Smith & Nephew, which is a New York
Stock Exchange listed company, and more importantly with
Medtronic, which is an even larger U.S. listed company,
American company. And they were, in essence, creating a
fraud on the Greek hospitals by paying employees of the
hospital to buy their stuff versus the other stuff at
these ridiculous prices.
Q. In any case you gave that information to the agent
and eventually you learned through the newspapers that
that that had resulted in a United States prosecution,
right?
A. The United States under the foreign I think it's
called corruption whatever, did get a $22 million
settlement with Smith & Nephew.
Q. And that was reported in the Wall Street Journal?
A. Yes. But not with Medtronic. And I'm -- I have
two interests in why. Obviously the one interest is
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anything that I can do that can help me, I would do.
The other interest, obviously -- and I had
discussed this with my previous lawyer -- is that this
information, the government has set up a program where
if you can help them go prosecute these types of things,
they actually compensate.
Q. Whistleblower?
A. How wonderful would that be if that could be
assigned to the people that lost.
But Medtronic to this day I have not -- I have no
knowledge that they have settled.
Q. Okay. This doesn't exactly have to do with the
amount of loss, but it came up during the cost of our
earlier examination.
Let me ask you this: Again remembering that this
hearing is only for the purposes of establishing the
amount of loss -- there are many other facts, many other
guideline calculations that the Court is going to have
make some determinations on -- as well as a final
sentencing which the Court has to consider the
sentencing statute and a whole bunch of other both
emotional, ideological and social factors, with that in
mind, is there something that I should have asked you
that I haven't that you think it's important for the
Court to know in its determination of amount of loss?
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A. As far as loss, I believe the one thing that we
didn't touch was there was a little spreadsheet done by
the community yesterday --
Q. Yes.
A. -- of contributions by me to the community. And I
think there's certain large contributions that aren't
there. So I would ask for those to be added. And I can
be specific, if you'd like.
Q. Let me get to that.
MR. DONOVAN: That won't take too much longer,
Your Honor.
THE COURT: Are you talking about Government's
3?
MR. McGARRY: I believe it's Government's
Exhibit 3, Your Honor.
THE COURT: Yes.
MR. McGARRY: That was prepared and presented
by Mr. Martini to the government on behalf of the
church. So while we introduced it, I guess the sponsor
of the document, if you will, would be the church
through their agent, Mr. Martini.
THE COURT: Can we just do this: Can we just
have the witness tell his lawyer, I think this is
missing, and then have that information given to the
church or the community and get a response back? I
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mean, at this point he's going to say this is missing.
That's not going to be very helpful to me.
MR. DONOVAN: That's fair enough. It's
another question whether Your Honor will even subtract
amounts that he donated from the amount of loss. That's
a legal question you're going to have to decide.
THE COURT: Yes.
BY MR. DONOVAN:
Q. Anything else that I failed to ask you that might
be of assistance to the Court in calculating the amount
of loss?
A. I can't think of anything right now.
MR. DONOVAN: No further questions, Your
Honor.
THE COURT: I have people who have been here
since 3:30 waiting for something. Let me caucus with
them at the sidebar. Our court reporter will need a
break also.
(Whereupon, a recess followed.)
(End of transcript excerpt.)
* * * * *
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C E R T I F I C A T E

UNITED STATES V. GREGORY LOLES
3:10CR00237(AWT)


I, Corinna F. Thompson, RPR, Official Court
Reporter for the United States District Court for the
District of Connecticut, do hereby certify that the
foregoing pages, pages 1 - 72, are a true and accurate
transcription of AN EXCERPT OF my shorthand notes taken
in the aforementioned matter on November 7, 2013, to the
best of my skill and ability.







/s/__________________________

CORINNA F. THOMPSON, RPR
Official Court Reporter
450 Main Street, Room #225
Hartford, Connecticut 06103
(860) 547-0580






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Case 3:10-cr-00237-AWT Document 163-4 Filed 02/20/14 Page 74 of 74









ATTACHMENT E
(PART 1)
Case 3:10-cr-00237-AWT Document 163-5 Filed 02/20/14 Page 1 of 104
UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF CONNECTICUT


- - - - - - - - - - - - - - - - x

UNITED STATES OF AMERICA 3:10CR00237(AWT)

vs.

GREGORY P. LOLES
HARTFORD, CONNECTICUT
Defendant NOVEMBER 25 , 2013

- - - - - - - - - - - - - - - - x


EXCERPT OF SENTENCING HEARING - VOLUME III
CROSS-EXAMINATION OF GREGORY LOLES

BEFORE:

HON. ALVIN W. THOMPSON, U.S.D.J.


APPEARANCES:


FOR THE GOVERNMENT:

OFFICE OF THE UNITED STATES ATTORNEY
157 Church Street, 23rd Floor
New Haven, Connecticut 06510
BY: MICHAEL S. MCGARRY, AUSA

FOR THE DEFENDANT:

LAW OFFICE OF JEREMIAH F. DONOVAN
P. O. bOX 554
Old Saybrook, Connecticut 06854
BY: JEREMIAH DONOVAN, ESQ.

Corinna F. Thompson, RPR
Official Court Reporter
Case 3:10-cr-00237-AWT Document 163-5 Filed 02/20/14 Page 2 of 104
TABLE OF CONTENTS

WITNESS DIRECT CROSS REDIRECT RECROSS
GREGORY LOLES
BY MR. McGARRY: 3
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3
(Omission.)

(Transcript excerpt follows.)
MR. McGARRY: Should we inquire?
THE COURT: After she reminds him he's under
oath.
GREGORY LOLES,
called as a witness, having been previously
duly sworn or affirmed, was examined and
testified as follows:

THE CLERK: May I remind you you remain under
oath.
THE WITNESS: Yes.
THE CLERK: Please state your name for the
record.
THE WITNESS: Gregory Loles.
THE CLERK: And could you spell your last
name.
THE WITNESS: L-O-L-E-S.

CROSS-EXAMINATION
BY MR. McGARRY:
Q. Good morning, Mr. Loles.
A. Good morning.
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Q. The first thing that I'd like to direct your
attention to is a document that is not a factual
document but it's your plea agreement.
You recall entering into a plea agreement with the
government, correct?
A. Yes.
Q. And pursuant to the plea agreement, the government
was recommending or agreed to recommend that you would
get points for acceptance of responsibility, correct?
A. Yes.
Q. And you've become familiar with the Guidelines.
And though you've had counsel, you also are aware that
there's a Guideline calculation and part of that
calculation that was done would give you three points
for acceptance of responsibility, correct?
A. Yes, I was.
Q. And it's also in the plea agreement -- and I can
show it to you if you need your recollection
refreshed -- that the above listed recommendation for
acceptance is conditioned on the defendant's affirmative
demonstration of acceptance of responsibility, correct?
A. Correct.
Q. And included in that, must truthfully admit the
conduct comprising the offense of conviction and
truthfully admitting or not falsely denying any
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additional relevant conduct for which the defendant is
accountable under 1B1.3.
You're familiar with that provision, correct?
A. Yes.
Q. And you are also required to truthfully disclose to
the probation officer, here today in the person of
Sandra Hunt, information requested including a truthful
financial statement and details of your financial
condition, correct?
A. Yes.
Q. And you've done the latter one, correct?
A. I believe you have received that, yes.
Q. And as far as the acceptance of responsibility,
you're aware, are you not, that the government reserves
the right to seek a denial of the acceptance of
responsibility if you engage in acts which indicate
you're not terminated or withdrawn from the criminal
conduct, which here you've done. You've been
incarcerated, correct?
A. Correct.
Q. Or could provide a basis for an adjustment for
obstructing or impeding the administration of justice.
You're familiar with that provision, correct?
A. Correct.
Q. And the plea agreement cites to Section 3C1.1 of
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the Guidelines. You're familiar with the Guidelines,
correct?
A. Yes.
Q. And page 3C1.1 provides as a basis for denying you
acceptance of responsibility providing material false
information to a judge. Are you familiar with that?
A. Yes, I've heard that.
Q. And/or providing materially false statements to law
enforcement that significantly obstructs or impeded the
investigation. You're familiar with that, correct?
A. Yes.
Q. So the bottom line is you're required to tell the
truth, correct?
A. Absolutely.
Q. And regardless of loss amount, number of victims,
use of sophisticated means, one of the other factors
that goes into your sentence is whether or not you're
accepting responsibility, correct?
A. Yes.
Q. And if the Judge were to believe that you're making
a material false statement, he could deny you that,
correct?
A. I understand.
Q. And if he were to deny you that, your guidelines
would presumably go up by the additional three levels
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that your now credited with, correct?
A. I understand.
Q. And you understand that if he were to find that you
were obstructing justice, he could impose an additional
two levels above that. Do you understand that?
A. I understand.
Q. So what hangs in the balance as far as a Guideline
calculation is not just the loss figure, but it could
conceivably go up an additional five levels if you were
to make materially false statements or the Judge were to
find that you're obstructing justice. You understand
that?
A. I understand.
Q. I'd like to turn to part of your direct testimony
where you talked about Milbury Holdings. Do you
remember talking about Milbury Holdings, yes?
A. Yes.
Q. A couple of weeks ago or last week.
And also, I believe when you met with the FBI
agents, specifically Agent McPhillips, you mentioned at
one point in your interviews that all of the accounts
became one account. Do you remember saying that, words
to that effect?
A. All the accounts here in the U.S. The Apeiron
Capital account at Citibank was the means that
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Farnbacher Loles was being sort of grown, and all other
financial transactions started from the Apeiron Capital
account.
THE COURT: When we say "all of the accounts
became one account," what do we mean by that? I'll just
ask Mr. McGarry to make sure I understand that.
BY MR. McGARRY:
Q. Fair to say that you moved money between Apeiron
and Farnbacher Loles as you needed it in order to keep
both entities going as long as you could?
A. Well, the Apeiron account was the source of all
funding for Farnbacher Loles at its inception. So
everything when Farnbacher Loles started came from the
Apeiron account.
Q. I'm looking for the quote.
In that regard, just to go back to the Judge's
question, you kind of informed the agent, did you not,
that all accounts even became one account; that you used
the money -- you commingled and moved the money back and
forth as needed, correct?
A. Well, the Apeiron account was where all my money
was, if you will -- anything that I earned. And then I
think you've seen I paid my expenses out of that account
from before, obviously, this horrible thing started. It
was always the Apeiron account. So when I decided to
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create this new business, the funding for it all came
from the Apeiron account.
Q. So the money in Apeiron was used to cover
Farnbacher Loles' expenses. The money went from Apeiron
to Farnbacher Loles, correct?
A. Yes. I mean, the Apeiron account was the source
of -- that's where all our family money was and
eventually obviously other people's money also went into
that account.
Q. So again, if you could just answer my question.
The Farnbacher Loles was born, in part, out of Apeiron,
correct?
A. It was funded, yes. The creation of the company
was funded by Apeiron Capital.
Q. Again going to your statement that you gave to the
FBI, you told the FBI, didn't you, that the money in
Apeiron was used to cover Farnbacher Loles expenses,
correct?
A. Well, again, like I said, it was money from Apeiron
that created Farnbacher Loles.
Q. And you told the FBI you needed to create value and
you made a conscious decision to create Farnbacher
Loles. And you also admitted to the FBI that you took
money from old ladies who invested their money through
Apeiron to create your company Farnbacher Loles,
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correct?
A. The company was not created -- I mean, I had money
and I was able to create Farnbacher Loles.
Eventually --
Q. And part of that money was money that you took from
people who were at the church, correct?
A. Eventually there was money involved from people
from the church, because their money went into the same
Apeiron account. And when I said that all accounts
became one, the Apeiron account, who was, if you will,
the banker of --
Q. Let me stop you there. So you did say all accounts
became one account?
A. But what I meant by that is --
Q. But you said it, correct?
A. Well, but the context I think is what is important,
or what you want to lead to. And the context is that
the Apeiron account was the center of all my finances
from 1995, not only when this started.
Q. I'm going to try to limit my questions to the fraud
which started 2001. And if you could limit your answers
to that, I think that will be helpful in moving us
along, okay? To the extent that we need to get context,
we'll ask for context, okay?
A. I simply want to say the nature of how the Apeiron
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account, the one Citibank Apeiron account was used
starts in 1995. It did not start just in 2001.
Q. Let's talk about 2001 moving forward. You created
Farnbacher Loles, correct?
A. Yes.
Q. You created Farnbacher Loles using money out of
Apeiron, correct?
A. Yes.
Q. And as things went, you went back -- money went
back and forth between the two, correct?
A. Eventually, when Farnbacher Loles had free cash
flow, it did numerous times return money to the Apeiron
account, keeping in mind that Apeiron has one
shareholder and Farnbacher Loles, the years that it was
being built, only had one shareholder before some equity
was sold. So yes, when Farnbacher Loles had free cash
flow or there was money that now went in the other
direction as well. That's absolutely true.
Q. So money went from Apeiron to Farnbacher Loles when
it was needed, and when there was cash at Farnbacher
Loles and you needed it at Apeiron, cash went back,
correct?
A. Yes. Because Farnbacher Loles started having
revenues.
Q. But the money went back, correct?
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A. Eventually there was movement in both directions,
absolutely.
Q. And that is how you came to the statement to the
FBI that it all became one account?
A. Because -- exactly. I mean, Apeiron was financing
obviously the fraud as well. And when I say one
account, obviously I was paying those liabilities from
the same account, yes.
Q. And included in the Apeiron account was money that
you also got from Milbury Holdings, correct?
A. Money that came from overseas, yes.
Q. And I believe we saw that in Government's Exhibit 4
last week, but let me pull that up.
You see on the screen in front of you a list of
transactions prepared by the FBI of money coming in from
Milbury Holdings?
A. Yes.
Q. And that was some of the money that went into
Apeiron, correct?
A. All of that went into Apeiron, I believe.
Q. And some of that money was commingled and used to
support Farnbacher Loles, correct?
A. To grow Farnbacher Loles, yes.
Q. And the money from Apeiron -- I'm sorry -- from
Milbury Holdings, I believe you testified about it last
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week, but there was -- you had a friend in Greece,
correct?
A. I assume you're referring to Mr. Missailidis who
has passed away?
Q. I was referring -- I guess Mr. Missailidis served
as a business lawyer for the Karayanis family; is that
correct?
A. Among other people, yes, Mr. Karayanis was a client
of Mr. Missailidis. I found out after his death, but
yes.
Q. And I believe you also stated that the companies in
Greece supplied medical devices, but they also needed to
bribe doctors with cash to get into major hospitals?
A. Would you like me to explain that statement?
Q. Did you say this to the FBI when they asked you
about the money?
A. This is what I found out about Mr. Karayanis's
activities, yes.
Q. And this is what you told the FBI, correct?
A. He disclosed to me after --
Q. The FBI didn't disclose anything to you, did they?
A. Mr. Karayanis disclosed his activities in Greece,
and these are the references to Smith & Nephew and
Medtronic Corporation here in the U.S.; that they
were -- and I think I explained what I knew of how they
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did what they did to -- at the meetings we had. We can
go into all that if you wish.
Q. They gave you the money presumably to park it in
your account, correct?
A. What do you mean they gave me the money?
Q. When Milbury Holdings sent you the money, they
weren't going to buy the Arbitrage bonds or the
Knightsbridge bonds, they were giving you the money to
park it in your account, correct?
A. Milbury Holdings was a company that
Mr. Missailidis, that passed away, John Missailidis, I
believe it was a Panamanian company, and he was using
this for his investing and for all sorts of things.
Q. But he wasn't giving you the money to build your
business, was he?
A. No. Together -- together, he and I invested in --
I don't think we ever got into this, but we invested in
the Greek stock market and a lot of money was made.
Q. But the money that came over here to Apeiron --
A. Yes.
Q. -- he gave you that money to park it in the United
States to keep it from the Greek authorities or the tax
authorities, correct?
A. That's not true.
Q. He didn't give it to you to park it?
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A. First of all, he had passed away. So he didn't do
anything.
Q. Okay.
A. He passed away before any of this happened.
Q. Okay.
A. I don't know if that's clear in the record.
Q. Okay. Was the money from Milbury Holdings given to
you to park it?
A. You say that term because I used that term.
Q. Interestingly, yes.
A. Yes. I used that term because when Farnbacher
Loles was being built, I brought some of that money into
the U.S., and the hope was that once the company was
able to build its revenues, it would be able to be
returned. Obviously that wasn't the case. It cost
much, much more to establish Farnbacher Loles and
eventually the money was invested into Farnbacher Loles.
THE COURT: What were the terms of the
transfer?
BY MR. McGARRY:
Q. These were wire transfers that came in, correct?
A. Yes, it was.
Q. And you didn't have an agreement or contract, did
you?
A. Agreement or contract for what? For bringing the
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money in?
Q. For the $14 million coming to you.
A. Yes. Well, but --
Q. Did you have an agreement, yes or no?
A. With who? No.
Q. With Milbury Holdings?
A. Milbury Holdings simply is where this money
existed.
Q. I understand.
A. Yes.
Q. Did you have an agreement with Milbury Holdings as
to why they were sending you the money?
A. Because I instructed them to send me the money.
Q. And they were sending you the money to park it?
A. They were sending me the money because I had the
right to have this money where I wanted it and I wanted
it here to grow this business.
THE COURT: Let me just ask this: What kind
of an entity is Milbury Holdings, or was it?
THE WITNESS: Milbury Holdings is a Panamanian
corporation.
THE COURT: And Apeiron is another company.
THE WITNESS: Apeiron Capital Management is
I -- I believe it was Delaware.
THE COURT: So it's not you. It's a company.
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I guess my question is: If we have money transferred
from one company to another company, that's no different
than if money goes from my account to Mr. McGarry's.
THE WITNESS: Yes.
THE COURT: I'm going to want to have some
understanding of where my money is going from my account
to Mr. McGarry's. My question is: What were the terms
of the transfer?
THE WITNESS: The money that was in --
THE COURT: You can't say I wanted the money.
It's Apeiron that's getting the money. You're not
Apeiron. It's an entity. Milbury Holdings is an
entity. So the question I have is: What were the terms
of the transfer?
THE WITNESS: The terms of the transfer was
that that money was -- although it was held in an
entity, it was Loles money, and I needed it here because
this is where this investment needed support at the
time.
THE COURT: Okay. Thank you.
THE WITNESS: I used this term "parked"
because the hope was that it wouldn't have to stay here.
It would be a loan that could then be repaid. It didn't
work out that way. Farnbacher Loles was dramatically
more expensive to build out than what obviously I
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thought.
BY MR. McGARRY:
Q. In fact, somebody came to visit you at Wyatt,
didn't they, to ask about their money?
A. Someone came for Mr. -- for George Missailidis had
somebody come, yes.
Q. And I believe they threatened a lawsuit, correct?
A. Well, George was very concerned because what we
discovered obviously after his father passed away is
what the Karayanis family, or what his father
potentially was involved in helping the Karayanis family
do in Greece.
Q. Which was avoid paying taxes on medical devices
that were being sold, correct?
A. Oh, much more than that.
Q. But that was part of it, correct?
A. I don't think -- what they were doing is they were
bribing Greek authorities to buy these grossly
over-priced medical devices that they were selling for
years and years representing Smith & Nephew and
Medtronic products in Greece. This is what the
Karayanis father and two sons that I met with in Greece
explained to me. And what they basically said is that
John, the deceased father, was helping them doing some
invoicing and such things through the UK. We discussed
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the details, I think. And he wanted a continuation of
this. And obviously I told George, the son, that you
can't be involved in what these guys are doing. And it
did eventually stop.
Q. So there was some potentially illegal activity with
these companies overseas, correct?
MR. DONOVAN: Object to the form of the
question. It's just too vague.
BY MR. McGARRY:
Q. Was it your understanding that there was some
potentially illegal activities going on and they gave
you the money to park it in the United States?
A. Mr. McGarry, it was not their money. The Karayanis
money was not in Milbury Holdings. You seem to --
Karayanis family and their businesses in Greece who were
representing American companies in medical devices were
clients of Mr. Missailidis.
Milbury Holdings, to make clear, what I know of
Milbury Holdings is for many years Mr. Missailidis had
this company and he would invest with it as being the
investor entity when the Greek stock markets were
booming and there were a lot of people investing. This
is an entity that he used, as a lot of people in Greece
do, versus doing things in their own name they use
entities.
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Q. Let me ask you a simple question: Was one of the
purposes of transferring the money to get the money out
of London?
A. The money was fine where it was in London. I don't
understand what you mean to get it out of London? I
needed the funding here.
Q. I'm going to ask my question again. Was part of a
purpose of transferring the money to you to get the
money out of London?
A. You're saying transferring the money. It was my
decision to bring this money in. I don't understand --
you're implying -- and again, there may have been other
funds in Milbury Holdings as well, but I don't
understand what you want me to say.
Q. Did you tell the FBI that the purpose of
transferring the money to Loles, yourself, was to get
the money out of London?
A. I don't know what the context of getting out of
London. It was perfectly safe in London. But I see
what you're saying. I mean, I think -- again, I don't
know what the question was that -- can you -- yeah. I
mean, the $14 million was accumulated over the years.
The purpose of transferring the money to Loles was to
get the money out of London. I don't recall me saying
that it was to get it out of London. Why would it
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matter where the money was kept?
Q. Okay.
A. I mean, I'm not following.
Q. Let's move forward.
At some point in time you took in an investment
into Farnbacher Loles of $1 million from Mr. Zugel?
A. Yes.
Q. And you sold Mr. Zugel, by your estimates,
10 percent of the company, correct?
A. Yes.
Q. And you, by yourself, valued the company and told
him it was valued at $10 million. So 10 percent would
be $1 million, correct?
A. That's not correct.
Q. I'll ask the question again.
Did you value the company at $10 million?
A. We jointly valued the company at $10 million. And
the agreement for the sale of the 10 percent was a
rather substantial document created by Mr. Zugel's
lawyers.
Q. You didn't --
A. Excuse me. Attached to that is a balance sheet.
Q. You didn't disclose to him when you sold him
10 percent of your company that some of the money going
into Farnbacher Loles was from Milbury Holdings, did
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you?
A. There was -- why would Milbury Holdings matter to
Mr. Zugel?
Q. You did not disclose to him that some of the money
that was supporting Farnbacher Loles at this time was
from Milbury Holdings, did you?
THE COURT: I guess, just because I'm noticing
this, Mr. Loles --
THE WITNESS: Yes.
THE COURT: -- Mr. McGarry asks you a
question, and instead of answering the question, Why
would that matter to Mr. Zugel? What I'm interested in
is not you asking him a question but you answering the
question.
THE WITNESS: I'm sorry. Please ask the
question again.
BY MR. McGARRY:
Q. You didn't disclose to Mr. Zugel when you sold him
10 percent of your company that money from Milbury
Holdings was being put into Farnbacher Loles, did you?
A. No, Milbury Holdings was never mentioned between me
and Mr. Zugel.
Q. When he was trying to make his investment decision,
he didn't know that part of the money that was keeping
Farnbacher Loles going at that point was from Milbury
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Holdings, did he?
A. No.
Q. And you also at one point entered into a agreement
with Mr. Nicholson to give him 10 percent of Farnbacher
Loles?
THE COURT: Let me ask a follow-up question.
MR. McGARRY: Yes, sir.
THE COURT: Mr. Loles referred to a balance
sheet was attached --
THE WITNESS: Yes.
THE COURT: -- to that agreement.
Did the money that came from Milbury Holdings
affect what was on that balance sheet?
THE WITNESS: The balance sheet which was
attached to the agreement actually listed all the assets
of Farnbacher Loles. And actually, Mr. Zugel felt --
because the assets weren't 10 million. The assets, I
think, were about five and a half to 6 million. And he
included what we called goodwill because the company had
functioned for several years.
THE COURT: Who prepared the balance sheet?
THE WITNESS: We did it together with
Mr. Zugel. Mr. Zugel was a big client of the company
and that's how he became familiar with it and decided
that he wanted to invest in the company.
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THE COURT: As you went down the lines of
balance sheet, were any of the numbers that were on the
balance sheet affected by the fact that money had come
from Milbury Holdings?
THE WITNESS: Well, the balance sheet had
assets of Farnbacher Loles. Money from Milbury
Holdings --
THE COURT: Were any of the assets greater
because money had come from Milbury Holdings?
THE WITNESS: Money from Milbury Holdings, our
personal money, had bought --
THE COURT: So the answer is "yes"?
THE WITNESS: Yes, I mean.
THE COURT: Thank you.
BY MR. McGARRY:
Q. Were any of those assets greater because money came
from Apeiron, which was, at that point, taking money
from investors who were parishioners of the church?
A. All the funds went into the Apeiron account. So
there's money from Milbury Holdings, there's our money,
our family money, and there's money from other people.
And eventually, obviously, money moved from the Apeiron
account to Farnbacher Loles.
Q. So is the answer "yes"?
A. So yes, you would have to say that the sources of
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money to the Apeiron account were, in essence, three,
including other people who obviously got hurt, myself,
and Milbury Holdings' money.
Q. And you did not disclose to Mr. Zugel this source
of money of Milbury Holdings or the people who got hurt,
the parishioners of the church, the other investors, did
you?
A. No.
Q. And you also entered into an agreement with Nelson
Nicholson where you agreed, because of money he had
given you, that he would get 10 percent of the company,
didn't you?
A. Nelson wanted to get -- to give 10 percent, a
10 percent interest in Farnbacher Loles to his nephew.
And I gave him the document that I see you have here,
which is the document that Mr. Zugel's lawyers created.
And I said this is what the first 10 percent was sold.
Obviously, Nelson was aware of that. And if you want to
do it, I think this should be the basis of investing.
Q. So it's your testimony that this document revealed
to Mr. Nicholson that 10 percent had gone to Mr. Zugel?
A. Well, he was aware. Nelson and I were very close.
He knew I had sold 10 percent to -- that I had sold
10 percent of Farnbacher Loles. I don't know if he knew
the name of the person or if it mattered, but
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absolutely.
MR. McGARRY: This is a government's exhibit,
which we premarked, Your Honor, so it's a little out of
order, but this is Government's Exhibit 37.
THE COURT: Okay.
MR. McGARRY: Make sure to give a hard copy
for the record.
BY MR. McGARRY:
Q. Take a look at Exhibit A, which is page number i.
This the lays out initial percentage interest. Do you
see that? 85 percent for Gregory Loles, 10 percent for
Nicholson Properties, 5 percent for Horst Farnbacher.
Do you see that?
A. Yes.
Q. And that adds up to 100 percent, doesn't it?
A. Yes. Obviously, Christian Zugel should have been
here as well.
Q. But he wasn't, was he?
A. It wasn't put in, no.
Q. And Mr. Zugel had invested in October of 2006
thereabouts, didn't he?
A. No, that's not correct. Not October 2006. I
believe --
Q. It was 20096, wasn't it? Before 2007?
A. I believe it was in the beginning of '08, but I
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think -- yes, because '09 -- I think you need to check
on that. I don't think it was that early. So please
check on that.
Q. Well, you didn't disclose to Mr. Zugel -- Mr. Zugel
wired in $255,000 October 30
th
, 2006, $55,000,
December 2006?
MR. McGARRY: May I approach?
THE COURT: You may.
MR. McGARRY: This might refresh your
recollection.
A. As I said, Mr. Zugel was a client. Those
transactions -- and you can obviously contact
Mr. Zugel -- those transactions had nothing to do with
his purchase. I am fairly sure that -- yes, here it is.
You see 1/8/2009, $335,000. That is one of the first
transactions for the purchase, right here. 1/8.
BY MR. McGARRY:
Q. So it was your testimony a few minutes ago --
A. Yes.
Q. -- that Mr. Zugel bought 10 percent of the
company --
A. Yes.
Q. -- based on a valuation that you and he did?
A. Yes.
Q. And you valued it at $10 million, correct?
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A. Yes.
Q. And that he got 10 percent at $1 million, correct?
A. Yes.
Q. That was your testimony about 10 minutes ago?
A. Yes.
Q. However, you didn't disclose to Mr. Zugel that
Mr. Nicholson already owned 10 percent of the company,
did you?
A. That's incorrect. Mr. Zugel bought his 10 percent
first. I'm afraid that your dates are wrong.
Mr. Zugel --
Q. So Mr. Zugel bought his 10 percent first?
A. Which I believe was in January of '08.
Q. So then you didn't disclose to Mr. Nicholson that
Mr. Zugel owned 10 percent and it's nowhere in this
agreement, is it?
A. He knew -- Nelson knew that I had sold 10 percent
of the company and that he was buying an additional --
that I was divesting an additional 10 percent. It's not
reflected on this page clearly correctly. It should
have been, yes.
Q. I'm going to go back to the acceptance of
responsibility and remind you that you're under oath.
A. Yes.
MR. DONOVAN: May it please the Court, that's
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unnecessary.
BY MR. McGARRY:
Q. Did you disclose to Nelson Nicholson --
MR. DONOVAN: I'll withdraw the objection.
BY MR. McGARRY:
Q. -- that Christian Zugel had bought 10 percent when
Nelson was buying -- when Nelson was buying 10 percent
of the company, did you disclose to him that you had
sold to Mr. Zugel 10 percent of the company already?
A. 100 percent.
Q. You disclosed 100 percent?
A. He absolutely knew and we used the Zugel documents
to do it, except for this exhibit where obviously his
name was put in where Christian Zugel's name was where
it should have been in addition. But Nelson definitely
knew that I had already sold -- we had celebrated
together that Farnbacher Loles had reached the point
where a sophisticated person like Christian Zugel, a
hedge fund manager who knew the company, studied the
company, saw enough promise in it that he invested
$1 million in the company.
Q. But he didn't know that part of what was propping
up the company was money from Milbury Holdings, did he?
A. He did not know the source of my funds, no.
Q. I want to move forward to another topic. You
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testified last week about day trading and profits that
you made day trading, correct?
A. Yes.
Q. And prior to beginning this scheme for which you've
pleaded guilty, you were a registered broker, correct?
A. Yes.
Q. You had your license, correct?
A. Yes, I did.
Q. You had a Series 7, I believe?
A. I had a Series 7.
Q. I believe you had Series 63?
A. Or 65. One of those.
Q. And you're familiar with the rules and regulations
regarding securities trading, correct?
A. Fairly familiar, yes.
Q. And you were familiar with the term "cherry
picking," correct?
A. I understand what it applies, yes.
Q. And cherry picking is when you take favorable
trades and assign them to one account and give that
account preference over other accounts, correct?
A. Correct.
Q. And the SEC has brought cases on cherry picking,
correct?
A. If bad trades are given to certain people and the
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good trades are given to other people, or to oneself,
absolutely.
Q. And here what you were doing was taking good trades
and giving them to the church and you said you'd take
bad trades and kept them for yourself?
A. I was day trading for myself.
Q. I'm going to ask you if you can answer my question.
You testified that you took successful trades and
gave -- assigned them at the end of day after the
positions were closed, assigned them to the church, and
you took the unsuccessful trades and assigned them to
either other clients or yourself, correct?
A. There were no other clients.
Q. To yourself, correct?
A. I kept all trades in my account. At the end of the
day on a particularly successful day, yes, I gave
whatever I was able to to the church account. And this
was -- and they knew this was happening. I asked for
their permission before.
Q. So you were cherry picking the good trades to give
to the church, correct?
A. From myself. In a way, yes.
Q. And if you had kept them, if you had opened them
for yourself, closed them for yourself, realized the
gain, you would then have a short-term capital gain,
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correct?
A. Yes. There would be gains, yes.
Q. And there would be tax consequences on a short-term
capital gain, correct?
A. There would be.
Q. And then if you turned around and were being
charitable and donated the equal amount of profit to the
church, the church being a charity wouldn't have to pay
taxes on it, correct?
A. They wouldn't, obviously.
Q. But you would have paid taxes on the short-term
capital gain, presumably?
A. I would have paid taxes. And then potentially if I
did it that way, would then get a donation deduction for
the amount.
Q. But the donation deduction might go against
ordinary income, not against short-term capital gains
which are at a different rate, correct?
A. I believe that that maximized the money to the
community by doing it this way.
Q. And it avoided taxes that you would have had to pay
had you not cherry picked at the end of the day after
the positions were closed, correct?
A. I was trying to give money to the community. If
taxes were avoided, I didn't keep any benefit, I gave it
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all to the community.
Q. But you didn't pay taxes on the trades that you
would have had to pay if you didn't cherry pick,
correct?
A. Well, those trades weren't realized in my account.
They were booked into the church's account. If I had
not given them, you are correct, there would have been a
tax liability to me.
Q. And if you had losses, then you were able to credit
those losses against your personal tax liability,
correct?
A. The losses are losses, yes.
Q. And I believe the Judge asked a question last week,
but let me ask it to you: You never reported the money
that you took from the investors that you used for
yourself on your taxes, did you?
A. You mean as income?
Q. Correct.
A. No.
Q. So all through -- the scheme alleges from 2001 to
the day of your arrest, for '01 through '09, you never
reported any of those monies that you used for your
house or your child's college education, you never
reported that money as income, did you?
MR. DONOVAN: Object to the form of the
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question. There's an assumption inside the question
which he's not being asked. It's just assumed. I guess
it's a "are you still beating your wife" kind of
question.
MR. McGARRY: I'll ask it this way.
BY MR. McGARRY:
Q. Did you use some of the money that you took to pay
tuition at Saint Andrew's?
A. The Apeiron account paid for tuition at Saint
Andrew's. The Apeiron account was where all our money
was. And that is the same account that other people's
money went into, and Milbury Holdings as you call it
money went into. So the monies that we contributed were
far more than what the tuition was at Saint Andrew's.
But if you would like to say that other people's money
paid the tuition at Saint Andrew's, I guess you can say
that because that account that received all our family
money, Milbury Holdings, and unfortunately other
people's money did pay all our expenses, as it did from
1995, as I think we said in our conversations. We
always used that Apeiron account as our -- how we paid
things.
Q. You also paid tuition at Cornell, didn't you?
A. Absolutely.
Q. And that came out of the Apeiron account?
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A. Everything came out of the Apeiron account.
Q. Which was where the parishioners who are listed
here on Exhibit 1A, where their money went into,
correct?
A. Almost all the money, I believe, went straight into
the Apeiron account, yes.
Q. And you also took some trips, correct? You went to
Milan, I believe?
A. It was actually business trips to Milan.
Q. And the money that you paid for your personal
expenses, you never declared that on your taxes, did
you, as income? You never bothered to try to track it,
did you?
A. To -- when I went on a business trip, to say that
the cost of the business trip should be income? No, I
did not do that.
Q. How about the college tuition at Cornell?
A. No.
Q. The Saint Andrew's tuition?
A. Apeiron is where we had our money. Yes, that is
also the same account that other people's money went in.
Q. And you lived out of that account, correct?
A. From 1995 that's how we -- that's the account --
from when I started working as a broker and making
money, it was always the Apeiron account.
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Q. But starting in 2001, you weren't a broker anymore,
correct?
A. No.
Q. And you weren't making money, correct?
A. I was trading for myself. I was making money and
we had been successful. We had made money.
Q. In the past you had made money?
A. Absolutely.
Q. But then you started the scheme, correct?
A. In 2001, that's when it started.
Q. And that was your primary source of funds, correct?
A. No, it wasn't.
Q. Was Milbury Holdings your primary source of funds?
A. Milbury Holdings was one source, as you know.
Q. And the Ponzi scheme was another?
MR. DONOVAN: May I object to the form of the
question.
BY MR. McGARRY:
Q. The scheme to which you pleaded guilty was another?
A. There were funds that came from that, absolutely.
Q. And you didn't have any other source of positive
income in 2003, '04, '05, '06, '07, did you?
A. Well, Farnbacher Loles had started.
Q. It had started, but it was using money from Apeiron
and Milbury Holdings to keep it going, correct?
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A. Not to keep it -- to grow. It was buying assets.
I don't understand why you're saying to keep it going.
Q. It wasn't generating profit above its expenses, was
it?
A. It was a new company. It did not have free cash
flow probably until '05, '06.
Q. But it didn't -- even in '05, '06, it didn't
generate positive income, it was still drawing off
Milbury and Apeiron?
A. It was still growing, yes.
Q. It was still drawing off Milbury and Apeiron,
correct?
A. The company was still growing, yes, and needed
infusions of funds, yes.
THE COURT: Do I take it then you're agreeing
that it was drawing money as opposed -- you're saying
"growing" and he's saying "drawing money."
THE WITNESS: As we started with one facility
in Danbury --
THE COURT: Put it this way: Unless you say
"no," I'm going to construe that answer as you were
drawing the money.
THE WITNESS: Apeiron was transferring money
into Farnbacher Loles through this time period, yes.
THE COURT: Okay.
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BY MR. McGARRY:
Q. I want to talk -- we're talking about day trading.
I'd like to talk about the money that Nelson Nicholson
loaned you to do this day trading, okay?
A. Okay.
Q. Nelson Nicholson gave, into the Pershing account,
$700,000, correct?
A. Into the church's Pershing account, yes.
Q. And that was in Pershing and Peter Anastasian -- if
I'm pronouncing his name correctly --
A. You are.
Q. -- had signature authority over that, correct?
A. Yes.
Q. And approximately March of 2004, in connection with
the New Haven Savings Bank transaction, which we'll get
to, Nelson instructed Peter Anastasian to wire the money
to a law firm of at the State Bank of Trust of Fargo,
Fargo, North Dakota, correct?
A. Correct.
Q. And prior to that, you didn't have custody over the
money. It was in a Pershing account, correct?
A. Absolutely.
MR. McGARRY: This, Your Honor, is
Government's Exhibit 42 which is up on the screen.
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BY MR. McGARRY:
Q. I'm going to jump ahead to after New Haven Savings
Bank. That money, when it came back -- and I know your
testimony and we'll get to it -- that money came back to
an Apeiron account at Citibank, didn't it?
A. I believe so, yes.
Q. It didn't go back into Pershing, did it?
A. No.
Q. And Peter Anastasian didn't get signature authority
back over the money, did he?
A. It was no longer part of the church account, that's
correct.
Q. And it went to the Apeiron account, correct?
A. Yes.
Q. And it never went back to Mr. Nicholson, did it?
A. It sat in the Apeiron account, yes.
Q. And then it was eventually used with the other
money in the Apeiron account, correct?
A. It was then used for the Fantasma transaction with
Mr. Nicholson that I think we've talked about and
described. Yes, it was used.
Q. He never got the money back, did he?
A. No, because --
Q. He never got the money back, did he?
A. No.
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Q. And the church never got the money back, did it?
A. The money -- it was Mr. Nicholson's money. It was
never the church's money.
Q. Mr. Nicholson loaned it to the church for the
benefit of the church, correct?
A. Yes.
Q. It went to North Dakota, correct?
A. Uh-huh.
Q. It came back to Citibank, correct?
A. Correct.
Q. And Mr. Nicholson never got it back, correct?
A. He didn't get it back.
Q. Did you --
A. Because he instructed me, as you know, as part of
the Fantasma transaction, that he wanted to take the
100 percent of it, as I think he had mentioned when he
spoke with --
Q. That's your testimony. Your testimony is that
he -- I want to get this clear.
A. He did not get it back.
Q. He didn't get it back, correct?
A. He did not get it back because he instructed --
Q. Is it your testimony that he explicitly instructed
you to take that $700,000 and do something with it and
send it to Fantasma Toys? Is that your testimony?
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A. No, not to Fantasma Toys. He told me -- I had
already sent $700,000 plus to Fantasma Toys. When it
went poorly, he basically said, because it was his
friend, his idea, Nelson said the money that is sitting
in Apeiron -- he knew when the money came back from
North Dakota it didn't go to his account. He knew that.
It didn't go to the church account. Everybody knew
that. He knew where it was sitting.
Q. And is it your testimony that you told him that you
had sent money to Fantasma Toys that was your money?
A. There's -- the transfers, I think you have them. I
think it was $740,000 prior to New Haven Savings of my
money from --
Q. Your money?
A. -- from I believe Pershing. Again, unfortunately I
don't have the Pershing records, but I believe it was
from my Pershing trading account that monies were sent
to -- I sent $750,000 originally. I sent roughly
$750,000.
Q. And the money that you sent originally --
A. Yes.
Q. -- that was other people's money, wasn't it?
A. I can't say it was other people's money.
Q. It was money in the Apeiron account, wasn't it?
A. Not everything in the Apeiron account was other
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people's money.
Q. You didn't have $700,000 of money that you had
earned in a legitimate job in 2004, did you?
A. There was money in our account. I don't know how
much I had. First of all, it wasn't in 2004. I think
it was in 2002, 2003, in smaller amounts that the monies
were going into Fantasma.
I believe you may have the wire transfers. I don't
have them.
Q. The money in the account included money from the
Endowment Fund, didn't it, at that point?
A. You're asking me things that obviously I have no
documents to say, so --
Q. You don't know?
A. I can't say. You're saying that transfers from
Apeiron to Fantasma in New York, you want me to tell you
what the origin of those transfers were. I don't have
the dates.
Q. You don't know?
A. I can't tell you off the top of my head, no.
Q. Do you know or do you not know whether or not money
from the Endowment Fund was in your account when you
sent the money to Fantasma toys?
A. Money from the Endowment Fund I guess started
flowing sometime in 2001, 2002.
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Q. Do you know or do you not know that money from
Iosifidis was in your account when you sent money to
Fantasma Toys?
A. Obviously, there was money. There was a
transaction with the Iosifidis family.
Q. Money from Myra Grossman, money from Judith Lang,
money from Chaltas, money from L-O-L-I-S was in the
account when you sent money to Fantasma Toys, correct?
A. There was -- obviously, if you have the transfers,
then absolutely, there was.
Q. When, in your mind, Mr. Nicholson, as you
testified, bought you out, or said you could have -- he
would buy you out, did you tell him in fact he wasn't
buying you out but he was buying out the Endowment Fund
and the Iosifidis and Grossman and the other people
whose money made up the balance of the account when you
sent those transfers down to New York?
A. No, I didn't say that.
Q. So in essence, by staying silent, if he in fact did
say that -- and I believe his testimony differs from
yours -- if in fact he did say that, that was just
another fraud on Nelson Nicholson, wasn't it?
A. If that's what you want to say, that's what --
obviously, I understand what you're saying since other
people's money was in that account --
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Q. Since other people's money was in the account, it
would have been their half of Fantasma Toys, correct?
A. You choose to make it seem like the Loles family
had no money. I wish I had the documents, and perhaps
maybe with Mr. Donovan's help, I can get the documents
to show that the Loles family did have money. But
there's no question that the same account at Citibank
that received these good people's money was the account
that went into this investment with Mr. Nicholson in New
York.
Q. And you didn't tell Nelson Nicholson that, did you,
when you had this conversation that you claim occurred
where he absolved you of the other half of the company
and was going to take it for himself, did you?
A. He wanted -- to tell him that there were other
people's monies involved, obviously no, I did not.
Q. Correct. You didn't tell him that, did you?
A. No, I did not.
Q. So if in fact you did sell him -- and so the record
is clear, I'm not necessarily accepting that -- but if
in fact you did sell him your half of the company, in
fact you were selling him something you didn't own in
the first place, correct?
A. First of all, it wasn't a company that he was
buying. It was we both put this money into Fantasma New
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York as loans, as I think you know. It wasn't equity or
anything. And when the company in New York got into
trouble, obviously he felt bad that on his
recommendation I also stood to lose, and that's how the
700 that came from North Dakota between he and I was
settled out.
Q. But you didn't stand to lose, did you, because it
wasn't your money?
MR. DONOVAN: I haven't objected --
A. You're implying that we don't have money as a
family.
MR. DONOVAN: Mr. Loles --
A. I don't accept that.
MR. DONOVAN: I'll withdraw that.
Could the court Instruct the witness that if I
object, he has to wait until Your Honor rules.
THE COURT: Yes. If Mr. Donovan stands up,
you stop talking.
THE WITNESS: I'm sorry.
THE COURT: You keep saying it's not as if the
Loles family didn't have money. What percentage of the
money in the account was Loles family money, roughly?
You can just give me a number.
MR. DONOVAN: I wonder if I can object to your
question, because it's over a period of time.
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THE COURT: At the point in time we're talking
about of this transaction.
MR. DONOVAN: Thank you, Your Honor.
THE WITNESS: When the money was returned, or
as the money was put into this company in New York? I
believe it was in 2002, 2003. I think they have --
THE COURT: You don't know?
THE WITNESS: I couldn't tell exactly. But
obviously, this is something that hopefully over the
next couple of days I have some of my banking records
available to me.
THE COURT: Okay.
THE WITNESS: Perhaps we can work some -- to
provide a little bit more information.
BY MR. McGARRY:
Q. It's fair to say, isn't it, that after the money
came back from North Dakota, the $700,000 that was
loaned to (sic) the church, it never went back to
Mr. Nicholson or the church, correct?
A. Correct.
Q. I'd like to keep moving forward as to the New Haven
Savings Bank transaction.
A. Yes.
Q. When this fellow by the name of Gus Boosalis
called, he was told to talk to you, correct?
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A. My --
Q. He was told to talk to you, correct?
A. I believe Father Peter did refer him just to me,
yes.
Q. And he called you, correct?
A. Correct.
Q. And the initial documents were presented to you,
correct?
A. Eventually, yes, he presented -- or his lawyer,
Mr. Frisk, presented the two documents that they were
using.
Q. And you negotiated -- eventually negotiated a
better rate from the rate originally proposed, correct?
A. I believe the document had 75 percent and it went
to 72 percent or something like that.
Q. And you advised members of the church who were
depositors that if they had money, that they should do
it themselves, correct?
A. Yes.
Q. That's the advice you gave them, correct?
A. To anyone that had this opportunity, if they had
the ability, I was fairly confident that it was going to
be very successful so they should participate if they
can.
Q. And for you -- for them to deal with Gus Boosalis
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and Attorney Frisk, you had to be comfortable with them,
correct?
A. Because of the liability of this money being lent
to these people, definitely wanted people that, one,
would be comfortable, would not run off with this loan
money and then potentially put me at risk.
Q. So you had to be comfortable with them, correct?
A. I tried to be as comfortable as possible of the
people that I would recommend -- I believe it was Old
Financial was the name of their company -- would lend
money to.
Q. But you felt that it had to be someone that you
were comfortable with that was not going to run away
with the money, correct?
A. Well, it was a big liability. And it seemed -- not
it seemed -- it was clear that if they chose to not do
any -- any purchasing of the IPO or so forth, they can
take this money and go.
Q. Right, and for them to participate --
A. Yes.
Q. -- and I'm referring to your testimony before this
Court -- it had to be someone that, quote, I was
comfortable, who was not going to run away with the
money, correct?
A. Absolutely.
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Q. And that was your decision, correct?
A. Well, I was -- I was recommending names to Old
Financial to lend money to.
Q. And you would submit the names, correct?
A. I submitted the names.
Q. And they wanted you to be the contact person,
correct?
A. Yes. I mean, I would give them the documents, tell
them to go review them with their attorney or whoever
they'd like to understand.
Q. And you talked to Gus Boosalis more than 10 times
before the offering, correct?
A. Yes. He was calling frequently.
Q. And you were sort of a liaison for the parishioners
and the church -- a liaison between the parishioners and
the church office, correct? You were sort of a liaison,
fair to say?
A. Yes. I mean, Mr. Boosalis, his initial contact
with the community was to, in essence, find an agent.
He hoped that Father Peter may be that agent.
Q. But it turned out that it was you, correct?
A. It turned out that it was me.
Q. And you had to make sure that the documents were
executed correctly, didn't you?
A. Part of my responsibility was to get the documents
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signed and --
Q. Executed correctly?
A. Executed correctly, yes.
Q. And in fact, you told some of the parishioners to
open an account at a local brokerage firm in Westport,
didn't you?
A. Well, eventually they would have to sell the stock.
So I knew some people at this local firm and that was
one place that potentially could handle the sale of the
stock for them.
Q. And you told some of the parishioners to open a
account at a local brokerage firm, didn't you?
A. Yes.
Q. And you even went there with them, with a couple of
them, didn't you?
A. Whoever wanted me to be there with them to open
their account, yes.
Q. So you went with them, with a couple of them to the
brokerage firm, didn't you?
A. Yes.
Q. And you provided them with documents and discussed
the financial arrangement with them to the extent they
wanted to discuss it with you, didn't you?
A. The documents -- the loans documents they were
signing you're referring to?
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Q. Correct.
A. Yes.
Q. To the extent they wanted to discuss it, you
provided them the documents and discussed the financial
arrangements with them, didn't you?
A. I explained my understanding of the documents to
them.
Q. And you were the source for them, if they had
questions, eventually if they had questions, they would
come to you, correct?
A. Yes. If they -- it was their decision, obviously,
if they wanted to execute this loan. But if they had
any questions, Old Financial didn't want to interact
with anybody. They wanted just one person. And they --
Q. And they would come to you?
A. They made me that person, yes.
Q. And you had to kind of translate the documents for
some of the parishioners, correct?
A. If you mean into Greek? People that were not well
versed in English?
Q. I mean explain, financially explain it to some of
them.
A. Or explain what their responsibility is that they
are creating by their signature on these documents, yes.
Q. And you went through it with them.
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A. To the best of my ability, yes.
Q. And you even opened a account for some of them,
correct?
A. Once they decided that they wanted to enter this
transaction, anything that I could do to help them, I
would help them.
Q. And eight or 10 people you helped set up a account
at Source Capital, didn't you?
A. Source -- was that the brokerage in Westport, I
believe? Was it called Source?
Q. Let me ask you: Did you help eight or 10 people
set up a account at a brokerage firm in Westport to help
sell the shares?
A. Yes.
Q. And most of the people were not particularly
sophisticated, were they?
A. I would say that they weren't particularly
sophisticated.
Q. That they were not particularly sophisticated?
A. Yes, I would agree.
Q. In fact, for some of them you took the shares to
Source Capital for them or with them, didn't you?
A. Whatever help they needed, I was there to help
them, yes.
Q. You took the shares to Source Capital for them or
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with them, didn't you?
A. Yes.
Q. And you even communicated with Source Capital to
sell some of the shares based on dollar-cost averaging,
didn't you?
A. The group decision was for -- yes. I'm sorry. You
don't want the explanations. You want yes or no
answers. So I'll just say yes.
Q. You communicated with Source Capital to sell based
on dollar-cost averaging, didn't you?
A. I felt that was the best way to do it just so
everybody got the same.
Q. You communicated with Source Capital to sell based
on dollar-cost averaging, didn't you?
A. Yes.
Q. And you actually complained about the rate that Old
Financial was taking, didn't you? You complained to Old
Financial, to Frisk?
A. About the 72 percent?
Q. Correct.
A. Yes. Obviously, I thought that was outrageous.
Q. But you told parishioners that Old Financial was
going to make a contribution to the church, didn't you?
A. What I told them is that there is compensation for
this and that all the compensation will go to the
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church, meaning my compensation as agent I would turn
over to the church, absolutely. I wasn't trying to make
anything for myself here, as everything was turned over.
Q. Well, you were personally going to get no
compensation from either side, correct? You weren't
going to get paid by the parishioners and you weren't
going to get paid by Old Financial, were you? There was
no compensation from either side?
A. No. I, as agent, they had an arrangement, not just
with me but I believe with somebody else in New London
or something, that there was compensation for bringing
them people.
Q. We're not talking about someone in New London. You
personally were going to get no compensation from either
side, were you?
A. I had made the decision before even the first
person signed that I was going to turn everything over
to the community, absolutely.
Q. Do you remember giving SEC testimony?
A. Absolutely.
Q. And you were under oath, correct?
A. Yes.
Q. And you were in New Haven, Connecticut; is that
correct?
A. I believe Hartford or --
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Q. And you testified: So I had absolutely no
compensation from either side.
A. Yes. This was after the fact. And that was a
correct statement, since I turned over all the
compensation.
Q. And you definitely told the parishioners, under
what you testified to under oath where you swore to tell
the truth, correct?
A. Yes.
Q. The same oath that you took here, correct?
A. Yes.
Q. And it was in Connecticut, correct?
A. Yes.
Q. And you testified that you told the parishioners
that hopefully you're going to remember the church and
you know when it's time for fundraising and for whatever
reason the fundraiser is going to come in a couple of
months, that you wanted the parishioners to contribute
as well, correct?
A. I wanted the people that would benefit from these
loans, hopefully some of their windfall, that they would
also contribute, because we were in the midst of
collecting money for our building fund.
Q. But you personally received no compensation or
there was no compensation to you or anyone else,
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correct?
A. I turned over all my compensation to the community.
Attorney Frisk told me, once we made that calculation,
that odd number, the $987,000 and change number, he
said, What do you want me to do with it? And I said,
Send it to the church office.
Q. So there was no compensation to you?
A. I did not take any compensation.
Q. Or anyone else?
A. What do you mean "anyone else"? I was the agent so
I don't know what "anyone else" would mean. What do you
mean?
Q. You were asked if you had any documents related to
compensation and you testified, I don't have any in my
possession, any documents, and there was no compensation
to myself or anyone else.
So there's no document that has anything to do with
compensation, correct?
A. There was no compensation.
Q. Thank you. There was no compensation. That's your
testimony?
A. You know what I mean, sir. There was $987,000
earned as a commission from those loans that were made.
Q. Well, you told the parishioners that Old Financial
was going to make a contribution to the church, didn't
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you?
A. I told them that everything that I make will go to
the church.
Q. You testified, did you not, Once Frisk said to us
that there would be something coming from Old Financial,
we absolutely -- we told people that, you know, we had,
you know -- we're saying to people we expect you to help
the church from your end of the windfall. But, you
know, people were seeing that sort of the bulk of the
money was going to go back to Old Financial. We did
tell them they're telling us that they are also going to
give us some kind of contribution.
A. That's right. The compensation. It was laid out
from the beginning that they would give 15 percent
commission for every loan that was made.
Q. And you started to get more aggressive as the
number of parishioners participating went up, didn't
you, with Frisk?
A. I wouldn't say more aggressive. After about
$6 million worth of funding, he actually wanted to stop.
And that's where the transfer of the million four came
about.
Q. But you kept on toting to Frisk --
A. That I want more. I want you to make more loans,
obviously to create a bigger --
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Q. And you were getting a little more aggressive with
him, weren't you?
A. I don't know if it's aggressive. I was just saying
that there are more people that want to borrow. Why
wouldn't you want to lend us more money?
Q. Do you remember giving your testimony at the SEC?
A. Yes.
Q. I was getting a little more aggressive because it
was clear this was getting really good for them.
So you were getting more aggressive with him,
weren't you?
A. Well, he started questioning, you know, $6 million
is a lot of money. We don't know you people and so
forth. So I guess I used the word "aggressive" saying,
but there's more people through word of mouth that
wanted these loans, that didn't have the ability to do
the IPO with their own funds. And it was -- I looked at
it as a double positive. They would make some money.
Unfortunately, not as much as if they had their own
money to do the IPO, but better than not doing anything.
Q. And you told Boosalis, didn't you, that there was
going to be a lot of running around that you were going
to have to do and that the church was going to be
compensated, didn't you?
A. I said that, absolutely.
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Q. You did a major piece of the running around for the
community so that the money would come to the church,
correct?
A. I had made the decision from the initial day when
he said that there would be compensation for this that I
would turn it all over to the community.
Q. My question was: You did a major piece of the
running around for the community so that money would
come to the church, correct?
A. So that the money would be made and it would
eventually be given to the church, yes.
Q. And you kept pounding away, didn't you, hoping
you'd get a substantial donation for the church out of
the whole deal, didn't you?
A. It's not a donation. We can refer to it as a
donation, but --
Q. So it wasn't a donation?
A. It was compensation that I then directed it to go
to the church.
Q. So if somebody were to have called it a donation,
they would be wrong, correct?
A. A donation from who?
Q. From Old Financial to the church. If somebody said
it was a donation, they would be incorrect?
A. I think that would be incorrect, yes.
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Q. Let's look at your testimony from the SEC.
Did you discuss the Old Financial contribution with
the church? Yes, I'm sure at some point I did. Yeah, I
basically told them, I said, you know, I remember at
some point saying, you know, there's going to be a lot
of running around here that we're going to have to do.
The church is going to get compensated. And he said,
obviously, yes. Because obviously I would have been
pretty upset if suddenly I did a major part, piece of
the running around here for the community and a lot of
people acknowledged it. And yeah, it's great for all
these people, and some of the money -- but everybody
knows that my main interest was that, you know, the
money come to the church?
A. Exactly. The money come to the church was my
interest. And Mr. McGarry --
Q. And you say here, So I kept on pounding away, you
know, perhaps maybe in the back of my mind hoping that
we, you know, a substantial, you know, donation out of
this whole deal.
So you were the one who used the word "donation."
But today you don't want that word. Today you call it
compensation.
A. Mr. McGarry, he offered 15 percent on every loan.
Once they stopped wanting to give us more money at about
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$6 million of the total $13 million that they lent, I
organized to send the million four, in essence as a
security deposit to them. And then another $7 million
came, for a total of $13 million, which created this
money that was turned over to the church. And I think
you're aware, even though I was very much not interested
in it, there was even a thank you that was put in a
newsletter by the community.
Q. We'll get to that.
THE COURT: Why don't we give the court
reporter about a five minute break or so.
MR. McGARRY: Right now?
THE COURT: Yes.
MR. McGARRY: Sure.
(Whereupon, a recess followed.)
THE COURT: Please be seated everyone.
MR. McGARRY: Continue, Your Honor?
THE COURT: Yes, please.
BY MR. McGARRY:
Q. Did you request that Old Financial make a
contribution to the church?
A. I told Mr. Frisk to wire -- to send the money to
the church versus to Apeiron, yes.
Q. You told him to send it directly to the church,
correct?
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A. Yes.
Q. And so did you request the contribution on behalf
of the church, or did he offer?
A. From the first phone call, Mr. Boosalis said, This
is how I do these transactions. The agent gets
15 percent of what we make on every loan.
Q. So did you request that they make a contribution to
the church?
A. I told them to -- once we calculated the amount of
$987,000, less whatever corrections, he said, What do
you want me -- I remember the phone call. It was a
while ago obviously. What do you want me to do with the
money? Because obviously, he had wired money to me
before. And I said, Send it directly to the church.
Q. And you said, Why not just send it just directly to
the church; is that your testimony?
A. Excuse me?
Q. You said -- I believe you testified in this court,
Why not send it directly to the church?
A. He told me, What do you want to do with the money?
I remember that question from him. And I said to send
it directly to the church. I had obviously told them
what my intentions were as well, Boosalis, Frisk. There
was no --
Q. So would you say he brought it up or you suggested
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it?
A. No. Once the number was calculated, he said, Where
do you want me to send the money? And then I responded.
Q. But didn't you testify in front of the SEC that you
were complaining about the rate and he brought up the
idea of the contribution to the church?
A. The rate had nothing to do with the contribution.
It was what the borrowers were going to pay.
Q. Didn't you tell the SEC that you complained about
the rate and he brought up the concept of making a
contribution to the church?
A. The two were not -- I mean, I complained about the
72 percent. And then obviously he said, But it's not
like we keep all of it -- or the 75 percent. He says
there's the agent fee. And I had made clear from
Mr. Boosalis from the beginning that whatever your deal
is, I want you to know that I'm going to give this money
to the church. And his reaction was, That's your
business. I don't care what you do. I just want good
reliable people that we can lend money to, which
obviously was his concern.
Q. This is the SEC testimony.
Question: Did anyone within the church
organization suggest a contribution from Old Financial
to the church?
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Answer: I think some people, you know, were
skeptical.
And you're asked here: Whose idea was it that Old
Financial would make a contribution to the church?
Answer: I would say that he brought it up.
But it's your testimony here today that you told
him that you wanted it to go to the church.
So did he bring up the concept of the contribution
to the church, as you testified under oath in front of
the SEC, or did you bring up the concept of sending the
money to the church as you testified in front of Judge
Thompson?
A. The money was generated as a fee. Now, the
question that I was asked back then was -- let me read
it again.
Whose idea was it that Old Financial would make a
contribution to the church?
I would say that he brought it up.
Did you request it?
Q. No, I didn't. I was just sort of complaining about
the rate. I didn't, you know, request specifically. I
was hoping that, you know, I was hoping that our rate
would be better and then we could go to our parishioners
and say, hey, do something?
A. Excuse me. So here --
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Q. Did he bring up the idea that Old Financial would
make a contribution to the church, as you testified in
front of the SEC? Or did you bring up the idea of
sending money to the church as you testified here in
court?
A. You're mixing two things together. If you would
let me clarify.
When I was complaining to him about the rate, it
was the rate that the borrowers were going to pay. And
in the conversation, instead of reducing the rate --
apparently obviously it was much fresher then. This was
a few months after all this happened -- he must have
come back and said, Well, I'd rather keep the rate at
75 percent than go to -- eventually we went to
72 percent. Maybe we can make a contribution.
Q. So it was --
A. Because, as you can see, this was negotiating the
rate, not the fee for the loans. This was the rate on
the loans. So you're confusing --
Q. So you're saying that he said that they'll make a
contribution to the church instead of lowering the
interest rate?
A. Let's keep it at 75 and then I can just give
something to the church.
Q. So the money to the church wasn't an agent fee?
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A. It was a agent fee for placing the loan.
Q. Was it an agent fee or was it to keep the rate at
72 percent?
A. It was an agent fee for placing the loans. The
negotiation was to go from 75 to a better number for the
people that were borrowing and he was resisting,
apparently, and saying let's keep it at 75, because
that's what we do everywhere, and maybe we can give
something to the church. He knew that obviously I
wanted --
Q. So for keeping it at 75, then he made the
contribution to the church?
A. Which he didn't. It went to 72, as you know.
Q. It went to 72. So he didn't keep it at 75?
A. No.
Q. We got into 72?
A. We got it to 72, but the fee for placing loans, the
agency fee for placing loans, that's irrespective of if
it's 75, 72 or 85. Those are two different things.
He -- that conversation clearly was me trying to
get a better rate. That didn't affect what the fee
would be.
Q. Whose side idea was it that Old Financial would
make a contribution to the church?
A. Well, here apparently he was trying to keep it at
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75. That's what this implies. Eventually we didn't
keep it at 75. It did go to 72.
Q. So whose idea was it that Old Financial would make
a contribution to the church?
MR. DONOVAN: I'm objecting because there is
two different, quote, contributions, and my friend is
combining them into one.
THE COURT: Well, what are the two
contributions?
MR. DONOVAN: One is the agency fee that was
contributed.
THE COURT: I know what we're saying the
sources or reasons are. I want to know when are the
contributions? I only heard about one contribution.
Are you saying there are two components to the --
MR. DONOVAN: There is a proposed contribution
that's never made because they get the rate from 75 to
72.
THE COURT: Let's talk about the contribution
and the proposed contribution.
MR. DONOVAN: Great. Thank you, Your Honor.
BY MR. McGARRY:
Q. So the check that came to the church was a
contribution to the church, correct?
A. The check had nothing to do with this contribution
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conversation here. Eventually it failed because the
rate went to 72 percent. So there was no contribution
by Frisk to the community to keep it at 75 because it
didn't stay at 75.
Now, the monies that came to the church were a
result of the calculation of a fee based on 15 percent
to the agent that placed the loans.
Q. So what you're saying is that the contribution was
separate from the conversation to lower the rate to
72 percent?
A. Absolutely. Two unrelated things.
Q. Let's go down to lines 14 and 15.
Question: And did the conversation about the
contribution occur before Mr. Frisk agreed to lower the
interest rate to 72 percent?
Um, I would say part of that conversation.
So it was in fact part of that conversation and
they weren't two different things?
A. Mr. McGarry, I think you understand the context of
lowering from 75 to 72, okay? The money that was
generated because of the placement of the loans. And
Father Peter can testify, because he was offered the
money originally. And obviously, he laughed it off and
said, I don't even know what he was talking about, this
guy, that's why I told him to call you.
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These people wanted an agent mostly in the Greek
community. That's why they approached the Greek church.
Q. So would you agree with me that your testimony in
front of the SEC reads as follows:
Question: Whose idea was it that Old Financial
would make a contribution to the church?
Answer: I would say he brought it up.
Does it say that?
A. Yes. And there we go again.
Q. Will you agree with me --
A. That's what it says.
Q. -- that in your testimony in this court you
testified, And he was implying, did I want it to go to
my DLJ or my Citibank account. He was aware of both. I
said, Why not send it directly to the church.
Would you agree with me that those two statements
are inconsistent?
A. They are not inconsistent. They are two different
things. Like we said, the 75, 72 calculation is one
thing. The other day here in court we were talking
about where the $987,000 should go. And clearly I chose
for it to go directly to the church.
Q. So on -- moving forward. On June 15
th
of 2004 --
MR. McGARRY: And I have one copy -- we have
the executed copy, which is premarked
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Government's Exhibit 43, which is difficult to see.
We got a better copy this morning, Your Honor,
so we were unable to pre-mark it, but I'll mark
Government's Exhibit 43A and I have a copy for the Court
and for Probation.
BY MR. McGARRY:
Q. As you can see, the copy on your screen, Mr. Loles,
is not entirely clear.
Do you recognize this document, Mr. Loles?
A. I never actually saw the check, but I recognize Old
Financial as the lender.
Q. And it's from Fargo, North Dakota, correct?
A. That's where they were out of.
Q. So after doing all this work and all this, I think
we saw in your testimony you called it running around,
after doing all this running around, eventually,
regardless of who brought it up, who suggested it, Old
Financial sent $987,895 to the church, correct?
A. Yes.
Q. It went to St. Barbara's Church, correct?
A. Yes.
Q. And it was deposited into the building fund,
correct? If you look at the back of the check --
A. Yes. It says building fund, absolutely.
Q. And so this was for the benefit of the church,
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correct?
A. This was the church's building fund, yes.
Q. And this is was the amount that the church
received, correct?
A. Yes.
Q. So the church got nearly a million dollars, and I
believe you testified last time, based in part on you're
forts, correct?
A. Yes.
Q. And then the money went from the -- went from the
church's account to the Citibank Apeiron account, didn't
it?
A. They then decided to put the money into the
so-called bonds, unfortunately, yes.
Q. And the so-called bonds were the fraud that you
pled guilty to, correct?
A. Yes.
Q. So for all of this six weeks of running around,
going down to Westport, advising people on the
documents, walking people through the documents, dealing
with Frisk, dealing with Boosalis, the church got almost
a million dollars and then it ended up in your account,
correct?
A. Eventually they put it in, I think quickly after it
came, instead of sitting at, you know, whatever, no
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interest or low interest, I'm not sure whose decision it
was but the decision was made to put it into the bonds.
Q. So in fact you ended up getting something for all
your work, correct?
You got the million dollars, didn't you, the
$987,000?
A. It eventually came to Apeiron, Mr. McGarry. It
could have gone directly to Apeiron and then me turn it
over, but I thought I was doing a good thing. I'm sorry
if it came out that it was yet another bad thing. I've
done a lot of very, very poor decision-making,
obviously, in my life. I thought that this was
something that I was pretty proud of. I'm sorry.
And the 21 people that did take these loans,
obviously --
Q. I don't believe there's a question pending.
A. Sorry.
Q. And in fact there was an announcement that went out
to the church, didn't it, after this million dollars
came in?
A. I think there was some people organized -- I don't
know if it was the president at the time, who I believe
was Mr. Bazonis (phonetic), they put this silly ad, that
obviously I wasn't at all interested in, thanking for
the contribution. I believe they mention myself and
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Nelson, as we always did a lot of our activities
together. Like he said, many people considered him, as
I did, like my father. I did everything with Nelson.
Q. And the money was to go to the building fund,
correct? It was first put into the building fund,
correct?
A. The idea was we were in the midst of this of
designing this building that was getting more and more
expense. So yes, the money was going to be used for the
building fund.
Q. I think you testified that the building that the
community must build first was a gymnasium for the
children, correct?
A. That was my personal opinion.
Q. And I believe you testified on page 88 of your
testimony regarding the ad. Do you recall this
testimony: I think that what he was trying to do was
recognize that, you know, Greg worked his bottom off for
the community to make this happen with no personal
upside.
And I believe you said the president wanted that to
be acknowledged, correct?
That's what you testified to the SEC, correct?
A. Yes.
Q. But you ended up with the million dollars, correct?
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A. The church got the money and then they put it into
the bonds.
Q. So you were working on behalf of the church to get
the money, the church got the money, and then shortly
after that it went to Apeiron?
A. It was transferred -- it was sent to Apeiron for
bonds, absolutely yes.
Q. And the bonds didn't exist, correct?
A. The bonds, as we all know, they did not exist.
Q. And it went into that one big account that we
talked about, the metaphorical one big account?
A. Yes, it did.
Q. But in reality, it got moved between accounts,
correct? From Apeiron to Farnbacher Loles when needed,
correct?
A. It went into that account.
Q. Okay. In fact, in addition to -- in addition to
doing this, you also, I believe -- in addition to this
ad -- do we have the ad?
MR. McGARRY: I'm going to mark this, Your
Honor, which we got this morning,
Government's Exhibit 65. And maybe I'll ask the agent
to sticker the other ones 66 and 67.
May I approach, Your Honor?
THE COURT: You may.
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BY MR. McGARRY:
Q. I'm handing you a copy. Is this The Ministry, the
church's newsletter?
A. Uh-huh.
Q. There's a flag marking -- Does it read, We received
a extremely generous $1 million cash donation from the
Nelson and Loles families to be dedicated to our new
gymnasium building.
That's the ad or announcement?
A. Apparently, yes.
Actually, this is just the text. I think they
actually had something even more profound than this. I
don't recall. I wasn't particularly interested in that,
but --
Q. And in addition to that appearing in The Ministry
in the winter of '09, you also had an ad in The Ministry
that said Apeiron Capital Management, investment
management brokerage services, Gregory Loles?
A. Yes. I think we've discussed this ad.
Q. And what's the date on that copy of The Ministry?
A. The date on this copy it says winter '08.
Q. Winter '08 or Winter '09?
A. On the bottom it says Winter '08. And I think you
asked me about this several times and I told you that
this ad --
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Q. Let me ask you: Do you recognize that ad?
A. Yes.
Q. And that's your company, correct?
A. That was -- yes, that was my company.
Q. And that's running in The Ministry in winter of
'08 or winter of '09?
A. This one says winter of '08.
Q. And also we have --
MR. McGARRY: Let me mark this
Government's Exhibit 66.
Do you recognize this?
May I approach?
THE COURT: You may.
BY MR. McGARRY:
Q. Do you recognize this document?
A. It's the dinner ad, yeah.
Q. That's the dinner ad; is that correct?
A. I mean, yes. They would do a book. Do you want me
to turn to the blue marker?
Q. If you turn to the blue marker --
A. Uh-huh.
Q. -- is that -- why don't you read that page, that
full-size page ad there.
A. It's the same information as the ad in the
newsletter.
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Q. And what does it say?
A. It says Apeiron Capital Management, 575 Fifth
Avenue, New York, New York, 10017.
Q. So that was your old company, correct?
A. That was my company until 2000.
Q. And then --
A. And so is the phone number, as you know, as you've
asked me.
Q. And here in '08, that's your new phone number,
correct?
A. No, no. That 888 number is -- was the number in
New York. That's not a new phone number.
What I'd like to --
Q. Fair to say that these ads are running -- this ad
is running in the church bulletin in the winter of 2009,
correct?
A. I remember the conversation very accurately. If
you'd like --
Q. Is it fair to say that this ad for Apeiron Capital
is running in the church Ministry in the winter of 2009?
A. Yes, it is.
Q. Okay.
A. Can I say why it's in there?
Q. I'll ask the question.
A. Okay.
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MR. McGARRY: I'm going to mark this
Government's Exhibit 67.
BY MR. McGARRY:
Q. And you were asked by the SEC, were you not, if you
were doing any active marketing. Do you remember being
asked if you were doing any active marketing?
A. Yes.
Q. But I believe you testified that you were not doing
any active marketing after 2000; is that correct?
A. Yes.
Q. And then they ask you, After 2000, did you engage
in any marketing whatsoever? And by that I mean ads you
represented to people that, you know, have an entity
that provides financial services, pamphlets, fliers?
Answer: No, no active marketing.
A. Yes. And if I can explain?
Q. Let me ask the question.
A. Okay.
Q. Is your explanation going to be that that was an
old ad. You weren't actively marketing. It was just an
ad in the church bulletin?
A. My explanation is, as you can see here, there's two
blanks. And I remember Lea, the church secretary who
would organize these things, I think it was like $300 a
year or some nominal amount to be here. But since there
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were blanks, I told her, Don't take the ad out until
obviously you have other things to put in. I'm happy
paying the $300.
What I wanted to point out -- and we've discussed
this in our conversations -- is that all this
information is from 2000 when we were in New York,
because the phone number is the phone number in New York
in 2000. If this was an ad that after 2000 was truly
trying to solicit -- and obviously, in late '90s, 2000,
we were still operating, I was operating -- why would it
have a number that is not functioning to me anymore?
So that is my explanation why that is there.
Every opportunity I had I tried to give to the
community.
Q. Did that include -- did giving to the community
include taking the nearly million dollars that had been
donated from Old Financial?
A. The million dollars was not donated by Old
Financial. It was a fee. We've had the conversation,
Mr. McGarry. Obviously you can choose, as anyone, to
see it the way you like. I thought I was doing a good
thing. I'm sorry.
Q. Do you remember Ms. Joanna Nictas?
A. Yes.
Q. She's one of the parishioners, correct?
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A. Actually, not a parishioner of ours, but from a
another church close to ours.
Q. And do you see where it says -- do you recognize
your signature on the bottom of what's been marked
Government's Exhibit 44?
A. Yes.
Q. And beneath that where it says investment
professional's signature, if applicable, do you see
that?
A. I'm not sure what this form is, but obviously it's
some kind of an account form, I believe. Do you have
the top of this form?
Q. Is that your signature on the bottom --
A. Yes.
Q. -- above the words "investment professional"?
A. Yes, that is my signature.
Q. We've redacted the personal information.
Where it says financial organization, I hereby
designate Apeiron Capital Management as the financial
organization.
Do you see that up on top?
A. Yes.
Q. Mrs. Nictas was a customer of yours?
A. Mrs. Nictas invested in the bonds, yes.
Q. And this is the bonds that did not exist, correct?
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A. The bonds that did not exist, yes.
Q. And this is her account?
A. That's hers.
MR. McGARRY: Just for the record, we did not
redact the account number because there was really no
account. So save time for the paralegals.
BY MR. McGARRY:
Q. It says investment advisor, Apeiron Capital
Management, Inc., correct?
A. It does say so, yes.
Q. And she believed she was holding $436,000, correct?
A. Yes, she did.
Q. And she believed she was holding GE Arbitrage
bonds, correct?
A. Yes.
Q. Travelers Arbitrage bonds, correct?
A. Yes.
Q. Knightsbridge Arbitrage bonds, correct?
A. Yes.
Q. And this was in 2007, correct?
A. Yes.
Q. And May 1
st
to May 31
st
.
Did you think you were doing a good thing for the
community when you sent Ms. Nicholson for her IRA this
fraudulent statement?
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MR. DONOVAN: Objection. Argumentative.
THE COURT: I'll allow it.
MR. DONOVAN: Thank you, Your Honor.
A. Mr. McGarry, my statement about doing a good thing
was working for the 987. I'm not proud at all of these
things obviously.
BY MR. McGARRY:
Q. And turning to page 4 of Government's Exhibit 44,
Louis Basel and Marie Basel, do you recognize them?
A. Absolutely.
Q. And they were invested in Knightsbridge Arbitrage
bonds?
A. Correct.
Q. Bonds which didn't exist?
A. Correct.
Q. And turning to Government's Exhibit 45, is this a
letter to Father William Kehayes with your signature?
A. Yes.
Q. You talked about interest payments will be mailed
monthly. Do you see where you wrote that?
A. Yes.
Q. There were no interest payments, were there?
A. No, sir.
Q. And on the second page it says advisor, Apeiron
Capital Management and that's William Kehayes and
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Christine Kehayes. Do you see that?
A. Yes.
Q. And so they were both on this statement, were they
not?
A. Yes, they were.
Q. And Peter and Maria Anastasian. They thought they
were invested in the bonds as well, correct?
A. Yes.
Q. And talk about that for a second. Turning to
Government's 48, tell the Court, if you will, what this
document is?
A. This was basically giving them the interest that
they earned supposedly during the year in a document so
they can do their taxes.
Q. So they could pay the taxes on what they thought
was interest income, correct?
A. What they thought and, regardless, what I hoped was
going to be interest income but eventually it was not
interest income.
Q. But there were no bonds, correct?
A. There were no bonds. What I mean by -- if I was
able to make them whole, then this would have been
interest on their money. But as we all know, that's not
what happened.
Q. And so they would have presumably reported to the
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IRS that they made interest and paid taxes on that,
correct?
A. Yes.
Q. Did you create this document?
A. Yes, I did.
Q. And that was to create the appearance that there
was in fact interest?
A. Well, it was to give them the amount that they
would have to report in their taxes.
MR. DONOVAN: I'm sorry. Give them?
THE WITNESS: To give the person. In this
case Peter Anastasian.
BY MR. McGARRY:
Q. And his wife was on the account statement as well,
wasn't she?
A. I don't recall if she was. You had a previous
document that I think showed her name as well. So I --
but I think for this purpose it was only one tax, one
Social Security used.
Q. Let me turn your attention to
Government's Exhibit 52.
Do you recognize your signature on this letter?
A. Yes.
Q. And this is a letter to Marya Grossman. Do you see
that?
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A. Yes.
Q. And you write, Included are the documents you
requested. Originally when you started investing with
my firm you opened two accounts, one with Marya and one
with John, both held jointly with you. The two accounts
were established as mirror images. The objective was to
preserve capital. In July of 2004 I was notified by
Nelson that an annuity you were receiving from a source
unrelated to me had been terminated. After consulting
with Nelson and you, we decided to withdraw $100,000
from each account and establish two additional accounts
mirroring the initial account. The additional income
from these accounts is U.S.D. $1,158 per month.
There was no interest income, was there?
A. No. This was the bonds. Mrs. Grossman was a
client when the firm was in New York, an acquaintance of
Nelson. And as you can see in the letter, Nelson
handled her affairs.
Q. This is a letter where you are moving her money
from a real account to a fraudulent Apeiron account; is
that correct?
A. Nelson obviously, having invested in the bonds,
decided that Marya should also invest in the bonds.
Q. And you didn't tell her no, correct?
A. Excuse me?
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Q. You didn't tell her no, she couldn't invest. You
took her money, didn't you?
A. I did not tell her she could not invest.
Q. You close with wish you all the best. And then you
say Popi and the kids send their love.
A. We had met Marya on several occasions. Very, very
nice lady.
Q. And she trusted you, didn't she?
A. She trusted Nelson. And obviously, when she saw
Nelson was comfortable with me, she obviously then
trusted me as well.
Q. As did other people in the church, correct?
A. Yes, absolutely.
Q. Because you had made a lot of money for the church,
correct?
A. I think the people on the Endowment Fund would
agree, yes.
Q. Including making almost a million dollars on the
New Haven Savings Bank, correct?
A. Yes.
Q. Which went to your Apeiron account, didn't it?
A. The Building Fund decided --
MR. DONOVAN: Objection.
THE COURT: One second. We have an objection.
MR. DONOVAN: Asked and answered. I'll
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withdraw the objection because we know what the answer
will be.
A. The Building Fund decided to put the million
dollars into Apeiron, yes, they did.
BY MR. McGARRY:
Q. And this is Marya and John's account statement,
Government's Exhibit 53. Do you see that?
A. Like the letter said, there's two mirror accounts.
$100,000 each.
Q. And this is 55 is the mirror account. An
additional account, correct? This is Marya and Marja?
A. Her daughter.
Q. And they got tax statements as well, correct?
Take a look at Government's Exhibit 57.
A. Everybody did. Or almost everybody.
Q. I want to go back briefly. I know we're coming
right up on the lunch hour, Your Honor, so I will finish
up.
I want to go back quickly to Fantasma Toys.
I don't see Mr. Nicholson here, but do you recall
his testimony? Do you recall his testimony?
A. From the other day, yes.
Q. Do you recall where the first part of his
testimony, your attorney, Mr. Donovan, was asking him
questions that tended to imply that the cash from
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Apeiron was money that he directed you to send to
Fantasma Toys on his behalf.
Do you remember those questions?
A. Yes, I remember that, yeah.
Q. Those questions, which Nelson got fairly upset
about, correct?
A. Yes.
Q. And Nelson was instructed to go home and get
documents proving that he sent money from his other
accounts directly to Fantasma Toys. Do you remember
that?
A. His 750 or so thousand dollars, yes.
Q. And in fact, he did send his 750 from his other
accounts, didn't he?
A. I never said that he didn't.
Q. You sat there when he got cross-examined about
that, didn't you?
A. I was there. Was there a situation that I could
have stopped it? I mean, you have to understand that --
Q. You knew -- let me ask the questions.
You knew when he was getting cross-examined that he
had in fact paid the money from money outside of
Apeiron, correct?
A. There's no question that he had put in $750,000. I
can't say where all of it came from. It's been a very
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long time.
Q. Right. And whether it's little photocopies of
pictures or big copies of checks, the money came from
his own money from non-Apeiron sources, correct?
A. If now he has that, all of it came from that, I
wouldn't know. If he would have asked me to send
something on his behalf, I would have. But he put up
$750,000 or so, and I -- and again, this was over time.
So it wasn't -- it wasn't one big transaction. But
eventually --
Q. And you put $750,000 of money that was in Apeiron,
correct?
A. I think almost all of my money came, I would think,
from Apeiron. I think Mrs. McCartney probably knows
better than I.
Q. Was that your money or was that other people's
money?
A. Mr. McGarry, we've -- we're saying the same thing.
That account held all of our family's money, the money
that I directed to come from Milbury, and unfortunately
the money of a lot of very good people.
So to say that that account was the source,
absolutely, that was the source. To imply that it was
only their money I think is inaccurate.
Q. Let me take your answer from last week.
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Question: Now, of the $740,000 that Apeiron sent
to Dwyer, sent to the toy company, how much do you think
was yours and how much was Nelson's?
Now, we've already established that Nelson sent his
money separately, correct? He had his own 700-plus,
correct?
A. We eventually had a million-five in that company
and it was half and half.
Q. And he sent separate, correct?
A. If you have documents that it was all separate. I
don't remember. It was many years. He could have told
me to send something on his behalf, or maybe he funded
it totally on his own. But I would not be surprised if
he funded it totally on his own.
Q. And that's what he testified to, wasn't it?
A. And that's what he said, yes.
Q. And then you testified, Of the money that came out,
that's a tough question because I don't have any
documents. But the money that came out of Apeiron
accounts I believe was primarily my money because it was
coming out of -- and again, did you find it mostly
coming out of Pershing?
So again, you answer with a question.
But it really wasn't primarily your money, was it?
It was other individuals', wasn't it?
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A. It was not primarily other individuals. We had all
our money in that account. If it was from the Pershing
account, I would say that's even more sort of our funds.
But I don't know. You understand in what context I said
"mine," "mine" being from Apeiron.
Q. Fantasma Toys, unlike Knightsbridge Capital, was a
real company, correct?
A. Yes, it was a real company -- is a real company, I
believe.
Q. And in fact -- and you told the FBI about it,
didn't you?
A. About Fantasma?
Q. Yes.
A. I believe it came up, yes.
Q. And in fact, you remember talking to them in
2008 -- I'm sorry, 2010, after you were incarcerated?
A. I remember there was meetings in New Haven and I
believe there was one meeting up in Central Falls.
Q. And you told them in 2010, this company still
exists and Loles and Nicholson each own 50 percent of
the stock of Fantasma Toys, didn't you?
A. That was the -- that was the transaction.
Nicholson came up with the idea of creating Fantasma
Toys. Right. So this is the Fantasma Toys that Nelson
created that I think you had some tax document, the
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50/50.
Q. Right. In 2010, you told the FBI that you each
owned 50 percent?
A. That's what he created, yes.
Q. Right. Because that was the situation. You each
owned 50 percent?
A. I think Mr. Nicholson explained it well.
Q. Okay.
A. So he created this because this was going to be
where we were going to have the funds returned to us.
Q. Right. And as a matter of fact, at one point you
told the FBI that you wanted to make people whole,
correct -- if you can read that.
You stated you wanted to make people whole, the
investors?
A. I wanted to make people whole.
Q. And you also said that you believed you have a
interest in Fantasma Toys and explained how if Fantasma
Toys could take off, maybe you would get some money to
pay people back, correct?
A. I don't think there was all that elaboration, but I
explained that there was this Fantasma Toys entity.
Q. Which, perhaps if things went well with Wal-Mart
and with China, that you would be able to use your half
to maybe pay some people some of their money back, words
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to that effect, correct?
A. I don't -- yes, go ahead.
Q. You answered my question.
A. I said I wanted to make people whole. And we
discussed that there was this entity that I still had a
interest in, this 50/50 entity in Connecticut.
Q. Right.
A. But the money didn't go to that entity.
Q. That was in 2010 you still had the interest,
correct?
A. Well, Nelson created the entity and put us both
down, but as you saw, there were two transfers from that
entity to me, and I can't even recall what the situation
was that I then sent the money back to the entity. The
two wires for $135,000 each.
Q. But in 2010 you told the FBI you wanted to make
people whole and you had -- you had -- he has -- you
still had and you just said you still had an interest in
Fantasma Toys, correct?
A. This is what is written here, but, I mean, Nelson
himself said that he owned all of Fantasma Toys. So
there's conflicting opinions or things on both sides
here.
Q. And you told the FBI --
A. Yes. I told the FBI that anything I have I want
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obviously to be able to start as soon as possible the
process of making people --
Q. Fair enough. And included in that you included
your share of Fantasma Toys, which, as you can see on
the screen, you testified it still exists and Loles and
Nicholson each own 50 percent. And this is after you
were in custody, correct?
A. Yes. The Connecticut entity was a 50/50 entity.
Q. Right. Because Nelson never bought you out, did
he?
A. That's incorrect. And he himself told you that he
owned all of the interest in Fantasma.
Q. He never told you he was buying you out?
A. Yes, he did. He told me the --
Q. So let's stay with that thread for a minute.
So then when you told the FBI that you each owned
50 percent of the stock, was that not true?
A. There's two entities here. There's this Fantasma,
LLC Connecticut entity that Nelson had me also as
50 percent interest in it. And then there was the money
that was obviously put into the New York entity.
At some point in '05, Nelson said, I know you need
more money for Farnbacher Loles. Take the 700 and I
will have the full interest.
If something comes of it --
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Q. If I could stop you there.
A. Okay.
Q. So therefore, when you told the FBI that you owned
50 percent of the stock in Fantasma Toys, that wasn't
true, was it?
A. I'm still listed. I think he still has me listed
as 50/50. But as you saw, whenever there was a
distribution, he took the full distributions.
Q. Well, you owed the man a couple million dollars,
didn't you?
A. Well, today. I mean, it was 400 two weeks ago and
now you have it at $3 million. For four years you had
it at $400,000, sir, and now it's $3 million. I haven't
seen the documents yet.
Q. You owed the man --
A. You had it as $400,000 for four years, sir. And
now, a week before my sentencing, it became $3 million.
With all due respect, I think I can at least see these
documents and try to understand how your $400,000 became
$3 million after four years of --
MR. McGARRY: Your Honor, I know we have a
lunch break, but I have about two minutes of questions
and then I'm done.
BY MR. McGARRY:
Q. I want to ask you about another topic. I want to
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ask you about a construction loan that you helped
negotiate with New Haven Savings Bank for approximately
$3 million. Do you remember that?
A. Not New Haven Savings. It was another bank.
Milford something bank, I believe.
Q. And it was a couple million dollars, a construction
loan, correct?
A. I think it was three. I think you're right.
Q. You went to the bank and you negotiated to try to
get a good rate, correct?
A. I think -- I don't recall ever going to the bank,
but --
Q. There was a discussion that they wanted some
security, correct? You remember negotiating the
construction loan, correct?
A. I did not negotiate the construction loan, but
they -- I remember them coming to the Endowment Fund and
they were nervous about just having the building, I
believe. So when they came to the Endowment Fund we
said, Well, there's the Endowment Fund as well.
Q. And in fact, the bank, be it Milford Savings Bank,
wanted to have some more security, so what was pledged
to that bank was the money in the Endowment Fund,
correct?
A. I believe that's what the Parish Council decided to
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do. I was not on the Parish Council or party to that.
Q. But you, through Apeiron, had the Endowment Fund,
didn't you?
A. What do you mean I had the Endowment Fund?
Q. You had all the money that was left in your
Citibank account.
A. The Endowment Fund obviously had some stocks and a
fair amount in the nonexistent bonds. I believe what
they did is they went into some sort of limited support
of the actual loan.
Q. So the nonexistent bonds only did a limited support
of a bank loan for a construction loan, not a full
support?
A. Sir, the community, the leaders of the community at
the time did not know that those were not real bonds.
Q. But you knew?
A. So in good faith, in good faith they pledged the
Endowment Fund, or some part of the Endowment Fund.
Again, I wasn't party.
Q. I understand.
A. I think insinuating that I negotiated something is
inaccurate.
Q. But you knew that --
MR. DONOVAN: May I object? It's just
argumentative and it's irrelevant. It doesn't have
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anything to do with the amount of loss.
THE COURT: I'll figure out whether it's
relevant later once I see the whole picture.
BY MR. McGARRY:
Q. You knew that there were no bonds?
A. From day one I knew there were no bonds, sir.
Q. Yet you stood by while the church pledged,
unknowingly, part of the Endowment Fund to a bank for a
construction loan, didn't you?
A. I believe the final document, which I didn't see,
included that if the bank -- if the community couldn't
live up to its obligations, that they would also have a
fall-back to the Endowment Fund. I didn't have the
ability --
Q. Which was held in nonexistent bonds, correct?
A. Some of it was held in nonexistent bonds.
Q. And you knew that, didn't you?
A. I knew it from day one, sir.
Q. And you didn't tell anybody, did you?
A. I don't understand the context that I would tell
them all of a sudden that don't pledge those bonds
because they are nonexistent. I should have never done
it, sir, and then I wouldn't be in this situation.
Q. To use your words, you never told the folks at the
church, the people who were working on the construction
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loan, Don't pledge those bonds?
A. Don't pledge. I didn't say "don't pledge,"
absolutely I didn't say. Why would I -- and it wasn't
my word to say yes or no. If they wanted to pledge the
Endowment Fund, I believe they even had to go to the
parish -- to the community.
Q. But you were the only one who knew the bonds didn't
exist.
A. Exactly.
Q. And you didn't tell anyone?
A. No.
Q. So the church took out this $3 million construction
loan in part on your say so that there was money in the
Endowment Fund?
A. No, sir.
Q. Just like Ms. Nictas took her IRA and gave it to
you?
A. The church needed $3 million to complete their
building. I think it's inaccurate to say -- they needed
$3 million or else the building couldn't happen. That's
why they took a $3 million loan.
Q. The last area is you made a point through questions
to your lawyer that you made sure that Father Peter got
a slightly different deal on the interest rate than
other people who purchased stock in New Haven Savings
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Bank. Is that fair to say?
A. The interest was zero.
Q. And he didn't know what other people were getting
and other people didn't know what he was getting,
correct?
A. His business was his business. I wasn't going to
talk about it.
Q. So he ended up with a little bit more money than he
would have but for your going to bat for him with Old
Financial, correct? Fair to say?
A. Just taking it off the top. Not going to bat. He
didn't pay -- he wasn't charged what --
Q. The interest?
A. That 72 -- which would have been $72,000 of his
$100,000.
Q. So he got a little bit more money than he otherwise
would have?
A. He got -- yes. Instead of 20-some thousand he got
a $100,000.
Q. And he took that money and he invested it with
Apeiron, didn't he?
A. And he gave it to me.
Q. And he didn't get it all back, did he?
A. He got roughly half of it back.
Q. But he didn't get it all back, did he?
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A. He didn't get it all back.
Q. So to the extent that you went to bat -- my word --
for the parish priest so he could get a little bit more
money, you ended up getting a little bit more money?
A. No. No one got more money because Frisk deducted
it from the 980. That's how we got the 987. It would
have been a million 40, or whatever. Something a little
bit more.
Q. Which you would have gotten anyway because you kept
that other check?
A. Sir, once they decided to put it into -- once the
money went to the community and the community decided to
put it in the fictitious bonds, it obviously came to
Apeiron, sir. I think we established that.
Q. So it was either going to the community from Frisk
as a donation and go to you, or go to Father Peter and
then go to you. But either way, you end up with the
money?
A. Sir, you know that they invested the Building Fund
money with -- and not that it's worth anything, but
obviously the building fund got back substantially more
than what they put in.
MR. McGARRY: May I have a minute, Your Honor?
THE COURT: You may.
(Pause.)
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MR. McGARRY: I have no more questions, Your
Honor, but just a point of housekeeping. Ms. McCartney
told me that she can testify, if necessary, about the
joint accounts so I won't go through them. It might be
more efficient, rather than showing them all to
Mr. Loles, to have her just put them in so we can have
an accurate count of joint accounts.
THE COURT: Great.
MR. McGARRY: Thank you. No more questions.
THE COURT: We'll take our lunch break.
(End of transcript excerpt.)
* * * * *
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C E R T I F I C A T E

UNITED STATES V. GREGORY LOLES
3:10CR00237(AWT)


I, Corinna F. Thompson, RPR, Official Court
Reporter for the United States District Court for the
District of Connecticut, do hereby certify that the
foregoing pages, pages 1 - 102, are a true and accurate
transcription of AN EXCERPT OF my shorthand notes taken
in the aforementioned matter on November 25, 2013, to
the best of my skill and ability.







/s/__________________________

CORINNA F. THOMPSON, RPR
Official Court Reporter
450 Main Street, Room #225
Hartford, Connecticut 06103
(860) 547-0580



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Case 3:10-cr-00237-AWT Document 163-5 Filed 02/20/14 Page 104 of 104









ATTACHMENT E
(PART 2)
Case 3:10-cr-00237-AWT Document 163-6 Filed 02/20/14 Page 1 of 48
UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF CONNECTICUT


- - - - - - - - - - - - - - - - x

UNITED STATES OF AMERICA 3:10CR00237(AWT)

vs.

GREGORY P. LOLES
HARTFORD, CONNECTICUT
Defendant NOVEMBER 25 , 2013

- - - - - - - - - - - - - - - - x


EXCERPT OF SENTENCING HEARING - VOLUME III
REDIRECT & RECROSS-EXAMINATION OF GREGORY LOLES

BEFORE:

HON. ALVIN W. THOMPSON, U.S.D.J.


APPEARANCES:


FOR THE GOVERNMENT:

OFFICE OF THE UNITED STATES ATTORNEY
157 Church Street, 23rd Floor
New Haven, Connecticut 06510
BY: MICHAEL S. MCGARRY, AUSA

FOR THE DEFENDANT:

LAW OFFICE OF JEREMIAH F. DONOVAN
P. O. BOX 554
Old Saybrook, Connecticut 06854
BY: JEREMIAH DONOVAN, ESQ.

Corinna F. Thompson, RPR
Official Court Reporter
Case 3:10-cr-00237-AWT Document 163-6 Filed 02/20/14 Page 2 of 48
2
TABLE OF CONTENTS

WITNESS DIRECT CROSS REDIRECT RECROSS
GREGORY LOLES
BY MR. DONOVAN: 3
BY MR. McGARRY: 24
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Case 3:10-cr-00237-AWT Document 163-6 Filed 02/20/14 Page 3 of 48
3
(Transcript excerpt follows.)

GREGORY LOLES,
called as a witness, having been previously
testified as follows:

REDIRECT EXAMINATION
BY MR. DONOVAN:
Q. With respect to you telling the agents the various
accounts, the Apeiron account, the various Farnbacher
Loles account, your personal account and the
Knightsbridge accounts all merged into one, did you mean
that literally, that they all became simply one single
account at Citibank?
A. No. It was three accounts. I mean, there's no way
to merge them.
Q. Well, more than three, weren't there? You had a
personal --
A. Well, Farnbacher Loles, the different departments
had like sort of street, performance and things. But
the -- what I'm saying is that the money was flowing,
but no, it was separate accounts.
Q. Fair to say you didn't keep very good track of who
was giving what money to whom; is that fair enough?
A. Well, I think --
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Q. Let me ask you this: Is there a capital account --
did Farnbacher Loles have a capital account that listed
the contributions of capital from Apeiron?
A. No, it wasn't done that formally, no.
Q. Fair enough.
Now, with respect to the information that you gave
concerning the attempt to bribe Greek officials in order
to get medical devices sold there, did you have anything
to do with that plot?
A. No. It was described to me by my lawyer's client
who -- my lawyer who passed away, his son told me as
sort of a family sort of acquaintance, You have to talk
to these people. They're telling me things that dad was
doing for them or with them and they wanted to continue.
So on a trip to Greece, I think it was for his -- not
for the funeral, but there's something that happens
three months after the funeral, I actually sat down with
these Karayanis people and they described in great
detail -- I gave as much detail as, if you will, the
government wanted to listen to about how they were doing
what they were doing.
But no, I was not involved. I didn't even know
that this was happening. I hadn't met these people.
Q. Okay. Did you learn that several years after you
gave this information an indictment was returned on one
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of the companies that you talked about had actually
pled?
A. The two companies were Smith & Nephew and Medtronic
that this family spoke to me about, the Karayanis family
spoke to me about. And a couple of years after our
conversations, Smith & Nephew did pay, I think, about a
$22 million fine specifically for their activities in
Greece. I'm not aware that Medtronic has also had
anything done.
Q. And you don't know the extent to which what you
told the agents was forwarded to the prosecutors in that
case?
A. I was simply told that it was passed on. I don't
know if it -- I don't know how it was used, no.
Q. Now, with respect to Milbury Holdings, remember I
asked you the question: Was there a capital account set
up with respect to monies that Apeiron gave to any of
the Farnbacher Loles entities?
With respect to Milbury Holdings, was there any
kind of a document that established what the money from
Milbury Holdings -- was there a capital account at
Farnbacher Loles for Milbury Holdings?
A. No.
Q. Was there a capital account at Apeiron for Milbury
Holdings?
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A. No.
Q. The money that came over from Milbury Holdings, I
mean, it belonged to Milbury Holdings, but who owned
Milbury Holdings?
A. Milbury Holdings, upon his passing, was John
Missailidis was the owner of Milbury Holdings.
Q. Did that money really belong to John Missailidis?
A. No.
Q. Who did it belong to?
A. The money that came is money that I earned with
John over the years primarily in trading over the Greek
stock.
Q. Essentially, it was you're money?
A. Well, yeah. That's why it came in the fashion it
came. It was just sort of on demand.
THE COURT: Can you explain that a little
more?
BY MR. DONOVAN:
Q. Why don't you explain that a little bit more. Tell
us how that money was earned?
THE COURT: How it's his money if it's Milbury
Holdings money?
BY MR. DONOVAN:
Q. Why was Milbury Holdings money really yours?
A. Milbury Holdings was the investor for most of the
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investing that he and I did in the Greek -- Greece was
an emerging market in the early '90s and so forth. So
there was huge interest and appreciation in the market.
Q. Remind us who "he" was?
A. He was Mr. Missailidis who passed away, who was a
friend and lawyer that represented -- because we lived
in Greece, as you know, for a number of years and that's
where I met him.
So when the Greek markets started doing well and
there was a lot of investing, I was sort of already in
the investment business and here we had a emerging
market at our feet. A lot of new capitalization and so
forth. So a lot of money was made.
And the investment vehicle in the Greek markets, he
chose for it to be Milbury Holdings. So we both put
some seed money and then just started trading, mostly in
new capitalizations. And it just -- and it grew
substantially as the whole market grew.
Q. What was Milbury Holdings? Was it a company or an
LLC?
A. It was -- I believe it was Panamanian. It was a
company that he basically was running his finances
through.
So the way these capitalizations were working in
the Greek market system is an entity would actually ask
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for a certain amount of stock, let's say, in an offering
and then it would be granted. And if it was
over-subscribed, everything would be prorated. It was
unlike here where the stock is given to individuals.
There you actually -- there was a proration done.
And then there's a lot of secondary trading that we
did. I mean, I lived in Greece.
Q. You don't have to go through all the details.
THE COURT: I guess I'm getting the impression
from what your client is saying is that he's saying he
put money into Milbury Holdings, Mr. Missailidis put
money in, and that money was invested and he
subsequently got a return of his investment with
earnings.
I guess what I'm interested in is when did he
put money in and how much? Does that come out? Is that
somewhere in the record?
BY MR. DONOVAN:
Q. Could you tell us that?
A. Let's see. My contributions would have been -- now
we're talking in the late '80s. I can go to the bank
records and probably try to -- well, not bank records
here.
Q. Just roughly?
A. I would say a total of a million euro, a little
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more than a million euro.
Q. And that was an investment made in the late '80s?
A. Yeah. That's way, way early. My dad had some
property. We had sold some things. And everybody in
Greece was investing in the market. And we had done --
and that was sort my contribution. And then he kept his
ledger about sort of what was mine, what was his. I
was, if you will, the more market knowledgeable person.
But again, it was a roaring bull market. So it was more
just being in the right place at the right time.
Q. And what period of time did the trading take place,
the initial public offerings and the investment in
companies?
A. Well, when Greece was granted the Olympics for
2004, it was the 10 years, if you will, before that was
the big sort of financial boom. And Greece had just
entered into the European community. So suddenly,
borrowing in Greece went from 8, 9 percent to 4 percent,
overnight literally, which is what's created obviously
the huge financial problems that Greece has now.
But yeah, it was in that period sort of from the
late '80s it started as Greece was sort of an emerging
market and then it became a developed market. And then
obviously came the huge crash like all the emerging
markets in I think the early 2000s.
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Q. Where were you living when you were doing this
trading?
A. Well, we were living mostly in Greece. And that's
where he and I sort of met and solidified our
relationship. And then we continued, even when I came
back to the U.S. in -- came back -- I'm sorry -- came
back to the U.S. in '91 we obviously continued. There
was no need for me to be there. Through various sort of
computer systems, I was able to see the Greek market
live. So I was able to continue doing whatever trading
we needed to do.
Q. One of the documents that the government has
introduced is a document that appears to be between you
and Mr. Nicholson concerning an investment in Farnbacher
Loles, but it also appears to be the -- it looks like
it's the establishment of an LLC that didn't exist
before.
Can you explain how that document was produced?
A. When Christian Zugel made his decision to invest,
he had his lawyers draw up the document you're referring
to. Obviously we looked at it a bit more today. And I
recall now that what Christian said at the time is --
because Farnbacher Loles was there for two or three
years. He basically said, Just to make it easier,
especially since now I'm also coming in, let's create
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new LLCs. And actually, it's in that document that you
see all these LLCs that became all -- each one had a
account at Citibank that were created. Because before
there was only one Farnbacher Loles account at Citibank.
Q. What did you do with that document when it was time
for Mr. Nicholson to invest?
A. When Nelson decided that -- and it wasn't for his
benefit. He really wanted it for his nephew that he
wanted to get 10 percent of Farnbacher Loles for him, I
gave him the document and basically said -- obviously,
put his name in it -- and said this is the Zugel
document that the whole company started with.
And again, as you can see, Nelson and I were very
informal in both directions.
Q. And who was it who changed -- it appears as though
where Zugel's name appears, Nelson Nicholson Holdings
was replaced; is that right?
A. That's all that was done.
Q. Who did that?
A. Probably I'm assuming I must have done that.
Q. What I'm curious about is the typeface and
everything seems the same. It doesn't seem as though
you wiped it out?
A. I believe Christian's lawyers had sent the document
electronically so it was able to just change.
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Q. So you just searched and replaced Zugel's name
with --
A. Basically. Not even doing it correctly. But I
think from what Nelson says, I mean it's clear that he
made the decision that he wanted to get involved with
Farnbacher Loles. He was obviously very proud of
Farnbacher Loles.
Q. You recognize something different about
Mr. Nicholson's buying a 10-percent interest in an LLC
that's already formed and this document here that seems
to have to do with the formation of a brand new LLC. Do
you understand that now?
A. Now, obviously. Because it wasn't reformed for
Nelson. He became part of the existing Farnbacher
Loles.
Q. So without looking at this LLC, what was the deal
between you and Mr. Nicholson that got him into
Farnbacher Loles?
A. Well, he basically agreed that I will pay the same
valuation as Mr. Zugel.
Q. And he was going to pay how much?
A. It was $1 million.
Q. And then what would he get?
A. He would get 10 percent. And actually, Christian
Zugel and Nelson, or the entity that the Nelson wanted
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it to be, I'm not sure if he used his nephew's name
or some entity.
Q. Nicholson Holdings?
A. They would be getting a distribution based on
revenues as described by the Zugel document.
Q. And did he pay a million dollars for the
investment?
A. No. He never -- we never consummated the whole
million. There's the number of $200,000 that he
mentioned and it does ring a bell. I think it was more
folding in maybe some other things that he had helped me
along the ways. Always helpful with the growing of
Farnbacher Loles.
But the 800 was still outstanding when obviously
everything came crashing down.
Q. Okay. We talked a little bit about cherry picking.
A. Yes.
Q. About the term "cherry picking." And you would
agree with me, would you not, that that's an illegal
action by which someone doing trading attributes
profitable trades to one client and unprofitable trades
to another, no matter who it was who actually -- in
whose name he actually made the trade, fair enough?
A. No question. If one is giving losing trades here
and winning trades there, that wasn't what exactly
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what's going on.
Q. Why was what you were doing with respect to day
trading not cherry picking in the way that it's used to
mean a SEC violation?
A. Well, because the trading was all done in what I
call the principal account, my account.
Q. It was your money?
A. The opening and the closing of those transactions
would all be in my account, unless posted differently at
the close of the day. So when there was a particularly
profitable day, I would simply move whatever can fit --
and obviously looking at my profit and loss, because if
I had a bad day I might have to keep a good day's
profits to keep my account in balance -- but eventually
we were able to create I think 280-some thousand dollars
that was put into the Endowment Fund account where there
was no risk involved.
And again --
Q. So it was not a situation where you were giving the
church -- you were assigning to the church trades that
you could have assigned to some foreign Greek investor
or some New York City investor. It was just your trades
essentially?
A. No. Those trades either had to be put into either
the church account when I designated it, or they would
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be in my account.
Q. Now, with respect to the tax ramifications, by
assigning the trade to the church's account, you didn't
realize -- you didn't personally realize any profit,
right?
A. Well, there would be a short-term capital gain.
Q. By assigning the trade to the church, you yourself
wouldn't realize any profit?
A. No, obviously not.
Q. If you hadn't assigned it to the church, say you
made $2,500 on a trade, okay? So there's a $2,500
short-term capital gain, right, that would have had to
have been reported on your income tax return, right?
A. As ordinary income, I believe.
Q. Okay. And it would go to either -- it would either
be a short-term or a long-term capital gain, but it
would go to your -- what's it called -- what's that
final line on the first page of your tax return? Your
net income anyway, right?
And if you had then contributed that money to the
church, you could have deducted that as a charitable
contribution, right?
A. Yes. In theory, the church office for some people
when they would ask they would get a letter or something
saying that they donated, yeah.
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Q. So whether you attributed the trade to the church
or whether you attributed it to yourself and then
donated the money to the church, the tax consequences
are still the same, right?
A. I'm not an accountant, but I don't see the
advantage since it's a dollar-for-dollar deduction, I
believe. But I don't want to say that -- obviously, my
intent or the ends that I was trying to achieve was to
put money into the Endowment Fund.
THE COURT: I'll just say, I stopped listening
when he said he's not a accountant because the answer
didn't really make sense to me. But we'll -- just so
you know.
A. I don't want to say that I know how.
BY MR. DONOVAN:
Q. In any case, you didn't view -- you didn't believe
that you would get any tax advantage out of doing it
that way rather than -- rather than attributing the
trades to yourself, taking the money from the trade and
contributing the trade directly to the church?
A. My motive --
Q. Did you see any tax advantage?
A. I didn't see any tax advantage.
Q. In fact, why were you doing that? Why didn't you
did it the other way? Why didn't you just take the
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money and then contribute it to the church?
A. Well, because first of all, because as you can see,
it ended up being a lot of money. I mean, I can think
of a lot of reasons. Just nobody did that. Nobody was
writing 20, $30,000 a year checks to the church. At
least -- maybe certain people. But it just didn't seem
like something sort of -- I thought that this was an
easier way where if I had, in my mind, if I had a good
day, when the Endowment Fund decided to go to Pershing
and the accounts were in the same place so this can
actually happen, I would just tell Pershing that of the
20,000 shares bought and sold today, 4,000 -- and always
for whatever -- and always for whatever the years of the
trading -- there was never a flat or down trade, because
that's not -- there was no reason to ever give them a
flat or a down trade.
Q. With respect to Fantasma, this is kind of a muddle
and I want to go through this piece by peace, okay?
Fantasma is a company that is run in New York,
right?
A. Fantasma Toys, when it was introduced to me and
Nelson, was this Dwyer person in New York.
Q. And Dwyer was an old friend of Nelson's?
A. Yeah. They shared sort of a magic fraternity.
They were both interested in magic. I think they met at
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magic conventions and they were friends.
Q. And Fantasma Toys needed some capital; is that
right?
A. Fantasma Toys originally had some orders that
needed to be manufactured in China where they were doing
their manufacturing and they needed money because these
companies that they were selling their products to were
paying 120, 160 days. So obviously they needed, to be
able to fulfill those orders, they needed sort of
working capital.
Q. And Nelson discussed it with you and the two of you
decided you would invest; is that right?
A. We went and we met, the first meeting I remember --
Q. Let's cut to the chase. I want to get --
A. Yes. We started giving Mr. Dwyer money so he can
build his product.
Q. Was it all in one big lump sum?
A. No. It was as needed over a period of months and
maybe even more than just months.
Q. What was the approximate amount of money that you
furnished to Dwyer?
A. I believe we both did roughly the same amount,
about $750,000. I think I heard a number of $740,000.
Q. You didn't check on Nelson's checks and things to
make sure that he actually did give $750,000, roughly?
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A. When Nelson tells me he did something, he did it.
Q. And $740,000 came from Apeiron; is that right?
A. I believe that's the amount, 740.
Q. What were the terms that these monies were given to
Dwyer and Fantasma of New York?
A. Well, the loans, if you will --
Q. Is that what they were? They were loans?
A. Well, they were loans so he can build his product.
Q. Were they loans from you to Fantasma?
A. Again, it was me and Nelson, right, sort of
going -- sort of matching. So when he would give 100, I
would give a 100 and so forth.
Q. Who kept the documents with respect to this?
A. Nelson kept the documents.
Q. What were the terms of the loan to Fantasma?
A. It was very simple. I think it was 10 percent
simple interest. So when he supposedly would get paid
in 120 days, 160 days, he would pay us the interest.
And if he had another order, he would keep the money or
he would return the principal. That was the concept.
Q. Did there come a time when Nelson suggested to you
setting up another company?
A. Yes. But before that, one of the first orders, one
of the first big orders, if not the first order, ended
up being devastating for Fantasma because it was with
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FAO Schwartz --
Q. And FAO Schwartz went bankrupt?
A. So now I think it was four or five hundred thousand
dollars at the time and now it's lost or tied up in that
bankruptcy.
So now -- and this will go to your question of why
this 50/50 LLC in Connecticut. So now Dwyer comes back
and he says, okay, I'm finished unless you guys want to
put more money in --
Q. All right.
A. -- because there are other clients. We eventually
will get some money from FAO Schwartz and so forth.
So at that point that's how we ended up at the big
number of a million five.
To show his good faith, Dwyer says, Okay, for this
money on top of the lost money, if you will, I pledge to
you two the stock of Fantasma in New York.
Q. So if he didn't repay the money you would own all
the stock?
A. If the whole thing blew up, at least you guys will
own Fantasma. Obviously, if it blew up, what that would
really mean is we would own the tax loss.
Q. So what did -- tell me, was it you who decided to
start an LLC in Connecticut?
A. No.
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Q. Who decided that?
A. It was Nelson.
Q. And why -- how was that explained to you?
A. Well, so that entity was going to be the entity
that would start getting paid back our million five.
Q. Rather than you individually?
A. Rather than us individually. And Dwyer started
making some payments and I think continued, from what
Nelson said the other day, making payments. He just
told Dwyer, When you want to pay us back, principal or
interest, we've created this entity. I guess Nelson
felt that the accounting would be easier that way. But
he created that entity where we were 50/50.
Q. Okay. All right. And then -- tell us how your
interest in Fantasma was closed out?
A. Mr. McGarry showed where I talked about 50 percent
interest in Fantasma, which does continue through today.
But there's two things: There's loans or debt to
Fantasma New York, and then there's this idea that we
own its equity.
So when Nelson said take the $700,000, he was
basically taking me out of the debt, which was the
$740,000 or what I put in. And the understanding -- and
the reason he didn't take me off of the equity is that
now -- and he obviously believed in Dwyer, that Dwyer
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would be able to be successful and pay back these
loans -- he would take the million five. But since I
was there from day one, if there would have been some
kind of upside, Nelson being Nelson would say then we
can decide what we're going to do if our equity ever has
any value. Because there was no contract that said as
soon as he paid us back we would necessarily have to
give him all the equity. As a matter of fact, Dwyer was
saying perhaps that for your help you guys would keep --
just complicated conversations.
But by 2009, there had been a couple of transfers.
And if you noticed, some monies that did come to me, I
don't know if he needed it again or whatnot. I see that
I transferred $135,000 twice back into Fantasma Toys.
And I think sort of netting out what I was given,
putting it back after I was taken out of the, if you
will, the loan.
So my net contribution or receipt from the
Connecticut LLC I think, you know, Nelson engineered it
to be zero. Obviously, when he took me out, I think
that's when I had to put the money back, because that's
his at that point.
Q. And would it be fair to say that between you and
Nelson you hardly ever actually kept any kind of formal
agreements?
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A. It was -- yes. I mean, that's my fault and perhaps
a little bit his. But I should have kept better
records.
MR. DONOVAN: May I just a moment, Your Honor?
THE COURT: Certainly.
(Pause.)
BY MR. DONOVAN:
Q. Just to make this clear: Those ads that appeared
in the parish bulletins, those had telephone numbers
that were no longer assigned to Apeiron, right?
A. Well, those were the numbers when we had our
offices in New York. That's when that ad was put in.
It was never taken out. But if it was truly
advertising, I think I would have had a number that I
can be reached.
Q. And the numbers weren't working, right? If you
called that number you wouldn't reach you?
A. If you notice, it's an 800 number and 800 numbers
point at a regular number. And those were pointing
obviously to when we were in New York. That was I think
one of our 800 numbers in New York when we had the RIA.
Q. I still don't understand. If I picked up the
number and dialed the phone --
A. Yes.
Q. -- would it get to you?
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A. No.
Q. Would that call reach you?
A. Not after year 2000 when the lease expired in New
York, I was out of that space. So it would not have
anything to do with me.
Q. So far as you know, no one ever contacted you as a
result of reading those ads?
A. They couldn't.
Q. Anything else that I've missed that might explain a
little bit the financial aspects of this proceeding?
A. I don't have anything off --
Q. Okay.
MR. DONOVAN: Thank you, Your Honor.
THE COURT: Mr. McGarry.
MR. McGARRY: Yes, sir.

RECROSS-EXAMINATION
BY MR. McGARRY:
Q. I might actually save time if I --
Do you remember, Mr. Loles, do you remember
speaking with the FBI on a couple of occasions including
at the detention center in Rhode Island?
A. Yes.
Q. And do you remember that Milbury Holdings was the
topic of discussion?
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A. I'm sure -- yes, it definitely came up, yes.
Q. Let me, in the interest of time, go right to page 4
of the memorandum directing your attention to the third
paragraph.
MR. McGARRY: I believe, Your Honor, this is
Government's Exhibit 32 and it was also an attachment to
the sentencing memo filed last year.
THE COURT: I have the attachment.
BY MR. McGARRY:
Q. On page 4, second full paragraph, do you remember
telling the FBI that there was no formal agreement from
George to invest in Farnbacher Loles but simply take the
money off his hands, but it was the Missailidis'
family's money.
Do you remember saying that?
A. I don't see what context that would have been in.
There was no formal agreement for -- can I read this?
This is the beginning of the Wall Street Journal?
Q. Do you remember telling the FBI that it was
Missailidis' family money?
A. That the 14 million was their money?
Q. Correct. Do you remember telling that to the FBI?
A. I do not remember saying that and saying that
George was afraid it would be seized by the authorities
in the UK. I think George was afraid because of the
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Karayanis situation.
Q. There's no question pending, Mr. Loles.
A. Sorry.
Q. Your answer is you don't remember telling that to
the FBI?
A. I don't understand the context of what we were
discussing. When Mr. Missailidis passed away, George,
who's his son, suddenly gets these accounts that have a
lot more than just the $14 million in it. And I don't
know if we were talking about what George -- I think
George was concerned --
Q. Do you remember telling the FBI that the intent was
that Loles was growing the Farnbacher Loles business and
he would reconcile with George later?
Do you remember telling the FBI that, that you
would pay George his money back later?
A. Well, I think reconcile with George -- it wasn't
George's money. It was sitting in Milbury Holdings.
Q. It was the Missailidis' family's money, correct?
A. No, it was not. Not what came here. If there was
more money in Milbury Holdings, that could be theirs,
but that's not accurate what you're saying.
Q. I'm just quoting you back to you. So if it's not
accurate, which time were you not accurate? When you
talked to the FBI for four hours in 2010, or when you
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talked to this judge for two hours today? Which time
was it not accurate?
A. Mr. McGarry, George was afraid that the $14 million
would be seized. Medtronic --
Q. Let me put it this way: George would have no
reason to worry about the $14 million if it was your
money, would he? But he was worried about it being
seized because it was not your money, correct?
A. Because it was in their family entity. I didn't
have direct link. He knew his father and I had
dealings, but I didn't have -- I couldn't go and
physically take the money out.
So obviously I assumed that in this context we're
talking about -- because George was very worried and
that's how I even heard about all this Karayanis stuff
because he brought me in and he said Medtronic is being
investigated, Smith & Nephew is being investigated.
Eventually are they going to try to implicate my father?
We sort of pieced together what exactly was going on.
I mean, I'm sorry that I'm confused.
Q. Let me direct your attention to page 2. Do you
remember telling the FBI Milbury Holdings is a
Panamanian company and is Missailidis' personal company
comprised of his personal money?
A. The most -- most of the money in Milbury Holdings
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was his, but what we did in trading together and was
therefore then allowed to come to me was obviously my
part of profits with George's father.
Q. And this, today -- put the question this way: How
many times did you meet with the FBI?
A. I think three or four times.
Q. Maybe five? Maybe six? How many hours did you
spend talking with the FBI?
A. Whatever you all wanted to talk, obviously I was
willing to talk.
Q. And today is the first time that you've ever said
that the $14 million was from some kind of trading
profits that you made trading in Greece which you could
see live on your computer, which would presumably be a
about 2:00 or 3:00 in the morning, correct?
MR. DONOVAN: I'm sorry?
A. You guys were asking the questions. You weren't
asking me -- whatever I was asked, I answered to the
best of my ability.
THE COURT: I guess I'd like to understand
something.
THE WITNESS: Yes.
THE COURT: We're talking about $14 million.
You say you put in, I think, a million euros originally
back in 19 --
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THE WITNESS: In the '80s.
THE COURT: So just explain to me --
THE WITNESS: The growth --
THE COURT: -- what happened to that money and
how much was in at the time we're talking about when
we're talking about the $14 million? How much was in
Milbury Holdings and who did it come from?
THE WITNESS: I only knew what I had an
interest in. So I don't know the total balance of
Milbury Holdings.
THE COURT: Okay.
THE WITNESS: Because again --
THE COURT: So just give me a rough
approximation over the years, so far as you can, from
the 1980s to the point in time we're talking about,
about how much money you had in Milbury Holdings?
THE WITNESS: Well, eventually it grew to that
full amount.
THE COURT: What full amount?
THE WITNESS: The 14.
THE COURT: Okay.
THE WITNESS: There was over, I would say, 12
years of active trading. And then there was a period
where the Greek market was not doing anything. And then
obviously, unfortunately John just passed away all of a
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sudden and it created the confusion. George sees all
these investigations and his father's name being
mentioned and so forth.
As you can see, if there was a fear that
something was happening.
THE COURT: I'm not -- I'm just interested in
the amounts of money and when. That's all I want to
know.
THE WITNESS: Yes. So that would be the
total. And I would draw in --
THE COURT: And you don't have any
recollection as to the growth from a million euros to
$14 million?
THE WITNESS: Oh, no. There was 12 years. I
could sit and sort of put something to show you, but
there was years and years of investing. And obviously,
with the big capitalizations, just like when the market
was growing here, these things were coming public at
120 percent. Big increases as new companies were being
capitalized. And we, like everyone --
THE COURT: I guess what I'm trying to get a
sense for is at what rate did the value of your
investment in Milbury Holdings grow?
THE WITNESS: I guess it was compounding -- we
can sit and calculate. I think it was about 12 years of
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active trading. So it was compounding at 25 percent.
THE COURT: 25 percent a year on average?
THE WITNESS: Maybe a bit more. Obviously, by
leaving the money in and taking bigger and bigger
allocations, I mean, some of these --
THE COURT: I'm only interested in numbers.
THE WITNESS: Yes.
THE COURT: I think you're supposed to be
financially astute. 25 percent a year or more
compounding?
THE WITNESS: Right.
THE COURT: That answers my question.
And then at the end of this time period your
total -- the total value of your investment was
$14 million?
THE WITNESS: Thereabouts.
THE COURT: That was everything?
THE WITNESS: That was everything. And
obviously, when it was all brought --
THE COURT: That answers my question. Thank
you.
THE WITNESS: Sorry, sorry.
BY MR. McGARRY:
Q. Yet at no point in the multiple hours that you sat
with the FBI did you talk about your $1.6 million euro
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investment compounding --
THE COURT: $1.6 million.
BY MR. McGARRY:
Q. So one million euros roughly?
THE COURT: Depends on when.
A. 1.3, 1.4.
BY MR. McGARRY:
Q. I remember it was 1.65 the last time I could afford
to go to England, but that was well before this job.
You never told the FBI anything about compounding.
In fact, you told them that it was the Missailidis
family money, didn't you?
Take a look at the screen if it helps refresh your
recollection.
And George was afraid the $14 million would be
seized by the authorities in the United Kingdom.
A. But again, I'm not sure of the context at this
point. As you can see, it was not transferred in one
lump sum. It was in smaller amounts as needed by
Farnbacher Loles that it was transferred. So I guess --
Q. I think you told -- you told the FBI that they did
not want to do one big wire but multiple smaller
transfers. You spoke to George and he understood that
Loles was trying to grow Farnbacher Loles' business.
A. That's right.
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Q. The purpose was to get the money out of London.
A. I understand that you want to look at it that way.
There was an investigation, which is what drew me in to
talk with these people. He was concerned. I think
their father had a lot of his net worth in Milbury
Holdings and so forth.
Q. And in fact, I believe you told the FBI that it was
comprised of his personal money.
A. That's just not accurate. What can I tell you?
Q. So when you told that to the FBI you were not being
accurate?
A. No. Milbury Holdings, obviously I described
Milbury Holdings, which was the company that John would
do a lot of his personal finances through, including our
mutual trading.
Q. Moving to the day trading -- and I'm just going to
be brief because I know the hour is late -- is it your
testimony that it was easier to loan the money to the
church and trade on the church's -- to match the trades
for the church when they were winning trades and donate
money that way rather than just to write a check?
I just want to make sure that's your testimony.
A. I found it easier at the end of a good day of
trading to be able to post some profits to the church
account.
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Q. And it's your testimony that it had nothing to do
with the tax consequences and the difference between
short-term capital gains and ordinary income and
ordinary deductions?
A. I wanted to give money to the church. I wasn't --
I mean --
Q. So when Nelson sat here and told the Judge that it
was done that way for tax purposes, he was mistaken?
A. No. What Nelson, I believe, said was that the
church didn't pay any tax. So perhaps that the impact
of the contribution was bigger if it went straight to
them.
Mr. McGarry, I could have kept those trades. I
think, or I assume you agree that I could have kept the
trades. I wanted to give money to the church account.
Q. Okay.
A. I don't see what other motive I could have had.
Why give it then at all?
Q. As far as Fantasma Toys, you were asked a number of
questions this afternoon about the money, quote, I put
in; what, quote, I put in.
In fact, that wasn't your money. That was the
money that was in Apeiron, correct?
A. I believe all checks for my contributions to
Fantasma, the so-called 740, was from the Apeiron
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account.
Q. And that was an account that had other people's
money in it, wasn't it?
A. It also had other people's money in it, absolutely.
Q. So in fact, you didn't put any of your own money
in. It was either money that you got from investors or
maybe some small amount of money you might have got from
your wife's family, correct?
A. You're implying that I've never made any money or
had any money. That's not accurate. Any monies during
the operation of Apeiron Capital in New York City, all
that money would have been either in the principal
account or in the Citibank account. And that's where
eventually, unfortunately, other people also had me
deposit their money.
So yes, all of the money ended up in that one
place.
Q. And in 2010, you told the FBI that you and Nelson
each owned 50 percent of the stock and that it still
existed, correct?
A. To the best of my knowledge it still existed and we
had the 50 percent. And then there was the debt.
Q. And it wasn't until I guess this afternoon that you
came up with the difference between the debt and the
equity and this somehow forgiving?
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A. There was never any purchase of the equity. The
equity was given to us by Dwyer for us to continue
funding. And actually, Nelson should have the
documents. You should ask Mr. Nicholson to show you,
because I know they drew up documents on how this
pledging or transfer of the equity would happen.
THE COURT: Let me just ask a question. I
just want to follow up on one point the witness made.
Mr. Loles, you were talking about the Apeiron
account.
THE WITNESS: Yes.
THE COURT: And you said that's the account
where, unfortunately, other people had me deposit their
money. I didn't quite follow that. Other people had
you deposit their money?
THE WITNESS: People that ended up investing
in the bonds, their money was deposited in that Citibank
Apeiron account, that that is the same with the account,
since there was only one, that did --
THE COURT: The point of my question is I
didn't understand why you said "other people had me."
THE WITNESS: No, no, no. I on behalf of
other people. I misspoke. Nobody --
THE COURT: All right.
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BY MR. McGARRY:
Q. You testified earlier that you had a buyer for the
Carlisle car. Do you remember when you testified about
that?
MR. DONOVAN: Objection.
THE COURT: Yes.
BY MR. McGARRY:
Q. Who bought the Carlisle car?
MR. DONOVAN: Objection. Beyond the scope.
It's beyond the scope of my redirect.
THE COURT: Well, I guess I'm interested,
so --
A. The situation with the Carlisle car --
BY MR. McGARRY:
Q. We're trying to keep it brief because it's late.
Who bought the Carlisle car?
A. It was a person that contacted us from somewhere in
the Midwest. I can't tell you his name. I don't
remember his name.
Q. Do you remember the state?
A. I want to say something like Iowa or something.
Some Midwestern state.
Q. How much did he pay?
A. He was looking for a car in the area of about
$130,000 or $125,000, something in that area. I forget
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Case 3:10-cr-00237-AWT Document 163-6 Filed 02/20/14 Page 38 of 48
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the exact thing.
We've discussed the Carlisle car situation. The
Carlisle car was a better fit for this person.
Q. My question is: Who bought it? And your answer is
you don't remember?
A. Yes, I don't remember exactly the person's name.
But I know it was somewhere in the Midwest. Because
people would contact us and say, I want the car, I'm
going to pay you this.
Q. Why don't we just take a look at your SEC testimony
going to when they ask you: Can you just tell us what
you have been doing in terms of employment for the last
10 years?
A. Where are you now?
Q. Lines 11 and 12 with the answer. Now, this is in,
I believe, 20 --
A. '04, '05.
Q. -- '05 you gave your testimony. Um, the last ten
years, you know, various things. Typically,
self-employed. Um, our family is Greek in descent and
we have from, um, my wife's side of the family we have
business interests in Greece that has been a primary, if
you will, business. Um, you know, Apeiron Capital
Management was mentioned. It was an investment -- it
was a investment advisory company.
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A. Correct.
Q. And in the last couple of years, um, there's
Farnbacher Loles Motorsports, which is motor sports
related activities business that I have gotten into.
THE COURT: Is that page 15?
MR. McGARRY: I believe that's page 7 of the
SEC testimony.
THE COURT: I was just trying to place that.
Okay.
BY MR. McGARRY:
Q. So you speak about Apeiron Management in the past
tense, correct?
A. Yes. Obviously if it's 2004.
Q. But people's money were still going into there at
that point, wasn't it?
A. Well, Apeiron Capital Management's account, or the
Apeiron account, was the account that people that wanted
to invest in these bonds, their money was deposited into
that Apeiron account.
Q. And you told -- let's see if I have a minute.
(Pause.)
BY MR. McGARRY:
Q. And on page 66 of your testimony you told them,
It's not -- you know, Apeiron Capital is not really
doing anything, which is talking about the ad.
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Do you see that?
A. Right. Saying that the 800 number was in New York,
right?
Q. Right. But then you went on to add that the
Apeiron Capital is not really doing anything.
Do you see that?
A. Well, in the context I think they were asking if it
was in the investment advisory business. Isn't that
what they were asking?
Q. You said it's not really doing anything. Do you
think that taking in $12 million from parishioners and
the Endowment Fund and using it for your car racing
business is not really doing anything?
A. I think the context of this question was is Apeiron
Capital operating as a investment advisor? Obviously I
used the Apeiron Capital account for a terrible other
reason.
Q. I'll try and just show the Court.
It's not the best use. It's a little crooked.
Question: If we take a look at this. It's been
marked Exhibit 4. That's in their interview. Take a
second look and look at it. It's the newsletter. This
is The Ministry, correct?
If you go to page 10, which is similar what was
introduced today, Answer: Apeiron Capital Management.
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A. Well, that's what the ad says, yes.
Q. And you say this is the ad that's been there for a
really long time, since Apeiron was created. And then
you go on to say, It's not -- you know, Apeiron Capital
is not really doing anything.
Do you see that?
A. Well, I believe their questions were is it an
ongoing registered investment advisor.
Q. Regardless of that question, you said Apeiron
Capital is not really doing anything, didn't you?
A. Yes. Again, in the context that they were asking
is it a working --
Q. And my question --
A. -- because they saw the ad, they assumed that it
was -- that the RIA was still working.
Q. And my question to you is: That statement is not
true, is it? Apeiron Capital was doing a lot of things,
wasn't it? It was running $14 million from Milbury
Holdings through its accounts, it was running over
$12 million of investor money through its account,
wasn't it?
I see you nodding?
A. Mr. McGarry, that account was used to deposit
people's money. That's a fact.
Q. And the money went --
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A. This question -- as you know, this question was in
reference to it being an investment advisory at the
time. The account was used for those terrible reasons
that you mention, yes, for the deposit of people that
were buying these bonds.
Q. Just so the Court is clear, this question is about
the ad in the newsletter?
A. Yes. I believe --
Q. We had a roomful of parishioners earlier today.
You had an ad in the newsletter. And this is, I
believe, March 23, 2006, in the middle of the fraud,
correct?
A. That the ad was still there.
Q. Right. And March of 2006 is the middle of the
fraud to which you pled guilty to, correct?
A. Yes, yes.
Q. And the ad was still there?
A. Correct. The ad was there till 2008 you had
earlier.
Q. And the SEC asked you about the ad, correct?
A. Yes, and I told them that --
Q. And you told them that Apeiron is not really doing
anything, didn't you?
A. In the context that they were asking to see if it
was still an investment advisor, as it was in New York,
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I believe that my answer was accurate.
THE COURT: Is this an exhibit, this
transcript?
MR. McGARRY: We can make it an exhibit.
THE COURT: Why don't we do that. I'll read
it myself and I'll draw my own conclusions.
MR. McGARRY: Very good. I forget what number
we're up to. We'll give it a sticker and submit it.
THE COURT: Sure.
MR. McGARRY: And you'll have a clean version
of it.
And also, Your Honor, just so you're aware,
the 302s about which we were discussing are also
exhibits.
THE COURT: Okay. The courtroom deputy is
going to make an exhibit list for me in the morning she
said. So I'll ask her to share that with everyone and
make sure I have copies of all the exhibits and we
haven't missed anything on the list.
MR. McGARRY: We'll print this out.
Mr. Donovan has a copy of it already. But we will give
him a clean copy with the matching exhibit sticker.
And I think with that, Your Honor, I have no
more questions.
THE COURT: You may step down.
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(Whereupon, the witness was excused.)
THE COURT: I think there are a couple of
other points we have to put things on the record, but I
think we've probably used up the court reporter's
allotted hours for the day.
There were a couple of objections maybe to
soliciting on behalf of a charitable institution or
church?
MR. McGARRY: Correct. I think there are
probably two areas. One is acting on behalf of a
religious or charitable organization. I think to a
large extent Mr. Loles told us about his conduct acting
on behalf of the church, certainly in raising that
million dollars today. But I think, if necessary,
Mr. Stamos, who has been patiently here, could tell us
on another day some of the other activities that
Mr. Loles did as far as with the church.
And then I think the other issue is vis-a-vis
number of victims. And not to be overly technical --
THE COURT: Why don't we talk about this at
the sidebar so the court reporter can have a break,
because I think I know what you're going to tell me, but
the real question is when do we address this?
(Discussion at sidebar off the record.).
THE COURT: So we will get the outline of
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cases before Thanksgiving and what other things for the
record for Monday. We'll come back on Monday, put those
things on the record. If there's questions about the
cases, I'll ask them. Counsel will do written
submissions for the record on the briefing of the cases.
MS. HUNT: I will file my addendum tomorrow,
which will include Mr. Loles' written statement, his
financial statement, and the new loss chart.
THE COURT: Okay. And then we can pick the
date for the sentencing the week after next.
MR. McGARRY: Okay.
THE COURT: Actually, you can pick that right
now. Do you have your calendars?
MR. McGARRY: This will probably trump
everything. If I can turn my phone on --
THE COURT: Okay. I'm going to use mine.
(Pause.)
THE COURT: Sentencing will be on the 12
th
at 1:00. And we'll have the hearing on the 2
nd
. We'll
pick up on Monday at 10:00 and then sentencing will be
12
th
at 1:00.
MR. McGARRY: Very good.
MR. DONOVAN: Thank you, Your Honor.
MS. HUNT: Thank you, Your Honor.
MR. McGARRY: Thank you for your time.
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Case 3:10-cr-00237-AWT Document 163-6 Filed 02/20/14 Page 46 of 48
46
THE COURT: All right. We will adjourn.
(Proceedings adjourned at 5:50 PM.)

(End of transcript excerpt.)
* * * * *
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Case 3:10-cr-00237-AWT Document 163-6 Filed 02/20/14 Page 47 of 48
47

C E R T I F I C A T E

UNITED STATES V. GREGORY LOLES
3:10CR00237(AWT)


I, Corinna F. Thompson, RPR, Official Court
Reporter for the United States District Court for the
District of Connecticut, do hereby certify that the
foregoing pages, pages 1 - 46, are a true and accurate
transcription of AN EXCERPT OF my shorthand notes taken
in the aforementioned matter on November 25, 2013, to
the best of my skill and ability.







/s/__________________________

CORINNA F. THOMPSON, RPR
Official Court Reporter
450 Main Street, Room #225
Hartford, Connecticut 06103
(860) 547-0580



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Case 3:10-cr-00237-AWT Document 163-6 Filed 02/20/14 Page 48 of 48
Attachment F
Case 3:10-cr-00237-AWT Document 163-7 Filed 02/20/14 Page 1 of 3
Case 3:10-cr-00237-AWT Document 163-7 Filed 02/20/14 Page 2 of 3
Case 3:10-cr-00237-AWT Document 163-7 Filed 02/20/14 Page 3 of 3
Attachment G
Case 3:10-cr-00237-AWT Document 163-8 Filed 02/20/14 Page 1 of 6
Case 3:10-cr-00237-AWT Document 163-8 Filed 02/20/14 Page 2 of 6
Case 3:10-cr-00237-AWT Document 163-8 Filed 02/20/14 Page 3 of 6
Case 3:10-cr-00237-AWT Document 163-8 Filed 02/20/14 Page 4 of 6
Case 3:10-cr-00237-AWT Document 163-8 Filed 02/20/14 Page 5 of 6
Case 3:10-cr-00237-AWT Document 163-8 Filed 02/20/14 Page 6 of 6
Attachment H
Case 3:10-cr-00237-AWT Document 163-9 Filed 02/20/14 Page 1 of 3
Case 3:10-cr-00237-AWT Document 163-9 Filed 02/20/14 Page 2 of 3
Case 3:10-cr-00237-AWT Document 163-9 Filed 02/20/14 Page 3 of 3









ATTACHMENT I

Case 3:10-cr-00237-AWT Document 163-10 Filed 02/20/14 Page 1 of 3
Case 3:10-cr-00237-AWT Document 163-10 Filed 02/20/14 Page 2 of 3
Case 3:10-cr-00237-AWT Document 163-10 Filed 02/20/14 Page 3 of 3









ATTACHMENT J

Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 1 of 27
cux
lJ;\lLEIT
WJLK.IKSON
m:U.zlez: honse
I8 parliament street
p.o. box hill lSI;l
hamilton hm fx
bermwla
telepho:l.e: { u1) 2!1s-
4!130
fax: (441) 292-7880
website: www.ehw.com
EXEMPrEri COMPANY FORMATION QUESTIONNAIRE
Please e<>m:plete the following in detail, in OJder to expedite the incorporation process
and enable 11$ to provide an efficient service to you.
ruent coatadName: {; 12 y
Mailing Address: 4 s ,q HI /l y
P Lot-6"5
13/looK- f2oJ91J
PhoneNumbt;r:a>t?/ Zb3 30o 6fJ5/ FaxNumber.Oo/ 26/ 7/08
E .. mailAddreas: F.lf £1'1 B IJC..Ht;RLot..B"S' L.OM
1. PROPOSED NAME FOR COMPANX
Name of Company (Please give at least two aJternative names):
fflR::TN •.. _LT /:J. (i)
07
I NJI&SToR...S) Lrl>
. I
lls?OcJATes. LTIJ. (ii)
(iii)
LIMITED OR LTD. (Please indicate your preference).
Note: Bermuda Law requires companies to include either
11
Limited" or "Ltd." as the last
word of their names.
2. INTENDED TYPE OF BUSINESS OF THE COMPANY
Give details of the precise nature and fields of operation of the business intended to be carried
on by the Company. Details of the objeds and powers wbich may be taken by reference are
enclosed. Special ProVisions will be drafted as appropriate for inclusion in the Companys
Memorandum of Association. If the Company is insurance/insurance-related, please refer to
and complete the related questionnaire entitled, "Pre-Incorporation Information Form".
1-lot.,i) £/lntL'/' J  
I .
- 1-
························--···--·---····-·····-·-· ····--··----·--·····-···-·-···-··-·-·--····-····-----------
MIS 00025
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 2 of 27
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 3 of 27
Address: (Jnaillng)

(Streetaddress)
Contact Number: (phone)
(fax)--------
____

DateofBirtll: --r--------------------------
(percentage) ------
5. BMA DECLA.RA.TIONFORMS
Please provide a com.p1ete<l BMA Declara1ion Form (attached) on each proposed beneficial
owner of 5% or more share& in the new company.
If the proposed beneficial owner is a company. Please supply:
(i) if pubHcly quoted, a copy of the latest Annual Report to Shareholders;
(ii) if privately held, a copy of the latest financial statements together with the names,
addresses, nationalities, occupations and percentage of ownership of· all of tbose
sbateholders owning 5% or more in. the private company together with a completed
BMA Declaration Form for each.
6. ISSUANCE OF SHARES
(i) Are the shares to be registered in the name of the beneficial owners or are they to be
registered in the name of a nominee? Cason Corporate Services Limited provides a
nominee company, Coson Company Limited, for this purpose if required. Please
consult the enclosed table of fees. Signature of our standard nominee agreement will be
required.
Note: It is the policy of Coson Corporate Services Limited to require the capital to be
fully paid at inception if Coson Company Limited is to act as nominee shareholder.
To   0/tVro/EJ2
(ii) If a nominee is to be used, is there any objection to the name of the ultimate beneficial
owner(s) being furnished to the auditors?
-4-
··········--···----·····--···-····---··-·-··--····-·----·····-·····- ... ············-······-····-··-···---········
• • .. -·-······-····-----·············-···--·-··--
MIS 00027
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 4 of 27
7. FULLY PAID SHARES
If other than 100%, please incli<:a.ll! the amount to be paid upon the initial allotment.
Fvuy ?A1b
s. REGISTERED omCE
The registered office of the Company is normally supplied by Cox Hallett Wilkinson through
Coson Corporate Services Limited. Please advise if you desire an alternative location in
Bemmda.
9. OFFICE REOUlREMENTS IN BERMUDA
Please state whether the Company 'Will be setting UE •
yes, e ~ to know:
(i)
(ii)
(ill) employees will require a work permit. in what capacity: ------
10. PJRKTORS &ALTERNATED:qwcTORS OF THE COMPANY
Names, addresses, nationalities and occupations of D:irectots and any alternate Directors are
required. The :minimum number of Directors is two. Bermuda a w ~ a company to:
(i) have a minimum of two Directors, other than alternate Directors, both of whom are
ordinarily resident in Bermuda; or
(il) have a Secretary who is ordinarily resident in Bermuda and a Director, other than an
alternate Director, who is ordinarily resident in Bermuda; 6r
® have a Secretary who is ordinarily resident in Bermuda and a Resident Representative.
A Resident Representative is entitled to receive notice of, and to attend and be heard at, all
meetings of Directors and Shareholders and must act as agent for the service. of process in
Berntuda. ~ Resident Representative has a duty under the Act to inform the Registrar of
Companies if the Company commits any :tnaterial breach of any provision of the Company Act,
1981 or issues or transfers any shares in contravention of any applicable laws or regulations.
Please advise which of the abooe options you requite.
-6-
MIS 00028
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 5 of 27
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 6 of 27
14. ACCODN:rlNG
(i} Name and address of person who will be responst"ble for keeping day-to-day accounting
records ot the Company.
(ii) Name and addresa of Managers; (H any) Accountants, Principal Representative {for
insurance companies).

(iii) Details of management and/ or accounting services to be provided.
{iv) Name and address of auditors {please indicate if audit will be waived).
\a)fl\\l£j:J
15. BYE-LAWS
We recomm.end that the Company adopt this firm's standard Bye-laws (a copy of which can be
provided upon request), subject to the insertion of such special provisions as may be required.
Please list any such requite.ments.
 
16. RETAINER FQR INCORPQRATION
We require a retainer of US$5,300.00 for disbursements w be incurred on account of this firm's
legal fees specified in the accompanying Table of Minimum Fees.
17. BILLING & RETAINER
(i) From whom will Cox Hallett Wilkinson receive continuing instl'u.ctions in relation to the
corporate administration and secretarial representation of the Company upon which the
local direcwrs are authorised to rely?
-10-
MIS00030
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 7 of 27
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 8 of 27
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 9 of 27
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 10 of 27
MANAGED ACCOUNT
APPLICATION AND AGREEMENT
The tODowing.items attadled to tbis I!«<Unt applicatioa:
a Check for lnitial mVl:Bbllart (cbeck number )
a 1iusfu mrm r.r-.... &am IDIIIher
Q Othet
Oftarily
oa....w.
o OIS'RIDWI fOiliiiOI
Siatt illlrida 6Ift W.S GiNa:-----
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Matlllf Ia WlliO 61ft. W.S Ginn:
0111151
alii
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Q UlU1Eil UAIHJl'f COIIPAIIY'
0 I.'STATP
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Ap DesiglltM,. Ttrlliaale: -----
......... takl• hWf of tkAalmlll:
Q Q hmMI hpca$ellldlft Q fxKulor llemNr AppNded to Accuat --· -·-
Q AUdalstJwler 0

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0 IOII-PRSIIIUIBJDEIIJ AtCOIIIT
0 IOIPIOFIT 8IGAIIlA1IOI'
o l'fiSIHII& uc IIA lWlllnl!, loiiMr, r• SEP. SIIIPI.EJ'
0 Olllfll'fiSIIIIG UI IEIJIBHII' A«Dm {(a) pntfit shrill plel, (ij __, ,.m- plaa, ttl plaa,
(d} .f81tlrl ,.., ltlildMWikll"
0 JIAIISFEI OUEATII''
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IS 1HE rum All E11J11Y ORGAIIZED OUTSID£ OF TilE UIIITBl STlm? 0 Tes
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o 01'1181111Ull1Ga CAB lfliH lrl4hlt, allier 1llaa-* IIIII, IIISt-ila .rpiUitld}.
a IIAICIIII...._. IMt th -· Jthilelestrt pttd., PAS lll.lls181e dlsallln lllliler
th Ttnns .a CIUillns ef Yaar Cad alllllllqla ._, aad ...... Dlsdtsano Slalelnent.
S.. SodiH Xlfl """XI¥).
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u A SIIIRfl Option Ag..-1
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Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 11 of 27
AIXIIUIII 11111119: ; _
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lst/lis_., ........ llllilllllis .......... ISANIIIOrAc11 Ol'es rp4;
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ldlllllfylllt-efiM.$dll.allbWI, IIIIIICOIIII:r. _________________ __,_ ___ _
NEIEICBAIIGE IIMSflll
Please initial this liCdioo If you wish to - )'OW account iofOtmation via NctEx.dlange Investor.
I 1llldeabDd lnl'eltOc is a service which will allow ma daily aa:as to my newP.AS account I authorize P.AS to establish the
lnvestnrsetVia: and that I will be Ntnished with.a NetED:1aaage Invrstot ID . .I umierstand that I can authorize any third party
I designate to view my la:Diint(s) by signiDg a separate authorizatiOn filf that pllipO&C.
For Netflxrbangelmator identifialtion purpoces, please provide your mother'• maiden name:------------
1 wish to set up my ac.counts on NetF.xdwlge ------
I:rutial Here
1 wish to add this ICCOUnt to my exiSting NetExclwlgc lnYestor ID: -----,::--------
NctEn:banse Investor: ID Initial Here
COISIIII TO lllaiOIIC DIMI\'
You may eUoc:t to IIIXetlll trade confirmaCons, a«ount atatemeats, and other documents (in lieu them on paper) via NetExchange
will need to log in 2nd elect this optioll.
Please note: If )'Oil ded: online I'D m:cM: deamniCdelm:ry oftrule IXInfirmatiom, statementS, and other no
lonp be eligible to RCeiw: paper-· c:opies. of these documents via poai allliL You tqnesent that you have =d. and underslllnd the additional
information fOwld in aubR:aioo 1, paragraph (f) ofSeaiotl XIII of' the: "Thms and Conditions ofYour Cash and Matgin Aa:ounts• or thiS
!.ccount .Agreell)Cilt, CDJJGCtJUng your con$cnt to elc:arook ddm:ry of trade confirmations, 1.IXOUilt
  '·./ ,,,.,,":>. <·:··,·· ..
4CCOOJtnru: $0N)£2S67 /}$$f7C,J/{Te$i LTD &Al!Of'IIIIStlfAmlCABLf: I I
7
SOCIAL SKUIIlliUMIU: TAXPAYfiiO IQM1£1:
llll'IIDAJE: I I COOIIJIY Of anzttsBIJI:
mEPJIOIIl MIIMHIIIIOIIE): li:UPIIOIIE IIIIMIR lBUSIIIHSJ:
E-MAil:

01y: Still: C:T Zlp/hsfi!Ceda: QbtJ/ Oly: _____ Stt11a: __ Zip/hsta!Code: __ _
FTII R.B (OIIIIIry:_
nmous 1101£ srmr Atams c•o r.o.aom): CRY: ZIP CODE:
PRE.YIOUS- SliER ANms (10 f.O.IOIES); OlY: srm: Zit tilDE:
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 12 of 27
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 13 of 27
. ,
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tll'ltsali tl&dlly
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SO(fAl S«IIIJliiUIH: •
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ta8IIOI£ IUIJII flllliB:
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L5AI. ADDifSV (CURt .. P.O. Ia)

I I
TAXPATIIII IIIMIB:
ClllllY Of arJl815111P':
JWI.IIIG ADIII5S (if differtat fmnligal adirtul
MUtE ______________________________ _
·Oir. Stele: __ .Zip/Pastil Cede:---
Caulllr7=_
"'f}'OU .... been at rru. address mc.fner than _,yean, pre- providi>all ot.ldrceeca 'Wh= you haft n:lidccl. fOr the pRW>us two yean:.
·I'I£YIOIIS HC!IIf st1&l' &DIIIf5S (10 tO. Ions!: 01\': STAlE: ZIP CODE:

Pleatc c:omp1ete aD bddw.
1YPE Of JdSIIIm (If self-..,teyft, iaAimtt "-.-.of WaessJ:
art:
Please c:Omplcw this scaion.
1Yn tf IIEXI'IISI GOmJIIIflt I'IICJJO ID'": Q 60YRUBIT VISA
ZIP COO£:
0 UIIEMl'I.OYm !11911'1
Q stUDBiliSTDTJ
YWS EMPLOYED:
Zll/POSTAI. CODE:
Q OlllflSOVBIIIM ISSUED ID: ___________ _
IDIIBMIB: COlJifm DF ISSUE:
DAlE Of rSslrE: I I
 
Clearing, <Ustod)l«other ........,_-.may l>e ....,.cdod by I'IHsh!ng uc; member FINM. N'ISE, SJPC.
Pershing Adv!sol Solul!- rolla on its aftliiMe ,_;de .-ut1on services. Trademark($) belong to their l'l!sp«!Ne ownen:.
DAlE Of Wlwto.ll: I I
MIS 00037
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 14 of 27
.A(COUIT ftMI£1; . : .
..:·:
Q'fls QHo
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....... - .... flit tcaiiii·W...S,., ... milllll? Q • Q .,. Ir,a.,.,a ...... "'!JJIPP= ... .Additioaal Accouac HoJdcr Sappla&at iQrm.
L PJe.e note that we will fumish. $bltemcli.Q and wnfinnationa to tbc You authorize PAS to maJtc awilable
IICW'*st'&temCil!lland coofimladou& to yoUr .Ainhorizccl Adviso.r(s) as you direct. PAS Will also i:auac
to be scm c.: .made uU!able duplicate-- tad tny otbor mtmested party that you indi.catc b!!l.ow. Your
authcirizatioft abo permi5 your AuthoriBed Advi8or{s) to l'icw and dowuioad your IICCOUnt information tD their
clectrcmic symm.
PUASIIIOif: Azty additions or de1e!ions to intaesled. panics mast be in writing .
•. ....-.:--.·.•:;·· "':· ·.-· ' .

COIIITliY: Zlf/I'OSlAL CODE:
lTPf OF IGTIFIWIOI; QSialllllttll Q c..nn.llon
"·· ',
ACCOUIIT IWIE:
IIAJUI& !!Jfii6S:· OJJ: SlAT£:
COIIIITIY: Zll'/l'OSUL CODE:
&!lila: I
TYPE Of 1011fiWIOR: Q Slelemtll Q Cafinnltlatt
(Add separmmeet fOr additional Interated Parties.)
11 PROXIES AND CORPORATE MAILINGS
........................ ________ MiS-Obll38
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 15 of 27
ACCOUfiT HUH:
I
To -m>atiorls. · q }<iar'Wrapke IDa\18ged a<:coaot,_al ac:c:ountOW!iaS D'lll$t sign this section. In lleu.of
separate requesr to PAS and at tbe .W:be JqlO.rted the bmki:rage aa:ount m=nent You cm.obla!n.

AUlliORIZDJI:
I ofeech   byiiplagbef-. I (we) di=t Penhing ILC 10
discoimoue moiling.,._ !nde to IDI: (us) lilr Illy r (we) llndentuid ami admowkclge thor:
• I {WI>) williiOf P*f li:e t.aed on my(_, decisioa 10 aocure this acction..
• is Data condidoo ID my {Cillr) eatierlng into orcontinuiDgpor!icipcion in a wrap li:e pmgram.
• I("'\) dUs iaotmcO.oa io diocoabnuie Jllliliagoftzade • ""1 time.
All_--..-.....,..........__...,.w....r..
ACCoUIIf D\miV!JimFS, £Jt. SI6IW8IE am
Pleae chooR ibe ·lllO!IIe)' madoet fund or Olher cah invcstnu:nt vdUde in which ,oor cub bQmces in J"'W' llOJitl!timmml: aa:ounts should
be automatieally Uolea iadiCated, aD cash balances tornoan:tiremcnt adlountswiH be autoinarlca1ly inw:sted in the
Fcdaatl:d Capital Rese:ma (FCR) Fuud. FQr importm.t in&mation about each limcl, please l1!lid the fund p10SpeetUs.
11011: All cash baWw:e8 for retimnent ac:c:ounts will be in the Penbing Govoemm.ent Aceooat (PGR).
TAXAilt ISSOO lllifill hrd.se) HOITWilf tSSOO hdllll Priasej
O.r.Hreled c.,ni Q R1111m IBIUI
(hfnlt Ftt ... lllir_. AaDHis) Q 11ft TtnliRilftlrdC4di T11151 C4di Sirles (fiiTO
o ftHrlfed cmn...t._.,. tFGII o Ca1i1enii W Trvs1 Cash Serte.IFClll
01-.e f-.4 Dtpestt .-..IFIIJO...-.Vm AciOIIII 0 c.-tblllualrlpel Ca Tmt Cesil Slrils tFOCI
o ,....,..... ,,.. .......... Slnka lfiiOSJ: {SJoa,eoo lllillllnl flllltll "-'-l o "-lw"1 MllildpGI Will l'nlst ca Serte. tFNJCJ
C1 fllleniH "'-................ {fiii(J: ts5111.118 .._.lallllt illmiiiiiiJ o fqilil Muldpa/ UsiJ Tmt WI! Series (RAO
olldler . .
.._ ...... .,.. ......... ........... Ofi'SIIOIEilOilY fUiilt (aei ................. Unhll$1i1115)
o FaUrat.d Short "fml U.$. Pri11t Fnds IDS QISS !lm.DJ
0 Fllltralld Slum Ter• fud Ill$ Class!OGYDJ
0 Fedinlel Teno li..S.. Gotera-.t FtnuiiSDS (tau !OGSDJ
Q ,...,_. S1Nri Tirai • .S. Treamy rllild ISS Cliss IOTSSJ
Pleaee COIIIIIIete this section in c.mli:r tn sa up Slllnding lOi: DDt-part)' fedenlliuid wire regucsa. CompJ.cang this iCdi.on .. you
to ttlUISfi:c Nnas via wiR: nom this bcolrengi 8IXlOUilt to 811 aca>1IDt with at the fiimlcial OlgBIIization indicatM DCIOW.
'I"his in filll fol-ce and elfed: until DOCity PAS ofi• revocation by tcftpbooc: oc in writmg and PAS bas had sufficiCIIttime to act
on it.
IAIJ(MI£:· IAI(CITf: tAll STATE: WIICOUmY:
FOR lH£ 1£1£fff Of:
IE<BYII& lAIII ACCDUIIT KUMlER:
FUQI!EI CREDII TO (If APPUCAILEt ACCOUIT IIIUfl (If APPUCABLEl:
fOR FfiWI. Aid WilE$ 0111511£ OF Tl£ •na STAT£5:
CHIPS AlA (IIIJSIDl U.S. OI1.Y):
SWifT CDOE (1111l518f U.S. OHlYI:
tiC COD£ toUISIDf B.S. Oll1l'l<
a u.s.Dtlm oDihr: __________ _
----·-· -·-----------------·---------------
MIS 00039
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 16 of 27
ACCUIUUI!t ' ·' .
ACGIIII1' 11PI ...........  
kmlllt 1/l
fiLl ....
JCCOIIIJ-
lt1IIUI. USE Olllf .
llfllllloiiC--
MH1W14
___,,..,
MIS 00040
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 17 of 27
- '- *-····· ··-------·-·· ·- ·-········-······-- ............................................._,,..,.,,.. ,_ ......... ······--····'"····-··-
MIS 00041
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 18 of 27
•••••''''"''"'' .. "'''''''''''"M•o-Mooo•OM
··········-······-········--·-···-····-·-········-·····-··-- ················-····-·-·-········--·-
MIS00042
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 19 of 27
  ofded]ug.Orhetubmbroralpangpal other forms
oa. • .......,.. one haS aaintl:n:st m )IUIJraemunt{c) with I'AS..
i) JOlN'r ACCOUNTS--Unlr:stothcrwise 8edioa I · · joint Aec:oun
  beheld by. you· · · to eitha-:m,.
or to J'OIIC. llfiPOtlllatlie other • · . to Wie·.n ac:tion on hiii or 11Cr.bdl1lf and to
Jepll:Selltb_ or her.!fi.all PAs rbd be m sballnot to

m)MtiT'UAL aodseBingUIUlUal fund sbaRs.
FWld rhua am be pmdoosed lllldaafd the fuliil without pa)'in_( feo:a.
n) SEPARA8II.JTY-H or c:oaditicm. shall beheld to be Lmlld by any court, or
cOndition. The
Of cod coiidi:tiaa8 tball·- be lflidecl. and this Apementshall be cmicd OUt .. if Ill}' such
mv:n6 ra:abiC plVmiGD 01' cooclidoa. ""* not ClOI1lall>cd hm:m.
o) HEADINGS ARE DESCRIPTIVE-The baeofis purposes only and shill not be deell'led to
moclif1 ocquali4r any of me rigbtaor obllgationa lilt &.rth ouda
p} RECORDING CONVEBSAnONS-Y011 uada:stBnd ud tpe thatmr potecrion. PAS may l!lemonically l'e<XliXI any of
)'i>urtdephone with .
q} the 1Wl and eotin: betwm:n the parties with.n:apea to
proriaion$ hezzin, and rheae ue ao otiU or ia ClOidlict bezewitf..
r) 'ttRMINA'nON--You..., that PAS has therlgltt to IICCOWlt(a} at any lime by DDiice to you. The pnMsiom of this
sarme the lamination afyour ac:Count(s).
s)  
you. By amrirming 1o by J'l* indiCate to ofthesci c:haD&ei Jfl""!. do not ao;ept the
!D12It noti£v PAS Ja wntmg of aDd your aa:ouut{s) Will be dosed. Howeft:r, )'OU wil[ mnam liable in- my
outstiadiDg debits audfor clwgcs on your lli:coum(s).
t) THE LAWS OF1HE STATE OF NEW YORK GOVERN-Thia and its shaD be pemed by the laws of
the State ofNcrw Yodt..nthout givingdlt.ct to ilB amfiids ofl:aws provisions.
u) ARBITRAilON DISCLOSURES
nilS AGREE'MENTCONI:AIN$ A CLAUSE. BY SIGNING AN ARBITRATIO'N
AGREEMENT 'mE PARnES AGREE AS JIOLLOWS>
• AIL ARE GIVING UPTHERIGHTTO SUE EACH O'ffiERIN COUIIT,
1NCLUDJNG'I11E RIGRi:''l'O A 'l'RIAL BY JUR!lEXCEPT AS PltOVIDED BYTHE RULES OF mE
ARBITRA.TION FORUM IN WHICH A CLAIM IS FILED.
• ARBITRATIONAWAIIDS ARE GENERAlLY FINAL AND BINp_!N.§.!.PARI'Y'S ABIUTYTO HAVE A COURT
REVERSE OR MODIFY AN ARBrntATION AWARD IS VERY UMLt:rv.
a THE ABILllY OF THE l'AKIIES TQ OBTAIN DOCUMENTS. WITNESS STATEMENTS, AND oniER
DISCOVER\" IS GENERAlLY MORE LIMITED IN ARBI'l'RA1'ION1HAN IN COURT PROCttDINGS.
• THE ARBlTRAl'ORS 00 NOr HAVE TO EXPLAINTHEREASON(S) FOR TIIEIRAWARD ..
• 1HE PANEL OF ARBlTRATORS WIQ. TYPICAILYINCUIDE A MINORITY OF ARBITRIJ()RS WHO WERE
OR ARE AFmLUm WITHTHE SECURmF.S INDUSTRY.
• THE RULES OF SOME ARBl'l'RAnON FORUMS MAY IMPOSE TIME IlMlTS FOR BRINGING A CLAIM IN
ARBrrRATION.IN SOME CASES, A CLAIM mAT IS INEUGIBLE FORARBrrRATION MAYBE BROUGHT IN
COUR'[
• THE RULES OF 'mE ARBlTRATION FORUM IN WHICH THE CLAIM IS FILEP, AND ANY AMENDMENTS
THERETO, SHAlL BE INCORPORATED INfO TillS AGREEMENT.
v} ARBITRATION AGREEMENT
ANY CONTROVERSY BETWEEN YOU AND US SHAlL :BE SUBMITTED TO ARBITRATION BEFORE TIIE NEW
YORK STOCK EXCHANGE. INC. OR ANY oniER NATIONAL SECU1UTIES EXCHANGE ON WHICH A
TRANSAC'nON GlVlNG RlS! TO THE CLAIM TOOK PLACE (AND oNLY BEFORE SUCH EXCHANGE) OR
FINRA.
NO PERSON SHAlL BRING A PUTATIVE OR CF.RilllED CLASS ACTION TO SEEK TO
ENFORCE ANYPREDJSPUTEARBITRATION AGREEMENT AGAJNsr ANY PERSON WHO l1N> INmATED IN
COURT A PUTATIVE CLASS ACTION OR WHO IS A MEMBER oF A P0TATIVE CLASS WHO HAS NOT OPTED
OUT ANY CLAIMS BYTilJ!: PUTATIVE CLASS ACTION
UNTIL (1)1HE CLASS CElmFJCATlON IS DENIED; CLASS IS DECEI01F!ED; OR {3)THE CUSTOMER IS
EXCWDED FROM THE CLASS BY THE COURl: SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO
ARBITRATESHALLNOTCONSTITUTEAWAIVEROFANYRIGliTSUNDERTinSAGJmEMENTEXCEPTTO
THE EXTENT srATED HEREIN.
1HE LAWS OFTHE SfATE OF NEW YORK GOVERN.
MIS 00043
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 20 of 27
AUIIOIIUUIIut '
' ' '
. ..I ............ :
'""''"' '"'"' """"''""""'"'""" """""""""""-""""""'"" ________ , ____ ,_, _____ ,, ___ , _____ """""""""""'''""'
MIS 00044
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 21 of 27
ACCOIIIIT 111111£1: :
:-;
•• # ·- "' ., ...
................ .
10 provide some b.&: liiCtl aboot.jllilCbaaug seaJriries on margin.llld to afertyou m the risks
imolvQI with 1rlldias-m t.ll'llllpl Befin in a margin aecount, it is important 10 c:an:fully miew theM ·
by Persbing.llld to C'ODIUltwlth your Aatbodzed Advisor(o) .tegan:liog any qucetiono or concerns you may-=
'"6-llllllplllllllOU!ltL
When ;ou,pan:J- -m.. of Jlll1ing Blr them in fidlor borrowiug pan of the pardwe price nom Ponbing.If you
choose 10 fiom Penhiug.. you will Deed 10 open t llll1'gjn with PAS. which will introduce lllcb tcalmrt(•) m Pershing.
-UIIid 86 the loan that was made tO )ioo.m.pun:hue the -nies or any other indebtedness arising
afU;t the ini1_Dd tmn1n11::tion. '!f m JOIIr_acxowu{s} decline in va1Qe, so docs the value of the collatcnl supporting your ICian. As a
msult, PenbiogC111. tab-. em Dlueamargin.callmd/or sell securitic:s other assets in any of your
aa:ount(s) held -.ith PmbiDg, in onfec to maimain its .required cqui1¥ in the mqin IIIXiOWlt.
It is importsnt t11at :pOll JUDy 1UidersbaiJd the ri&b imlolftd in ttading aecurities on Jiwgin. These tiska include the fo1Iowing:
Y4* tr.n,_dcJ-itia thc.-giaueoaat.
in value of seturitis that - purehuecl 011uwgift may mJUin: you (D provide additional funds 10 Pershing 10 avoid the fu=d sale
of those iicurities or other S«mitia or JOOI': ao:ount(a).
Pcnhiaramim:e die nle of secmldes ill }"iiaraccounl(s).
If the eqaityiii70W' bdmr PenbiDgc m........._ magin Perahiug can se.ll the securitieS or other 8JSCIB in any of
your IICCOIJDt(s).belclat PenbiJigto cuverthe awgindeticimcy. You a1sowillbe responsible fur any short &II in the account{s) afiersuch a
sale.
Penhiagcaa eellJOW8eCIIriliellotodaer _.. ,
miltskcaly belic:oe ibat a lJIIISt COI:Itact tbcm fur call to be v.Wd, aad that the financial
cmnot other llSds in their tcOOUDts to meet the call unlells the filllllicial bas contacted them
tint. This is a.. Ml!et !inmcial 1rill attanpt to notifY their dicnw of but they- not rcquiRd to do so.
However, cmt if a financial organiution bas amtadl:d a c6e.otand provided a specific date by wbicl> the cliCAt can meet a IIWgin call, the
liiWII:ial JtilltUe11CCC811Sl)' steps to pti*Ct its 6nauCi.t mterem. including immediAtely selling the seeurities without
notice to the client. .
Penhiag...,. ................ . .,.u1imeperiodswilhautuotic&to,.,...
In repro 1o house, maitw:nana:, and other margin dlllw, 1n IU:u Hquidations, Pershing may pent1k you a period of time to
sati&IY .. call. This lime period sb.n not ill any .., waive or diminiab Penbl.,g's right ill its sole disaetion. to shorten the time period m
which you mayaf:idt a call, iaduding ooe .w-ly oubliaDdiog, ot llC> demand that ,. c:all be satistic.l immediatidy. Nor does such
waive or diminish the .right of.Pc:nhing m sell out PQiidons to atisfjr the call, which can be ao high u the fiill indebtedness ·owed by you.
Matgin m&y llld c:haoged by Pez.biagill its ook diacretion and judgement.
  wlaida J;,pi«1amJ ur!IOW to meet a magis calL
Beauae the the margin 1om, Penbins hu the right to daide whic:h security t>C> sell ill order to protect its
Pershing can inaase ita mpUmne$ at any time and is not mquirtd to provide you with advaocc
written notice. These changes ill firm poliey often take cffec:t: iaunediatdy and ma.y IaUlt ill the mail1tenat= in&rgin call. Your
f&tHe to .ims1y the tallm&y C!ll1Se Pershittg to liquidate ouell s«nrities in JIO!ll' 20:0Uilt(s).
You a"Caoteadtled to--.ion oEiime onamargia call.
Wbi1c an cxtCD8ion of time to meet be available to clien1s under certain conditions, adient does tiOt have a right
to the cxtcasicm.
Yoarwrittaa MatziaApementwidl Peahmgprorillcll folr cataia
The Mmgin Agreement set .forth ill Section xm of this Aa:ount Appllation and Agreement is •leg2lly binding agxeement, c=not be
modified by condw::t. and no fiailu3 on the part ofPcmbiDg at·any time to enf<m:e its rights \Hider the Mmgin Agreement t>C> the pateot
permitted sba1l in any way be deemed to Wllive, l'llCNiifjl or adax any of the rights granted Pershing, including those riglrts vested in
Pershing to dealovitb collateral on all loans advanced ro you.
Also, the CODBdtnteo the fUll and endre betwt!en the parties with teSpeCt to the pto!lision of the Margin
Agteemcnt, _. 8lell0 oml or m COilBict with the Maigin Agn:cmcnt unless you have advised in writing to Pmhing
of IUdl tOnflid. mndifiatiob, amendmeot; oc sapp'lement to the ocmy indmduai provision of the Margin
Agreement om oalybe ill writing signed by a of Pershing. You should cudUIIy review your Margin for the rights
llld limiutioJIS gomning )'!lUl nwgin aa:ouot Jdatiousbip.
MIS 00045
Case 3:10-cr-00237-AWT Document 163-11 Filed 02/20/14 Page 22 of 27
A«OIIT IUIIEI: : -· "L ' j
.ACaJIIIf5
lhaeby request that PAS open a brokmge liauom iD. the uamea&s!:r4 u IIXXIW1t awnas on this Aa:ount App1iation and The
to and lllldeapan hereof.
Prior to irpllg .n:ptaeDt that I includes portions
ciSecdoa XIll and the Mazgin Dllc:loam: Statement, SeaioaXIV, if applicab1e), and I agree to be bound bry the terms citheAgteement as
amcndccUi.,111 time to time. I uodast.nd that PAS may aead 111e disclostna teg111ting 1111 a«ounm, and that PAS may modlf}: those
c:lidosun:a to time by kndiDg 111e updmd·diidosutes. I agree that PAS may p!VVide 1l:pldiDg this aa:mmtto the
Authotized IUideataad llllli.ap:e tb.tJOU will q.ena F\mdibg.A.xoom. a Mumld Fund Acrounr, and a sepatate attount tOt
cac:h iirfatmcnt lllaDap' or imacmcnts1fle .indicued in the Account Alloc:atio1118Cction, and tOt each Manager or investment
style mat· I may <:booee ill. the 1inu& I audtori:a: PAS to Ul bmstment lllllllllgers or imatmeai: styles and c:om:sponding &a:ow1u, in.
by PAS fimu AutliatlzedAdwis!x(s). I undemmd that !his .Aaount App1icaaon and.Agleement
Cmduding the liCXIJI2DI: pans each-opeaec1 pu;$iJIIItto !his Attoant Application mel Agteemem Cmduding atcounu
opened in the fUtum & additio!W insttuctioas m:dved by PAS from the Authorlzcd.Advisor(s)). I
willbe F\mding Aa:ount suhjed m my other aaounu pmsuant to
the alloc:aliml iDsttw:dons u indiaiied &-in or as otherwise on file at PAS.

U.ru- otberwDe iodicat1:d to PAS, I authorize PAS to c:aiculate lmt&tmenr gains and losses in m.y sc:rount utili2ing the lim-in-first-out
(F1FO) method fbr all secmities.
fib
1.........._, lli.tmy Pia Spo.ar.,...,._ Piau Sporuor
.fiwmoreiafilrmacien.
I hcJcby aud>orizC PAS to deduct my inR$tment advismy &eo fimu my aa:oum: widloutmy duty by PAS to ·inquire as to their accuracy or
pmpriet}t I fiutb« authorize PAS to deduct ias fees 1iom U1fiiXOW11S and c:n:dit such oitber dha:tly (or indim:rly through the Plan Sponsor.
in which. cue who .tW1 be aolely responsible tOt nMewing such fees fOr aa:macy and pmpriety) to PAS. PAS may cb2nge its &eo at any time.
I undentand that the Au!horizcdAdvilor(s) may trlCXliDIDeDd that I pw:a.- mutual funds or other imestmcnt sponson:d by or
PAS or its that m:ot, PAS or its·afliliau:s wiB..m:civc addidooai fees from those mutual funds or
proih,ias. In addition, PAS or its af6liata may .rec:eiw aerricing, clistnbntion, or other -UCil fimu any mirtaal £imdil (whether affi1iatl:d with
PAS or 1101;) that my Autborized.AdYilor(a) n:c;ommc:nds 1hat I pun;bue.lUilde!mnd tlmt PAS is llding solely as and not as
an inveatma'lt will only caayout in the 1!81fing aJithorlzaiOn sc:CMn hcn:in. PAS' fcea ue scpatate from
the id.Wiaq fcea .dwged by Advi.or{s}. I undmtaad 1hat I am DOt Cllli&d to ldlatc (I( any fcea if my IClCO<IAtll ate cana:lcd
duMg a pcrlodforwbich I have been ahady
-S'P'IS
I hl!l'llby audlorize PAS hhing to: (1) disbume a.eta fOr inYatmcnt pmposea tOt rtxr benefit or to me pe:rsonal1y. as instructl:d by
my Plan Sponsor, (2) to Ielllit checlts to me at my acidless M teaml; (3) Wi.te fimds aild otherwise: to make disbursement. of funds held in my
account(&) per the Blmding iostruaions on file with PAS; and (4) tD make futJd toll!sfera between my acmunt(s) at the cfuection of my Plan
Sponsoe Ifi want funds dilbuncd from. my acx:ount(s) to a financial Olpflization nor on file with PAS or tn a I hereby agree to
provide PAS on -=h O<allll!llCe with • writiJon lettBr to disbwse such funds out (I( my aalOWlt(s) by check, wU-c, or
other furm to l!llch financlal OlpDizatiQn or a third pny.l acknowlalge and agree that PAS may contact 111e to verify anNor confirm niy
authorizo.tion prioc to making such clls&umelnent •
.....
Ifl have, or my repesentati'fe bu. cbeclrM the box oo·page l. of this Acc:ouut Application indicating that I would 1i1ce mugin privileges
extended to -,then that the prlvilega- gnn!M by Penbing in its sole dia::n:tion under the 1£Ims of the Custnmcr
andMAJBin 1Jlsclosute Sta1Hient, Ill of which I have read and undemand. I understand that, in a margin IAXOQilt, I may lose
more thm .neely my iDidal investment.
Bysipia!thh.Apemear, I IICbowleclp111atsemritiesnocfallypd     m ,... or '-'eel by,-to 01bets.
1UDIII6 AIIIOIII8·
I.admowledge rca:ipt of mel I have and undenmnd the trading authorization t=ns of this Aa:ount Application and .Ag=ment and
I hca:by consent to those rpecifie tern'lS, granting trading authorization as ddincd in this Aa:owrt Applicalion and .Agieanent.
fiiE110Fl4

MIS 00046
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ATTACHMENT K

Case 3:10-cr-00237-AWT Document 163-12 Filed 02/20/14 Page 1 of 4
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ATTACHMENT L

Case 3:10-cr-00237-AWT Document 163-13 Filed 02/20/14 Page 1 of 15
Case 3:10-cr-00237-AWT Document 163-13 Filed 02/20/14 Page 2 of 15
FD-302a (Rev. I 0-6-95)

318£-NH-46690
Continuation ofFD-302 of
  , On 12/11/2 0 0 9 . Page _.....:2=---


LOLES' father wanted to go back to Greece in the early 1970's and
eventually moved LOLES back to Greece. LOLES studied at the
American Community school with other American military kids. He
went to high school in Greece and did not have any other siblings.
LOLES was an only child. In Greece, LOLES learned how to be an
American.
After finishing high school, LOLES had an interest in
engineering. LOLES returned to the United States and attended
Purdue University to study mechanical and industrial engineering.
His first job after college was in Norfolk, Virginia for Newport
News Shipping as an engineer in new technology. During this time,
his parents (father and aunt) went back and forth between the
United States and Greece. LOLES was not very happy with his first
job in Virginia and his supervisor at the time recommended going
back to New York.
In New York, LOLES met two guys running a computer
management consulting company out of their apartment. They worked
in a very "high risk, high reward" business and they told LOLES he
could be out of a job soon if business did not work out. Their
business was primarily computer simulation consulting for brokerage
companies. His first big project was the simulation of a stock
brokerage branch on Wall Street. LOLES initially thought the guys
who worked on "Wall Street" were geniuses, but he later determined
that they were basically "glorified used car salesmen." At that
time, LOLES became intrigued with the financial industry as all of
his computer consulting clients were brokers or somehow affiliated
with the financial industry. Chase had used his company's computer
program as a training tool.
LOLES married his childhood sweetheart and had a couple
of children. His wife was a close family friend whom he knew for
many years. LOLES moved to Greece in the mid to late 1980's with
his family. His third child was born in Greece in 1991. All three
children were United States citizens. By this time, LOLES and his
wife had to make a decision on where to they raise their children,
either Greece or the United States.
He came to the United States to settle and his management
consulting business fizzled. However, LOLES had the exposure to
the financial industry in working in the Wall Street climate. He
made client contacts and asked how he could get information on how
to enter the financial industry as an actual broker. LOLES spoke
with a contact at Paine Webber who advised LOLES that he (LOLES)
Case 3:10-cr-00237-AWT Document 163-13 Filed 02/20/14 Page 3 of 15
FD-302a (Rev. I 0-6-95)

318E-NH-46690
Continuation of FD-302 of
_ __,G"'"'r""""e""-g=o-""r_.y---"P"""'.'---'L"'"o=l-"'e""'s'------------- , On 12 I 11 I 2 0 0 9 , Page --'3"---


would have to jump through hoops to enter the business despite
having more experience than most new employees. This colleague at
Paine Webber recommended seeking employment at a smaller firm and
getting his Series 7 license. LOLES managed to find a job at
"Investors Associates" and eventually received his Series 7 license
scoring a 97% on the exam. Many people teased LOLES that he scored
such a high number as he only needed to score 80% to pass, but he
studied hard for the test as he wanted to learn the business.
LOLES did not like the environment at Investors Associates and left
the firm.
After working at Investor Associates, LOLES went to work
at a branch of AG Edwards in Hamden, Connecticut in the early
1990's, perhaps 1993 or 1994. AG Edwards was a nice facility. His
manager asked LOLES if he was Greek and whether he spoke Greek.
LOLES told him that he was Greek and did speak the language
fluently. His manager told him that there was a large Greek church
in Orange named St. Barbara's (hereinafter referred to as "the
church"). His manager also recommended to him not telling too many
people that he was a stock broker and not to try to market his
services too aggressively around the church. He thought that
giving business cards out to parishioners was very shallow.
LOLES eventually became a member of the St. Barbara's
church community. He and his family attended the festival every
year and he was embraced by the community. One of the parishioners
mentioned the Endowment Fund to LOLES and he (LOLES) was invited to
a meeting. Later, LOLES became a member of the Endowment Fund
board. LOLES explained that the brokerage firm that was handling
the account for the Endowment Fund was not going well. LOLES did
not like commission based earnings, and preferred a fee-based
earning structure. He mentioned this to his manager at AD Edwards,
but his manager told LOLES that they only did commission based fee
structures.
LOLES received substantial financial support from his
wife's family. LOLES eventually left AG Edwards and started his
own investment advisory company named APEIRON CAPITAL MANAGEMENT.
LOLES needed a custodian for his company and used DLJ Pershing
along with some family money that was provided to him. LOLES had
accounts at Pershing so he could take a fee to compensate his firm.
At this point, LOLES had something to offer his church. The
parishioner handling the Endowment Fund account at the time was
charging too much. LOLES asked whether the oversight of the
Endowment Fund could be moved to APEIRON, but LOLES would not
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FD-3Q2a (Rev. I 0-6-95)

318E-NH-46690
Continuation ofFD-302 of             , On 12 I 11 I 2 0 0 9 , Page --=1-=2 __


photos of his children and left a note. He knelt down in the rear
of the car and fell asleep. LOLES' son DINO was looking for LOLES
and called his mother to find out where he was. DINO came to the
house to look for him. DINO understood that LOLES was under
financial pressure and DINO found LOLES laying at the rear of the
car in the garage. DINO told LOLES something profound that set
LOLES back. DINO told LOLES that "we have more good to do in
life." LOLES hopes to be able to do some work to help these people
and there are two or three people he is very concerned about.
LOLES felt that these individuals were his family.
Regarding the execution of wire transfers, LQLES advised
the wires were on Citibank online auto payments each month
depending on how much interest was calculated. Once in a while,
LOLES would use the mail but he would usually say, "these things
are what they are." Typically, he would hand deliver statements,
but he also mailed them at times. LOLES advised the level of trust
between LOLES and church parishioners was very high .
LOLES explained that the funds which he managed were
private and commingled. LOLES used a "minimum to participate"
pitch to encourage people to invest with him. He did not tell
people "you got to invest in this." That type of pitch was not his
style. LOLES' success was taking advantage of the market at the
time. Some were concerned that LOLES made money on the New Haven
Savings Bank initial public offering (IPO). If people met the
initial threshold, they could invest in the New Haven Savings Bank
IPO. Many investors were in the higher return funds, but some
wanted to diversify. Some individual investors wanted to have more
funds.
LOLES created the fal.se account statement forms
representing holdings that did not exist (similar to what was
displayed to him earlier in the interview) using Excel on his
laptop computer. LOLES did not know where the laptop was but it
would either be in his home office or his office in Danbury at
FARNBACHER LOLES.
LOLES denied receiving assistance from any other person
in this scheme. He created these false accounts on his own and no
one else participated with him, including anyone at a bank or
financial institution .
Regarding selling stocks, LOLES did not buy, sell, or
hold stocks. He knew the rules if he were found to control stocks.
Case 3:10-cr-00237-AWT Document 163-13 Filed 02/20/14 Page 13 of 15
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ATTACHMENT M

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ATTACHMENT N

Case 3:10-cr-00237-AWT Document 163-15 Filed 02/20/14 Page 1 of 17
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Case 3:10-cr-00237-AWT Document 163-15 Filed 02/20/14 Page 17 of 17









ATTACHMENT O

Case 3:10-cr-00237-AWT Document 163-16 Filed 02/20/14 Page 1 of 5
Case 3:10-cr-00237-AWT Document 163-16 Filed 02/20/14 Page 2 of 5
• .FD-302a (Rev. I 0-6-95)
4lt 318E-NH-46690-302
Continuation ofFD-302 of _                     _,L,.._O""'L,.._E=S __________ , On 12/0 7 /2 010 , Page --=2 __
4lt
4lt
$35,000 and the judgment is now worth $1.7 million. COUTU's lawyer
up until the plea was a local attorney, but he wanted a good lawyer.
COUTU was afraid of a conflict of interest, bu\ now he is represented
by JIM FELMAN who is also GURIAN's attorney. FELMAN did everything
for GURIAN. FELMAN handled the COUTU plea. FELMAN wanted COUTU to
settle the case.
COUTU told LOLES that GURIAN is not a good guy. GURIAN
bragged about setting up a Christmas tree and gift operation where
people come in and buy cheap presents that are broken.
COUTU found his way onto the board of directors of one of
GURIAN's "shell" companies. These shell companies are used in a "pump
and dump" stock fraud run by GURIAN. One of the shell companies may
have been named Nano Sound. The names of the shell companies change.
COUTU was the beneficiary of a shell company, and COUTU received large
amounts of stock, which would be sold for profit. GURIAN lives in
Florida. While COUTU has not seen GURIAN's bank account statements,
COUTU said GURIAN is "good for $30 million."
LOLES' son DINO is now in Atlanta studying the foreclosure
market. DINO bought a small house from Sun Trust bank for about
$15,000. It was mortgaged by Sun Trust for $135,000. The bank told
DINO that he had to wait one year at which time he could apply for a
$75,000 mortgage. DINO is working with a developer. LOLES had
conversations about the mortgage market with COUTU. COUTU told LOLES
that he had a guy, and "GURIAN will back this stuff." LOLES did not
want to have DINO get involved with GURIAN even though COUTU asked
LOLES if he wanted to put them in touch. According to COUTU, GURIAN
would speak with LOLES.
GURIAN has been checking in with COUTU's third wife on the
telephone. COUTU does not speak with GURIAN directly. GURIAN told
her that as soon as he (COUTU) is out, that he will be fine. LOLES
advised that GURIAN is currently involved in a "pump and dump" stock
scam involving Russia. GURIAN has made six or seven trips to Russia
and COUTU would become the beneficiary of this scam because he has the
"paper" or stock certificates. LOLES did not think COUTU was "bull
shitting" him. According to LOLES, Russia is a "hot bed" for these
scams. A shell company is either bought or created and the business
may be out of Russia. People are sought to invest in the company.
The shell company is a United States company traded on a U.S. exchange
using Russia as a means in the scheme. GURIAN fronted for Russian
stock scammers in New York, one of whom may have been named ABRAMOFF.
GURIAN may have flipped on ABRAMOFF and other people in New York.
Case 3:10-cr-00237-AWT Document 163-16 Filed 02/20/14 Page 3 of 5
.
,
FD-302a (Rev. I 0-6-95)
318E-NH-46690-302
Continuation ofFD-302 of _   .... , On 12/ 0 7 /2 0 1 0 , Page _ _:3:::..___


Pink sheets are used in the pump and dump scheme, or the lowest level
of trading to stay on the bulletin board. Press releases are used,
as well as the creation of anticipation to pump up a stock.
LOLES stated substantial funds are believed to be in Panama.
COUTU is convinced GURIAN is doing this. LOLES believes he can get
the identity of the stock by meeting with GURIAN to know what is
getting pumped. GURIAN knows COUTU could have gotten him (GURIAN) in
trouble by now if he (COUTU) spoke to law enforcement about GURIAN.
GURIAN understands that he "has to give to take."
LOLES made it clear that he has no intent on engaging in
business with GURIAN, but if he is paying a penalty of $7.5 million,
there must be a lot of money involved. LOLES advised there is a large
group of people working with GURIAN in his pump and dump scam, not
just one person.
DOUGLAS BOONE, a white male, came into Wyatt as an inmate.
He was arrested and believed to have been a bookie in a RICO case.
The case was dropped and he was charged federally with having video
of him and a 13 year old girl on his computer. BOONE told LOLES that
the "idiots did not find the floor safe" with $412,000 in his Florida
residence when law enforcement conducted a search warrant.
LOLES recently met CHRISTOPHER PLUMMER who came to Wyatt in
the last few days. PLUMMER told LOLES that he has been charged in a
$1.5 million indictment. PLUMMER further explained that there was a
women also involved in the case and "everything is her fault".
PLUMMER told LOLES that he only received $80,000 from the project and
that $300,000 went for salaries of people involved in the project.
The $1.5 million came in from three separate groups of investors who
each gave $500,000. One of the investors was PLUMMER's neighbor.
PLUMMER also told LOLES that he runs an energy company and
that he was preparing to leave for Indonesia when he was arrested.
He needed to go to Indonesia to sign contracts for his energy
business.
LOLES mentioned ROBERT PONTE as another inmate at Wyatt.
PONTE sold real estate in Florida and he tried to get out of prison
on bond, but he did not have the necessary real estate for the bond
package. PONTE's parents have a bankruptcy lawyer who would not allow
them to put up their home as collateral.
Case 3:10-cr-00237-AWT Document 163-16 Filed 02/20/14 Page 4 of 5
.,
• (Rev. 10-6-95)

318E-NH-46690-302
Continuation ofFD-302 of
            _________ , On 12/0 7 /2 010 , Page __ 4.:.___


During the interview, LOLES mentioned that he has a bulging
disk in his back and had not seen a physician .
Case 3:10-cr-00237-AWT Document 163-16 Filed 02/20/14 Page 5 of 5









ATTACHMENT P

Case 3:10-cr-00237-AWT Document 163-17 Filed 02/20/14 Page 1 of 10
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ATTACHMENT Q
Case 3:10-cr-00237-AWT Document 163-18 Filed 02/20/14 Page 1 of 3
Case 3:10-cr-00237-AWT Document 163-18 Filed 02/20/14 Page 2 of 3
Property
Questidnj
Release
'Schedule
 
Sepnte
SocW
s:tell:u$
Tiwlsadi
Case 3:10-cr-00237-AWT Document 163-18 Filed 02/20/14 Page 3 of 3









ATTACHMENT R

Case 3:10-cr-00237-AWT Document 163-19 Filed 02/20/14 Page 1 of 3
HCLS-000001
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HCLS-000002
Case 3:10-cr-00237-AWT Document 163-19 Filed 02/20/14 Page 3 of 3









ATTACHMENT S

Case 3:10-cr-00237-AWT Document 163-20 Filed 02/20/14 Page 1 of 2
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ATTACHMENT T

Case 3:10-cr-00237-AWT Document 163-21 Filed 02/20/14 Page 1 of 4
Euro banknotes
Home 1 Euro 1 Banknotes and coins I Banknotes
The Bank
Payment & Settlement
Systems
Markets
Euro
Banknotes and coins
Cash Changeover
EU enlargement
Banknotes
Europa Series
Coins
Commemorative
Collector coins
Protection of euro
Counterfeiting
Exchange of mutilated
or damaged euro
banknotes
Banknotes
Reproduction
VVithdrawal of euro
bank notes
Cash Services
Recycling of euro
banknote
Drachma banknotes
Research and Publications
Statistics
Monetary Policy and
Eurosystem
Banking Supervision
Supervision of Private
Insurance
Euro banknotes
On 1 January 2002 euro banknotes were put into circulation in the 12 euro area countries. There are
seven denominations of different sizes and colours each: €5, €10, €20, €50, €100, €200 and €500.
Banknotes are legal tender throughout the euro area.
Euro banknotes feature the architectural styles from seven different periods in Europe's cultural history-
classical, Romanesque, Gothic, Renaissance, baroque and rococo, the age of iron and glass and modern
20th century architecture- without depicting any specific monument of any EU country.
The architectural styles from the seven periods in Europe's cultural history are represented as follows:
• Classical: €5 banknote;
• Romanesque: €10 banknote;
• Gothic: €20 banknote;
• Renaissance: €50 banknote;
• Baroque and rococo: €100 banknote;
• Age of iron and glass: €200 banknote;
• Modern 20th century architecture: €500 banknote
• Design
· ~
Design
The windows and gateways on the front of the banknotes symbolise the spirit of openness and
cooperation within the EU.
The bridges on the back symbolise close cooperation and communication between the people of Europe
and between Europe and the rest of the world. Bridges are stylised illustrations, not images of, or from,
actual constructions.
The 12 stars of the EU represent the dynamism and harmony of European nations.
Other design elements include:
• the name of the currency in both the latin (EURO) and the Greek (EYPQ) alphabets;
• the initials of the European Central Bank (ECB) in five linguistic variants (BCE, ECB, EZB, EKT and
EKP) covering the 11 official languages of the EU before its enlargement;
• the symbol © indicating copyright protection;
• the EU flag; and
• the signature of either Willem F. Duisenberg, Jean-Claude Trichet or Mario Draghi - the first,
second and third Presidents of the European Central Bank respectively. These banknotes are all
equally valid.
· ~   · ·
Willem F. Duisenberg Jean-Claude Trichet
• ICE EC8 EZI EICI IKP >o
· · ~
" : .:··a
" • • • Cl
0 • • •
Mario Draghi
Soecial features have been incorporated in order to facilitate blind and partially sighted persons.
Back to Top
Images by denomination
The euro is one of the strongest tangible symbols of the common identity of Europe, euro area countries
and their citizens.
http://www.bankofgreece.gr/Pages/en/Euro/Notes-coins/Notes/default.aspx
Page 1 of2
12/5/2013
Case 3:10-cr-00237-AWT Document 163-21 Filed 02/20/14 Page 2 of 4
Greece and the euro - European Commission
Page 1 of2
European Commission
• The euro
• Policy and surveillance
• Databases and indicators
• Publications
• News and Events
Greece and the eur·o
Greece joined the European Union in 1981, and adopted the euro in 2001 in time to be among the first wave
of countries to launch euro banknotes and coins on 1 January 2002.
Last update: 4 may 2009
Greece at a glance
Surface area: 131960 km
2
Population: 11 262 539 (Eurostat 2009)
Joined the European Union: 1 January 1981
Currency: Euro since 1 January 2001 (formerly Greek drachma, GRD)
Euro information
Status: Euro-area member since 1 January 2001
Fixed conversion rate: €1 = 340.750 GRD
Adoption of the euro: The euro banknotes and coins were introduced in Greece on 1 January 2002, after a
transitional period of one year when the euro was the official currency but only existed as 'book money' . The
dual circulation period - when both the Greek drachma and the euro had legal tender status - ended on 28
February 2002.
Exchange of former national currency: The Tp6nE(a TOC EM60oc (National Central Bank of Greece)
exchanged drachma coins until 1 March 2004 and will continue to exchange drachma banknotes until 1
March 2012.
Documents and publications
• Documents from the euro changeover are available on the Bank of Greece website (also in English)
Opinion polls and surveys
• Public opinion and the single currency (Eurobarometer website)
Downloads
http:/ I ec. europa.eu/ economy_ finance/ euro/ countries/ greece_ en.htm 12/5/2013
Case 3:10-cr-00237-AWT Document 163-21 Filed 02/20/14 Page 3 of 4
Greece and the euro - European Commission
Page 2 of2
• National sides of Greek euro coins
• Greek commemorative coins
Websites
Euro websites
• The euro on the Bank of Greece website (also in English)
• Archived websites on the euro
Institutions
• Toam:C:a Toe Ef..f..aooc (Bank of Greece, also in English)
• Ynoupy£io OIKovouiac Kal OIKOVOUIKWV (Ministry of Economy and Finance, also in English)
Business
• Euro Info Centres in Greece (in English only)
• Athens Chamber of Commerce and Industry (also in English)
• Hellenic Centre for Investments (also in English and German)
Consumers
• K.E.n.K.A. (Consumers Protection Center, also in English)
http: / I ec.europa. eu/ economy_ finance/ euro/ countries/ greece_ en.htm 12/5/2013
Case 3:10-cr-00237-AWT Document 163-21 Filed 02/20/14 Page 4 of 4









ATTACHMENT U

Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 1 of 15
CRD® or IARD(TM) System Current As Of: 12/16/2013
Snapshot - Individual
CRD® or IARD(TM) System Report provided to: MEMBERREG
Request Submitted: 12/17/2013 4:01:44 PM Page 1 of 14
Notice
CRD® or IARD(TM) Information: This report contains information from the CRD (Central Registration Depository)
system, or the lARD system (Investment Advisers Registration Depository), which are operated by FINRA, a national
securities association registered under the Securities Exchange Act of 1934. The CRD system primarily contains
information submitted on uniform broker-dealer and agent registration forms and certain other information related to
registration and licensing. The lARD system primarily contains information submitted on uniform investment adviser and
agent registration forms and certain other information related to registration and licensing. The information on Uniform
Forms filed with the CRD or lARD is deemed to have been filed with each regulator with which the applicant seeks to be
registered or licensed and shall be the joint property of the applicant and such regulators. The compilation constituting thE
CRD database as a whole is the property of FINRA. Neither FINRA nor a participating regulator warrants or guarantees
the accuracy or the completeness of the CRD or lARD information. CRD information consists of reportable and non-
reportable information.
FINRA operates the CRD system in its capacity as a registered national securities association and pursuant to an
agreement with the North American Securities Administrators Association, Inc. (NASAA).
FINRA operates the lARD system as a vendor pursuant to a contract with the Securities and Exchange Commission and
undertakings with NASAA and participating state regulators.
Reportable Information: Information that is required to be reported on the current version of the uniform registration
forms.
Non-Reportable Information: Information that is not currently reportable on a uniform registration form. Information
typically is not reportable because it is out-of-date; it was reported in error; or some change occurred either in the
disposition of the underlying event after it was reported or in the question on the form that elicited the information.
Although not currently reportable, this information was once reported on a uniform form and, consequently, may have
become a state record. Users of this information should recognize that filers have no obligation to update non-reportable
data; accordingly, it may not reflect changes that have occurred since it was reported.
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 2 of 15
CRD® or IARD(TM) System Current As Of: 12/16/2013
Snapshot - Individual
CRD® or IARD(TM) System Report provided to: MEMBERREG
Request Submitted: 12/17/2013 4:01:44 PM
Details for Request#:
Report:
Requested By:
Parameter Name
Request by CRD# or SSN:
Individual CRD# or SSN
Include Personal Information?
Include All Registrations with Employments:
12746147
Snapshot - Individual
TC
Include All Registrations for Current and/or Previous Employments with:
Include Professional Designations?
Include Employment History?
Include Other Business?
Include Exam Information?
Include Continuing Education Information? {CRD Only)
Include Filing History? {CRD Only)
Include Current Reportable Disclosure Information?
Include Regulator Archive and Z Record Information? {CRD Only)
 
CRD#
2332843
Yes
Page 2 of 14
Both Current and Previous
Employments
All Regulators
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
CRD® or IARD(TM) System Report -- See notice regarding CRD Data on cover page.
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 3 of 15
CRD® or IARD(TM} System Current As Of: 12/16/2013
Snapshot -Individual
CRD® or IARD(TM} System Report provided to: MEMBERREG
Request Submitted: 12/17/2013 4:01:44 PM
Individual 2332843 - LOLES, GREGORY PETER
Administrative Information
Composite Information
Full Legal Name LOLES, GREGORY PETER
State of Residence CT
Active Employments «No Current Active Employments found for this Individual.»
Reportable Disclosures? Yes
Statutory Disqualification? SDRQRSRVW
Registered With Multiple Firms? No
Material Difference in Disclosure? No
Personal Information
Individual CRD#
Other Names Known By
Year of Birth
2332843
«No Other Names found for this Individual.»
1959
Registrations with Current Employer(s}
«No Registrations with Current Employer(s) found for this Individual.»
Registrations with Previous Employer(s}
From 08/25/1995 To 06/03/1997 APEIRON CAPITAL MANAGEMENT, INC.(41053)
Reason for Termination Unknown Conversion
Termination Comment PER DISTRICTS REQUEST
Regulator Registration Category Status Date
CT AG 05/07/1997
Registration Status
T_NOREG
FINRA GP 06/03/1997 T _NOREG
FINRA GS 06/03/1997 T _NOREG
FINRA MP 06/0311997 T _NOREG
FINRA OP 06/03/1997 T _NOREG
From 07/01/1994 To 08/18/1995 A. G. EDWARDS & SONS, INC.(4)
Reason for Termination Voluntary
Termination Comment
Regulator Registration Category Status Date Registration Status
ARCA GS 08/29/1995 TERMED
CBOE GS 08/29/1995 TERMED
CT AG 08/29/1995 TERMED
FINRA GS 08/29/1995 TERMED
FL AG 08/2911995 TERMED
MA AG 08/29/1995 TERMED
NJ AG 08/29/1995 TERMED
NY AG 08/29/1995 TERMED
NYSE GS 08/29/1995 TERMED
NYSE-MKT GS 08/29/1995 TERMED
CRD® or IARD(TM} System Report -See notice regarding CRD Data on cover page.
Page 3 of 14
Approval Date
Approval Date
07/12/1994
07112/1994
07/05/1994
07/0511994
11/03/1994
10/24/1994
07/05/1994
07/05/1994
07/05/1994
07/12/1994
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 4 of 15
CRD® or IARD(TM) System Current As Of: 12/16/2013
Snapshot - Individual
CRD® or IARD(TM) System Report provided to: MEMBERREG
Request Submitted: 12/17/2013 4:01:44 PM
Individual 2332843 - LOLES, GREGORY PETER
Administrative Information
Registrations with Previous Employer(s)
Regulator Registration Category Status Date Registration Status
PHLX GS 08/29/1995 TERMED
From 03/08/1993 To 06/30/1994 INVESTORS ASSOCIATES, INC.(958)
Reason for Termination Voluntary
Termination Comment
Regulator Registration Category Status Date Registration Status
CA AG 07/13/1994 TERMED
CT AG 07/13/1994 TERMED
FINRA GS 07113/1994 TERMED
FL AG 07/1311994 TERMED
GA AG 07/13/1994 TERMED
HI AG 0711311994 TERMED
IL AG 07/13/1994 TERMED
LA AG 07/13/1994 TERMED
MA AG 07/13/1994 TERMED
MD AG 07/1311994 TERMED
Ml AG 07/13/1994 TERMED
MN AG 07/13/1994 TERMED
NJ AG 07/13/1994 TERMED
NY AG 07/1311994 TERMED
OH AG 07/13/1994 TERMED
PA AG 07/13/1994 TERMED
TX AG 07113/1994 TERMED
WA AG 07/1311994 TERMED
CRD® or IARD(TM) System Report -- See notice regarding CRD Data on cover page.
Page4 of 14
Approval Date
07/12/1994
Approval Date
05/15/1993
06/07/1993
04/30/1993
06/10/1993
05/15/1993
06/24/1993
06/07/1993
05/18/1993
06/07/1993
05/15/1993
01/13/1994
09/20/1993
06/08/1993
05/03/1993
06/08/1993
05/1511993
01/14/1994
06/0711993
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 5 of 15
CRD® or IARD(TM) System Current As Of: 12116/2013
Snapshot -Individual
CRD® or IARD(TM) System Report provided to: MEMBERREG
Request Submitted: 12117/2013 4:01:44 PM
Individual 2332843 - LOLES, GREGORY PETER
Administrative Information
Professional Designations
«No Professional Designations found for this Individual.»
Employment History
Page 5 of 14
From 08/1995 To 06/1997 Name APEIRON CAPITAL MANAGEMENT, INC.
Location WESTPORT, CT
Position NOT PROVIDED
Investment Related Yes
From 0711994 To 0811995 Name A. G. EDWARDS & SONS, INC.
Location HAMDEN, CT
Position NOT PROVIDED
Investment Related Yes
From 03/1993 To 06/1994 Name INVESTORS ASSOCIATES, INC.
Location N.Y., NY
Position NOT PROVIDED
Investment Related Yes
From 1 011992 To 03/1993 Name UNEMPLOYED
Location WESTPORT, CT
Position OTHER - NOT GIVEN
Investment Related No
From 0611980 To 01/1993 Name ACTIVE MANAGEMENT LIMITED
Location LONDON, England
Position OTHER - PARTNER
Investment Related No
From 06/1982
To 09/1992 Name ACTIVE MANAGEMENT INC
Location EKALIIWESTPORT
Position OTHER - SR. MGMT CONSUL TANT;MGMT CONSU
Investment Related No
Office of Employment History
From 08/1995 To 06/1997
Name APEIRON CAPITAL MANAGEMENT, INC.(41053)
Independent Contractor No
Office of Emplovment Address
CRD NYSE Branch Firm Billing Registered Private Address Address Type of
Branch# Code# Code Location? Residence? Start Date End Date Office
CRD® or IARD(TM) System Report -- See notice regarding CRD Data on cover page.
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 6 of 15
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 7 of 15
CRD® or IARD(TM) System Current As Of: 12/16/2013
Snapshot -Individual
CRD® or IARD(TM) System Report provided to: MEMBERREG
Request Submitted: 12/17/2013 4:01:44 PM
Page 7 of 14
Individual 2332843 - LOLES, GREGORY PETER
Administrative Information
CE Regulatory Element Status
Current CE Status NOCEST A TUS
CE Base Date
CE Appointments
«No CE Appointments found for this Individual.»
CurrentCE
«No Current CE found for this Individual.»
NextCE
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CE Directed Sequence History
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Inactive CE History Dates
«No Inactive CE History Dates found for this Individual.»
Previous CE Requirement Status
«No Previous CE Requirement Status found for this Individual.»
Filing History
Filing Date Form Type Filing type Source
09/09/2011 U6 CRD Individual FINRA
09/08/2011 U6 CRD Individual SEC
07/0S/1999 us Conversion APEIRON CAPITAL MANAGEMENT, INC. (410S3)
07/0S/1999 U4 Conversion APEIRON CAPITAL MANAGEMENT, INC. (410S3)
07/0S/1999 us Conversion A. G. EDWARDS & SONS, INC. (4)
07/0S/1999 U4 Conversion A. G. EDWARDS & SONS, INC. (4)
07/0S/1999 us Conversion INVESTORS ASSOCIATES, INC. (9S8)
07/0S/1999 U4 Conversion INVESTORS ASSOCIATES, INC. (9S8)
CRD® or IARD(TM) System Report -- See notice regarding CRD Data on cover page.
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 8 of 15
CRD® or IARD(TM) System Current As Of: 12/16/2013
Snapshot - Individual
CRD® or IARD(TM) System Report provided to: MEMBERREG
Request Submitted: 12/17/2013 4:01 :44 PM
Individual 2332843 - LOLES, GREGORY PETER
Reportable Events
Number of Reportable Events
Bankruptcy 0
Bond 0
Civil Judicial 0
Criminal 1
Customer Complaint 0
Internal Review 0
Investigation 0
Judgement/Lien 0
Regulatory Action 1
Termination 0
Occurrence# 1578382
FINRA Public Oisclosable Yes
Material Difference in Disclosure No
Disclosure Type
Reportable
Page 8 of 14
Regulatory Action
Yes
Filing ID 30942261 Form (Form Version) U6 (05/2009)
Filing Date 09/08/2011
Source United States Securities and Exchange Commission
Disclosure Questions Answered
Regulatory Action DRP
1. Regulatory Action initiated by:
A. Initiated by:
B. Full name of regulator:
2. Sanction(s) sought:
3. Date initiated/Explanation:
4. Docket/Case#:
5. Employing firm:
6. Product type(s):
7. Allegation(s):
DRP Version 05/2009
Securities and Exchange Commission
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Other: N/A
09/06/2011
3-14529
APEIRON CAPITAL MANAGEMENT, INC.
No Product
SEC ADMIN lA RELEASE 3272, SEPTEMBER 6, 2011: THE SECURITIES
AND EXCHANGE COMMISSION ("COMMISSION") DEEMS IT
APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC
ADMINISTRATIVE PROCEEDINGS BE INSTITUTED PURSUANT TO
SECTION 203{F) OF THE INVESTMENT ADVISERS ACT OF 1940
("ADVISERS ACT') AGAINST GREGORY P. LOLES f'RESPONDENT'). THE
COMMISSION FOUND THAT ON JULY 26, 2011, LOLES PLEADED GUlL TV
TO ONE COUNT OF MAIL FRAUD IN VIOLATION OF TITLE 18 OF THE
UNITED STATES CODE, SECTION 1341, ONE COUNT OF WIRE FRAUD IN
VIOLATION OF TITLE 18 OF THE UNITED STATES CODE, SECTION 1343,
ONE COUNT OF SECURITIES FRAUD IN VIOLATION OF TITLE 15 OF THE
UNITED STATES CODE, SECTIONS 77Q(A) AND 77X, AND ONE COUNT OF
MONEY LAUNDERING IN VIOLATION OF TITLE 18 OF THE UNITED
CRD® or IARD(TM) System Report -- See notice regarding CRD Data on cover page.
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 9 of 15
CRD® or IARD(TM) System Current As Of: 12/16/2013
Snapshot - Individual
CRD® or IARD(TM) System Report provided to: MEMBERREG
Request Submitted: 12/17/2013 4:01:44 PM
Individual 2332843 - LOLES, GREGORY PETER
Reportable Events
Regulatory Action DRP DRP Version 05/2009
Page 9 of 14
STATES CODE, SECTION 1956 BEFORE THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF CONNECTICUT, IN UNITED STATES V.
GREGORY P. LOLES CRIM. ACTION NO. 3:10CR247 (MRK).
8. Current status:
9. Limitations or restrictions
while pending:
10. If on appeal:
A. Appealed to:
B. Date
appealed/Explanation:
C. Limitations or restrictions
while on appeal:
11. Resolution details:
A. Resolution detail:
B. Resolution
date/Explanation:
12. Final order:
13. Sanction detail:
A. Sanctions ordered:
B. Other sanctions:
Final
Order
09/06/2011
No
Bar {Permanent)
C. Willful violation or failure No
to supervise:
i. Willfully violated:
ii. Willfully aided, abetted,
counseled,
commanded, induced,
or procured:
iii. Failed reasonably to
supervise another
person:
D. Sanction type details:
Sanction type: Bar {Permanent)
Registration capacities affected: ASSOCIATION WITH ANY INVESTMENT ADVISER, BROKER, DEALER,
MUNICIPAL SECURITIES DEALER, MUNICIPAL ADVISOR, TRANSFER
AGENT
Duration (length of PERMANENT
 
CRD® or IARD(TM) System Report -- See notice regarding CRD Data on cover page.
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 10 of 15
CRD® or IARD(TM) System Current As Of: 12/16/2013
Snapshot - Individual
CRD® or IARD(TM} System Report provided to: MEMBERREG
Request Submitted: 12/17/2013 4:01:44 PM Page 10 of 14
Individual 2332843 - LOLES, GREGORY PETER
Reportable Events
Regulatory Action DRP DRP Version 05/2009
Start date/Explanation: 09/06/2011
End date/Explanation:
Sanction type: Bar (Permanent}
Registration capacities affected: ASSOCIATION WITH ANY NATIONALLY RECOGNIZED STATISTICAL
RATING ORGANIZATION
Duration (length of PERMANENT
time)/Explanation:
Start date/Explanation: 09/06/2011
End date/Explanation:
E. Requalification type details:
F. Monetary related sanction type details:
14. Comment IN ANTICIPATION OF THE INSTITUTION OF THE PROCEEDINGS,
RESPONDENT SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER")
WHICH THE COMMISSION DETERMINED TO ACCEPT. SOLELY FOR THE
PURPOSE OF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGS
BROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TO WHICH THE
COMMISSION IS A PARTY, AND WITHOUT ADMITTING OR DENYING THE
FINDINGS, EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER HIM
AND THE SUBJECT MATTER OF THESE PROCEEDINGS AND THE
FINDING, WHICH ARE ADMITTED, RESPONDENT CONSENTS TO THE
ENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS
PURSUANT TO SECTION 203(F) OF THE INVESTMENT ADVISERS ACT OF
1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS
("ORDER"). THE COMMISSION DEEMS IT APPROPRIATE AND IN THE
PUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO IN
RESPONDENT LOLES'S OFFER. ACCORDINGLY, IT IS HEREBY ORDERED
PURSUANT TO SECTION 203(F) OF THE ADVISERS ACT, THAT
RESPONDENT LOLES BE BARRED FROM ASSOCIATION WITH ANY
INVESTMENT ADVISER, BROKER, DEALER, MUNICIPAL SECURITIES
DEALER, MUNICIPAL ADVISOR, TRANSFER AGENT, OR NATIONALLY
RECOGNIZED STATISTICAL RATING ORGANIZATION. ANY
REAPPLICATION FOR ASSOCIATION BY THE RESPONDENT WILL BE
SUBJECT TO THE APPLICABLE LAWS AND REGULATIONS GOVERNING
THE REENTRY PROCESS, AND REENTRY MAY BE CONDITIONED UPON A
NUMBER OF FACTORS, INCLUDING, BUT NOT LIMITED TO, THE
SATISFACTION OF ANY OR ALL OF THE FOLLOWING: (A) ANY
DISGORGEMENT ORDERED AGAINST THE RESPONDENT, WHETHER OR
NOT THE COMMISSION HAS FULLY OR PARTIALLY WAIVED PAYMENT OF
SUCH DISGORGEMENT; (B) ANY ARBITRATION AWARD RELATED TO THE
CONDUCT THAT SERVED AS THE BASIS FOR THE COMMISSION ORDER;
(C) ANY SELF-REGULATORY ORGANIZATION ARBITRATION AWARD TO A
CUSTOMER, WHETHER OR NOT RELATED TO THE CONDUCT THAT
SERVED AS THE BASIS FOR THE COMMISSION ORDER; AND (D) ANY
RESTITUTION ORDER BY A SELF-REGULATORY ORGANIZATION,
CRD® or IARD(TM) System Report -- See notice regarding CRD Data on cover page.
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 11 of 15
CRD® or IARD(TM) System Current As Of: 12/16/2013
Snapshot - Individual
CRD® or IARD(TM) System Report provided to: MEMBERREG
Request Submitted: 12117/2013 4:01:44 PM Page 11 of 14
Individual 2332843 - LOLES, GREGORY PETER
Reportable Events
Regulatory Action DRP
Occurrence#
FINRA Public Disclosable
Material Difference in Disclosure
FilingiD
Filing Date
Source
30946365
09/09/2011
FINRA
Disclosure Questions Answered
Criminal DRP
1. Organization:
A. Organization name:
B. Investment-related business:
c. Position:
2. Formal action was brought in:
A. Name of court:
B. Location of court:
c. Docket/Case#:
3. Event status:
A. Current status:
B. Event status
date/Explanation:
DRP Version 05/2009
WHETHER OR NOT RELATED TO THE CONDUCT THAT SERVED AS THE
BASIS FOR THE COMMISSION ORDER.
1579069
Yes
No
Federal Court
Disclosure Type
Reportable
Criminal
Yes
Form (Form Version) U6 (05/2009)
DRP Version 05/2009
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT
NEW HAVEN, CT
3:10CR237
Final
07/26/2011
4. Event and disposition disclosure detail:
A. Date first 11/30/2010
charged/Explanation:
B. Event and disposition detail:
Formal charge description:
No. of Counts:
Felony or misdemeanor:
Plea for each charge:
Disposition of charge:
Explanation:
Date of amended charge:
Amended charge:
No. of Counts:
Amended felony or misdemeanor:
Pleas for amended charge:
FRAUDS AND SWINDLES (1-3);
FRAUDS AND SWINDLES (4);
FRAUDS AND SWINDLES (5-7)
7
Felony
NOT GUILTY
Pled guilty
PLED GUll TY TO COUNT #4
CRD® or IARD(TM) System Report -- See notice regarding CRD Data on cover page.
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 12 of 15
CRD® or IARD(TM) System Current As Of: 12/16/2013
Snapshot - Individual
CRD® or IARD(TM) System Report provided to: MEMBERREG
Request Submitted: 12/17/2013 4:01:44 PM
Individual 2332843 - LOLES, GREGORY PETER
Page 12 of 14
Reportable Events
Criminal DRP DRP Version 05/2009
Disoosition of amended charae:
Explanation:
Formal charge description:
No. of Counts:
Felony or misdemeanor:
Plea for each charge:
Disposition of charge:
Explanation:
Date of amended charge:
Amended charge:
No. of Counts:
Amended felony or misdemeanor:
Pleas for amended charge:
Disposition of amended charge:
Explanation:
Formal charge description:
No. of Counts:
Felony or misdemeanor:
Plea for each charge:
Disposition of charge:
Explanation:
Date of amended charge:
Amended charge:
No. of Counts:
Amended felony or misdemeanor:
Pleas for amended charge:
Disposition of amended charge:
Explanation:
Formal charge description:
No. of Counts:
Felony or misdemeanor:
Plea for each charge:
Disposition of charge:
Explanation:
FRAUD BY WIRE, RADIO, OR
TELEVISION (8);
FRAUD BY WIRE, RADIO, OR
TELEVISION (9);
FRAUD BY WIRE, RADIO, OR
TELEVISION (10-17)
10
Felony
NOT GUILTY
Pled guilty
PLED GUlL TY TO COUNT #9
MANIPULATIVE AND DECEPTIVE
DEVICES (18-19);
MANIPULATIVE AND DECEPTIVE
DEVICES (20);
MANIPULATIVE AND DECEPTIVE
DEVICES (21-26)
9
Felony
NOT GUILTY
Pled guilty
PLED GUlL TY TO COUNT #20
ENGAGING IN MONETARY
TRANSACTIONS (27-30)
4
Felony
NOT GUILTY
Dismissed
CRD® or IARD(TM) System Report - See notice regarding CRD Data on cover page.
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 13 of 15

CRD® or IARD(TM) System Current As Of: 12116/2013
Snapshot - Individual
CRD® or IARD(TM) System Report provided to: MEMBERREG
Request Submitted: 12117/2013 4:01:44 PM Page 13 of 14
Individual 2332843 - LOLES, GREGORY PETER
Reportable Events
Criminal DRP
C. Date of
disposition/Explanation:
D. Sentence/Penalty details:
5. Comment:
DRP Version 05/2009
Date of amended charge:
Amended charge:
No. of Counts:
Amended felony or misdemeanor:
Pleas for amended charge:
Disposition of amended charge:
Explanation:
Formal charge description:
No. of Counts:
Felony or misdemeanor:
Plea for each charge:
Disposition of charge:
Explanation:
Date of amended charge:
Amended charge:
No. of Counts:
Amended felony or misdemeanor:
Pleas for amended charge:
Disposition of amended charge:
Explanation:
07/26/2011
SENTENCING SET FOR 10/14/2011
LAUNDERING OF MONETARY
INSTRUMENTS & AIDING/ABETTING
(31);
LAUNDERING OF MONETARY
INSTRUMENTS & AIDING/ABETTING
(32)
2
Felony
NOT GUILTY
Pled guilty
PLED GUll TY TO COUNT #32
ON JULY 26, 2011, LOLES PLEADED GUlL TV TO ONE COUNT OF
MAIL FRAUD IN VIOLATION OF TITLE 18 OF THE UNITED STATES
CODE, SECTION 1341, ONE COUNT OF WIRE FRAUD IN VIOLATION
OF TITLE 18 OF THE UNITED STATES CODE, SECTION 1343, ONE
COUNT OF SECURITIES FRAUD IN VIOLATION OF TITLE 15 OF THE
UNITED STATES CODE, SECTIONS 77Q(A) AND 77X, AND ONE
COUNT OF MONEY LAUNDERING IN VIOLATION OF TITLE 18 OF THE
UNITED STATES CODE, SECTION 1956 BEFORE THE UNITED
STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT, IN
UNITED STATES V. GREGORY P. LOLES GRIM. ACTION NO.
3:10CR247 (MRK). THE FOUR COUNTS OF THE INDICTMENT TO
WHICH LOLES PLEADED GUlL TV ALLEGED, INTER ALIA, THAT
LOLES DEFRAUDED INVESTORS AND OBTAINED MONEY BY MEANS
OF MATERIALLY FALSE AND MISLEADING STATEMENTS WHILE
OPERATING AN UNREGISTERED INVESTMENT ADVISER, THAT HE
CAUSED INVESTORS TO WIRE TRANSFER FUNDS TO THE
UNREGISTERED INVESTMENT ADVISER'S ACCOUNT FOR
CRD® or IARD(TM) System Report - See notice regarding CRD Data on cover page.
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 14 of 15
"
CRD® or IARD(TM) System Current As Of: 12116/2013
Snapshot -Individual
CRD® or IARD(TM) System Report provided to: MEMBERREG
Request Submitted: 12117/2013 4:01:44 PM Page 14 of 14
Individual 2332843 - LOLES, GREGORY PETER
Reportable Events
Criminal DRP
Regulator Archive and Z Records
DRP Version 05/2009
INVESTMENT PURPOSES, WHICH HE THEN DIVERTED FOR HIS
OWN PERSONAL USE AND BENEFIT, AND THAT HE USED THE
UNITED STATES MAILS AND PRIVATE COMMERCIAL INTERSTATE
CARRIERS TO DELIVER CHECKS TO INVESTORS AS PURPORTED
INTEREST FROM INVESTMENTS IN ORDER TO PERPETUATE HIS
FRAUD.
«No Regulator Archive and Z Records found for this Individual.»
CRD® or IARD(TM) System Report - See notice regarding CRD Data on cover page.
Case 3:10-cr-00237-AWT Document 163-22 Filed 02/20/14 Page 15 of 15









ATTACHMENT V

Case 3:10-cr-00237-AWT Document 163-23 Filed 02/20/14 Page 1 of 2
Amount Sender
500,000.00 MHL- EFG London
681,750.00 MHL- EFG London
678,500.00 MHL- EFG London
400,000.00 MHL- EFG London
500,000.00 MHL - EFG London
500,000.00 MHL - EFG London
490,000.00 MHL- EFG London
500,000.00 MHL- EFG London
500,000.00 MHL - EFG London
521,325.00 MHL- EFG London
800,000.00 MHL- EFG London
810,000.00 MHL- EFG London
500,000.00 MHL- EFG London
500,000.00 MHL - EFG London
250,000.00 MHL - EFG London
700,000.00 MHL- EFG London
1,000,000.00 MHL- EFG London
500,000.00 MHL - EFG London
46,853.92 MHL- EFG London
116,427.00 MHL- EFG London
219,000.89 MHL- EFG London
53,500.00 MHL- EFG Greece
289,000.00 MHL - EFG Greece
69,200.00 Space- EFG Greece
73,250.00 MHL - EFG Greece
200,000.00 MHL - EFG London
Total USD
Total EUR
Total GBP
Total CHF
4,878,2 50.89
6,420,202.00
46,853.92
53,500.00
Receiver
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Apeiron Capital Management
Knightsbridge Holdings Inc
Knightsbridge Holdings Inc
Knightsbridge Holdings Inc
Knightsbridge Holdings Inc
Autohaus Farnbacher
Date Currency
Aug. 13, 2007 USD
Aug. 30, 2007 USD
Sep.5,2007 USD
Nov. 23, 2007 USD
Jan. 11, 2008 EUR
Feb.13,2008 USD
Feb.15,2008 EUR
Mar. 7, 2008 EUR
Mar. 27, 2008 EUR
Apr. 7, 2008 EUR
Jun. 23, 2008 USD
Jun. 30, 2008 USD
Jul. 16, 2008 EUR
Jul. 22, 2008 EUR
Aug. 14, 2008 EUR
Aug. 20, 2008 EUR
Dec. 9, 2008 EUR
Jan. 23, 2009 EUR
Feb.16,2009 GBP
Feb.17,2009 EUR
Feb.17,2009 USD
Mar. 27, 2009 CHF
Mar. 27, 2009 USD
Apr. 2, 2009 EUR
Apr. 16, 2009 EUR
Jun. 8, 2009 EUR
~
1 1 . . - }   l l l l ~
Case 3:10-cr-00237-AWT Document 163-23 Filed 02/20/14 Page 2 of 2

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