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Case 2:08-cr-00116-KJM Document 547 Filed 06/30/14 Page 1 of 30

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

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BEFORE THE HONORABLE KIMBERLY J. MUELLER, JUDGE

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UNITED STATES OF AMERICA,

Plaintiff,

vs. No. 2:08-cr-00116

Volume 1
CHARLES HEAD, DOMONIC
McCARNS, BENJAMIN BUDOFF,

Defendants.

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REPORTER'S PARTIAL TRANSCRIPT

TRIAL PROCEEDINGS

(NO JURY SELECTION)

MONDAY, OCTOBER 21, 2013

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Reported by: DIANE J. SHEPARD, CSR #6331, RPR

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460


Case 2:08-cr-00116-KJM Document 547 Filed 06/30/14 Page 2 of 30 2

1 APPEARANCES

3 For the Government:

4
BENJAMIN B. WAGNER
5 UNITED STATES ATTORNEY
501 I Street, Suite 10-100
6 Sacramento, California 95814
BY: MICHAEL D. ANDERSON
7 MATTHEW G. MORRIS
Assistant U.S. Attorneys
8

9 For the Defendant, Charles Head:

10 SCOTT L. TEDMON
LAW OFFICES OF SCOTT L. TEDMON
11 980 Ninth Street, 16th Floor
Sacramento, California 95814
12

13 For the Defendant, Benjamin Budoff:

14 DWIGHT M. SAMUEL
LAW OFFICES OF DWIGHT M. SAMUEL
15 117 J Street, Suite 202
Sacramento, California 95814
16

17 For the Defendant, Domonic McCarns:

18 JAMES R. GREINER
LAW OFFICES OF JAMES R. Greiner
19 1024 Iron Point Road
Folsom, California 95630
20

21

22

23

24

25

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460


Case 2:08-cr-00116-KJM Document 547 Filed 06/30/14 Page 3 of 30 3

1 SACRAMENTO, CALIFORNIA

2 MONDAY, OCTOBER 21, 2013

3 PARTIAL TRANSCRIPT

4 ---oOo---

5 THE CLERK: Calling criminal case 08-116, United

6 States versus Charles Head, Benjamin Budoff and Domonic

7 McCarns. This is on for jury trial.

8 THE COURT: Good morning. Appearances?

9 MR. ANDERSON: Good morning, Your Honor. Michael

10 Anderson and Matthew Morris, Sally Kenney, a paralegal in the

11 United States Attorney's Office, Special Agent Chris

12 Fitzpatrick from IRS Criminal Investigation and Peter Byrnes,

13 who is an FBI special agent.

14 THE COURT: Defense.

15 MR. TEDMON: Good morning, Your Honor. Scott Tedmon

16 representing Charles Head. Also assisting me during the trial

17 is investigator Lisa Gara.

18 MR. SAMUEL: Good morning, Your Honor. Dwight Samuel

19 appearing with Mr. Budoff.

20 THE COURT: Good morning.

21 MR. GREINER: Good morning, Your Honor. James

22 Greiner representing Domonic McCarns. Mr. McCarns is present

23 before the Court. Also assisted by the two investigators

24 Robert Storey and Victoria Corona.

25 THE COURT: Good morning to you both. Today we're

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460


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1 going to work on selecting a jury. Just a couple of questions

2 I think I covered before.

3 The Government had proposed a statement of case. Is

4 that acceptable to the defense, Mr. Tedmon?

5 MR. TEDMON: Your Honor, I gave an amended proposed

6 statement, and I don't know if we've had a meeting of the minds

7 as to that entirely.

8 MR. SAMUEL: As did I, Your Honor. Actually, I

9 reviewed Mr. Tedmon's amended complaint (sic) which

10 incorporated my objections as well, so I'm fine with

11 Mr. Tedmon's statement.

12 THE COURT: All right. And Mr. Greiner?

13 MR. GREINER: I reviewed Mr. Tedmon's, and I joined

14 in an e-mail to the Government with Mr. Tedmon's statement of

15 the case, and I don't recall having seen anything back from the

16 Government.

17 THE COURT: Any objection to the defendants' proposed

18 statement of the case, Mr. Anderson?

19 MR. ANDERSON: Your Honor, we'd ask that the Court

20 read the Government's. It's based on the Indictment, and I

21 think fairly and neutrally sets forth what the charges are.

22 Obviously, the defendants dispute the charges, but it also

23 makes that clear.

24 THE COURT: Ms. Schultz, I need help tracking down

25 the defense. I'm going to review that quickly.

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1 Any objection to any of the proposed voir dire

2 questions of any other party? Mr. Anderson?

3 MR. ANDERSON: No, Your Honor.

4 THE COURT: Mr. Tedmon?

5 MR. TEDMON: Mr. Samuel?

6 MR. SAMUEL: No, Your Honor.

7 THE COURT: Mr. Greiner?

8 MR. GREINER: No, Your Honor.

9 THE COURT: I'll cover quite a few of those, not all

10 of them, and I would give each of you up to ten minutes each

11 for your own voir dire.

12 Is there any other housekeeping we need to cover

13 before we bring the jury pool on?

14 MR. SAMUEL: We had a question about -- I think we

15 understand we're getting a total of 13 each side, but I was

16 uncertain. I didn't see a court order to that effect.

17 THE COURT: I haven't severed.

18 MR. SAMUEL: Pardon?

19 THE COURT: Because I did not sever. You mean in

20 terms of strikes?

21 MR. SAMUEL: Correct.

22 THE COURT: Well, Ms. Schultz has prepared a strike

23 sheet. Your request was for 13 each defendant?

24 It's seven for the Government and thirteen for the

25 defense.

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1 MR. SAMUEL: Exactly.

2 THE COURT: Have you seen the strike sheet?

3 MR. SAMUEL: I'm sorry.

4 THE COURT: The strike sheet is set up in that way

5 with one additional strike for alternates per side. Does that

6 conform with the party's expectations?

7 MR. ANDERSON: That's my recollection, Your Honor.

8 MR. TEDMON: Your Honor, on the statement of the

9 case, I sent as proposed because we were going to try to do a

10 joint statement. I don't know that I actually filed an

11 alternative statement with the Court.

12 I have, however, what I have given to the Government

13 here, if the Court can take a look at this.

14 THE COURT: Is it showing a docket number at the top?

15 MR. TEDMON: Yes. The Government's statement of the

16 case is docket number 387.

17 THE COURT: And that's what I have. So you've marked

18 that up?

19 MR. TEDMON: I have, and I would be happy to provide.

20 THE COURT: If you could.

21 MR. TEDMON: The other parties have gotten it.

22 THE COURT: All right.

23 MR. TEDMON: I hope you can read my writing.

24 THE COURT: You have a copy of this, Mr. Anderson?

25 MR. ANDERSON: I don't in front of me, Your Honor.

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1 Actually, I unfortunately left it down in my office, but I have

2 seen it.

3 THE COURT: Maybe I can pass it down, you can look at

4 it and just tell me exactly what problem it would create given

5 it's just a statement of the case.

6 I know we addressed the issue of straw buyer. We'll

7 get to that before we begin with opening statements.

8 MR. ANDERSON: Your Honor, there is the issue also

9 that we will need to cover about Mr. Greiner's outstanding

10 discovery motion.

11 THE COURT: Do we need to cover that before the jury

12 is brought in?

13 MR. GREINER: No. And for the record, for the Ninth

14 Circuit, if it gets that far, it's not a discovery motion.

15 It's an in limine motion for Brady and Giglio material.

16 THE COURT: And there is no outstanding dispute that

17 needs to be addressed before opening?

18 MR. GREINER: I don't know if it's before opening.

19 MR. ANDERSON: Yes, Your Honor. From the

20 Government's perspective, it does. Because once the jury is

21 impanelled and jeopardy attaches, if the Court were to rule in

22 favor of Mr. Greiner, which obviously we hope the Court

23 doesn't, but if the Court were to rule in favor of

24 Mr. Greiner's position, it would present a problem in that the

25 Government would have to collect and turn over documents to

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460


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1 Mr. Greiner, or, alternatively, challenge the Court's order.

2 And to do so could take a significant period of time,

3 whether it's weeks or months. And then Mr. Greiner, if the

4 materials were produced, would need time to review them. Given

5 how broad the request was, that could be a significant amount

6 of time. It's something that would require us to hold a jury

7 potentially for months.

8 THE COURT: We will address it after we selected the

9 jury, before opening.

10 MR. GREINER: Just to refresh the Court's memory, I

11 narrowed it down to the two witnesses that the Government put

12 on their witness list.

13 THE COURT: Right. I understand. Before the jury is

14 sworn.

15 MR. ANDERSON: Yes.

16 THE COURT: I'm not going to delay the jury's coming

17 up to turn to that. Also there is the outstanding motion on

18 S.M., and we're going to take breaks. We're not going to

19 select this jury before noon. So as we take breaks, we'll work

20 on addressing some of these issues.

21 MR. ANDERSON: That's fine. As long as it's done

22 before the jury is impanelled. The Government is perfectly

23 happy with that.

24 THE COURT: So there's that motion, there's the S.M.

25 motion which the Court is prepared to address and file

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460


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1 something in writing probably later today.

2 Anything else that needs to be addressed before the

3 jury that will be seated is sworn?

4 MR. SAMUEL: The straw buyer issue. I'm not certain

5 whether the Court is prepared to compromise the --

6 THE COURT: What I decided was that the term can be

7 used but with explanation.

8 MR. SAMUEL: Right. And I think we need to

9 understand what that explanation is, so when we get started --

10 and even in opening statement, counsel should reflect what that

11 means if he's going use that word.

12 THE COURT: All right. We'll address that before

13 opening. Anything else? Mr. Greiner?

14 MR. GREINER: Yes, Judge. Is it possible from your

15 clerk to have the strike sheet?

16 MR. SAMUEL: We don't have strike sheets.

17 MR. GREINER: If I got one, I lost it.

18 THE COURT: The Clerk is --

19 MR. GREINER: We don't have to have it right now, but

20 some time before we get there so we know what's going on.

21 THE COURT: We'll provide that to you before we start

22 so you can look at it and tell me if you have any problems with

23 it.

24 MR. GREINER: I appreciate that, Judge. Thank you.

25 THE COURT: I'm assuming in this case it appears to

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460


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1 be the practice that's developed the parties are stipulating to

2 a pass not acting as a waiver?

3 MR. ANDERSON: Yes, Your Honor.

4 MR. SAMUEL: Yes.

5 MR. GREINER: Yes.

6 THE COURT: So if you're enforcing that, that's fine

7 with me. My jury selection process is different from that in

8 the case, but if you have a stipulation, I accept it.

9 Is there anything else on the list of housekeeping

10 that we will need to address at some point?

11 MR. ANDERSON: Your Honor, I would just like to put

12 on the record that an offer was conveyed to Mr. McCarns through

13 his counsel, Mr. Greiner, back several months ago. Mr. Greiner

14 took it, and came back to us, and indicated that Mr. McCarns

15 had rejected that offer.

16 THE COURT: All right. Anything to say in response?

17 MR. GREINER: Correct statement of the facts, Judge.

18 THE COURT: All right. Anything further?

19 MR. TEDMON: No, Your Honor.

20 THE COURT: So Ms. Schultz will make copy of the

21 strike sheet for you and give you a chance to look at that.

22 And then in a few minutes we'll call the jury up. So I'll take

23 a short break. If you have any concerns about the strike

24 sheet, you can let me know.

25 (Break taken.)

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1 THE COURT: You may be seated. I'm going to ask

2 Ms. Schultz to retrieve the statement of the case as annotated.

3 Did you have anything else you wanted to say about

4 that, Mr. Anderson?

5 MR. ANDERSON: Your Honor, I spoke with defense

6 counsel, and we all agreed to Mr. Tedmon's version with two

7 corrections that have been made. He had crossed out the word

8 straw buyer and replaced them with another word, and we agreed

9 to put the word straw buyer back in. They are both on page

10 two.

11 THE COURT: So that's a stipulated statement of the

12 case at this point? Mr. Tedmon?

13 MR. TEDMON: Yes, Your Honor.

14 THE COURT: Mr. Samuel?

15 MR. SAMUEL: Yes.

16 THE COURT: Mr. Greiner?

17 MR. GREINER: Yes, Your Honor.

18 THE COURT: It doesn't moot the issue of the

19 explanation. We'll still talk more about that.

20 MR. TEDMON: Your Honor, would the Court like me to

21 file something with the language that's been interlineated, or

22 is it fine the way it is?

23 THE COURT: It's fine the way it is. I'll use it to

24 just familiarize the jury pool with the case, and then I'll

25 integrate that into my preliminary instructions. And I'll have

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460


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1 time to do that before I finalize them.

2 All right. Thank you for your work on that. Just

3 checking on the length of trial. Are we still thinking four to

4 six weeks is accurate, Mr. Anderson?

5 MR. ANDERSON: We're hoping for four, but it could go

6 longer depending how long the defense cases take. I know there

7 have been a lot of defense subpoenas that have gone out.

8 THE COURT: Mr. Tedmon?

9 MR. TEDMON: I would concur with Mr. Anderson's

10 estimate. We're hoping four weeks. It could go longer.

11 THE COURT: Mr. Samuel?

12 MR. SAMUEL: Well, I'm hoping for four weeks, but I do

13 have some witnesses.

14 THE COURT: Mr. Greiner?

15 MR. GREINER: I guess I'm the only pessimist. Even

16 if the way we sit right now I think it's going to be closer to

17 six weeks. I don't want to misrepresent anything to the Court.

18 THE COURT: All right. I'll tell the jury four to

19 six weeks, but I will ride you all to keep the case moving

20 along. I have other trials waiting.

21 Just a couple of other issues. On the McCarns'

22 question, I'm not seeing the additional five pages of briefing

23 on the docket. Am I missing something?

24 MR. GREINER: You're not because it's on my computer.

25 THE COURT: When are you going to file that?

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1 MR. GREINER: I can file it when I get to the office

2 after we pick the jury, Judge. It's not going to be five

3 pages. It's going to be very short. The Court wanted some

4 additional --

5 THE COURT: I gave you leave to file that. I mean,

6 if you're going to file that. At this point, I would say the

7 motion is denied without prejudice.

8 MR. GREINER: I don't have to file it. I can argue

9 it orally. It's not -- to me, I don't have to file something

10 to argue to.

11 THE COURT: Then I'll accept argument on it when we

12 get through some of the jury selection.

13 Just two comments. I note that there is someone who

14 appears to be identified as an administrative assistant or the

15 U.S. Attorney's office on the list.

16 MR. ANDERSON: That's correct, Your Honor.

17 THE COURT: Do we want to take that person's time?

18 MR. TEDMON: No.

19 MR. GREINER: No.

20 MR. SAMUEL: No.

21 THE COURT: Would you stipulate to excusing her for

22 cause?

23 MR. ANDERSON: Yes, Your Honor.

24 THE COURT: All right. I'm going to do that at the

25 beginning then. That's juror number 11, Becky Conjulusa.

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1 And then we do recognize some of the jurors because

2 they were in a jury pool for the Stamper case that I had

3 recently. In particular, just to let you know, Mr. Barrantes

4 at some point in the process let Ms. Schultz know -- he did not

5 disclose this. He responded to questions in English. But he

6 did express concern to her about his English capabilities. I'm

7 going to ask a more pointed question than I usually ask to see

8 how people respond, too. Again, he responded to questions in a

9 way that the Court had no concerns, but I'm just letting you

10 know that. It did not become an issue in the Stamper trial.

11 But we know that. So I'm letting you know that.

12 MR. SAMUEL: The name again?

13 THE COURT: Manual Barrantes. If the Court's

14 recollection is correct. Juror number 44. I'm going to ask a

15 general question of all jurors, and we'll see what he says.

16 I've had jurors express that concern before, but upon further

17 questioning it's clear to the Court they can follow the

18 proceedings sufficiently to not be excused for cause.

19 All right. Are we ready?

20 MR. TEDMON: I think so.

21 MR. GREINER: Yes, Your Honor.

22 MR. ANDERSON: Yes, Your Honor.

23 THE COURT: All right. Let's bring the jury pool in.

24 (Jury selection reported but not transcribed.)

25 (Jury pool out.)

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1 (Break taken.)

2 THE COURT: You may be seated. Are these potential

3 jurors or what?

4 Just two questions. How long do you need to argue

5 your Brady/Giglio?

6 MR. GREINER: Short answer is as long as you'll give

7 me. Long answer is not very long. I mean, it's simple. You

8 can rule without prejudice. I can re-bring it up. But, I

9 mean, I can make my argument.

10 THE COURT: Are there any cases that you rely on?

11 MR. GREINER: None other than I gave you, Judge. I

12 mean, those are the controlling cases for the Brady/Giglio.

13 The Government wants to couch it as a discovery, and it's not a

14 discovery.

15 THE COURT: Let's come back at 12:45 and address that

16 issue. And at some point before the end of day can you let me

17 know if you have a stipulation about how to explain straw

18 buyer? Have you talked about that issue at all about what kind

19 of explanation could be given to the jury, or is that going to

20 be the Court's job?

21 MR. SAMUEL: I think it's going to be the Court's job

22 because I'm not going to enter into any stipulation about that.

23 I'm going to make a record.

24 MR. ANDERSON: I don't know that it will even need to

25 be the Court's job, Your Honor. We have witnesses who are

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1 prepared to testify what they understand straw buyer to mean.

2 MR. SAMUEL: That's the problem. We don't know what

3 they are going to say, and we don't know how they are going to

4 define it. And I think the cases that the Court -- the case

5 that the Court is relying upon required the Government to

6 specifically enumerate what it was in advance.

7 And I think that without that it would be difficult

8 to even make an opening statement or discussion, have a

9 discussion with that.

10 THE COURT: All right. Any other defense counsel

11 want to say something on this question? Mr. Tedmon?

12 MR. TEDMON: No, Your Honor. Just join in

13 Mr. Samuel's comments.

14 THE COURT: Mr. Greiner?

15 MR. GREINER: Joining the argument that Mr. Samuel is

16 making, Your Honor.

17 THE COURT: All right. Also at 12:45, if there any

18 jurors at this point that you want to talk about for cause, I'm

19 willing to hear your initial comments. I'm not thinking of

20 excusing anyone yet. But if it would expedite the process and

21 you have serious concerns, feel free to let me know at this

22 time.

23 There are 14 jurors left from a jury that Judge

24 England has selected this morning. Should we ask them to

25 remain just in case? The Court's inclination is to, yes, ask

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1 them to remain.

2 MR. TEDMON: I think we should.

3 MR. ANDERSON: Yes, Your Honor.

4 MR. GREINER: Certainly, Judge.

5 THE COURT: All right. So yes, Ms. Schultz.

6 Anything further? See you at quarter of 1:00.

7 (Lunch break taken.)

8 THE COURT: All right. We're back on the record

9 with the counsel, all defense counsel. Mr. McCarns is not

10 present.

11 MR. GREINER: He's not here yet, Judge. He has a

12 waiver on file. He knows to be here at 1:00. I suggested to

13 him 12:45, but since he has a waiver and this is a motion, I

14 would request that his presence be waived for this.

15 THE COURT: The waiver doesn't extend to voir dire.

16 MR. GREINER: No. Not to voir dire.

17 THE COURT: I'll accept the waiver as to this motion.

18 Just a couple thoughts on jurors. I was looking at my notes,

19 and the three I do have questions about at this point given the

20 schedule.

21 I was looking at Mr. Skaggs, the child custody

22 hearing at 2:00 p.m. He did say that was in Yuba County. And

23 so I'm thinking of letting him go for cause. Debra -- was it

24 Fontes? I'm not sure I got the spelling correctly. She's the

25 one with the meeting that goes all day on the 13th. And

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1 finally Ms. Yater is not available at all this coming Wednesday

2 when we're scheduled to be in court that afternoon. So my

3 thought is rather than detain them, excuse them. I don't think

4 any one of them is in the box yet. But rather than delay the

5 inevitable, would there be any objection to that? Again, I

6 don't think I have that name correct.

7 MR. GREINER: Those are the names I have down.

8 MR. ANDERSON: Your Honor, before a final decision is

9 made, it would be best if Mr. McCarns is here. But the

10 Government doesn't have any objection once he's here.

11 THE COURT: Anything to say about that, Mr. Tedmon?

12 MR. TEDMON: I'm fine with that, Your Honor. I do

13 have two other individuals I would like to discuss for cause.

14 THE COURT: All right. Why don't you run those names

15 by me before we hear from Mr. Greiner.

16 MR. TEDMON: It would be Mr. Grooms, Paul Grooms.

17 And the other one is Patrick Bupara. Those are the two.

18 MR. SAMUEL: I join in that as well.

19 THE COURT: Mr. Greiner?

20 MR. GREINER: Certainly regarding Patrick Bupara.

21 Paul Grooms is not coming to mind. But if defense counsel

22 believes that they should be excused, I'll join.

23 MR. TEDMON: He's the retired police captain.

24 MR. GREINER: Paul Grooms. Absolutely.

25 MR. SAMUEL: Captain.

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1 MR. TEDMON: Captain, yes.

2 THE COURT: All right. Mr. Greiner, five minutes

3 max.

4 MR. GREINER: Do it in less than that, Judge.

5 The question is about Brady and Giglio material.

6 It's not a discovery motion. I actually even made a request

7 under Rule 16, although the Government has said they are not

8 calling any expert witnesses for any documents.

9 There is material out there, Judge. And the reason

10 that we know there is material out there is because on Friday

11 of last week the Government just settled with JPMorgan Chase a

12 13 billion dollar settlement. And JPMorgan Chase is not going

13 to cut a check to the United States Government for 13 billion

14 dollars unless the Government showed them some documents.

15 THE COURT: That's a civil settlement.

16 MR. GREINER: Civil settlement. But the criminal

17 investigation is still ongoing. That's what the Government

18 told JPMorgan Chase in the settlement.

19 And if they are going to cut a check for 13 billion,

20 there is a reason that they did it. The Government has to have

21 something.

22 And I've narrowed this, as I put in the brief that I

23 filed prior to the motion in limine hearing on the 16th of

24 October, to the two individuals that the Government has now

25 said that they are going to call, and that's Steve Newcomb from

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1 Argent Mortgage and Brett Hellstrom from JPMorgan Chase.

2 So I'm looking for Brady/Giglio material. I have a

3 feeling there may be some transcripts out there from testimony

4 that they've done. So there is stuff out there someplace.

5 And the reason it's material -- I even went back to

6 look at the Government's trial brief, Document 386 -- and on

7 page five, paragraph two, lines 6 through 8, they cite one of

8 the Ninth Circuit cases where they talk about materiality,

9 omission statements, the natural tendency to influence or is

10 capable of influencing another's decision.

11 Well, none of these lenders in this timeframe had a

12 natural tendency to be influenced by anything other than give

13 me loans, I will bundle them, I will sell them upstream. That

14 is all they cared about. That is all any of them did.

15 JPMorgan Chase, Argent, Bank of America, Wells Fargo, Deutsch

16 Bank. The litigation that former Assistant United States

17 Attorney Matt Stegman is working on back in Washington D.C. in

18 this litigation group is --

19 So, to me, it's common sense there is Brady and

20 Giglio material out there. I'm asking for it on two witnesses

21 that the Government has.

22 THE COURT: Mr. Anderson, are you responding to this?

23 MR. ANDERSON: Yes, Your Honor.

24 THE COURT: Anything further to say in response to

25 that argument?

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1 MR. ANDERSON: I think we've covered all the things

2 in our brief except for one, which is Mr. Greiner keeps going

3 back to JPMorgan Chase and references that specific settlement

4 and there are news reports, of course, of an ongoing

5 investigation.

6 The witness, Brett Hellstrom, who is being called

7 from JPMorgan Chase, was actually a Long Beach Mortgage

8 employee, and we're talking about Long Beach Mortgage loans

9 that are at issue in this case, not JPMorgan Chase loans and I

10 want that to be clear to the Court and to Mr. Greiner, which I

11 think further suggests that, one, this is an overbroad request,

12 it's over burdensome, it's not material, and all the other

13 arguments the Government has made already.

14 THE COURT: Anything to clarify with respect to

15 Newcomb?

16 MR. ANDERSON: No, Your Honor.

17 THE COURT: Did other defense counsel wish to add

18 anything?

19 MR. SAMUEL: I would just like to verbally join the

20 motion, Your Honor.

21 THE COURT: All right. You had in writing joined, I

22 believe.

23 MR. SAMUEL: Yes.

24 THE COURT: All right. Your joinder is noted.

25 MR. TEDMON: And if I hadn't joined before -- I think

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1 I had -- but I would just join.

2 THE COURT: You would join to the extent it was

3 directed to exculpatory evidence?

4 MR. TEDMON: Correct.

5 MR. GREINER: Judge, if I may have two sentences.

6 THE COURT: You may.

7 MR. GREINER: The reason I say JPMorgan Chase is

8 because that is what the Government put on their witness list,

9 and, legally, JPMorgan Chase obtained possession, buyout, of

10 Long Beach Mortgage/Washington Mutual. That's number one.

11 Number two, it's the Brady and Giglio material that

12 involves Brett Hellstrom and Steve Newcomb. That's what I'm

13 looking for. Their parent companies, holding companies.

14 In the legal world, you've got to sift through where

15 they all are, and so that's why JPMorgan Chase, Argent

16 Mortgage, and whoever bought them all out. But that's what the

17 Brady and Giglio request is for. Those two witnesses.

18 THE COURT: Is that disputed, the acquisition?

19 Mr. Anderson?

20 MR. ANDERSON: No. Long Beach Mortgage was acquired

21 by JPMorgan Chase. It's just that the settlement was with

22 JPMorgan Chase, so I wanted that to be clear.

23 And, frankly, still I'm uncertain what Mr. Greiner is

24 actually asking for. It's almost impossible to decipher. And

25 as we put in our brief, it could be billions of pages of

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1 documents if construed broadly enough.

2 THE COURT: All right. The matter is submitted.

3 I'll let you know on a break before the end of the day or at

4 the end of day what my ruling is before the jury is sworn.

5 So anything to say about the defense position that

6 Grooms and Bupara also should be excused for cause,

7 Mr. Anderson?

8 MR. ANDERSON: Your Honor, could we wait until

9 Mr. McCarns is here?

10 MR. GREINER: May I check, Judge?

11 THE COURT: All right.

12 MR. GREINDER: If the Court will allow me an

13 important phone call.

14 (Defendant, Domonic McCarns enters the courtroom.)

15 (Jury selection continued, reported, but not

16 transcribed.)

17 THE COURT: So Ms. Schultz has a handwritten jury

18 chart. She's going to line folks up.

19 Let me see if I can just address Mr. Greiner's motion

20 briefly at this point in time.

21 I have considered his arguments. I have re-checked

22 the cases of U.S. v. Price, Ninth Circuit case, 566 F.3d 900,

23 and also Youngblood v. West Virginia, Supreme Court 547 U.S.

24 867. That's a 2006 case.

25 And just reviewing my thinking in very summary

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1 fashion, the defense here has the initial burden of producing

2 some evidence to support an inference that the Government

3 possessed or knew about material favorable to the defense and

4 failed to disclose it.

5 And while on the one hand the Government has no

6 obligation to produce information it does not possess or that

7 which it is unaware, it's also the case that the Government can

8 be found to have not honored its obligations if it turns over

9 only information that the prosecutor has in his or her

10 possession. The prosecution has an obligation to turn over

11 even evidence known to investigators.

12 But the case law that the Court has reviewed ties it

13 all to this case. And while Mr. Greiner, joined by the other

14 defendants, points to other cases in particular, the case

15 against JPMorgan Chase, in which there might be something

16 there, I don't see that he's met his initial burden to support

17 the inference that the Government here has information that

18 would be favorable to the defense and has failed to disclose

19 it. He clearly has made his record, however, and if something

20 comes forward at some point in time, that could be cause for

21 reconsideration or motions in this case.

22 So the motion is denied with reference to those two

23 cases in particular. It is without prejudice.

24 MR. ANDERSON: Your Honor, and the Court may not want

25 to do this, but the Government requests that the order be with

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1 prejudice because once the jury is impanelled, obviously, it

2 changes the --

3 THE COURT: I understand that request. But I don't

4 need you to argue that. It's without prejudice.

5 All right. Are we ready for the jury to come in?

6 Ms. Schultz will seat the jury in the box, those that we are

7 not using in the audience. You may do that now, Ms. Schultz.

8 (Jury selection continued, reported but not

9 transcribed.)

10 (Jury out.)

11 THE COURT: All right. You may be seated if you

12 want. The Court is just going to stand.

13 Very briefly, any objection to the preliminary

14 instructions? I don't know if we discussed that. I have

15 modified them to incorporate the statement of the case used

16 during voir dire. So any objection to the preliminary

17 instructions?

18 MR. ANDERSON: No, Your Honor.

19 MR. TEDMON: No, Your Honor.

20 MR. SAMUEL: No, Your Honor.

21 MR. GREINER: No, Judge.

22 THE COURT: With respect to scheme and straw buyer, I

23 know the defense is not going to agree to anything, but just so

24 you know what the Court is thinking.

25 I'm not going to plan to give a preemptive

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1 instruction, but if I hear something that raises concerns in my

2 mind, I may gave a curative instruction.

3 And this is some language and the cases I'm looking

4 at, just so you know. So there are copies here, Ms. Schultz.

5 You can hand those down once we are in recess.

6 Mr. McCarns had identified objections to two

7 exhibits. Can we just talk about those in the morning, if we

8 need to, before there is any attempt to admit them?

9 Is there anything else we need to discuss in the

10 morning besides those two exhibits?

11 MR. SAMUEL: S.M.

12 THE COURT: S.M. We're actually looking at what you

13 filed on the docket to make certain we've taken account of

14 that. I had not looked at that when I had drafted something,

15 so I think you'll see something by tomorrow morning, giving you

16 both my thoughts on the privilege and what that means. So I'll

17 either hand it to you, or you'll see it on the docket before we

18 start court.

19 In terms of time for opening, have we talked about

20 that? How much time does the Government believe it needs?

21 MR. ANDERSON: Under 20 minutes, I would like a

22 little bit of flexibility if it goes 25, but it should be under

23 20.

24 MR. TEDMON: Ten or less.

25 THE COURT: Mr. Samuel?

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1 MR. SAMUEL: I would like -- I mean I'm putting on an

2 affirmative defense, so I think, 20, 25.

3 THE COURT: Mr. Greiner, can you live with 25?

4 MR. GREINER: Well, just last night I timed out at an

5 hour and seventeen minutes.

6 THE COURT: Can you practice?

7 MR. GREINER: I mean, I started at three and a half

8 hours, and now I got it down to an hour and seventeen. So I'm

9 moving in the right direction, at least.

10 You tell me. I'll abide by whatever you tell me,

11 Judge. I'm just letting you know what I pared it down from.

12 THE COURT: Does 30 minutes give you enough time to

13 make your points or not? Are you prejudiced by a 30-minute cap

14 for opening? This is opening.

15 MR. GREINER: I know. If I could request not to go

16 over 45.

17 THE COURT: All right.

18 MR. GREINER: Is that okay?

19 THE COURT: All right. But that means each side will

20 have up to 45. If you revise that downwards in the morning,

21 you can compare notes and think about it, but not everyone has

22 to use that.

23 MR. TEDMON: I won't use it. Maybe 15 if I go slow.

24 THE COURT: Up to 45 each. And then we'll move

25 straight to the Government's presentation of evidence. You

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1 have your witnesses lined up for tomorrow?

2 MR. ANDERSON: Yes, Your Honor. We were just

3 discussing whether or not everybody arrived by plane on time,

4 but it should be ready to go.

5 I wanted to flag one thing for the Court, which is

6 that some -- at least one of the witnesses we anticipate having

7 testify tomorrow would be a witness from the other case, who is

8 being introduced as 404(b) evidence, so the Court may be want

9 to be ready with the proposed limiting instruction.

10 THE COURT: All right. And who is that witness?

11 MR. ANDERSON: Shannon Taylor.

12 THE COURT: What other witnesses do you plan for

13 tomorrow?

14 MR. ANDERSON: We have Kou Yang lined up, Sharolynn

15 Cardenas, possibly Korall Solares. I think that was -- I think

16 that should take us through the day, Your Honor. That should

17 do it.

18 THE COURT: All right. By the end of the week, I'll

19 start checking with you and see how we're doing. How much time

20 are you thinking the Government's case is going to take?

21 MR. ANDERSON: To put on the entire case, two and a

22 half to three weeks.

23 THE COURT: All right. Anything else, Mr. Tedmon?

24 MR. TEDMON: The only other thing we're working on

25 are redaction s to some of the e-mails, so we should have that

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1 straightened out before we start.

2 MR. ANDERSON: My proposal is that counsel just meet

3 and talk right now, after the Court's gone, and then we can

4 bring up any issues in the morning if there is anything left.

5 THE COURT: Mr. Samuel?

6 MR. SAMUEL: I was thinking of redactions, but that

7 has to be based upon what you decide on S.M. Because we were

8 talking about possible redactions.

9 THE COURT: Is there significant redaction issues for

10 tomorrow?

11 MR. SAMUEL: No.

12 MR. ANDERSON: For us, it would be the Government

13 exhibits, in particular the e-mails. So I do need to know from

14 defense counsel. And Mr. Tedmon and Mr. Greiner have both told

15 us which ones. And if I could get from Mr. Samuel, we will

16 work on the specific redactions to those e-mails because that

17 will come up tomorrow.

18 THE COURT: If we need to defer them being shown to

19 the jury or admitted, we'll do that. Anything further,

20 Mr. Greiner?

21 MR. GREINER: Your Honor, at this time I'd renew both

22 the speedy trial motion on Mr. McCarns and the motion to sever.

23 THE COURT: All right. Anyone wish to argue?

24 MR. GREINER: Submit it.

25 MR. ANDERSON: Submitted, Your Honor.

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Case 2:08-cr-00116-KJM Document 547 Filed 06/30/14 Page 30 of 30 30

1 THE COURT: Mr. Tedmon?

2 MR. TEDMON: I would join and submit.

3 THE COURT: Mr. Samuel?

4 MR. SAMUEL: Join and submit.

5 THE COURT: Those motions are denied. Anything

6 further?

7 MR. ANDERSON: No, Your Honor.

8 THE COURT: All right. See you tomorrow morning.

9 (End of partial transcript.)

10 (Court adjourned. 5:35 p.m.)

11

12 CERTIFICATION

13

14 I, Diane J. Shepard, certify that the foregoing is a

15 correct transcript from the record of proceedings in the

16 above-entitled matter.

17

18

19 /s/ DIANE J. SHEPARD


DIANE J. SHEPARD, CSR #6331, RPR
20 Official Court Reporter
United States District Court
21

22

23

24

25

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460


Case 2:08-cr-00116-KJM Document 548 Filed 06/30/14 Page 1 of 146

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

---oOo---

BEFORE THE HONORABLE KIMBERLY J. MUELLER, JUDGE

---oOo---

UNITED STATES OF AMERICA,

Plaintiff,

vs. No. 2:08-cr-00116

Volume 2
CHARLES HEAD, DOMONIC
McCARNS, BENJAMIN BUDOFF,

Defendants.

---oOo---

REPORTER'S TRANSCRIPT

TRIAL PROCEEDINGS

TUESDAY, OCTOBER 22, 2013

---oOo---

Reported by: DIANE J. SHEPARD, CSR #6331, RPR

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Case 2:08-cr-00116-KJM Document 548 Filed 06/30/14 Page 2 of 146 32

1 APPEARANCES

3 For the Government:

4
BENJAMIN B. WAGNER
5 UNITED STATES ATTORNEY
501 I Street, Suite 10-100
6 Sacramento, California 95814
BY: MICHAEL D. ANDERSON
7 MATTHEW G. MORRIS
Assistant U.S. Attorney
8

9 For the Defendant, Charles Head:

10 SCOTT L. TEDMON
LAW OFFICES OF SCOTT L. TEDMON
11 980 Ninth Street, 16th Floor
Sacramento, California 95814
12

13 For the Defendant, Benjamin Budoff:

14 DWIGHT M. SAMUEL
LAW OFFICES OF DWIGHT M. SAMUEL
15 117 J Street, Suite 202
Sacramento, California 95814
16

17 For the Defendant, Domonic McCarns:

18 JAMES R. GREINER
LAW OFFICES OF JAMES R. GREINER
19 1024 Iron Point Road
Folsom, California 95630
20

21

22

23

24

25

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Case 2:08-cr-00116-KJM Document 548 Filed 06/30/14 Page 3 of 146 33

1 I N D E X

2 GOVERNMENT WITNESSES PAGE

3 SHAROLYNN CARDENAS
DIRECT EXAMINATION BY MR. ANDERSON 106
4 CROSS-EXAMINATION BY MR. GREINER 135

6 GOVERNMENT EXHIBITS RECEIVED IN EVIDENCE


No. Description Page
7
10A1 Equity Purchase Agreement dated 6/14/2005 124
8 between Rufo Cardenas Jr., and Sharolynn
Noelani Cardenas (“Sellers”) and
9 FundingForeclosures.com (“Purchaser”)
10A2 Wire Instructions and Authorization re 125
10 property at 5666 Kei Place Kapaa, HI 96746,
10A3 Grant Deed for property in Kauai Hawaii, 129
11 10A4 Signature page reflecting “Date of Contract 131
Acceptance: 06/14/2005” and the signatures
12 of both Rufo Cardenas, Jr., and Sharolynn
Noelani Cardenas
13 10A5 Check-off list for Cardenas documents with 133
handwritten note in bottom right corner
14 10A6 Letter dated 4/6/2006 to Nations Property 133
Management from Cardenas’ re flood damage
15 to their home in Hawaii

16
DEFENSE EXHIBITS RECEIVED IN EVIDENCE
17 No. Description Page

18 DM-G1 November 28, 2003 e-mail from Sharolyn 138


Cardenas to Charles Head
19 DM-G2 Addendum to Equity Purchase Agreement 162
dated June 14, 2005
20 DM-G3 Exhibit “A” to Addendum to Equity 162
Purchase Agreement
21 DM-G4 Residential Lease After Sale Agreement 162
dated June 15, 2005
22 DM-G5 Acknowledgement By Seller dated June 14, 162
2005
23 DM-G6 Notice of Cancellation dated June 14, 162
2005
24 DM-G7 Invoice dated June 28, 2005 for Appraiser 162
DM-G8 "Affidavit of Deed" re: 5666 Kei Place,
25 Kapaa, HI

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1 SACRAMENTO, CALIFORNIA

2 TUESDAY, OCTOBER 22, 2013

3 ---oOo---

4 THE CLERK: Calling criminal case 08-116, United

5 States versus Charles Head, Benjamin Budoff and Domonic

6 McCarns. This is on for jury trial, and today is day two.

7 THE COURT: Good morning.

8 MR. ANDERSON: Good morning, Your Honor.

9 THE COURT: Mr. Anderson is here. Are we waiting for

10 Mr. Morris?

11 MR. ANDERSON: He's just outside. He's going to walk

12 in momentarily.

13 THE COURT: All defendants are present. All counsel

14 is present. Ms. Gara is present. I acknowledge receipt of

15 some amended lists.

16 On the calendar, just FYI, if it's not showing, if we

17 get to December 4th, that would be a dark day for the Court in

18 the afternoon. If the jury were already deliberating, I'd

19 allow them to deliberate in the morning, if they wish.

20 On the 404(b) instruction, I understand the pattern

21 instruction. I just didn't know if you had submitted a

22 tailored instruction.

23 So my question is, is the entire list of --

24 MR. ANDERSON: Mr. Morris is handling this issue,

25 Your Honor.

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1 THE COURT: All right. The question is how to tailor

2 that. I didn't know if there was an agreement.

3 MR. MORRIS: I think the safest, Your Honor, would

4 be, as far as the first series of alternatives, to simply leave

5 it at prior acts rather than saying crimes or wrongs.

6 With respect to the second series of alternatives, I

7 think motive, intent, opportunity, absence of mistake are all

8 applicable.

9 THE COURT: Motive, intent, opportunity, absence of

10 mistake.

11 MR. MORRIS: I don't think identity necessarily is

12 appropriate, knowledge.

13 THE COURT: Plan, preparation.

14 MR. MORRIS: Plan and preparation probably are. And

15 then lack of accident I think is also applicable. So all other

16 than identity would seem appropriate.

17 THE COURT: And including the last bracketed

18 sentence?

19 MR. MORRIS: I think we -- one or the other. I do

20 think that if we're going to go there, it's appropriate I

21 think, and I do think, also, it should be phrased in a way to

22 clarify -- the pattern says defendant. I think probably the

23 defendants would want us to clarify that as each particular set

24 of 404(b) comes in, that it applies to one or more, but

25 specifically name the defendants we're talking about.

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1 THE COURT: All right. And for Ms. Taylor today?

2 MR. MORRIS: That would be with respect to

3 Mr. Charles Head only.

4 THE COURT: So comments on that tailoring of the

5 pattern instruction?

6 Mr. Tedmon, would you agree with what the Government

7 has said should be included?

8 MR. TEDMON: Yes, I think that would be appropriate.

9 THE COURT: Mr. Samuel?

10 MR. SAMUEL: Yes. I believe they should specifically

11 define which defendant.

12 THE COURT: And Mr. Greiner?

13 MR. GREINER: My overall comment, Judge, is I object

14 to any 404(b) evidence, and I raise my severance motion again

15 based on that.

16 After that comment, I acknowledge what the Government

17 has done, and I take no position.

18 THE COURT: All right. So the renewed motion is

19 denied. I'll read the instruction as modified, as tailored.

20 On the S.M. motion, I am -- we're still finalizing an

21 order to file, but just so you know, my conclusions at this

22 point -- and if we need more argument on it, we can schedule

23 that during breaks -- the threshold question is, is there an

24 attorney/client privilege that Mr. Head himself can claim.

25 I can't find, at this point, based on the record

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1 before me, that there is. And so I don't believe I even need

2 to reach the question of the crime fraud exception. All of the

3 correspondence appears to be -- it's directed in many instances

4 to other people. It's related to corporate business.

5 I can take judicial notice of the fact that Head

6 Financial Services is suspended as a corporation. I don't

7 think Mr. Head can invoke the privilege based on both his

8 status as someone who is subject to fraud charges but also the

9 fact that that corporation is suspended. I acknowledge there

10 are other business names referenced. That's my fundamental

11 initial threshold decision on whether or not there's even a

12 privilege.

13 I have looked at the test articulated in the case of

14 -- it's the Graf case, G-r-a-f. U.S. v. Graf, 610 F.3d 1148,

15 Ninth Circuit 2010. There are five elements. I don't think

16 you can satisfy the second and fifth.

17 Mr. Samuel in his filing of what appears to be notes

18 used at the hearing, there is one line saying -- asserting that

19 the documents are not being offered for the truth of the

20 matter. And so the Court reads that as not relying on the

21 co-conspirator statement even -- although Mr. Samuel argues a

22 lot about co-conspirator, to the extent that the documents

23 would ultimately be offered not for the truth of the matter but

24 for evidence of motive and intent, they might be able to come

25 in. A question I would ultimately resolve based on the

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1 circumstances in which they are offered.

2 In terms of S.M. as a witness, I don't think there is

3 a basis for me, at this point in time, to order him to appear

4 as a witness.

5 MR. SAMUEL: You actually signed, once again, the

6 subpoena request for S.M.

7 THE COURT: Well, if the subpoena is signed, that's

8 one thing. And if he hasn't moved to -- in terms of an

9 additional order, I don't -- there is no basis for my making an

10 additional order.

11 MR. SAMUEL: That's fine.

12 THE COURT: So that's my resolution. To the extent

13 that affects any opening statements -- does it even affect

14 opening statements?

15 MR. SAMUEL: No.

16 THE COURT: So if you want to argue more about that,

17 the order will be on the docket later today, hopefully during

18 one of the breaks that we take, and then we can schedule

19 additional argument if you think I've got that wrong.

20 Ms. Schultz still needs to orient the jury, but her

21 suggestion is that she just let them know she will do that at

22 the first break, and we proceed with opening statements. Any

23 objection?

24 MR. ANDERSON: No, Your Honor. Do you plan to give

25 preliminary instructions before openings?

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1 THE COURT: Yes.

2 MR. ANDERSON: There was one other issue which --

3 counsel met last night and conferred regarding redactions on

4 e-mail exhibits, and we were able to reach agreements on all of

5 them save one, and that e-mail is an e-mail that we expect

6 would be introduced today.

7 THE COURT: What exhibit number? Well, you can let

8 me know on the first break.

9 MR. ANDERSON: That's fine, Your Honor.

10 THE COURT: I acknowledge that you filed several

11 stipulations. Did those stipulations cover the redactions?

12 MR. ANDERSON: No, Your Honor. The stipulations are

13 to foundation of various exhibits. Then the redactions, we

14 just reached the agreement informally and made the redactions

15 ourselves.

16 There will be redacted versions of the exhibits

17 substituted in where the unredacted versions were, and then

18 it's just the one exhibit which Mr. Morris is -- found. It's

19 Exhibit 124.

20 THE COURT: All right. Do you have competing

21 versions of proposed redactions?

22 MR. MORRIS: The competing versions are --

23 THE COURT: To provide to me in a form I can review.

24 MR. MORRIS: The competing version is I think

25 Mr. Greiner doesn't want the exhibit coming in at all; whereas,

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1 the Government has reached an agreement with the other

2 defendants, in particular with Mr. Tedmon, that a redacted

3 version is appropriate, and that the potential prejudice can be

4 taken care of through redaction.

5 THE COURT: All right. Do you have a proposed

6 redacted version for my review?

7 MR. MORRIS: I do.

8 THE COURT: If you could hand that to Ms. Schultz.

9 Anything else we need to discuss before we bring the

10 jury in first for preliminary instructions and then for

11 opening?

12 MR. ANDERSON: No, Your Honor.

13 MR. GREINER: No, Judge.

14 MR. SAMUEL: No, Your Honor.

15 MR. ANDERSON: Your Honor, there is one thing. I am

16 going to use the word straw buyer and the word scheme in my

17 opening. Rather than getting a lot of objection during the

18 course of my opening statement to those words that defense

19 counsel have already expressed displeasure about, can we just

20 enter into a sort of ongoing objection to that?

21 THE COURT: Is that acceptable, a standing objection

22 to the Government's use at any time of scheme or straw buyer?

23 Mr. Tedmon?

24 MR. SAMUEL: Are you prepared to stipulate to that,

25 that that standing objection lasts throughout the whole trial?

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1 MR. ANDERSON: Through the opening statement.

2 THE COURT: So for now for opening statement.

3 MR. SAMUEL: I'm just trying to preserve our

4 objection for appealable issues.

5 THE COURT: Agreed. You don't need to stand and

6 object, but you do have a standing objection to the use of

7 straw buyer and scheme in the opening statement.

8 MR. TEDMON: That's fine.

9 MR. SAMUEL: Yes, Your Honor.

10 MR. GREINER: Yes, Your Honor.

11 THE COURT: All right. And I'll consider, based on

12 what I hear, whether or not I need to make a clarifying

13 statement.

14 MR. ANDERSON: Thank you, Your Honor.

15 THE COURT: All right. Let's bring the jury in.

16 We will be using the back door, by the way. We had

17 thought about using Judge Karlton's jury room, but rather than

18 have the jury navigate around counsel table they will just

19 always be coming in and out the back door. That was Ms.

20 Schultz's plan.

21 (Pause in proceedings.)

22 MR. ANDERSON: Your Honor, so the record is clear,

23 the way that the jury will be brought in and where Mr. Head is

24 situated, it will prevent them from ever seeing that he is

25 shackled.

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1 THE COURT: Correct. That was a consideration.

2 (Jury in.)

3 THE COURT: You may be seated.

4 Welcome back to court, ladies and gentlemen of the

5 jury. It's good to see you this morning. There is often a

6 last-minute flurry of paperwork on the first morning of trial,

7 so we've taken a few extra minutes to do some housekeeping this

8 morning, but typically we will be ready to go at the time I

9 told you.

10 I understand Ms. Schultz may need to still spend some

11 time with you on orientation, but she can do that during a

12 break, and we will take a slightly longer break if needed.

13 It's my duty to read to you some preliminary

14 instructions. You will have copies with you when you retire to

15 deliberate, just so you know, but these will assist you as you

16 begin as the jury in this case.

17 At the end of the trial, I will give you more

18 detailed instructions, and it's those final detailed

19 instructions that will control your deliberations.

20 It will be your duty to decide from the evidence what

21 the facts are. You and you alone are the judges of the facts.

22 You will hear the evidence, decide what the facts are, and then

23 apply those facts to the law which I will give to you. That is

24 how you will reach your verdict.

25 In doing so, you must follow that law whether you

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1 agree with it or not. The evidence will consist of the

2 testimony of witnesses, documents, and other things received

3 into evidence as exhibits, and any facts on which the lawyers

4 agree or which I may instruct you to accept.

5 You should not take anything I may say or do during

6 the trial as indicating what I think of the evidence or what

7 your verdict should be.

8 During trial, you may hear me use a few terms you may

9 not have heard before. Let me just cover a few of those. The

10 party who is charging an individual with committing a federal

11 offense is called the plaintiff. In this action, the plaintiff

12 is the United States.

13 A party being accused of committing a federal offense

14 is called a defendant. The defendants are Charles Head,

15 Benjamin Budoff and Domonic McCarns.

16 Plaintiff is represented by Assistant United States

17 Attorneys Michael Anderson and Matthew Morris, and you met all

18 these people yesterday.

19 Defendant Charles Head is represented by Scott

20 Tedmon. Defendant Benjamin Budoff is represented by Dwight

21 Samuel. And defendant Domonic McCarns is represented by James

22 Greiner.

23 The trial lawyers are not allowed to speak with you

24 during this case. When you see them during a recess and pass

25 them in the halls and they do not speak to you, they are not

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1 being rude or unfriendly. They are simply following the law.

2 You will sometimes hear me refer to counsel. Counsel

3 is another way of saying lawyers or attorneys. I will

4 sometimes refer to myself as the Court.

5 There are rules of evidence that control what can be

6 received into evidence. From time to time during trial I may

7 make rulings on objections or motions made by the lawyers.

8 When I sustain an objection, I'm excluding that evidence from

9 the trial. If I sustain or uphold an objection to a question

10 that goes unanswered by the witness, you should not draw any

11 inferences or conclusions from the question. When I overrule

12 an objection, I am permitting that evidence to be admitted.

13 It is a lawyer's duty to object when the other side

14 offers testimony or other evidence that the lawyer believes is

15 not admissible. You should not be unfair or partial against a

16 lawyer or the lawyer's client because the lawyer has made

17 objections.

18 You should not infer or conclude from any ruling or

19 other comment I may make that I have any opinions on the merits

20 of the case favoring one side or the other. I do not favor one

21 side or the other.

22 To help you follow the evidence, I'll review that

23 brief summary of the charges against the defendants that I

24 shared with you yesterday. The defendants, Charles Head,

25 Benjamin Budoff, and Domonic McCarns, each are charged by the

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1 Superseding Indictment with conspiracy to commit mail fraud.

2 Charles Head is also charged with three counts of

3 mail fraud. The Superseding Indictment alleges that between on

4 or about March 19th, 2005 and continuing to at least June 30th,

5 2006, the defendants conspired to target distressed homeowners

6 in order to obtain title to their homes and steal their equity.

7 As part of the conspiracy, it is alleged that the

8 defendants made false statements and omissions to homeowners,

9 including statements that the homeowner would remain on title

10 to the home with an investor or company, that little or no

11 equity would be removed from the home, and that their credit

12 would be repaired. However, the defendants intended to place

13 title into the names of paid straw buyers and remove the equity

14 from the homes.

15 It is further alleged that the defendants would use

16 false statements on loan applications, including statements

17 regarding the income, assets and employment history of the

18 straw buyers, in order to get loans against the value of the

19 homes. Money from these loans would then be diverted out of

20 escrow into accounts controlled by the defendants or their

21 conspirators. The defendants deny these allegations.

22 All persons stand equal before the law and are to be

23 treated as equals.

24 To review the evidence you are to consider in

25 deciding what the facts are, it consists of the following: The

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1 sworn testimony of any witness, the exhibits which are received

2 into evidence, and any facts to which the lawyers have agreed.

3 The following things are not evidence, and you must

4 not consider them as evidence in deciding the facts of this

5 case: Statements and arguments of the attorneys, questions and

6 objections of the attorneys, any testimony I instruct you to

7 disregard and anything you may see or hear when court is not in

8 session, even if what you see or hear is done or said by one of

9 the parties or one of the witnesses.

10 Some evidence may be admitted for a limited purpose

11 only. When I instruct you that an item of evidence will be or

12 has been admitted for a limited purpose, you must consider it

13 only for that limited purpose and for no other.

14 Now evidence may be direct or circumstantial. Direct

15 evidence is direct proof of a fact such as testimony by a

16 witness about what that witness personally saw, or heard, or

17 did. Circumstantial evidence is proof of one or more facts

18 from which you could find another fact.

19 Inferences are deductions or conclusions which your

20 reason and common sense lead you to draw from facts which have

21 been established by the evidence in the case.

22 You should consider both kinds of evidence. The law

23 makes no distinction between the weight to be given to either

24 direct or circumstantial evidence. It is for you to decide how

25 much weight to give to any evidence.

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1 In deciding the facts in this case, you may have to

2 decide which testimony to believe and which testimony not to

3 believe. You may believe everything a witness says, or part of

4 it, or none of it. In considering the testimony of any

5 witness, you may take into account the following: Number one,

6 the opportunity and ability of the witness to see, or hear, or

7 know the things testified to; number two, the witness' memory;

8 number three, the witness' manner while testifying; number

9 four, the witness' interest in the outcome of the case and any

10 bias or prejudice; number five, whether other evidence

11 contradicted the witness' testimony; number six, the

12 reasonableness of the witness' testimony in light of all the

13 evidence; and, number seven, any other factors that bear on

14 believability.

15 The weight of the evidence as to a fact does not

16 necessarily depend on the number of witnesses who testify. The

17 test is not which side brings the greater number of witnesses

18 or takes the most time to present its evidence, but which

19 witnesses and which evidence appeal to your minds as being most

20 accurate and otherwise trustworthy.

21 At the end of the trial, you will have to make your

22 decision based on what you recall of the evidence. You will

23 not have a transcript of the trial. I therefore urge you to

24 pay close attention to the testimony as it is given.

25 If at any time you cannot hear the testimony,

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1 evidence, questions or arguments, or see the witnesses or

2 evidence, please let me know immediately so I can correct the

3 problem. Just speak out or raise a hand, and we'll fix that.

4 If you wish, you may take notes to help you remember

5 what witnesses said. If you do take notes, please keep them to

6 yourself until you and your fellow jurors go to the jury room

7 to decide the case. Do not let note taking distract you so

8 that you do not hear other answers by witnesses or observe

9 witnesses or evidence. When you leave, you can leave your

10 notes in the courtroom on your chair. They will be safe there

11 until the next time you appear.

12 Whether or not you take notes, you should rely on

13 your own memory of what was said. Notes are only to assist

14 your memory. You should not be overly influenced by the notes.

15 From time to time during trial it may become

16 necessary for me to talk with the attorneys out of your hearing

17 either by having a conference at the bench while you're present

18 in the courtroom, as you saw yesterday, or by calling a full

19 recess.

20 Please understand that while you are waiting we are

21 working. The purpose of any conference is not to keep relevant

22 information from you, but to decide how certain evidence is to

23 be treated under the rules of evidence and to avoid confusion

24 and error. We will, of course, do what we can to keep the

25 number and length of any conferences to a minimum. I may not

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1 always grant a request for a conference. Do not consider my

2 granting or denying a request for a conference as any

3 indication of my opinion of the case or what your verdict

4 should be.

5 I'll now say just a few words about your conduct as

6 jurors. First, keep an open mind throughout the trial and do

7 not decide what the verdict should be until you and your fellow

8 jurors have completed your deliberations at the end of the

9 case.

10 Second, because you must decide this case based only

11 on the evidence received in the case and on my instructions as

12 to the law that applies, you must not be exposed to any other

13 information about the case, or to the issues it involves during

14 the course of your jury duty.

15 Therefore, until the end of the case or unless I tell

16 you otherwise, these are the essential ground rules that apply,

17 and they elaborate on what I told you yesterday. Do not

18 communicate with anyone in any way, and do not let anyone else

19 communicate with you in any way about the merits of the case or

20 anything to do with it. This includes discussing the case in

21 person, in writing, by phone, or electronic means via e-mail,

22 text messaging, or any internet chatroom, blog, website or

23 other feature.

24 This applies to communicating with your fellow jurors

25 until I give you the case for deliberation, and it applies to

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1 communicating with everyone else including your family members,

2 your employer, and the people involved in the trial. Although

3 you may notify your family and your employer that you have been

4 selected as a juror in the case.

5 If you are asked or approached in any way about your

6 jury service or anything about this case, you must respond that

7 you have been ordered not to discuss the matter and then report

8 that contact to the Court.

9 Because you will receive all the evidence and legal

10 instruction you properly may consider to return a verdict,

11 again, do not read, watch or listen to any news or media

12 accounts or commentary about the case, or anything to do with

13 it. Do not do any research such as consulting dictionaries,

14 searching the internet, or using other reference materials.

15 And do not make any investigation or in any other way try to

16 learn about the case on your own.

17 It's the law that requires these restrictions to

18 ensure the parties have a fair trial based on the same evidence

19 that each party has had an opportunity to address. A juror who

20 violates these restrictions jeopardizes the fairness of these

21 proceedings. If you learn that any juror is exposed to any

22 outside information, please notify me immediately.

23 Third, if you need to communicate with me, you may

24 simply give a signed note to the clerk, Ms. Schultz, and she

25 will get that to me, and I'll address it promptly.

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1 And, fourth, do not make up your mind about what the

2 verdict should be until after you have gone to the jury room to

3 decide the case, and you and your fellow jurors have discussed

4 the evidence. Keep an open mind until then.

5 The next phase of the trial is about to begin.

6 First, each side may make an opening statement. An opening

7 statement is not evidence. It is simply an outline to help you

8 understand what that party expects the evidence will show. A

9 party is not required to make an opening statement.

10 The party will then present evidence, and counsel for

11 the defendants may cross-examine. Then the defendants may

12 present evidence, and the counsel for the plaintiff may

13 cross-examine.

14 After the evidence has been presented, the attorneys

15 will make closing arguments, and I will instruct you on the law

16 that applies to the case. After that, you will go to the jury

17 room to deliberate on your verdict.

18 With that, ladies and gentlemen, those are your

19 preliminary instructions. I'm going to acknowledge the

20 Government, Mr. Anderson, to make the Government's opening

21 statement.

22 We will take a break, just so you know, around

23 10:30 or a little bit thereafter. Mr. Anderson.

24 MR. ANDERSON: Thank you, Your Honor. Good morning.

25 Charles Head ran a company where sales agents like

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1 Domonic McCarns were encouraged to make false statements and

2 leave out key information in order to steal people's homes and

3 equity right out from underneath them. Other employees like

4 Benjamin Budoff helped make false statements to lenders in

5 order to get mortgages on those same homes.

6 It worked like this. First, get a homeowner to

7 unwittingly sign over title to his or her home, mislead them

8 about the documents they are signing, the deal they are

9 entering into. Second, transfer the ownership or the title of

10 that home to a person that you pay and you control. Third,

11 take out loans against the value of that home, mortgages on the

12 property. When doing that, use that process to skim the equity

13 out of the home into your own accounts. Fourth, continue to

14 collect payments from those homeowners. If you get an

15 opportunity, evict them from their own homes and re-sell their

16 house for a profit.

17 During this trial, you'll hear that this is what a

18 company -- really, a group of companies created and controlled

19 by Charles Head did. Companies by the names of Head Financial

20 Services, HFS, Creative Loans, Funding Foreclosures, 30K Per

21 Year, A1 Property Management. A number of company names but

22 all working together.

23 They would get sales leads from sources across the

24 United States. They would get leads from the internet. They

25 would get referrals from brokers that were in many different

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1 states. What they were looking for was homeowners who were a

2 little bit behind on their mortgage payments but who had

3 substantial equity in their homes.

4 The sales agents would talk to the homeowners. They

5 would give them the sales pitch. Domonic McCarns made that

6 sales pitch to many homeowners, who you will hear from in this

7 trial. And the pitch was not always the same. He said what it

8 took in order to get those homeowners to do the deal.

9 But you'll hear in this trial about some common false

10 statements and omissions that were made to many of the

11 homeowners. Statements like, you'll remain on title to your

12 home, you'll be on title to your home with an investor or with

13 a company, all or most of the equity will remain in your home,

14 or, it will remain in a trust that we set up, your credit will

15 be repaired by this program.

16 But you'll also hear in this trial what really

17 happened. The homeowners were removed from title to their

18 homes. These so-called investors weren't actual investors at

19 all. The equity from the home was almost immediately taken

20 from the home and put into accounts controlled by the

21 conspirators. And people's credit was not repaired.

22 See, the real key in this scheme was to get the

23 homeowners to sign documents. These documents provided cover

24 for Head Financial Services to take the equity out of the

25 homes. The sales agents would say one thing to the homeowners,

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1 and meanwhile have them sign documents that said something

2 else. In fact, you're going to hear from one Head Financial

3 Services employee as an example, Keith Brotemarkle.

4 Mr. Brotemarkle has pled guilty, and he admits to

5 making false statements himself. In the course of this

6 business, this conspiracy, Mr. Brotemarkle complained by e-mail

7 to Charles Head that Domonic McCarns' sales pitch was so

8 egregious that McCarns needed to be stopped. You'll see the

9 e-mail that was recovered by forensic computer analysis that

10 corroborates that statement from Mr. Brotemarkle.

11 As a result of that e-mail, nothing happened.

12 Homeowners continued to be deceived and many homeowners were

13 deceived. They would sign over title to their homes, or it

14 would look like they had, to one of the defendant's straw

15 buyers. You'll hear the term straw buyer used in and defined

16 in this trial. But in general it's somebody who purports to be

17 an owner of property but isn't actually taking an interest in

18 the property, not planning to make the payments or actually

19 control the property. Because it was Head Financial Services

20 that was really buying these properties.

21 The straw buyers are also where we get to Benjamin

22 Budoff's part in all of this. The evidence will show that

23 Budoff both worked to help recruit straw buyers into the

24 program, and that Benjamin Budoff also helped to make false

25 statements on loan applications in order to get the mortgages.

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1 In this case, the straw buyers were recruited over

2 the internet by word of mouth. And in some cases, they were

3 even family members of people involved in the scheme such as

4 Kerry Budoff, Benjamin Budoff's brother.

5 What Budoff would do is use the straw buyer's

6 identity and credit in order to get a loan on the home. As

7 part of this process, these straw buyers would sign mortgage

8 documents, loan applications, that contained false information.

9 Sometimes they knew that there was false information, and

10 sometimes they didn't. And this information would be things

11 like income, assets, employment, and so on. Things that would

12 be important to the bank in deciding whether or not to approve

13 the loan.

14 Once the straw buyer qualified for the loan, then the

15 money would go into escrow. An example of the false statements

16 in order to get this money into escrow on the loan applications

17 were e-mails that you are going to see where Benjamin Budoff

18 discusses increasing a straw buyer's income level on an

19 application in order to make sure that the straw buyer

20 qualifies for the loan.

21 In another example, you'll hear how Head Financial

22 Services would take money, send it through wire into a straw

23 buyer's account, have the straw buyer then take the money out

24 of the account and get a cashier's check. Then that cashier's

25 check would be sent back so that it would look like the straw

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1 buyer, and not Head Financial Services, was making the down

2 payment on the property.

3 So here we are, sales agents like McCarns make false

4 statements to homeowners in order to get them into the program.

5 Then other employees, like Budoff, make false statements to

6 lenders in order to get the mortgages.

7 And this is where the money comes into it. Because

8 once the mortgage is approved, the money goes into escrow

9 through an escrow company. You'll see escrow documents, and

10 you'll see summary charts from the transactions, and they'll

11 show that at this point tens of thousands of dollars were

12 diverted from each of these transactions, each of these loans,

13 not going to the seller of the home, the homeowner, the person

14 who would normally get the money from the sale of their home,

15 but instead being transferred directly into accounts controlled

16 by Charles Head.

17 Toward the end of the trial, Agent Fitzpatrick will

18 walk you through some charts and some examples to show you

19 exactly how this worked, and how the homeowners' equity was

20 sucked out of the home through this method.

21 So now the conspirators have the homeowner's

22 property, they have the mortgage, they've taken out the equity.

23 What they do now is they continue to collect monthly payments

24 from the homeowners. In some cases the homeowners think they

25 are still paying mortgages. In other cases, they've gotten the

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1 homeowners to sign what look like lease documents.

2 Now, remember, one of the false statements to these

3 people is that they are going to stay on title or keep the

4 home. But when the homeowners miss a payment, they don't move

5 to evict the homes -- they don't move to foreclose the people

6 from the homes like you would for somebody who owns the home,

7 for somebody who still holds the mortgage, like these people

8 thought they did, what they do instead is they move to evict

9 them like they are leasing the house. This, of course, allowed

10 the defendants to then gain full control over the property.

11 So that's the charged scheme, which covers a period

12 in 2005 to 2006. But in this trial, you are also going to hear

13 additional evidence that's admitted for a limited purpose, and

14 the Judge will instruct you what those limited purposes are.

15 But they include the knowledge and intent of Charles Head.

16 You will learn that prior to 2005, Charles Head had

17 conducted essentially the same scheme with an overlapping group

18 of employees, where false statements were made to homeowners in

19 order to take their homes, their title, their equity. You'll

20 hear from one of those homeowners hopefully today, in fact, who

21 will tell you that Charles Head personally pitched this program

22 to her, personally told her false statements about what would

23 happen, and that her home was lost as a result of the program.

24 To summarize, in this trial you will hear from some

25 of the homeowners who lost their homes and their equity to the

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1 defendants. You'll hear from straw buyers whose credit was

2 ruined by the scheme. You'll hear from lenders who will

3 explain how the statements made on the mortgage application

4 were false, agents who participated in the investigation.

5 You'll even hear from some of the co-defendants who

6 pled guilty, who will come in and testify in hopes of gaining

7 additional credit on their sentences. Those people, you will

8 probably not like what they themselves have done, but when they

9 come in and testify, you'll also see e-mails and other

10 documents that corroborate what they are going to tell you.

11 And there will be many documents involved in the case

12 for you to review including documents seized during search

13 warrants, mortgage files, things from the different companies

14 for you to review.

15 Finally, at the end of hearing all this evidence,

16 you'll receive instructions from the Judge about the law.

17 You'll learn about the elements of the offense and when a

18 person is held responsible in a conspiracy for what's done by

19 the other people in a conspiracy.

20 However, for now, just pay close attention to the

21 evidence. Because in the end, the evidence will show that

22 these defendants stole millions of dollars and many, many

23 people lost their homes and equity.

24 When Mr. Morris and I have a chance to address you

25 again at the end of the trial, we will ask you to please

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1 carefully consider that evidence, consider the law that the

2 Judge gives you, take it carefully and look at it all together,

3 fitting the pieces together, and find that each of the

4 defendants, Charles Head, Domonic McCarns, and Benjamin Budoff

5 are guilty. Thank you.

6 THE COURT: All right. Mr. Tedmon, do you wish to

7 make an opening statement?

8 MR. TEDMON: Yes, Your Honor.

9 Good morning. Couple things I want to get straight

10 from the beginning here. Mr. Anderson gave you what he

11 believes is the road map to the case, what he believes the

12 evidence will show.

13 As the Court has instructed, everything we say this

14 morning in terms of the opening statement is not evidence. The

15 evidence comes through the witness stand. I want to make sure

16 we're clear about that. That's the first thing.

17 Secondly, as it relates to what Mr. Anderson says in

18 terms of the totality of the evidence, he is simply wrong. The

19 key to this case is the contract. That's what you need to

20 focus on.

21 Mr. Anderson skips over that in his opening

22 statement. Well, I'm going to focus in on that this morning

23 for you. Homeowners are going to come in, and they're going to

24 testify.

25 Shannon Taylor, for example, may come in this

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1 morning. And she owned a home. And here's what happens.

2 She's in foreclosure. She's about ready to lose her home. My

3 client, Charles Head, who has a background in the mortgage

4 industry, did mortgage loans, had come up with a program to

5 allow people to do two things that they would not have been

6 able to do otherwise with a bank.

7 And those are as follows: One, they are able to stay

8 in their home. That's one. Not lose it. Which I suspect

9 every homeowner will say I was out, I was way behind, and they

10 were foreclosing. Mr. Head's program allowed them to stay

11 there, not have their family uprooted and have to move, kids

12 changing schools, those sorts of things. That's the first

13 point.

14 The second thing that Mr. Anderson doesn't tell you

15 is that they're given money -- 5,000, 10,000, 20,000 dollars,

16 whatever the agreed-upon amount is -- by Mr. Head. They didn't

17 get that otherwise. They were just going to lose their home.

18 Those are two things Mr. Anderson didn't tell you.

19 And within that context, look at the documents. You're going

20 to see a lot of documents in this case. But there is one

21 fundamental document called an equity purchase agreement. And

22 that is the beginning part of the transaction where the

23 homeowner isn't being lied to by my client. They are selling

24 their house. It's clear in the contract.

25 They also execute a lease agreement, which is the

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1 rental agreement. Now let me ask you something. In your

2 common sense and knowledge and what you do in your lives, if

3 you own a home, do you pay rent? No. You pay the mortgage.

4 These people sold their home. They knew it. And then they

5 were allowed to rent it back so they could stay there. So

6 Mr. Anderson is simply wrong in what he says.

7 They sold their home, and they were able to stay

8 there. That's what the evidence is going to show. And they

9 rented it back. That's the reality. That's what the evidence

10 is going to show.

11 So in terms of the totality of the contracts, these

12 witnesses, these homeowners are going to say I signed a bunch

13 of documents. And you're going to see all those, or most of

14 them. Some of the particular homeowners don't -- we don't have

15 a full packet. But you're going to be able to tell over the

16 course of time, over the weeks that we're here, what's in those

17 contracts, what's in that packet, and what they signed off.

18 They had a one-week cancellation clause.

19 Mr. Anderson didn't tell you that. Nobody put a gun to their

20 head. Nobody forced them to do anything. They had a right to

21 go see a lawyer. Take a look at this. Is this a good deal?

22 There was no duress, coercion, or anything of the sort. It was

23 a straight-forward contractual approach, and the homeowners

24 engaged in it, and decided to do it because that was their one

25 opportunity to keep their home. And on the back end, if they

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1 followed through and made their payments, maybe they could get

2 it back at the end.

3 So when you hear the evidence that I didn't know I

4 was selling my home, I didn't know my name was off title,

5 that's simply not true. That's adverse to the very contracts

6 they signed. So pay careful attention to that.

7 Now there is another thing that Mr. Anderson kind of

8 skips over, and I want to focus in on this in terms of what

9 you're going to hear. He talks about what certain people

10 coming in and testifying. Well most of those certain people

11 are convicted felons. They are cooperators. People like Kou

12 Yang, Keith Brotemarkle, who Mr. Anderson mentioned, John

13 Corcoran, and there is many more. They've all plead guilty,

14 and they are cooperating.

15 And the evidence is going to come out in this trial

16 they are looking for a benefit from the people at that table

17 right there.

18 Now their misdeeds are on them. Not on Mr. Head.

19 That's their problem. And what they're doing is they are using

20 their position to try to improve their only personal

21 circumstances. And their position is, I'll make a deal with

22 the Government, I'll cooperate, and let's just move on.

23 And so you'll hear from those people. But I would

24 submit to you what the evidence is going to show is that the

25 Government, as a back bone to their case, has to put the meat

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1 of their case on the backs of these cooperators, who the Court

2 will instruct you, in terms of their testimony, has to be

3 viewed with greater caution than other witnesses.

4 And there is a reason for it. They have a motive to

5 lie, to save their own skin, and that's what's going to happen

6 here, and you'll see that in the next four to six weeks.

7 As it relates to these other companies that

8 Mr. Anderson talks about, let me give you the lineup. We have

9 got -- these are not all of them, but I think there's several

10 of them -- Premier Services, Benjamin Budoff; Matrix

11 Investments, Josh Coffman, he's a cooperator; Loan Foreclosure

12 Help, Leonard Bernot; Paragon Financial, Anh Nguyen; Dynamic

13 Partners, Akemi Botari; Statewide Financial Group, Omar

14 Sandoval, he's a cooperator; Mainline Investment, Justin Wiley,

15 he's a cooperator; Choice Financial Network or Choice One,

16 Andrew Vu; Bridge Capital Investment, Ely Assadi, cooperator;

17 Nations Property Management, John Corcoran, he's a cooperator;

18 and Financial Enterprises, Michael Head.

19 Now, these are all these companies that are owned by

20 other people. They are not operated by Charles Head. Did he

21 have interaction with them? Yes.

22 But here's the thing, and this is what you have to

23 pay attention to particularly as the trial goes forward, the

24 Government is going to try to contextualize these relationships

25 to somehow bleed it over into Charles Head, but they are not

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1 going to be successful.

2 So keep in mind the various companies, who owns them,

3 what they did, and where they are today in terms of evaluating

4 their testimony and its credibility. That's very important to

5 do.

6 Now, there's two folks I want to talk about

7 particularly as it relates to the cooperators. There is Kou

8 Yang, who I suspect will testify earlier in this trial rather

9 than later. Kou Yang was an employee of Charles Head at Head

10 Financial Services. And you're going to find out that Kou Yang

11 was the one that was running the show.

12 She was the head of the loan department. She was a

13 loan processor. Mr. Head hired her. She was referred to

14 Mr. Head through his then girlfriend, Elizabeth Huerta Russell,

15 who will also testify, I would suspect.

16 And Kou Yang is the one that's really running the

17 show here. Now she's cooperating. So you got to keep that in

18 mind. There's some other baggage she has that will probably

19 come out. So pay attention to her.

20 The other one is Keith Brotemarkle. He's a

21 cooperator. Mr. Anderson mentioned him in his opening

22 statement. He's got all kinds of baggage, and you'll find out

23 about that.

24 So when you hear these things from the Government in

25 their opening statement, it's kind of shined up, but the

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1 shine's coming off, folks, during the trial.

2 MR. ANDERSON: Your Honor, this is opening statement.

3 I'm going to objecting to the argument.

4 THE COURT: Overruled. But, again, this is opening

5 statement.

6 MR. TEDMON: I understand.

7 THE COURT: These are statements of the attorneys,

8 not evidence. This is what the defense believes the evidence

9 will show.

10 MR. TEDMON: That's right. And the shine's coming

11 off. That's what I believe the evidence will show.

12 At the end of the day, when you have all the

13 evidence, and the Court instructs you, the Government will have

14 failed to prove conspiracy in Count One, and the Government

15 will have failed to prove mail fraud in Counts Two, Three and

16 Four. And when we're done and I give my closing argument, I'm

17 going to ask you to come back with verdicts of not guilty on

18 all four counts. Thank you very much.

19 THE COURT: Mr. Samuel, do you wish to make an

20 opening statement?

21 MR. SAMUEL: We're going to switch it up.

22 THE COURT: All right. Mr. Greiner.

23 MR. GREINER: That would be great, Judge.

24 Judge, would you prefer -- could I use the handheld

25 mic? Is that ok?

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1 THE COURT: You may. Is that available? We have the

2 --

3 MR. GREINER: I can try that. The last time did it,

4 the electricity --

5 THE COURT: Is the handheld available?

6 THE CLERK: Yes, Your Honor.

7 MR. GREINER: Judge Mueller, courtroom staff,

8 Mr. Morris, Mr. Anderson, Special Agent Fitzpatrick, Special

9 Agent Byrne, Mr. Samuel, Mr. Head, Mr. Tedmon, Mr. Budoff, my

10 client, Domonic McCarns.

11 Good morning, ladies and gentlemen. It's opening

12 statement. You've already heard two. This is my chance to

13 give an opening statement for Mr. McCarns.

14 Now you've already heard from the Judge, and from

15 Mr. Tedmon, and from Mr. Anderson that what we say is not the

16 evidence. That comes from the stand.

17 So in preparing for the opening, I started out

18 getting it down to three hours and seventeen minutes. So I

19 thought that was really great. Then I thought that might be a

20 little long. So then I pared it down to an hour and

21 seventeen minutes. And I thought, people are going to sleep on

22 that one. So this is about half of that. So we're going to

23 move through.

24 But what I want to do is the opening statement is

25 supposed to give you a roadmap of what's going on. I mean,

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1 this was an opportunity for the Government to tell you -- you

2 know, we read off 75 witnesses to you when we were picking you

3 as a jury.

4 And so they had an opportunity to say, you know,

5 we're going to call this person, and this is what they're going

6 to say. This is what we believe.

7 Now Mr. Tedmon got up on behalf Mr. Head and said,

8 look, this is what the evidence is going to show as far as he

9 believes.

10 I want to give a little more substance. And I tried

11 to figure out the best approach of this. And I've thought

12 about, okay, I'm going to do a timeline, I'm going to do

13 witness by witness and stuff like that. I'm not going to cover

14 all the witnesses. That's ridiculous.

15 But I think I'm going to break it down into three

16 segments. I'm going to give you a preview of -- Mr. Tedmon

17 said the companies. Mr. Anderson said the companies. Mr. Head

18 operated companies at various time periods, and so I want to

19 give you those operations.

20 Now Mr. Anderson said that there may be evidence

21 coming in prior to the allegations in the Superseding

22 Indictment to show certain things. And that may well happen,

23 and so I want to give you an idea of what the company structure

24 was like, what was going on at that time period. And, my

25 client, Domonic McCarns, wasn't even involved at that time.

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1 Wasn't even around.

2 And then the companies changed. They evolved into

3 the timeframe that the Government has the Superseding

4 Indictment. And I want to give you how the company now worked

5 in this timeframe. Then after I do the companies, I want to go

6 and I want to tell you what I believe what the evidence will

7 show.

8 That's kind of like the magic words. You know, we

9 always have to throw that in because we can't argue. This is

10 what the evidence shows. So if I forget to do that, I'm sure

11 somebody will remind me, and then I'll say the magic words,

12 okay, the evidence will show.

13 I want to go through some of the witnesses. The

14 witnesses I believe the Government's going to call to try to

15 prove their case against my client. But I want to go through

16 and tell you what the evidence will show, what they're going to

17 say. And then finally I want to cover a couple of things, some

18 highlights, some e-mails, and highlight some statements, so you

19 get kind of a broad overview.

20 Okay. So that's where we're going. Going to try to

21 compact it, keep your attention, so you stay with me.

22 All right. Okay. So let's start. We have to go

23 back to companies before my client even worked there. Now, to

24 give you something to grab on to, my client started working in

25 the Head companies right around January -- end of

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1 January/February of 2005. Okay. So that can give you kind of

2 a road stop sign. All right. So we're going to talk now prior

3 to that.

4 And what I believe is that the Government's going to

5 call a witness from the stand, Shannon Taylor. And she's going

6 to testify what happened prior to that time period. Because

7 that's how the companies were operating.

8 All right. How were the companies operating? Well,

9 Mr. Head had devised companies where if you take a circle and

10 you divide it in half, on one side of the circle you heard

11 Mr. Tedmon talk about all these companies, these Matrix and all

12 like that, well those were LLCs, Limited Liability Companies.

13 And Mr. Head's idea was he wanted people, Omar Sandoval, Justin

14 Wiley, Joshua Coffman, to work for him and get these LLCs, so

15 that when they did their program, money could go into the LLCs,

16 and they would be split 50-50 with Mr. Head and these people

17 that were working at the time.

18 And so that's kind of like the 50-50 program. Okay.

19 And that's what they did. And so Shannon Taylor is going to

20 get on the stand, and she's going to say, look, I was down in

21 Fresno. And what happened was that Charles Head, and

22 Mr. Coffman, and Cindy Gastelum come to her house with these

23 documents, to sign the documents. And they were documents, and

24 I signed them. And she's going to testify to that. And the

25 purpose of that is to show how the company worked prior to the

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1 time of the Superseding Indictment where my client is charged.

2 In that first form of the company, loan documents,

3 refinancing was all handled by Charles Head. The LLCs, these

4 people - Omar Sandoval, Joshua Coffman, Justin Wiley - they're

5 the people that went out and got various individuals. They

6 used postcards. Mailed postcards out to people by mass

7 mailers. They got lists to be able to mail these out.

8 People that were behind on their mortgage payments.

9 You can get lists for everything. And they would mail them

10 out. And these people would call in and then away they would

11 go.

12 So that's how the program was running in what I call

13 the 50-50 program, before my client was even working for the

14 Head program. So that's kind of like a broad stroke prior.

15 All right. Now, let's now jump ahead to where my

16 client started working and what's the construction of the

17 companies.

18 All right. As I said, the road sign, my client

19 started working about January/February 2005. At that time, the

20 company was in transformation. Mr. Head was changing. When he

21 had first started in the 50-50 was just home loans and

22 refinances, and then Mr. Head decided he wanted to move the

23 company from home loans and refinancings to foreclosures.

24 Okay. Now, Domonic McCarns, my client, not an owner

25 of a company, wasn't a limited liability corporation, didn't

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1 have any LLC. He was an employee. Went to work. He was an

2 employee. You'll see that he's on telephone lists as being an

3 employee.

4 He didn't have any management authority. He didn't

5 have any supervision authority. He didn't make decisions. He

6 was told what to do in a business that was transforming and

7 being compartmentalized into various areas.

8 Now I don't want to get lost in the forest. All

9 right. So Mr. Head is deciding that he wants to change the way

10 his program is going to be working, so he wants to move from

11 home loans and refinancing, and he wants to go to foreclosures.

12 Now, still using postcards and sending them out to people as

13 leads, still trying to contact brokers and saying, hey, if you

14 have people that are in situations that they are in

15 foreclosure, they missed their house payments, they can't

16 refinance, maybe we have a program that can help out. And

17 referral fees were given to brokers that would send people to

18 Mr. Head's company.

19 Now Mr. McCarns, Domonic McCarns, was an employee, no

20 managerial authority. And the way the company was starting to

21 evolve and be broken up, you've heard the name of Kou Yang.

22 Okay. Now Kou Yang started working for Mr. Head way back in

23 2000/2002. Long before Domonic McCarns was ever in the

24 picture.

25 Okay. So her history with Charles Head goes back

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1 years. So it's not surprising that she's, as Mr. Tedmon said,

2 she's running the operation. You will see e-mails where she's

3 telling people what to do. And on some of these e-mails my

4 client is cc'd saying "need appraisals, use these lists, here's

5 what we got going." Because she's running the show.

6 Now her position changes a little bit when the

7 programs change, when Mr. Head changes his program. Remember,

8 it was going from home loans and refinancing over to

9 foreclosures. And what Kou Yang was doing in the foreclosure

10 part of it was she was head of processing documents. Okay.

11 Processing the documents going to the banks.

12 All right. And so it was starting to break up and

13 become compartmentalized into different areas. So Kou Yang had

14 this area. And one of the people that worked under her, you'll

15 see e-mails and hear testimony, Sam Vu, a female. And you'll

16 see e-mails going and talking I need appraisals and what's

17 going on.

18 Okay. The other part of this foreclosure business

19 was Keith Brotemarkle. He was in charge, as the Government has

20 said, and which I will say, he was in charge of getting

21 investors or what the Government says straw buyers. He had

22 people working under him. They would have websites on the

23 internet to try to get people interested in being investors on

24 properties, or, as the Government says, straw buyers. They

25 would be paid $5,000 per property.

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1 But that was Keith's part of the business. But Keith

2 wasn't satisfied with just that part. Keith wanted to run the

3 whole show. And so there was always a power struggle between

4 Keith and Kou, who was doing what, who was in control, what was

5 going on. But Keith was the one that was in charge of getting

6 all of the investors and filling out what you'll see in the

7 documents, the loan applications.

8 Now, when Keith arrived, the company had documents

9 everywhere. It was pretty much a mess. I apologize for doing

10 this, but you have to step back for a second into that 50-50

11 part of the company. Back in the olden days, in the 50-50, it

12 was Kou that was typing out all the documents, all the loan

13 applications, all the letters, all the equity property

14 agreements. She was doing it by hand, typing them out, right.

15 And you'll see on some of the documents there's mistakes.

16 Wrong names. Wrong dates. Okay. That's because they had to

17 be typed out.

18 When Keith arrived, and this is now 2005 and forward,

19 when Keith arrived, he brought a different vision. He and

20 Charles Head decided you know what we're going to computerize

21 this, and that's what they did. They made computer programs.

22 They had programs for seeing if people could qualify for their

23 program. What did they owe on the house? What was their

24 foreclosure? Could they make it work? That was all done by

25 Keith. And Keith's the one that filled out all the loan

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1 applications.

2 You will not hear any evidence from the stand nor

3 will you see any document that has Domonic McCarns' name on a

4 loan application. Because that's not his job. That's not what

5 he did. His job on a day-to-day basis was on the telephone,

6 talking to people.

7 Now I'm going to stop for a half second. Because I'm

8 going to give you the theme that I'm going to try to have the

9 evidence show from the stand and the documents through the

10 case.

11 The theme is in two parts. No connection. Put it in

12 writing. The no connection is the Government has charged that

13 my client is involved in a conspiracy. Well, they have to

14 prove that he was in the conspiracy. They have to prove he had

15 intent to be in this conspiracy. Knowledge.

16 And the evidence from that stand, from the witnesses

17 that we're going to cover in just a second are going to show

18 that that didn't happen. So that's the no connection.

19 Put it in writing. Remember, Mr. Anderson stood up

20 here in opening and said, well, they made all these

21 representations. Domonic McCarns got on the phone and said,

22 well, you'll remain on title, and your equity won't be taken,

23 or you'll be put in a trust, or you won't have to lease your

24 house, and your credit will be repaired, and all that's false.

25 Well, number one, the evidence is not going to

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1 support that. And just to try to hit right straight at the

2 bullseye for a half a second. You'll see in evidence a letter

3 from an attorney sending a bill to Domonic McCarns for doing

4 credit repair on an individual. Government didn't tell you

5 that. Government said there was no credit repair. That was a

6 false statement. Well, it's in writing. A letter, a bill, and

7 a payment. It's not going to be me saying it. It's going to

8 be the document.

9 All right. So we've got the company going on. We've

10 got Keith Brotemarkle. He's doing the loan applications. He's

11 finding the investors. We've got Kou doing the processing.

12 We've got my client, Domonic McCarns, he's the one on the phone

13 selling, and he's talking to people. And the Government says,

14 hey, he made misrepresentations, and he's part of the

15 conspiracy, and he should be found guilty.

16 Now trying to think if there is anything else about

17 the business part of it, how it works. Let me cover this.

18 What Domonic McCarns sends to individuals that he talks to on

19 the phone are some of the things you've already heard - equity

20 property (sic) agreement in writing, notice of cancellation

21 document in writing, addendum to the equity purchase agreement,

22 notice pursuant to California law in writing, grant deeds in

23 writing, warranty deeds in writing, lease agreements in

24 writing, option agreements to purchase and to lease in writing.

25 All in writing. Sent.

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1 Now, one thing the evidence is going to show is a

2 difference between the 50-50 companies, remember the LLCs split

3 the 50-50, and when my client, Domonic McCarns, was working,

4 2005-after, is that in the 50-50 companies, those people would

5 meet person-to-person with the homeowners and sit down and have

6 them sign documents.

7 My client, what the evidence will be from the stand

8 and from the documents, my client talked to them on the phone,

9 sent them documents, never met with them and pressured them,

10 never met with them and had them hurry through and sign

11 documents, sent the documents to the people, read them, review

12 them, have people read them. So that's a difference. Okay.

13 Trying to think if there is anything else about the

14 business that I need to cover with you. I don't think so.

15 Probably halfway through I'll think of something.

16 But let me now talk about witnesses. And, again, I

17 don't know for certain who the Government's going to call. All

18 I know is that they listed 75 people. They don't have to call

19 them all. They can call several of them. But I think that

20 this is a pretty good list of who they are going to call.

21 Okay. So let's talk about them. All right. And

22 I've put them in time sequence, in a timeline, so that they

23 make a little bit of sense. Because as you remember, during

24 voir dire some of the attorneys stood up and said, hey, if the

25 evidence comes in piecemeal, and one over here to the piece,

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1 and over here, can you follow it.

2 Well, here's a timeline to try to help you so as the

3 witnesses come on the stand, you know where they fit in. Okay.

4 I already talked about Shannon Taylor. That's back in 2004.

5 That's April 2004. She's from Fresno. She had a husband named

6 Ben. And Domonic McCarns wasn't involved, and that's in the

7 50-50.

8 But we're going to talk to her. Because through her

9 the evidence is going to show the difference in what happened

10 to her and when Domonic McCarns was working. That's going to

11 be the important part for my client.

12 All right. Then 2005, February 7th, Delma Romero.

13 Okay. Now, Delma Romero had a house in Modesto. That's where

14 she lived. And she's kind of interesting, in a sense. Delma

15 Romero on a prior occasion gave some testimony. And when she

16 testified, she said that she had spoke to Charles Head. She

17 had spoke to Charles Head about what was going on and about her

18 house, her situation.

19 And at this prior occasion she was asked some further

20 questions, and then said she, oh, no, wait --

21 MR. TEDMON: Your Honor, I'm going to object to

22 restating prior statements. I mean, he's supposed to be

23 stating what the evidence may show. Not reciting some other

24 past event.

25 THE COURT: Sustained.

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1 MR. GREINER: So --

2 THE COURT: The Government computer appears to be

3 making -- can we just turn that off entirely?

4 MS. KENNEY: I just did.

5 THE COURT: All right.

6 MR. GREINER: So Delma Romero is down in Modesto, and

7 it is probably one of the earliest clients that Domonic McCarns

8 has any type of connection with at all, if he has any

9 connection. But she's sent documents. Equity purchase

10 agreement. Notice of cancellation. I mean, she sent those.

11 Now, at the time that she contacts Charles Head's

12 company, she's already in foreclosure. A notice of foreclosure

13 has already been filed in January of 2005. And so she's under

14 the gun. Okay. So that's Delma Romero. She has documents.

15 She signs them. We'll go through it with her, and we'll talk

16 about certain circumstances and what's happening.

17 Now, the next individual is April 14th, and her name

18 is Latasha Butts, and she lives in the State of Florida. And

19 here's what's interesting about Latasha Butts. Latasha Butts

20 is a loan officer. There is an e-mail correspondence between

21 Ms. Butts and my client, Domonic McCarns, and that clearly

22 shows that she's a loan officer. And as a loan officer, she

23 knows the mortgage business. She knows documents.

24 And my client sends those documents, purchase

25 agreement, notice of cancellation, addendums, notice pursuant

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1 to California law. All of these documents are sent. She has

2 an opportunity to read them, have them reviewed. And she signs

3 and enters into the program.

4 Now, understand Domonic McCarns' position is to talk

5 to the people on the phone. Once in a while to set up to make

6 sure that they are available for signings because they have to

7 sign documents with notaries. Maybe to make sure the appraisal

8 gets done.

9 Because at the beginning, when you have the equity

10 purchase agreement, the evidence is going to show you've got

11 the equity purchase agreement, you have to find out the value

12 of the house to find out what's going on with the person, and

13 you have to find out the status of title, what's owed. Because

14 sometimes, maybe in the excitement of being involved in a

15 foreclosure, individuals don't exactly remember everything they

16 owe on the house or how serious it is.

17 And so at the beginning, Domonic McCarns has to find

18 this information out. But Domonic McCarns is not involved with

19 loan applications, processing the documents to the bank, the

20 funding conditions, the documents that have to be obtained.

21 That's Kou. The loan applications and finding the investor,

22 straw buyer, that's Keith. And Domonic McCarns, the evidence

23 is going to show, has no involvement whatsoever.

24 Now, jumping ahead a little bit, you will see e-mails

25 from Kou, from Keith, from an individual named Ed Shaffer --

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1 and we'll get to Ed in just a moment -- that cc'd my client,

2 Domonic McCarns. But there isn't the return e-mail by my

3 client commenting, answering, making any statement to those

4 e-mails. Domonic McCarns has no control who cc's him on

5 e-mails. I mean, he can't block or stop that. But you don't

6 see the return acknowledgement.

7 April 27th. Now this is still in 2005. This is John

8 and Kelly DiSanto. They have a house down in Santa Clarita,

9 California. Here's what's interesting about them. Remember,

10 the Government said everybody lost their house, and they said

11 nobody got credit repaired. I already told you what the

12 evidence is going to show about that.

13 John and Kelly DiSanto entered into the program, had

14 documents sent to them, okay, like we talked about, entered

15 into the program, made their rent payments. And then what did

16 they do? They re-purchased their house. They got it back. It

17 wasn't taken from them. Domonic McCarns didn't steal their

18 house from them. They had a house at the beginning. They

19 entered the program. They had a house at the end.

20 Yolanda McKenzie. That's April 29th. She's up in

21 Minnesota. Yolanda McKenzie. You'll see some e-mails --

22 before I get to the e-mails -- Yolanda McKenzie, up in

23 Minnesota, she was going through a foreclosure. She had the

24 ability to have a family member help her out financially so she

25 didn't have to go through the foreclosure. But she didn't want

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1 to do that because she was embarrassed.

2 She was talking with Domonic McCarns and at the same

3 time talking to other investors not connected with Domonic,

4 trying to figure out which program was the best. Now, she was

5 in foreclosure, so her options were limited. And you'll hear

6 that from the stand.

7 And so what happens is when she's talking to this

8 other investor, it doesn't work out because the other investor

9 doesn't think he can make -- or she can make enough money. And

10 so the bottom line, the end that happens to Ms. McKenzie is

11 when she contacted Domonic McCarns, she was already losing her

12 property. It was in foreclosure. But instead of losing her

13 property, Domonic McCarns was able to get her some money to

14 help pay her bills.

15 And you'll see an e-mail to that effect saying, hey,

16 look, you know what, I convinced her to take x-number of

17 dollars, and she's moving out, which she already had to any

18 way. So she got something more than she was going to have

19 prior to talking to Domonic McCarns. And, again, the documents

20 were sent.

21 Deborah Kovacs. May 2nd. She's in Illinois.

22 Deborah Kovacs is kind of an anomaly because documents are sent

23 to her. She looks them over. She signs them. And then it's

24 getting down, time close to the foreclosure. She's supposed to

25 go to a signing to sign the final documents. She misses that

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1 signing by one day. I mean, Domonic McCarns is in California.

2 It's Deborah Kovacs that missed the signing by one day.

3 But you'll hear that Domonic McCarns was able to get

4 Deborah Kovacs into the program even after missing the

5 deadlines, getting her some money to pay bills.

6 And here's one piece of evidence that's going to be

7 what the evidence will show from all of the witnesses, the

8 homeowners. They are in foreclosure. They are going to lose

9 their house. And the Government says, well, there was

10 representations that their credit was going to be repaired, and

11 that didn't happen. I've already gone over one of the letters.

12 But their credit was repaired because the foreclosure

13 didn't go through and doesn't show up on their credit report.

14 And so instead of having a foreclosure on their credit report,

15 that foreclosure that they are facing imminently is not there.

16 All right. June 14th, Rufo and Sharolynn Cardenas.

17 And I suspect we're going to hear from her this morning.

18 Interesting. Here's kind of a timeline for them.

19 You'll see an e-mail where she sends an e-mail to Charles Head

20 back in 2003. 2003. Way before Domonic McCarns is working.

21 And then nothing happens. 2004, they file bankruptcy, the

22 Cardenases. And in 2005 they come back. Now Domonic McCarns

23 talks to her, sending her documents, talks to her about the

24 program.

25 Here's the interesting part about her -- and it will

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1 also be with another individual later on, Korall Solares in

2 Florida. But she's May 19th in 2006.

3 What the Cardenas -- what Sharolynn Cardenas does is

4 when she goes to sign the documents at the title company with

5 the notary, she stops, and she says I'm not going to sign

6 these. I have some questions. And she doesn't sign them. She

7 goes and talks to her broker. She waits two days. And then

8 she signs them.

9 Domonic McCarns wasn't in Hawaii. Ms. Cardenas

10 stopped the process, asked questions, and then entered into the

11 program.

12 Deborah Brockway. July 5. Up in Washington. Same

13 situation. Documents sent, discussed on the telephone,

14 opportunity to review them, have them reviewed.

15 Now, there is a little twist to Deborah Brockway.

16 And I believe the evidence is going to show -- and the

17 Government rightfully will bring this out -- Deborah Brockway

18 will say, well, you know what, at the beginning I didn't talk

19 to Domonic McCarns. I talked to a gal named Beverly. And I

20 was asking questions of Beverly and trying to get some answers,

21 and I couldn't get answers.

22 And then Ms. Brockway says that she talks to Domonic.

23 Okay. Now, I'm going to ask her about it. See what the

24 evidence is going to be from that. But here's the interesting

25 part of that whole thing, and I want you to hear it right now.

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1 When Deborah Brockway is on the stand, I believe the evidence

2 is going to show she's going to testify that she talked on the

3 phone to Domonic McCarns after Deborah Brockway received a

4 $108,000 check. Because this was the selling of the house and

5 the money.

6 Deborah Brockway will say that in that telephone call

7 with Domonic McCarns -- now understand it's all over, right,

8 everything is sold, done, documents are signed -- she's going

9 to say Domonic McCarns told me to send that $108,000 check down

10 to California. She's not going to say told. I believe the

11 evidence is going to say that he yelled at me, I was afraid.

12 Well, if in fact Domonic talked to her, if in fact

13 Domonic had that conversation, he's down in California. And

14 I'm going to ask Ms. Brockway, how would Domonic know about the

15 $108,000? Because, remember, Domonic only talked to them about

16 the program at the beginning. Who is involved in the loan

17 applications and the processing? That's Kou. That's not

18 Domonic.

19 All right. Well, that's Deborah Brockway. Hear it

20 first, and we'll see where the evidence goes.

21 Then you're going to hear about Thomas and Theresa

22 Daffron from Florida. And from my information, Thomas Daffron,

23 if he gets on the stand, is going to say Domonic told him about

24 the program, sent me the documents, told me exactly what was

25 going to happen, and it happened the way he said. Okay.

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1 I'm going to skip a couple of people. There's Jorge

2 Toledo in 2006. That's in the beginning of 2006. He's in

3 Arizona. Jerome and Denise Pearlman. They are in Oceanside,

4 California. And I'm going to skip them. And basically because

5 it's all the same.

6 Now whether Domonic McCarns had any contact with any

7 of these people, we'll have to find out. I don't think so.

8 But we'll find out.

9 And then there's Wanda and Kenneth Shifflet from West

10 Virginia. And then Bertha Woods from Ohio. Bertha Woods

11 talked to Domonic McCarns. Domonic sent her the documents.

12 Had them signed. Had her go to the notary. Did the signing.

13 Equity purchase agreement, notice of cancellation, addendum.

14 Those are the documents he's been charged with. That's what's

15 sent. That's what she signed.

16 Then there's an Alfred Limas from Sacramento. That's

17 April 18th. And then on May 5 is a Sheila Jones in Sacramento.

18 Domonic McCarns talked to her. Same documents sent. Same

19 opportunity to review. Put it in writing.

20 I'm going to skip Korall Solares just for a second.

21 I want to do her last.

22 I want to go to Scott and Denise Nowlin on August 6,

23 2006. Now, that's past what's charged in the Superseding

24 Indictment because they said June 30th. But, the Government

25 may want to try to bring them in and bring it in for other

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1 things, and so I'm going to talk about it in opening in case

2 the Government does, so you hear it from me first.

3 What's interesting about Scott and Denise Nowlin?

4 What type of individual is present when they do the signing of

5 the documents in Massachusetts? An attorney. If they have any

6 questions, they have anything they want to ask, there is an

7 attorney right there at the signing. Okay.

8 All right. Korall Solares from Florida. Interesting

9 individual for many reasons. But let me just give you what I

10 think is probably the highlight of why she's interesting.

11 Besides the fact that you'll see e-mails trying to get

12 confirmation of money, trying to get her to sign, get dates,

13 besides all of that stuff, besides documents being sent back to

14 her, having an opportunity to sign, she had issues about her

15 husband on the deed, and had to get her husband off and all

16 sorts of collateral stuff.

17 But you know what's the most important when she hits

18 that stand? And if she says, geez, I didn't understand

19 anything that was going on, and Domonic McCarns, he

20 misrepresented, he told me false things. Guess who she works

21 for at that time? An attorney. But not just any attorney.

22 It's an attorney in the State of Florida that works -- has as

23 clients banks. He's on the other side, trying to foreclosure

24 for banks. So she's working on the other side trying to

25 foreclose.

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1 THE COURT: Mr. Greiner, you have five minutes.

2 MR. GREINER: Thank you, Judge.

3 But it's not just any attorney that has banks as

4 clients. This is a large operation. 250 employees.

5 But you know what's even more incredible, this

6 attorney that she was working for at the time she was talking

7 to Domonic McCarns, he, the attorney, his office, was

8 committing fraud against the banks. He got disbarred.

9 All right. Let me just give you five little points.

10 Okay. I'm done with the businesses. I'm done with witnesses.

11 I want points and some e-mails. Okay.

12 You already know that Domonic McCarns was hired about

13 January/February of 2005. Guess what the evidence is going to

14 show? He got fired by Ed Shaffer and Keith Brotemarkle. He

15 got fired. In December of 2005 or January 2006. He got fired.

16 And then he went back, and he got rehired, but he got put on

17 probation. And the only way he could be on probation, he was

18 told never to go in to Kou Yang's office, ever.

19 Because you'll see from e-mails, Domonic McCarns is

20 the person at that place of business that questions everyone

21 and everything. What's going on? Why do we have to do this?

22 Why don't you tell me what's happening? Rough exterior.

23 Nobody likes him. But he gets his job done. He works. But

24 nobody tells him things. And he asks questions all the time.

25 Then what's even more incredible is in a meeting with

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1 Keith Brotemarkle and Ed Shaffer one day, Kou Yang's

2 significant other, boyfriend, comes barging into that meeting

3 and beats up Domonic McCarns because he made remarks about Kou

4 Yang's working. And what does Domonic do? He calls the cops

5 to the business. In a conspiracy you call the cops? You get

6 fired. That's what the evidence is going to show.

7 All right. I skipped over one individual when I was

8 talking about the businesses, but you've heard the name Ed

9 Shaffer. Ed Shaffer comes on a little bit after Keith

10 Brotemarkle. His part of the program was he wanted to look at

11 all the appraisals. He wanted all the appraisals of the

12 properties to go through him. Okay. And you'll see e-mails

13 like that. Okay.

14 Briefly talk about some e-mails you'll see. You'll

15 see e-mails about postcards. Do you remember I talked to you

16 about sending them out to people? You'll see Domonic McCarns

17 cc'd on e-mails, but no returns.

18 The Government talked to you about Keith Brotemarkle

19 sending an e-mail to Charles Head saying Domonic McCarns is out

20 of control. Do you remember that? The evidence is going to

21 show -- I can't wait to ask questions. I'm not going to tell

22 you what's going to happen, but I can't wait to go over that

23 e-mail with Keith Brotemarkle.

24 He's a cooperating witness. He's talked to the

25 Government many, many times. I can't wait. You're going to

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1 see e-mails that say mo money, mo money, mo money from Domonic.

2 You'll see e-mails that say cha ching, we hit the jackpot.

3 He's an employee. He's working hard. He's probably one of the

4 best salesmen there.

5 THE COURT: You should be wrapping up, Mr. Greiner.

6 MR. GREINER: Thanks, Judge.

7 That's it. That's what I think the evidence is going

8 to show. Hopefully, I've given you an outline of what's coming

9 up, witnesses, dates, times, help you put everything together.

10 When everything is done, when the Government has

11 given everything they can, I get one more shot to talk to you.

12 And I will stand up then as I am now.

13 The Government will not be able to meet their burden

14 and prove beyond a reasonable doubt that Mr. McCarns is

15 involved in this conspiracy or any conspiracy. He is not

16 guilty. Thank you, Judge Mueller.

17 THE COURT: We have come to a time for our first

18 break of the day. Let's take a 15 minute break. How much time

19 do you need for orientation, Ms. Schultz?

20 THE CLERK: Ten minutes.

21 THE COURT: All right. Let's make it a 20-minute

22 break. During that break, please remember my admonitions.

23 You'll be able to recite them yourself before long. But don't

24 talk to each other about the case, don't talk to anyone else,

25 don't do any research of any kind including using an electronic

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1 device. Don't begin to think about the case's conclusion.

2 There is a lot of ahead, as you can tell. If anyone does

3 attempt to contact you in any way, please let me know

4 immediately. Have a good break. We'll see you back here for

5 one more opening statement before the presentation of evidence

6 begins.

7 (Jury out.)

8 THE COURT: You may be seated if you'd like.

9 Just so I'm clear on the stipulations, there appear

10 to be some references to exhibits in the 500 series. Am I

11 supposed to have any of those?

12 MR. ANDERSON: No, Your Honor. What we did, because

13 they are supporting documents for some of the charts, we

14 designated them with a number, so that they would be easier to

15 refer to if we ever needed to.

16 THE COURT: All right. We'll take a break. See you

17 in 20 minutes.

18 (Break taken.)

19 THE COURT: All right. Just briefly on 124.

20 If I understand correctly, Mr. McCarns is objecting

21 to 124. The other defendants are satisfied by the redactions?

22 MR. TEDMON: That's correct, Your Honor.

23 MR. SAMUEL: Yes, Your Honor.

24 THE COURT: The Court will allow it to come in. I'm

25 going to overrule the objections of Mr. McCarns. The exhibits

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1 may come in as redacted.

2 (Jury in.)

3 THE COURT: You may be seated. Welcome back, ladies

4 and gentlemen. We are ready for the final opening statement.

5 Mr. Samuel is going to make an opening statement on

6 behalf of Mr. Budoff, and he informs me that will take no more

7 than 25 minutes.

8 MR. SAMUEL: Hopefully it won't take more than 25.

9 THE COURT: Well, I will let you know.

10 MR. SAMUEL: Ladies and gentlemen of the jury,

11 counsel, all parties in this courtroom, good morning.

12 First of all, I just want to make some observations.

13 And number one, I'm not going to repeat everything that my

14 counsel, co-counsel have stated. I think that would just be

15 ridiculous on my part. You've already heard it one time, so

16 even though I may not say it again, it doesn't mean it's not

17 important.

18 Number two, the stories that you hear about the loss

19 of one's home are heart-wrenching. There is no doubt about

20 that. They will draw out your compassion, but your obligation

21 is to remove that compassion and consider the evidence as

22 presented to you in a dispassionate fashion. That's really

23 what I wanted to say about that.

24 I have to agree with Mr. Greiner that placing these

25 events in context, particularly time context, is extremely

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1 important. So I have a theme as well as Mr. Greiner does, and

2 it's location, timeframe, communication. All essential in

3 placing something into context.

4 You should know in advance that Mr. Budoff will take

5 the stand, and he will testify on his own behalf, and he will

6 provide to you another side or another interpretation, if

7 that's appropriate, of what the events meant to him. So wait

8 until the completion of this case before you render any kind of

9 decision, and wait, of course, as you've been instructed until

10 you have been instructed.

11 It's unique. We have like four different approaches

12 here. I mean every one of us has a different approach to how

13 to handle an opening statement. And I'm no different than the

14 rest of them.

15 Now, some additional thoughts relative to

16 introduction. And that's -- I appreciate, and unfortunately I

17 got lucky enough to be after the break, so I'm sure your

18 attention will be with me throughout this whole presentation,

19 and, obviously, throughout these proceedings, and, obviously,

20 your consideration will be for independent defendants alone

21 when rendering your decision.

22 The opening statement, as has been said by everybody,

23 and I'm going to repeat it, is not really a statement of facts.

24 It's a statement of what we believe. So what has been stated

25 by all parties, including myself, is only what we believe. So

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1 don't hold it against us if we are erroneous in something.

2 Because my experience has been this always happens.

3 So we may think one thing's going to happen, something else may

4 happen. It's not our fault. Things are not necessarily in our

5 control. And it's predictable that testimony is not always

6 going to be what we think it is.

7 So let's talk first about the anticipated evidence.

8 And one of the first things that we're going to talk about is

9 Ben's reputation for honesty and truthfulness in the community

10 that he resided in. We know Ben is going to testify, so I

11 think this is important for you to understand who he is.

12 And we're going to call one witness, Michael

13 Tarufelli, who will testify about Ben's character. And Michael

14 has known Ben since 1997, and met Ben, actually, at a Bible

15 study at Ben's house.

16 He kept regular contact with Ben until 2008, which is

17 after the Indictment in this particular case. And he will

18 testify that Ben's reputation in the community was sterling,

19 meaning outstanding, for truthfulness and honesty. That's

20 where Ben is coming from.

21 Now Ben resides in Colorado Springs. That's why this

22 communication is an issue. Because he was only in the Head

23 offices, or whatever name they want to choose, one time. And

24 that included both while he was working -- and he's working in

25 two separate events. He's working, first of all, as a

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1 solicitor to obtain buyers, and he has that portion of the

2 case, and then he also was working in the loan aspects of the

3 case.

4 So in all that time, he was living in Colorado

5 Springs. So we have no situation in which he's engaged in

6 daily conversations. There is no situation in which he's

7 around the water tank talking to everybody else while everybody

8 else is there. And you're going to find out about the

9 atmosphere in those offices and what was going on.

10 And the only thing that you're going to see is

11 occasionally he responds to an e-mail, and occasionally he gets

12 cc'd without responses. The same comment that Mr. Greiner

13 made. Doesn't reflect what his understanding is unless, of

14 course, he responds, and that still doesn't reflect it, and

15 you're going to hear Ben testify about it.

16 On occasion -- and this is where we're going to get

17 to Kou Yang. But right now I'm just going to put it out to

18 you. Mr. Budoff, while he was involved with the loaning

19 process, would only be sent the last page of the 1003 form or

20 the loan application form. And he would send it back and sign

21 it off.

22 Now, let's start with Ben as involved with buyers.

23 Ben will characterize that as a win/win situation. Because

24 what it did -- well, let's put it in context first though.

25 Before Ben came into this business at all, he didn't

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1 have any experience whatsoever in the mortgage company

2 business, the loan processing. He had no knowledge whatsoever.

3 He would be characterized as a kind of blue collar kind of

4 worker. But he did have some experience with buying a house.

5 And he's going to explain to you what his experience was

6 because that involved, actually, somebody else putting money up

7 into an account, which the bank knew about, and getting a loan.

8 So there is a part of the context that you're going to get

9 involved with.

10 Now in 2005, Ben starts to work the leads for the

11 investigators (sic) which are provided by Mr. Brotemarkle.

12 Actually, it's about May or June of 2005. And this is an

13 important chronological situation. Before that time you really

14 can't saddle him with the knowledge of any other individual.

15 And contrary to what the Government is attempting to

16 do, which is blanketing everybody with a blanket of knowledge

17 that everyone is all knowledgeable about everything, this is

18 not true. The Government's going to have to prove

19 independently the communications and the knowledge of my

20 client, Mr. Budoff. And I don't think they're going to be able

21 to do that.

22 But what Ben does is he truthfully presents the plan

23 to the investors. But who is the guy who told Ben how to

24 present it? Well, that's Keith Brotemarkle. So Ben is relying

25 upon Keith to advise him on how to present this program. And

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1 so there is the beginning of miscommunication,

2 misunderstanding, just to begin with.

3 Ben explains to the investors about the lease

4 buy-back program. You've already heard about that. I'm not

5 going to go into it any further, but I adopt all the comments.

6 Ben thinks he is doing good. Finding people that

7 will help others re-establish their credit and get back on

8 their own feet. His belief is that he is helping. It's a

9 win/win situation.

10 Ben recruits his own brother, Kerry, and also

11 Mr. Mizell from his own church group to go and get involved as

12 buyers in this particular event. And then Ben follows up by --

13 and, finally, one of the things that Ben does besides

14 soliciting buyers is to follow up and obtain information from

15 the buyers that would be relevant, such as income, et cetera,

16 et cetera. Now this is not while he's a loan person, but while

17 he's soliciting buyers, and then he would pass them on. That

18 was kind of what his job was. And he would pass them on to a

19 company called Creative Loans.

20 Now Creative Loans would be the processing agency

21 that was involved in this procedure for some time. But it will

22 change, and you'll see, as Mr. Greiner reflects, there is

23 actually a third change, and I'll give you those dates shortly.

24 And then, of course, Creative Loans pays Ben for his

25 work. I mean, that's logical. And I believe that you will not

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1 hear a buyer which Ben solicited tell you that Ben misled them.

2 Now I may be wrong, but there's a lot of material

3 here, and I don't believe that's going to happen in this case.

4 Now, May of 2005 through August 21st of 2006, that's

5 the chronological period which is somewhat relevant. May of

6 2005 is when Ben was involved with buyers all the way up

7 through and, actually, past August 21st of 2006.

8 But what happens August 21st, 2006 is that the --

9 sorry -- Creative Loans was the party that was involved with

10 the processing of loans. And the Creative Loans was run by

11 Brotemarkle, and the primary employee was Kou Yang, or some

12 people interpreted that Kou Yang was running Creative Loans.

13 But either one. Both of those parties are involved.

14 Funding Foreclose was run by Brotemarkle as well.

15 I'm not too technical. Does this come out? Still have my

16 time, Your Honor.

17 And Nation's Property Management was run by Jack

18 Corcoran. All names which you've heard, and I'll mention some

19 of them later.

20 All of these companies were located at the same

21 address, and at least I believe they were all in the same

22 building. So there was a lot of conglomerate knowledge passed

23 around between parties. We don't know what it is. But, I

24 mean, one could infer that. But Ben, of course, was in

25 Colorado Springs. He wasn't there.

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1 And you also see in the presentation by the

2 prosecution, as well as other parties, that the contracts that

3 are involved with the sellers are in flux. There is constant

4 change going on. And this will become apparent by the evidence

5 as we go through the process.

6 August 21st. That's the date in which Mr. Head

7 decides to sell everything that he had to a guy named Lavar

8 Fletcher. I believe you'll see a contract of sale.

9 You'll see Head sells all of his interest for an

10 amount of $15 million to a guy named Lavar Fletcher, of which

11 Lavar paid $200,000 up front to take over the business.

12 And at that point in time, that's the beginning of

13 the business changing or morphing into another third kind of

14 set of businesses, actually. And, of course, September is when

15 it becomes more crucial. And, of course, that's after the

16 Indictment date. But, of course, they're going to offer

17 additional evidence.

18 But that September is when Mr. Budoff becomes

19 involved in the loan processing business himself. Actually,

20 September Ben borrows $60,000 to take over Creative Loans. Why

21 would somebody do that if he knew it was all in vain and that

22 it was a criminal enterprise?

23 Ben has absolutely no experience at this point with

24 processing. None whatsoever. The closest that he has come to

25 it would be to forward materials of information to Kou Yang

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1 and/or Keith Brotemarkle.

2 He's still in Colorado. That hasn't changed at all.

3 So the communication is primarily via e-mail. Ben sets up the

4 new business with a new address, new checking account, keeps

5 the same employees. That's probably one of his biggest

6 mistakes. And he makes them W-2 earners. All legitimate. All

7 consistent with a legal process.

8 But Ben, when he takes over this thing, hasn't had

9 any formal training. And the e-mails that you will see will

10 reflect that Ben is requesting training. And who is he

11 requesting training from? Keith. And he doesn't understand

12 the process.

13 Now, the important aspect about this is it's

14 September of '06, and November 16th is when the FBI came in.

15 Things stop. About two months.

16 Now, how many of us have ever been on OJT for two

17 months and been expected to know everything, with no training,

18 no background. So what happens is Ben relies upon Brotemarkle

19 and Yang to get the OJT, which obviously is a big mistake.

20 Because it's business as usual.

21 And what is business as usual? Well, let's talk

22 about Kou Yang. Kou Yang is kind of like the spider in the

23 middle of the web. Everything seems to go or flow around Kou

24 Yang and/or Mr. Brotemarkle. I mean, she's basically a black

25 widow. She'll take the stand. We know that. Everybody said

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1 that. She is going to be a cooperating witness. We know that.

2 She's involved with Head from anywhere from 2000 on,

3 or 2004 on, whichever testimony you decide to take. She was

4 hired by Head even though he knew she had suffered a felony

5 conviction. Not just any normal felony conviction, but a

6 felony conviction for committing embezzlement in a bank. He

7 knew it. He completely vetted her. He knew about the

8 probation officer. Yet he hired her. She received additional

9 things on behalf of -- and she got paid well by Mr. Head.

10 She will testify that on the 1003 forms, which is the

11 loan application, that she forged signatures on documents,

12 inflated incomes without anyone knowing, omitted information,

13 signed various documents without authorization. I believe

14 she's going to testify to all of that.

15 With respect to the evidence about Colorado, it will

16 reflect that she sent the last page -- and we have the

17 documents and we'll offer those into evidence -- of the 1003

18 form for Mr. Budoff's final signature. And, of course, that

19 excluded all of the information that went before it, which

20 included assets, which included income, which actually included

21 the choice of whether or not this business -- this property was

22 purchased as a residence, primary residence, or as an

23 investment.

24 The interesting thing is -- and there may be

25 discussion about whether the investment was for investment -- I

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1 mean, the purchase was for investment or whether it was in fact

2 primary residence -- when Mr. Budoff took over this business,

3 every, every 1003 form said it was investment. Every one of

4 them. So you might want to take a look at the forms. See what

5 they are. Make sure it's in the right timeframe.

6 And I think, we believe, that Ben's signature was

7 forged, and I think we will have that testimony as well.

8 Now who is -- by the way, one thing further -- I had

9 that on my other notes over here -- is that the big mistake is

10 that Ben trusted Kou Yang to do her job properly, and he also

11 trusted Mr. Brotemarkle to do his job properly while he got up

12 to speed on what his activities and things that were going on

13 for that two-month period of time.

14 So what's interesting is, what did Kou Yang tell him

15 was legal? And what did she tell Mr. Budoff was common in the

16 industry? And what did Keith Brotemarkle? So that's what we

17 talk about when we talk about putting things in place, in

18 context.

19 Now, Brotemarkle admits that early 2005 he was aware

20 of the equity stripping program. He had seen the contracts.

21 He was aware of the misrepresentations that that sellers (sic)

22 were making.

23 And that's an interesting point. The contracts

24 themselves, nobody argues that they are an illegal contract. I

25 don't think you'll ever hear that ever. So what you really are

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1 talking about is how the contracts were presented and sold.

2 And that is an individual aspect by individual

3 people. Unless it's known all over a group of people. So keep

4 that in mind as well.

5 Before September '06, loan applications or the Form

6 1003 often reflected buyers were going to reside in their

7 property. After September, it reflected investment.

8 He will admit including false statements of income

9 and assets without checking for documentation and without

10 buyer's knowledge. And he will admit of omitting purchases of

11 various buyers. And, of course, this is the guy that Ben

12 Budoff is supposed to get trained from and relies upon and

13 trusts.

14 Other witnesses could be Omar Sandoval. You've

15 already heard some discussion about him. He will testify that

16 signatures were forged, and notarizations and documents were

17 incorrect. Alternative documents were filled out without

18 persons knowing of the changes. Most, if not all, of these

19 occurred at the direction of Kou Yang and Keith Brotemarkle.

20 And, of course, the forgeries and changes of

21 information with documents, they were hidden from other people.

22 I believe that's Ben Budoff as well.

23 Testimony will support Ben's contention that he was

24 acting in good faith, and, if anything, he was the victim of a

25 conspiracy as well. He was the victim of Brotemarkle and a

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1 victim of Kou Yang, who were the puppets of Mr. Head.

2 Other witnesses, Justin Wiley. He will testify

3 similarly as to falsification of various items, and Kou Yang

4 using improper -- signing and improper documents.

5 And finally we have Ed Shaffer. And he's going to

6 testify he's worked at -- he worked there. He's worked at

7 mortgage for many, many years. And he will testify that

8 although he had been in the mortgage business for many years,

9 there was no way that he could determine whether or not the

10 loan applications were properly filled out.

11 How does that bear upon it? Well, if he has worked

12 for it for years, I don't know how Ben Budoff is going to

13 figure this out.

14 Shaffer will also testify that he sat in at least one

15 meeting with attorneys for Mr. Head in which the attorneys went

16 over the legality of the company and also explained the

17 contracts. That's where I got the comment that I don't think

18 anybody is arguing that the contracts are illegal. They may

19 have been presented illegally, but they are not illegal.

20 THE COURT: You have four minutes.

21 MR. SAMUEL: Okay. Well, I'll pass on a couple of

22 people here because they all reflect about the same thing that

23 I just emphasized to you. Each one will testify about the lies

24 and things that were going on between Kou Yang and

25 Mr. Brotemarkle.

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1 Ben voluntarily met with the FBI and the

2 investigators in this case. And you're going to hear testimony

3 about that didn't sound very good for Ben, and you're going to

4 hear his explanation of what went on, and what he was thinking

5 when he made the statements that he did. So please wait and

6 listen for that. And he's obviously going to take the stand.

7 I think the evidence will show that the sellers may

8 very well have been misled, but by salespeople, not by the

9 contracts. The evidence will show that Ben was not involved in

10 dealing with the sellers. There is no way.

11 Evidence will show that Ben made accurate

12 representations to the buyers. Evidence will show that Ben ran

13 Premier Services for about two months. Evidence will show that

14 he did not have the expertise nor the training to run the loan

15 processing company. I'm almost done. And the evidence will

16 show that Ben was an unwitting pawn of Brotemarkle, Kou Yang

17 and his misunderstandings.

18 He didn't have the required intent. The evidence

19 will support that completely, and that is required -- and he

20 didn't even have the knowledge of what was going on. Both of

21 those things are required before you can render any decision.

22 And I believe at the completion of this case, ladies

23 and gentleman, after your full and complete consideration of

24 all the facts, that you will render and I'm asking you to

25 render a verdict of not guilty. Thank you.

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1 THE COURT: All right. We'll let you unplug and sit

2 down.

3 Ladies and gentlemen, that does conclude the opening

4 statements of the attorneys. As I told you earlier, the

5 opening statements are not evidence.

6 Just another reminder, even though the charges here

7 have been joined for trial, you ultimately will be directed to

8 decide the case of each defendant of each crime charged against

9 that defendant separately.

10 And I want to cover a couple of terms you've already

11 heard. One is scheme. I want to make certain it's clear a

12 scheme is any plan or course of conduct. A scheme by itself

13 does not imply something unlawful.

14 You've also heard the term straw buyer. A straw

15 buyer is one who takes title to property for a short period of

16 time and also obtains a loan on that property, all for the

17 benefit of another. Being a "straw buyer" by itself is not a

18 violation of law.

19 Now I'm going to turn to the Government and ask if

20 it's ready to begin its presentation of evidence. Mr. Anderson?

21 MR. ANDERSON: Yes, Your Honor. The United States

22 calls Sharolynn Cardenas.

23 THE COURT: All right. At this point, we'll go until

24 about 12:30 and take a break and go to our 1:30 adjournment

25 time today.

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1 (Photograph taken of the witness.)

2 THE CLERK: Please step into the witness stand and

3 remain standing.

4 Do you swear to tell the truth, the whole truth, and

5 nothing but the truth, so help you God?

6 THE WITNESS: I do.

7 THE CLERK: Thank you. You may be seated. Please

8 state your full name and spell your last name for the record.

9 THE WITNESS: Sharolynn Cardenas, Sharolynn spelled

10 S-h-a-r-o-l-y-n-n. Last name Cardenas, C-a-r-d-e-n-a-s.

11 THE COURT: You may proceed.

12 SHAROLYNN CARDENAS,

13 a witness called by the Government, having been first duly

14 sworn by the Clerk to tell the truth, the whole truth, and

15 nothing but the truth, testified as follows:

16 DIRECT EXAMINATION

17 BY MR. ANDERSON:

18 Q. Good morning, Ms. Cardenas.

19 A. Good morning.

20 Q. Where are you from?

21 A. Kauai, Hawaii.

22 Q. Back in 2004 and 2005 were you living in Hawaii?

23 A. Yes.

24 Q. Did you have a home there?

25 A. Yes.

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1 Q. Where was that home?

2 A. 5666 Kei, K-e-i, Place, Kapaa, Hawaii.

3 Q. At some point did you fall behind on some of your

4 bills?

5 A. Yes.

6 Q. Did you declare bankruptcy or start the bankruptcy

7 process as a result?

8 A. We declared bankruptcy, yes.

9 Q. As you were in that process, did you become involved

10 with a group related to your home and the mortgage on your

11 home?

12 A. Yes.

13 Q. How did that happen?

14 A. As we filed for bankruptcy, our lawyer suggested that

15 these people could help us.

16 Q. Which people were those?

17 A. It was Twyus Peahu at first.

18 Q. First of all, how do you spell Twyus Peahu?

19 A. T-w-y-u-s. Peahu, P-e-a-h-u.

20 Q. Who is Twyus Peahu?

21 A. He was a mortgage broker.

22 Q. Was he located in Hawaii, too?

23 A. Yes, he was.

24 Q. You said at first. From your interactions with

25 Mr. Peahu, were you introduced to someone else?

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1 A. No.

2 Q. Were you not introduced, but did you end up having

3 contact with someone else?

4 A. Yes.

5 Q. Who did you end up having contact with?

6 A. With Domonic McCarns.

7 Q. How did you have contact with Domonic McCarns?

8 A. With Twyus Peahu.

9 Q. Did you ever end up speaking with Domonic McCarns on

10 the phone?

11 A. Yes.

12 Q. Could you tell us about your first conversation?

13 A. First conversation was he introduced hisself to us

14 and told us that he would be able to help us to get out of our

15 bankruptcy situation.

16 Q. Did he give you any specifics about what he could do?

17 A. No.

18 Q. What did you do after that conversation?

19 A. I talked to my husband about the situation, and he

20 said, well, look into it. And the reason why we did that, it

21 was because our attorney, bankruptcy attorney, told us that

22 they would be able to help us.

23 Q. What did you do to look into it more?

24 A. I went back to Twyus Peahu and asked him more

25 information, and he said just do what they say to do.

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1 Q. After that conversation, what's the next thing that

2 happened?

3 A. We received a packet in the mail to fill out some

4 paperwork about ourselves.

5 Q. Now, prior to receiving that packet, had you had one

6 or more than one conversation with Domonic McCarns?

7 A. Prior to that, we had just one more conversation.

8 Q. Could you tell me about that conversation?

9 A. That conversation was about when we received the

10 packet, go ahead and let our attorneys know to cancel the

11 bankruptcy.

12 Q. Was the bankruptcy preventing you from losing your

13 house at that time?

14 A. No.

15 Q. Did Domonic McCarns say anything about what entering

16 the program with him would do to your credit?

17 MR. GREINER: Objection. Leading.

18 THE COURT: Sustained.

19 Q. BY MR. ANDERSON: What did Mr. McCarns say, if

20 anything, about the specifics of that program in that second

21 conversation?

22 A. He said that going through this program would help us

23 make good on our credit, and that within a year they would be

24 able to help us get our home back.

25 Q. Did Mr. McCarns tell you what would happen to the

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1 equity in your home?

2 MR. GREINER: Objection. Leading.

3 THE COURT: Sustained.

4 Q. BY MR. ANDERSON: Was there any discussion of the

5 equity in your home?

6 A. The equity of our home was that $200,000 was going to

7 be put into an escrow account for us. That after we're done

8 paying the mortgage for one year, that the house -- that equity

9 would be coming back to us to use to buy back our home.

10 Q. Based on your conversation with Domonic McCarns, did

11 you decide whether or not to sign those documents?

12 A. We were still hesitant at that time.

13 Q. What did you do?

14 A. We went back to Twyus Peahu, asking him if this is

15 legit, and he said, yes, to go ahead. He's worked with the

16 company before.

17 Q. What did you do next?

18 A. We waited and received a phone call from the title

19 company to make an appointment to come in and sign the

20 paperwork.

21 Q. Did you end up going somewhere to sign the paperwork?

22 A. Yes, we did. We went to Security Title.

23 Q. When you got to Security Title, did you find out

24 anything you didn't know before?

25 A. Yes.

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1 Q. What did you find out?

2 A. We found out that we would be selling our home, more

3 than what our home was worth, and there was some paperwork

4 without no writings on it, but they told us that's what we're

5 going to sign.

6 Q. How did you find out that your home was getting

7 signed over to someone else?

8 MR. GREINER: Objection. Leading.

9 THE COURT: Sustained.

10 Q. BY MR. ANDERSON: So you're at the meeting and you --

11 you said that's the first time you find out about your home

12 getting signed over?

13 A. Yes.

14 Q. So was there some method at the meeting that caused

15 you to know that?

16 A. We asked about our home being sold, and they really

17 didn't have an answer for us, so we said we're not going to

18 sign, and we left.

19 Q. Where did you go?

20 A. We went to RBC Mortgage where Twyus Peahu worked at.

21 Q. Why did you go there?

22 A. We wanted to know more information about selling our

23 home.

24 Q. What did you find out?

25 A. He said that that was the process, and don't worry,

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1 we're going to get it back.

2 Q. After this conversation, did you have a chance to

3 speak with Domonic McCarns again?

4 A. Yes. It was approximately 45 minutes after we left

5 Twyus Peahu's office. Domonic had called us and questioned why

6 we didn't sign.

7 Q. What was Domonic's tone of voice when he called you?

8 A. That he was angry with us that we didn't sign at all.

9 Q. What did you tell Domonic McCarns?

10 A. That we still had questions about selling our home,

11 and he said don't worry about it.

12 Q. Did he tell you anything else about it?

13 A. He told us that the person's -- the person's name

14 that was on the paperwork, she works for their office, and she

15 often does that for them. And that after two to three months

16 our name would be back on the deed for the home.

17 Q. Did he tell you whether or not he had been through

18 the process with that woman before?

19 A. He said she always does that for them.

20 Q. How did you react to that conversation?

21 A. I just felt like, wow, something different.

22 Q. Prior to that day when you went in to sign the

23 paperwork and spoke with -- on that same day you had that

24 conversation with Domonic McCarns, did you know that you were

25 going to be selling your house?

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1 A. No. Not at all.

2 Q. How was it that you found out that you were going to

3 be selling your house, did you see it on the documents or talk

4 to somebody?

5 A. We read the documents more.

6 Q. What's the next thing that happened?

7 A. My husband and I discussed it, and then we were

8 wondering what else can we do. We called Twyus again, and then

9 he said don't worry about it. He and the title company looked

10 for the best interest for us.

11 Q. Did you end up going back and signing the documents?

12 A. Yes, we did.

13 Q. After you signed those documents, did you receive --

14 after you signed those documents, did you at a later point

15 receive additional documents?

16 A. Yes, we did.

17 Q. Okay. What were the documents you received at a

18 later point?

19 A. That we were leasing our home or renting our home.

20 Q. How long after you signed the first set of documents

21 did you get that second set?

22 A. It was a week after.

23 Q. Did that raise any concerns for you when you received

24 the lease?

25 A. Yes, it did.

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1 Q. Why?

2 A. It said that we would be renting our home at 1,500 a

3 month, there was no pets, and a quick deed thing also was

4 included with that.

5 Q. What do you mean a quick deed thing?

6 A. It was some paperwork that we never saw in there.

7 Q. Did the paperwork that you received after you had

8 already signed the first set of documents, that second set of

9 paperwork, was that paperwork ever -- did you expect to receive

10 that paperwork before you got it?

11 A. No.

12 Q. Did it appear to reflect what you had understood the

13 transaction you were entering into was?

14 A. No.

15 Q. After receiving that second set of paperwork, did you

16 contact anybody?

17 A. Yes. I contacted Domonic again.

18 Q. What was said in that conversation?

19 A. In that conversation, he say just go ahead. Don't

20 worry because you still remain in the house. Nobody's ever

21 going to take it away from you. And within one year you're

22 going to get your money back, and you can buy back your home.

23 Q. Did he tell you whether or not you had an option to

24 back out?

25 A. No.

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1 Q. What did he tell you?

2 A. He just told me that this is the fastest and easiest

3 way that we can get it and own our home still.

4 Q. Did he say anything about your equity in escrow or

5 your equity?

6 A. The equity was going to be in escrow for a whole

7 year.

8 Q. How much equity was that supposed to be?

9 A. 200,000.

10 Q. Were you also supposed to receive some money right

11 then?

12 A. Yes. We were supposed to receive a check for 20-plus

13 thousand to go ahead and pay our bills so that the credit would

14 be a lot better.

15 Q. Now did you actually receive that check for 20,000?

16 A. Yes.

17 Q. That's "yes"?

18 A. Yes.

19 Q. Did you ever get that $200,000 that was supposed to

20 be held for you?

21 A. No.

22 Q. What were you planning to do with that $200,000?

23 MR. GREINER: Objection. Speculation. Relevance.

24 THE COURT: Sustained.

25 Q. BY MR. ANDERSON: Had you had a discussion with

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1 Mr. McCarns about what it was that you were going to do with

2 that --

3 MR. GREINER: Same objection.

4 THE COURT: Just answer the question yes or no.

5 Overruled. Just yes or no for now.

6 THE WITNESS: Yes.

7 Q. BY MR. ANDERSON: What had you told Mr. McCarns, and

8 what had Mr. McCarns told you about that money?

9 MR. GREINER: Compound. Speculation.

10 THE COURT: Sustained as to compound.

11 Q. BY MR. ANDERSON: What had Mr. McCarns told you about

12 that money?

13 A. That it would be sitting in escrow for us to buy back

14 our home.

15 Q. So based on that statement, were you planning on

16 using that $200,000 to get back full title to your home?

17 A. Yes.

18 MR. GREINER: Objection. Speculation.

19 THE COURT: Overruled.

20 Q. BY MR. ANDERSON: After that conversation, did you

21 have any further reason or desire to talk to Domonic McCarns

22 about the transaction?

23 A. Yes.

24 Q. Did you try and contact Domonic McCarns?

25 A. Yes. It was further down the line.

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1 Q. Okay. Why was it you tried to contact Domonic

2 McCarns?

3 A. Because on our island there was 40-plus days of rain,

4 and I ran a child care out of my home. And the ceiling

5 collapsed, missing one of our children, and so we were trying

6 to get the insurance or someone to come and repair because we

7 had to close the business down.

8 Q. Were you able to get --

9 Well, first of all, did you call Mr. McCarns?

10 A. Yes.

11 Q. Did you leave him messages?

12 A. I left messages on the recording.

13 Q. Did you ever get him to call you back?

14 A. There was no response.

15 Q. What did you end up doing about the collapsed roof on

16 the insurance?

17 MR. GREINER: Objection. Relevance.

18 MR. ANDERSON: I'll tie it up, Your Honor. It's

19 going to be relevant.

20 THE COURT: All right. I'll allow it just this

21 question first. You may answer.

22 Q. BY MR. ANDERSON: What did you do about the collapsed

23 roof?

24 A. We also contacted Twyus Peahu, and he tried to

25 contact Charles Head.

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1 MR. GREINER: Objection. Hearsay or relevance. How

2 do we know that?

3 THE COURT: Sustained. The jury shall disregard that

4 last answer.

5 Q. BY MR. ANDERSON: Okay. So you contacted Twyus Peahu

6 in --

7 Did you also try and contact the insurance company to

8 get money?

9 A. Yes, we did.

10 Q. Were you able to get money from the insurance company

11 to fix the roof?

12 A. No. They told us it had to go through the mortgage

13 company and then they disburse the monies to us.

14 Q. And who was the company that you needed to contact in

15 order to get the insurance money?

16 A. It was through --

17 Q. You don't need the name, but who were you trying to

18 contact to get that insurance money from?

19 A. Domonic McCarns.

20 Q. Did you also send a letter to Domonic McCarns and

21 Head Financial Services about this problem?

22 A. Yes.

23 Q. Did you ever get the insurance money for the roof

24 caving in?

25 A. No.

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1 Q. At some point did you stop making payments to Domonic

2 McCarns and Head Financial Services?

3 MR. GREINER: Objection. Didn't make payments to

4 Domonic McCarns. There is no evidence.

5 THE COURT: Sustained.

6 Q. BY MR. ANDERSON: Who were you making rent payments

7 to?

8 A. Funding Foreclosures.

9 Q. And at some point did you stop making those payments?

10 A. Yes, I did.

11 Q. Why was that?

12 A. It was because there was no response from the company

13 as to the insurance part. There was no response about what we

14 should do. Because there was no income, we had to close the

15 business.

16 Q. So this was all after the roof caves in and you can't

17 get a response?

18 A. Yes.

19 Q. If you had known that your equity would be taken,

20 would you have entered into this deal?

21 MR. GREINER: Objection. Speculation. Relevance.

22 It's not relevant what she would have done. It's at the time.

23 THE COURT: Just state the objection without

24 discussion. Sustained.

25 MR. ANDERSON: Your Honor, I would ask to be allowed

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1 to ask it since it goes to materiality of the statements.

2 MR. GREINER: Same objection, Judge.

3 THE COURT: Try again.

4 Q. BY MR. ANDERSON: Had you known that your equity

5 would not be held for you in trust, would you have entered into

6 this transaction?

7 A. Not --

8 MR. GREINER: Same objection, Judge. Same question.

9 THE COURT: Sustained.

10 MR. GREINER: Motion to strike any answer given and

11 admonish the jury.

12 THE COURT: That motion is granted. The jury shall

13 disregard the last answer.

14 Q. BY MR. ANDERSON: Was Domonic McCarns' statement that

15 your money would be held in equity important to your decision

16 as to whether or not to get involved in this transaction?

17 A. Yes.

18 Q. Are you still in that home?

19 A. Yes.

20 Q. What did you do regarding the roof?

21 A. We went --

22 MR. GREINER: Objection, Judge. Relevance. What she

23 did with the roof.

24 THE COURT: Sustained.

25 Q. BY MR. ANDERSON: Is the home in a completely

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1 repaired condition?

2 A. Yes.

3 Q. Are the cabinets in?

4 A. No.

5 MR. GREINER: Objection. Lack of evidence.

6 Cabinets.

7 THE COURT: Sustained.

8 Q. BY MR. ANDERSON: All right. Now you said you never

9 got the insurance money. Were you able to get a small amount

10 of money to make some repairs on the house?

11 A. Yes.

12 Q. From who?

13 A. FEMA.

14 MR. GREINER: Objection, relevance.

15 THE COURT: Overruled.

16 Q. BY MR. ANDERSON: I'm sorry. You said FEMA?

17 A. Yes.

18 Q. Was that amount much less than the insurance company

19 would have provided?

20 MR. GREINER: Objection. Speculation.

21 THE COURT: Sustained.

22 Q. BY MR. ANDERSON: Do you know how much money the

23 insurance company was supposed to provide?

24 MR. GREINER: Objection. Lack of personal knowledge.

25 MR. ANDERSON: It's yes or no.

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1 THE COURT: Overruled. Answer the question yes or

2 no.

3 THE WITNESS: Yes.

4 Q. BY MR. ANDERSON: How much?

5 MR. GREINER: Objection. Speculation.

6 THE COURT: Overruled.

7 Q. BY MR. ANDERSON: How much was the insurance company

8 supposed to give you?

9 A. $12,000.

10 Q. How much did you get from FEMA?

11 A. $3,900.

12 Q. Have you been able to get the equity back that was

13 taken from your home?

14 A. No.

15 Q. I would like you to turn to that binder that's in

16 front of you.

17 MR. GREINER: Actually, Judge, on that last answer

18 and question there is lack of evidence that it was taken.

19 THE COURT: Overruled.

20 Q. BY MR. ANDERSON: I would like you to turn to what's

21 been marked as Government's Exhibit 10A for identification.

22 THE COURT: This is 10A1?

23 MR. ANDERSON: Yes, Your Honor. Excuse me.

24 Q. BY MR. ANDERSON: Do you have that in front of you?

25 A. Yes.

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1 Q. And that's an 11-page exhibit. Do you see all

2 11 pages of it?

3 A. Yes.

4 Q. Okay. Do you recognize those documents?

5 A. Yes.

6 Q. What are they?

7 A. Equity Purchase Agreement.

8 Q. And do some of the pages in this document bear your

9 signature?

10 A. Yes.

11 MR. ANDERSON: Your Honor, I would ask that

12 Government's Exhibit 10A1 be admitted. It's also covered by

13 the stipulation of the parties that it is a document that was

14 found during the execution of search warrants on November 16th,

15 2006, during the execution of the search warrants at A-1

16 Property Management in Newport Beach, California, Creative

17 Loans, Premier Services in Irvine -- excuse me -- on Irvine

18 Boulevard in Tustin, California, and FCO on Nutmeg Place in

19 Costa Mesa, California.

20 THE COURT: Any objection, Mr. Tedmon?

21 MR. TEDMON: No, Your Honor.

22 THE COURT: Mr. Samuel?

23 MR. SAMUEL: No, Your Honor.

24 THE COURT: Mr. Greiner?

25 MR. GREINER: No, Your Honor.

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1 THE COURT: All right. 10A1 is admitted.

2 (Government Exhibit 10A1, Equity Purchase Agreement

3 dated 6/14/2005 between Rufo Cardenas Jr., and Sharolynn

4 Noelani Cardenas (“Sellers”) and FundingForeclosures.com

5 (“Purchaser”), admitted into evidence.)

6 THE COURT: And it may be displayed to the jury. You

7 may proceed.

8 Q. BY MR. ANDERSON: Do you see the address on page one

9 of the Government's Exhibit 10A1, 5666 --

10 THE COURT: Hold on.

11 MR. GREINER: Judge, one screen is not working over

12 here on the defense side.

13 THE COURT: All right. We need everyone to be able

14 to see. We will give Ms. Schultz a moment --

15 MR. ANDERSON: Your Honor, it's not essential that we

16 go through every document in detail. I'll keep moving on.

17 MR. GREINER: But we don't have it on the screen.

18 MR. ANDERSON: We will take it down. That's fine.

19 Let's go to Government's Exhibit 10A2.

20 THE COURT: That was just the first page of 10A1

21 being displayed?

22 MR. ANDERSON: It was.

23 THE COURT: So we'll go back to those if we have the

24 screen working, if the Government wishes.

25 Q. BY MR. ANDERSON: So now we're looking at

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1 Government's Exhibit 10A2. Do you recognize Government's

2 Exhibit 10A2?

3 A. Part of it.

4 MR. ANDERSON: Your Honor, I'm going to ask that

5 Government's Exhibit 10A2 be admitted pursuant to that

6 stipulation as a document found during the execution of search

7 warrants.

8 THE COURT: Any objection? Mr. Tedmon?

9 MR. TEDMON: No.

10 THE COURT: Mr. Samuel?

11 MR. SAMUEL: No.

12 THE COURT: Mr. Greiner?

13 MR. GREINER: No, Your Honor.

14 THE COURT: All right. 10A2 is admitted. It's two

15 pages.

16 (Government Exhibit 10A2, Wire Instructions and

17 Authorization re property at 5666 Kei Place Kapaa, HI 96746,

18 admitted into evidence.)

19 MR. ANDERSON: Are the monitors working?

20 MR. SAMUEL: No monitors are working.

21 Q. BY MR. ANDERSON: Let's talk about 10A2. Does it say

22 wire instructions and authorization at the top?

23 A. Yes.

24 Q. You said that you recognized part of it but not

25 another part. Which part do you recognize?

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1 A. The first part on the top.

2 MR. TEDMON: Your Honor, this is going to be

3 difficult if she's going to start segmenting the document

4 because the jury is not going to even know what she's referring

5 to and neither do we. I think we need to have the screens at

6 this point.

7 THE COURT: All right. I think that's fair enough.

8 You said IT is on the way. Can you elicit further testimony

9 without reviewing document?

10 MR. ANDERSON: No. The further testimony is based on

11 the document. Maybe this is a good time for a break.

12 THE COURT: We had checked this all out, but

13 Government equipment, being what it is at times, it appears not

14 to be functioning. So we're going to as quickly as possible

15 get the monitor for Mr. Greiner and Mr. McCarns working during

16 the break.

17 Please remember my admonitions. Don't talk about the

18 case. Don't think about conclusions. Don't do any research.

19 Let me know if anyone contacts you. We'll let you know as soon

20 as we're ready to go.

21 (Jury out.)

22 (Break taken.)

23 THE COURT: All right. All monitors are working. I

24 guess we always make certain they are on as a matter of course,

25 and we fixed the one monitor. The other one is slipping. But

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1 we'll just charge ahead until 1:30 today.

2 You should have a copy of the order in the form in

3 which it will appear on the docket today, signed. If you want

4 to talk about that at the end of the day, we can.

5 My question is, I would unseal the documents I

6 conditionally sealed. They were sealed conditionally. So we

7 need to talk about that. Let's bring the jury back in.

8 (Jury in.)

9 THE COURT: You may be seated. Welcome back, ladies

10 and gentlemen. All our monitors are working, and we also

11 tightened the one monitor that was slipping. As we did that,

12 the other monitor started to slip. Just so you know, that one

13 is wedged in a way that it's staying up for now, but if you

14 touch it, it might slip. Or maybe it's the one on the other

15 end. It's this end.

16 All right. In any event, I think we're set to go

17 until 1:30, which is our adjournment time. So let's pick up

18 where we left off. Mr. Anderson.

19 MR. ANDERSON: Your Honor, I would ask that

20 Government's Exhibit 10A2 be admitted, if it hasn't already,

21 and ask to publish it.

22 THE COURT: It has been admitted so you may publish

23 it, show it to the jury.

24 Q. BY MR. ANDERSON: Now this is a two-page document,

25 and we're looking at the first page of it. You had said that

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1 there were some things that you recognized and then there were

2 other things. What is it that you recognize on the document?

3 A. I recognize from the top to authorization, the bank

4 name down for the account was not filled in.

5 Q. And I'm going to highlight a portion of the document.

6 Is that the portion of the document that was not filled in?

7 A. Yes.

8 Q. Where it says Pacific Mercantile Bank, 949 South

9 Coast Drive, Number 300, and then gives account numbers, and

10 phone number, and for the account of Creative Loans?

11 A. Yes.

12 Q. Okay. And let's turn to page two of this exhibit.

13 Is the same thing the case here on page two of the exhibit?

14 A. Yes.

15 Q. Now if you look to Government's Exhibit 10A3, do you

16 recognize Government's Exhibit 10A3? And right now we're just

17 talking about the first page.

18 A. Yes.

19 Q. What do you recognize about that document?

20 A. Our signature.

21 MR. ANDERSON: Your Honor, I would ask that this

22 document also be admitted as a document recovered during the

23 search warrants pursuant to the stipulation.

24 THE COURT: 10A3, page one?

25 MR. ANDERSON: Yes, Your Honor. If there is no

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1 objection, I'll have the whole thing admitted. What I would

2 like to focus on is 10A1 (sic).

3 THE COURT: Any objection, Mr. Tedmon?

4 MR. TEDMON: No objection to 10A3 all the way through

5 3-7, the entire exhibit.

6 THE COURT: Seven pages. Mr. Samuel, any objection?

7 MR. SAMUEL: No objection.

8 THE COURT: Mr. Greiner?

9 MR. GREINER: No objection for 1 through 7 of this

10 exhibit, Judge.

11 THE COURT: 10A3 is admitted. All seven pages.

12 (Government Exhibit 10A3, Grant Deed for property in

13 Kauai Hawaii, admitted into evidence.)

14 Q. BY MR. ANDERSON: And you said you recognized

15 signatures. If you touch the screen next to you, it will

16 create an arrow. Could you touch the screen near the

17 signatures that you recognize?

18 A. (Indicating.)

19 Q. Whose signatures are those?

20 A. My husband's and mine.

21 Q. Now, on this deed it lists Rufo Cardenas, Jr., and

22 Sharolynn Cardenas granting the property. Is that you and your

23 husband?

24 A. Yes.

25 Q. And it says it's granting it to

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1 FundingForeclosures.com. Do you recognize

2 FundingForeclosures.com?

3 MR. TEDMON: Objection, Your Honor. Vague as to

4 time.

5 THE COURT: Sustained.

6 Q. BY MR. ANDERSON: That's fair.

7 Sitting here today, do you know what

8 FundingForeclosures.com was?

9 MR. GREINER: Objection. Relevance. Today.

10 Q. BY MR. ANDERSON: And then I'll work backward.

11 THE COURT: Overruled. You may answer yes or no.

12 Q. BY MR. ANDERSON: Do you recognize the name

13 FundingForeclosures.com?

14 A. Yes.

15 Q. When did you first hear the name

16 FundingForeclosures.com?

17 A. It was a while after we heard different names.

18 MR. GREINER: Objection. Non-responsive. Move to

19 strike.

20 THE COURT: Sustained. The jury shall disregard that

21 answer.

22 Q. BY MR. ANDERSON: I'm going to ask the question

23 again, and if you could give an answer that's more specific to

24 time period or references other events we've already discussed.

25 When did you first hear about

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1 FundingForeclosures.com?

2 A. A while after we signed the paperwork.

3 MR. ANDERSON: Let's go to Government's Exhibit 10A4.

4 Your Honor this is a one-page exhibit, and I would

5 ask that it be admitted pursuant to the stipulation.

6 THE COURT: Any objection, Mr. Tedmon?

7 MR. TEDMON: No, Your Honor.

8 THE COURT: Mr. Samuel?

9 MR. SAMUEL: No, Your Honor.

10 THE COURT: Mr. Greiner?

11 MR. GREINER: No, Your Honor.

12 THE COURT: All right. Exhibit 10A4 is admitted.

13 (Government Exhibit 10A4, Signature page reflecting

14 “Date of Contract Acceptance: 06/14/2005” and the signatures of

15 both Rufo Cardenas, Jr., and Sharolynn Noelani Cardenas

16 admitted into evidence.)

17 Q. BY MR. ANDERSON: Do you recognize Government's

18 Exhibit 10A4?

19 Let me ask you two questions. Do you recognize the

20 signatures on Government's Exhibit 10A4?

21 A. Yes.

22 Q. Do you know whose they are?

23 A. Yes.

24 Q. Whose?

25 A. My husband's and mine.

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1 Q. Now if we zoom out, this appears to be a document

2 that's at the back of other pages. Is that right?

3 MR. GREINER: Objection. Relevance. And it's vague.

4 THE COURT: Sustained.

5 Q. BY MR. ANDERSON: Government's Exhibit 10A4, does

6 that appear to be the first page of a document that you signed?

7 MR. GREINER: Objection. Speculation. Lack of

8 personal knowledge.

9 THE COURT: Sustained. You can rephrase.

10 Q. BY MR. ANDERSON: Ask you this, do you recall ever

11 seeing any pages that went before this document, this page,

12 that were a part of the document?

13 MR. GREINER: Objection. Compound.

14 THE COURT: Overruled.

15 Q. BY MR. ANDERSON: You can answer the question.

16 A. Can you rephrase that?

17 Q. Sure. Do you know if you were ever given pages that

18 preceded this page?

19 MR. GREINER: Objection. Vague.

20 MR. ANDERSON: Yes or no, and then I'll follow up.

21 THE COURT: Overruled. You may answer if you're

22 able.

23 THE WITNESS: I can't remember that.

24 Q. BY MR. ANDERSON: Okay. You can't remember getting

25 additional pages before this page?

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1 MR. GREINER: Objection. Asked and answered.

2 THE COURT: Sustained.

3 MR. ANDERSON: Let's go to Government's Exhibit 10A5.

4 Your Honor, this is yet another document that's stipulated to

5 as having been recovered at the search warrant location, so I

6 would ask that it be admitted pursuant to that stipulation.

7 THE COURT: Any objection, Mr. Tedmon?

8 MR. TEDMON: No, Your Honor.

9 THE COURT: Mr. Samuel?

10 MR. SAMUEL: No, Your Honor?

11 THE COURT: Mr. Greiner?

12 MR. GREINER: No, Judge.

13 THE COURT: 10A5 is admitted.

14 (Government Exhibit 10A5, Check-off list for Cardenas

15 documents with handwritten note in bottom right corner admitted

16 into evidence.)

17 Q. BY MR. ANDERSON: I just want to ask you a very small

18 amount of questions about this.

19 The name, Cardenas, that's your last name, is that

20 right?

21 A. Yes.

22 Q. And then where it lists city and state, is that the

23 city and state that you lived in?

24 A. Yes.

25 Q. Let's go to Government's Exhibit 10A6. Another

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1 document found in the search warrant, and according to the

2 stipulation ask that it be admitted, Your Honor.

3 THE COURT: Any objection? Mr. Tedmon?

4 MR. GREINER: No, Your Honor.

5 MR. TEDMON: No, Your Honor.

6 MR. SAMUEL: No, Your Honor.

7 THE COURT: All right 10A6 is admitted, two pages.

8 (Government Exhibit 10A6, Letter dated 4/6/2006 to

9 Nations Property Management from Cardenas’ re flood damage to

10 their home in Hawaii admitted into evidence.)

11 Q. BY MR. ANDERSON: Do you recognize this document?

12 A. Yes.

13 Q. What is it?

14 A. It's a letter I wrote to the company.

15 Q. A letter about what?

16 A. About the situation about the rain and the flood and

17 the ceiling caving in.

18 Q. Were you asking for anything in this letter?

19 MR. GREINER: Objection. Speaks for itself. Best

20 evidence.

21 THE COURT: Sustained.

22 Q. BY MR. ANDERSON: The date that's on the letter,

23 April 6, 2006, is that approximately when you wrote the letter?

24 A. Yes.

25 MR. ANDERSON: Thank you. No further questions, Your

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1 Honor.

2 THE COURT: All right. Cross-examination.

3 Mr. Greiner, you're going to go first?

4 MR. GREINER: Yes, Your Honor, if I could.

5 THE COURT: All right.

6 CROSS-EXAMINATION

7 BY MR. GREINER:

8 Q. Thank you, Judge. Good morning, Ms. Cardenas.

9 A. Good morning.

10 Q. Let me give you a brief overview. I want to talk to

11 you about the testimony you did today. I want to talk to you

12 then about statements you gave to the Government prior to

13 today. And then I want to talk to you about documents. So

14 we'll break it up into three areas. Okay?

15 A. Okay.

16 Q. And if you can do this for me, if you can speak into

17 that mic so I can hear and also so the court reporter can hear,

18 that would be helpful.

19 A. Okay.

20 Q. And if you don't understand anything I ask you, just

21 ask me to repeat it, and I'll be glad to do it. Okay?

22 A. Okay.

23 Q. All right. To get a timeframe, do you recall back on

24 November 28th of 2003 sending an e-mail to Charles Head?

25 MR. TEDMON: Objection. Relevance.

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1 THE COURT: Overruled.

2 THE WITNESS: No.

3 Q. BY MR. GREINER: Do you remember filling out

4 information regarding who you were, your phone number -- or do

5 you recall -- strike that.

6 Do you recall filling out information on the internet

7 about your house in 2003?

8 MR. TEDMON: Objection. Relevance.

9 THE COURT: Overruled.

10 THE WITNESS: Not that I remember.

11 Q. BY MR. GREINER: Okay. Then let's do this. I think

12 behind you, I think, there should be a red binder. Do you see

13 a red binder back there?

14 A. Yes.

15 Q. Okay. And in that binder, if you'd turn to the

16 letter G as in George. Do you have that in front of you?

17 A. Yes.

18 Q. And do you see the document that's labelled on the

19 lower right-hand corner where it says exhibit number DM-G1? Do

20 you see that document?

21 A. Yes.

22 Q. And on that document, do you see at the top it says,

23 "from Sharolynn Cardenas," do you see that?

24 A. Yes.

25 Q. And that's your name, correct?

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1 A. Yes.

2 Q. All right. And you see the date sent, it says

3 Friday, November 28th, 2003, do you see that?

4 A. Yes.

5 Q. And do you see it says "to" and it says "Charles

6 Head," do you see that?

7 A. Yes.

8 Q. Okay.

9 MR. TEDMON: Your Honor, I'm going to object at this

10 point. Move to strike. Mr. Greiner hasn't laid a foundation

11 for admission of the document, and to start asking questions

12 about a document that is not admitted is inappropriate.

13 THE COURT: Sustained.

14 MR. TEDMON: Move to strike any question and answer.

15 THE COURT: The jury shall disregard the answer so

16 far.

17 MR. GREINER: I move admission of DM-G1 pursuant to

18 the stipulation that all counsel have signed.

19 THE COURT: Mr. Tedmon?

20 MR. TEDMON: No objection.

21 THE COURT: Mr. Samuel?

22 MR. SAMUEL: No objection.

23 THE COURT: Mr. Anderson?

24 MR. ANDERSON: No objection.

25 THE COURT: All right. Then 10G1 (sic) is admitted.

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1 (Defendants' Exhibit DM-G1, November 28, 2003 e-mail

2 from Sharolynn Cardenas to Charles Head admitted into

3 evidence.)

4 Q. BY MR. GREINER: Ms. Cardenas, at the top of G-1 do

5 you see it says "from Sharolynn Cardenas"?

6 A. Yes.

7 Q. It says "sent Friday, November 28, 2003"?

8 A. Yes.

9 Q. It says "to Charles Head"?

10 A. Yes.

11 Q. And below do you see where its written -- it says,

12 "contact information," it says, "your new client Sharolynn

13 Cardenas"?

14 MR. TEDMON: Your Honor, can we publish the document?

15 MR. GREINER: Sure. Is that possible?

16 THE COURT: Is there cooperation in publication?

17 MR. ANDERSON: Yes, Your Honor. What we've done is

18 the Government has agreed to bring up defense exhibits provided

19 Mr. Greiner speaks slowly and clearly and not put too much of a

20 burden on Ms. Kenney. It's actually a harder job than it

21 looks.

22 THE COURT: So DM-G1 may be published.

23 MR. GREINER: I'll abide by those rules. Speaking

24 slowly. Enlarge that, please.

25 MR. TEDMON: I'm sorry?

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1 THE COURT: Mr. Greiner, asked for a portion to be

2 enlarged. So this is a portion of DM-G1.

3 Q. BY MR. GREINER: Ms. Cardenas, do you see the

4 information that's been enlarged on the computer screen from

5 Exhibit DM-G1?

6 A. Yes.

7 Q. Does that information reflect the house that you and

8 your husband owned back in 2003?

9 A. Yes.

10 Q. And does that reflect your desired loan in the amount

11 of $130,000?

12 A. Yes.

13 MR. GREINER: Judge, can I ask your clerk one

14 question?

15 (Pause in proceedings.)

16 Q. BY MR. GREINER: And you also see that the

17 approximate property value you listed is $190,000, do you see

18 that?

19 A. Yes.

20 Q. Okay. And you also see that self credit rating you

21 put back in 2003 is bad, correct?

22 A. Yes.

23 Q. Okay. Were you having financial challenges back in

24 2003?

25 A. Yes.

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1 Q. You owed money on bills you couldn't pay?

2 A. Yes.

3 Q. And in your testimony you said that you filed

4 bankruptcy, so is that the result of you being unable to pay

5 your bills?

6 A. Yes.

7 Q. We can take that exhibit down. Thank you.

8 All right. Prior to ever speaking even to your real

9 estate broker -- Mr. Peahu?

10 A. Peahu.

11 Q. -- Peahu, you had a bankruptcy lawyer, right?

12 A. Yes.

13 Q. And you had that lawyer in 2004, correct?

14 A. Yes.

15 Q. And you had that bankruptcy lawyer in 2005, correct?

16 A. Yes.

17 Q. And your bankruptcy lawyer is the one that suggested

18 talking to -- Mr. Peahu?

19 A. Peahu.

20 Q. -- Peahu, who was the real estate broker, right?

21 A. Yes.

22 Q. And the reason for that that you understood was what?

23 A. That he would be able to help us back on our feet.

24 Q. How?

25 A. By getting another mortgage company to help us.

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1 Q. In what way?

2 A. I have no idea.

3 Q. Were you looking to sell your house?

4 A. No.

5 Q. Were you looking to refinance your house?

6 A. Yes.

7 Q. So you wanted to refinance to get money out, is that

8 right?

9 A. "Get money out" meaning?

10 Q. Okay. Why did you want to refinance your house?

11 A. To try to get our loan at a better rate and to get

12 our bills down.

13 Q. How were you going to get your bills down by getting

14 your house loan at a better rate?

15 A. By borrowing extra money to pay our bills.

16 Q. So you wanted to borrow more money to pay bills and

17 get that out of your house, correct?

18 A. Correct.

19 Q. And Mr. -- say his last name one more time?

20 A. Peahu.

21 Q. And Mr. Peahu did that for you, correct?

22 A. Yes.

23 Q. And what type of interest rate did he get on your

24 house?

25 A. There was no interest rate.

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1 Q. Okay. Well, then share with me, Mr. Peahu, what did

2 he do for you? What did he do for you?

3 A. He connected us with Mr. McCarns.

4 Q. So Mr. Peahu didn't refinance your house?

5 A. No.

6 Q. Do you know why he didn't?

7 A. No.

8 Q. Did you ask him?

9 A. Yes.

10 Q. Did he respond?

11 A. He said this was the only way to go.

12 Q. Did you ask him why?

13 A. No.

14 Q. Why didn't you?

15 A. I'm not too sure.

16 Q. Did you ever ask your bankruptcy lawyer if you had

17 other options?

18 A. No.

19 Q. So Mr. Peahu said he couldn't help you, correct?

20 A. He did not use that words.

21 Q. He said he couldn't be of assistance to you?

22 A. He just told us this is the only way to go.

23 Q. Okay. And so then how did you get in contact, as you

24 say it, with Domonic McCarns?

25 A. Mr. Peahu asked for our permission to give our

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1 numbers, our phone number to a company that can help us.

2 Q. Okay. And so can you tell the ladies and gentlemen

3 of the jury how many times did you personally meet with Domonic

4 McCarns?

5 A. I never did meet Domonic McCarns.

6 Q. Okay. So was it always by telephone?

7 A. Yes.

8 Q. So when you spoke on the phone, what you know is you

9 spoke to him -- a person that said the person's name was

10 Domonic McCarns?

11 A. Yes.

12 Q. And you don't know who that person actually was, do

13 you?

14 A. No.

15 Q. All right. If we could have Government's

16 Exhibit 10A1, please.

17 THE COURT: You can also look on the document on the

18 screen, ma'am, whichever is easiest for you.

19 MR. GREINER: Whichever you want to do, Ms. Cardenas.

20 Tell me when you're ready.

21 THE WITNESS: I'm ready.

22 Q. BY MR. GREINER: On your screen is Government's

23 Exhibit 10A1 entitled Equity Purchase Agreement. You received

24 that, correct?

25 A. Yes.

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1 Q. And you received that in the mail?

2 A. Yes.

3 Q. If you would turn to page 10A1-2, which is the second

4 page?

5 A. Yes.

6 Q. If you go down the left-hand column, down toward the

7 bottom, do you see two Xs in two boxes?

8 A. Yes.

9 Q. And the words after those Xs say "seller agrees,"

10 correct?

11 A. Yes.

12 Q. Who put the Xs in the boxes?

13 A. That's not an X.

14 Q. I'm sorry?

15 A. That's not an X.

16 Q. What is it?

17 A. It's initials. My husband's initials.

18 Q. Okay. Did you see him initial it?

19 A. Yes.

20 Q. Okay. If you would turn to the fourth page, which is

21 Government's Exhibit 10A1-4, please. Do you have that in front

22 of you?

23 A. Yes.

24 Q. And you notice in the middle where it says

25 unconscionability, do you see that the word "seller" has a

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1 bracket in black ink?

2 A. Yes.

3 Q. And do you see where it says "re-sale," it has a

4 bracket in black ink, do you see that?

5 A. Yes.

6 Q. And do you see the words, "black out-not

7 comfortable"?

8 A. Yes.

9 Q. Did you write that?

10 A. Yes, I did.

11 Q. Why did you write that?

12 A. Because at that time I was asking questions with

13 Mr. McCarns over the phone.

14 Q. Okay.

15 A. And I told him that I did not feel comfortable about

16 it being purchased for immediate re-sale, and he said -- he

17 told me that if I want to, I could write on the side of it how

18 I felt.

19 Q. And that's what you did?

20 A. Yes, I did.

21 Q. Did you ever take that document to your bankruptcy

22 attorney?

23 A. No.

24 Q. Did you ever take the document, which is Government's

25 Exhibit 10A1 through 10A1-4, to Peahu to have him read it?

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1 A. Yes, I did.

2 Q. And at the bottom of page 10A1-4 you and your husband

3 signed it, correct?

4 A. Yes.

5 Q. If we could turn to page 10A1-5, please. Do you have

6 that in front of you, ma'am?

7 A. Yes.

8 Q. Okay. And you see your signature, correct?

9 A. Yes.

10 Q. And you see your husband's signature?

11 A. Yes.

12 Q. And you signed this page after reading it, right?

13 A. Yes.

14 Q. Okay. Did you take that page to your bankruptcy

15 lawyer?

16 A. No.

17 Q. Did you take that page to Peahu?

18 A. Yes.

19 Q. And did he read it?

20 A. Yes.

21 Q. Did he read it before you signed it?

22 A. Yes.

23 Q. And after he read it, you signed it, right?

24 A. Yes.

25 Q. Okay. If you turn to Government's Exhibit 10A1-6,

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1 please. Do you see that document, ma'am? Or you can turn to

2 it in the binder.

3 A. Okay.

4 Q. And you see Government's Exhibit 10A1-6, correct?

5 A. Yes.

6 Q. And at the top do you see the date of June 14, 2005?

7 A. Yes.

8 Q. And it may be quicker to look at the documents

9 instead of going back on the computer and apologize to you and

10 to the jury.

11 But that date of June 14, 2005, that's the same date

12 that's on the equity purchase agreement, which is Government's

13 Exhibit 10A1, isn't that true?

14 If you look at page 10A1, Government's Exhibit 10A1,

15 the first page, and do you see right up there near Equity

16 Purchase Agreement, do you see the date of June 14, 2005?

17 A. Yes.

18 Q. Go back to 10A1-6, do you see that?

19 A. Yes.

20 Q. If we could enlarge that. And on 10A1-6, there is

21 handwritten it looks like it says "one-year lease," do you see

22 that?

23 A. Yes.

24 Q. And that's your handwriting?

25 A. Yes.

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1 Q. And you put that on the document?

2 A. Yes.

3 Q. Okay. And then there's also some more brackets on

4 Government's Exhibit 10A1-6, paragraph D-5, in the last

5 sentence, do you see a bracket before the word "month"?

6 A. Yes.

7 Q. The word "month to month" do you see the other

8 bracket?

9 A. Yes.

10 Q. And those are brackets you put, correct?

11 A. Yes.

12 Q. And then if we go to the next page, please. Do you

13 see your signature, correct?

14 A. Yes.

15 Q. With the date of June 14, 2005, right?

16 A. Yes.

17 Q. And you see your husband's signature, right?

18 A. Yes.

19 Q. And you see the date of June -- it looks like 14,

20 2005, right?

21 A. Yes.

22 Q. Now, I thought I heard you say that the first time

23 you heard about FundingForeclosures.com was a while after you

24 signed the paperwork. Do you recall saying that?

25 A. Yes.

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1 Q. Okay. Well, on Government's Exhibit 10A1-7, do you

2 see underneath your signature there appears to be somebody's

3 signature, do you see that?

4 A. Yes.

5 Q. Okay. If you would enlarge that, please.

6 And do you see under that signature it has words

7 under the line, do you see that?

8 A. Yes.

9 Q. What does that read?

10 A. FundingForeclosures.com.

11 Q. And the date to the left of that is June 15th, '05,

12 correct?

13 A. Yes.

14 Q. And that's the document that you signed on June 14th,

15 '05, correct?

16 A. I'm sorry. I cannot answer that.

17 Q. Well, let's enlarge the document. And let's then

18 magnify it.

19 Your signature with the date of June 14th, '05,

20 correct, ma'am?

21 A. That's my signature, but that's not my date.

22 Q. Okay. So when you told the ladies and gentlemen of

23 the jury a little bit earlier that you signed the document on

24 June 14th, '05, you were wrong?

25 A. Yes.

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1 Q. If we could take that document off. If we could go

2 to Government's Exhibit 10A1-8, please. Do you see that

3 document, ma'am?

4 A. Yes.

5 Q. And that's acknowledgement by seller, correct?

6 A. Yes.

7 Q. And do you see your initials?

8 A. Yes.

9 Q. And do you see your husband's initials?

10 A. Yes.

11 Q. Did you take the document that's entitled

12 Acknowledgement By Seller, Government's Exhibit 10A1-8, to your

13 bankruptcy lawyer?

14 A. No.

15 Q. Did you take the document entitled Acknowledgement By

16 Seller to your real estate broker, Peahu?

17 A. Yes.

18 Q. And did you sign acknowledge -- or initial

19 acknowledgement by seller after you took the document to your

20 real estate broker, Peahu?

21 A. Yes.

22 Q. Did you ask Peahu any questions about the document

23 entitled Acknowledgement By Seller?

24 A. Yes.

25 Q. And if we could go to page two of Government's

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1 Exhibit 10A1-9, please.

2 THE COURT: It's page 10A1-9, which is also shown as

3 page two.

4 Q. BY MR. GREINER: Thank you. If we could highlight

5 that, please.

6 Do you see the highlighted portion of page two of

7 Exhibit 10A1-9, ma'am?

8 A. Yes.

9 Q. And do you see the date?

10 A. Yes.

11 Q. And that's June 14th, '05, correct?

12 A. Yes.

13 Q. And just to the left of that date you see your

14 husband's initials?

15 A. Yes.

16 Q. And you see your initials, correct?

17 A. Yes.

18 Q. If we could take that document off the screen. If we

19 could put Government's Exhibit 10A1-10, please.

20 Do you have that document, ma'am?

21 A. Yes.

22 Q. That's entitled Notice of Cancellation?

23 A. Yes.

24 Q. And do you see the date or do you want me to enlarge

25 it? Do you see the date on it?

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1 A. I can see the date.

2 Q. And what is the date?

3 A. June 14, 2010 -- oh, 2005.

4 Q. Let's enlarge it. What's the date again?

5 A. June 14th, 2005.

6 Q. All right. If we could enlarge, please.

7 And do you see the next sentence down says that you

8 have until midnight on a certain date to cancel, do you see

9 that?

10 A. Yes.

11 Q. And what is that date?

12 A. June 20th, 2005.

13 Q. Okay. And do you see your husband's signature on

14 that page?

15 A. Yes.

16 Q. And do you see your signature on that page?

17 A. Yes.

18 Q. Did you take that document to your bankruptcy

19 attorney?

20 A. No.

21 Q. Did you take that document to your real estate

22 broker, Peahu?

23 A. Yes.

24 Q. And did you ask questions about that document --

25 A. Yes.

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1 Q. -- to Peahu?

2 A. Yes.

3 Q. And after asking questions, you signed the document,

4 correct?

5 A. Yes.

6 Q. And your husband signed the document, correct?

7 A. Yes.

8 Q. If we could take that document down and go to the

9 next exhibit which would be Government's Exhibit 10A1-11.

10 Do you have that document in front of you, ma'am?

11 A. Yes.

12 Q. It's entitled Affidavit of Deed, correct?

13 A. Yes.

14 Q. Okay. And if we could have that highlighted, please.

15 Do you see on Government's Exhibit 10A1-11, Affidavit

16 of Deed, paragraph 2-B, where it says "consideration in the

17 amount of" and then there is a figure, correct?

18 A. Yes.

19 Q. What's that figure?

20 A. $26,000.

21 Q. Okay. And that's what you ultimately received,

22 correct?

23 A. Yes.

24 Q. Okay. And if we could enlarge the document, please.

25 Do you see your husband's signature on Government's

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1 Exhibit 10A1-11?

2 A. Yes.

3 Q. And on that same document do you see your signature?

4 A. Yes.

5 Q. Did you take the affidavit of deed to your bankruptcy

6 lawyer?

7 A. No.

8 Q. Did you take the affidavit of deed to your real

9 estate broker, Peahu?

10 A. Yes.

11 Q. Did you ask Peahu questions about your affidavit of

12 deed?

13 A. Yes.

14 Q. After asking questions of Peahu of the affidavit of

15 deed, did you see your husband sign it?

16 A. Yes.

17 Q. Did you sign the document entitled affidavit of deed?

18 A. Yes.

19 Q. If we could take that document down and go to

20 Government's Exhibit 10A2, please.

21 Do you have that document in front of you, ma'am?

22 A. Yes.

23 Q. Okay. And you discussed with the Government this

24 document on direct examination, do you remember that?

25 A. Yes.

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1 Q. And it's entitled Wire Instructions and

2 Authorization, correct?

3 A. Yes.

4 Q. And on that document, which is Government's

5 Exhibit 10A2, you see your husband's signature, correct?

6 A. Yes.

7 Q. And you see your signature, correct?

8 A. Yes.

9 Q. And you placed your signature on this document after

10 giving the notary proof of identification of who you were,

11 correct?

12 A. Yes.

13 Q. And you visually saw your husband sign this document,

14 Government's Exhibit 10A2, after he gave the notary proof of

15 identification, correct?

16 A. Yes.

17 Q. Before you signed the wire instructions and

18 authorization document, did you take that document to your

19 bankruptcy attorney?

20 A. No.

21 Q. Did you take the document to your real estate broker,

22 Peahu?

23 A. No.

24 Q. And if we could go to the next document, which is

25 Government's Exhibit 10A2-2, do you see that document, ma'am?

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1 A. Yes.

2 Q. It's also entitled Wire Instructions and

3 Authorization, correct?

4 A. Yes.

5 Q. It also bears your husband's signature, correct?

6 A. Yes.

7 Q. And it also bears your signature, correct?

8 A. Yes.

9 Q. But it does not have the notary, correct?

10 A. Yes.

11 Q. You did not sign Government's Exhibit 10A2-2 at the

12 same time that you signed the same document that is

13 Government's Exhibit 10A2, did you?

14 A. No.

15 Q. You signed them on different dates, correct?

16 A. I can't answer that.

17 Q. All right. And you noticed that 10A2-2, where it

18 says -- if we could enlarge that, please -- where it says "for

19 the account of" on Government's Exhibit 10A2-2, that's blank,

20 correct?

21 A. Yes.

22 Q. Okay. If we could enlarge, please.

23 And also on Government's Exhibit 10A2-2 where it says

24 "escrow officer," that's blank, correct?

25 A. Yes.

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1 Q. And those two items are different than on

2 Exhibit 10A2, correct?

3 A. Yes.

4 Q. Because on 10A2 it has the name of an escrow officer,

5 right?

6 A. Yes.

7 Q. And it has the name for "the account of," correct?

8 A. Yes.

9 Q. And that's the document that you notarized, correct?

10 A. I can't answer that. My reason? The bank --

11 Q. Not asking your reason.

12 A. Okay.

13 Q. Your answer in front of the ladies and gentlemen of

14 the jury will stand. Thank you.

15 If we go to Government's Exhibit 10A3, please. Do

16 you have that in front of you, ma'am?

17 A. Yes.

18 Q. Entitled Grant Deed, do you see that?

19 A. Yes.

20 Q. You see your husband's signature on that document,

21 correct?

22 A. Yes.

23 Q. You see your signature on that document, correct?

24 A. Yes.

25 Q. And it is not notarized, correct?

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1 A. Yes.

2 Q. And it bears no indication that it was filed at any

3 county recorder's office, correct?

4 A. Yes.

5 Q. And in the enlarged portion, which you discussed with

6 the Government, it says "hereby grants to," and then it has a

7 name, correct?

8 A. Yes.

9 Q. And what's that name?

10 A. FundingForeclosures.com.

11 Q. If we can go to Government's Exhibit 10A3-4, please.

12 Do you have that document in front of you, ma'am?

13 A. Yes.

14 Q. And down toward the bottom do you see in all capital

15 letters, underlined, it says "warranty deed," correct?

16 A. Yes.

17 Q. And in the middle of the page it says, "parties to

18 document," do you see that? I'll enlarge it.

19 A. Yes.

20 Q. Now it's easier to see. It says "parties to

21 document," correct?

22 A. Yes.

23 Q. And it says "grantor," and it lists your husband,

24 Rufo Cardenas, Jr., correct?

25 A. Yes.

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1 Q. And it lists you, Sharolynn -- I don't want to

2 mispronounce your middle name -- Cardenas, correct?

3 A. Yes.

4 Q. And then "grantee" it has a name, correct?

5 A. Yes.

6 Q. And it says "Bunny Mattice Clevenger," correct?

7 A. Yes.

8 Q. And if you go to Government's Exhibit page 10A3-6.

9 Do you have that in front of you?

10 A. Yes.

11 Q. You see your husband's signature, correct?

12 A. Yes.

13 Q. And you see your signature, correct?

14 A. Yes.

15 Q. And you see that it's been notarized, correct?

16 A. Yes.

17 Q. And you see the date is September 20, 2005, correct?

18 A. Yes.

19 Q. If we can go to Government's Exhibit 10A4, please.

20 Do you have that in front of you, ma'am?

21 A. Yes.

22 Q. And on that page you see your husband's signature?

23 A. Yes.

24 Q. You see your signature?

25 A. Yes.

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1 Q. And neither of you dated it, correct?

2 A. Yes.

3 Q. Why?

4 A. I'm not too sure.

5 Q. Okay. If we can go to Government's Exhibit 10A6,

6 please. Do you have that in front of you, ma'am?

7 A. Yes.

8 Q. If you can enlarge that.

9 Now, at one point in time on your direct examination

10 with the Government you told the ladies and gentlemen of the

11 jury that you wrote a letter to Domonic McCarns. Do you

12 remember that?

13 A. Yes.

14 Q. All right. Government's Exhibit 10A6 is a letter

15 that you typed, correct?

16 A. Yes.

17 Q. It's dated April 6th, 2006, correct?

18 A. Yes.

19 Q. And the words underneath the date are what, ma'am?

20 A. Nations Property Management.

21 Q. And then there is an address, correct?

22 A. Yes.

23 Q. And the address is in Santa Ana, California, correct?

24 A. Yes.

25 Q. And then who did you address the letter to?

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1 A. To whom it may concern.

2 Q. Okay. And nowhere -- we can enlarge.

3 And nowhere on the first page of Government's

4 Exhibit 10A6 do you use the name Domonic McCarns, correct?

5 A. Yes.

6 Q. And if you turn to page 10A6-2, you see your

7 signature, correct?

8 A. Yes.

9 Q. Nowhere on that page, 10A6-2, do you use the name

10 Domonic McCarns, correct?

11 A. Yes.

12 Q. But you cc your attorney, correct?

13 A. Yes.

14 Q. And you also cc TP, which is Peahu, right?

15 A. Yes.

16 Q. Now I want to talk to you about documents that are in

17 the red binder. So you can take the big binder. There you go.

18 Push it aside. And I want to talk to you about Domonic McCarns

19 Exhibit G. Okay. So you should have that tab.

20 Do you have that?

21 A. Yes.

22 Q. And I want to talk about DM-G2. If we could pull

23 that up.

24 MR. ANDERSON: Mr. Greiner, this is what we talked

25 about. You got to get it admitted so that Ms. Kenney doesn't

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1 inadvertently --

2 THE COURT: G-2 is not yet admitted.

3 MR. GREINER: The G series of Domonic McCarns, G-1

4 through and including DM-G8, I would offer to be admitted into

5 evidence pursuant to the stipulation entered into between the

6 parties.

7 THE COURT: Any objection, Mr. Tedmon?

8 MR. TEDMON: No objection, Your Honor. Some of this

9 is duplicative of what the Government has already introduced,

10 and so my only concern is make sure the jury isn't confused.

11 THE COURT: Understood. Mr. Samuel?

12 MR. SAMUEL: No objection.

13 THE COURT: Mr. Anderson?

14 MR. ANDERSON: The same concern as Mr. Tedmon. At

15 some point if we keep introducing the same document --

16 (Defendants' Exhibit DM-G1, DM-G2, DM-G3, DM-G4,

17 DM-G5, DM-G6, DM-G7, DM-G8, (See Index for descriptions)

18 admitted into evidence.)

19 THE COURT: My question is, Mr. Greiner is anything

20 here not duplicative of what's already been admitted as a

21 Government exhibit?

22 MR. GREINER: Yes. G-4.

23 THE COURT: Do you need the other copies in?

24 MR. GREINER: Well, I thought --

25 THE COURT: Let's at least not take time in front of

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1 the jury.

2 MR. GREINER: I can let you know my thoughts.

3 THE COURT: We can address any duplication of

4 exhibits to clarify the jury's job as we move forward.

5 For now, the entire G series is admitted G-1 through

6 G-8. And your going to focus on G-4 now?

7 MR. GREINER: G-4 and G-7, which were not in the

8 Government's exhibit. So if we could have DM-G4, please.

9 Q. BY MR. GREINER: Do you have that in front of you

10 ma'am?

11 A. Yes.

12 Q. If we could enlarge that. This document is entitled

13 Residential Lease After Sale Agreement, do you see that, ma'am?

14 A. Yes.

15 Q. And the first paragraph has the date of June 14,

16 2005, correct?

17 A. Yes.

18 Q. And you see that it's entered into between Nations

19 Property Management, correct?

20 A. Yes.

21 Q. And that's referred to as the landlord, correct?

22 A. Yes.

23 Q. And it's entered with your husband, Rufo Cardenas,

24 Jr., correct?

25 A. Yes.

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1 Q. And yourself, Sharolynn Cardenas, correct?

2 A. Yes.

3 Q. And you're listed as tenant, correct?

4 A. Yes.

5 Q. If we could take that off and go to the next page,

6 please.

7 Do you have the next page in front of you, ma'am?

8 A. Yes.

9 Q. And do you see paragraph 12?

10 A. Yes.

11 Q. It looks like there is a bracket in front of the word

12 "landlord," correct?

13 A. Yes.

14 Q. And then off to the side on the right, it appears to

15 say "quiet enjoyment," do you see that?

16 A. Yes.

17 Q. You wrote those two words "quiet enjoyment," correct?

18 A. Yes.

19 Q. And did you take this residential lease after sale

20 agreement to your attorney?

21 A. No.

22 Q. Did you take it to your real estate broker, Peahu?

23 A. Yes.

24 Q. Did you ask Peahu questions?

25 A. Yes.

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1 Q. And after asking Peahu questions, if we could go to

2 the last page, please.

3 THE COURT: The last page of G-4, 1492.

4 MS. KENNEY: This is page three. Do you know how

5 many pages it is?

6 MR. GREINER: Four. Thank you.

7 Q. BY MR. GREINER: And after Peahu answered your

8 questions, you signed the residential lease after sale

9 agreement, correct?

10 A. Yes.

11 Q. And your husband signed it, correct?

12 A. Yes.

13 Q. And it's dated June 15th, 2005, correct?

14 A. Yes.

15 Q. If we could go to G-7, please.

16 Do you have that document in front of you, ma'am?

17 A. Yes.

18 Q. Do you recall sometime in the early -- sometime in

19 the late part of June 2005, an appraiser coming out to your

20 property?

21 A. Yes.

22 Q. I want to talk to you now about your testimony on

23 direct examination with the Government.

24 Okay. I don't think I need to refer to any

25 documents. I think we're done with those. All right.

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1 A. Okay.

2 Q. Do you remember talking with the Government, saying

3 that a person you understood to be Domonic McCarns sent you a

4 packet of documents, correct?

5 A. Yes.

6 Q. That was the equity purchase agreement document,

7 right?

8 A. I'm not too sure.

9 Q. Do you have any recollection in your mind what the

10 first package of documents were that were sent to you?

11 A. Yes.

12 Q. So you know what they were?

13 A. It was for information.

14 Q. Okay. Anything else?

15 A. Not that I can recollect.

16 Q. All right. Then you testified on direct that prior

17 to receiving the second package of documents you talked to a

18 person that you -- that represented themselves to be Domonic

19 McCarns, do you remember that?

20 A. Yes.

21 Q. Okay. And do you recall what was in that second

22 package of documents?

23 A. Paperwork on our home. Paperwork on our home.

24 Q. What was the paperwork?

25 A. I can't recollect at this time.

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1 Q. Okay. And you told the ladies and gentlemen of the

2 jury that in your second conversation with the person that

3 represented themselves as being Domonic McCarns, that person

4 said let your bankruptcy attorney know to cancel the

5 bankruptcy, do you remember that?

6 A. Yes.

7 Q. And so did you call your bankruptcy attorney?

8 A. Yes.

9 Q. Or did you go see him?

10 A. I called him.

11 Q. So you called him on the phone. And what did you

12 tell him?

13 A. I told him that Mr. McCarns told us to give him a

14 call to dismiss the bankruptcy.

15 Q. Okay. And did your attorney ask you any questions?

16 A. And he said, "are you sure?" And I said that's what

17 I was instructed to do.

18 Q. And what did your attorney say?

19 A. He said okay. He was not on the island at that time.

20 Q. Okay. Well, you talked to him by phone, right?

21 A. Yes.

22 Q. Okay. And there was no pressure on you when you made

23 the phone call, was there?

24 A. No.

25 Q. And you talked as long as you wanted to with your

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1 attorney, right?

2 A. As long as I had because he was in between court

3 cases.

4 Q. Okay. Well, did you tell him to call you back?

5 A. No.

6 Q. Did you call him back?

7 A. No.

8 Q. All right. So you had the conversation with your

9 attorney. Did your attorney ask who is this person that says

10 their name is Mr. McCarns?

11 A. He did ask that part.

12 Q. Okay. And what did you tell him?

13 A. I said it's a person that Mr. Peahu got us hooked us

14 up with.

15 Q. And what else did you say about him, anything?

16 A. And he said okay.

17 Q. So that's all you told your attorney?

18 A. Yes.

19 Q. Your real estate broker hooked you up with this guy

20 named Mr. McCarns and he says dismiss my bankruptcy?

21 A. Yes.

22 Q. That's it?

23 A. Yes.

24 Q. And your bankruptcy attorney said done?

25 A. He didn't say "done." He just said okay.

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1 Q. Okay. Did you sign any documents with your

2 bankruptcy attorney saying that you authorized him to dismiss

3 your bankruptcy?

4 A. Not that I can remember.

5 Q. Did you sign any bankruptcy documents that were filed

6 with the Court saying you authorized your bankruptcy to be

7 dismissed?

8 A. Not that I can remember.

9 Q. Did your bankruptcy attorney ever mail to you any

10 documents that said that your bankruptcy was dismissed?

11 A. Yes.

12 Q. And do you remember the date?

13 A. No.

14 Q. You talked to the Government on direct examination

15 about a term and I'm -- I want to find out what you understand.

16 You used the term equity, do you remember that?

17 A. Yes.

18 Q. What is your understanding of the term equity?

19 A. The term equity that I understand is the amount that

20 our home is worth during that time.

21 Q. And that's your understanding of the term equity?

22 A. Yes.

23 Q. So using your term, when you said that Mr. McCarns

24 said that the $200,000 of equity in your house was going to go

25 into an escrow account, what was your understanding how that

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1 was going to happen?

2 A. My understanding of the $200,000 was going into an

3 account that is going to be held for us. And at the end of the

4 one-year lease with them, it was going to come back to us, that

5 $200,000.

6 Q. I appreciate your answer, but directing you back to

7 what my question was.

8 What was your understanding of how -- where was that

9 $200,000 coming from?

10 A. From my understanding at that time, the $200,000 was

11 coming from another loan that was made towards our home. There

12 was a balance due on our home that was going to be paid off

13 during that time. And then there was a balance left over that

14 was going to an equity account or an escrow account.

15 Q. Well, I got to go back to the documents. If you

16 could turn in the red binder to DM-G1. We already talked about

17 that. If you could turn to that, please. And if we could put

18 that on the screen.

19 THE COURT: You have about three more minutes, just

20 so you know.

21 MR. GREINER: Thank you, Judge.

22 Q. BY MR. GREINER: Now, DM-G1 is an e-mail that you

23 wrote to Charles Head back on November 28, 2003, and in that

24 you said that your desired loan amount was 130,000, do you see

25 that?

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1 A. Yes.

2 Q. And do you see your approximate property value was

3 190,000, do you see that?

4 A. Yes.

5 Q. So you just testified in front of the jury that you

6 believed this $200,000 in equity was going to come from another

7 loan on your house, right?

8 A. Yes.

9 Q. So that means you were going to get a loan for

10 somewhere in the amount of $390,000?

11 A. No.

12 Q. Now you also talked over with the Government that --

13 let me hold off on that for a second.

14 THE COURT: If you're opening up another line of

15 questioning, we can just break here.

16 MR. GREINER: That's fine.

17 THE COURT: That brings us to the end of the first

18 day of trial, ladies and gentlemen. I'm going to excuse you

19 for the rest of the day. Our schedule tomorrow is 1:30 to

20 4:30. So if you can be ready to go right at 1:30, we should be

21 ready now that we've gotten going.

22 Overnight, and during the afternoon and tomorrow

23 morning, please keep in mind all of my instructions. No

24 thinking about the ultimate conclusion of the case, no research

25 of any kind, electronic, or going to the library, or reading

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460


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1 any kind of book about what the case might be about. If you

2 happen to see any news reports, please divert your eyes, don't

3 listen to anything that may be reported about the case. If

4 anyone attempts to contact you in any way, let me know first

5 thing tomorrow.

6 Have a good afternoon, evening, and tomorrow morning,

7 and we'll see you 1:30 tomorrow. Thank you very much.

8 (Jury out.)

9 THE COURT: You may step down, ma'am. If you could

10 be back in your seat tomorrow at 1:30.

11 THE WITNESS: Thank you.

12 THE COURT: Thank you.

13 All right. Just briefly. You may be seated if you'd

14 like.

15 On the exhibits, because there is no joint exhibit

16 list, can you meet and confer and tell me how you propose to

17 simplify the question of possible duplication of exhibits for

18 the jury? I don't know if it's a cross-reference chart with

19 multiple columns. Meet and confer. So that even if multiple

20 sets go to them, they can easily know if something is a pure

21 duplicate.

22 I'll get a better sense as we go along, but to the

23 extent -- this is the first witness covering ground, I

24 understand taking time. But if there's way to speed up the

25 second witnesses, I might start prodding you. But I'm just

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1 telling you what I'm thinking at this point.

2 In terms of unsealing of those documents, did you

3 have something you wanted to say about that?

4 I conditionally sealed the S.M. documents. Do you

5 want to think more about that?

6 MR. TEDMON: Could I do that, Your Honor? And either

7 send the Court and the counsel an e-mail later today. Would

8 that be all right? I want to go through the documents again

9 and see if there is any sanitation.

10 THE COURT: Fair enough.

11 MR. SAMUEL: That's fine with me, Your Honor. I'm

12 more than happy to unseal them all, but I did that out of an

13 abundance of care.

14 THE COURT: Does anyone else have a dog in this

15 fight?

16 MR. GREINER: No position, Judge.

17 MR. ANDERSON: No, Your Honor.

18 THE COURT: So I'll wait to here from you. Is there

19 anything more today?

20 I assume tomorrow we will get to -- how much longer

21 do you have?

22 MR. GREINER: Just to finish up with her testimony

23 and to go over what she told the agents prior to today.

24 THE COURT: Time estimate?

25 MR. GREINER: I don't know, Judge. You've seen me in

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1 trial. I'm doing the best I can. I'm trying not to duplicate.

2 It's a document case.

3 THE COURT: It's a document intensive case. I'm not

4 giving you a hard time yet. I'm giving you notice that I may

5 gave you a hard time in the future.

6 MR. GREINER: I anticipate that's going to happen at

7 some point.

8 THE COURT: Mr. Hansen is getting his virtual trip to

9 Hawaii by virtue of this case.

10 MR. GREINER: I hope he's enjoying it.

11 THE COURT: I'm going to let you know if you're up

12 against 20 minutes. How much time will you need, Mr. Tedmon,

13 of this witness?

14 MR. TEDMON: At this point, I don't think I'm going

15 to ask any questions.

16 THE COURT: Mr. Samuel?

17 MR. SAMUEL: Don't think I have a question.

18 MR. GREINER: I'll take his five and his eight.

19 THE COURT: I didn't offer that. I think we'll get

20 to other witnesses tomorrow. Either Kou Yang, or Ms. Taylor,

21 or Solares.

22 MR. ANDERSON: Hopefully, get to both Ms. Taylor and

23 Ms. Yang tomorrow. Obviously, we need to move faster than we

24 did today.

25 THE COURT: Anything further? Mr. Anderson?

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1 MR. ANDERSON: No, Your Honor. Thank you.

2 MR. TEDMON: No, Your Honor.

3 MR. SAMUEL: No, Your Honor.

4 MR. GREINER: I think there's one thing that's

5 outstanding. And I asked the Government.

6 I think you ruled pretrial my in limine motion about

7 Mr. McCarns' amount of money that he made.

8 THE COURT: I deferred.

9 MR. GREINER: And so you're expecting me to object

10 then during trial and to do it that way, correct?

11 I just wanted to make sure. That's why I didn't say

12 anything in opening.

13 THE COURT: I've taken a peek at the exhibits, so I'm

14 ready for objections based on whatever the status is with

15 respect to that document at the time it's offered. If it's

16 offered. Anything further?

17 MR. TEDMON: No, Your Honor.

18 MR. ANDERSON: No, Your Honor.

19 THE COURT: We're in recess. I'll be available

20 starting 1:15 p.m. tomorrow. Otherwise, be ready to go at

21 1:30.

22 (Court adjourned. 1:34 p.m.)

23

24

25

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Case 2:08-cr-00116-KJM Document 548 Filed 06/30/14 Page 146 of 146

2 CERTIFICATION

4 I, Diane J. Shepard, certify that the foregoing is a

5 correct transcript from the record of proceedings in the

6 above-entitled matter.

9 /s/ DIANE J. SHEPARD


DIANE J. SHEPARD, CSR #6331, RPR
10 Official Court Reporter
United States District Court
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DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460


Case 2:08-cr-00116-KJM Document 549 Filed 06/30/14 Page 1 of 127

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

---oOo---

BEFORE THE HONORABLE KIMBERLY J. MUELLER, JUDGE

---oOo---

UNITED STATES OF AMERICA,

Plaintiff,

vs. No. 2:08-cr-116

Volume 3
CHARLES HEAD, BENJAMIN
BUDOFF, DOMONIC MCCARNS,

Defendants.
/

---oOo---

REPORTER'S TRANSCRIPT

TRIAL PROCEEDINGS

WEDNESDAY, OCTOBER 23, 2013

---oOo---

Reported by: DIANE J. SHEPARD, CSR #6331, RPR

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Case 2:08-cr-00116-KJM Document 549 Filed 06/30/14 Page 2 of 127 177

1 APPEARANCES

3 For the Government:

4
BENJAMIN B. WAGNER
5 UNITED STATES ATTORNEY
501 I Street, Suite 10-100
6 Sacramento, California 95814
BY: MICHAEL D. ANDERSON
7 MATTHEW G. MORRIS
Assistant U.S. Attorneys
8

9 For the Defendant, Domonic McCarns:

10 JAMES RALPH GREINER


Law Offices of James R. Greiner
11 1024 Iron Point Road
Folsom, CA 95630
12

13 For the Defendant, Benjamin Budoff:

14 DWIGHT M. SAMUEL
Law Offices of Dwight M. Samuel
15 117 J Street
Suite 202
16 Sacramento, CA 95814

17
For the Defendant, Charles Head:
18
SCOTT L. TEDMON
19 Law Offices of Scott L. Tedmon
980 Ninth Street
20 16th Floor
Sacramento, CA 95814
21

22

23

24

25

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1 I N D E X

2 GOVERNMENT WITNESSES PAGE

3 SHAROLYNN CARDENAS
CROSS-EXAMINATION BY MR. GREINER (CONT'D) 184
4 REDIRECT EXAMINATION BY MR. ANDERSON 202
RECROSS-EXAMINATION BY MR. GREINER 207
5
SHANNON TAYLOR
6 DIRECT EXAMINATION BY MR. MORRIS 215
CROSS-EXAMINATION BY MR. TEDMON 226
7 CROSS-EXAMINATION BY MR. GREINER 236
REDIRECT EXAMINATION BY MR. MORRIS 237
8 RECROSS-EXAMINATION BY MR. TEDMON 239

9 KOU YANG
DIRECT EXAMINATION BY MR. MORRIS 241
10

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1
GOVERNMENT EXHIBITS RECEIVED IN EVIDENCE
2 No. Description Page

3 5A1 Foreclosure Closing Worksheet Seller: 222


Benjamin & Shannon Taylor Buyer: Adam
4 Coffman
5B1 U.S. Department of Housing and Urban 222
5 Development Settlement Statement for
property at 54 North Shelly Avenue Fresno CA
6 Borrower: Adam Coffman Seller: Benjamin &
Shannon Taylor Lender: Olympus Mortgage
7 Company
5B2 Uniform Residential Loan Application in the 222
8 name of Adam Coffman for property at 54
North Shelly Avenue Fresno CA with
9 attachments
5B3 Castlehead Inc., Escrows Receipt for Funds 222
10 and copy of check dated 5/12/2004 Received
from Adam Coffman Washington Mutual Bank
11 check payable to Castlehead Escrow in the
amount of $2,438.39
12 5B4 Power of Attorney – Special Adam Coffman 222
appoints Joshua Coffman as power of
13 attorney Signed, dated and notarized on
4/26/2004 With attachments
14 5C1 Grant Deed recorded in Fresno County 222
5/14/2004 for property at 54 North Shelly
15 Avenue, Fresno CA Grantor: Benjamin &
Shannon Taylor Grantee: Adam Coffman
16 5D1 Bank of America Business Checking Statement 222
for 4/29-2004-05/26 2004 Account for
17 Financial Enterprises LLC Copies of checks
61 Foreclosure Schedule April 2005 259
18 62 Foreclosure Schedule May 2005 260
63 Foreclosure Schedule (Undated) 260
19 64 Chart with headings: Property; Bank; Loan 260
Payment; Mortgage Payment; Bank Phone #;
20 Tenant; Buyer; Lease Payment (Undated)
65 Chart with headings: Property; Bank; Loan 260
21 Payment; Mortgage Payment; Bank Phone #;
Tenant; Buyer; Lease Payment Date: July
22 66 Foreclosure Schedule (Undated) 260
7B2 Uniform Residential Loan Application in the 261
23 name of Ashley Reynolds for property at 542
East 167th Street, San Juan Capistrano, CA
24 92675
104 Email dated 3/21/2005 From Charles Head 266
25 114 Email dated 4/15/2005 From Kou Yang To 268
Charles Head Subject: RE: Simone Bu deal

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1
GOVERNMENT EXHIBITS RECEIVED IN EVIDENCE
2 No. Description Page

3
116 Email dated 4/21/2005 From Heather Worch To 274
4 Charles Head RE: SINGLETON
122 Email dated 5/3/2005 From Kou Yang To 276
5 Charles Head Subject: RE: Stuff
103 Email dated 8/31/2004 From Charles Head To 282
6 Kou Yang Subject: RE: Tracy
124 Email dated 5/12/2005 From 286
7 mhead@financial-enterprises.com To Charles
Head Subject: RE: File Number 07050423
8 (redacted)
125 Email dated 5/13/2005 From Kou Yang 287
9 kouyang@headmortgage.com To Josh’s
Blackberry, <jactor5@tmo.blackberry.net> CC
10 Charles Head charleshead@headmortgage.com
Subject: RE: TAYLORS
11 148 Email dated 7/11/2005 From Kou Yang To 290
Charles Head Subject: RE: (Blank)
12

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1 SACRAMENTO, CALIFORNIA

2 WEDNESDAY, OCTOBER 23, 2013

3 ---oOo---

4 THE CLERK: Calling criminal case number 08-116,

5 United States v. Charles Head, Benjamin Budoff and Domonic

6 McCarns. This is on for jury trial, and today is day three.

7 THE COURT: Good afternoon. All counsel are present.

8 All defendants are present.

9 Ms. Schultz played for you a voicemail. The Court

10 hasn't heard it, but she played for you a voicemail from a

11 subpoenaed witness.

12 We have a juror note. We can talk about unsealing.

13 I don't think there is any hurry. We can do that on the first

14 break.

15 What about the juror note?

16 MR. TEDMON: Your Honor, I recall this juror. He was

17 the football official/assigner.

18 THE COURT: Correct.

19 MR. TEDMON: And my understanding is that the Ed

20 Shaffer in this case has never lived in Northern California.

21 Probably for the most part, if not all of it, lived in Southern

22 California.

23 So I don't know for sure, but there is nothing that

24 we would know of that would indicate, at least on behalf of

25 Mr. Head, that the Ed Shaffer that juror Larry Vaughn is

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1 talking about is the Ed Shaffer in this case.

2 THE COURT: Anything else that anyone wishes to add?

3 Mr. Anderson?

4 MR. ANDERSON: We're not aware of any information

5 suggesting they are the same person. Of course, if he comes to

6 testify, we'll follow-up.

7 THE COURT: Mr. Greiner?

8 MR. GREINER: Nothing to add, Judge. Thank you.

9 THE COURT: Mr. Samuel?

10 MR. SAMUEL: I have no information.

11 THE COURT: Any objection to my simply informing

12 Mr. Vaughn that we've reviewed his note, and we don't believe

13 there is any issue?

14 MR. GREINER: That's fine, Judge.

15 MR. TEDMON: Yes, Your Honor.

16 MR. ANDERSON: That's fine.

17 THE COURT: Let's bring the jury back in. You have

18 about 15, 20 minutes, Mr. Greiner?

19 MR. GREINER: I organized it, Judge. I'm hoping just

20 to march straight through.

21 It may go over a little bit, but I really tried to

22 organize it. If you see me stray from organization, then you

23 can --

24 THE COURT: I'll let you know when you're bumping up

25 against 20 minutes.

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1 MR. GREINER: I know.

2 (Jury in.)

3 THE COURT: You may be seated.

4 Welcome back to court, ladies and gentlemen of the

5 jury. We hope you had a good evening and morning. We're ready

6 to proceed this afternoon, going until 4:30.

7 I just wanted to begin briefly by acknowledging a

8 note from Mr. Vaughn, Juror Vaughn. I've reviewed that note

9 with counsel, expressing a concern about possibly knowing a

10 witness. We don't think there is an issue. If you have

11 further thoughts on that, let us know.

12 JUROR 7: I don't know if he's the same person.

13 THE COURT: Thank you for letting us know, but we

14 have thought about that and don't see any issue.

15 We're going to pick up with the cross-examination of

16 this witness. Ma'am, please remember you were sworn yesterday.

17 You continue to testify subject to the oath you were given.

18 THE WITNESS: Yes.

19 THE COURT: And Mr. Greiner has a brief additional

20 period of time for cross-examination. Then we'll turn to

21 Mr. Samuel. Mr. Greiner.

22 SHAROLYNN CARDENAS,

23 a witness called by the Government, having been previously

24 sworn by the Clerk to tell the truth, the whole truth, and

25 nothing but the truth, testified as follows:

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1 CROSS-EXAMINATION (CONT'D)

2 BY MR. GREINER:

3 Q. Thank you, Judge. Good afternoon, Ms. Cardenas.

4 A. Good afternoon.

5 Q. Make sure you move the mic close to you and speak up

6 so the court reporter can hear you. Okay?

7 A. Okay.

8 Q. I was just given information by the Government that I

9 didn't have any time to prepare for last night, so there's

10 going to be a couple of additional questions on that

11 information I just received.

12 But I'm not going to do that at the start. I'm going

13 to start with what I prepared for last night, and then we'll

14 get to what the Government just told me. Okay? So you know

15 where I'm going.

16 MR. ANDERSON: Your Honor, I object to that

17 characterization. Mr. Greiner --

18 THE COURT: Sustained.

19 MR. ANDERSON: -- is trying to prejudice the jury.

20 That's not a fair description.

21 THE COURT: No discussion. The objection is

22 sustained. The jury shall disregard Mr. Greiner's comments.

23 You may proceed.

24 Q. BY MR. GREINER: Between yesterday and today, did you

25 have any discussion about your testimony yesterday with

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1 anybody?

2 A. No.

3 Q. Okay. So you didn't talk to the Government about it?

4 A. No.

5 Q. Okay. Did you relay any information to the

6 Government between yesterday's testimony and today?

7 A. Any information meaning?

8 Q. Did you tell them something about what you testified

9 to yesterday?

10 A. About my name.

11 Q. Okay. So you did have a conversation with the

12 Government, true?

13 A. Yes.

14 Q. About the testimony you gave yesterday, true?

15 A. About the testimony I gave yesterday?

16 Q. Yes.

17 A. About my name.

18 Q. Okay. I'll pick up with that line of questioning in

19 a moment. I want to now talk to you about what you discussed

20 with the Government on direct examination yesterday. That's

21 what I'm going to talk to you about. Do you have that in your

22 mine now?

23 A. Yes.

24 Q. The first thing I want to talk to you about is

25 remember the e-mail that you sent to Charles Head back in

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1 November of 2003?

2 A. I remember that e-mail.

3 Q. You did not get a refinancing on your house because

4 of that e-mail, correct?

5 A. I'm not too sure.

6 Q. Do you have any recollection of refinancing your

7 house before you filed bankruptcy?

8 A. Yes.

9 Q. And when did you refinance your house before you

10 filed bankruptcy?

11 A. I'm not sure of the date.

12 Q. And who refinanced your house before you filed

13 bankruptcy?

14 A. I'm not too sure.

15 Q. How much did you refinance your house for?

16 A. I'm not sure of the amount.

17 Q. Do you remember the interest rate?

18 A. No.

19 Q. Do you remember the monthly payments?

20 A. No.

21 Q. You filed bankruptcy in what month of 2004?

22 A. I'm not sure.

23 Q. How many months were you behind on your mortgage

24 payment when you filed bankruptcy?

25 A. I'm not too sure.

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1 Q. Had you received a notice of foreclosure from the

2 bank before you filed bankruptcy?

3 A. Yes.

4 Q. And does that refresh your memory as to how many

5 months behind you were in payments before you filed bankruptcy?

6 A. No.

7 Q. You went to the bankruptcy lawyer --

8 Let me back up. Before going to the bankruptcy

9 lawyer, did you go to Peahu to try refinance your house?

10 A. No.

11 Q. Did you try to sell your house before you went to the

12 bankruptcy lawyer?

13 A. No.

14 Q. Did you try to borrow money from any family members

15 before you went to the bankruptcy lawyer?

16 A. No.

17 Q. Did you try to borrow money from any source before

18 you went to the bankruptcy lawyer?

19 A. Yes.

20 Q. And what source did you go to?

21 A. My church.

22 Q. And did they turn you down?

23 A. No.

24 Q. How much did they give you?

25 A. 7,000.

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1 Q. And how long did that keep the bank from foreclosing

2 on your house?

3 A. It was the day before they auctioned off my house

4 that we flew in to Oahu and went to see the bankruptcy courts.

5 So everything was done before the auction of our house.

6 Q. Okay. So your house was so far into foreclosure that

7 you actually had a deeded sale date, a trustee sale date,

8 right?

9 A. Yes.

10 Q. And the day before that sale date was to occur, you

11 went to a bankruptcy lawyer, correct?

12 A. That day before.

13 Q. And that bankruptcy lawyer filed a Chapter 13 stay in

14 the bankruptcy court, correct?

15 A. Yes.

16 Q. And that stay prevented the bank from foreclosing on

17 your house, correct?

18 A. Yes.

19 Q. And in addition, that bankruptcy created two payments

20 that you had to make per month, correct?

21 A. Yes.

22 Q. One payment was the bankruptcy court took all of the

23 bills that you were behind plus the arrears in your house, put

24 them together, and that was one payment a month that had you to

25 make, correct?

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1 A. Yes.

2 Q. And then you also had to make your mortgage payment

3 per month, correct?

4 A. Not that I remember.

5 Q. So you don't remember being in a Chapter 13 having to

6 make two monthly payments?

7 A. Not two monthly payments.

8 Q. Okay. And then you finally came to a point where you

9 failed to keep up with your mortgage payment and you got

10 another notice of foreclosure on your house while you were in

11 bankruptcy, right?

12 A. No.

13 Q. Okay. So you're in bankruptcy, and the stay is at

14 the bank, and it's at that time that you then went to Peahu to

15 try to refinance your house?

16 A. Yes.

17 Q. And Peahu could not refinance your house?

18 A. He did not say could not.

19 Q. Did he try?

20 MR. ANDERSON: Objection. Calls for speculation.

21 Q. BY MR. GREINER: To your knowledge, did he try?

22 THE COURT: Overruled. You may answer yes or no.

23 THE WITNESS: I'm not too sure.

24 Q. BY MR. GREINER: Did you ask Peahu to try to

25 refinance your house?

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1 A. I just asked him for help.

2 Q. And he couldn't help you, correct?

3 A. No.

4 Q. No, being he did not help you, correct?

5 A. No. He just told us that he was sending us someone

6 else.

7 Q. Right. But Peahu could not do anything himself?

8 MR. ANDERSON: Objection. Calls for speculation.

9 Q. BY MR. GREINER: To your knowledge?

10 THE COURT: Sustained.

11 Q. BY MR. GREINER: Peahu could not do anything himself

12 to help you, correct?

13 MR. ANDERSON: Objection. Calls for speculation.

14 THE COURT: Sustained.

15 Q. BY MR. GREINER: To your knowledge --

16 THE COURT: Sustained. Move on to the next question.

17 Q. BY MR. GREINER: The only thing Peahu did was sent

18 you to another company, correct?

19 A. Yes.

20 Q. And that was Funding Foreclosures?

21 A. Not too sure.

22 Q. Did he send to you another company?

23 A. He did not say. He did not say Funding Foreclosures.

24 Q. He didn't say a name of a company?

25 A. No. He just gave me Domonic McCarns' name.

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1 Q. And you didn't call him?

2 A. Excuse me?

3 Q. You didn't call a person named Domonic McCarns, did

4 you?

5 A. No.

6 Q. Somebody called you, correct?

7 A. Yes.

8 Q. Now, when you were talking to this company that Peahu

9 sent you, you were still in bankruptcy, correct?

10 A. Yes.

11 Q. You were still making your bankruptcy payments?

12 A. Yes.

13 Q. Okay. You didn't try to sell your house?

14 A. No.

15 Q. You didn't try to refinance your house with any other

16 company?

17 A. No.

18 Q. You didn't try to borrow any more money?

19 A. No.

20 Q. And you talked about with the Government that -- they

21 asked you, "well, how did you know that you were selling your

22 house," and you said you read more documents, do you remember

23 that?

24 A. Yes.

25 Q. Okay. Well, in the equity purchase agreement that

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1 we've looked at, that specifically said that it was an

2 agreement to sell your house, and you read that, right?

3 A. Yes.

4 Q. And so you knew when you signed the equity purchase

5 agreement that you were selling your house, right?

6 A. No.

7 Q. Okay. So even though you read the words that you

8 were selling your house, you didn't know that?

9 A. You might say that.

10 Q. Okay. And when you read the words that you were

11 receiving the $26,000 because you were selling your house, you

12 understood that by selling your house that's why you were

13 getting the $26,000?

14 A. No.

15 Q. Even though you read those words, correct?

16 A. I read those words and I asked questions.

17 Q. Right. And you asked questions of Peahu, correct?

18 A. Yes.

19 Q. And then after asking those questions, you signed the

20 document, right?

21 A. After talking to Domonic McCarns again.

22 Q. And you signed the documents, right?

23 A. Yes.

24 Q. Now yesterday you said you talked to Peahu, he

25 answered your questions, and then you signed the documents, do

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1 you remember that?

2 A. Yes.

3 MR. ANDERSON: Objection. Misstates the testimony.

4 THE COURT: Overruled.

5 Q. BY MR. GREINER: And when you signed the equity

6 purchase agreement, you read it so closely that you even

7 bracketed the part where it said that the person purchasing the

8 property may immediately re-sell it, do you remember that?

9 A. Yes.

10 Q. And so when you read that, you understood that

11 because you had a question about it, right?

12 A. Yes.

13 Q. So you knew you were selling your property?

14 A. No.

15 Q. And when you talked to the Government about reading

16 more documents, finding out that you were selling your house,

17 when you signed the addendum to the equity purchase agreement,

18 you knew the language in there that you had bracketed about a

19 one-year lease meant that you were selling your house and

20 renting your house back to yourself, right?

21 A. Can you rephrase that question again?

22 Q. Sure. When we look at Government's Exhibit 10A1-6,

23 the Addendum to Equity Purchase Agreement, you actually wrote

24 on the left-hand column that we saw yesterday "one-year lease,"

25 do you remember that?

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1 A. Yes.

2 Q. And you actually bracketed in the sentence on

3 paragraph D5, the last sentence, where it said month-to-month

4 tenant, do you remember that?

5 A. Yes.

6 Q. Okay. So you read that and understood that you were

7 leasing back your property, correct?

8 A. For that one year.

9 Q. Right. Which meant that you were selling your

10 property to lease it back, right?

11 A. No.

12 Q. Okay. So you were owning your property but you were

13 renting your property, is that what you believe?

14 A. We were owning our property, but, yet, paying the

15 mortgage to this company. And after that, get back -- after

16 the one year, get back our home within two to three months,

17 with our name on the deed, and our home within one year with

18 the $200,000 to put back into that home.

19 Q. And why was your name off the deed in the first

20 place?

21 A. Because according to what we were told is that they

22 needed someone with stronger credit on the deed and to get the

23 mortgage.

24 Q. Well, you know by reading that you sold your

25 property, that's why your name was off the deed, right?

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1 MR. ANDERSON: Objection. Vague as to when she knew

2 what.

3 Q. BY MR. GREINER: Well, when you read the documents

4 and questioned --

5 When you read the documents, specifically the grant

6 deed, you knew that you were selling your property, correct?

7 A. I had a feeling, yes.

8 Q. And that feeling was proved true because the grant

9 deed said you were coming off and somebody else was going on

10 the title of your house, right?

11 A. Yes.

12 Q. And you knew you were selling your house because you

13 knew that you were renting your house for a year, right?

14 A. In my understanding, no. We were always told that we

15 would get the $200,000 back at the end of one year to

16 re-purchase our home.

17 Q. Right. And we covered that yesterday, and I

18 appreciate your answer. Let me get to that in a second.

19 My question to you is, you knew you had sold your

20 house, that's why you entered into the lease agreement,

21 correct?

22 A. No.

23 Q. And we talked about the $200,000 yesterday, and you

24 told us that you had no expectation of getting a $390,000 loan

25 on your house, right?

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1 A. Yes.

2 Q. And one of the documents that you read, and you had a

3 question about, and you asked Peahu about was the

4 acknowledgement by seller, right, that's one of the documents?

5 A. Yes.

6 Q. All right. And you remember on paragraph two it says

7 that the seller acknowledges that the seller's residence is

8 currently in foreclosure, and it was, right?

9 A. Yes.

10 Q. Okay. And that prior to entering into this

11 transaction with the purchaser, the seller has exhausted all

12 When the
means to try to resolve you read
foreclosure, and you had tried
the documents,
13 everything, right? specifically the
grant
14 A. Yes. deed, you knew
that you were
15 Q. Okay. Andselling
thenyour
paragraph three says that seller
property, correct?
16 understands that as A.
part
I hadof the foreclosure proceeding a
a feeling,
yes.
17 trustee sale has been scheduled, and it had been, right?

18 A. Yes.

19 Q. And, again, on the acknowledgement by seller

20 document, paragraph four, it says, seller understands that the

21 equity purchase agreement, which the seller has entered into,

22 is not a loan and is not a mortgage, and you knew that, right?

23 A. Yeah.

24 Q. And you also knew when you signed the acknowledgement

25 by seller that it said that the seller will forfeit title to

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1 seller's residence and lose any claim that the seller may have

2 to the current equity in the seller's residence, and you read

3 that, right?

4 A. Yes.

5 THE COURT: Mr. Greiner, as we agreed, that's

6 20 minutes.

7 MR. GREINER: Okay. Then let me do two things very

8 short.

9 THE COURT: All right.

10 Q. BY MR. GREINER: Let's see. I'm not sure which one

11 will take longer.

12 Let me do it this way. Do you remember -- you

13 remember talking to the Government prior to testifying,

14 correct?

15 A. Yes.

16 Q. Okay. And on one occasion, around April of 2007, do

17 you remember telling the Government that you were referred to

18 FundingForeclosures.com by Peahu, do you remember telling them

19 that?

20 A. Yes.

21 Q. And that you also spoke to a person named John at

22 this company, do you remember that?

23 A. Yes.

24 Q. Okay. And do you remember telling the Government

25 that all documents were signed in the presence of a notary at

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1 Security Title, do you remember that?

2 A. Yes.

3 Q. And do you remember telling the Government that your

4 monthly mortgage prior to entering into the contracts with this

5 company was 1,800, do you remember that?

6 A. Yes.

7 Q. And afterwards, your monthly payment was 1,500, do

8 you remember that?

9 A. Yes.

10 Q. And remember talking to the Government on or about

11 July of 2013, just a couple of months ago?

12 A. Yes.

13 Q. Okay. Do you remember telling the Government that

14 questions that you had about the program that you asked your

15 broker Peahu, right?

16 A. Yes.

17 Q. And that Peahu said that the program was okay, do you

18 remember telling the Government that?

19 A. Yes.

20 Q. Now, did you look at some documents between your

21 testimony yesterday and today?

22 A. Yes.

23 Q. All right. And do you remember the documents you

24 looked at?

25 A. Yes.

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1 Q. Okay. Tell me what they are?

2 A. It was the 10-1-A (sic). It was all the similar

3 documents that you have asked me to look in this red book also.

4 Q. Say that last sentence again.

5 A. It was all the documents that you have asked me to

6 look at yesterday also.

7 Q. Okay. So I had you look at all the documents in the

8 white book and in the red book. I had you look at all of them.

9 A. Okay.

10 MR. ANDERSON: That's not actually true. They're

11 huge books.

12 THE COURT: Objection. No speaking. If there is an

13 objection --

14 MR. ANDERSON: Objection. Maybe Mr. Greiner can ask

15 a more specific question.

16 Q. BY MR. GREINER: All of the Government's exhibits

17 labeled 10A1 you looked at, right?

18 A. Yes. Yes.

19 Q. And all of the exhibits labeled DM-G through the end

20 of that series you looked at, right?

21 A. Yes.

22 Q. Now what did you find? What did you tell the

23 Government?

24 A. You want me to tell you what I told the Government?

25 Q. That's my question.

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1 A. I told them the same thing what I said yesterday.

2 That parts of it was missing at the time of signing.

3 Q. What do you mean by parts?

4 A. Where there was a bank transaction number and so

5 forth.

6 Q. We talked about that. On the wire transaction?

7 A. Yes.

8 Q. We talked about that. One is dated June. One is

9 dated September. One wire transaction has no account and no

10 escrow agent. And the other one in September has an escrow

11 agent and an account. Right?

12 A. Yes.

13 Q. Okay. We talked about that. What else?

14 A. We talked about my signatures.

15 Q. On what documents?

16 A. On the 10-1-A (sic).

17 Q. So the Government's documents?

18 A. Yes.

19 Q. What about your signature on Government's

20 Exhibit 10A1-4?

21 A. Can I look at it?

22 Q. Absolutely. Look at it all you want.

23 A. Yes.

24 Q. All right. What about it?

25 A. That is my signature.

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1 Q. Okay. I'm just trying to find out what you told the

2 Government. So what else did you tell them?

3 A. Nothing else. We just went through that part.

4 10A1-A (sic), -2, -3, -4, the reading, and the signatures.

5 That's about it.

6 Q. Now you're saying signatures. So there are other

7 documents that have your signature on them?

8 A. Yes.

9 Q. You talked to the Government about that?

10 A. Yes.

11 Q. All right. What did you say? Which document? I

12 wasn't there. I don't know. I'm just trying to find out.

13 A. Well, I told them that all of them is my signature.

14 Q. Okay. That's what you told them?

15 A. Yes.

16 Q. All right. We're good then.

17 A. Okay.

18 MR. GREINER: Just one second, Judge.

19 Judge, I appreciate the extra time. Thank you very

20 much.

21 THE COURT: Mr. Samuel, do you have any examination

22 of this witness?

23 MR. SAMUEL: No, I don't, Your Honor.

24 THE COURT: Mr. Tedmon?

25 MR. TEDMON: No, Your Honor.

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1 THE COURT: Any redirect?

2 MR. ANDERSON: Yes, Your Honor.

3 THE COURT: How much time do you estimate you need?

4 MR. ANDERSON: Under ten minutes.

5 REDIRECT EXAMINATION

6 BY MR. ANDERSON:

7 Q. Let's clear up. This conversation you had with the

8 Government, did you talk to me or Mr. Morris today?

9 A. Who is Mr. Morris?

10 Q. That's him right there.

11 A. Not to him.

12 Q. Was it something where people came to you and asked

13 you questions, or did you mention something to someone this

14 morning or this afternoon?

15 A. I just mentioned something this morning -- I mean

16 this afternoon.

17 Q. While you were waiting to testify here?

18 A. Yes.

19 Q. Who did you talk to?

20 A. That gentleman right here.

21 Q. And what did you tell him?

22 A. That last night I was bothered, and I could not sleep

23 because there was something that I remembered in the documents

24 that was addressed to Mr. Charles Head. It was an e-mail that

25 was supposedly from me. What bothered me was my name was

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1 spelled wrong. There is two Ns in my name, but in that

2 document there's only one N.

3 Q. Now, in that e-mail that was discussed yesterday, do

4 you recall specifically going to Head Financial Services or

5 e-mailing Charles Head personally?

6 A. No.

7 Q. Did you ever fill out forms at various websites

8 online about mortgages or related to getting a mortgage?

9 A. Yes.

10 Q. And so can you tell us where or when that e-mail came

11 to exist?

12 A. Are you speaking about the e-mail that came --

13 Q. Yes.

14 A. Only yesterday was the first time I ever seen the

15 e-mail.

16 Q. Okay. Some of the other information on it appears to

17 be information about you or about your property?

18 A. Yes.

19 Q. Okay. So it's fair to say that that at least appears

20 to be referring to your property?

21 A. Yes.

22 Q. All right. Do you have any legal or real estate

23 background?

24 A. No.

25 Q. Do you have any training in the law or in real

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1 estate?

2 A. No.

3 Q. After you saw the documents, did you talk to Domonic

4 McCarns before signing them?

5 A. Yes.

6 Q. Was your conversation with Domonic McCarns and what

7 he told you part of the reason that you signed those documents?

8 A. Yes.

9 MR. GREINER: Objection. Compound.

10 THE COURT: Sustained.

11 MR. GREINER: Move to strike. Admonish the jury,

12 please.

13 THE COURT: The jury shall disregard that answer.

14 You may start over.

15 Q. BY MR. ANDERSON: Let me ask it a little bit

16 different.

17 Was what Domonic McCarns said in that conversation

18 part of the reason that you signed the documents?

19 MR. GREINER: Objection. Vague as to time.

20 MR. ANDERSON: It's the same --

21 THE COURT: Sustained.

22 Q. BY MR. ANDERSON: And when I ask that question, I

23 mean the same conversation that we've been discussing between

24 when you first saw the documents and when you signed them?

25 A. Yes.

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1 Q. And that's "yes"?

2 A. Yes, we signed it because of what was promised to us.

3 Q. All right. Did you ever intend to have -- in this

4 transaction to have $212,071.94 of your equity wired to a bank

5 account that was controlled by Charles Head and not returned to

6 you?

7 MR. TEDMON: Objection.

8 MR. GREINER: Objection.

9 THE COURT: One at a time.

10 MR. TEDMON: Lack of foundation as far as a bank

11 account being controlled by Charles Head.

12 MR. ANDERSON: I have a good faith basis, Your Honor,

13 and will link it up next question.

14 MR. GREINER: Objection. Relevance and speculation.

15 THE COURT: Mr. Tedmon's objection is sustained. So

16 you can -- don't answer that question.

17 Q. BY MR. ANDERSON: Let me do it in parts.

18 Did you ever give permission for $212,071.94 of your

19 equity to be taken from your home and kept by someone else?

20 MR. GREINER: Objection. Phrase "your equity." Lack

21 of foundation --

22 THE COURT: Sustained.

23 Q. BY MR. ANDERSON: Did you ever give permission for

24 $212,071.94 of the equity in your home to be taken and kept by

25 someone else?

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1 MR. GREINER: Same objection. Lack of personal

2 knowledge and speculation as to "your equity."

3 THE COURT: Overruled.

4 Q. BY MR. ANDERSON: You can answer the question.

5 A. No.

6 Q. Did you give permission for that money --

7 Did you intentionally give permission for that money

8 to be wired to a bank account held by the corporate entity

9 Creative Loans?

10 MR. GREINER: Same objection. Speculation. Lack of

11 personal knowledge as to "your equity."

12 Q. BY MR. ANDERSON: All right. The equity in your

13 home?

14 THE COURT: All right. You can answer that question.

15 The objection is overruled.

16 MR. GREINER: Same objection to this question, Judge.

17 Q. BY MR. ANDERSON: You can answer the question.

18 A. No.

19 Q. And the same exact question, would your answer "no"

20 change if you knew that that bank account had as a signer

21 Charles Head on it?

22 MR. GREINER: Objection -- go ahead.

23 MR. TEDMON: First of all, it's speculation. The

24 question is confusing.

25 THE COURT: Sustained.

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1 Q. BY MR. ANDERSON: Did you give permission for

2 $212,071.94 of equity from your home to be wired into a bank

3 account that had Charles Head as a signatory?

4 MR. TEDMON: Objection, Your Honor. Lack of

5 foundation.

6 THE COURT: Sustained.

7 MR. ANDERSON: Well, what's the missing --

8 THE COURT: The objection is sustained. Next

9 question.

10 Q. BY MR. ANDERSON: Did you trust the information

11 provided to you by your real estate broker, Peahu?

12 A. Yes.

13 Q. Did you trust the information given to you by the

14 person on the phone who said he was Domonic McCarns?

15 A. Yes.

16 MR. ANDERSON: No further questions.

17 THE COURT: All right. Any recross, Mr. Greiner?

18 MR. GREINER: Yes, on two areas, Judge.

19 RECROSS-EXAMINATION

20 BY MR. GREINER:

21 Q. If we could pull up DM-G-1, please.

22 Ma'am, what I'm going to talk about is an exhibit in

23 the red book, DM-G, as in George, 1, please.

24 Judge, I could speed it up. I could hand her this

25 document.

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1 THE COURT: All right. You may approach.

2 THE WITNESS: Thank you.

3 Q. BY MR. GREINER: All right. Ma'am, this is the

4 e-mail that you told the Government had a misspelling of your

5 first name, correct?

6 A. Yes.

7 Q. No misspelling of your last name, correct?

8 A. Yes.

9 Q. Let's go over some of the information in there.

10 Where it says "your new client," the "Sharolynn" then

11 would be misspelled because it has one N, correct?

12 A. Yes.

13 Q. It's not working or I have to do something? Sorry.

14 My fault. Thank you.

15 And you can look on the screen if you want. Where it

16 says "your new client" and says "Sharolynn Cardenas," then the

17 "Sharolynn" is misspelled because it's not two Ns, correct?

18 A. Yes.

19 Q. Work phone number, that was your work phone number

20 back in 2003, correct?

21 A. Yes.

22 Q. And where it says home phone number, that was your

23 home phone number back in 2003, correct?

24 A. Yes.

25 Q. And that's your e-mail address, correct?

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1 A. Yes.

2 Q. And that's your street address?

3 A. Yes.

4 Q. City?

5 A. Yes.

6 Q. State?

7 A. Yes.

8 Q. Zip code?

9 A. Yes.

10 Q. Where it says "special contact instructions,

11 morning," that would be the best time to contact you, wouldn't

12 it?

13 A. Yes.

14 Q. And then where it says "desired loan," where it says

15 "type, re-finance," that's what you were looking for in 2003,

16 correct?

17 A. Yes.

18 Q. When it says "desired loan amount, 130,000," that's

19 how much you were looking for in 2003, correct?

20 A. Yes.

21 Q. Loan to value, it says 68 percent. That was your

22 estimate, correct?

23 A. Yes.

24 Q. Where it says "loan category selected," you put

25 "sub-prime," correct?

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1 A. Yes.

2 Q. When it says "approximate property value of 190,000"

3 that was your estimate of your property value at the time,

4 correct?

5 A. Yes.

6 Q. And, again, "State, Hawaii," that's the state, right?

7 A. Yes.

8 Q. Where it says "current loan amount of 130,000," that

9 was your current loan amount about in 2003, correct?

10 A. Approximate, yes.

11 Q. And where it says "self credit rating," it says

12 "bad," that was your analysis of your credit rating at the

13 time, correct?

14 A. Yes.

15 Q. All right. Just one second, Judge.

16 On redirect examination you were talking to the

17 Government about your equity, do you remember that?

18 A. Yes.

19 Q. Okay. We talked about that yesterday. Let's talk

20 about it again today.

21 Your understanding of what equity in your house was?

22 MR. ANDERSON: Objection. Beyond the scope of

23 redirect.

24 THE COURT: Overruled. You may answer.

25 THE WITNESS: Yes.

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1 Q. BY MR. GREINER: Actually, the question requires a

2 little bit more, I think.

3 What is your understanding of equity in your house

4 back in the time of 2005?

5 A. Back in 2005? You're asking about equity? I had no

6 knowledge of.

7 Q. Did you believe back in 2005 that you could take

8 equity and buy groceries?

9 A. I did not understand what equity was about at that

10 time.

11 Q. Okay. In 2006, did you have an understanding of what

12 equity in your house was?

13 A. No.

14 Q. Okay. Did you have an understanding back in 2005

15 that you could make a deposit in a bank of your equity in your

16 house?

17 A. No.

18 Q. Did you have an understanding in 2006 that you could

19 make a deposit of your equity in a bank account?

20 A. No.

21 Q. Did you understand in 2005 that equity is not a real

22 number?

23 A. Yes.

24 MR. ANDERSON: Object -- that's fine.

25 Q. BY MR. GREINER: Did you understand in 2006 that

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1 equity is not a real number?

2 A. Yes.

3 Q. Did you understand that the only way anyone can ever

4 determine if they have equity in their house in 2005 would be

5 to actually sell their house and pay off their mortgage, and

6 any money left would be called equity?

7 A. No.

8 Q. Did you have an understanding in 2006 that the only

9 way you could determine if you had equity in your house was if

10 you sold your house, paid off your mortgage and liens and

11 taxes, and whatever else, and any money left over would be your

12 equity in your house?

13 A. At the year of 2006?

14 Q. Yes.

15 A. Yes.

16 Q. And you sold your house and you received $26,000,

17 right?

18 A. Yes.

19 Q. And that's after asking questions and signing

20 documents?

21 A. And getting promises.

22 Q. So the answer would be "yes," right?

23 A. Yes.

24 MR. GREINER: Thank you.

25 THE COURT: Mr. Anderson?

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1 MR. ANDERSON: No, Your Honor.

2 THE COURT: All right. Let me just ask so that the

3 record is clear. Ms. Cardenas identified someone.

4 MR. ANDERSON: Agent Peter Byrne.

5 THE COURT: It was Agent Peter Byrne. Is it the

6 gentleman sitting in the audience now who raised his hand?

7 THE WITNESS: Yes.

8 THE COURT: All right. So the record clear.

9 May this witness step down? Mr. Anderson?

10 MR. ANDERSON: Yes, Your Honor.

11 THE COURT: Mr. Tedmon?

12 MR. TEDMON: Yes.

13 THE COURT: Mr. Greiner?

14 MR. GREINER: Yes.

15 THE COURT: Mr. Samuel?

16 MR. SAMUEL: Yes.

17 THE COURT: Next witness.

18 MR. MORRIS: United States calls Shannon Taylor.

19 THE CLERK: Ms. Taylor, please come forward.

20 (Photograph taken of witness.)

21 THE CLERK: Please raise your right hand.

22 Do you swear to tell the truth, the whole truth, and

23 nothing but the truth, so help you God?

24 THE WITNESS: Yes.

25 THE CLERK: Please state your full name and spell

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1 your last name for the record.

2 THE WITNESS: Shannon Taylor, S-h-a-n-n-o-n,

3 T-a-y-l-o-r.

4 THE COURT: I understand I should give an

5 instruction.

6 MR. MORRIS: Yes, Your Honor.

7 THE COURT: So you understand, the reason we're

8 taking photographs, those will be available for you in your

9 binders to help you remember names and faces. That's why we're

10 engaging in that exercise with the parties' permission.

11 With respect to Ms. Taylor's testimony, I understand

12 that you may hear evidence that Charles Head committed other

13 acts not charged here. You may consider this evidence only for

14 its bearing, if any, on the question of Mr. Head's intent,

15 motive, opportunity, preparation, plan, absence of mistake or

16 absence of accident, and for no other purpose. You may

17 proceed.

18 MR. SAMUEL: If the Court could instruct this is only

19 to Mr. Head and no other defendant.

20 THE COURT: To further clarify, you may not consider

21 any such evidence as evidence of guilt of the charges for which

22 Mr. Budoff and Mr. McCarns are now on trial.

23 SHANNON TAYLOR,

24 a witness called by the Government, having been first duly

25 sworn by the Clerk to tell the truth, the whole truth, and

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1 nothing but the truth, testified as follows:

2 DIRECT EXAMINATION

3 BY MR. MORRIS:

4 Q. Ms. Taylor, where do you live?

5 A. In Clovis, California.

6 Q. I'd ask to you think back to the 2004 timeframe. Did

7 you live in Clovis, California then?

8 A. No.

9 Q. Where did you live?

10 A. Fresno, California.

11 Q. Do you recall your address in Fresno?

12 A. Yes, 54 North Shelly Avenue.

13 Q. And approximately how long had you lived at that

14 address?

15 A. I believe, from what I can remember, about four

16 years.

17 Q. Thinking again about early 2004, at the beginning of

18 2004 did you own or rent that house?

19 A. Own.

20 Q. And were you falling behind on your mortgage at that

21 time?

22 A. Yes.

23 Q. To the best of your recollection, about how far

24 behind were you on your mortgage?

25 A. We had received a letter about possibly foreclosure

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1 proceedings if we didn't get caught up.

2 Q. In that timeframe, Spring of 2004, did you become

3 involved with a company to try to solve that?

4 A. Yes.

5 Q. And do you recall who it was that you became involved

6 with?

7 A. Head Financial.

8 Q. Do you recall any individual people with Head

9 Financial that you interacted with?

10 A. Yes. Josh Coffman and Cindy Gastelum.

11 Q. Anybody else?

12 A. And Charles Head.

13 Q. Do you recall how you first became aware of Head

14 Financial or of one of those three people?

15 A. I believe it was a postcard in the mail.

16 Q. Do you recall what that postcard said?

17 A. I believe it said something about if you're in

18 financial problems, re-financing, helping you out of

19 foreclosure, something to that effect, to help somebody who is

20 in that financial situation that we were in.

21 Q. Did you do anything in response to receiving that

22 postcard?

23 A. I made a phone call to the number that was on the

24 card.

25 Q. And do you recall who you spoke to?

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1 A. I don't recall, but I believe it was a secretary or

2 someone.

3 Q. Okay. And to the best of your recollection, what did

4 you tell that person?

5 A. I explained the situation and asked them what options

6 or what could they do for us, or if that was the kind of stuff

7 that they took care of.

8 Q. And did you eventually speak to somebody other than

9 the secretary you just mentioned?

10 A. I believe it was Josh Coffman I spoke to.

11 Q. And to the best of your recollection, what did Josh

12 Coffman tell you?

13 A. He wanted to set up a meeting to meet us and go over

14 the different options for situations and how they could help

15 us.

16 Q. And do you recall whether you spoke to him once or

17 more than once?

18 A. I don't recall.

19 Q. Did you in fact meet with Josh Coffman?

20 A. Yes.

21 Q. Where did you meet with him?

22 A. At my property. At my house.

23 Q. Okay. Was anybody else present other than you and

24 Josh Coffman?

25 A. Yes, Charles Head and Cindy Gastelum.

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1 Q. Was anybody else there?

2 A. No -- well, my ex-husband. Sorry.

3 Q. And to the best of your recollection, can you

4 describe this meeting time and/or location of this meeting at

5 your house?

6 A. We sat at the kitchen table. We talked about our

7 situation again. They offered a type of --

8 Q. Can I interrupt for a second here.

9 As we talk about this meeting here, I would like you

10 to be as specific as you can about who said what to the best of

11 your memory?

12 A. Okay.

13 Q. So if you can to the best of your memory -- let me do

14 this actually. You sat at the table with who?

15 A. With Cindy, Charles and Josh.

16 Q. What's your recollection of Cindy's role at that

17 meeting?

18 A. Cindy's role was one of notary.

19 Q. What do you recall about what Josh did or said at

20 that meeting?

21 A. Josh seemed to be the talker for the financial group,

22 seemed to be the one who set up the -- the salesman.

23 Q. What, if anything, do you recall about Charles Head's

24 role at that meeting at your table?

25 A. Charles seemed to be the one in charge.

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1 Q. So going back to what Josh told you, the sales part

2 that you just talked about, what is your recollection of what

3 you were told by Josh the deal would be?

4 A. The deal would be that we would be on title with an

5 investor. The investor we did not know who that would be.

6 "We" meaning me and my ex-husband. And that would go on for a

7 year while we made small payments, which ended up being rent.

8 And then after that year, we would refinance, and the house

9 would be put back into our name alone.

10 Q. Do you recall any discussion about the equity in your

11 house?

12 A. There was no discussion about equity in our house.

13 Q. Did you have any understanding as to what would

14 happen to the equity in your house as part of this deal?

15 A. No.

16 Q. What was your recollection about how long this

17 process would be?

18 A. A year.

19 Q. And this conversation where these terms were

20 presented to you, were all the people that you previously

21 mentioned present at the table when those were said?

22 A. Yes.

23 Q. After this information was given to you, did you make

24 any decision about whether you wanted to proceed with this

25 program?

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1 A. Yes.

2 Q. And what was the decision you made?

3 A. We decided to do it so that we could save the house.

4 Q. Did you sign any papers?

5 A. Yes.

6 Q. Could you describe the process of signing those

7 papers to the best of your recollection today?

8 A. It was rather hurried. And being that we had gone

9 through escrow when we originally bought the house, it wasn't

10 as long as that, and there wasn't as much paperwork. Other

11 than that, it was pretty, you know, here's this quick

12 explanation, if any, and sign or initial.

13 Q. And was it at this same meeting -- the one you just

14 told us about --

15 A. Yes.

16 Q. -- when you made the decision to sign the papers, was

17 your belief that you would be on title with an investor

18 important to you in making that decision?

19 A. Yes.

20 Q. When you made the decision to sign those papers, was

21 the fact that no discussion had occurred regarding equity

22 important to you in making that decision to sign the papers?

23 MR. TEDMON: Objection. Leading.

24 THE COURT: Sustained.

25 Q. BY MR. MORRIS: Did you have in your mind a belief

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1 about the equity in your house?

2 A. Yes.

3 Q. Did your belief about the equity in your house have

4 any role in your decision to sign the papers?

5 A. Yes.

6 Q. What role or what impact did your belief about the

7 equity have in your decision to sign the papers?

8 A. Well, we believed that the equity would stay intact.

9 MR. MORRIS: Your Honor, I'm going to ask to move in

10 the five series of exhibits. These are all covered by the

11 stipulation. I'll read them out by list. 5A1 are documents

12 recovered in the search warrant. 5B1, 5B2, 5B3 and 5B4 are

13 escrow or lender records. 5C1 are county recorder records.

14 5D1 are bank records.

15 THE COURT: Any objection, Mr. Tedmon?

16 MR. TEDMON: No, Your Honor.

17 THE COURT: Mr. Samuel?

18 MR. SAMUEL: No, Your Honor.

19 THE COURT: Mr. Greiner?

20 MR. GREINER: No. Since the limiting instruction, it

21 doesn't affect Mr. McCarns.

22 THE COURT: All right. 5A1 through 5D1 are admitted.

23 MR. SAMUEL: That would be as to Mr. Head only.

24 THE COURT: Agreed, Mr. Morris?

25 MR. MORRIS: That's correct, Your Honor.

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1 THE COURT: All right. So those documents are

2 admitted with respect to the Government's case against

3 Mr. Head. The testimony is subject to the limiting instruction

4 the Court gave at the beginning.

5 (Government Exhibits 5A1, 5B1, 5B2, 5B3, 5B4, 5C1,

6 5D1, (See index for descriptions) admitted into evidence.)

7 Q. BY MR. MORRIS: Could you bring up 5C1, please. Can

8 you see, on the monitor in front of you, that page?

9 A. Yes.

10 Q. Do you recognize the signatures -- well, let me ask

11 you this. Is that your name?

12 A. Yes.

13 Q. Do you recognize the signature above your name?

14 A. Yes.

15 Q. As you sit here today, does that appear to be your

16 signature?

17 A. Yes.

18 Q. The person above you, the name above you, do you know

19 Benjamin D. Taylor, Jr.?

20 A. Yes.

21 Q. How do you know him?

22 A. I was married to him for 17 years.

23 Q. At the time of 2004 were you still married to him?

24 A. Yes.

25 Q. In the course of your 17 years of marriage, did you

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1 become familiar with his signature?

2 A. Yes.

3 Q. As you sit here today, does that appear to be your

4 husband's signature above yours?

5 A. Yes.

6 Q. Zoom back out, please.

7 Again, thinking back to spring of 2004, did you know

8 somebody named Adam Coffman?

9 A. No.

10 Q. And I'll ask you at this point, based on your

11 understanding now, today, do you understand what this document

12 is?

13 A. Today, yes.

14 Q. What is this document?

15 A. This is a grant deed in which it gives Adam Coffman

16 our house.

17 Q. At the time that you signed the document, was your

18 intention to give Adam Coffman your house?

19 A. No. And I don't recall signing this document.

20 MR. TEDMON: Objection, Your Honor. Move to strike

21 the last part of the answer as non-responsive.

22 THE COURT: Sustained. The jury shall disregard that

23 last answer.

24 Q. BY MR. MORRIS: And to clarify the signatures we just

25 looked at a second ago, your testimony is that you think those

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1 are your signatures?

2 A. Yes.

3 Q. If you could bring up 5B4, page six, please. And

4 I'll ask you to look at the bottom of the page in front of you.

5 Above your name there appears to be a signature.

6 Does that appear to be your signature?

7 A. No.

8 Q. And above your husband's name, does that appear to be

9 his signature?

10 A. No.

11 Q. And the next page, please.

12 And above your name on this page, does that appear to

13 be your signature?

14 A. No.

15 Q. And above your husband's name, does that appear to be

16 his signature?

17 A. No.

18 Q. I think you said you live in Clovis now?

19 A. Uh-huh, yes.

20 Q. After you signed these documents, what, if anything,

21 do you recall about the next interactions you had with the

22 folks that were -- any of the people who were at that table?

23 A. I had called Head Financial or Castlehead Financial

24 -- I can't remember, can't recall -- that I had called to ask

25 about a copy of our documents that were signed because we had

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1 only received a partial amount of them.

2 Q. And let's stop and talk about that for a second.

3 A. Oh, okay.

4 Q. So we go back to the date you are at the table and

5 sign the documents --

6 A. Uh-huh.

7 Q. -- did you receive copies of the documents there that

8 day?

9 A. No.

10 Q. Did you ever have another meeting where you signed

11 documents?

12 A. No.

13 Q. Did you ever receive any further documents from Head

14 Financial to sign?

15 A. No.

16 Q. Okay. So then the phone call you make to -- do you

17 recall who you called?

18 A. I don't recall. I'm sorry.

19 Q. What did you ask in that phone call?

20 A. For copies of the documents that were signed that

21 day.

22 Q. Do you recall who you were speaking to at whichever

23 organization you called?

24 A. Oh, gosh, no, I don't recall.

25 Q. But what happened next to the best of your

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1 recollection?

2 A. To the best of my recollection, next we started

3 receiving threatening phone calls from Josh Coffman that he was

4 going to evict us from the house.

5 Q. Do you still live in that house?

6 A. No.

7 MR. MORRIS: Your Honor, could I have a moment with

8 Mr. Tedmon?

9 THE COURT: You may.

10 (Discussion between counsel.)

11 MR. MORRIS: No further questions, Your Honor.

12 THE COURT: All right. Mr. Tedmon,

13 cross-examination?

14 MR. TEDMON: Yes, Your Honor.

15 CROSS-EXAMINATION

16 BY MR. TEDMON:

17 Q. Ms. Taylor, good afternoon.

18 A. Good afternoon.

19 Q. I want to start with your relationship with Head

20 Financial. You indicated on direct examination that your

21 initial contact was with Josh Coffman, true?

22 A. I believe so.

23 Q. And just in the totality of your contacts with anyone

24 from Head Financial, the majority of those were with Josh

25 Coffman, true?

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1 A. True.

2 Q. And in fact, the only time you ever talked to or met

3 with Charles Head was at your kitchen table, true?

4 A. True.

5 Q. Every other contact was with Josh Coffman, correct?

6 A. Correct.

7 Q. So from the time that you got the postcard in the

8 mail to the point where Mr. Coffman, Mr. Head and Ms. Gastelum

9 showed up at your house, all your contacts were with Josh

10 Coffman, correct?

11 A. To the best of my recollection, yes.

12 Q. All right. And when those three individuals -

13 Mr. Coffman, Mr. Head, and Ms. Gastelum - showed up, it was

14 Mr. Coffman that provided you the details of the program, true?

15 A. For the most part.

16 Q. Well, he was the one doing the talking, correct?

17 A. For the most part.

18 Q. All right. Well, Mr. Head didn't offer any details,

19 did he?

20 A. Not that I can recall.

21 Q. Okay.

22 A. Specifically.

23 Q. And prior to you meeting with them at your house, it

24 was your intention to enter into the -- you and your husband at

25 the time to enter into this program, correct?

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1 A. Sure.

2 Q. Well, they brought the documents with them, correct?

3 A. Correct.

4 Q. All right. And after listening to Mr. Coffman, you

5 and your husband signed the documents, true?

6 A. True.

7 Q. Now part of the program was that you would get money

8 up front, correct?

9 A. Correct.

10 Q. All right. Mr. Morris didn't ask you about this. In

11 fact, the way the program worked was you signed these

12 documents, and in exchange for which you would get a check for

13 $20,000, correct?

14 A. Correct.

15 Q. And in fact, you got a check for $20,000, true?

16 A. True.

17 Q. All right. Now the documents that relate to your

18 transaction we don't have, but I want to ask you some questions

19 to the best of your recollection. Okay. I know it's been a

20 long time.

21 Do you recall a document called an Equity Purchase

22 Agreement?

23 A. No.

24 Q. Are you saying that that was not part of the package

25 or you don't recall?

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1 A. That was not part of the package.

2 Q. You specifically remember that?

3 A. Yes.

4 Q. Okay. How do you remember that there was not an

5 equity purchase agreement?

6 A. Because I think I would recall us giving away our

7 equity.

8 Q. Well, if the document's entitled Equity Purchase

9 Agreement, is that something that you specifically don't recall

10 seeing?

11 A. True.

12 Q. You don't recall that?

13 A. No.

14 MR. TEDMON: Your Honor, if we could have -- one

15 moment -- well, let's wait on that for a second.

16 Q. BY MR. TEDMON: You knew as part of the program that

17 you were selling your house, correct?

18 A. No.

19 Q. Well, you paid rent to some organization after you

20 signed the documents, true?

21 A. Well, it wasn't called rent when we were told about

22 it.

23 Q. Okay. Well, you made payments to another company?

24 A. Yes.

25 Q. Correct?

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1 A. Yes.

2 Q. All right. And those were -- those payments were in

3 the form of a lease option, do you recall that?

4 A. Yes.

5 Q. All right. Where somebody else was taking ownership

6 of your property, and you were leasing it back for a period of

7 time, correct?

8 A. Correct. But that's not how it was explained.

9 Q. Well, but that's what it was, true?

10 A. True.

11 Q. All right. And at some point you stopped making

12 payments on this lease option, correct, after you had signed

13 these documents?

14 A. No.

15 Q. That's not correct?

16 A. That's not correct.

17 Q. Do you recall making payments to a Matrix Investment

18 Group?

19 A. Yes.

20 Q. And that was associated with Josh Coffman, correct?

21 A. Yes.

22 Q. All right. And in September of 2005 you stopped

23 making payments to Matrix Investments, didn't you?

24 A. I believe that was part of my attorney and his

25 attorney's agreement so that they could sell the house

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1 together.

2 Q. Okay. Well, keeping the attorneys out of it for a

3 moment, you stopped making payments in September of 2005?

4 A. But that was only because it was an attorney's

5 agreement. Not because we wanted to.

6 Q. Ms. Taylor, let me just ask you this, did you or did

7 you not stop making payments in September of 2005 on the

8 property?

9 A. Not to my recollection.

10 Q. All right. Do you recall giving a statement to Agent

11 Fitzpatrick?

12 A. Yes.

13 Q. You gave him a statement on April 5, 2007, do you

14 recall that?

15 A. Yes.

16 MR. TEDMON: Your Honor, may I approach?

17 THE COURT: You may.

18 Q. BY MR. TEDMON: This is Bates number 1337/1336. I

19 would like you to take a look at paragraph four, last sentence.

20 Just read that to yourself, please. Let me know when you're

21 finished.

22 A. (Witness reviewing document.) Okay.

23 Q. Are you done?

24 A. Yes.

25 Q. Now, does that refresh your recollection as to

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1 whether you stopped making payments in September of 2000 --

2 A. No.

3 Q. It does not?

4 A. No.

5 Q. So if that's in Agent Fitzpatrick's report, are you

6 saying that could be wrong?

7 A. It could be.

8 Q. So he took the information down incorrectly, is that

9 your position?

10 A. That could be.

11 Q. All right. We will get to that with him then. Now

12 with regard to the eviction process --

13 A. Uh-huh.

14 Q. -- I want to focus on that. That's all Josh Coffman,

15 true?

16 A. Yes.

17 Q. And what did Mr. Coffman tell you when he called

18 about the eviction?

19 A. That he was kicking us out of the house.

20 Q. And it was because you were failing to pay rent, is

21 that why?

22 A. I believe that's what he said.

23 MR. TEDMON: Your Honor, if we could have -- this has

24 been previously admitted into evidence, 10A1, page one.

25 THE COURT: That may be displayed.

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1 MR. TEDMON: Thank you.

2 Q. BY MR. TEDMON: Ms. Taylor, this has already been

3 moved into evidence, and I want to just go through a few

4 documents rather briefly here.

5 Do you see where it says Equity Purchase Agreement at

6 the top?

7 A. Yes.

8 Q. All right. Is it your testimony you do not recall

9 signing a document with that entitlement?

10 A. No.

11 Q. If we could have Government's Exhibit 10A1-6, please.

12 It states at the top, Addendum to Equity Purchase Agreement,

13 Potential For Equity Sharing, do you see that?

14 A. Yes.

15 Q. Do you recall seeing a document like that in the

16 packet that you signed?

17 A. No.

18 Q. Government's 10A1-8, please. Expand that. That says

19 Acknowledgement By Seller, do you see that?

20 A. Yes.

21 Q. Do you recall that being in the packet of documents?

22 A. No.

23 Q. All right. Government's 10A1-10, please. Do you see

24 this says Notice of Cancellation?

25 A. Yes.

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1 Q. Do you recall that being in the packet of documents

2 that you signed?

3 A. I don't recall.

4 Q. You don't recall?

5 A. No.

6 Q. All right. 10A1-11, please. And that says Affidavit

7 of Deed, do you see that?

8 A. Yes.

9 Q. Do you recall that being in the packet of documents

10 that you signed?

11 A. No.

12 Q. You do not. Okay. What is it that you recall about

13 being in the packet of documents that you signed, Ms. Taylor?

14 A. I recall the lease agreement. I recall something

15 about the investor being added to the title. There was very --

16 it wasn't like a packet.

17 Q. Well, how many individual documents do you recall

18 there being?

19 A. There may have been about 10.

20 Q. Ten individual documents?

21 A. Yeah.

22 Q. Entitled separately from each other?

23 A. No. The lease agreement had, like, four.

24 Q. Well, I want to make sure the jury is clear on this

25 as well as us. Okay.

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1 How many total pages of documents do you recall

2 signing that day?

3 A. About 10.

4 Q. All right. And what was the total number of pages

5 within those documents, would you say?

6 A. About 10.

7 Q. Ten pages total?

8 A. Yeah, 10 pages total.

9 Q. Okay. And of those 10 pages total, were they divided

10 up into different individual documents, is that your

11 recollection or no?

12 A. You mean, like, the purchase agreement or the lease

13 agreement or whatever in -- divided into each thing, is that

14 what you're talking about?

15 Q. Well, yeah.

16 A. Yes.

17 Q. When we buy a house they are all together --

18 A. Right.

19 Q. -- but they are actually separate documents.

20 A. Uh-huh.

21 Q. You recall there were separate documents?

22 A. Yes.

23 Q. And it totalled about 10 pages?

24 A. Yes.

25 Q. All right. Now ultimately you were able to keep your

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1 house, true?

2 A. No.

3 Q. No. What happened?

4 A. Well, I hired an attorney.

5 Q. Uh-huh.

6 A. And we agreed to sell the house together.

7 Q. Okay. So there was an agreement to do that?

8 A. Yes.

9 Q. All right. And when was that?

10 A. I don't know. It was 2005. I don't recollect the

11 exact year.

12 Q. All right. It was 2005?

13 A. I don't know.

14 Q. You don't recall?

15 A. Yeah.

16 MR. TEDMON: All right. Nothing further, Your Honor.

17 Thank you.

18 THE COURT: Any redirect?

19 Well, let me ask. Any questions, Mr. Samuel? Just

20 so I'm perfectly clear. Mr. Greiner?

21 MR. SAMUEL: No.

22 MR. GREINER: I just have two, Judge, really quick.

23 CROSS-EXAMINATION

24 BY MR. GREINER:

25 Q. Good afternoon, Ms. Taylor.

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1 A. Good afternoon.

2 Q. That meeting that occurred at your house, that was in

3 2004?

4 A. Yes.

5 Q. And all of these activities that you were talking

6 about, that was also in 2004, right? Hold on?

7 MR. TEDMON: Objection. I don't know what activities

8 mean.

9 THE COURT: Sustained.

10 Q. BY MR. GREINER: Okay. When you were meeting at your

11 house, when you contacted the organization before the meeting,

12 that all occurred in 2004, correct?

13 A. Yes.

14 MR. GREINER: Thanks.

15 THE COURT: Mr. Morris, any redirect?

16 MR. MORRIS: Mr. Samuel?

17 THE COURT: He said he has no questions.

18 REDIRECT EXAMINATION

19 BY MR. MORRIS:

20 Q. Mr. Tedmon asked about contacts with Josh Coffman as

21 opposed to contacts with Charles Head, and so I would like to

22 clarify. Referring you to the meeting at your dining room

23 table --

24 A. Yes.

25 Q. -- that you previously talked about.

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1 I think, correct me if I'm wrong, your testimony in

2 substance was that Josh was doing most of the sales pitch?

3 A. Yes.

4 Q. And at that meeting did Josh talk to you about

5 retaining yourself on title on the house?

6 A. Yes.

7 Q. When Josh said that to you, was Charles Head present?

8 A. Yes.

9 Q. Did Charles Head interrupt Josh?

10 A. No.

11 Q. Did Charles Head clarify that that wasn't true?

12 A. No.

13 Q. And when you previously said that there was no

14 discussion of losing the equity in the house, is it also true

15 that neither Josh nor Charles told you --

16 MR. TEDMON: Objection. Leading.

17 THE COURT: Sustained.

18 Q. BY MR. MORRIS: Did anybody present at the table tell

19 you that the equity would be taken out of your house?

20 A. No.

21 Q. Mr. Tedmon asked you about sort of how the -- where

22 the house goes at the end, and you said that you entered an

23 agreement jointly to sell the house, is that right?

24 A. Yes.

25 Q. Do you remember whether or not there was an agreement

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1 about the proceeds of that sale?

2 A. Yes.

3 Q. What was the agreement with respect to the proceeds

4 of the sale?

5 A. There was -- any money from after the sale would be

6 split between Adam Coffman and us.

7 Q. And did you receive that half of the proceeds?

8 A. No.

9 MR. MORRIS: No further questions, Your Honor.

10 THE COURT: Mr. Tedmon, any recross?

11 MR. TEDMON: Just briefly.

12 RECROSS-EXAMINATION

13 BY MR. TEDMON:

14 Q. Ms. Taylor, at the conclusion of the meeting with

15 Mr. Head, Mr. Coffman, and Ms. Gastelum, you knew you were

16 getting $20,000, true?

17 A. True.

18 Q. And you also knew that you were then from that point

19 forward going to be leasing your home, correct?

20 A. Correct.

21 Q. It was a contract that you've testified you signed

22 that indicated that, right?

23 A. Yes.

24 Q. And that changed the nature of your relationship with

25 your home, you were no longer making a mortgage payment, you

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1 are leasing it, true?

2 A. True.

3 Q. All right. Now, with regard to the end of the story

4 that Mr. Morris was talking about, relative to the selling of

5 the home, that was an agreement, correct?

6 A. Yes.

7 Q. It was a settlement?

8 A. Yes.

9 Q. Right?

10 A. Yes.

11 Q. Okay. And that settlement was with Josh Coffman,

12 true?

13 A. Yes.

14 Q. All right. And your interests, correct?

15 A. Yes.

16 MR. TEDMON: Thank you. Nothing further.

17 THE COURT: Anything, Mr. Samuel?

18 MR. SAMUEL: No.

19 THE COURT: Mr. Greiner?

20 MR. GREINER: No, Judge. Thank you.

21 THE COURT: Mr. Morris?

22 MR. MORRIS: No, Your Honor.

23 THE COURT: This witness is excused, Mr. Morris?

24 MR. MORRIS: Yes, Your Honor.

25 THE COURT: Mr. Tedmon?

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1 MR. TEDMON: Yes.

2 THE COURT: Mr. Samuel?

3 MR. SAMUEL: Yes.

4 THE COURT: Mr. Greiner?

5 MR. GREINER: Yes.

6 THE COURT: Next witness.

7 MR. MORRIS: Your Honor, the Government calls Kou

8 Yang.

9 THE CLERK: Ms. Yang, please come forward.

10 (Photograph taken of the witness.)

11 THE CLERK: Do you swear to tell the truth, the whole

12 truth, and nothing but the truth, so help you God?

13 THE WITNESS: I do.

14 THE CLERK: Please state your full name and spell

15 your last name for the record.

16 THE WITNESS: Kou Yang. It's K-o-u, Y-a-n-g.

17 THE COURT: You may proceed. We will go for about

18 10, 15 minutes and take our one break of the day.

19 KOU YANG

20 a witness called by the Government, having been first duly

21 sworn by the Clerk to tell the truth, the whole truth, and

22 nothing but the truth, testified as follows:

23 DIRECT EXAMINATION

24 BY MR. MORRIS:

25 Q. Ms. Yang, I'll ask you to think back to the early

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1 2000s. What line of work were you in then?

2 A. In the early 2000s, I was in mortgage loan

3 processing.

4 Q. To the best of your recollection, when did you start

5 being involved with mortgage, the mortgage industry?

6 A. I would say probably in 2001, 2002.

7 Q. Okay. Let's start with the very -- when you first

8 got involved in the mortgage industry, who did you work for?

9 A. Charles Head.

10 Q. And how long after 2001 did you continue working for

11 Charles Head?

12 A. I worked for Charles Head all the way until 2006.

13 Q. Okay. And did you work continuously for him through

14 that time?

15 A. I worked for him until about 2000 -- late 2005, early

16 2006, and then in 2006 we were transferred over to someone

17 else.

18 Q. Who was it that you started working for then in 2006?

19 A. Benjamin Budoff.

20 Q. Let's go back to the beginning. I want to be clear

21 on the time because it's kind of a long time scope there.

22 When you started, how would you describe what your

23 job duties were?

24 A. When I was trained to do my job, it was just

25 processing mortgage loans.

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1 Q. Okay. Let's stop there for a second then. What does

2 processing mortgage loans entail?

3 A. That means that when the loan officers get their loan

4 together, they will bring it to us if the client has agreed to

5 go forward with the loan. They will then take the application

6 and then send that over to us with a form, telling us that --

7 MR. GREINER: Objection to the word "they." I don't

8 know who it is.

9 THE COURT: Sustained.

10 THE WITNESS: Oh, loan officers, when the loan

11 officers get the deal, they will -- the loan officers will then

12 bring it to us and tell us to go ahead and open escrow and open

13 title and order the appraisal.

14 Q. BY MR. MORRIS: I'm going to stop you for a second

15 then. Give you some terms I would like you to define.

16 And when you say open title, what do you mean by open

17 title?

18 A. What we do is we go to the title company, and we have

19 them open a title -- to pull the title report on the property,

20 to see if there is any liens or who is on title.

21 Q. And what did you mean when you said open escrow?

22 A. Every transaction has to have an escrow account where

23 all the money goes through, and that's the escrow account.

24 Q. Okay. Sorry I interrupted you. You were saying that

25 you receive the application, you open title, open escrow. And

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1 what else do you do, if anything?

2 A. We ordered the appraisal.

3 MR. TEDMON: Your Honor, just to speed things along,

4 can Ms. Yang, when she identifies something not with "we" or

5 "us" or "them," but if it's "her," she should say it's "her."

6 With that understanding, I won't have to object.

7 Q. BY MR. MORRIS: Throughout your entire testimony,

8 please be as specific as you possibly can as to what you would

9 do, what other people would do. And if you're talking about

10 other people, be as specific as you can about who those people

11 are. Okay?

12 THE COURT: All right. That agreement of the parties

13 is accepted, and, Mr. Morris, if you could police that.

14 MR. MORRIS: I will do the best I can, Your Honor.

15 THE COURT: All right.

16 Q. BY MR. MORRIS: And so when you say ordering

17 appraisal, would you order the appraisal?

18 A. Yes.

19 Q. Was it something that other people could also do in

20 the office or just you?

21 A. At the beginning and the loans that we were doing, I

22 was opening -- I was ordering the appraisals.

23 Q. Was there anything else that you would do in the

24 course of your duties as a loan processor? Again, focusing at

25 the beginning when you started.

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1 A. At the beginning, what I would do was once all of

2 those forms came in, when the title reports and the escrow

3 instructions and the appraisals come in, what I would do then

4 is I would print the application, which is the 1003, and I

5 would stack it according to how each bank wants it.

6 And then I would then Transbox it to the appropriate

7 banks that the loan officer has instructed them to go to.

8 Q. You used the term 1003. What is, in your experience,

9 a 1003?

10 A. A 1003 is a mortgage loan application.

11 Q. Okay. And I think you used the term Transbox. What

12 is a Transbox?

13 A. Transbox is kind of like a delivery service that --

14 the banks would provide us with an envelope, and there were

15 Transboxes everywhere, you know. And what we will do is we

16 would drop them off in the Transbox, and then the next day,

17 that night, they would collect them. The Transbox people, they

18 would collect them and then deliver it to the appropriate

19 places.

20 Q. From that point then, what would be the next part of

21 your role in mortgage processing, if any?

22 A. What we would do is I would wait for the approvals to

23 come back. It would take about three to four days. And then

24 when the approvals are faxed in or e-mailed in to us, they

25 would either tell us if the loan was either approved or denied.

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1 Q. And when you say "us," who are you talking about?

2 A. The loan processors.

3 Q. Is there anything else within your job, again

4 focusing at the beginning of your time, anything else in your

5 job duties as a loan processor that you can recall?

6 A. That's pretty much it. And when the approvals came

7 through, we would just process it.

8 Q. Did you have any role or any involvement in the loan

9 application process after that? Again, focusing at the

10 beginning of your time.

11 A. With the loan applications, no.

12 Q. Okay. Then I would like you to -- going from the

13 time where you first started doing this, did your job duties

14 ever change?

15 A. Yes, they did.

16 Q. Okay. To the best of your recollection, when did you

17 have other job duties besides what you've already described?

18 A. When we first started, the office was pretty small,

19 so Charles had me doing a lot of, like, office manager, you

20 know, jobs like ordering supplies, paying for bills, all the

21 miscellaneous stuff.

22 Q. Did your job duties or did the loan processing task

23 change at all during your time employed there?

24 A. Yes.

25 Q. Okay. In what ways did your loan processing duties

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1 change?

2 A. At the beginning, we were doing just straight

3 refinancing and sales, loans for purchasing.

4 Q. Clarify. "We"?

5 A. The loan officers in the office. When we first

6 started, the culture of the office was refinancing and, you

7 know, sales, loans.

8 And as we were doing loans for about two years in, I

9 would say, Charles started to do foreclosures.

10 Q. And so how did you become aware of what you just

11 testified to, that there was a change of what the focus was?

12 A. Charles had a meeting with all the loan officers, and

13 he informed everybody that we were going to be getting away

14 from doing refinancing, and, you know, the regular loans that

15 we were doing. That we were going to be doing other loans that

16 were still loans, but they were different, and they involved

17 foreclosures, and we would be making more money.

18 Q. Let me pause for a second and ask, where physically

19 did you work? The address you worked at?

20 A. We worked -- I don't remember.

21 Q. Let's start. When you first started, to the best of

22 your recollection where did you work?

23 A. When I first started, I worked in Long Beach at the

24 Long Beach office on Atlantic, I believe.

25 Q. Okay. And did you ever move from that office?

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1 A. Yes, we did.

2 Q. Where did you move next?

3 A. We moved to Costa Mesa.

4 Q. Do you recall, to the best of your recollection, when

5 that move happened?

6 A. That move happened in 2006 or late 2005. Early --

7 earlier than that. It's got to be. Probably 2005 or -4.

8 Because I know we were there for at least two to three years.

9 Q. And did you ever work in a location other than Long

10 Beach on Atlantic and Costa Mesa?

11 A. Yes.

12 Q. Where did you work other than those two locations?

13 A. I worked in a location in Tustin.

14 Q. Was that then after Costa Mesa?

15 A. Yes. That was after Costa Mesa.

16 Q. Do you recall approximately when you moved from Costa

17 Mesa to Tustin?

18 A. I would say probably Spring of 2006.

19 Q. Focusing -- let's focus on the --

20 Well, let's start with Tustin and work our way back.

21 Did anybody else work with you at the Tustin location?

22 A. Yes.

23 Q. Who worked there with you?

24 A. Yes. At the location there were all the processors.

25 It was the processing office. So it was Sam Vu, Linda Nguyen,

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1 Lisa Vang, Emily Yang and Pang Yang. Those were it.

2 Q. Okay. And then before that at Costa Mesa, can you

3 describe the Costa Mesa office?

4 A. At the Costa Mesa office, it was -- we had a

5 department that was all loan officers, and then we had another

6 department that was all processors. And all the loan officers

7 would be in the same office. Charles had an office there.

8 Q. Okay. And then prior to that Long Beach, can you

9 describe the location, the physical location at Long Beach?

10 A. We were all in, like, a big room, like -- and then we

11 would just have desks all over the room, and then we would all

12 be in one room, you know. Everybody had a different desk.

13 Q. And the fact that you describe it that way, is that

14 different from the other locations?

15 A. Yes. Yes.

16 Q. In what way was the physical layout different from

17 the other locations?

18 A. In Long Beach, it was one big room with a bunch of

19 different desks for the loan officers and for the processors,

20 and Charles had his own office. And then at the Costa Mesa

21 office, everybody pretty much had their own office except for a

22 few rooms. We had like two or three loan officers in there.

23 And then at the Tustin office, it was all just processors, and

24 we had different rooms for different positions.

25 Q. And I think we covered who worked with you physically

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1 at Tustin.

2 Going then back earlier to that at Costa Mesa, who

3 did you work with, who physically was located there in Costa

4 Mesa?

5 A. In Costa Mesa, it was -- at the beginning it was Mike

6 Head, Domonic McCarns, Elizabeth Huerta, Keith Brotemarkle,

7 Brian -- I don't remember last names, but I remember Brian.

8 There was a few more, but I don't remember all the names. It's

9 been a while.

10 Q. And I think you said that was at the beginning. Did

11 anybody else come or go during the time that you were at Costa

12 Mesa, to the best of your recollection?

13 A. Yes. While we were at Costa Mesa, Mike Head left.

14 Oh, another person, Anh -- no, Anh wasn't there. But Andrew Vu

15 was there at the beginning, and then he left. And then Mike

16 Head was there at the beginning, and he left. And then they

17 brought on -- once Keith came on board, he hired more sales

18 people.

19 Q. Okay. And we'll talk about more people perhaps later

20 on in your testimony.

21 THE COURT: That brings us to a good time for a

22 break. Let's take our afternoon break. We'll have one

23 afternoon break. About 15 minutes.

24 During the break, please remember my admonitions. No

25 discussing the case, no thinking about its conclusions, no

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1 research. If anyone reaches out to you, let me know. Have a

2 good break.

3 (Jury out.)

4 THE COURT: You may step down, Ms. Yang. If you can

5 be back in your seat in 15 minutes.

6 All right. Just briefly on the sealing/unsealing,

7 here's my proposal. You can think about it. The local rules

8 actually do provide for documents being returned to the parties

9 if the Court doesn't grant sealing. Now, here we did

10 conditionally seal on the docket.

11 I think all things considered, I could return the

12 documents. You can mark them as an exhibit next in order for

13 Budoff. And then if you're going to use some of them in trial,

14 we will address any objections at the time. But I'm not

15 relying on them in making any dispositive ruling, so I don't

16 feel the need to unseal them on the public docket in light of

17 the exchange of e-mails I've seen.

18 MR. SAMUEL: I think they've already been actually

19 enumerated in the exhibit list that we posted. But if not,

20 I'll certainly make --

21 THE COURT: Here's the packet. We did scan it, but

22 I'm going to hand it back to Mr. Samuel.

23 MR. TEDMON: That's fine, Your Honor. I'm in full

24 agreement with that.

25 MR. ANDERSON: That's fine, Your Honor. As long as

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1 he retains it in case there is some issue down the road.

2 THE COURT: All right. So I'll probably issue some

3 order clarifying and likely striking that from the docket.

4 All right. So Ms. Schultz will provide that.

5 Anything else we need to discuss?

6 MR. TEDMON: Not at this time, Your Honor.

7 MR. SAMUEL: No.

8 THE COURT: All right.

9 (Break taken.)

10 THE COURT: All right. Let's bring the jury in.

11 (Jury in.)

12 THE COURT: Welcome back to court, ladies and

13 gentlemen. We will resume now with the examination of

14 Ms. Yang. You may be seated, Ms. Yang, as may the rest of you.

15 And we'll go until 4:30 today. Mr. Morris. How much longer do

16 you think you have?

17 MR. MORRIS: I would like to think I can get through

18 it in a half hour. I'm optimistic that we'll be done with

19 direct by the end of the day and into cross.

20 THE COURT: All right.

21 Q. BY MR. MORRIS: Ms. Yang, if we can focus in -- again

22 break this up by time periods based on where you were working

23 physically, starting with Tustin.

24 Do I understand correctly that it was processors only

25 working in Tustin?

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1 A. Yes.

2 Q. So at that time did you have any awareness or

3 knowledge of what the salespeople were saying as part the sales

4 side that you described?

5 MR. TEDMON: Objection. Vague as to who the

6 salespeople are.

7 THE COURT: Sustained.

8 MR. GREINER: Objection. Compound.

9 THE COURT: Sustained.

10 Q. BY MR. MORRIS: You previously talked about sales and

11 processing being two separate parts of the company?

12 A. Yes.

13 Q. At the time you were in Tustin, did you have any

14 involvement -- or were any of the salespeople in that location?

15 A. No.

16 Q. Did you have any opportunity to observe or see the

17 salespeople doing their jobs?

18 A. When I was at Tustin, no.

19 Q. Okay. Then let's back it up one earlier than that,

20 and let's go to Costa Mesa.

21 Were the salespeople also in the same office in Costa

22 Mesa?

23 A. Yes.

24 Q. Did you have on any occasion in Costa Mesa the

25 opportunity to see salespeople doing their part of the job?

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1 A. Yes.

2 Q. What did you observe when you saw that?

3 MR. TEDMON: Vague as to time.

4 MR. GREINER: Objection. Vague as to people.

5 THE COURT: Sustained.

6 Q. BY MR. MORRIS: As to time, focusing on Costa Mesa,

7 and being as specific as you can about individuals, what did

8 you observe in that time period -- do you recall any

9 individuals that you observed doing a sales part of the job?

10 A. Yes. In Costa Mesa, there were loan officers that

11 we --

12 MR. GREINER: Objection. Non-responsive. Question

13 is sales. Response loan officers.

14 THE COURT: Sustained. You may answer the question.

15 THE WITNESS: Okay.

16 THE COURT: But the question is about sales.

17 THE WITNESS: The salespeople were, in a sense, they

18 were loan officers because the loan officers actually made the

19 sales, so they are one and the same.

20 But the salespeople, they would get leads from the

21 internet or from whatever that Keith and Ed Shaffer put

22 together. I guess people would go online.

23 MR. GREINER: Objection. Speculation.

24 THE WITNESS: The --

25 THE COURT: Sustained.

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1 THE WITNESS: The homeowners.

2 THE COURT: Actually, to make this -- answer the

3 question and then wait for the next question. All right.

4 Q. BY MR. MORRIS: And confine your answers to what you

5 observed.

6 A. Okay.

7 Q. And so what did you observe about -- let me use the

8 term loan officers since that's what you're using.

9 What did you observe about the loan officers in their

10 interactions with customers?

11 MR. GREINER: Objection. Vague again, Judge. No way

12 to cross loan officers.

13 THE COURT: Sustained.

14 Q. BY MR. MORRIS: Using individual names, what did you

15 observe individual loan officers doing?

16 A. Well, one salesperson that I know is Domonic McCarns.

17 He was in the Costa Mesa office, and he would take the leads

18 that would come over the internet, and he would call the

19 homeowners, and he would pitch a sale to them.

20 Q. Did you have the opportunity to observe Domonic

21 McCarns' portion of those phone calls?

22 A. Yes, I have heard phone calls that he has made

23 before.

24 Q. What did you hear?

25 A. I would hear him calling the homeowners, and, you

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1 know, asking them, you know, did you inquire about saving your

2 home, and whatever that they said. Then he would go on to say,

3 well, we have a program that you -- that you may qualify for,

4 and, you know, we can go over all the things, and then he went

5 into his pitch.

6 Q. To the best of your recollection, what was that

7 pitch?

8 A. To the best of my knowledge, the pitch was that we

9 would take the home and put it in an investor's --

10 Q. Let me interrupt you. Careful with the word "we."

11 So, again, without using terms like "we" and "they," to the

12 best of your recollection what was Mr. McCarns' pitch?

13 MR. SAMUEL: Your Honor, I'm going to object as

14 hearsay as to my client only. This is 802(d) --

15 THE COURT: Overruled.

16 MR. SAMUEL: It only goes to Mr. McCarns.

17 THE COURT: The objection is noted. You may proceed.

18 Q. BY MR. MORRIS: You can answer the question.

19 A. Okay. The loan officer, Domonic McCarns, I have

20 heard him say: We will take the loan, and we'll have an

21 investor purchase the property in their name. You remain in

22 the property for a duration of a year until your credit is

23 fixed. And then during that time, you pay rent to us. And

24 then after a year, you can purchase the property back.

25 Q. So we're talking still about Costa Mesa. Can you

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1 describe physically the loan processing portion, the physical

2 location at Costa Mesa?

3 A. The location of where we --

4 Q. Yeah. Where you worked.

5 A. I had my own office. And it was right next to

6 Keith's office. But there was an office right in front of me

7 that was bigger, so we had all the processors in that room.

8 There was about four different processors.

9 Q. Did you have any methods whereby you tracked loans in

10 process?

11 A. Yes.

12 Q. What methods did have you in place to track loans in

13 process?

14 A. We had a white board, and on that white board I would

15 write all the names of the sellers, and the buyers, and the

16 location of the property, and then the amount or the loan

17 officer, the salesperson.

18 Q. Did you have any filing system there?

19 A. Yes.

20 Q. Can you describe your filing system?

21 A. Our filing system was while the loan was still being

22 worked on, it would be in the processing office. But once the

23 loan has funded and it's closed, they would be filed in the

24 filing room. There was a filing room that was right down the

25 hall, and it was where the kitchen-type was, and we would put

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1 the files and file it in there.

2 Q. To your recollection, was the filing room open or

3 available to anybody who worked there?

4 A. Yes. It was in the kitchen, so it was open to

5 everybody.

6 Q. I'll ask you, on the cart behind you, to find the

7 binder that has Government's Exhibit 61. So it would be a blue

8 -spined binder, and we're looking for the one that says 61.

9 A. Is it volume five of eight?

10 Q. If it contains 61.

11 A. 28A through 90.

12 Q. If you can open it up to tab 61.

13 A. Okay.

14 Q. Do you recognize that document?

15 A. Yes.

16 Q. How do you recognize it?

17 A. Because I've -- I made it.

18 Q. Do you recognize the handwriting on the document?

19 A. Yes.

20 Q. How do you recognize the handwriting?

21 A. It's my handwriting.

22 MR. MORRIS: Your Honor, the Government will move to

23 admit Exhibit 61.

24 THE COURT: Any objection, Mr. Tedmon?

25 MR. TEDMON: No, Your Honor.

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1 THE COURT: Mr. Samuel?

2 MR. SAMUEL: No.

3 THE COURT: Mr. Greiner?

4 MR. GREINER: No, Your Honor.

5 THE COURT: All right. 61 is admitted.

6 (Government Exhibit 61, Foreclosure Schedule April

7 2005 admitted into evidence.)

8 Q. BY MR. MORRIS: Could you describe what we're looking

9 at on the screen there?

10 A. We're looking at a schedule of foreclosures that we

11 currently own, which is the company currently owns.

12 Q. And the column that says LO, what is your

13 recollection of what you meant by that column?

14 A. Loan officer.

15 Q. Okay. And the column there that says client -- let

16 me just use one example -- what is your understanding or

17 recollection of that name in the column that's not in

18 parentheses?

19 A. That is the seller.

20 Q. And the name in the parentheses, what's your

21 recollection of that name?

22 A. That is the buyer.

23 Q. And over here, what's your recollection of the

24 significance of what would be written in that part of the

25 chart?

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1 A. What I wrote down was "paid," and what that means was

2 that I had made the mortgage payment on that loan.

3 Q. And if you could -- it may be hard to see. Can you

4 see what's typed underneath where it says paid?

5 A. Yes.

6 Q. What's the significance of the information underneath

7 where you wrote paid?

8 A. Well, the 448.85, that was the difference, and then

9 the 224.42 was half of what the loan officer would pay and what

10 Charles would pay.

11 Q. So when you say in this example 448.85 is the

12 difference, what do you mean by "the difference"?

13 A. The difference between the rent that was sent in and

14 the actual mortgage.

15 MR. MORRIS: Your Honor, I'll also move to admit

16 Exhibits 62, 63, 64, 66. All of those are subject to the

17 stipulations as items found during the search warrant.

18 THE COURT: 62 through 66. Any objection, Mr. Tedmon?

19 MR. TEDMON: No, Your Honor.

20 THE COURT: Mr. Samuel?

21 MR. SAMUEL: No.

22 THE COURT: Mr. Greiner?

23 MR. GREINER: No, Your Honor.

24 THE COURT: All right. 62 through 66 are admitted.

25 (Government Exhibits 62, 63, 64, 65, 66, (See Index

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1 for descriptions) admitted into evidence.)

2 Q. BY MR. MORRIS: Can I ask you to switch binders to

3 find Exhibit 7B1, please -- sorry -- 7B2.

4 A. 72?

5 Q. 7B, as in Bravo, 2. It will be in a different

6 binder.

7 A. Okay.

8 Q. Do you recognize that type of document?

9 A. Yes.

10 Q. How do you recognize it?

11 A. This is the 1003 or the mortgage loan application.

12 Q. I think you previously had talked about a 1003. Is

13 this the form that you had talked about prior?

14 A. Yes.

15 MR. MORRIS: Your Honor, I would ask to admit 7B2.

16 It is covered by the stipulation also.

17 THE COURT: Any objection?

18 MR. TEDMON: No.

19 MR. SAMUEL: No.

20 THE COURT: Mr. Greiner?

21 MR. GREINER: No, Your Honor.

22 THE COURT: 7B2 is admitted, and it may be displayed.

23 (Government Exhibit 7B2, Uniform Residential Loan

24 Application in the name of Ashley Reynolds for property at 542

25 East 167th Street, San Juan Capistrano, CA 92675 admitted into

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1 evidence.)

2 Q. BY MR. MORRIS: I'm going to ask you -- we're going

3 to go through the document, and I'm going to ask you, based on

4 your recollection and your memory of your job duties, if you

5 could explain the various parts of this document as you used

6 it.

7 So if we could start at the top, what are -- this

8 portion that I've kind of put a really bad squiggly line next

9 to, what is that part of the document telling you in your

10 recollection?

11 A. It pretty much just tells me what the loan amount is

12 going to be, what type of loan it is, what the interest rate,

13 the property address that this loan application is for, whether

14 it's purchase loan or refinance, and just the typical

15 information about a particular loan and property.

16 Q. And just to make sure I'm clear. When you talked

17 about whether it's purchase or refinance, is that the area that

18 we're talking about?

19 A. Yes, that is correct.

20 Q. And the purpose over here, what's your understanding

21 of that section of the document?

22 A. That is whether it's going to be the primary

23 residence in which the buyer is going to live in, or if it's

24 going to be a second home, or if it's going to be an investment

25 property.

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1 Q. And if you could zoom out. Try go to the bottom half

2 of the page here.

3 Moving our way down, what's your understanding of

4 this section of the document?

5 A. That is the borrower's information.

6 Q. And this part that appears to be blank, what, in your

7 recollection or experience, would go there?

8 A. If there's a co-borrower, then you would put that

9 person's information there.

10 Q. And this bottom section here, what's that part of the

11 form for?

12 A. That is their employment information so that they can

13 verify that they are employed.

14 Q. Zoom out. Go to the next page, please.

15 Looking at this top portion here, what's that section

16 of the document doing?

17 A. This is pretty much the income that the borrower, you

18 know, has. So whatever that they have in terms of income would

19 go there.

20 Q. If we could zoom out and cover this portion.

21 And what is this portion of the document describing?

22 A. This portion of the document is all their assets and

23 all their liabilities. For instance, any properties that they

24 currently already have, and then the liabilities are their

25 bills in terms of credit cards, loans that they have

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1 outstanding.

2 Q. And if we can zoom out and go to the next page,

3 please. And looking at this top part here, what is this

4 portion of the application involving?

5 A. This portion of the application is they are supposed

6 to list any properties that the buyer currently already owns,

7 and their mortgages, and, you know, how much they owe.

8 Q. Okay. And what does this portion of the form deal

9 with?

10 A. To the left, it's pretty much just the, you know, the

11 sales price, and then any fees that, you know, that occurred

12 during the sale or during the loan. And then if there's a

13 second loan, that goes to the bottom, and then it just tells

14 you how much the borrower has to come in with to close the

15 loan.

16 Q. And what does the right side tell you?

17 A. The right side is just information asking about the

18 buyer, like, if they have any current judgments, bankruptcies,

19 you know, personal information.

20 Q. Okay. And this bottom portion here, what does that

21 portion of the document tell you?

22 A. Well, the first signature is the borrower's

23 signature. The person that's taking out the loan would sign

24 that part. And then we would list, you know, what ethnicity

25 they are and how the application was taken. And then the loan

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1 officer that took the loan would sign it.

2 Q. You can bring it down.

3 In the course of your employment there, did you deal

4 with these types of documents?

5 A. Yes. Every single loan had to have one of these

6 forms.

7 Q. Did you enter the information into the forms?

8 A. No.

9 Q. Who did?

10 A. The loan officer.

11 Q. And I think your testimony was at some point you then

12 dealt with that form, was that right?

13 A. Yes.

14 Q. How would you then get the information that has been

15 entered by the loan officer to the point where the form is in

16 your possession?

17 A. There is a system that they put the loan into, and so

18 when they are done, they will just e-mail us and tell us the

19 file is ready. They will also make a -- print it and then turn

20 it into us with a form which asks us to order the title and

21 open the escrow and order the appraisal. So that's all turned

22 in at the same time.

23 Q. During the time that you worked at Costa Mesa, who

24 did you consider to be your boss?

25 A. In Costa Mesa, my boss was Charles Head.

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1 Q. Okay. I'll ask you to change binders again. I'm

2 looking for Exhibit 104.

3 Actually, you know what, Your Honor, it's covered by

4 the stipulation, so maybe than rather having her shuffle

5 through binders --

6 THE COURT: Any objection to 104 being displayed,

7 Mr. Tedmon?

8 MR. TEDMON: 104? That's fine. No objection.

9 THE COURT: Mr. Samuel?

10 MR. SAMUEL: No objection.

11 THE COURT: Mr. Greiner?

12 MR. GREINER: No objection.

13 THE COURT: All right. 104 is admitted and may be

14 displayed.

15 (Government Exhibit 104, Email dated 3/21/2005

16 From Charles Head admitted into evidence.)

17 Q. BY MR. MORRIS: If you could review what's on the

18 screen in front of you, and when you've had a chance to, if you

19 could tell us what it is that, to your recollection, is being

20 discussed in that e-mail?

21 A. (Witness reviewing document.) Okay.

22 Q. What is that e-mail discussing?

23 A. This is an e-mail that was sent from Charles to me

24 telling me that he's going on a trip, and that he will be back

25 on Monday. And that he had hired somebody, an assistant, so

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1 for me to help get her set up and train her. And to get Liz,

2 which was previously an assistant, to help train her in

3 whatever that she was doing. And then he pretty much was

4 telling me what to do with her, and to make sure that she feeds

5 his shark.

6 THE COURT: Do you have an objection?

7 MR. GREINER: Yes, Judge. I make an objection under

8 801(d)(2)(E) as to my client.

9 MR. SAMUEL: Join.

10 THE COURT: All right. That objection is noted. Do

11 you have a response to that, Mr. Morris?

12 MR. MORRIS: I think it's consistent with the motion

13 in limine. To the extent that it's covered by 801(d)(2)(E),

14 that will be resolved prior to the conclusion of the

15 Government's case-in-chief. And if not, by the end of the day

16 today. You can bring that down.

17 And Exhibit 114 I will be asking to admit pursuant to

18 the record stipulation.

19 THE COURT: 114?

20 MR. MORRIS: 114.

21 THE COURT: Any objection, Mr. Tedmon?

22 MR. TEDMON: No, Your Honor.

23 THE COURT: Mr. Samuel?

24 MR. SAMUEL: Not as to foundation.

25 THE COURT: Mr. Greiner?

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1 MR. GREINER: No, Judge.

2 THE COURT: Did you have another objection,

3 Mr. Samuel?

4 MR. SAMUEL: I'm waiting to see the document. I know

5 it's within the stipulation. It may be an 801(d)(2)(E).

6 MR. MORRIS: Is that admitted, Your Honor?

7 MR. SAMUEL: That would be the objection.

8 THE COURT: An 801(d)(2) objection?

9 MR. SAMUEL: Yes.

10 MR. GREINER: I would join. 801(d)(2)(E), Judge.

11 THE COURT: All right. That objection is overruled.

12 You may go ahead and display.

13 (Government Exhibit 114, Email dated 4/15/2005 From

14 Kou Yang To Charles Head Subject: RE: Simone Bu deal admitted

15 into evidence.)

16 Q. BY MR. MORRIS: If you can bring it up and go to the

17 second page, please.

18 Actually, I apologize. Go one page to the front.

19 Just to clarify, I'll have you look at this. I'm

20 going to start on the previous page and work backwards, given

21 what it is that we're looking at. So second page. And if we

22 can focus in on the bottom half, please.

23 Do you recall or what's your recollection, if you

24 have one, of this portion of the e-mail that I've highlighted

25 on the screen for you?

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1 A. (Witness reviewing document.) Okay.

2 Q. Let me start with this. Do you remember somebody

3 named Steve Cangro?

4 A. Yes.

5 Q. And in this e-mail to you, do you have in your mind

6 what the word "an overstated problem," what that phrase means?

7 A. Yes.

8 Q. What does that phrase mean to you?

9 A. The overstated problem means that we have overstated

10 the loan because the loan is a stated loan, and so you can

11 state their income, and there's a problem with the overstating

12 how much someone makes.

13 Q. And this other term here, "DTI issues," do you have

14 in your mind what the term DTI issue would have meant in this

15 e-mail?

16 A. Yes.

17 Q. What does that term mean to you?

18 A. DTI is debt-to-income, and what he's saying is that

19 the borrower has too much debt-to-income so they don't qualify

20 for the loan.

21 Q. Looking at the next level or next up of this e-mail,

22 how do you reply to Steve Cangro?

23 A. I pretty much tell him that the borrower, Simone Bu,

24 has money in her 401k that would offset her seasoning, you

25 know, and she has a verification of a deposit on file that

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1 shows that she has $35,000.

2 Q. You just used a term "seasoning." I don't think I've

3 heard you use that.

4 Can you explain to the jury what you mean by

5 seasoning?

6 A. Yes. Seasoning means that you have to have a certain

7 amount in your account for at least, you know, a set amount of

8 time that the bank tells you, you know, that you have to have

9 to show that you've had the money in your account.

10 Q. I'm going to have to go back and forth on pages. If

11 you can go to the first page for a second so that we can focus

12 in down here.

13 The top of this next section of the e-mail. Who did

14 you then e-mail about this?

15 A. I e-mailed Charles Head.

16 Q. And go back to the second page, please, and we'll

17 focus in on the top.

18 And what did you say to Charles Head?

19 A. I pretty much just told him what deal this is for,

20 which we refer them to cities. So I told him, you know, it was

21 the San Jose deal. And that we need a co-borrower because the

22 income that we stated is too high for the borrower, and so now

23 we're going to need someone else on the loan to get more

24 income.

25 Q. Can you clarify what you mean by "the income that we

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1 stated on the loan is too high for the borrower," what do you

2 mean by that?

3 A. Like, for instance, for example, if you're a school

4 teacher, you -- probably in one month you make about 4,500.

5 You can't state on your loan application that you make $9,000

6 because that would be overstating. Because it's public

7 knowledge that a teacher does not make that type of money.

8 Q. Why would you have overstated someone's income on the

9 loan application?

10 A. They would have probably overstated it on the loan

11 application to get the loan --

12 MR. GREINER: Objection. Non-responsive.

13 THE COURT: Sustained.

14 Q. BY MR. MORRIS: Why would have you overstated income

15 on a loan application?

16 A. To make the loan work.

17 Q. What do you mean by "make the loan work"?

18 A. So that they had enough income to take out the loan

19 because the loan was probably like 500,000, and they needed the

20 income to qualify.

21 Q. So let me focus in on this section. In response to

22 your e-mail to Charles, what does he say to you?

23 A. He says, yeah, why not add somebody else to the loan.

24 Q. And then can you explain your response back to him,

25 please?

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1 A. My response back to him was, who do you want me to

2 add? And I said Amber because she was the next person in line

3 to go on a loan. And then I asked him what address do I use

4 for her? You know, I'm going to use the same address as

5 Simone, where Simone lives now, and say that they live

6 together, and then I'm asking him how does that sound.

7 Q. Why are you saying in this e-mail: I need an address

8 out here, I'll use the same address?

9 A. Because Amber, I know that she lives in Florida

10 somewhere. And so this property is out here in San Jose in

11 California. So the bank is not going to believe that someone

12 that lives in Florida is going to buy a house in San Jose.

13 It's more believable if she lived in the state.

14 Q. And how does Charles Head respond to that?

15 A. Sounds good, and that Amber didn't care, and her fee

16 is 2,000.

17 MR. MORRIS: I'm going to ask to move in, Your Honor,

18 Government's Exhibit 116 pursuant to the stipulation.

19 THE COURT: Any objection, Mr. Tedmon?

20 MR. TEDMON: No, Your Honor.

21 THE COURT: Mr. Samuel?

22 MR. SAMUEL: As to the stipulation, no objection.

23 THE COURT: All right. No objection whatsoever?

24 MR. SAMUEL: Still looking for it, Your Honor.

25 THE COURT: All right. Mr. Greiner?

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1 MR. GREINER: No objection as to the stipulation.

2 There will be an 801(d)(2)(E) objection.

3 MR. SAMUEL: I'll join in that.

4 MR. MORRIS: Same response, Your Honor.

5 THE COURT: I just want to remind the jurors, given

6 the objections, so you know what the Court is thinking in

7 response to those.

8 Two things. First of all, you've already heard, and

9 I'm certain you're remembering, but just to refresh your

10 memory, a separate crime is charged against each defendant.

11 There are separate counts, separate defendants. They are

12 joined for trial. But ultimately your job will be to decide

13 the case against each defendant.

14 You've heard that there is a conspiracy charge in the

15 case, and, ultimately, I will give you more detailed

16 instructions regarding that conspiracy charge. But for now, to

17 give you some guidance and thinking about that, to the extent

18 you're hearing statements, evidence is coming in, you should

19 not consider that with respect to the conspiracy charge as

20 against any defendant unless you ultimately find beyond a

21 reasonable doubt that there was a conspiracy, that that

22 defendant was a member of that conspiracy, and that the act or

23 statement testified to was in furtherance of that conspiracy.

24 That's just some guidance. Again I'll remind you of

25 that and give you further clarifying instructions at the end of

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1 trial. Mr. Morris.

2 (Government Exhibit 116, Email dated 4/21/2005

3 From Heather Worch To Charles Head RE: SINGLETON admitted into

4 evidence.)

5 Q. BY MR. MORRIS: If we could bring up then 116. And

6 I'll ask you to look at the bottom third of that page. If you

7 could review it, and when you've had a chance to, if you have a

8 recollection of what's being discussed in that e-mail, if you

9 could share that with the jury?

10 A. (Witness reviewing document.) Okay.

11 Q. What's your recollection of what's going on in that

12 part of the e-mail?

13 A. This is an e-mail that Heather sent to me asking me

14 how she should, you know, respond to the sellers, Diane

15 Singleton, and what she stated was what is on the contract.

16 Q. Do you recognize that language that's in the all

17 capitals?

18 A. Yes.

19 Q. How do you recognize that language?

20 A. That is what was on the contract that the seller

21 signed. It's come through my desk. Once they sign it, they

22 will send it in.

23 Q. And we will zoom in here, and I'll ask you how did

24 you reply about that guidance that she was asking you to give

25 her?

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1 A. I pretty much told her Charles has to be the person

2 to answer these types of questions because I'm -- I'm not

3 equipped. It's not my job.

4 Q. And how does Charles respond to her?

5 A. He pretty much says that this comes from our legal

6 department, and to just initial it, and it's not that

7 important. Nonchalant.

8 MR. GREINER: Objection to the nonchalant as being

9 non-responsive, Judge.

10 THE COURT: Overruled.

11 Q. BY MR. MORRIS: I'm going to ask to bring in

12 Exhibit 122 pursuant to the stipulation.

13 THE COURT: Any objection, Mr. Tedmon?

14 MR. TEDMON: No, Your Honor.

15 THE COURT: Mr. Samuel?

16 MR. SAMUEL: Rather that making this all the time, I

17 would just repeat my objection.

18 THE COURT: Is that a standing objection?

19 MR. SAMUEL: Yes.

20 THE COURT: We'll clarify that in a housekeeping

21 session to a series.

22 MR. SAMUEL: Thank you.

23 THE COURT: But for now the same objection,

24 Mr. Greiner?

25 MR. GREINER: Yes. No objection to bringing the

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1 document in, but 801(d)(2)(E) as to the contents, Judge.

2 THE COURT: All right. 122 may be displayed.

3 (Government Exhibit 122, Email dated 5/3/2005 From

4 Kou Yang To Charles Head Subject: RE: Stuff admitted into

5 evidence.)

6 Q. BY MR. MORRIS: Can you look at the bottom quarter

7 there.

8 In this e-mail, can you explain what it is that

9 you're saying in this e-mail?

10 A. I'm sending an e-mail to Heather and to Charles

11 telling them that instead of using Creative Loans, that we need

12 to use Nations Property Management, which is the management

13 company.

14 Q. What do you mean by the term VOR?

15 A. The term VOR is verification of rent.

16 Q. What is a verification of rent?

17 A. Like if you're going to take out a loan to buy a

18 house, the bank wants to know that you have been paying on your

19 rent for a minimum of the last two years. So that's a

20 verification of rental for the last -- the previous two years.

21 Q. And this discussion you're having about we're using

22 Dynasty now but they know that Dynasty is with HFS, what do you

23 mean when you say that?

24 A. Dynasty is the realty part of the company, of Head

25 Financial. And HFS is Head Financial Services, and that is the

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1 loans part of the company.

2 Q. And why was it that you felt the need to write an

3 e-mail about they know that Dynasty is with HFS or they can

4 find out?

5 A. The reason why is because they can link it together

6 and find out that Dynasty and Head Financial are one and the

7 same company by simply just looking it up.

8 Q. And why did that concern you?

9 A. Because it's kind of like a conflict of interest.

10 They would -- you know, if we're verifying but we're doing the

11 loan, it's a conflict.

12 Q. And how does Charles respond to you when you suggest

13 getting this loan?

14 A. They say that Nations Property Management is a DBA,

15 doing business as, Creative Loans, and that they could not find

16 out, and that I needed to get a new phone line to answer

17 Nations Property Management when it rings.

18 Q. Do you recall, as you sit here, why you were

19 discussing having separates phone lines?

20 A. So that we can do verifications.

21 MR. TEDMON: Objection as to "we."

22 THE WITNESS: So that the -- so --

23 THE COURT: Wait for Mr. Morris to clarify.

24 The objection is sustained. The jury shall disregard

25 that answer.

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1 Q. BY MR. MORRIS: Do you recall why you and Charles

2 were having a conversation about wanting to get a separate

3 phone line?

4 MR. TEDMON: Objection. It's not a conversation.

5 It's an e-mail string.

6 THE COURT: Sustained.

7 Q. BY MR. MORRIS: Do you recall why you and Charles

8 were trading e-mails about getting a separate phone line?

9 A. Yes. That was so that when the bank will call in to

10 verify, we will verify it for the bank.

11 MR. TEDMON: Objection as to "we."

12 THE COURT: Sustained.

13 THE WITNESS: The office, the processors, I mean --

14 Q. BY MR. MORRIS: Let me ask you this, did you

15 personally verify rent when the phone rang at the office?

16 A. I have verified before.

17 Q. Were you verifying rent for people who actually

18 rented properties through you?

19 A. No.

20 Q. So can you explain how it is that you would be

21 verifying rent payments for somebody who is not actually

22 renting a property through Dynasty?

23 A. We were told --

24 MR. TEDMON: Objection as to "we." The question is

25 may verify.

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1 THE COURT: Listen carefully to the question and

2 answer that question.

3 Q. BY MR. MORRIS: Can you explain why it is that you

4 would be verifying rent payment for somebody who is not

5 actually renting a property through the company you work for?

6 A. I was verifying rental for people that weren't really

7 renting because that's what I was told to do.

8 Q. To your knowledge, was there a purpose for why you

9 were doing that?

10 A. Yes. That is so that the loan can fund. Without the

11 verification, we cannot fund the loan.

12 Q. Given that answer, this might be -- let me change

13 course for a second.

14 Were you arrested for your role in what you did at

15 Head Financial Services?

16 A. Yes.

17 Q. Were you charged with a crime?

18 A. Yes.

19 Q. Did you plead guilty to a crime for what you did at

20 Head Financial Services?

21 A. Yes.

22 Q. Are you testifying here as part of an agreement with

23 the Government to testify against the others?

24 A. Yes.

25 Q. While we're on the topic, was this arrest your first

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1 brush with the law?

2 A. No.

3 Q. What other legal problems have you had prior to this?

4 A. In 1998 roughly -- '97, '98 -- I was arrested for

5 grand theft.

6 Q. What was it that you did that caused you to be

7 arrested for grand theft?

8 A. I was working at a bank, and I was skimming from an

9 account.

10 Q. Do you recall approximately how much money you

11 skimmed at the bank?

12 A. About 44,000.

13 Q. Was that before or after you started working for Head

14 Financial?

15 A. Before.

16 Q. This is a yes or no, so just confine it to that.

17 Do you have any reason to know whether or not Charles

18 Head knew of your prior conviction for embezzlement when he

19 hired you?

20 A. Yes.

21 Q. What's the basis on which you know that Charles Head

22 knew about your prior conviction?

23 A. One of my best friends is his children's mother.

24 Q. And if you could -- and how is it that that leads you

25 to believe that he knows about your prior conviction?

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1 A. Yes. Because she knew and --

2 MR. GREINER: Objection. Hearsay.

3 THE COURT: Sustained.

4 Q. BY MR. MORRIS: Had you informed his prior girlfriend

5 about your conviction?

6 A. Yes.

7 Q. Had you informed Charles Head about your prior

8 conviction?

9 A. I did not tell him personally.

10 Q. Are you aware of how it is that he may have come to

11 know about it?

12 A. Yes.

13 Q. How did you become aware of how it is that he came to

14 know about your conviction?

15 A. He's talked to me about it. She, my friend, has also

16 told me that she --

17 MR. GREINER: Objection. Hearsay.

18 THE COURT: Sustained.

19 Q. BY MR. MORRIS: Did you have any conversations with

20 somebody associated with your prior conviction with regard to

21 Mr. Head?

22 MR. TEDMON: Objection. Vague.

23 THE COURT: Sustained.

24 Q. BY MR. MORRIS: Did you serve time for that prior

25 conviction?

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1 A. Yes, I did.

2 Q. When you got out, did you have a probation officer?

3 A. Yes.

4 Q. Did you have any conversations with your probation

5 officer about Charles Head?

6 A. Yes.

7 Q. What conversations did you have with your probation

8 officer with Charles Head?

9 A. That he was my boss, and that I was working. Because

10 they wanted to know who I was working for, and I told her. And

11 Charles Head also had a conversation with her, with my

12 probation officer, telling him -- telling her my job duties.

13 Q. If we can go to Exhibit 103, please. That also is

14 covered by the stipulation.

15 THE COURT: Any objection, Mr. Tedmon?

16 MR. TEDMON: One moment, Your Honor. That's fine,

17 Your Honor. No objection.

18 THE COURT: Mr. Samuel?

19 MR. SAMUEL: Still looking, Your Honor.

20 THE COURT: Mr. Greiner?

21 MR. GREINER: No objection to it coming in, Judge.

22 It will be an 801(d)(2)(E) objection.

23 MR. SAMUEL: Same objection, Your Honor.

24 THE COURT: Overruled. The exhibit is admitted.

25 (Government Exhibit 103, Email dated 8/31/2004 From

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1 Charles Head To Kou Yang Subject: RE: Tracy admitted into

2 evidence.)

3 MR. MORRIS: Your Honor, given the time period in

4 this one in particular, it may be worth reiterating this is

5 404(b) material as to Charles Head only, given the time and the

6 participants.

7 THE COURT: All right. Ladies and gentlemen, based

8 on what Mr. Morris just said, the Court understands that you

9 are about to hear evidence regarding acts that are not charged

10 in this case. You should consider this evidence only for its

11 bearing, if any, on the question of intent. And this is

12 Mr. Head's intent, Mr. Morris?

13 MR. MORRIS: Yes, Your Honor.

14 THE COURT: Mr. Head's intent, motive, opportunity,

15 preparation, plan, absence of mistake, or absence of accident,

16 and for no other purpose.

17 If I understand correctly, this would not be evidence

18 you should consider as evidence of guilt of any crime for which

19 Mr. Budoff and Mr. McCarns are now on trial.

20 MR. MORRIS: Correct, Your Honor.

21 THE COURT: All right.

22 Q. BY MR. MORRIS: Ms. Yang, have you had a chance to

23 review what's on the screen in front of you?

24 A. Yes.

25 Q. Do you recall what this e-mail is discussing?

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1 A. Yes.

2 Q. And what is it discussing?

3 A. It is a verification of employment that Charles Head

4 had asked Tracy to do for us.

5 Q. Stop you for a moment. Who is Tracy if you can

6 recall?

7 A. Tracy was an associate of Charles.

8 Q. I'm sorry. So you were saying?

9 A. And she didn't want to do it. And so we needed that

10 verification in order to fund the loan. Doing the verification

11 of employment was typically one of the very last things that

12 they did to -- right before they fund the loan.

13 And when they tried to do it, she didn't want to do

14 it. And so there was a lot of going back and forth. And

15 pretty much I was sending him an e-mail saying that I took care

16 of it.

17 Q. And when you say "took care of it," if you could

18 summarize what did you do to take care of it?

19 A. When they called and left a number, I called back and

20 I verified the employment and said that I was Tracy.

21 Q. But your name is not Tracy, right?

22 A. No.

23 Q. And the person who you were verifying employment for,

24 do you recall who that person was?

25 A. I don't even remember. It was probably the Parker

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1 file --

2 Q. Don't speculate if you don't recall.

3 A. Well, the Parker file, that is for Josh and Justin's

4 house that they bought for themselves.

5 Q. So based on your memory of that, whose employment

6 were you verifying?

7 A. I don't remember his first name, but Parker is Josh's

8 girlfriend's brother. That's what I remember.

9 Q. And after telling Charles that you had claimed to be

10 Tracy and verified employment, what is his response?

11 A. He congratulated me. Told me that I did a good job.

12 Q. If we can go to 124, please. This is covered by the

13 stipulation.

14 THE COURT: 124. Any objection, Mr. Tedmon?

15 MR. TEDMON: No, Your Honor.

16 THE COURT: Mr. Samuel?

17 MR. SAMUEL: Same.

18 THE COURT: Mr. Greiner?

19 MR. GREINER: Actually, I object to it coming in,

20 Judge.

21 THE COURT: Grounds?

22 MR. GREINER: This is one that was objected to

23 previously and then was --

24 THE COURT: Just the objection. Can you state the

25 objection?

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1 MR. GREINER: Relevance.

2 THE COURT: That objection is overruled. This is

3 coming in as redacted.

4 MR. MORRIS: As redacted.

5 MR. SAMUEL: The number?

6 THE COURT: 124. It's one-page. This document is

7 redacted, but it will be shown as redacted.

8 MR. GREINER: And then the 801(d)(2)(E) objection

9 also, Judge.

10 THE COURT: All right.

11 (Government Exhibit 124, Email dated 5/12/2005 From

12 mhead@financial-enterprises.com To Charles Head Subject: RE:

13 File Number 07050423 admitted into evidence.)

14 Q. BY MR. MORRIS: And I'd ask you to focus in up here.

15 Do you know who J. Michael Head is?

16 A. Yes.

17 Q. Who was he?

18 A. Jeremy Michael Head.

19 Q. And how do you know him?

20 A. I knew him because he's Charles Head's brother.

21 Q. When you had previously testified about folks that

22 worked with you in various phases of your employment, was this

23 one of the people who you had mentioned?

24 A. Yes. Mike Head.

25 MR. MORRIS: I would like to go to 125, Your Honor.

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1 It's also covered by the stipulation.

2 THE COURT: Any objection, Mr. Tedmon?

3 MR. TEDMON: No, Your Honor.

4 THE COURT: Mr. Samuel?

5 MR. SAMUEL: Same objections.

6 THE COURT: Mr. Greiner?

7 MR. GREINER: No objection to it coming in, but

8 801(d)(2)(E) objection.

9 THE COURT: All right. The exhibit will come in.

10 (Government Exhibit 125, Email dated 5/13/2005 From

11 Kou Yang kouyang@headmortgage.com To Josh’s Blackberry,

12 <jactor5@tmo.blackberry.net> CC Charles Head

13 charleshead@headmortgage.com Subject: RE: TAYLORS admitted into

14 evidence.)

15 Q. BY MR. MORRIS: On this e-mail, I'm going to do the

16 same. I'm going to work from the bottom up, if I could.

17 So this bottom section, what's the subject of this

18 e-mail series of e-mails?

19 A. It's about the Taylors, which is the last name of one

20 of the sellers.

21 Q. Do you have a recollection of who Josh is?

22 A. Yes. Josh Coffman.

23 Q. And his question to you was what?

24 A. He's asking me what's up with the court date for the

25 Taylors.

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1 Q. And then your reply up here. If you could explain to

2 the jury your reply?

3 A. I'm pretty much telling him that we need -- all we

4 need is a writ, which is a form that comes from the sheriff's

5 department in order to evict someone that's living in a

6 property. I'm telling him that I've already called them

7 yesterday.

8 Q. Who is "them", I called "them" yesterday?

9 A. I already called the sheriff's office to, you know,

10 to confirm the writ.

11 Q. Okay.

12 A. And that -- and then I went on to explain to him that

13 the Taylors have called Nora.

14 Q. Can I interrupt you. Who is Nora?

15 A. Nora is the escrow officer at the escrow company, and

16 she informed me that the Taylors had asked for all of their

17 documents that they signed at escrow. And Nora informed me

18 that it is rightfully theirs, and that she would have no choice

19 but to release it to them.

20 Q. What does that last sentence mean when you wrote

21 that?

22 A. (Reading): I know that you had Cindy sign the escrow

23 instructions, et cetera, for the sellers.

24 That meant that in escrow there's escrow instructions

25 that the sellers sign, and they don't have to be notarized. So

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1 in those escrow instructions Charles had Cindy, who was an

2 assistant at that time, sign them for the Taylors.

3 Q. Who is Cindy?

4 A. Cindy was an assistant to the office, an office

5 assistant at that time.

6 Q. So Cindy is not one of the Taylors?

7 A. No.

8 Q. And your intent of that sentence to say -- what was

9 it that Cindy did? What exactly are you saying Cindy did here?

10 A. She forged the Taylor's signatures.

11 THE COURT: Are you on track to finish in ten

12 minutes?

13 MR. MORRIS: I'm not, Your Honor, but I'm making

14 relatively good progress, I think.

15 THE COURT: All right.

16 Q. BY MR. MORRIS: We're going to bring in 158, if we

17 could, Your Honor, subject to the stipulation also.

18 THE COURT: Any objection, Mr. Tedmon?

19 MR. TEDMON: Which one is it?

20 MR. MORRIS: Sorry. 148.

21 MR. SAMUEL: 148 or 140?

22 THE COURT: Mr. Tedmon?

23 MR. GREINER: Mr. Morris, what's the number one more

24 time?

25 THE COURT: 148. Mr. Tedmon, any objection?

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1 MR. TEDMON: This is a five-page exhibit, correct?

2 MR. MORRIS: Yes, it is.

3 MR. TEDMON: No objection.

4 THE COURT: Mr. Samuel?

5 MR. SAMUEL: 801(d)(2)(E).

6 THE COURT: Mr. Greiner?

7 MR. GREINER: No objection pursuant to the

8 stipulation. Objection 801(d)(2)(E).

9 THE COURT: All right. The exhibit will come in.

10 You're probably understanding at this point. When

11 you hear 801(d)(2)(E), you can be reminded of my clarifying

12 instruction with respect to the conspiracy charge and the way

13 in which you should think about the evidence as to each

14 defendant.

15 And I'll remind you of that periodically but assume

16 that you retain a recollection of what I told your earlier

17 today.

18 All right. Mr. Morris. 148.

19 (Government Exhibit 148, Email dated 7/11/2005 From

20 Kou Yang To Charles Head Subject: RE: (Blank) admitted into

21 evidence.)

22 Q. BY MR. MORRIS: If we could go to the second page.

23 If you want to take a second to read through this and see if

24 you recall the topic that's being discussed in these e-mails.

25 A. (Witness reviewing document.) Okay.

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1 Q. Do you recall what's being discussed here? That's

2 yes or no?

3 A. Yes.

4 Q. What is it that this e-mail was discussing?

5 A. It is discussing the fact that we have a property

6 that we had made payment on. Because the Dillers were in

7 foreclosure, and in order for their property not to go up for

8 sale, we had to pay the loan current. And so we did that for

9 her. But then she at some point was like, well, I don't want

10 to do this anymore. At that time, we had already got a deed

11 from her signing it over to Lenny's name.

12 Q. And --

13 MR. TEDMON: Your Honor, I'm sorry. I'm going to

14 object to the use of the word "we." Move to strike that

15 portion of the previous answer.

16 THE COURT: Well, at this point, I'm going to

17 overrule. But please ask follow-up questions to clarify --

18 MR. TEDMON: Thank you.

19 THE COURT: -- the use of the word "we" there.

20 Q. BY MR. MORRIS: What did you mean when you said "we"

21 had paid on the Diller's property, who did you mean?

22 A. Charles Head.

23 Q. Were you involved in making payments on properties?

24 A. Not for this type of deal.

25 Q. Okay. Were there other types of stuff that you made

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1 payments for?

2 A. Yes.

3 Q. This portion at the bottom, do you have a

4 recollection of who Eddie is?

5 A. Yes.

6 Q. Who is that?

7 A. Eddie Vanegas.

8 Q. And as you sit here, do you have an understanding of

9 what straw buyer means?

10 A. Yes.

11 Q. What does that mean to you?

12 A. The term straw buyer is used when we have somebody

13 put the loan in their name.

14 MR. GREINER: Objection. "We." Non-responsive.

15 THE COURT: Sustained.

16 THE WITNESS: When the office --

17 MR. GREINER: Objection. Office. Non-responsive.

18 THE COURT: Can you tee this up, Mr. Morris?

19 Q. BY MR. MORRIS: Yes. Let me see if I can rephrase

20 this.

21 Did you use the term straw buyer in your work at Head

22 Financial?

23 A. Yes.

24 Q. And did you have knowledge of how a straw buyer, to

25 use your term, fit into these transactions?

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1 A. Yes.

2 Q. Were you involved in processing paperwork that

3 involved straw buyers?

4 A. Yes.

5 Q. In the context of what you did with straw buyer

6 paperwork, what do you mean by a straw buyer?

7 A. What I mean by a straw buyer is someone that we are

8 putting the -- someone that is buying the property in their

9 name but they don't actually own it. They are actually buying

10 for the company or --

11 Q. Okay. In this part about where Charles says to you,

12 tell Eddie that we can find a new straw buyer if he's willing

13 to pay the fee we gave to him, what does that mean to you?

14 A. Charles pays all his straw buyers a fee. Everybody

15 has a different price, but the normal rate is about $5,000.

16 And so at that time Charles had already given Eddie his money

17 for this particular loan, and so now that he's not -- no longer

18 going to be on this loan, Charles wanted to get his money for

19 the fee back.

20 MR. MORRIS: Take it down. If I could just clarify

21 for the record, Your Honor. When I've been mentioning the

22 stipulation so far in the 100-series e-mails, if I could read

23 that portion of the stipulation language so it's in the record.

24 THE COURT: All right.

25 MR. TEDMON: That's fine.

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1 MR. SAMUEL: Fine.

2 MR. GREINER: No objection.

3 THE COURT: All right. You may read the stipulation.

4 MR. MORRIS: The stipulation of the parties with

5 respect to these e-mails are that: The e-mails admitted

6 pursuant to the stipulation from the e-mail address or

7 addresses or containing the following names in the "to" or

8 "from" line, those names being charleshead@headmortgage.com,

9 charleschead@headmortgage.com, Charles Head, Charles C. Head,

10 and Charles C. Head belong to and were used by the defendant

11 Charles Head, and they stipulate that the e-mails in

12 Government's Exhibits 100 through 154 were either sent to or

13 from defendant Charles Head.

14 I would like to move to Exhibit 201. Although, Your

15 Honor, I'm moving on to -- even though it's involving a

16 different defendant. I know it's two minutes early but maybe

17 break at this point.

18 THE COURT: All right. We'll start with 201

19 tomorrow. I'll review the schedule with counsel once the jury

20 is excused.

21 I am going to excuse you at this point in time. Our

22 schedule tomorrow, as you'll recall, is 8:30 to 1:30 with two

23 short breaks. So please be ready to go at 8:30.

24 Overnight, please keep in mind, as always, my

25 instructions. You will receive all the information that you

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1 need to decide this case in this courtroom. So please do not

2 discuss the case with anyone. Do not do any research of any

3 kind. Do not go online, go to the library. Don't begin to

4 think about its ultimate conclusion. Continue to keep an open

5 mind until you've heard all the evidence, you receive my final

6 instructions, and you have deliberated with your fellow jurors.

7 Have a good evening. We will see you tomorrow

8 morning at 8:30. Thank you.

9 (Jury out.)

10 THE COURT: You may step down, Ms. Yang. Please be

11 back and ready to go at 8:30. Please avoid any contact with

12 the jurors.

13 All right. You may be seated if you'd like. Just so

14 I'm clear, how much longer do you think you need, Mr. Morris?

15 Can you wrap it up in 15 minutes?

16 MR. MORRIS: Your Honor, I've got maybe 10 to 15 more

17 e-mails that I would like to go through and then some wrap-up

18 questions. I would expect 15 to a half hour. The working

19 through the e-mails is going a little slower than I expected

20 with her. I'm going to try to keep it going faster.

21 THE COURT: All right. If you can look at your

22 schedule, refine it.

23 And after Ms. Yang, are we still expecting

24 Ms. Solares? I gather that's the person who left us a message.

25 I haven't listened to it.

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1 MR. ANDERSON: Exactly. Ms. Solares has indicated

2 her intention not to voluntarily comply with the subpoena and

3 has entered a complaint about having been subpoenaed and also

4 about the way that we've dealt with her.

5 Although, of course, we have a different view of it,

6 and I have e-mails and things if the Court wants to see them.

7 So that may be an issue we need to address.

8 We are considering seeking -- which I was hoping that

9 we wouldn't have to -- but seeking a material witness warrant.

10 It's something that we don't do lightly. Particularly when

11 someone is a victim in a case rather than just another witness.

12 So we've been trying every means we have not to have to do

13 that.

14 THE COURT: Is she essential to your case?

15 MR. ANDERSON: Well, she may be very important. So

16 what we've been trying to do is hopefully there would be some

17 way that we wouldn't need to, or there would be some

18 alternative, or that we could work with her and work something

19 out where she would be more cooperative.

20 And that's why we haven't brought it to the Court's

21 attention yet. But probably within the next few days if this

22 continues to be an issue and we think we can't get around it

23 some other way, we're going to be presenting something to the

24 Court on that matter.

25 THE COURT: All that said, who is next after

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1 Ms. Yang?

2 MR. ANDERSON: Ms. Yang will testify. Mike Mattice

3 is also on the schedule for tomorrow. Justin Wiley is on the

4 schedule for tomorrow. Alfred Limas is a possibility for

5 tomorrow. Howard Peter. Daniel Castillo.

6 Given the way that this has gone so far, I think that

7 we won't get through probably not even half of those people,

8 but we're not so far off track yet that I'm concerned.

9 THE COURT: All right. I think we need to think

10 about picking up the pace a little bit, if we can. Any

11 critiques of my --

12 MR. SAMUEL: As it relates to Kou Yang, Your Honor,

13 she, I think for many of us, is very central. I think that we

14 should be permitted some leeway in the amount of time that we

15 utilize to examine her because she has a lot of things to say.

16 She's probably the most critical witness in this case.

17 We may be able to pick up time elsewhere, but I think

18 that the Court should consider giving us leeway.

19 THE COURT: I understand she's a critical witness.

20 To the extent you can be prepared to move it along.

21 I'm just thinking about the big picture here.

22 MR. ANDERSON: One thing that may put the Court's

23 concerns at least at ease for now, is that we have front-loaded

24 witnesses who we thought would take longer.

25 And it does seem in most trials, including this one,

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1 that as we go, the witnesses will take less and less time.

2 THE COURT: I'm just putting you on notice that at

3 some point I'll start whining significantly. Ms. Schultz?

4 (Discussion between the Court and clerk.)

5 THE COURT: Mr. Miller has indicated he's in between

6 prescriptions. And although he doesn't think he has missed

7 anything material, he would feel more comfortable if he were

8 moved into the front row, closer to a monitor. So Ms. Schultz

9 will see if there is another juror willing to switch with him.

10 MR. ANDERSON: No objection.

11 MR. GREINER: No objection, Judge.

12 THE COURT: All right.

13 MR. SAMUEL: That's fine.

14 THE COURT: Any comment on 801(d)(2)(E)?

15 Occasionally, I'm going to give the reminder. Is there any

16 critique of that general instruction?

17 MR. TEDMON: No. It was my understanding from the in

18 limine hearing that it was a standing objection.

19 At some point, if we felt that they didn't tie it up

20 with evidence independent of the co-conspirator's statements,

21 we would move at that time or do a Rule 29. So that's why I'm

22 not objecting to all this because that's what my understanding

23 was.

24 MR. SAMUEL: My understanding was slightly different.

25 I understood them to say as it relates to certain things.

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1 However, at this particular point, I mean, we haven't entered

2 into, verbally on the record anyway, a stipulation that there

3 is a standing order that can be used as an objection in any

4 appealable issue. And I think that's critical.

5 Once we can do that, I think then that would possibly

6 speed things up. But we don't have that agreement on the

7 record anywhere.

8 MR. SAMUEL: I don't think it's contained within the

9 stipulation.

10 THE COURT: Can you meet and confer?

11 MR. SAMUEL: Absolutely.

12 THE COURT: Identifying witnesses and exhibits?

13 MR. SAMUEL: Yeah.

14 MR. GREINER: Judge, if I might. This issue, this

15 801(d)(2)(E) issue I've dealt with historically all the way

16 back into the old courthouse. And the case up in the Ninth

17 Circuit -- at one point in time, I think that I mentioned in

18 limine, I got stung by the Ninth Circuit because I was good on

19 Monday and bad on Tuesday and good on Wednesday. So from my

20 perspective, based on that history, if it goes up to the Ninth

21 Circuit, I don't want to get stung again.

22 THE COURT: Is there no way to anticipate at least

23 with certain things and put in writing? While you can always

24 then supplement that with statements on the record. If there's

25 not, there's not. But if there is.

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1 MR. ANDERSON: I think there might be, Your Honor.

2 If defense counsel wants to provide us with a stipulation with

3 exhibit numbers and witness testimony, I would definitely

4 consider it. That's a very reasonable thing.

5 MR. GREINER: That's what I don't want to do. I

6 don't want to hamstring myself. I don't know what the

7 Government's case is.

8 MR. ANDERSON: Well, the stipulation would be to the

9 items in the stipulation, and if there were other items that

10 weren't stipulated to, Mr. Greiner is more than capable,

11 obviously, of standing up and making objections to those

12 things.

13 THE COURT: If you can't, you can't. But if you can

14 anticipate in some respects. I understand Mr. Tedmon is saying

15 there is a standing objection whenever it applies.

16 MR. TEDMON: Right. And that was exactly what we

17 discussed, and Mr. Greiner said I got stung by the Ninth

18 Circuit. We said, well, we don't want to be jumping up like

19 jumping jacks every other question. That was my --

20 THE COURT: But still, it doesn't apply to every

21 single witness. Every single exhibit.

22 MR. TEDMON: Exactly.

23 THE COURT: So if there's a way to anticipate, inform

24 the Court, preserve in writing, when you know it's going to be

25 an issue. Exhibits, you're looking at them, and then you're

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1 making the call. So I don't know if the Government can provide

2 a list of exhibits it's going to deal with on a certain day.

3 MR. SAMUEL: That would be helpful.

4 MR. ANDERSON: Well, if we're going to do a

5 stipulation, it would be helpful if we did one for all the

6 exhibits because then we would have it all set and done.

7 There's also the companion issue of the 404(b)

8 evidence. And to the extent that there is anything that

9 Mr. Greiner or Mr. Samuel want a 404(b) instruction on, that

10 would be a good -- and even Mr. Tedmon if he wants the 404(b)

11 instruction on some things. If they want to bring that to our

12 attention, too, I know the Court's been very accommodating

13 about giving that instruction and will give one at the end, but

14 if we want one throughout the trial, we can work that out, too.

15 THE COURT: To the extent that you can meet and

16 confer and identify these issues in a way that I can anticipate

17 them, I will. I have the instructions at the ready. I'll try

18 to be alert.

19 I think there might be a way you could identify when

20 you know it's going to be an issue without precluding your

21 saying something else, if needed. Anything else?

22 MR. TEDMON: I don't think so.

23 THE COURT: All right. See you in the morning at

24 8:30.

25 (Court adjourned. 4:38 p.m.)

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2 CERTIFICATION

4 I, Diane J. Shepard, certify that the foregoing is a

5 correct transcript from the record of proceedings in the

6 above-entitled matter.

9 /S/ DIANE J. SHEPARD


DIANE J. SHEPARD, CSR #6331, RPR
10 Official Court Reporter
United States District Court
11

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25

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460


Case 2:08-cr-00116-KJM Document 550 Filed 06/30/14 Page 1 of 210

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

---oOo---

BEFORE THE HONORABLE KIMBERLY J. MUELLER, JUDGE

---oOo---

UNITED STATES OF AMERICA,

Plaintiff,

vs. No. 2:08-cr-00116

Volume 4
CHARLES HEAD, DOMONIC
McCARNS, BENJAMIN BUDOFF,

Defendants.

---oOo---

REPORTER'S TRANSCRIPT

TRIAL PROCEEDINGS

THURSDAY, OCTOBER 24, 2013

---oOo---

Reported by: DIANE J. SHEPARD, CSR #6331, RPR

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Case 2:08-cr-00116-KJM Document 550 Filed 06/30/14 Page 2 of 210 303

1 APPEARANCES

3 For the Government:

4
BENJAMIN B. WAGNER
5 UNITED STATES ATTORNEY
501 I Street, Suite 10-100
6 Sacramento, California 95814
BY: MICHAEL D. ANDERSON
7 MATTHEW G. MORRIS
Assistant U.S. Attorney
8

9 For the Defendant, Charles Head:

10 SCOTT L. TEDMON
LAW OFFICES OF SCOTT L. TEDMON
11 980 Ninth Street, 16th Floor
Sacramento, California 95814
12

13 For the Defendant, Benjamin Budoff:

14 DWIGHT M. SAMUEL
LAW OFFICES OF DWIGHT M. SAMUEL
15 117 J Street, Suite 202
Sacramento, California 95814
16

17 For the Defendant, Domonic McCarns:

18 JAMES R. GREINER
LAW OFFICES OF JAMES R. GREINER
19 1024 Iron Point Road
Folsom, California 95630
20

21

22

23

24

25

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1 I N D E X

2 GOVERNMENT WITNESSES PAGE

3 KOU YANG
DIRECT EXAMINATION BY MR. MORRIS (cont'd) 324
4 CROSS-EXAMINATION BY MR. TEDMON 387
CROSS-EXAMINATION BY MR. GREINER 435
5 CROSS-EXAMINATION BY MR. SAMUEL 490

10

11

12

13

14

15

16

17

18

19

20

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25

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1
GOVERNMENT EXHIBITS RECEIVED IN EVIDENCE
2 No. Description Page

3 201 Email dated 4/12/2005 From Kou Yang To 325


Charles Head CC Domonic McCarns Subject:
4 UPDATES
204 Email dated 4/18/2005 From Kou Yang 330
5 212 Email dated 6/10/2005 From Domonic McCarns 335
To Kou Yang; Charles Head;
6 eds@fundingforeclosures.com; Keith
Brotemarkle Subject: Reynolds/pointer –
7 Everette, WA
224 Email dated 7/11/2005 From Domonic McCarns 339
8 To Ed Shaffer; Keith Brotemarkle; Kou Yang;
Sam Vu; Charles Head Subject: Thompson
9 (redacted)
228 Email dated 6/8/2006 From Domonic McCarns To 343
10 Kou Yang Subject: RE: Updated payoff Lien #
1 on title
11 251 Email dated 10/19/2006 10/19/2006 To Keith 345
at Foreclosure Options; Kou Yang; Lisa Vang;
12 domonicm@nfcoptions.com;
toddh@nfcoptions.com Subject: RE:
13 BUDOFF/Eggleton Appraisal Inquiry
310 Email dated 5/18/2006 From Andrea Manriquez 349
14 331 Email dated 10/3/2006 From Keith at 354
Foreclosure Options To Kou Yang Subject: RE:
15 Please Submit: FERREYRA/TRAINOR
333 Email dated 10/3/2006 From Keith at 355
16 Foreclosure Options To Kou Yang; Lisa Vang;
benb@psloans.net Subject: RE: VOE MCELVEEN,
17 TROY
341 Email dated 10/17/2006 From Keith at 359
18 Foreclosure Options To Kou Yang;
benb@psloans.net
19 Subject: RE: 06-d75291
345 Email dated 10/18/2006 From Keith at 362
20 Foreclosure Options To benb@psloans.net
CC Sam Vu Subject: RE: Morgan at Peoples
21 349 Email dated 10/20/2006 From Benjamin Budoff 364
To Kou Yang; Sam Vu Subject: RE: (Blank)
22 354 Email dated 10/26/2006 From Kou Yang To Lisa 365
Vang; Keith at Foreclosure Options
23 CC benb@psloans.net Subject: RE:
WILLIFORD/Dreyer Funding inquiry
24

25

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1
GOVERNMENT EXHIBITS RECEIVED IN EVIDENCE
2 No. Description Page

3 127 Email dated 5/31/2005 From Kou Yang To 429


Charles Head; Jack Corcoran Subject: CHARLES
4 MORTGAGES
209 Email dated 5/11/2005 From Domonic McCarns 465
5 To Pang Yang; Kou Yang; Heather Worch
CC Charles Head Subject: Disanto, John &
6 Kelly
214 Email dated 6/15/2005 From Kou Yang To 467
7 Charles Head
215 Email dated 6/15/2005 From Kou Yang; Keith 468
8 Brotemarkle; Ed Shaffer; Charles
Head Subject: FW: Mckenzie (ff.com)
9

10

11 DEFENSE EXHIBITS RECEIVED IN EVIDENCE


No. Description Page
12
CH-R Business Records re: FCO, Inc. Asset 405
13 Purchase Agreements with Head Financial
Services, Inc. and Creative Loans, LLC
14 CH-T Email dated 5/19/2005 From Kou Yang To Pang 421
Yang CC Keith Brotemarkle, Velda Palm
15 DM-S1 Terms of employment Domonic McCarns 447
DM-S2 Terms of Employment Creative Loans, LLC. 447
16 BB-E1 Uniform Residential Loan Application for 22 492
Noyes Street, Duxbury, MA 02332
17 BB-F1 Month-to-Month Agreement, Dated 12/1/03 495

18

19

20

21

22

23

24

25

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1 SACRAMENTO, CALIFORNIA

2 THURSDAY, OCTOBER 24, 2013

3 ---oOo---

4 THE CLERK: Calling criminal case 08-116, United

5 States versus Charles Head, Benjamin Budoff, and Domonic

6 McCarns. This is on for jury trial, and today is day four.

7 THE COURT: Good morning. All counsel are present.

8 MR. GREINER: Good morning, Your Honor.

9 THE COURT: All parties are present. Mr. Miller and

10 Ms. McKenzie are going to switch, if you haven't heard.

11 Ms. McKenzie remains an alternate, but she will be in the back

12 row to facilitate Mr. Miller's viewing of the monitor. Let's

13 bring the jury in.

14 MR. TEDMON: Your Honor, one issue I want to raise.

15 THE COURT: All right.

16 MR. TEDMON: I want some clarification on this

17 801(d)(2)(E) issue. I know it's important because we're still

18 fairly early in the trial.

19 This is my recollection of what the record should

20 show. I filed a motion in limine, number one, on the 26th of

21 September raising the 801(d)(2)(E) issue. Both counsel --

22 counsel for Mr. McCarns, counsel for Mr. Budoff -- joined.

23 We had a hearing on the motion in limine, and at that

24 time, after listening to the various positions, the Court

25 indicated it would take the Ninth's model, which was that the

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1 Government is going to be allowed to bring in the

2 co-conspirator statements prior to having to prove it up. And

3 if later on that wasn't the case, then, obviously, the defense

4 is free to argue for Rule 29.

5 My understanding, additionally, and what has been

6 done in every other trial I've participated in where I filed

7 this motion, which I do routinely, is that there is a standing

8 objection or a continuing objection to the 801(d)(2)(E)

9 statements so we don't have to jump up and down all the time

10 objecting. That's the whole point of the in limine motion that

11 I filed.

12 Now if I'm incorrect in that assessment or

13 recollection, I would like to know. Because yesterday I did

14 not enter any objections because of the in limine motion

15 hearing.

16 It's different than 404(b). I would certainly agree

17 with everyone that if it's 404(b), each counsel for each

18 defendant must at the time that the 404(b) item is provided or

19 at least presented they need to file an objection

20 contemporaneous to that event.

21 But in terms of 801(d)(2)(E), I would like the

22 Court's guidance on this because I want to make sure the record

23 is clear for my client.

24 THE COURT: Well, I'm prepared to accept the standing

25 objection. I don't know that I can muzzle counsel. I don't

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1 know which cases or case Mr. Greiner is referring to, but I'm

2 prepared to accept a standing objection. I encouraged the

3 parties yesterday to meet and confer to see if they could

4 stipulate the Government would acknowledge a standing

5 objection. I understand the Government does acknowledge a

6 standing objection.

7 MR. ANDERSON: Right, Your Honor. Mr. Tedmon and I

8 actually discussed this last night at some length. And I think

9 the way that he just described it is accurate. There are a lot

10 of statements which everyone agrees are statements that at

11 least in the Government's view are co-conspirator admissions,

12 801(d)(2)(E). But there are also other statements which are

13 404(b).

14 And I think as far as the 801(d)(2)(E), the things

15 that happened clearly within the timeframe that the Government

16 has alleged is part of the conspiracy, the motion in limine is

17 clear that defense counsel is challenging that these were not

18 necessarily in furtherance of the conspiracy. The Government's

19 going to have to tie that up or there's going to be a motion

20 under Rule 29 later.

21 As far as these other statements that are 404(b), if

22 defense counsel is satisfied with an instruction at the end of

23 the case regarding it, that's fine with the Government. But if

24 the defense counsel wants instructions as we go along, then

25 that's going to be on each counsel to bring that up.

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1 MR. SAMUEL: I have a comment or observation, Your

2 Honor. And that is that, obviously, as to the 802(d)(2)(E)

3 material, most, if not all, of the e-mails are subject to that

4 objection. I brought that up today. I think that somehow the

5 Court could maybe advise the jurors that all the e-mails that

6 have been admitted or are being admitted are subject to that

7 objection.

8 I had thought about that last night, but I didn't

9 have the opportunity to speak with counsel about that until

10 this morning. I don't know if that's a compromise, but I think

11 that that at least would perfect the record at least in my

12 mind.

13 THE COURT: So all e-mails?

14 MR. SAMUEL: Yes.

15 MR. ANDERSON: Your Honor, I think that's not

16 entirely accurate because there are some e-mails that aren't

17 being admitted under that theory. They are being admitted

18 under the theory that there are other acts, evidence admissible

19 against Charles Head.

20 THE COURT: That's why I asked you to meet and

21 confer. We cannot take time for me to go through the exhibit

22 list one-by-one. You know your cases better than I do. I have

23 some sense of this case based on what I've sat through, and I

24 can anticipate who might be subject to the 801 objections -- I

25 mean 802 objections. It's early in the morning. But unless

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1 you can meet and confer and give me lists.

2 Mr. Tedmon, so it's clear, the Court accepts your

3 standing objection. I don't think the Government would argue

4 on appeal you that didn't preserve your record.

5 MR. TEDMON: Thank you.

6 THE COURT: If Mr. Samuel and Mr. Greiner can enter

7 into standing stipulations with the Government, it would

8 probably allow to us move a little more quickly. But at this

9 point, I don't hear that you've reached a focused stipulation

10 in a way that allows me to do anything more than play along as

11 we go.

12 MR. GREINER: Good morning, Judge. James Greiner

13 representing Mr. McCarns.

14 Correct. As of this morning, I have not been able to

15 reach any type of an agreement. I may be able to in the next

16 couple days when we're not in trial.

17 As far as today goes, as far as my record, I want to

18 make sure that I preserve my record. The Government has

19 already said that the e-mails are coming in for dual purposes

20 or different purposes, and I just don't want to miss something

21 in case this goes to the Ninth Circuit.

22 So as far as today is concerned, I'm going to

23 continue to do what I think I have to do to represent my

24 client, but I will certainly take the Court's direction and see

25 if there is a way we can work it out with the Government.

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1 THE COURT: All right.

2 MR. SAMUEL: One further issue, Your Honor.

3 Yesterday, the Court was asking for objections. It doesn't

4 quite work that way because --

5 THE COURT: I was asking for objections?

6 MR. SAMUEL: Yeah. As it relates to each item.

7 Either we have to find the paper document because if they are

8 not published on the screen, and they can't be published on the

9 screen because they're going to be published to everybody. So

10 that's kind of a mechanical problem.

11 THE COURT: I understand. I was presuming some

12 familiarity with the record such that you could look at the

13 list and know, but I gather that's unrealistic.

14 MR. SAMUEL: I don't think so. Sorry, Your Honor.

15 THE COURT: I understood what was going on.

16 So Mr. Tedmon, do you want me to make some general

17 statement to the jury that even though you aren't objecting

18 you've --

19 MR. TEDMON: Yes.

20 THE COURT: -- you have made a standing objection,

21 and so even they aren't hearing from you, you are making the

22 same objection.

23 MR. TEDMON: Yes. I think Mr. Samuel's suggestion,

24 which I would agree with, makes a lot of sense. And that way

25 at least the jury knows that I'm not disinterested, falling

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1 asleep or don't care. I would appreciate that.

2 One other comment. I don't know if this will help or

3 not, and it's the last thing I'll say. The Indictment period

4 is March 19th, 2005 to at least June 30th, 2006. It seems to

5 me, based on what we did at the in limine hearing, that nobody

6 is losing any traction in terms of preserving the record on the

7 801(d)(2)(E) issue if there's a standing objection as to all

8 three defendants. That eliminates that concern.

9 The only other issue that I think presents itself is

10 404(b), and I don't think we need an exhibit list or to compare

11 notes. Each counsel should just object at the time that that

12 e-mail is coming in that it's 404(b) and should come in only as

13 to Charles Head.

14 That would streamline the process. The record would

15 be very clear. And then the Government can argue, if they

16 don't think it is, why it's not. You know, if it's somewhat of

17 an extended dialog, we can do it outside the presence of the

18 jury or at sidebar. I don't know why we can't do it that way.

19 MR. SAMUEL: My comment is that the 404(b) material,

20 I think, works well when the Government specifically states

21 this is 404(b) material as it relates to this specific

22 defendant. We don't know where they are coming from. Rather

23 than us having to object, guessing whether it's 404(b)

24 material. It's offered specifically under that theory.

25 Otherwise, it would be objectionable. And, consequently, I

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1 think that as they have done, they should continue to announce

2 the material, and who it relates to, and the Court should

3 continue to give the admonition.

4 THE COURT: Is the Government able to do that? In

5 the last Head trial the Court was always alerted in advance.

6 MR. ANDERSON: Yes, Your Honor.

7 THE COURT: Yesterday, I had to anticipate at least

8 once a 404(b) instruction maybe.

9 MR. ANDERSON: I think it was more that you were so

10 quick, Your Honor, that you were able to anticipate it before

11 we were able to ask for the Court's instruction. Obviously,

12 having done the other trial, you're very aware of the outlines

13 of this case.

14 We can do that. The question is, that in some cases

15 there may be things that some of the counsel think -- that

16 could be admitted for multiple purposes as 404(b) -- under a

17 404(b) theory or as intrinsically intertwined with the offense,

18 or as substantive evidence against all three defendants. And

19 in those cases, the Government would be introducing under all

20 those theories and would not ask for a 404(b) instruction.

21 If the defense counsel thinks that those other

22 theories of admissibility do not apply, then they need to

23 object on those other grounds and ask for a limiting

24 instruction that it be only for 404(b). At which point, the

25 Government can respond and say, well, Your Honor, in addition

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1 to the other acts evidence reason that this could be admitted,

2 it could be admitted under these other theories as well. And

3 that's what we're concerned about.

4 Because there are certain things that, obviously, to

5 everyone it's very clear that 404(b) is the only ground for

6 admission, and in those cases it's easy for us to say, Judge,

7 this is 404(b) evidence.

8 THE COURT: And can you compare notes every evening,

9 identifying the witnesses that are coming and alert me to those

10 issues in advance?

11 MR. ANDERSON: We can try, Your Honor. I don't know

12 that we will be 100 percent. We can try for 90 or 95 percent.

13 THE COURT: The more you do that the better.

14 MR. ANDERSON: So to let the Court know, Justin Wiley

15 will testify most likely today, and there will be 404(b)

16 evidence presented from him.

17 And the second issue is whether or not defense

18 counsel wants an instruction at every single point where 404(b)

19 evidence is presented, or if they want it on a daily basis, or

20 periodically for certain pieces of evidence, or a final

21 instruction at the end of the trial. And I can't make that

22 decision for them.

23 THE COURT: What is the defense response to that

24 suggestion?

25 MR. SAMUEL: I think it needs to be the jury needs to

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1 be instructed each time that 404(b) material is presented.

2 THE COURT: Mr. Tedmon?

3 MR. TEDMON: Yes. As much as I don't like the fact

4 that typically rings the bell of my client's name, I have to

5 agree with Mr. Samuel that the only way to know how the record

6 is moving forward is to know it at that time. So I think we're

7 stuck with having to identify the 404(b) item and who it

8 relates to, and that it doesn't relate to the other defendants

9 as to that particular piece of evidence.

10 Otherwise, if it's an omnibus, sort of end-of-the-day

11 sort of thing, they are not going to be able to sort out what

12 was related to who or who it wasn't related to, which I know is

13 Mr. Samuel's and Mr. Greiner's concern.

14 THE COURT: Mr. Greiner?

15 MR. GREINER: I'm going to make the objection and ask

16 for the instruction. I'm going to try to monitor my client's

17 case the best I can. That's who I represent.

18 THE COURT: And that's on 404(b)? You're talking

19 about 404(b)?

20 MR. GREINER: 404(b).

21 THE COURT: Mr. Samuel, you wanted to say something

22 else?

23 MR. SAMUEL: Well, the only other thought I had was,

24 you know, it's a little misleading if the Court says -- I

25 understand it's only related to a specific defendant. But the

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1 witness itself sometimes can bring up issues that may be

2 utilized for their consideration as to the credibility of the

3 witness. For example, witness may admit that they lied. Now

4 under the 404(b) theory, the jurors might think that the aspect

5 of lying doesn't affect the credibility as it relates to that

6 witness as it relates to another defendant. So, for example,

7 we have a situation in which -- I think it was yesterday -- in

8 which one of the witnesses said -- I'm sorry -- I can't recall

9 the specifics.

10 But it came to me when I was thinking, well, yeah,

11 the 404(b) only applies to Mr. Head, but on the other hand this

12 witness has admitted something which is detrimental to their

13 credibility, and, consequently, am I entitled to argue that

14 even though the evidence wasn't brought in against my client.

15 And I think I am entitled to that.

16 And if that's the case, then the jurors should be

17 aware that although it only applies to innocence or guilt as to

18 a specific defendant, doesn't necessarily preclude them from

19 considering for other purposes.

20 THE COURT: Well, I have the feeling we could spend

21 all day talking about these issues, and we have a jury waiting.

22 Again, you know your cases better than I do despite

23 my general familiarity. And so I'm going to start with a

24 general comment following up on what the jury was hearing about

25 801(d)(2)(E) yesterday, advising that Mr. Tedmon has a standing

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1 objection, advising them that whenever they hear from

2 Mr. Samuel and Mr. Greiner -- and/or Mr. Greiner that there is

3 an 801(d)(2)(E) objection, that the parties are reminding us

4 that they should not consider the evidence unless the

5 Government proves beyond a reasonable doubt dot-dot-dot.

6 MR. SAMUEL: I basically would just say join, so I

7 mean, obviously, you can just say to the jurors that when you

8 hear Mr. Greiner make the objection, which he intends on doing,

9 it's joined by all parties.

10 THE COURT: Any objection to that phrasing?

11 MR. TEDMON: That's fine.

12 THE COURT: All right. Then 404(b), if the

13 Government alerts me to its position that that instruction

14 should be read, or if a party requests it, I will read that

15 instruction.

16 MR. ANDERSON: That makes sense, Your Honor.

17 I want to flag one issue that will come up

18 immediately with this witness. Mr. Morris is going to ask

19 questions --

20 THE COURT: With Ms. Yang?

21 MR. ANDERSON: With Ms. Yang.

22 -- regarding e-mails sent by Benjamin Budoff that

23 fall after June 30th, 2006. The Indictment charges until at

24 least June 30th, 2006. And in any event, the Government's

25 argument would be that the conspiracy, the plan, or scheme

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1 extends to at least through November 2006, and that, therefore,

2 those statements are co-conspirator admissions as well.

3 But I wanted the Court to be aware of that and

4 defense counsel to be aware that that's coming next.

5 MR. SAMUEL: And obviously that raises the issue of

6 variance and my argument with variance, and I need the Court,

7 obviously, to be aware of that. Because I think that there is

8 a definite change in the fashion in which the business was run.

9 Totally different.

10 THE COURT: I've been alerted to this through the

11 motions in limine. I don't know how much I fully understand

12 that argument. So I assume you'll make objections and the

13 record will be preserved.

14 MR. ANDERSON: Your Honor, I know we're getting short

15 on time, but there is one final thing.

16 The Court had said "the Government proved beyond a

17 reasonable doubt that the conspiracy existed." But the

18 threshold question which goes to the Court for the

19 admissibility of these co-conspirator statements is by a

20 preponderance of the evidence that a conspiracy exists and when

21 the statement was made the defendant had knowledge of and

22 participated in the conspiracy and statement was made in

23 furtherance of the conspiracy. And that's citing United States

24 v. Larson, 460 F.3d 1200, at pin cite 1211.

25 THE COURT: That's the Court's determination.

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1 MR. ANDERSON: Right. And that's for the

2 admissibility.

3 THE COURT: Hopefully, the jury will still be

4 applying the beyond-a-reasonable-doubt standard.

5 MR. ANDERSON: To determine the guilt of the

6 defendants, but whether or not that evidence comes in.

7 THE COURT: So are you suggesting different wording?

8 MR. ANDERSON: What I'm suggesting is that the Court

9 say that there's an objection to the admissibility of the

10 statements as far as whether or not they can apply to other

11 defendants who are alleged to be in the conspiracy.

12 I'm conditionally admitting this provided that the

13 Government meet the threshold it needs for the admissibility of

14 these statements. However --

15 To a certain extent, this is the Court's decision not

16 the jury's. Because if we reach the point where the Government

17 hasn't met the standard, this case is not going to go to the

18 jury. It will never get to them.

19 THE COURT: I understand that, but how do you frame

20 the jury's thinking about it in the meantime, or do you concede

21 it's a dismissal?

22 MR. ANDERSON: Well, I'm not going to concede it, but

23 it seems likely. And if we reach that point, then we'll have

24 to talk about whether remedial instructions saying disregard

25 all this testimony are sufficient to cure the problem that

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1 we've created.

2 But I think in the meantime something along the lines

3 of: Throughout trial defense counsel raised various objections

4 to the admissibility of evidence. In some cases the Court

5 allows it provisional on other things occurring later, and

6 you're simply to focus on the evidence that's admitted and

7 follow the Court's instructions. I'll give you instructions at

8 the end of the case.

9 THE COURT: Do you have the instructions that were

10 actually used in Knight?

11 MR. ANDERSON: No, I don't have those.

12 THE COURT: It appeared the Court there was reminding

13 the jury of its ultimate obligation. That's why I've been

14 using the language I have. I mean I didn't go to the record

15 and --

16 MR. ANDERSON: That may make sense to say at the end

17 ultimately you're going to have to determine beyond a

18 reasonable doubt whether each of these individuals individually

19 was participating in the conspiracy and was guilty of the

20 crime.

21 That makes a lot of sense to remind the jury you will

22 receive instructions later on. You're going to have to find

23 beyond a reasonable doubt.

24 THE COURT: That was the tack I was taking, but I had

25 not researched, you know, every other court's --

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1 MR. TEDMON: Your Honor, if I could. I agree with

2 the Court's initial thought. I certainly don't want the jury

3 to ever be given a different standard like preponderance of the

4 evidence because that's a mistrial. There is no way -- there

5 is a lot of new jurors on this jury panel. But even if they

6 weren't, this Court cannot give them another standard.

7 THE COURT: Mr. Anderson was just suggesting

8 conditional admission. I can throw that in.

9 But I was trying to remind them of their ultimate

10 responsibility when the case goes them.

11 MR. ANDERSON: I absolutely agree with Mr. Tedmon.

12 The Court should not say preponderance or anything along those

13 lines to the jury. That's absolutely true.

14 THE COURT: Final words. And then we're going to

15 bring the jury in. Mr. Greiner?

16 MR. GREINER: Yes, Judge. I would object to the

17 Court saying anything to the jury along the lines the

18 Government has argued this morning. I think the way the Court

19 handled it yesterday was fine.

20 But I think if the Court tries to say conditionally

21 admitted or anything of that nature, it's just going to add to

22 confusion, lead to a mistrial, lead to error. And I would

23 strongly urge the Court not to go into that area because I

24 think that's just fraught with problems.

25 THE COURT: All right. Mr. Samuel?

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1 MR. SAMUEL: Nothing further.

2 THE COURT: All right. Let's bring the jury in.

3 (Jury in.)

4 THE COURT: You may be seated. Welcome back to the

5 courtroom, ladies and gentlemen. I know you've been here for

6 some time this morning. One of these days we're going to get

7 our momentum going and be able to start promptly when you

8 arrive. That was my hope yesterday when I excused you. We did

9 take some time to do housekeeping. As I told you at the

10 beginning, when you are waiting, we are working.

11 And I just wanted to share with you the upshot of

12 that. Again, you've heard this but to just set the stage for

13 more of what you'll hear today. You may again hear counsel

14 referencing 801(d)(2)(E), and that is simply a way of reminding

15 you -- and, by the way, when that happens it may be that one

16 attorney makes that objection, but the others are joining.

17 Even though you didn't hear Mr. Tedmon saying that yesterday,

18 just so it's clear for you and for the record, he joins in

19 those objections.

20 And, really, it's a reminder to you that ultimately

21 your job when you retire to deliberate, which will be several

22 weeks, hopefully sooner rather than later, several weeks from

23 now, it will be to not consider the evidence against any given

24 defendant unless the Government proves beyond a reasonable

25 doubt -- and this is with respect to the conspiracy charge --

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1 that there was a conspiracy, that that defendant was a member

2 of that conspiracy, and the act or statement testified to was

3 in furtherance of the conspiracy.

4 So I'm not going to repeat that every time. I will

5 give you final instructions reminding you of that and

6 clarifying it. But that's what's going on when you hear that

7 statement from counsel again.

8 So thank you again for your patience with us. We are

9 now ready to go. Ms. Yang is back on the stand.

10 Ms. Yang, you were sworn yesterday. You continue to

11 testify subject to that oath. Understood?

12 THE WITNESS: Yes.

13 THE COURT: All right. Mr. Morris.

14 KOU YANG,

15 a witness called by the Government, having been previously

16 sworn by the Clerk to tell the truth, the whole truth, and

17 nothing but the truth, testified as follows:

18 DIRECT EXAMINATION (cont'd)

19 BY MR. MORRIS:

20 Q. Good morning again, Ms. Yang.

21 A. Good morning.

22 MR. MORRIS: Your Honor, I'm going to ask to admit

23 Government's Exhibit 201. It is covered by the stipulation.

24 THE COURT: Mr. Tedmon?

25 MR. TEDMON: No objection.

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1 THE COURT: Mr. Samuel?

2 MR. SAMUEL: Just a moment, Your Honor.

3 THE COURT: Mr. Greiner?

4 MR. GREINER: Yes, objection. 801(d)(2)(E), Judge.

5 THE COURT: All right. Overruled. It will come in.

6 (Government Exhibit 201, Email dated 4/12/2005

7 From Kou Yang To Charles Head CC Domonic McCarns

8 Subject: UPDATES admitted into evidence.)

9 THE COURT: All right. You may display 201, it's

10 admitted.

11 Q. BY MR. MORRIS: Ms. Yang, if you would take a moment

12 and review the e-mail on the screen in front of you, and when

13 you've had a chance to review it, I'll ask you some questions

14 about it.

15 A. (Witness reviewing document.) Okay.

16 Q. Do you have an understanding of what it is that you

17 are saying in this e-mail?

18 A. Yes.

19 Q. What is that that you're talking about?

20 A. I was talking about two loans that we have at a

21 lender.

22 MR. GREINER: Objection to "we."

23 THE WITNESS: Two loans --

24 THE COURT: Overruled. But can you get a general

25 definition of "we." I don't think we can prevent Ms. Yang from

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1 using that so why don't you do some definition work right now.

2 Q. BY MR. MORRIS: You've been using the word "we" a

3 lot, and so I wonder if you could explain -- let's focus it

4 right now on this timeframe, April of 2005. When you say "we

5 had at a lender," who do you mean "we"?

6 A. In this particular case, when I say "we" I mean the

7 company, Head Financial, Charles Head, Domonic McCarns, me.

8 You know, we all processed this loan. And they brought it to

9 me. I processed it. So we were all involved.

10 Q. You were explaining the e-mail.

11 A. We had two loans at the bank, and the property in

12 Tucson, Arizona was reduced down to 90 percent, and then the

13 one in Riverside we had at 100 percent, and the reason why we

14 did it that way was because we can prove that -- or we can try

15 to prove to the bank that they were going to live in the --

16 that the buyer was going to live in the Riverside property

17 because it's more believable that way.

18 Q. Okay. So then if we can then -- if you could explain

19 then. How does that question of the believability of owner

20 occupancy, how does that relate to this 90 percent and this

21 100 percent that's in the first sentence?

22 A. Because the lender will --

23 MR. GREINER: Objection. Speculation. Lack of

24 personal knowledge.

25 THE COURT: Sustained.

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1 MR. GREINER: Move to strike.

2 THE COURT: The jury shall disregard the beginning of

3 that answer. You may lay a foundation if you're able.

4 Q. BY MR. MORRIS: In the course of your employment in

5 the mortgage industry, did you become familiar with the loan

6 and the loans that you processed when a lender would or

7 wouldn't fund a loan?

8 A. Yes.

9 Q. And in your experience in your processing of loans

10 during that time period, were there certain criteria that would

11 affect them, would affect the funding of loans?

12 A. Yes.

13 MR. SAMUEL: Vague as to time.

14 MR. GREINER: Objection. Lack of personal knowledge

15 and speculation to the lender.

16 THE COURT: Overruled.

17 Q. BY MR. MORRIS: You can answer.

18 A. There were guidelines from the bank on which they

19 will approve a loan, and they would give a particular loan

20 100 percent financing if it was an owner-occupied property.

21 So as long as we can prove that it is an

22 owner-occupied property, we can obtain 100 percent financing.

23 Q. Okay. And so when you say Tucson had to be reduced

24 to 90 percent, what are you saying there?

25 A. What I was saying is because we cannot prove that

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1 they're going to live in the Tucson property, so because the

2 guidelines say that if it's not an owner occupied, then they

3 will only lend 90 percent, and we would have to come in with 10

4 percent down.

5 Q. And why did you use the term "more believable"?

6 A. Because the borrowers reside in California. And so

7 to buy a property and live in Riverside, California is much

8 more believable than to buy a property and live in Tucson

9 because they worked in California.

10 Q. Are you aware of who this person is, Vu?

11 A. Yes.

12 Q. Who is that?

13 A. I believe that was Simone Vu.

14 Q. And based on your involvement in this transaction,

15 was Ms. Vu planning to live in Tucson?

16 A. No.

17 Q. And based on your understanding of your involvement

18 in this transaction was Ms. Vu planning to live in Riverside?

19 A. No.

20 Q. So you previously said that somebody would live owner

21 occupied?

22 A. Yes.

23 Q. Was Ms. Vu going to be living in either of those

24 properties?

25 A. No.

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1 MR. GREINER: Objection. Speculation, lack of

2 personal knowledge.

3 THE COURT: Sustained.

4 MR. GREINER: Move to strike. Admonish the jury.

5 THE COURT: The jury shall disregard that answer.

6 Again, you can lay the foundation.

7 Q. BY MR. MORRIS: Back to the two previous questions.

8 Maybe I misunderstood you.

9 I think you said that based on your involvement in

10 this transaction and your knowledge of who Ms. Vu is, is that

11 how you knew that Ms. Vu was not going to be living in the

12 Tucson house?

13 A. Yes.

14 MR. GREINER: Same objection. Lack of personal

15 knowledge and speculation.

16 THE COURT: Overruled.

17 MR. SAMUEL: It assumes something not in evidence.

18 The 1003 document and what was stated on the 1003 document.

19 THE COURT: Overruled.

20 MR. MORRIS: I think your answer was "yes"?

21 THE WITNESS: Yes.

22 Q. BY MR. MORRIS: And the same question with respect to

23 Ms. Vu and the Riverside house?

24 MR. GREINER: Same objection, Judge.

25 THE COURT: Overruled.

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1 Q. BY MR. MORRIS: You can answer.

2 A. Yes.

3 Q. And so more believable, more believable for who?

4 A. For the bank.

5 MR. MORRIS: I'll be asking to bring in Exhibit 204,

6 Your Honor.

7 THE COURT: Mr. Tedmon, any objection?

8 MR. TEDMON: No, Your Honor.

9 THE COURT: Mr. Greiner?

10 MR. GREINER: 801(d)(2)(E), Judge.

11 THE COURT: Mr. Samuel?

12 MR. SAMUEL: Other than that, no objection.

13 THE COURT: All right. 1024 is admitted.

14 MR. MORRIS: That's 204.

15 (Government Exhibit 204, Email dated 4/18/2005

16 From Kou Yang admitted into evidence.)

17 Q. BY MR. MORRIS: If you would take a moment to review

18 the e-mail on the screen in front of you.

19 A. (Witness reviewing document.) Okay.

20 Q. Asking you to focus on the time period of this e-mail

21 April 18, 2005. I would like to go with you through the --

22 first go through who it's being sent to, and ask you if you

23 could help identify these people. So if we could start with

24 Xochitl Sandoval?

25 A. Yes, she was someone that worked at the office.

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1 Q. The office being?

2 A. Head Financial.

3 Q. Who is Brian Singleton, if you recall?

4 A. He also worked there.

5 Q. I think you've already discussed Charles Head, but

6 who, in your impression, was Charles Head at that time?

7 A. Charles Head is our boss.

8 Q. And what, if anything, was Domonic McCarns' role in

9 the office at that time?

10 A. He was someone that also worked there. He was an LO,

11 loan officer.

12 Q. Do you recall who Jeff is?

13 A. He -- I'm thinking Charles' cousin. Is it?

14 MR. TEDMON: Objection. She's speculating.

15 THE COURT: Sustained. The jury shall disregard.

16 THE WITNESS: I don't remember.

17 Q. BY MR. MORRIS: You don't recall, Jeff?

18 A. Yeah.

19 Q. Who is Josh Coffman?

20 A. He was also someone that worked there.

21 Q. What was his role at the office?

22 A. He was also another salesperson.

23 Q. And I think salesperson -- I think yesterday we --

24 A. Loan officer and salesperson are one and the same.

25 Q. Who was Justin Wiley?

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1 A. He was also a loan officer.

2 Q. And looking at this April 2005 timeframe, who, if you

3 recall, was Keith Brotemarkle?

4 A. Keith was the manager for the loan officers.

5 Q. And was there anybody else named Kou Yang there?

6 A. No. Just me.

7 Q. Who is your recollection of Leonard Bernot?

8 A. He was also a loan officer.

9 Q. And who, if you recall, was Levender Parker?

10 A. He was also a loan officer there.

11 Q. Looks like there's two Liz Gonzalezes. Do you recall

12 who Liz Gonzalez was?

13 A. I don't remember who Liz Gonzalez is.

14 Q. Do you recall Liz Huerta?

15 A. Yes.

16 Q. Who is Liz Huerta?

17 A. She was also a loan officer.

18 Q. Do you have any other knowledge of Liz Huerta outside

19 of being a loan officer?

20 A. Yes, she was my friend.

21 Q. Do you recall who Pang Yang was?

22 A. Yes.

23 Q. Who was Pang Yang?

24 A. She was a junior processor.

25 Q. A processor. And so who would she have worked for in

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1 the organization?

2 A. She would work for me. She would process loans.

3 Q. And Sandoval, do you recall who Sandoval would be?

4 A. Yes. That would be Omar Sandoval.

5 Q. What was his role in the organization?

6 A. He was also a loan officer.

7 Q. Do you recall who Scott might have been?

8 A. Yes.

9 Q. Who is Scott?

10 A. He was also a loan officer.

11 Q. And who, if you recall, was Velda Palm?

12 A. She was also a loan officer.

13 Q. And what is it that you're telling all these people

14 on this e-mail?

15 A. I sent them an e-mail letting them know that for all

16 the foreclosures that we are going to do from now on the equity

17 would have to be $50,000 or more in order for them to submit

18 the file, and that they would have to check their comps for the

19 properties up front and do all of their calculations so that we

20 all don't waste our time.

21 Q. Why, if you recall, did you send this e-mail?

22 A. I was informed by Mr. Charles Head to --

23 MR. GREINER: Objection. Hearsay as to Mr. McCarns.

24 MR. SAMUEL: Join.

25 THE COURT: Overruled.

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1 THE WITNESS: Charles Head told me to send out an

2 e-mail informing everybody because he didn't want anymore loans

3 to come through that he wasn't making enough money on.

4 Q. BY MR. MORRIS: If we could go to the next page.

5 Same date. Now it looks about 10:38. Can you

6 explain to the jury what this e-mail is saying?

7 MR. GREINER: Judge, is that the second page of the

8 same exhibit or a different exhibit?

9 MR. MORRIS: Same exhibit.

10 THE COURT: Still in 204.

11 MR. GREINER: Okay.

12 Q. BY MR. MORRIS: What does that e-mail say?

13 A. I am telling everybody that all the loans that we

14 have in the system, that we currently have that we're

15 processing that have 50,000 or less in equity, we will go ahead

16 and finish those out. For all new files, we will not process

17 them.

18 MR. MORRIS: We can go to 212. And I will be asking

19 to admit that per the stipulation.

20 MR. TEDMON: 202?

21 MR. MORRIS: 212.

22 THE COURT: Mr. Tedmon, any objection?

23 MR. TEDMON: No, Your Honor.

24 THE COURT: Mr. Greiner?

25 MR. GREINER: No, Judge.

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1 THE COURT: Mr. Samuel?

2 MR. SAMUEL: No, Your Honor.

3 THE COURT: All right. 212 is admitted.

4 (Government Exhibit 212, Email dated 6/10/2005 From

5 Domonic McCarns To Kou Yang; Charles Head;

6 eds@fundingforeclosures.com; Keith Brotemarkle Subject:

7 Reynolds/pointer – Everette, WA admitted into evidence.)

8 Q. BY MR. MORRIS: I would like to start at the bottom

9 of this June 10th e-mail. We've covered some of the people in

10 the "to" line, but I wonder if you can tell me if you recall

11 who is eds@fundingforeclosures.com?

12 A. That was Ed Shaffer.

13 Q. What was his role in the organization?

14 A. He was in charge of marketing.

15 Q. Are you familiar with a business by the name of

16 fundingforeclosures.com?

17 A. Yes.

18 Q. What was fundingforeclosures.com?

19 A. Fundingforeclosures.com was the business in which the

20 sellers or the homeowners will go and put in their information

21 if they are interested in the program, and that's where the

22 leads would come through.

23 Q. And so you used the word "funded" in this e-mail.

24 What does that word mean to you?

25 A. That word means that the loan is now closed.

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1 Q. Okay. And what do you mean by closed? What is it

2 that -- what do you mean by closed?

3 A. It's finished. The bank has funded, and they are

4 going to be recording the deed at the county recorder's office,

5 and that the property now belongs to Reynolds.

6 Q. And do you recall or do you have an idea of why you

7 would have told Domonic McCarns that this loan had funded?

8 A. I told Domonic McCarns because he was the loan

9 officer on the loan.

10 Q. And why would you have told Charles Head that this

11 loan had funded?

12 A. Because I usually tell him on every file that the

13 funds --

14 Q. Why would have you told Ed that the loan had funded?

15 A. Because he was also one of the managers.

16 Q. And the same question for Keith Brotemarkle?

17 A. Because Keith was the loan officers' manager.

18 Q. And this reply from Domonic, I wonder if you could

19 try to circle that. Did you know Domonic -- you don't need to

20 zoom it out.

21 Did you know Domonic by a nickname?

22 A. Yes.

23 Q. What nickname did he go by?

24 A. Q.

25 Q. Did you know of anybody else in the Head organization

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1 that went by that nickname?

2 A. No, just him.

3 Q. You can bring it down. I'm going to ask to bring up

4 10A5, which was admitted yesterday or the day before, Your

5 Honor, I believe.

6 THE COURT: It is in evidence.

7 Q. BY MR. MORRIS: I'm going to zoom it in a bit for

8 you. Do you recognize this type of document?

9 A. Yes.

10 Q. What is this document?

11 A. This is the form that they -- we check off --

12 Q. By "we"?

13 A. Of the processors would check off making sure that we

14 had each one of those items.

15 Q. Okay. And file name at the top, what does that

16 indicate to you?

17 MR. GREINER: Objection. Hearsay, lack of

18 foundation, lack of personal knowledge.

19 THE COURT: Sustained. Just start with the

20 foundation.

21 Q. BY MR. MORRIS: When you said that we, the

22 processors, would check this off, you're familiar with these

23 forms?

24 A. Yes.

25 Q. And you used these forms in the course of your job

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1 duties at Head?

2 A. Yes.

3 Q. Did you fill these forms out?

4 A. Yes.

5 Q. And I think your prior testimony was that at some

6 point you became the head of processing?

7 A. Yes.

8 Q. The people that worked for you as processors, did

9 they fill these forms out?

10 A. Yes.

11 Q. Did you review these forms ever?

12 A. Yes.

13 Q. In all of that experience with these forms, what does

14 file name mean?

15 MR. GREINER: Same objection as to this specific

16 file.

17 THE COURT: Overruled.

18 THE WITNESS: The file name is the seller's name.

19 Q. BY MR. MORRIS: I think city and state might be

20 self-explanatory, so let me move to the last column. What does

21 "UW" mean?

22 A. That's underwriter.

23 Q. And what goes in that column?

24 A. That is the name of the loan officer.

25 Q. Looking at the entire page in front of you, do you

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1 recognize any of the handwriting on the page?

2 A. Yes.

3 Q. Which handwriting do you recognize?

4 A. The one that's in the box at the bottom.

5 Q. When you wrote --

6 You say you recognize this as being your handwriting?

7 A. Yes, it is.

8 Q. Did you write this?

9 A. Yes, I did.

10 Q. When you wrote "wire $212,071.94," what did you mean

11 when you wrote that?

12 A. That is the total wire that the escrow company sent

13 to the sellers.

14 Q. Why are you keeping track of that number?

15 A. Because that is money that needs to come back to

16 Head.

17 BY MR. MORRIS: I'll be asking to bring in

18 Government's 224, Your Honor.

19 MR. TEDMON: No objection, Your Honor.

20 THE COURT: All right. Mr. Greiner?

21 MR. GREINER: Just one moment, Judge. No objection.

22 THE COURT: Mr. Samuel?

23 MR. SAMUEL: No objection.

24 THE COURT: All right. 224 is admitted.

25 (Government Exhibit 224, Email dated 7/11/2005 From

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1 Domonic McCarns To Ed Shaffer; Keith Brotemarkle; Kou Yang; Sam

2 Vu; Charles Head Subject: Thompson admitted into evidence.)

3 Q. BY MR. MORRIS: You can take a moment to review this

4 e-mail.

5 A. (Witness reviewing document.) Okay.

6 Q. What is it, based on your recollection, being

7 discussed in this e-mail?

8 A. Domonic McCarns is sending all of us an e-mail

9 informing us that the client who is the sellers went down to

10 the notary office and they have signed all of the documents

11 selling their property. He's pretty much telling us that in

12 the future if there's any issues with his loans, for us to let

13 him know and he will handle it himself unless he tells us

14 otherwise.

15 He's pretty much telling us that he has, you know,

16 gained a relationship with his clients, and that he knows how

17 to handle the problems, and he knows what to do to close the

18 deal within the company guidelines.

19 And then he went on to say that his client is

20 straight now and that the docs are signed and notarized.

21 Q. Stop you there. If you come back up, we were just

22 talking about this portion here. The sentence I've poorly

23 underlined.

24 What did that sentence mean to you when you read it?

25 MR. GREINER: Objection. Relevance. Her state of

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1 mind is not relevant.

2 THE COURT: Sustained.

3 Q. BY MR. MORRIS: Okay. If you can cover this section

4 here. What's being discussed in that part of the e-mail?

5 MR. GREINER: Document speaks for itself, Judge.

6 Objection.

7 THE COURT: Sustained.

8 Q. BY MR. MORRIS: Okay. In your experience, what's

9 Ed's role in a transaction at Head Financial?

10 A. Ed's role was bring -- he was the marketing part of

11 it, so he brought in the lead.

12 Q. And what is Sam's role at Head Financial?

13 A. Sam was the person that processed the loan.

14 Q. And do you recall what role Sam played at the

15 company? I don't think we've discussed Sam yet.

16 A. Sam is the processor at the company.

17 Q. Does Sam -- we previously spoke about Simone Vu. Is

18 there a relationship between Sam Vu and Simone Vu?

19 A. No.

20 Q. And based on your recollection of this transaction,

21 what's Keith's role?

22 A. Keith is the manager of the loan officers, so he

23 would help them find a bank to send the loan to.

24 MR. GREINER: Objection. Lack of personal knowledge

25 and speculation.

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1 THE COURT: Overruled.

2 Q. BY MR. MORRIS: And this part where it says "thanks

3 for managing the flow, Kou," what does that mean?

4 A. Um --

5 MR. GREINER: Objection, speculation.

6 Q. BY MR. MORRIS: Do you know what "managing the flow"

7 means?

8 A. Yes.

9 Q. What does managing the flow mean?

10 A. Pretty much making sure that everything was done

11 properly.

12 Q. So if Simone Vu and Sam Vu were not related, who is

13 Simone Vu?

14 A. Simone Vu is Domonic McCarns -- the mother of his

15 daughter.

16 Q. And did Simone Vu work in the office?

17 A. No.

18 Q. So what was her role in the documents we previously

19 looked at?

20 A. She was a straw buyer, a buyer.

21 MR. MORRIS: I'm going to ask to bring in 228.

22 MR. TEDMON: No objection.

23 THE COURT: Mr. Greiner?

24 MR. GREINER: Sorry, what number was it?

25 THE COURT: 228.

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1 MR. GREINER: Just one second, Judge. No objection.

2 THE COURT: Mr. Samuel?

3 MR. SAMUEL: 801(d)(2)(E), Your Honor.

4 THE COURT: All right. 228 is admitted.

5 (Government Exhibit 228, Email dated 6/8/2006 From

6 Domonic McCarns To Kou Yang Subject: RE: Updated payoff Lien #

7 1 on title admitted into evidence.)

8 Q. BY MR. MORRIS: If you would take a moment to review

9 the portion of the e-mail that I've zoomed in on.

10 A. (Witness reviewing document.) Yes.

11 Q. Do you recall what this e-mail was discussing?

12 A. Yes.

13 Q. What is it that this e-mail involved?

14 A. It was Domonic McCarns telling Emily, who was the

15 girl that would order all the payoffs, he's telling her, you

16 know, look at how fast I got the payoff with the stuff -- with

17 his charm, I guess, he was able to get it.

18 Q. What is a payoff?

19 A. A payoff is a letter from the lender telling Head --

20 or telling the company that's ordering it how much --

21 MR. TEDMON: Your Honor, I'm going to move to strike

22 the last answer because it's either the company or it's Head.

23 She needs to enumerate specifically.

24 THE WITNESS: The company, Head Financial.

25 THE COURT: All right. With that clarification.

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1 MR. TEDMON: Thank you.

2 THE COURT: The objection is acknowledged.

3 THE WITNESS: Okay. Telling Head Financial how much

4 it will be to pay off that loan.

5 Q. BY MR. MORRIS: And if you could take a moment to

6 review that and explain your response to Domonic?

7 A. Okay.

8 Q. What's your response?

9 A. I told Domonic -- I e-mailed him back and said that

10 Emily did not try to get the payoff for the loan that he's

11 referring to, and that I already had that payoff in the file.

12 And that the one that I was concerned about was the one that

13 was in bankruptcy, in the bankruptcy, and that was it. So I'm

14 asking him what -- why did he even send that e-mail.

15 Q. And what was his reply to your e-mail?

16 A. He pretty much asked me what am I talking about, and

17 that earlier this morning he had asked her to obtain the payoff

18 and -- because supposedly we had misplaced it the first time

19 that he got it for us. But he's saying that I -- I did it

20 myself and I was able to get it faster.

21 MR. MORRIS: I'll ask to bring in Government's 251,

22 Your Honor.

23 MR. SAMUEL: 251?

24 MR. MORRIS: 251.

25 MR. TEDMON: No objection.

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1 THE COURT: Mr. Greiner?

2 MR. GREINER: 801(d)(2)(E), Judge.

3 THE COURT: Mr. Samuel?

4 MR. SAMUEL: Join.

5 MR. GREINER: And also, Judge, it's not relevant as

6 to Mr. McCarns due to the date.

7 THE COURT: All right. The objection is overruled.

8 The document may come in. The Court will provide instructions

9 that clarify date ranges.

10 (Government Exhibit 251, Email dated 10/19/2006

11 10/19/2006 To Keith at Foreclosure Options; Kou Yang; Lisa

12 Vang; domonicm@nfcoptions.com; toddh@nfcoptions.com Subject:

13 RE: BUDOFF/Eggleton Appraisal Inquiry admitted into evidence.)

14 Q. BY MR. MORRIS: And if we could start on the second

15 page. If you would take a moment to review what's in front of

16 you.

17 A. (Witness reviewing document.) Okay.

18 Q. This e-mail, kouy@psloans.net, who is that?

19 A. That is me.

20 Q. What is psloans.net?

21 A. That is the new company that we were transferred over

22 to for the processing. It's -- I forgot what it was called

23 like Premier Services Loans or something to that effect.

24 Q. Do you recall approximately when you were transferred

25 to that company?

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1 A. I believe it was in the Spring sometime.

2 Q. Spring of?

3 A. Or the Summer of 2006. Probably the Summer of 2006.

4 Q. Do you recall that transfer happening, the process of

5 transferring to the company?

6 A. Yes.

7 Q. Could you describe that transfer, please?

8 A. Charles Head came to us, the managers, and told us

9 that we were going to be moving to a different location. He

10 told us that the loan officers would be going to another

11 location in Costa Mesa, and that the processors would be going

12 to another location in Tustin. He informed us that we needed

13 to be separated, and he pretty much just told us there's an

14 office you guys just have to move there, and your new boss is

15 going to be Benjamin Budoff.

16 MR. GREINER: Judge, objection to that testimony

17 under 801(d)(2)(E) and relevance as to time.

18 THE COURT: All right. Those objections are noted

19 but overruled.

20 Q. BY MR. MORRIS: Did Charles Head say why he was

21 telling you this?

22 A. He said that he was selling the company.

23 Q. Did he say why?

24 A. Yes. He said that -- he was getting too much heat

25 from the FBI, and that he was going to sell off the company but

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1 only in terms of ownership. He would still be our boss.

2 MR. GREINER: Judge, same objections to those two

3 last answers, this conversation has those same two objections.

4 THE COURT: All right. Noted for the record.

5 Overruled.

6 Q. BY MR. MORRIS: Did he say anything about whether

7 this was a permanent change or a temporary change?

8 MR. GREINER: Same objection, Judge.

9 THE COURT: Overruled.

10 THE WITNESS: He said that this would be a permanent

11 change.

12 Q. BY MR. MORRIS: Did he say whether -- this is just a

13 yes or no. Did he say whether he was leaving the industry

14 completely?

15 MR. TEDMON: Objection. Leading.

16 MR. MORRIS: Foundation. Yes-or-no question, Your

17 Honor.

18 MR. GREINER: Same objection.

19 THE COURT: Sustained. We've been going for a little

20 bit more than a half an hour. How much longer do you think you

21 need?

22 MR. MORRIS: I do have seven or so e-mails -- eight

23 e-mails, and then a series of wrap-up questions with

24 procedures.

25 THE COURT: All right. Just keep moving along.

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1 Q. BY MR. MORRIS: Who is Kerry Budoff, if you recall?

2 A. Kerry Budoff was one of our straw buyers.

3 Q. And --

4 MR. GREINER: Objection to "our."

5 THE WITNESS: Well --

6 THE COURT: Overruled.

7 Q. BY MR. MORRIS: Right there. Do you recall who

8 domonicm@nfcoptions.com is?

9 A. Yes.

10 Q. Who is that?

11 A. Domonic McCarns.

12 Q. And if you could zoom out and go to the first page.

13 And if you could just review this sentence. Do you

14 understand what the expression "buyer is full" means?

15 A. Yes.

16 Q. What does that mean?

17 A. That means that this particular buyer -- we can no

18 longer put that buyer on anymore loans because they have too

19 many loans on their credit report already.

20 Q. What do you mean by too many loans on their credit

21 report?

22 A. Because the bank will not lend to a buyer --

23 MR. GREINER: Objection. Speculation, lack of

24 personal knowledge.

25 Q. BY MR. MORRIS: Let me tee this up. Again, the same

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1 old questions about your experience throughout the years that

2 you worked in the mortgage industry at this company, what do

3 you mean by the "buyer is full" and "too many loans on their

4 credit"?

5 A. From my experience, when a buyer has too many loans

6 on their credit report, the bank will not lend to that buyer.

7 Q. And the time period of October 2006, who did you

8 consider your boss to be?

9 A. Benjamin Budoff.

10 MR. MORRIS: Going to go to go 310.

11 THE COURT: Objection, Mr. Tedmon?

12 MR. TEDMON: No, Your Honor.

13 THE COURT: Mr. Greiner?

14 MR. GREINER: 801(d)(2)(E) and then relevance.

15 THE COURT: Mr. Samuel?

16 MR. SAMUEL: Same objection, Your Honor. What was

17 the exhibit number?

18 THE COURT: 310. The exhibit will come in over those

19 objections.

20 (Government Exhibit 310, Email dated 5/18/2006

21 From Andrea Manriquez admitted into evidence.)

22 Q. BY MR. MORRIS: If I could ask you to think back to

23 the timeframe of May 2006. I'll see if we can skip folks we

24 have already talked about but ask you who these people are.

25 Do you recall who Beverly Rocheleau was?

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1 A. Yes.

2 Q. Who was Beverly Rocheleau?

3 A. A loan officer.

4 Q. Do you recall Beverly Smith?

5 A. Yes.

6 Q. Who was Beverly Smith?

7 A. Another loan officer.

8 Q. Do you recall Brian Gatlin?

9 A. Yes.

10 Q. Who was Brian Gatlin?

11 A. Another loan officer.

12 Q. How about David Gabran?

13 A. I don't remember that name.

14 Q. How about David Parks?

15 A. Yes. He was another loan officer.

16 Q. And as of May 18th, 2006, what was your understanding

17 of Domonic McCarns' role in the organization?

18 A. At that time, he was a loan officer, but I think at

19 that time they had already moved him over to overseeing a few

20 loan officers.

21 MR. GREINER: Objection. Speculation.

22 THE COURT: Sustained.

23 MR. GREINER: Move to strike. Admonish the jury.

24 THE COURT: The jury is instructed to disregard the

25 answer given the use of the word "I think."

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1 Q. BY MR. MORRIS: Do you have recollection of whether

2 that move had happened?

3 A. Yes.

4 Q. And based on your recollection, what was Domonic's

5 role in May 2006?

6 A. He was in charge of a few of the newer loan officers.

7 He was supposed to guide them through the process.

8 Q. Do you recall who Donna Guerrero was?

9 A. She was a processor.

10 Q. And we have talked about Ed Shaffer. I think we've

11 talked about Emily Yang. Heather Blood. Do you recall Heather

12 Blood?

13 A. Yes.

14 Q. Who was Heather Blood's role?

15 A. She was also a loan officer.

16 Q. How about Heydi Yanez?

17 A. I don't remember her.

18 Q. Do you recall Jack Corcoran?

19 A. Yes.

20 Q. What's Jack Corcoran's role?

21 A. He was our CFO, our accountant.

22 Q. Joseph Palmquist?

23 A. Yes. He was one of our receptionists.

24 Q. Between the last time and this e-mail, had there been

25 any change in Keith Brotemarkle's role in the organization?

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1 A. He was still the loan officers' manager. Everybody

2 -- all the loans went through him to come to final.

3 Q. Who was Ken White?

4 A. He was also a loan officer.

5 Q. Who was Olga Wilson?

6 A. Olga Wilson was the wife -- well, he worked with Jack

7 Corcoran.

8 Q. The wife of somebody who worked with Jack Corcoran?

9 A. No. Actually, he actually worked with Jack Corcoran.

10 She was his assistant. But how she came to the company was

11 she's the wife of the person that created the system. The IT

12 person.

13 Q. And then I'll ask to go to the fourth page of this

14 exhibit. Zoom in on the top half.

15 And just to the extent we haven't covered, let me hit

16 a few of these. What's your understanding of what

17 headmortgage.com was?

18 A. Head Mortgage was the loans part of it. We did all

19 the mortgages.

20 Q. And I think we have talked about

21 fundingforeclosures.com?

22 A. Yes.

23 Q. What is nationspm?

24 A. That is the property management part of the company.

25 They created a company that manages the properties.

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1 MR. TEDMON: Objection, Your Honor. Move to strike

2 anything after "it's a property management company" as

3 non-responsive.

4 Q. BY MR. MORRIS: Who ran Nations Property Management?

5 THE COURT: Overruled. You can tie it up.

6 Q. BY MR. MORRIS: Who ran Nations Property Management?

7 A. Charles Head.

8 Q. Do you recall any other people who worked at Nations

9 Property Management?

10 A. Yes. Jack Corcoran.

11 Q. Do you recall what 50kperyear.com was?

12 A. Yes.

13 Q. What was that?

14 A. That was the initial e-mail that -- from

15 marketing that was the initial e-mail that they sent out to the

16 prospective sellers letting them -- I mean -- not sellers --

17 buyers letting them know that they could make up to 50K per

18 year.

19 Q. And what was 30kperyear?

20 A. The same thing. Just a different number.

21 Q. Do you recall who worked at 50kperyear or 30kperyear?

22 A. For 30kperyear it was Benjamin Budoff, and a few

23 other guys worked at 50kperyear.

24 MR. MORRIS: I would like to bring in 331, please,

25 Your Honor. Covered by the stipulation.

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1 THE COURT: 331?

2 MR. MORRIS: 331.

3 THE COURT: Any objection, Mr. Tedmon?

4 MR. TEDMON: No, Your Honor.

5 THE COURT: Mr. Greiner?

6 MR. GREINER: 801(d)(2)(E), Judge.

7 THE COURT: Mr. Samuel?

8 MR. SAMUEL: Same objection.

9 THE COURT: All right. 331 is admitted over those

10 objections.

11 (Government Exhibit 331, Email dated 10/3/2006

12 From Keith at Foreclosure Options To Kou Yang

13 Subject: RE: Please Submit: FERREYRA/TRAINOR admitted into

14 evidence.)

15 MR. GREINER: Judge, I would also make an objection

16 as to relevance as to time.

17 MR. SAMUEL: Join.

18 THE COURT: Overruled.

19 Q. BY MR. MORRIS: What are you saying in that e-mail?

20 A. What I'm telling Ben is that this particular file

21 that we have filed that there is a notice of default on their

22 title. And because of that the bank will only lend 90 percent.

23 We would have to come in with 10 percent down. And I'm telling

24 him that the guidelines for the bank says we can only -- the

25 only time that we can go 90 with 5 percent -- 90 percent from

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1 the bank, 5 percent second, and a 5 percent down is if when

2 there is no notice of default.

3 Q. And if we could look at this reply from Keith. What

4 is Keith's reply?

5 A. Maybe they won't catch it.

6 Q. Do you have an understanding as you sit here as who

7 Keith would mean by "they" based on your involvement in this

8 e-mail?

9 A. The bank.

10 MR. MORRIS: Going to go to 333, Your Honor. Also

11 covered by the stipulation.

12 THE COURT: Any objection, Mr. Tedmon?

13 MR. TEDMON: Your Honor, just subject to the variance

14 issue as to all these e-mails that were past the date the

15 Government has established, no.

16 THE COURT: Mr. Greiner?

17 MR. GREINER: 801(d)(2)(E) and relevance as to the

18 time.

19 THE COURT: Mr. Samuel?

20 MR. SAMUEL: Same objections as to relevance because

21 that's a variance issue.

22 THE COURT: All right. The exhibit is admitted over

23 those objections.

24 (Government Exhibit 333, Email dated 10/3/2006

25 From Keith at Foreclosure Options To Kou Yang; Lisa Vang;

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1 benb@psloans.net Subject: RE: VOE MCELVEEN, TROY admitted into

2 evidence.)

3 Q. BY MR. MORRIS: If we could go to the second page,

4 please. If you could review the e-mail, and when you've had a

5 chance to review it, I'll ask you some questions.

6 A. Okay.

7 Q. On this e-mail, if we haven't covered it, who is Lisa

8 Vang?

9 A. She was a junior processor.

10 Q. And at the time of October 2nd, 2006, what's your

11 understanding of Ben's role?

12 A. He was our boss.

13 Q. What's Keith's role?

14 A. He was our boss on the foreclosure side.

15 Q. And what was your role, as you understood it, at this

16 time?

17 A. I was the processing manager.

18 Q. What's a VOE?

19 A. That's a verification of employment.

20 Q. Do you understand or do you have a recollection of

21 what's being discussed in this e-mail?

22 A. Yes.

23 Q. What is it that's going on here, that is being

24 discussed in the e-mail?

25 A. Lisa sent an e-mail to everybody letting us know that

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1 we -- this particular buyer works for the postal office, and

2 there is no way of us bypassing verification of employment

3 because with U.S.P.S. there is a system, a phone number that

4 you call to verify employment, and you put in the code, and

5 then the system will then tell you how much this person makes,

6 and --

7 Q. Okay --

8 A. -- because we have --

9 Q. That's all right. If you can zoom out and go to the

10 first page.

11 And do you understand what Keith was saying, what he

12 said in this in reply?

13 A. Yes.

14 Q. What was he saying?

15 A. He is telling us to either blackout or whiteout that

16 information and then to e-mail him the point file to redo.

17 Q. Based on your experience in this organization, why

18 would you want to blackout or whiteout information?

19 A. Because we do not want the bank to know that

20 information.

21 Q. Why not?

22 A. That would pretty much kill the deal.

23 Q. Why would it kill the deal?

24 MR. SAMUEL: Objection. Speculative, Your Honor, and

25 vague as to who.

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1 THE COURT: Sustained. You can rephrase.

2 MR. SAMUEL: Request it be stricken.

3 THE COURT: There's no answer yet.

4 Q. BY MR. MORRIS: Subject to the same questions I've

5 asked before. Based on your experience processing these loans

6 in this organization for the years that you processed it, why

7 would this kill the deal?

8 A. Because they stated or the loan officer stated how

9 much this buyer made. And in actuality, that particular

10 borrower does not make that amount.

11 Q. Zoom out, please. What are you saying here when you

12 discussed this with Keith, Lisa and Ben?

13 A. I'm telling them that there is no way that we can

14 bypass that phone verification.

15 MR. MORRIS: Bring it down. If we can go to 341. If

16 I could ask to admit 341 subject to the stipulation.

17 THE COURT: Any objection, Mr. Tedmon?

18 MR. TEDMON: Your Honor, subject to the variance

19 issue, no objection.

20 THE COURT: All right. Mr. Greiner?

21 MR. GREINER: 801(d)(2)(E), relevance because of

22 time.

23 THE COURT: Mr. Samuel?

24 MR. SAMUEL: Join both.

25 THE COURT: All right. 341 is admitted over those

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1 objections.

2 (Government Exhibit 341, Email dated 10/17/2006 From

3 Keith at Foreclosure Options To Kou Yang; benb@psloans.net

4 Subject: RE: 06-d75291 admitted into evidence.)

5 Q. BY MR. MORRIS: If we could go to page four, please.

6 If you can review this for a moment?

7 A. (Witness reviewing document.) Okay.

8 Q. Do you recall what Nova Star Mortgage was?

9 A. That was a lender.

10 Q. Was it a lender that you used as part of this

11 organization?

12 A. Yes.

13 MR. TEDMON: Objection. When he says "this

14 organization," there's several companies here that we're

15 talking about.

16 THE COURT: Sustained. The jury shall disregard the

17 answer.

18 Q. BY MR. MORRIS: Was it one of the lenders that you

19 used during the time period that we have been talking about so

20 far today?

21 A. Yes.

22 MR. TEDMON: Your Honor, same objection.

23 THE COURT: Can you use more precision in asking your

24 questions, Mr. Morris.

25 Q. BY MR. MORRIS: The lender that you, singular, you

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1 personally used in the course of your employment?

2 A. Yes.

3 MR. TEDMON: Employment with who?

4 THE COURT: That's the point, Mr. Morris.

5 Q. BY MR. MORRIS: If you recall, when did you start

6 using Nova Star?

7 A. We started using Nova Star probably in late 2005,

8 2006.

9 Q. And when you started using Nova Star, who did you

10 work for?

11 A. I worked for Charles when we started, and then I

12 worked for Benjamin Budoff.

13 Q. So Nova Star was a lender during the time that you

14 worked for both of those companies?

15 MR. TEDMON: Objection. Leading.

16 THE COURT: Sustained.

17 Q. BY MR. MORRIS: What is DTI?

18 A. Debt-to-income ratio.

19 Q. And based on your experience processing loans through

20 the years that you've testified about, what does "reasonable

21 based on position and credit profile" mean?

22 A. That means that the income that we have stated for

23 the borrower is not reasonable for the position that they hold.

24 Q. And if you could then come to page one of this

25 exhibit. I'm going to ask you to look at this first, and then

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1 I gotta go to the next page and come back.

2 In this e-mail from Pang to you, what does she ask

3 you?

4 A. To please advise.

5 Q. Zoom out, go to the next page.

6 And are we looking now at the same text we just

7 talked about?

8 A. Yes.

9 Q. Zoom out, please, and go back to the first page.

10 And how did you respond when she asked you to please

11 advise?

12 A. I then sent an e-mail to Ben and Keith letting them

13 know that we can't use this particular lender anymore on these

14 deals.

15 Q. Why not?

16 A. Because they are very particular, and we're not going

17 to be able to get approvals.

18 Q. Zoom out. Take it down.

19 MR. MORRIS: I'm going to ask to go to 345, Your

20 Honor. And there's only a couple more e-mails at this point.

21 THE COURT: Any objection, Mr. Tedmon?

22 MR. TEDMON: Subject to the variance issue, no.

23 THE COURT: Mr. Greiner?

24 MR. GREINER: 801(d)(2)(E) and relevance as to time,

25 Judge.

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1 THE COURT: Mr. Samuel?

2 MR. SAMUEL: Join as to both.

3 THE COURT: All right. 345 is admitted over those

4 objections.

5 (Government Exhibit 345, Email dated 10/18/2006 From

6 Keith at Foreclosure Options To benb@psloans.net

7 CC Sam Vu Subject: RE: Morgan at Peoples admitted into

8 evidence.)

9 Q. BY MR. MORRIS: If we can go to page two. In this

10 e-mail from Ben, if you could review it and tell me what it is

11 that you and he are discussing.

12 A. (Witness reviewing document.) Okay.

13 Q. What are you discussing in this part of the e-mail?

14 A. Ben is sending us an e-mail that he received a phone

15 call from the bank telling us that they do not think that a

16 certified nurse's assistant has an income of 4700.

17 Q. And I'm going to ask to continue on the next page for

18 the rest of it. And what's the next sentence discussing?

19 A. (Witness reviewing document.)

20 Okay. He's saying that they are curious about the

21 down payment. They don't think that the buyer has that money

22 in her account. And then also the appraisal has a different,

23 you know, sales price.

24 Q. Zoom out. Previous page, please. And if you can go

25 to the first at the bottom. I'm going to have to ask you to

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1 look across the page again.

2 So the bottom of the first page, this is a reply from

3 you to Ben?

4 A. Yes.

5 Q. And if we can go to the second page. What are you

6 telling Ben in this e-mail?

7 A. I'm telling him that when I put in the numbers, it

8 looks like 3500 will work.

9 Q. What do you mean by work?

10 A. Meaning that if we put that he makes $3,500, that his

11 debt-to-income ratio will still be okay.

12 Q. Zoom out. Go back to the next page prior.

13 And how does Ben respond to you?

14 A. He's telling me that it's too high, and now we're

15 asking Keith what he thinks.

16 MR. MORRIS: Take it down. I'm going to ask to admit

17 Government's 349.

18 THE COURT: Any objection, Mr. Tedmon?

19 MR. TEDMON: Just subject to the variance issue, no.

20 THE COURT: Mr. Greiner?

21 MR. GREINER: 801(d)(2)(E) and relevance as to time.

22 THE COURT: All right. Mr. Samuel?

23 MR. SAMUEL: Join as to both.

24 THE COURT: All right. 349 comes in over those

25 objections.

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1 (Government Exhibit 349, Email dated 10/20/2006

2 From Benjamin Budoff To Kou Yang; Sam Vu Subject: RE: (Blank)

3 admitted into evidence.)

4 Q. BY MR. MORRIS: If you could take a moment and then

5 I'll ask you what this e-mail is talking about.

6 A. (Witness reviewing document.) Okay.

7 Q. What is it that's being discussed in this e-mail?

8 A. Sam, the processor, is sending myself and sending Ben

9 an e-mail letting us know that these particular checks will be

10 sent to him in the mail and he should be getting it.

11 Q. Based on your knowledge and your involvement, what

12 are these checks for?

13 A. These are the checks from the loans. Dana Capital is

14 the broker that we were going through, and they would send the

15 checks to us, and we would then forward them over to Ben

16 because he was the loan officer on file.

17 Q. And so, to your knowledge, where did this money come

18 from?

19 A. This money came from the loans that we funded.

20 MR. MORRIS: And last e-mail, 354, ask that that be

21 admitted subject to the stipulation.

22 MR. TEDMON: Your Honor, subject to the variance, no

23 objection.

24 MR. GREINER: 801(d)(2)(E) and relevance as to time.

25 MR. SAMUEL: Same.

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1 THE COURT: All right. 354 comes in over the

2 objections.

3 (Government Exhibit 354, Email dated 10/26/2006 From

4 Kou Yang To Lisa Vang; Keith at Foreclosure Options

5 CC benb@psloans.net Subject: RE: WILLIFORD/Dreyer Funding

6 inquiry admitted into evidence.)

7 Q. BY MR. MORRIS: In this e-mail, if you could review

8 it briefly and then I'll ask you some questions.

9 A. (Witness reviewing document.) Okay.

10 Q. What is a VOD?

11 A. That is a verification of deposit.

12 Q. What does that mean?

13 A. That means how much money does one have at the bank.

14 Q. And this section where Lisa is telling you it was the

15 company's money which sat there for Pinet to close, can you

16 explain what that meant?

17 A. That means that that was the company's money that we

18 sent over to the buyer to have in their account, so that when

19 the bank verifies it, they will have enough money in the

20 account to close the deal.

21 Q. Why do you need to have enough money in an account to

22 close a deal?

23 A. Because you need to have reserves. You have to have

24 a certain amount of money based on the loan amount in your

25 account liquid so that should -- you can pay your mortgage.

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1 They want to know that you have money in the bank.

2 Q. Based on your experience processing loans over the

3 years you processed them at Head, what happens if those

4 reserves aren't in someone's account?

5 A. The loan will be denied.

6 Q. Now, I'm going to ask you to think back to yesterday

7 when you testified about somebody named Cindy forging

8 signatures, do you recall that testimony?

9 A. Yes.

10 Q. Is that the only instance that you can recall while

11 working at Head Financial where somebody forged signatures?

12 A. That is not the only time.

13 Q. Okay. In your experience, was forging of signatures

14 a common or uncommon experience there?

15 MR. GREINER: Objection as to time, people, company.

16 Vague.

17 MR. TEDMON: Join.

18 MR. SAMUEL: Join.

19 THE COURT: Sustained.

20 Q. BY MR. MORRIS: Let's start when you began at the

21 Long Beach location. In your experience, was forging

22 signatures common or uncommon at that point?

23 MR. GREINER: Same objection as to what people, what

24 time, what documents.

25 MR. TEDMON: Join.

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1 THE COURT: Sustained.

2 MR. MORRIS: I think her testimony about who was

3 there is established, and in light of that I think the

4 testimony will have whatever weight the jury wants to give it,

5 Your Honor.

6 THE COURT: So the question is construed as for the

7 entire period of time?

8 MR. MORRIS: Construed at Long Beach and the people

9 she testified working at Long Beach at that time.

10 THE COURT: With that clarification, objection

11 overruled.

12 THE WITNESS: When we started at Long Beach, we did

13 not forge. At the beginning we did not forge any signatures.

14 Q. BY MR. MORRIS: So when did you start forging

15 signatures?

16 A. Once we started doing the foreclosures.

17 Q. Who forged signatures other than Cindy, if anybody?

18 MR. TEDMON: Objection, Your Honor. If this is from

19 personal knowledge, that's one thing. I don't want her to

20 speculating.

21 MR. MORRIS: Limited to your personal knowledge.

22 THE COURT: That's understood, Ms. Yang?

23 THE WITNESS: Yes.

24 THE COURT: All right.

25 THE WITNESS: To my personal knowledge, it did not

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1 happen all the time because the sellers were sent a set of

2 escrow instructions and they signed them. There were only a

3 few select customers that were on the fence. Those were the

4 ones that they would sign for.

5 MR. TEDMON: Objection. Non-responsive. Move to

6 strike.

7 MR. GREINER: Join.

8 MR. SAMUEL: Join.

9 MR. GREINER: Also objection as to "they."

10 THE COURT: Sustained. The jury shall disregard that

11 answer.

12 Q. BY MR. MORRIS: The question was, who in your

13 experience and personal knowledge forged signatures?

14 A. I don't recall particular people.

15 Q. Did you forge signatures when you worked there?

16 A. When I was asked to, yes.

17 MR. TEDMON: Objection. The question was: Did she

18 forge them or not?

19 THE WITNESS: Yes.

20 MR. GREINER: Non-responsive.

21 THE COURT: Overruled.

22 THE WITNESS: Yes.

23 Q. BY MR. MORRIS: Whose signature did you forge?

24 A. I do not remember.

25 Q. Who asked you to forge signatures?

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1 A. Charles.

2 Q. Was that a common or uncommon experience?

3 MR. TEDMON: Objection. Vague as to time.

4 THE COURT: Sustained.

5 Q. BY MR. MORRIS: Still focusing on the time at Costa

6 Mesa?

7 MR. TEDMON: Wait. I thought we were in Long Beach.

8 THE COURT: Sustained.

9 Q. BY MR. MORRIS: Let me re-clarify. I think your

10 testimony was at Long Beach there wasn't forging going on.

11 A. No, there wasn't.

12 Q. And then once you moved on to Costa Mesa?

13 A. Uh-huh.

14 Q. So focusing on your time at Costa Mesa.

15 A. Okay. Well, at Long Beach there was a period of time

16 when everything was not like that. And then towards the end of

17 Long Beach was when it started to get a little crazy.

18 Q. Okay. So --

19 MR. TEDMON: Objection. Move to strike.

20 Non-responsive.

21 THE COURT: Overruled. You'll have your chance to

22 cross-examine.

23 Q. BY MR. MORRIS: So in your recollection, when did the

24 forgeries begin?

25 A. At the end of our stay at Long Beach.

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1 Q. And did that correspond to any other changes that

2 were going on in the company at that time?

3 A. Yes.

4 Q. What was going on in the company when the forgery

5 started?

6 A. When we started doing foreclosures.

7 Q. Did the forgeries continue at the Costa Mesa office?

8 A. Only for a little bit of time, and then it did stop.

9 Q. Okay. You recall yesterday we talked about the

10 installation of a phone line to do verifications of rent. Do

11 you recall that testimony?

12 A. Yes.

13 Q. And do you recall testifying that you were verifying

14 rent for people that did not in fact rent through the company?

15 A. Yes.

16 Q. Let's go time-by-time here. During your time at Long

17 Beach, do you recall false verifications of rent happening in

18 instances other than the one we talked about yesterday?

19 A. There were a few times.

20 Q. After you started at Long Beach, did there come a

21 time where false verifications of rent became more common than

22 a few times?

23 A. Yes.

24 Q. Approximately when did that happen?

25 A. When we started doing foreclosures and the buyers

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1 didn't have, you know, a way to verify their --

2 MR. GREINER: Objection. Non-responsive to the

3 question. This part.

4 THE COURT: Sustained.

5 MR. GREINER: Move to strike that.

6 THE COURT: Well, just --

7 Q. BY MR. MORRIS: The testimony was when you started

8 doing foreclosures?

9 A. Yes.

10 Q. Do you have any understanding --

11 Were you involved in false verifications of rent at

12 that time?

13 A. No.

14 Q. When did you become involved in false verifications

15 of rent?

16 A. At the end of Long Beach.

17 Q. Did you continue being involved with false

18 verifications of rent after the move to Costa Mesa?

19 A. Only in the beginning until Keith came on board.

20 Q. And focusing on instances that you were personally

21 involved with, do you have an understanding of why it is you

22 were falsely verifying people's rent? That's a yes or no.

23 A. Yes.

24 Q. Okay. What is your understanding of why it was that

25 you were falsely verifying people's rent?

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1 A. We were falsely verifying their rent because if they

2 did not have a rental history for the last two years, then we

3 would have to make up verification for those last two years.

4 Q. Do you know if anybody else was involved in false

5 verification of rent? That's yes or no.

6 A. Yes.

7 Q. From your own personal knowledge, who else was

8 involved in falsely verifying rent?

9 A. The loan officers.

10 Q. Do you know whether or not -- and this is a yes or

11 no.

12 Do you know whether or not anybody other than you and

13 the loan officers knew about the false verifications of rent?

14 MR. SAMUEL: Objection, Your Honor. I don't believe

15 that -- I think that's leading.

16 THE COURT: Just state the objection.

17 MR. SAMUEL: It assumes something not in evidence,

18 and it's broad as to all loan officers. Unless she has

19 personal knowledge, there is no foundation for it.

20 THE COURT: Sustained. You may rephrase.

21 Q. BY MR. MORRIS: Which loan officers -- going back a

22 question -- of loan -- your testimony being loan officers did

23 the false verifications?

24 Do you recall any particular loan officers who were

25 involved in falsely verifying rent?

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1 A. You mean -- okay, when you say falsely verifying the

2 rent, you mean somebody will call and they would verify it, or

3 they would -- because when you have a verification of rent,

4 most of the time the paperwork is good enough for the bank.

5 It's only in a -- so it's the -- the employment is what they

6 call for.

7 But the rental -- the verification of, you know, rent

8 will be fine. So they don't actually call in nobody for the

9 rent. Nobody actually got on the phone and say they live here.

10 So it was a document that was filled out.

11 Q. Who filled out those documents?

12 A. The loan officers.

13 MR. SAMUEL: Objection. Vague.

14 MR. GREINER: Objection. Vague.

15 MR. TEDMON: Join.

16 THE COURT: The objections are overruled. It's

17 overruled given the answer that's been given, but Mr. Morris

18 may follow up.

19 Q. BY MR. MORRIS: If you can clarify with particular

20 names or if you can't?

21 A. All the loan officers were like the Mike Heads, the,

22 you know, Domonic McCarns. Because you have to submit a full

23 file.

24 Q. All right. And to the question I was getting at

25 then.

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1 Other than you, and other than the people that you've

2 testified about, the loan officers who were involved in these

3 false verifications, do you have have knowledge of whether

4 anybody else in the organization, in the company, in Head

5 Financial, knew about the false verifications of rent?

6 MR. SAMUEL: Objection. Speculative.

7 THE COURT: Just answer that question yes or no.

8 THE WITNESS: Yes.

9 Q. BY MR. MORRIS: How do you know that other people

10 knew about the false verification of rent?

11 A. Because they were the ones that told us to do it.

12 Q. And who was it that told you to do it?

13 A. Keith Brotemarkle and Charles Head.

14 Q. I would like you to think back to yesterday, talked

15 about verification of employment. Do you recall that?

16 A. Yes.

17 Q. And you recall talking about having falsely verified

18 employment?

19 A. Uh-huh. Yes.

20 Q. False verification of employment, was there more than

21 one instance of false verification of employment in your

22 experience?

23 A. Yes.

24 Q. Then going to the beginning at Long Beach, was false

25 verification of employment a common practice when you were at

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1 Long Beach, when you started at Long Beach?

2 A. When I started, no.

3 Q. Did it become more common over time?

4 A. Yes.

5 Q. When did it become more common?

6 A. When we started doing foreclosures.

7 Q. To your knowledge, were you the only person doing

8 false verification of employment?

9 A. No.

10 Q. Okay. Do you recall any other people specifically

11 who were engaged in falsely verifying employment?

12 A. Yes.

13 Q. Who were those people?

14 A. I remembered Mike Head, Omar Sandoval. Those are the

15 only names that I can remember.

16 Q. Other than you and Mike and Omar, do you have

17 personal knowledge of anybody else who knew that false

18 verification of employment was being done?

19 A. Yes.

20 MR. SAMUEL: Speculative.

21 THE COURT: Well, the "yes" answer is accepted.

22 Q. BY MR. MORRIS: So you have personal knowledge of

23 other people who knew about it?

24 A. Yes.

25 Q. Who knew about it based on your personal knowledge?

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1 A. Charles Head.

2 Q. We've spoken, I think, several times about

3 overstating income on loan applications.

4 Other than the instances that we've talked about over

5 the last two days, are there any other times that you were

6 involved in loan applications that overstated income?

7 A. Yes.

8 Q. Going back to the beginning at Long Beach, was

9 overstating income a common practice at that time?

10 A. No.

11 Q. Did it eventually become more common?

12 A. Yes.

13 Q. When did it become more common?

14 A. When we started doing foreclosures.

15 Q. Other than you, do you have personal knowledge of

16 other people who were involved in overstating income on loan

17 applications? And that's just a yes or no.

18 A. Yes.

19 Q. Based on your personal knowledge, who do you know of

20 who was involved in overstating income on loan applications?

21 A. All the loan officers.

22 MR. SAMUEL: Object, Your Honor. Once again, "all

23 the loan officers" is vague as to who she's referring to.

24 THE COURT: Sustained.

25 Q. BY MR. MORRIS: Can you name some specific loan

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1 officers who you knew from personal experience were involved in

2 overstating income on loan applications?

3 A. Mike Head, Omar Sandoval, Domonic McCarns, Keith

4 Brotemarkle, Benjamin Budoff.

5 Q. Other than the people that you've talked about, are

6 you aware of anybody else who knew about the false -- or is it

7 the overstatement of income?

8 A. Yes.

9 Q. Who else, other than the folks you knew about or

10 talked about already, who else knew about the overstatement of

11 income?

12 A. Well, Keith and Charles Head.

13 Q. You talked a couple of times about owner occupancy,

14 and that you were trying to figure out who to claim owner

15 occupancy to make it more believable for the bank. Do you

16 recall that?

17 A. Yes.

18 Q. Other than those instances that we've specifically

19 spoken about here, were you involved in other instances where a

20 loan application falsely claimed owner occupancy?

21 A. Yes.

22 Q. Going back to when you started at Long Beach, when

23 you started at Long Beach was it a common or uncommon

24 experience for you to be involved in falsely claiming owner

25 occupancy on a loan application?

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1 A. No.

2 Q. Did it become more common later?

3 A. Yes.

4 Q. When did it become more common?

5 A. When we started doing foreclosures.

6 Q. From your personal knowledge, are you aware of any

7 people who were involved in those applications where you

8 falsely claimed owner occupancy?

9 A. Yes.

10 Q. Who was involved in transactions where those

11 representations were made?

12 A. Leonard Bernot, Omar Sandoval, Domonic McCarns, Mike

13 Head, everybody -- and then Benjamin Budoff, Keith Brotemarkle.

14 Q. Other than the people that you just listed, was there

15 anybody there who was aware of the fact that false

16 representations of owner occupancy were on loan applications?

17 A. Yes.

18 Q. Who was that?

19 A. Charles Head.

20 MR. MORRIS: May I have a moment, Your Honor?

21 THE COURT: You may.

22 (Discussion between counsel.)

23 Q. BY MR. MORRIS: We have now, I think, talked through

24 a lot of the process, and I would like you to focus at the end

25 of the process after what we talked about, which is the funding

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1 you mentioned earlier.

2 You talked about a wire. There is a handwritten

3 notes about a wire. Can you tell the jury what would happen

4 when money was wired into the company at the conclusion of

5 these transactions funding?

6 MR. GREINER: Objection. Vague as to time. Vague as

7 to person. Vague as to file.

8 THE COURT: Sustained.

9 Q. BY MR. MORRIS: Focus on the time when you're doing

10 foreclosure transactions. If you could answer the question?

11 A. The amount that I wrote down, the wire amount, that

12 is the amount that the escrow company sent over to the sellers,

13 and then what the sellers were supposed to do was to then send

14 that back to the company minus what they were supposed to get

15 from the deal.

16 Q. What happened --

17 If you know, do you know what happened to the money

18 once it was sent back to Head Financial?

19 A. Yes.

20 Q. What would happen to that money once it was sent back

21 to Head Financial?

22 MR. TEDMON: Objection, Your Honor. There is a

23 multitude of transactions, so it's vague. If he wants to

24 identify a specific transaction, that's fine.

25 THE COURT: Sustained. Or a clear category of

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1 transactions.

2 Q. BY MR. MORRIS: I'll ask you to focus on when --

3 focus the time when we're doing foreclosures, focus the time

4 when the company was at Costa Mesa, focus in on the 2005

5 timeframe.

6 In fact, I'll bring up 10A5, if we could. Let's

7 focus on this particular transaction. So using this as an

8 example where you talked about where you know where the money

9 came from, where would the money go -- in using this as an

10 example transaction -- after the money came into Head

11 Financial?

12 A. The money will then -- we will then disburse it

13 amongst the loan officers. The consideration usually -- the

14 sellers keep that part and only send the difference to us. And

15 then the loan officers will then be paid on their portion. And

16 then majority of the time Charles Head will take his --

17 MR. TEDMON: Objection, Your Honor. This is

18 non-responsive. It's not the majority of the time.

19 THE COURT: Sustained.

20 MR. GREINER: Move to strike that answer.

21 THE COURT: That motion is granted. The jury shall

22 disregard the answer.

23 We have five more minutes until our break. I assume

24 you can get through your direct in that time?

25 MR. MORRIS: If I can get through the objections, we

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1 can.

2 Q. BY MR. MORRIS: I'm going to bring up 5A1 for you.

3 Are you familiar with the Taylor transaction?

4 A. Yes.

5 Q. Are you familiar with this document?

6 A. Yes.

7 MR. GREINER: Judge, I would object as to the

8 timeframe as to Mr. McCarns. Request a limiting instruction.

9 MR. SAMUEL: Join.

10 THE COURT: As to timeframe?

11 Q. BY MR. MORRIS: This is the Taylor transaction. It's

12 404(b) as to Mr. Head. I'm going to use this and then go from

13 there to see if I can get testimony to talk about it.

14 THE COURT: This is 5A1?

15 MR. MORRIS: Yes, Your Honor.

16 THE COURT: All right. This exhibit was previously

17 admitted as to the Government's case against Charles Head. You

18 may recall that if you have a really good memory, or your notes

19 may reflect that.

20 So just to remind you of the instruction I gave then

21 that: This is evidence that Mr. Head committed other acts not

22 charged here. You may consider this evidence only for its

23 bearing, if any, on the question of Mr. Head's intent, motive,

24 opportunity, preparation, plan, absence of mistake, or absence

25 of accident, and for no other purpose. You may not consider it

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1 as evidence of guilt of the crimes for which Mr. Budoff and

2 Mr. McCarns are now on trial.

3 Q. BY MR. MORRIS: Do you recognize this document?

4 A. Yes.

5 Q. Did you use this document?

6 A. Yes.

7 Q. Do you recognize the handwriting on the document?

8 A. Yes.

9 Q. Whose handwriting is it?

10 A. Mine.

11 Q. Can you explain what the document shows?

12 A. This is a document that pretty much, you know, notes

13 all the money that was involved in this particular transaction,

14 the total amount that was wired to the sellers, the proceeds

15 that the sellers kept, and then the proceeds that go to the

16 buyer and what the balance is. And then on the net profit on

17 purchase is the 50 percent split between the loan officer and

18 Charles.

19 Q. You can bring that down.

20 During the time that you were processing loans after

21 that transaction, did the process for disbursing funds

22 afterwards change?

23 A. Yes.

24 Q. In what way did the process change --

25 When did the process change?

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1 A. When we moved to Costa Mesa.

2 Q. In what ways did the process change from what you

3 just described on that transaction?

4 A. The loan officers were no longer getting 50 percent.

5 Q. Were they getting less than or more than 50 percent?

6 A. Less than.

7 Q. Were there any other changes in the process after you

8 had made the move to Costa Mesa?

9 A. Yes. In obtaining documents, yes.

10 Q. And what was the -- I should have been more clear.

11 Regarding the disbursing of funds, other than the

12 percentages was there any change in the disbursal of funds

13 after you moved to Costa Mesa?

14 A. Yes.

15 Q. What other changes were made in the disbursal of

16 funds after moving to Costa Mesa?

17 A. The loan officers were not paid right away. I

18 remember that. They were -- they were given a set amount,

19 like, if you fund one loan, you get a certain amount instead of

20 50 percent of the profit. So it was, like, for instance, for

21 example, if you fund one loan, you get $5,000.

22 Q. So other than the amount, were there any other

23 changes in the way funds were disbursed after a transaction

24 closed?

25 A. I'm not really familiar with that because now that

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1 became an accounting issue. Once we moved to Costa Mesa, I was

2 kind of moved away from all of that and I concentrated on just

3 processing.

4 MR. MORRIS: I just have one or two more questions,

5 Your Honor, and then I'll be wrapping up.

6 Q. BY MR. MORRIS: Did you, in the time that you worked

7 at Costa Mesa, did you have access to the company bank

8 accounts?

9 A. Yes.

10 Q. Were you a signatory on the account?

11 A. Yes, I was.

12 Q. Are you aware of any company bank accounts that you

13 didn't have access to?

14 A. I'm -- I don't -- I'm not aware.

15 Q. In the course of the time that you were involved in

16 having access to those accounts, are you aware of wires coming

17 in and then going into a trust account?

18 A. No.

19 Q. Did you ever hear of any of the accounts at the

20 company being called a trust account?

21 A. No.

22 MR. MORRIS: May I have a moment, Your Honor?

23 Your Honor, the only thing left is I would like, as

24 yesterday, for housekeeping purposes to read the stipulation

25 with respect to the 200 and 300 series of the e-mails into the

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1 record, if the Court doesn't object or counsel doesn't.

2 THE COURT: These are stipulations. The Court has

3 reviewed them. Any objection to them being read into the

4 record?

5 MR. TEDMON: No.

6 MR. GREINER: No.

7 MR. SAMUEL: No.

8 THE COURT: All right. Those may be read.

9 MR. MORRIS: With respect to the e-mails in this

10 series of 200 to 258, it's stipulated between the parties that

11 the e-mails admitted pursuant to the stipulation from the

12 e-mail address or addresses or containing the following names

13 in the "to" or "from" line, those names being

14 domonicm@ngcoptions.com, Domonic McCarns and Domonic Q. McCarns

15 belonged to and were used by defendant Domonic McCarns.

16 The parties stipulate that all e-mails in the

17 Government's Exhibits 200 through 258 were sent to or from

18 defendant Domonic McCarns.

19 With respect to the 300 to 371 series, it's

20 stipulated between the parties that e-mails admitted pursuant

21 to the stipulation from the following names or e-mail addresses

22 or containing the following names in the "to" or "from" line,

23 those being bbudoff@30kperyear.com, benb@psloans.net, Ben

24 Budoff and Benjamin Budoff belonged to and were used by

25 defendant Benjamin Budoff.

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1 The parties stipulate that the e-mails in series 300

2 through 371 were either sent to or from defendant Benjamin

3 Budoff.

4 No further questions, Your Honor.

5 THE COURT: All right. That brings us to the time

6 for our first break of the morning given when we started in

7 court. So let's take a 15-minute break.

8 During that break, please remember all of my prior

9 admonitions, no thinking about the case's ultimate conclusion,

10 no discussing it amongst yourselves, no research of any kind.

11 Have a good break. We will see you in 15 minutes.

12 (Jury out.)

13 THE COURT: You may step down, Ms. Yang. Please be

14 back in 15 minutes. Again, avoid any contact with jurors.

15 15-minute break. Recognizing that Mr. Morris took an

16 hour and a half for what he thought would be half an hour, just

17 for everyone's planning purposes do you have any estimate of

18 your time, Mr. Tedmon? Is this witness likely to take the rest

19 of the day?

20 MR. TEDMON: It's likely.

21 MR. SAMUEL: Yes.

22 THE COURT: That's the Court's assumption at this

23 point given the amount of time and the critical nature of this

24 witness.

25 Once we adjourn today with the jury, I do want to

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1 review the witness list with you and at least know for now who

2 we know is not going to be called on the list, so we can start

3 to whittle down.

4 This is a critical witness. But after this week, a

5 lot of foundation is going to be laid, and I'm assuming the

6 scripts can tighten up to focus. So I'll see you in

7 15 minutes.

8 (Break taken.)

9 (Jury in.)

10 THE COURT: Welcome back, once again, ladies and

11 gentlemen. We are now going to turn to the cross-examination

12 of Ms. Yang beginning with Mr. Tedmon.

13 MR. TEDMON: That's correct, Your Honor.

14 CROSS-EXAMINATION

15 BY MR. TEDMON:

16 Q. Ms. Yang, good morning.

17 A. Good morning.

18 Q. I want to start basically where you left off.

19 Mr. Morris was asking you questions about these wires

20 and where the money went. Do you recall those questions?

21 A. Yes.

22 Q. Okay. Now, during the period of time that you worked

23 for Head Financial, you are aware that Charles Head was

24 responsible for paying all of the overhead for the business,

25 correct?

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1 A. Yes.

2 Q. All right. And that would include the time he was in

3 Long Beach, correct?

4 A. Yes.

5 Q. During the time the company was in Costa Mesa,

6 correct?

7 A. Yes.

8 Q. And then you testified that the company was

9 effectively sold off, and then it was moved to Tustin, I

10 believe, is that right?

11 A. Yes.

12 Q. And Mr. Head was not involved in that operation, was

13 he, as an owner?

14 A. As an owner, no.

15 Q. No. So somebody else would be responsible for the

16 financial overhead payments when it went to Tustin, true?

17 A. Yes.

18 Q. So when you indicate to the jury that Mr. Head

19 received, for example, 50 percent of the funds -- do you

20 remember that?

21 A. Yes.

22 Q. -- he had to pay for the office overhead, correct,

23 the rent, the electricity, correct?

24 A. Yes.

25 Q. Employee salaries, correct?

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1 A. Yes.

2 Q. Withholding, correct?

3 A. I don't know what you mean.

4 Q. Well, taxes, he had to pay those, right?

5 A. Yes.

6 Q. Supplies, correct?

7 A. Yes.

8 Q. All of that, correct?

9 A. Yes.

10 Q. Nobody else did, the loan officers didn't, did they?

11 A. No.

12 Q. You didn't, did you?

13 A. No.

14 Q. Mr. Head did, correct?

15 A. Yes.

16 Q. Yes. So he had a much larger financial obligation as

17 compared to anybody else in Head Financial Services, correct?

18 A. Yes.

19 Q. Now, going back to when you started working, and I

20 want to focus your attention on when the office was in Long

21 Beach. This was earlier testimony yesterday, so I want to make

22 sure the jury is clear on the timeframe.

23 All right. When did you start working for Head

24 Financial Services? Month and year, if you know.

25 A. I don't remember the month, but it was in, I would

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1 say, 2001, 2002. It's been a long time.

2 Q. Okay. Well, let me ask you this, you were out of

3 employment prior to coming in to work for Head Financial

4 Services, true?

5 A. Yes.

6 Q. All right. And you had a friend -- and have a friend

7 -- but had a friend at that time known as Elizabeth Huerta,

8 correct?

9 A. Yes.

10 Q. Her married name is now Russell?

11 A. Yes.

12 Q. And back at the time you started working for Head

13 Financial Services you were looking for employment, true?

14 A. Yes.

15 Q. And Charles Head's girlfriend and also the mother of

16 his child was Elizabeth Huerta, correct?

17 A. Yes.

18 Q. And you were very good friends with Liz, is how you

19 knew her, correct?

20 A. Yes.

21 Q. And so the way that you got referred over to Head

22 Financial Services was through your very good friend Liz

23 Huerta, correct?

24 A. Yes.

25 Q. And she was with Charles Head at the time, true?

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1 A. At that time I do not think they were together

2 anymore.

3 Q. They had been together in the past?

4 A. Yes.

5 Q. And they had a significant relationship?

6 A. Yes.

7 Q. Okay. So that was the way that you were introduced

8 to Charles Head and the opportunity to work at Head Financial

9 Services was through Liz Huerta?

10 A. Yes.

11 Q. And you were hired, correct?

12 A. Yes.

13 Q. Now, Mr. Morris asked you about your prior

14 conviction, your state court conviction?

15 A. Yes.

16 Q. Do you recall that?

17 A. Yes.

18 Q. All right. And that was in 1998, true?

19 A. Yes.

20 Q. That was a state court conviction?

21 A. Yes.

22 Q. All right. For which you were sentenced?

23 A. Yes.

24 Q. It was a felony?

25 A. Yes.

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1 Q. All right. You've completed your sentence and were

2 placed on -- was it probation or parole?

3 A. Parole.

4 Q. Parole. Okay. I want to clarify that because

5 Mr. Morris said probation. So you're on parole, correct?

6 A. Yes.

7 Q. Now, Mr. Head knew that, correct?

8 A. Yes.

9 Q. At the time you were hired?

10 A. Yes.

11 Q. In fact, he participated and cooperated with your

12 parole officer and yourself in terms of allowing you to have a

13 job, true?

14 A. Yes.

15 Q. He gave you an opportunity, correct?

16 A. Yes.

17 Q. All right. And you were thankful for that, correct?

18 A. Yes.

19 Q. All right. Now when you first started working there,

20 I think you testified it was primarily conventional loans, is

21 that right?

22 A. Yes.

23 Q. So can you explain to the jury, just so we're clear,

24 what you mean by conventional loans? And I'm restricting it to

25 what you did at Head Financial. Okay.

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1 A. Conventional loans were just regular loans. Like,

2 for instance, if you needed to refinance your home, you would

3 come to Head Financial, and we would then refinance your home

4 for you, or, if you needed to purchase a home, you would come

5 to Head Financial, and we would obtain the loan for you, a

6 straight loan.

7 Q. All right. And that's what you did at the outset of

8 your employment with Head Financial Services, correct?

9 A. Yes.

10 Q. Now, also during that time you had other -- other

11 duties, would that be correct to say?

12 A. Yes. Yes.

13 Q. All right. For example -- and this is why you're --

14 while you're in Long Beach. I want to restrict it to that so

15 we don't get confused about the timeframe.

16 You handled payroll, is that right?

17 A. For a very short period of time because I don't

18 really know how to do it.

19 Q. But you did some of that?

20 A. Yes.

21 Q. You were also involved in doing the Quickbooks, the

22 accounting part of it?

23 A. For a very -- whatever he showed me was what I

24 learned how to do.

25 Q. Right. But you did that?

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1 A. Yes.

2 Q. You processed loan files, which you've testified to?

3 A. Yes.

4 Q. All right. You interacted with lenders, correct?

5 A. Yes.

6 Q. You paid the mortgages?

7 A. Yes.

8 Q. Correct?

9 A. Yes.

10 Q. And as time went along, you became a supervisor of

11 the loan officers, true?

12 A. No.

13 Q. You did not. You were head of the loan processing,

14 were you not?

15 A. Of processing.

16 Q. Okay. So the loan processing is different from the

17 loan officers?

18 A. Yes.

19 Q. Let's stay with that for a second. Loan processing

20 is actually processing the documents?

21 A. Yes.

22 Q. And it's the interaction between you, on behalf of

23 Head Financial Services, and the lender?

24 A. Yes.

25 Q. From a document-exchange standpoint?

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1 A. Yes.

2 Q. That would be fair to say?

3 A. Yes.

4 Q. Okay. The loan officers, would it be fair to say,

5 are more like salespeople?

6 A. Yes.

7 Q. Okay. And their job is to follow leads, correct?

8 A. Yes.

9 Q. All right. Did you have mortgage brokers come into

10 Head Financial Services while you were in Long Beach, as far as

11 you know?

12 A. No.

13 Q. Did you have people coming in from other companies

14 trying to sell loan programs?

15 A. Yes.

16 Q. All right. And they would talk to you, correct?

17 A. Yes. Because I would need to know the guidelines.

18 Q. Right. And that was true during your time at Long

19 Beach?

20 A. Yes.

21 Q. As well as Costa Mesa? Or not?

22 A. Yes.

23 Q. So both?

24 A. Partially. But once we moved to Costa Mesa, all of

25 that stopped.

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1 Q. Because you went the direction of foreclosure?

2 A. Yes.

3 Q. How about Tustin? When you were at Tustin?

4 A. No. We did not have any representatives from

5 lenders.

6 Q. You did not. Okay.

7 Now with regard to the 1003s, these Uniform

8 Residential Loan Applications which we have seen?

9 A. Yes.

10 Q. You were involved with those, correct?

11 A. Yes.

12 Q. How were you involved with those?

13 A. I would -- once the loan officers were done filling

14 them out with the proper information, they would forward them

15 over, or they would tell me that, you know, this particular

16 file is ready, and then they would turn in a form for us to

17 order title, open escrow, and order appraisal.

18 Q. Okay. And the reason for the 1003s was to establish

19 what the financial picture was of the potential purchaser,

20 true?

21 A. Yes.

22 Q. All right. And during your time at Head Financial

23 Services, you forged those documents, did you not?

24 A. What do you mean?

25 Q. Well, the 1003 is supposed to be signed by the

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1 potential purchaser, correct?

2 A. Uh-huh. Yes.

3 Q. All right. And then it's also supposed to be signed

4 by the interviewer, correct?

5 A. Yes.

6 Q. And the information contained on the 1003 is supposed

7 to be supplied or received from the potential purchaser, right?

8 A. Yes.

9 Q. All right. And you were involved in falsifying some

10 1003s during your time there, correct?

11 A. Most of it --

12 Q. Yes or no?

13 A. Yes.

14 Q. Now, you were charged in this case, true?

15 A. Yes.

16 Q. All right. And you pled guilty?

17 A. Yes.

18 Q. And you are pending sentencing, correct?

19 A. Yes.

20 Q. All right. So as part of your deal with the

21 Government, you are seeking a cooperation reduction in your

22 sentence, true?

23 A. Yes.

24 Q. All right. And that's fundamentally why you're here

25 today, correct?

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1 A. Yes.

2 Q. All right. You know that your sentencing guidelines

3 are 108 to 135 months, correct?

4 A. Yes.

5 Q. And the Government, as part of your agreement, would

6 seek a reduction of up to 50 percent of what your sentence

7 would ordinarily be, correct?

8 A. Yes.

9 Q. And that's because of your cooperation, true?

10 A. Yes.

11 Q. All right. It's the Court that ultimately decides

12 your sentence, you know that, correct?

13 A. Yes.

14 Q. But you certainly are relying on the Government to

15 pitch a much lower sentence than you would otherwise get

16 because of your cooperation, true?

17 A. Yes.

18 Q. All right. Now, let's look at the timeframe of this.

19 You were charged in this case March -- I'm sorry -- February of

20 -- one moment, Your Honor -- I'm sorry, March 13th of 2008,

21 does that sound about right?

22 A. Yes.

23 Q. That was over five years ago, right?

24 A. Yes.

25 Q. Okay. And your attorney was a guy by the name of

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1 Joseph Lowe, correct?

2 A. Yes.

3 Q. Is he still your attorney?

4 A. Yes.

5 Q. Is he here today?

6 A. No.

7 Q. He's not here. All right.

8 So you were charged and the case proceeded, correct?

9 A. Yes.

10 Q. All right. And in your interactions with your

11 attorney, Mr. Lowe, you reviewed all the discovery, correct?

12 A. Yes.

13 Q. And it was hundreds of thousands of pages of

14 documents, true?

15 A. Yes.

16 Q. A lot?

17 A. Yes.

18 Q. You had an opportunity to look at all that and review

19 a lot of witness statements, did you not?

20 A. Not everything. But for the most part, yes.

21 Q. And you persisted in your not guilty plea through

22 2009, correct?

23 A. Uh-huh.

24 Q. Is that "yes"?

25 A. Yes.

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1 Q. Okay. And you persisted in your not guilty plea

2 through 2010, correct?

3 A. Yes.

4 Q. And you persisted in your not guilty plea through

5 2011, correct?

6 A. Yes.

7 Q. And you persisted in your not guilty plea through

8 2012, correct?

9 A. Yes.

10 Q. And in March of 2013, this year, you decided to plead

11 guilty, correct?

12 A. Yes.

13 Q. After had you a chance to look at all the evidence

14 and read all the witness statements, correct?

15 A. Yes.

16 Q. All right. Then you go to the Government and say,

17 "hey, I want a deal, I'll cooperate," through your lawyer,

18 true? Well, that's what you did, correct?

19 A. Yes.

20 Q. All right. And in fact, you entered a plea before

21 Judge Mueller on March 13th of 2013, do you recall that?

22 A. Yes.

23 Q. And that was your cooperation deal, right?

24 A. Yes.

25 Q. And now you're pending sentencing?

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1 A. Yes.

2 Q. When is your sentencing date, if you know?

3 A. Right now it's been pushed out to January.

4 Q. Of next year?

5 A. Yes.

6 Q. January 2014?

7 A. Yes.

8 Q. All right. So you can continue to engage in your

9 cooperation before you're sentenced, right?

10 A. I don't know why it's been pushed out, but I'm sure

11 that's the reason why.

12 Q. You know you have to complete your cooperation before

13 you're going to get sentenced, you know that, correct?

14 A. I was told that I was coming back. They just told me

15 what date to come back on.

16 Q. All right. And keeping the March 13th date in mind,

17 that's the date you pled guilty, the first time you talked to

18 the Government about all of your observations and information

19 and so forth was March 12th, correct?

20 A. Yes.

21 Q. The day before you pled guilty, correct?

22 A. Yes.

23 Q. That was the first time you ever wanted to tell the

24 Government the truth, right?

25 A. Yes.

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1 Q. And then you gave another statement on April 18th,

2 2013, do you recall that?

3 A. Yes.

4 Q. Now, going back to your March 12th statement, the

5 first one, about how long was that interview in terms of time?

6 A. Probably like two hours, maybe.

7 Q. Okay. And during that interview, Mr. Anderson was

8 present, correct?

9 A. Yes.

10 Q. And Mr. Morris was present, correct?

11 A. Yes.

12 Q. And an agent by the name of John Sommercamp was

13 there?

14 A. Yes.

15 Q. Was Special Agent Chris Fitzpatrick there, do you

16 recall?

17 A. I'm not sure.

18 Q. Okay.

19 A. I remember those three.

20 Q. And it lasted about two hours, is that right?

21 A. Yes.

22 Q. And your attorney, Mr. Lowe, was there as well,

23 correct?

24 A. Yes.

25 Q. And they covered a wide variety of topics, correct?

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1 A. Yes.

2 Q. All right. And you told them everything you knew

3 about what they were asking, true?

4 A. Yes.

5 Q. You were given no limitations on what you could tell

6 them during that interview, correct?

7 A. Yes.

8 Q. That's correct?

9 A. Yes.

10 Q. All right. And then, likewise, on April 18th, your

11 second interview, how long did that interview last?

12 A. Maybe another two hours. An hour and a half, two

13 hours.

14 Q. Okay. And at that interview Mr. Anderson was there,

15 correct?

16 A. Yes.

17 Q. Mr. Morris was there?

18 A. Yes.

19 Q. Do you recall Agent Sommercamp being there?

20 A. I don't recall.

21 Q. Okay. Was there a law enforcement agent there,

22 though?

23 A. I think so. I don't remember.

24 Q. Okay. Do you recall whether Special Agent

25 Fitzpatrick was there?

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1 A. I think Sommercamp was there.

2 Q. You do?

3 A. Yes.

4 Q. Okay. And how about your attorney, was he there,

5 Mr. Lowe?

6 A. Yes.

7 Q. And for another two hours you went through these

8 various questions and you provided information, true?

9 A. Yes.

10 Q. And there was no limitation on what you could tell

11 them, right, they wanted to know all that you knew, correct?

12 A. On the first one. But on the second one, no.

13 Q. Okay. So between the two interviews, which lasted

14 approximately four hours --

15 A. Uh-huh.

16 Q. -- you had an opportunity to tell them everything you

17 knew, right, between those two interviews?

18 A. Yes. What I can remember, yes.

19 Q. Without limitation, correct?

20 A. Yes.

21 Q. Now, keeping that in mind, you testified this morning

22 that Mr. Head sold his companies, do you recall that?

23 A. Yes.

24 Q. All right. And do you recall when that was that he

25 sold his companies?

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1 A. In 2006. I'm thinking like early Summer of 2006.

2 MR. TEDMON: All right. Your Honor, at this time I

3 would move Defendant's CH-R into evidence as covered by the

4 stipulation.

5 THE COURT: Any objection, Mr. Morris?

6 MR. MORRIS: No objection, Your Honor.

7 THE COURT: Mr. Samuel?

8 MR. SAMUEL: No objection.

9 THE COURT: Mr. Greiner?

10 MR. GREINER: No objection, Your Honor.

11 THE COURT: All right. CH-R is admitted.

12 (Defendants' Exhibit CH-R, Business Records re: FCO,

13 Inc. Asset Purchase Agreements with Head Financial Services,

14 Inc. and Creative Loans, LLC admitted into evidence.)

15 Q. BY MR. TEDMON: Thank you. If we could have just

16 page one of CH-R on the screen, please.

17 (Pause in proceedings.)

18 MR. TEDMON: Your Honor, I'll use the ELMO. That's

19 fine.

20 THE COURT: All right. ELMO is a fancy word for

21 overhead projector, if you didn't know that already.

22 Q. BY MR. TEDMON: All right. This is a copy of the

23 original CH-R. Can you see that, Ms. Yang?

24 A. Yes.

25 Q. Okay. Now, I'm going to focus in, now that you've

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1 seen the first page of a multiple-page document, into this

2 upper section, and that arrow -- well, strike that. That says

3 Charles Head, Director, correct?

4 A. Yes.

5 Q. All right. And you worked with Mr. Head for several

6 years, correct?

7 A. Yes.

8 Q. Okay. That is his signature, you would know that,

9 correct?

10 A. Yes.

11 Q. Now, this talks about a meeting, correct?

12 A. Yes.

13 Q. All right. And this portion here says "considering

14 an offer of sale of the corporation to FCO, Inc.," do you see

15 that?

16 A. Yes.

17 Q. "And the transaction thereat of all such other

18 business and so forth," correct?

19 A. Yes.

20 Q. Now, what this document represents is the sale of

21 Charles Head's businesses, Head Financial Services, Creative

22 Loans to other individuals, true?

23 MR. MORRIS: Objection. Calls for legal conclusion.

24 MR. TEDMON: If she knows.

25 THE COURT: Ask the foundational question.

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1 Q. BY MR. TEDMON: Do you know who Mr. Head sold Head

2 Financial Services to?

3 A. Yes.

4 Q. Who was that?

5 A. Benjamin Budoff -- well, it depends -- sorry.

6 Q. Let me focus it, Your Honor.

7 Do you know who Lavar Fletcher is?

8 A. Yeah.

9 Q. Let me just ask the questions. All right. Do you

10 know who Lavar Fletcher is?

11 A. Yes.

12 Q. Lavar Fletcher was the owner of FCO, Incorporated,

13 correct?

14 A. Yes.

15 Q. And Head Financial Services was sold to FCO, Inc.,

16 who was owned by Lavar Fletcher?

17 A. Yes.

18 Q. And that's what this is talking about, this first

19 page of CH-R, correct?

20 A. Yes.

21 Q. All right. Now the date of the meeting is

22 August 11th, 2006, correct?

23 A. Yes.

24 Q. Does that sound correct to you in terms of your

25 recollection now of the timeframe that Mr. Head sold Head

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1 Financial Services?

2 A. Yes.

3 Q. Then we're going to go to page two of the exhibit.

4 And this is a similar document to what we looked at on page

5 one, would you agree with that?

6 A. Yes.

7 Q. All right. And this talks about a special notice or

8 waiver of notice of special meeting of Creative Loans, correct?

9 A. Yes.

10 Q. And it also talks about the fact they're considering

11 an offer of sale of the company, Creative Loans in this

12 instance, to FCO, Inc., true?

13 A. Yes.

14 Q. And, again, you recognize that as being Charles

15 Head's signature?

16 A. Yes.

17 Q. And the date of the meeting is August 11, 2006,

18 correct?

19 A. Yes.

20 Q. Then later on in the document it has some specific

21 information, but I want to draw your attention to this portion

22 here. It says, "buyer's principal Freddie Lavar Fletcher,"

23 correct?

24 A. Yes.

25 Q. Now that buyer's principal is the owner of FCO who is

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1 purchasing both Head Financial Services and Creative Loans,

2 correct?

3 A. Yes.

4 Q. And then I'm moving to the signature page of the

5 document. And it says, "in witness whereof the parties hereto

6 have executed this agreement as of the date first above

7 written." Now the date of the meeting was August 11th,

8 correct?

9 A. Yes.

10 Q. 2006?

11 A. Yes.

12 Q. Right. We have gone through that.

13 Now the date of the signature -- again, this is

14 Charles Head's signature, you know that, correct?

15 A. Yes.

16 Q. And the date is 8-22-06, correct, August 22nd?

17 A. Yes.

18 Q. And Freddie Lavar Fletcher's name is typed in there,

19 correct?

20 A. Yes.

21 Q. Under that it says FCO, Inc., true?

22 A. Yes.

23 Q. With the signature above it, true?

24 A. Yes.

25 Q. Now, do you know if that's Mr. Fletcher's signature

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1 or not?

2 A. I don't know.

3 Q. All right. You have no reason to think it is not,

4 though, do you?

5 A. No.

6 Q. And he signed it on August 21st, 2006, correct?

7 A. Yes.

8 Q. All right.

9 THE COURT: Mr. Tedmon, is the highlighting on the

10 original?

11 MR. TEDMON: No, Your Honor. That's just for -- that

12 was for my reference purposes since we can't find the original.

13 But I will clear that with the jury.

14 All the highlighting that I've just shown is not in

15 the original document. That was for my purpose to find it, so

16 ignore the highlighting and look at the content. Thank you,

17 Your Honor.

18 THE COURT: All right.

19 Q. BY MR. TEDMON: So based on what we've seen in CH-R,

20 Mr. Head had sold the companies sometime between August 11th,

21 which was the meeting, and August 22nd, which was the last date

22 of the signature blocks, would you agree with that?

23 A. Yes.

24 Q. And that sounds correct as far as your recollection

25 goes?

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1 A. Yes.

2 Q. All right. Now, you testified this morning that

3 Mr. Head told you he sold the companies off because he was

4 getting heat from the FBI?

5 A. Yes.

6 Q. That's what you testified to?

7 A. Yes.

8 Q. Okay. And you also testified that he told you he

9 would still be your boss, right?

10 A. Yes.

11 Q. And you testified that this change in ownership

12 Mr. Head told you would be a permanent change, correct?

13 A. Yes.

14 Q. All right. So by permanent change, was it your

15 understanding that he was no longer going to be an owner of

16 either company, is that what that meant?

17 A. No. When I said permanent, which meant the sale was

18 permanently like they were -- they made a sale.

19 Q. Right. The companies had been sold?

20 A. But I still talked to him about my --

21 MR. TEDMON: That's not my question. I move to

22 strike that as non-responsive.

23 THE COURT: That motion is granted. The jury shall

24 disregard.

25 Q. BY MR. TEDMON: So you were clear in your own mind

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1 the companies had been sold?

2 A. Yes.

3 Q. Mr. Head was no longer the owner?

4 A. Yes.

5 Q. And Lavar Fletcher had now taken over?

6 A. Yes.

7 Q. Okay. So let me ask you this, the comment that

8 you've testified to this morning about Mr. Head selling it

9 because he was feeling heat from the FBI?

10 A. Yes.

11 Q. During these four hours of interviews with the agents

12 you never said that, did you, you never told them that?

13 A. I did tell them that he sold the property -- I mean,

14 he sold the company. But I was never asked those specific

15 questions, and I did not --

16 Q. Well, Ms. Yang, I just asked you earlier, you were

17 able to give the Government statements without limitations, do

18 you remember that?

19 A. Yes.

20 Q. From like ten minutes ago?

21 A. Yes.

22 Q. All right. You had an opportunity and an obligation,

23 as a matter of fact, as a cooperator, to tell them everything

24 that you knew, correct?

25 A. Yes.

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1 Q. And you did not tell them that Mr. Head sold the

2 companies because he was feeling heat from the FBI, did you?

3 A. No.

4 Q. And furthermore, you didn't tell the agents during

5 these four hours of interviews that Mr. Head told you that he

6 was still going to be your boss, did you?

7 A. No.

8 Q. First time you said that was this morning, right?

9 A. I have said it before.

10 Q. I'm talking about to the Government?

11 A. I have said it before.

12 Q. Well, did you have any other interviews other than

13 these two that I've spoken about?

14 A. No.

15 Q. So there wouldn't be a record of it then, would there

16 be?

17 A. There should have been because I did --

18 Q. Ms. Yang, there wouldn't be a record of it if you

19 didn't speak to them other than these two times, right?

20 A. I know that I did say that he sold the company.

21 Q. I didn't ask you if you told them he sold the

22 company. I've already covered it. You've already given your

23 answers.

24 Now, the fact of the matter is that -- well, strike

25 that.

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1 Let's go back to the timeframe and make sure we clean

2 that up. As far as your recollection is concerned, when did

3 the Head Financial Services company move from conventional

4 loans to foreclosures, when did that happen?

5 A. Probably, say, in 2003 or -4 -- -4 -- I don't

6 remember exact dates because it's been a long time. But about

7 2004.

8 Q. Okay.

9 A. -5

10 Q. So is your best approximation 2004?

11 A. 2004. At the end of 2004, early 2005 maybe.

12 Q. Okay. Well, when did the company move to Costa Mesa?

13 A. Probably in 2005.

14 Q. So was the change to the foreclosure approach while

15 you were in Long Beach or not?

16 A. At the end of our stay in Long Beach was when the

17 foreclosures started.

18 Q. And about how long, it was a matter of months, weeks?

19 A. Probably a few months.

20 Q. All right. And then it was moved to Costa Mesa?

21 A. Yes.

22 Q. So would it sound right that you moved to Costa Mesa

23 maybe in 2005?

24 A. Yes.

25 Q. Okay. Now you started working for Charles Head

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1 2001/2002?

2 A. Yes.

3 Q. Okay. And do you recall when, was it early, middle

4 or late that you started working as far as the time of year?

5 A. Probably early 2001.

6 Q. Okay. And as I've already asked you, you were

7 entrusted with several responsibilities with Head Financial

8 Services, correct?

9 A. Yes.

10 Q. All right. So in 2004, I want to fix your attention

11 on that, you were still in Long Beach, correct?

12 A. Yes.

13 Q. All right. And by that time, some three years after

14 your employment with Mr. Head, you were running the office,

15 correct?

16 A. I was running the processing, yes.

17 Q. You were running the operation?

18 A. The processing department.

19 Q. Well, okay. Did you oversee anything else in terms

20 of daily operations?

21 A. Making sure that supplies were ordered.

22 Q. What else?

23 A. Making sure that things were paid.

24 Q. Okay. What else?

25 A. Whatever that Charles asked me to do, I did.

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1 Q. Well, but as part of your job duties -- let's stay

2 with the loan side of it --

3 A. Okay.

4 Q. -- you were responsible for running all of that,

5 correct?

6 A. No, I was not.

7 Q. You were not?

8 A. No.

9 Q. Well, you were a loan processor?

10 A. I was a loan processor.

11 Q. And I think you testified while in Long Beach you

12 indicated that you all worked in a big room on different desks,

13 do you recall that?

14 A. Yes.

15 Q. But Mr. Head had his own office?

16 A. Yes.

17 Q. He was separated from where you were?

18 A. Yes.

19 Q. Okay. How many people were working with or under you

20 while in Long Beach in the loan processing department?

21 A. At the beginning, it was just me, and then we hired

22 another processor like a year in, so that was two. And then

23 towards the end, we had about three other processors and I.

24 Q. Okay. And you say "by the end," you mean before you

25 moved to Costa Mesa?

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1 A. Yes.

2 Q. And you were in charge of those folks?

3 A. I was in charge of the processing girls, yes.

4 Q. All right. And in fact, as far as the loan

5 processing goes, Mr. Head relied on you to make sure that ran

6 smoothly and appropriately, correct?

7 A. Yes.

8 Q. Now, moving on to 2005, we have established that the

9 office was moved to Costa Mesa, correct?

10 A. Yes.

11 Q. Okay. Was that early in the year?

12 A. I would say maybe Spring.

13 Q. Okay. March, April?

14 A. Something like that.

15 Q. All right. And explain to the jury after the move to

16 Costa Mesa how your department changed in terms of its size, if

17 at all?

18 A. We hired a few more girls.

19 Q. And that was at the outset of the move?

20 A. That was after the move, yes.

21 Q. Right. Okay. And so how many people were in your

22 loan processing division?

23 A. I think we were now at about, including myself, six.

24 Q. Six?

25 A. Five or six, yeah.

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1 Q. Okay. And you were in charge of that loan processing

2 division?

3 A. Yes.

4 Q. Okay. And in fact, you were the one that was really

5 making all the decisions and calling the shots as it related to

6 loan processing, true?

7 A. When it came to loan processing, yes.

8 Q. Okay. And that ran the gamut from all these various

9 forms and documents that you've testified to regarding loans?

10 A. No.

11 Q. No?

12 A. No. Those forms were provided to us.

13 Q. Well, I know, but you were in charge of making sure

14 that they were processed, correct?

15 A. Yes. Processing is -- what they provide to us is

16 what we process. We can only process what is provided to us.

17 Q. And provided to you by whom?

18 A. The loan officers.

19 Q. Okay. And so once you get that information, it's

20 your responsibility and you oversaw this to make sure all that

21 information was correct?

22 A. Yes.

23 Q. All right. And to follow up on VORs, for example,

24 verifications of rent?

25 A. I don't follow up on those. What happens is all the

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1 files are supposed to be turned in with all of that information

2 already in it.

3 Q. Okay. But as a loan processor, and you're the head

4 of this division, before it's sent over to the bank or

5 interacting with the bank, that's part of your responsibility?

6 A. We had to make sure that the form was there in the

7 file.

8 Q. Right. Correct. And that was your responsibility or

9 at least the people that worked under you?

10 A. To make sure that the form was in the file.

11 Q. Right. So we're talking about verification of rent

12 forms, if appropriate?

13 A. Yes.

14 Q. Right. Verification of deposits, if appropriate,

15 correct?

16 A. Yes, uh-huh.

17 Q. Verification of employment, if appropriate?

18 A. Yes.

19 Q. The 1003 --

20 A. Yes.

21 Q. -- correct? The appraisal?

22 A. Yes.

23 Q. All right. Any --

24 A. Escrow instructions and the title.

25 Q. Exactly. Okay. And escrow instructions can include

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1 anything from how the money is to be disbursed?

2 A. Yes.

3 Q. To pest reports? I mean, there can be all kinds of

4 stuff that goes through escrow?

5 A. Yes. Yes.

6 Q. So all of that is under your umbrella of authority?

7 A. Yes. Once the file is provided to me, yes.

8 Q. And in point of fact, Mr. Head was rarely, if ever,

9 involved in those day-to-day operations, that was your

10 responsibility, correct?

11 A. In terms of processing, yes, I was in charge of the

12 processing department.

13 Q. Right. In fact, you wanted to leave Mr. Head out of

14 that loop, didn't you?

15 A. No.

16 Q. You didn't. All right.

17 Well, Your Honor, I would ask to have admitted

18 pursuant to the stipulation defendant's CH-T. It's an e-mail

19 that's covered by the stipulation.

20 THE COURT: Any objection?

21 MR. TEDMON: Previously marked and provided to all

22 counsel.

23 THE COURT: Mr. Morris?

24 MR. TEDMON: Your Honor, so the record is clear, the

25 parties have an agreement to stipulate the document into

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1 evidence. We're going to have to do an amended stipulation to

2 include some of these other documents that are now coming in,

3 but it's covered within the context of the stipulation.

4 THE COURT: No objection?

5 MR. MORRIS: We will agree that we will stipulate to

6 this document, and we will be updating the stipulation with

7 this and others throughout the trial, I think.

8 THE COURT: Mr. Samuel?

9 MR. SAMUEL: I'll agree.

10 THE COURT: Mr. Greiner?

11 MR. GREINER: No objection, Judge.

12 THE COURT: All right. CH-T is admitted.

13 (Government Exhibit CH-T, Email dated 5/19/2005

14 From Kou Yang To Pang Yang CC Keith Brotemarkle, Velda Palm

15 admitted into evidence.)

16 Q. BY MR. TEDMON: All right. Now, Ms. Yang, this has

17 been introduced in evidence as CH-T, do you see that? Do you

18 see that on the screen?

19 A. Yeah. But it's really small.

20 Q. We can't kind of cut and paste here, but I'll make it

21 bigger. I just wanted to give you the first page.

22 A. Okay.

23 Q. So let's zoom in. Can you read that a little better?

24 A. Yes.

25 Q. All right. Now at the top it's an e-mail from you,

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1 Kou Yang, to Charles Head, do you see that?

2 A. Yes.

3 Q. And the date is May 19th, 2005, do you see that?

4 A. Yes.

5 Q. And then if we go further down the document -- and

6 let me do one other thing -- this was May 19th, 2005, and the

7 time is 6:35 p.m., do you see that?

8 A. Yes.

9 Q. All right. And then we go to the middle of page one,

10 and it's a string of e-mails. This is from you, Kou Yang, to

11 Velda Palm, do you see that?

12 A. Yes.

13 Q. Okay. And that's May 19th, 2005, 3:30 p.m., right?

14 A. Yes.

15 Q. Now who is Velda Palm?

16 A. She was a loan officer.

17 Q. She worked for you?

18 A. No. She -- well, she is a loan officer, so she

19 wouldn't work for me. She worked for Head Financial.

20 Q. Okay. So she was -- to use my terms, to keep it a

21 little more understandable -- she would be more on the sales

22 side?

23 A. Yes.

24 Q. As opposed to the loan processing side?

25 A. Yes.

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1 Q. Okay. And then there's some other names here. Keith

2 Brotemarkle, do you see that?

3 A. Yes.

4 Q. Now I know you testified a little bit about

5 Mr. Brotemarkle, but who is Keith Brotemarkle?

6 A. Keith Brotemarkle was the manager for the loan

7 officers.

8 Q. That would be on the sales side?

9 A. On the sales side, yes.

10 Q. And you were in charge of the loan processing side?

11 A. Yes.

12 Q. In May of 2005, correct?

13 A. Yes.

14 Q. And then we've got Pang Yang, do you see that?

15 A. Yes.

16 Q. Who is Pang Yang?

17 A. She was a junior processor.

18 Q. In your division?

19 A. Yes.

20 Q. Okay. So she was under your supervision?

21 A. Yes.

22 Q. And then also cc'd is Charles Head, correct?

23 A. Yes.

24 Q. Okay. Now, going to the bottom of the document, we

25 have the same date of May 19th, 2005, at 3:15 p.m., do you see

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1 that?

2 A. Yes.

3 Q. And this is from you, correct?

4 A. Yes.

5 Q. To Pang Yang, correct?

6 A. Yes.

7 Q. And the cc is to Keith Brotemarkle and Velda Palm?

8 A. Yes.

9 Q. True?

10 A. Yes.

11 Q. On this particular string of e-mails Mr. Head is not

12 cc'd is he?

13 A. No.

14 Q. Now this comes from you, correct?

15 A. Yes.

16 Q. And says "subject voicemails," right?

17 A. Yes.

18 Q. And you indicate in here, (reading): I know it was

19 taken care of because I made sure myself. I don't know why

20 they don't have it. They are slow with mail over there. It

21 took three weeks for George to get disclosures after we called

22 for a whole week straight.

23 What are you talking about there, if you recall?

24 A. I don't remember.

25 Q. All right. And then it says, "Velda," and then it

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1 continues on the next page. Starting here. See that there?

2 A. Yes.

3 Q. "Can you leave Charles out of the day-to-day

4 operation." You're telling Velda this, right?

5 A. Yes.

6 Q. Leave Mr. Head out of this day-to-day?

7 A. Yes.

8 Q. Now, this is in May of 2005, shortly after the

9 company was moved to Costa Mesa, right?

10 A. Yes.

11 Q. And you are instructing Velda Palm to keep Charles

12 Head out of the day-to-day operations, that's your directive,

13 correct?

14 A. When it comes to loan processing.

15 Q. That's what you're telling her, leave him out,

16 correct?

17 A. Because he doesn't process. That's why.

18 Q. Ms. Yang, you're telling her to leave Charles Head

19 out of the day-to-day operation, that's what it says, correct?

20 A. Yes.

21 Q. And then you go on, "I think I told you more than

22 once, talk to Keith and I."

23 Now Keith is Keith Brotemarkle, right?

24 A. Yes.

25 Q. Now, Keith Brotemarkle is the head of the sales side,

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1 correct?

2 A. Yes.

3 Q. You're part -- you're head of the loan processing

4 side?

5 A. Yes.

6 Q. And this e-mail is telling Velda Palm, you have an

7 issue you come to Keith or me, right?

8 A. Yes.

9 Q. And keep Charles Head out of it, correct?

10 A. Yes.

11 Q. Because you and Keith were running the show, that's

12 why this is stated the way it is, correct?

13 A. No.

14 Q. It's not correct?

15 A. That is not correct.

16 Q. Does it say in here -- let's read on, (reading): I

17 believe that we have been trying to resolve this. You did not

18 have to e-mail him to let him know or tell him we are not going

19 to do our jobs. We did ours. And if Dana cannot find it, it

20 is out of our hands. We can resend it and hope that they get

21 to them.

22 Do you see that? Now you're scolding her for

23 contacting Mr. Head, correct?

24 A. Yes.

25 Q. Because you're keeping Mr. Head out of the loop,

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1 that's why you're scolding her, correct?

2 A. This was one file out of a lot of files, and it was

3 pretty much just if they had a document. And in terms of tier

4 in the company, you go to one person, and then if we can't

5 handle it, then you go to the next person. We were the people

6 that she was supposed to speak to first. And if we couldn't

7 handle it, then we took it to Charles.

8 Q. I see. Well, Charles Head wasn't cc'd on this

9 e-mail, was he?

10 A. We cc'd him on it afterwards.

11 Q. He wasn't cc'd on it when you wrote it to her?

12 A. Yes.

13 Q. Yes or no?

14 A. Yes, he was not.

15 Q. So you're making decisions without the opportunity to

16 allow Mr. Head to know what you're doing along the way,

17 correct?

18 A. To find a copy of a file?

19 Q. Well, I'm asking about this e-mail. This is what

20 this e-mail shows, does it not?

21 A. About finding a copy of a file. That's not really

22 making a decision. That was a part of my job.

23 Q. Well, the e-mail speaks for itself.

24 Now, you were in Costa Mesa from approximately the

25 Spring of 2005 through August or so of 2006, does that sound

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1 about right?

2 A. That sounds correct.

3 Q. Okay. And during the period of time that you were in

4 Costa Mesa, you were responsible for making sure the mortgages

5 were paid, correct?

6 A. Not -- no. Not at Costa Mesa. I only did it for a

7 short period of time and then somebody else was hired on to do

8 that job.

9 Q. Okay. That was Jack Corcoran?

10 A. Yes.

11 Q. So let me ask you this, if you moved to Costa Mesa

12 the Spring of 2005, let's say, February, March, something like

13 that, does that sound about right?

14 A. Probably.

15 Q. Approximately?

16 A. Yeah. Approximately.

17 Q. You were responsible for making sure the mortgages

18 were paid for a short period of time?

19 A. Yes.

20 Q. Few months?

21 A. Probably.

22 Q. And, in fact, they were all paid, correct?

23 A. Yes.

24 Q. All right. And it was ultimately handed over to Jack

25 Corcoran to make sure that the mortgages were paid, correct?

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1 A. Yes.

2 Q. All right. Your Honor, pursuant to the stipulation,

3 can I have Government's Exhibit 127 entered into evidence,

4 please.

5 THE COURT: Any objection, just so it's clear,

6 Mr. Morris?

7 MR. MORRIS: No objection.

8 THE COURT: Mr. Samuel?

9 MR. SAMUEL: Just a moment, Your Honor.

10 THE COURT: Mr. Greiner, do you know your position?

11 MR. GREINER: No objection.

12 MR. TEDMON: It's a six-page document by the way,

13 Your Honor.

14 MR. GREINER: Judge for Mr. McCarns, it would be

15 801(d)(2)(E).

16 MR. SAMUEL: Also for Mr. Budoff, Your Honor.

17 THE COURT: All right. 127 comes in over objections.

18 (Government Exhibit 127, Email dated 5/31/2005

19 From Kou Yang To Charles Head; Jack Corcoran Subject: CHARLES

20 MORTGAGES admitted into evidence.)

21 Q. BY MR. TEDMON: All right. If we can have page one

22 of that exhibit, please. All right. This is Government's 127.

23 I'm going to ask to expand the top portion.

24 This is an e-mail from you to Charles Head and Jack

25 Corcoran, correct?

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1 A. Yes.

2 Q. And dated May 31st, 2005, correct?

3 A. Yes.

4 Q. All right. Now, looking at this e-mail, does that

5 give you a little better idea about when the files -- I'm sorry

6 -- strike that -- when the mortgages or responsibility for

7 paying the mortgages were handed off to Mr. Corcoran?

8 A. Yes.

9 Q. And that would basically be through the end of May,

10 and then it was handed off to him in June, would that sound

11 about right?

12 A. Yes.

13 Q. And you indicated here that this is an updated list

14 of all mortgages Charles is responsible for, correct?

15 A. Yes.

16 Q. Now, that's actually Head Financial Services,

17 correct, or the company's responsible for them?

18 A. Charles is Head Financial Services.

19 Q. Okay. You worked for Head Financial Services,

20 correct?

21 A. Yes.

22 Q. So the company is the one responsible for them?

23 Mr. Head is the owner?

24 A. Yes.

25 Q. But what I want to clarify is he's not personally

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1 responsible, the company is responsible for paying them?

2 A. Yes.

3 Q. Okay. All right. And then it indicates "I paid all

4 of May so June is due," correct?

5 A. Yes.

6 Q. "Please make sure that all mortgages are paid monthly

7 before the last day of the month."

8 A. Yes.

9 Q. Correct? And it talks about "we never want our

10 investors to get a 30-day late on their mortgages," correct?

11 A. Yes.

12 Q. And just take that down. Thank you.

13 So what you're telling Mr. Corcoran is that it's

14 important to make sure these things are paid on time?

15 A. Yes.

16 Q. And you did that as part of your responsibilities for

17 a few months?

18 A. Yes.

19 Q. Right?

20 A. Yes.

21 Q. On behalf of Head Financial Services?

22 A. Yes.

23 Q. And after that, it was Mr. Corcoran's responsibility

24 to make sure they were paid on time?

25 A. Yes.

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1 Q. Now that was May 31st of 2005. Later on, ultimately

2 in August of 2006 the companies were sold, correct?

3 A. Yes.

4 Q. All right. Now, I want to talk a little bit about

5 that. Once the companies were sold, you indicated, I believe,

6 that they were moved to Tustin, correct?

7 A. Yes.

8 Q. All right. When were the companies, as best you can

9 specifically recall, physically moved to Tustin?

10 A. In the Summer of 2006.

11 Q. So the company was sold on or about August 2006?

12 A. Uh-huh.

13 Q. And the companies were physically moved six months

14 later?

15 A. No. No.

16 Q. When did they get moved to Tustin?

17 A. 2006. And I said that we moved to Tustin in 2006, so

18 it's not the summer, and August is part of the summer.

19 Q. So they moved shortly thereafter?

20 A. Yes.

21 Q. And when you say the companies moved, you're talking

22 about Head Financial Services?

23 A. Yes.

24 Q. All right. Which was owned by Lavar Fletcher at that

25 point?

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1 A. Yes.

2 Q. Which is also FCO, Inc., correct?

3 A. Yes.

4 Q. Creative Loans was moved?

5 A. Yes.

6 Q. Which was also owned by Lavar Fletcher, correct?

7 A. Yes.

8 Q. FCO, Inc., correct?

9 A. Yes.

10 Q. Any other companies that were moved to the Tustin

11 location?

12 A. No. Tustin did not come to -- Lavar did not come to

13 Tustin. Lavar's part of the company went to another location

14 in Costa Mesa.

15 Q. Okay. But a place separate and distinct from the

16 Head Financial Services Costa Mesa location?

17 A. Yes. A different one.

18 Q. All right. So when you testified about Tustin, what

19 was moved to Tustin?

20 A. Only the processing department.

21 Q. The processing department of what company?

22 A. Of Premier Services.

23 Q. Premier Services, you're certain about that?

24 A. Yes.

25 Q. Okay. And Premier Services was owned by Benjamin

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1 Budoff?

2 A. Yes.

3 Q. All right. Was Benjamin Budoff there physically

4 present running Premier Services in Tustin, California?

5 A. No. Because he lived in Colorado.

6 Q. So he wasn't even there?

7 A. He was not there.

8 Q. Okay. Physically?

9 A. Physically he was not there.

10 Q. All right. Any other companies moved to Tustin other

11 than Premier Services?

12 A. No. Only the processing.

13 Q. Which was under the umbrella of Premier Services?

14 A. Yes.

15 Q. Now, you've spoken about an Ed Shaffer, do you recall

16 that?

17 A. Yes.

18 Q. Who is Ed Shaffer?

19 A. He was in charge of marketing.

20 Q. Marketing for what?

21 A. To get the leads in. He had -- he put up a website,

22 I guess. I wasn't really involved in that so -- but from what

23 I remember, he was in charge of getting the leads.

24 So once the leads came in on people that were

25 interested in the program, that his job was to do the leads.

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1 Q. Okay. And Ed Shaffer worked with Keith Brotemarkle

2 pretty closely?

3 A. Yes.

4 Q. And that's while the office was in Costa Mesa,

5 actually even, correct?

6 A. Yes.

7 Q. Before it was sold and moved?

8 A. Yes.

9 Q. All right. One moment, Your Honor.

10 Now you testified yesterday, correct?

11 A. Yes.

12 Q. All right. And obviously you came here this morning,

13 correct?

14 A. Yes.

15 Q. Have you given any other statements to the Government

16 between your testimony yesterday and this morning?

17 A. No.

18 MR. TEDMON: Okay. I have nothing further, Your

19 Honor. Thank you.

20 THE COURT: All right. Mr. Samuel, are you next?

21 Mr. Greiner. All right. We will go for about

22 15 minutes and then take our second break, just so you know.

23 CROSS-EXAMINATION

24 BY MR. GREINER:

25 Q. Good morning, Ms. Yang.

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1 A. Good morning.

2 Q. I'm going to change how I was going to start talking

3 with you, so changing up a little bit. Pick up a little bit

4 where Mr. Tedmon talked to you.

5 And that was you talking to the Government prior to

6 you testifying. Okay?

7 A. Yes.

8 Q. And I don't want to repeat a lot. I'm going to try

9 to get right in and get right out with a lot of stuff.

10 But you told Mr. Tedmon that you talked to the

11 Government on or about March 15th of 2013, do you remember

12 that?

13 A. Yes.

14 Q. Okay. And you also told Mr. Tedmon that you talked

15 to the Government on or about April 30, 2013, do you remember

16 that?

17 A. Not the dates. Probably like April 18th or something

18 like that.

19 Q. April 18th. All right. We will go with April 18th.

20 Have you talked to the Government at any other time

21 prior to testifying?

22 A. Not yesterday but the day before I just looked at

23 some documents.

24 Q. What documents did you look at?

25 A. Some documents that Mr. Morris talked about earlier.

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1 Q. So you looked at e-mails?

2 A. Yes.

3 Q. And did you talk to Mr. Morris about the e-mails?

4 A. Yes.

5 Q. And was your memory refreshed about the e-mails in

6 this discussion and conversation?

7 A. Yes.

8 Q. Agent Fitzpatrick, was he there?

9 A. No.

10 Q. Agent Sommercamp?

11 A. No.

12 Q. Was Mr. Anderson there?

13 A. Yes -- no, wait, Mr. Anderson was not there.

14 Q. Okay.

15 A. Like two days ago, Mr. Anderson was not there.

16 Q. So just you and Mr. Morris?

17 A. Mr. Morris and Peter, the Agent Peter. He's a new

18 agent.

19 Q. So a couple days ago you saw some e-mails and you had

20 conversation to refresh your recollection?

21 A. Uh-huh. Yes.

22 Q. Yes. Okay. And were you shown any other documents?

23 A. No. That was it. Everything that he showed me

24 today. That was it.

25 Q. Did you see anybody take any notes at that meeting?

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1 A. No.

2 Q. Did you take any notes?

3 A. No.

4 Q. All right. Did you see any other documents at that

5 meeting?

6 A. No. Not that I recall, no.

7 Q. And the subject matter of the meeting that you had a

8 couple days ago was limited solely to the documents that

9 Mr. Morris showed you, correct?

10 A. Yes.

11 Q. Did you tell the Government, Mr. Morris and the FBI

12 agents, did you tell them anything else?

13 A. No.

14 Q. Now, when you spoke to the Government in March of

15 2013, you never told the Government that Domonic McCarns forged

16 any document, correct?

17 A. Yes.

18 Q. Yes, that's correct?

19 A. Yes, that is correct.

20 Q. And when you spoke to the Government in April of

21 2013, you never told the Government that Domonic McCarns forged

22 any documents, that's correct?

23 A. Yes, that is correct.

24 Q. And when you talked to the Government just two days

25 ago, you never told the Government that Domonic McCarns forged

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1 any document, correct?

2 A. Correct.

3 Q. And when I talk about any document, I'm not talking

4 about verifications of rent, or verifications of employment, or

5 verifications or anything, or 1003s or anything, I'm talking

6 about you never said anything about Domonic McCarns ever

7 forging any document, ever, correct?

8 A. I was not asked, so, no, I --

9 Q. And you never volunteered that, did you?

10 A. There is a lot of information. So, I mean, if I'm

11 asked, then I can elaborate on it. But if I'm not asked, there

12 is a lot of information, and I -- I probably didn't. But, I

13 mean, I know that this was a common practice.

14 Q. Okay. You never told the Government a specific

15 document that you could point to, after reviewing the hundreds

16 of thousands of documents in this case before you pled guilty,

17 that Domonic McCarns forged, correct?

18 A. No. Correct.

19 Q. You never gave the Government a single piece of paper

20 from the discovery of hundreds of thousands of pages in this

21 case that you said Domonic McCarns forged that document right

22 there, did you?

23 A. No.

24 Q. And your plea agreement says that you're to be

25 truthful about everything, right?

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1 A. Yes.

2 Q. And you are to be forthcoming and tell the

3 Government, right?

4 A. Yes.

5 Q. And your plea agreement is not limited to just

6 questions that the Government asks you, it doesn't say all we

7 want you to do is answer our questions truthfully, it doesn't

8 say that, does it?

9 A. No.

10 Q. It says you are to be truthful, right?

11 A. Right. But do you remember everything?

12 Q. I appreciate your question. But I'm not on the stand

13 and sworn as a witness, so I'll just get to ask questions.

14 Okay. I appreciate that.

15 All right. And even today you could not point

16 Mr. Morris to any specific document that Domonic McCarns

17 forged?

18 A. Mr. Morris? No. There were no documents that I was

19 shown today, no.

20 Q. And you didn't point him to any, did you?

21 A. Not to any specific document, no.

22 Q. When you were talking to Mr. Morris on direct

23 examination, you didn't say, oh, by the way, turn to page

24 426,822 in discovery, and that document I know Domonic McCarns

25 forged, you didn't do that, did you?

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1 A. No.

2 Q. Okay. Now I'm going to -- let me talk to you about

3 something else really quick so I don't forget this.

4 In your direct examination and your testimony, you

5 keep saying loan officer and sales, and so I want to try to see

6 if we can get a good handle on this. Okay.

7 So what I'm going to try to do is, back in 2004 --

8 2003/2004, you were working for Head Financial Services,

9 correct?

10 A. Yes.

11 Q. And at that time, the way Head Financial Services was

12 being run was different than when it went through the

13 transformation stage to do the foreclosures, correct?

14 A. Yes.

15 Q. All right. So now let's talk about how it was run

16 before the foreclosure stage. And how it was run then was that

17 it was made up of Charles Head, correct?

18 A. Yes.

19 Q. You were there, correct?

20 A. Yes.

21 Q. And then there were, you've said, loan officers slash

22 sales agents, there, correct?

23 A. Yes.

24 Q. And those people, those sales agents were Omar

25 Sandoval?

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1 A. Yes.

2 Q. Justin Wiley?

3 A. Yes.

4 Q. Justin Coffman?

5 A. Josh Coffman.

6 Q. Josh Coffman?

7 A. Yes.

8 Q. And Michael Head?

9 A. Yes.

10 Q. And Domonic McCarns wasn't there?

11 A. No. Not in Long Beach.

12 Q. He was not there, right?

13 A. Yes, you are correct.

14 Q. Okay. And how the Head Financial Services was

15 operating in Long Beach was that the sales agents, the people

16 that would go out and talk people into the financing of their

17 house or refinancing, they would actually go out and meet these

18 people one-on-one, right?

19 A. To sign the documents.

20 Q. To sign the documents?

21 A. Yes.

22 Q. Right. And they also then would bring the documents

23 back, and they would give the documents that were signed to

24 you, correct?

25 A. Yes. Once they were signed, they would bring them to

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1 me. Yes, that's correct.

2 Q. Because there was nobody else in the office but

3 Charles Head, correct?

4 A. Yes.

5 Q. You, correct?

6 A. Yes.

7 Q. And then the sales agents, correct?

8 A. Yes.

9 Q. And how the payment was split in Long Beach was it

10 was split 50-50, correct?

11 A. Yes.

12 Q. It was split 50-50 with the sales agents and with

13 Charles Head, fair statement?

14 A. Yes.

15 Q. Okay. And it was the sales agents that also, in

16 conjunction with yourself, on occasion had to find banks to

17 make the loans, right?

18 A. Yes.

19 Q. Because there wasn't lines of demarcation at Long

20 Beach, you were all in a big office, right?

21 A. Yes.

22 Q. And so the sales agents and you have to find banks to

23 make the loans?

24 A. Yes.

25 Q. And have the loan documents filled out, correct?

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1 A. Yes.

2 Q. And you have to submit those to the banks, correct?

3 A. Yes.

4 Q. And you have to get the title company going, right?

5 A. Yes.

6 Q. And all of this on a day-to-day basis, you're knee

7 deep in doing all of this work and helping people get it all

8 done, right?

9 A. When it comes to processing, yes.

10 Q. Well, not just processing --

11 A. Uh-huh.

12 Q. -- because there wasn't a line of demarcation. If

13 something needed to be done in Long Beach, you were the person

14 that was going to get it done, there wasn't anybody else,

15 right?

16 A. When it came to the paperwork, yes.

17 Q. Paperwork and we covered all the different areas of

18 the paperwork, right?

19 A. Right.

20 Q. Then the company changed. You talked to Mr. Tedmon

21 about it changed from doing the loans and the refinancing, it

22 changed over to doing foreclosures, right?

23 A. Yes.

24 Q. And in your mind, this is when the office moved from

25 Costa Mesa to Long Beach, right?

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1 A. No. It went from Long Beach to Costa Mesa.

2 Q. I'm sorry. Did that three times last night. Went

3 from Long Beach to Costa Mesa, right?

4 A. Yes.

5 Q. Okay. And then in Long Beach several things

6 happened. The sales agents or the individuals that were

7 working, Michael Head, he was no longer in Costa Mesa, right,

8 he went to Arizona?

9 A. He actually worked in Costa Mesa for a few months.

10 Q. But then he left and went to Arizona?

11 A. Yes.

12 Q. And Omar Sandoval wasn't in the Costa Mesa office?

13 A. No.

14 Q. And Justin Wiley wasn't in the Costa Mesa office?

15 A. No.

16 Q. And Josh Coffman wasn't in the Costa Mesa office?

17 A. No.

18 Q. All right. And before I forget a fact, in Long Beach

19 the sales agents, the loan officers, they also had set up what

20 were called LLCs, right, you knew that?

21 A. Yes.

22 Q. And that's how the money came to the sales agents was

23 in through their LLCs, their limited liability corporations,

24 right?

25 A. Yes.

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1 Q. Now as it moves from Long Beach to Costa Mesa, we've

2 already talked about the individuals that aren't there in Costa

3 Mesa, right?

4 A. Uh-huh.

5 Q. Correct?

6 A. Yes.

7 Q. You have to answer "yes" because the court reporter

8 has to get it down.

9 A. I said "yes."

10 Q. All right. Now, Domonic McCarns didn't start working

11 in Costa Mesa until February 1st of 2005, right?

12 A. I don't remember exactly when. But he came over

13 shortly after we came over to Costa Mesa.

14 Q. Okay. Well, he didn't come over from working for a

15 Head company, right, he came to work for Head on about

16 February 1st, 2005, fair?

17 A. Yes.

18 MR. GREINER: Judge, pursuant to the stipulation, I'd

19 ask to be admitted DM-S1 and DM-S2?

20 THE COURT: Any objection?

21 MR. MORRIS: No, Your Honor.

22 THE COURT: Mr. Tedmon?

23 MR. TEDMON: No, Your Honor.

24 THE COURT: Mr. Samuel?

25 MR. SAMUEL: No.

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1 THE COURT: All right. DM-S1 and -2 are admitted.

2 (Defendants' Exhibit DM-S1, Terms of employment

3 Domonic McCarns and DM-S2, Terms of Employment Creative Loans,

4 LLC admitted into evidence.)

5 MR. GREINER: Thank you. Could we have DM-S1 up on

6 the screen, please.

7 THE COURT: How much time do you need with this

8 exhibit?

9 MR. GREINER: Very short.

10 THE COURT: Why don't we cover this exhibit, and then

11 we'll take our break.

12 Q. BY MR. GREINER: Do you have it on your screen,

13 Ms. Yang?

14 A. Yes.

15 Q. And if we could enlarge that area. And on DM-S1 you

16 see the name of Domonic McCarns, right?

17 A. Yes.

18 Q. And you see the date February 1, 2005, correct?

19 A. Yes.

20 Q. And then "at will employment, 60-day trial period,"

21 do you see that?

22 A. Yes.

23 Q. And if we could enlarge it. And then do you

24 recognize Mr. McCarns' signature?

25 A. Yes.

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1 Q. And that's his signature on the document, right?

2 A. Yes.

3 MR. GREINER: Judge, do you want to take a break now?

4 THE COURT: Let's do that. Let's take our second

5 break of the morning. Another 15-minute break.

6 As always, please remember my admonitions. I'll see

7 you back here in 15 minutes, and then we will adjourn at 1:30

8 today.

9 (Jury out.)

10 THE COURT: How much longer do you believe you need

11 Mr. Greiner? Just a reasonable estimate?

12 My question is, can we get through with this witness

13 today? If we could, that would be ideal.

14 MR. GREINER: I'm going to try everything I can,

15 Judge. I've got it marked out. I've got it done. The

16 Government took three-and-a-half hours with this witness.

17 Mr. Tedmon took some time. I'm going to do everything I can.

18 MR. SAMUEL: I still --

19 THE COURT: I understand that.

20 MR. SAMUEL: I would say no to be fair.

21 THE COURT: All right. Just looking at the schedule,

22 I think Ms. Schultz has posted this schedule, it was showing

23 next Tuesday dark. I definitely have conflicts later in the

24 day, but I could go for two hours Tuesday morning if you wanted

25 to do that. If the jury is available.

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1 Now, if they've seen the calendar, they might have

2 made other arrangements.

3 MR. TEDMON: Your Honor, because I have been married

4 to the calendar the Court's giving us, I have clients coming in

5 on Tuesday. I could do it, but it would be really tough.

6 THE COURT: All right. We'll stick with the schedule

7 then. But we'll still talk about how to pick up after Ms. Yang

8 and start moving this along while giving the people enough

9 time. You get your fair share of the Court's time, but you

10 don't get the rest of the year.

11 (Break taken.)

12 THE COURT: All right. Let's bring the jury back in.

13 (Jury in.)

14 THE COURT: You may be seated. Welcome back, ladies

15 and gentlemen. This is our last leg for the day and for the

16 week. Mr. Greiner still has some more cross-examination. You

17 may proceed.

18 MR. GREINER: Thank you, Judge.

19 Q. BY MR. GREINER: Good afternoon, Ms. Yang.

20 A. Good afternoon.

21 Q. In the break, did you talk to anybody about your

22 testimony?

23 A. No.

24 Q. Did you see any documents?

25 A. No.

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1 Q. All right. I apologize to you, apologize to

2 everybody in the courtroom. I thought this was covered. It

3 wasn't covered, so I've got to go back for a half second to

4 Long Beach.

5 A. Okay.

6 Q. Do you have it on your mind?

7 A. Yeah.

8 Q. Just a few points, and then we'll move ahead.

9 Long Beach, when I talk about Mr. Coffman, Mr. Wiley,

10 Mr. Sandoval, Michael Head, loan officers slash sales agents,

11 okay, that's what I want to talk about here. All right? Do

12 you have that in mind?

13 A. Yes.

14 Q. Okay. Now, they found investors, correct?

15 A. Yes.

16 Q. Okay. And they actually -- those individuals, when

17 they were in Long Beach in 2004, they actually did fill out

18 loan applications, right?

19 A. Yes.

20 Q. And those individuals, Mr. Wiley, Coffman, Sandoval

21 and Michael Head, they actually collected rent from people that

22 sold their property and the program to the company, correct?

23 A. Yes.

24 Q. And they also, if the situation presented itself,

25 Mr. Coffman, Mr. Wiley, Mr. Sandoval, Michael Head, they would

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1 also either sell the property back to the people that were

2 renting, correct?

3 A. Yes.

4 Q. Or do eviction process if that was in order, correct?

5 A. Yes.

6 Q. And part of the reason in Long Beach in 2004 that

7 there was this 50-50 split was because half of the mortgage had

8 to be paid by the loan officer/sales agent, right?

9 A. Yes.

10 Q. And half to be paid by Charles Head?

11 A. Yes.

12 Q. If I could have Government's Exhibit 61, please. And

13 if we could just enlarge the top part, please.

14 And you talked to the Government about this exhibit,

15 right?

16 A. Yes.

17 Q. And on the second line where it lists the name of

18 Karie Joest, and if you go over four columns it has those two

19 figures, one in the 400s and one in the 200s, correct?

20 A. Yes.

21 Q. And that was because in 2004 the investor or the loan

22 officer/sales agents, having their limited liability

23 corporations, had to pay half of whatever the mortgage was on

24 the property, correct?

25 A. Yes.

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1 Q. And Charles Head had to pay half, that was the

2 agreement, right?

3 A. Yes.

4 Q. And that's one of the reasons why it was this 50-50

5 split back in 2004 in Long Beach as far as paying the loan

6 officer/sales agents, correct?

7 A. Yes.

8 Q. Thank you very much.

9 All right. Now, Costa Mesa, 2005, showed you a

10 document, beginning of February 2005, Domonic McCarns. We

11 offered that, right?

12 A. Yes.

13 Q. Now, at that time in the office at Costa Mesa there

14 was yourself, right?

15 A. Yes.

16 Q. And Domonic McCarns?

17 A. Yes.

18 Q. And Brian Singleton?

19 A. Yes.

20 Q. And Charles Head?

21 A. Yes.

22 Q. And that was just about it, right?

23 A. Not at the beginning. Mike Head was there.

24 Q. Well, he might have been there, but he was going to

25 Arizona, right?

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1 A. Yeah. I mean --

2 Q. And that's where he went, right?

3 A. Yes. He moved to Arizona.

4 Q. Okay. And Keith Brotemarkle, he came on a little bit

5 later after February of 2005, correct?

6 A. Yes. After we moved to Costa Mesa, they hired Keith,

7 yes.

8 Q. Okay. Now before they hired Keith, okay, things

9 still had to get processed, things still had to get done,

10 correct?

11 A. Yes.

12 Q. And Domonic McCarns' job was to talk to people on the

13 phone, right?

14 A. Yes. The sales part of it, yes.

15 Q. That was his job?

16 A. Yes.

17 Q. He wasn't to go out and meet people in the field,

18 right?

19 A. No. I don't recall, no.

20 Q. In fact, whatever leads he got at the beginning he

21 got because Charles Head gave it to him, right?

22 A. Yes.

23 Q. Okay. And then as the months started to go by, when

24 you're at Costa Mesa, then Keith came on board, would that be

25 fair?

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1 A. Yes.

2 Q. Because Keith Brotemarkle came on board before Ed

3 Shaffer, true?

4 A. Yes.

5 Q. And when Keith came on board, some changes happened

6 in the company, right?

7 A. Yes.

8 Q. One of the changes was that Keith took over finding

9 investors, right?

10 A. Yes. The buyers? You mean investors?

11 Q. Buyers, investors. If we could have Government's

12 Exhibit 127.

13 MR. SAMUEL: Object. 801(d)(2)(E).

14 THE COURT: That objection is already recorded.

15 Correct?

16 Q. BY MR. GREINER: When you talked to the Government

17 about Document 127, you actually used the term "investors"

18 because at the time period in 2005 that's what they were to

19 you, you understood them to be investors, right?

20 A. Yes.

21 Q. In fact, from what you knew, people in the company

22 knew them as investors, right?

23 A. Yes.

24 Q. And as far as you knew, that's what Domonic McCarns

25 knew of people as investors, right?

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1 A. Yes.

2 Q. Okay. Thank you.

3 Now in 2005 when Keith Brotemarkle comes on, he's the

4 one that's in charge with now finding the investors, correct?

5 A. Yes.

6 Q. Domonic McCarns was never in charge of finding any

7 investors when he worked for any of the Head Financial

8 companies, correct?

9 A. Correct.

10 Q. The other thing that -- I think you know this. If

11 you don't, then you can say you don't.

12 But the other thing that Keith took over was he hired

13 a couple people below him, Tua Vang was one, correct?

14 A. Yes.

15 Q. All right. And they would actually screen investors

16 and give information to Keith, correct?

17 A. Yes.

18 Q. And Keith was actually the one that would put an

19 investor to a certain property, isn't that right?

20 A. Yes.

21 Q. That was his job?

22 A. Yes.

23 Q. And that wasn't Domonic McCarns' job, was it?

24 A. At that time, no. But he did do a few loans where he

25 was responsible for that part of it.

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1 Q. Okay. Now, you tell the ladies and gentlemen of the

2 jury that he did a few loans. Tell them what loans he did?

3 A. Well, he did the loans for Simone Vu where he was the

4 one who took the application, and he was the one who brought

5 her to the table.

6 Q. Okay. Well, in reality, what happened was Simone Vu

7 met Charles Head --

8 MR. TEDMON: Objection. Your Honor. Counsel is

9 testifying.

10 THE COURT: Sustained.

11 Q. BY MR. GREINER: Simone Vu met Charles Head at a fund

12 raising event --

13 MR. TEDMON: Objection, Your Honor. No testimony to

14 that effect.

15 THE COURT: Sustained.

16 Q. BY MR. GREINER: You understand that Charles Head met

17 Simone Vu at some point in time, correct?

18 A. I did not know that Charles Head knew Simone Vu in

19 any sort of way.

20 Q. At all?

21 A. From my understanding and from what I knew was Simone

22 Vu is the mother of Domonic McCarns's child, and that's how I

23 knew her. But I don't have any information as to how Simone Vu

24 and Charles Head know each other.

25 Q. On the application that you're talking about, that

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1 property never went through, correct, it never was approved?

2 A. I'm not sure. But I do know that Simone Vu did have

3 loans.

4 Q. But on the property you're talking about with Domonic

5 McCarns, that one never went through, isn't that correct?

6 A. I don't know which loan. There's so many loans.

7 Q. But you're the one that's testifying to the jury that

8 Domonic McCarns put Simone Vu on a piece of property, right?

9 A. He was the one who took the application.

10 Q. Tell the ladies and gentlemen of the jury if that

11 application actually went through?

12 A. What happens -- okay, so what happens in an

13 application is --

14 Q. I apologize. I don't mean to interrupt. But my

15 question is simple. Can you tell the ladies and gentlemen of

16 the jury if the application that Domonic McCarns did, that

17 you're testifying to was Simone Vu, went through? Yes or no?

18 A. I don't remember.

19 Q. Now, at Costa Mesa, were Domonic McCarns' duties the

20 same as Scott Wagner's?

21 A. At the beginning, yes.

22 Q. Were they the same as -- I'm not sure how to

23 pronounce her name -- but Beverly Rocheleau?

24 A. At the beginning, yes.

25 Q. Beverly Smith?

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1 A. Yes.

2 Q. Shayna Fischler?

3 A. Yes.

4 Q. David Parks?

5 A. Yes.

6 Q. Nick Cevant?

7 A. Yes.

8 Q. And none of those individuals had anything to do with

9 loan applications, did they?

10 A. No.

11 Q. Now when Ed Shaffer came on board at Costa Mesa, he

12 was involved in the marketing, that's what you told the jury,

13 right?

14 A. Yes.

15 Q. And one of the marketing techniques was the internet

16 50K, correct?

17 A. Yes.

18 Q. And Domonic McCarns wasn't involved in that, was he?

19 A. No.

20 Q. And another marketing technique was the 30K. Right?

21 A. Yes.

22 Q. And Domonic McCarns wasn't involved in that either,

23 was he?

24 A. No.

25 Q. Now processing is what you were in charge of, right?

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1 A. Yes.

2 Q. Domonic McCarns had nothing to do with processing,

3 did he?

4 A. Not in the processing, no.

5 Q. He didn't report to you, did he?

6 A. No.

7 Q. And you didn't give him any job assignments as a

8 processor, did you?

9 A. No.

10 Q. And Domonic McCarns had no job duties to cut any

11 checks on behalf of the company, did he?

12 A. No.

13 Q. He didn't have any job duties to pay any bills,

14 correct?

15 A. No.

16 Q. During all the time that you worked at Costa Mesa and

17 in all of the loan applications -- which shorthand for loan

18 applications you've said many times is 1003, correct?

19 A. Yes.

20 Q. I just don't want the jury to get confused on that.

21 In all the time at Costa Mesa and all of the loan

22 applications that you saw, you never saw Domonic McCarns'

23 signature on any loan application, correct?

24 A. No.

25 Q. "No" being correct, right?

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1 A. Yes.

2 Q. All right. Would you say that you -- in all of the

3 time that you worked for the companies that were owned by

4 Charles Head, that would cover a year of six, seven,

5 eight years?

6 A. From 2001 or -2 to -6. About five years.

7 Q. And you understood Charles Head trusted you?

8 A. Yes.

9 Q. And trusted your ability to make decisions on a

10 day-to-day basis?

11 A. When it came to processing, yes.

12 Q. Well, there were times when you made decisions in

13 other areas, right, because you were the only one there?

14 A. No. Because if there was something that needed an

15 answer on that -- that was not within my department, I would

16 ask for his opinion or I would ask him, and then he would then

17 direct me.

18 Q. Well, let's take, for example, you actually let the

19 employees go a half a day around the July 4th holiday in 2005,

20 do you remember that?

21 A. Sure, yeah. I don't remember. But --

22 Q. Do you remember doing that? That you let the

23 employees go because the banks were closed, there wasn't

24 anything to do, and there is no sense in keeping people around,

25 right, and that's what you wrote and told Charles, I'm letting

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1 them go?

2 A. I don't remember but if -- I mean, that's one date in

3 a long period of time. And if I did that, then, yes.

4 Q. All right. Let me have -- if we could put up

5 Government's Exhibit 201, please.

6 THE COURT: This is already in over objections. It

7 may be displayed.

8 MR. GREINER: Right. The objections have been made

9 so I'm just going to go for it.

10 Q. BY MR. GREINER: Now you talked to the Government

11 about this on direct, do you remember that?

12 A. Yes.

13 Q. And this e-mail is simply cc'd to Domonic McCarns,

14 right?

15 A. Yes.

16 Q. And this e-mail has no response attached to it from

17 Domonic McCarns, correct?

18 A. Yes.

19 Q. If we could have Government's Exhibit 205, please.

20 -- I'm sorry, can we have Government's Exhibit 204.

21 All right. Government's Exhibit 204 you talked about

22 on direct, correct?

23 A. Yes.

24 Q. And dated April 18th of 2005, right?

25 A. Yes.

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1 Q. That's when you're in Costa Mesa, right?

2 A. Yes.

3 Q. Okay. And when you went through this, you kept

4 saying loan officers about the people that were in the -- that

5 it was addressed to, do you remember that?

6 A. Yes.

7 Q. Okay. Those loan officers are actually telephone

8 sales agents, right, they are on the phone selling the product,

9 right?

10 A. Yes.

11 Q. And so when you use the term loan officer, you're not

12 using the term loan officer as a bank like Chase or Wells Fargo

13 would use it, right?

14 A. I don't know how they use it because I don't work for

15 them, but I know we referred to them as loan officers.

16 Q. But they weren't in the traditional sense of loan

17 officers -- let me back up.

18 You've already talked to the Government that you've

19 worked for years with banks and lending institutions, right? I

20 mean, you had daily contact with them?

21 A. Yes.

22 Q. And so daily contact with banks and lending

23 institutions, you know that they use different titles for

24 people that work there, right?

25 A. Yes.

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1 Q. Funders?

2 A. Yes.

3 Q. Underwriters?

4 A. Yes.

5 Q. Closers?

6 A. Yes.

7 Q. Okay. You know that the people that were working in

8 Costa Mesa that were on the telephones, Domonic McCarns, that

9 was a sales agent selling the product, correct?

10 A. Yes. That is why I said loan officer slash sales.

11 Q. Right. But the loan officer part could be a little

12 bit misleading because they were on the phone selling, Domonic

13 McCarns was on the phone selling, right?

14 A. Yes. That was their job.

15 Q. That was his job?

16 A. The loan officers' jobs, yes.

17 MR. GREINER: If we could have Government's

18 Exhibit 205, please.

19 THE COURT: I don't believe 205 is in yet.

20 MR. GREINER: It's not?

21 THE COURT: No. Are you seeking to admit it?

22 MR. GREINER: Well, if it's not in I won't talk about

23 it.

24 THE COURT: Does anyone else have a different record?

25 MR. TEDMON: It's not in --

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1 MR. MORRIS: We agree, Your Honor.

2 THE COURT: All right.

3 Q. BY MR. GREINER: All right. Let's go to Government's

4 Exhibit 212.

5 THE COURT: This is in.

6 Q. BY MR. GREINER: This is an e-mail dated June 10th,

7 correct?

8 A. Yes.

9 Q. And it's from Domonic, correct?

10 A. Yes.

11 Q. To you and other people, right?

12 A. Well, no. I sent it. If you look at the bottom, I

13 sent it.

14 Q. Let's look at the very top. Doesn't the very top say

15 "from Domonic"?

16 A. Yes. He was responding to my e-mail.

17 Q. Okay. Then let me get it correct. You first sent an

18 e-mail out, correct?

19 A. Yes.

20 Q. And then Domonic responded, right?

21 A. Yes.

22 Q. And when Domonic responded, he responded to all of

23 the upper management in the company, correct?

24 A. Yes.

25 Q. All right. And Domonic is saying "mo money in,

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1 that's what I'm talking about," right?

2 A. Yes.

3 Q. Because the only way he could make a living as a

4 sales agent was if he sold the product and the person bought

5 the product, right?

6 A. Yes.

7 Q. I mean, you've worked for Charles Head for years.

8 Charles Head wasn't going to give free money to anybody, right?

9 A. Yes.

10 Q. So Domonic McCarns had to earn his money, right?

11 A. Yes.

12 Q. Okay. Thank you.

13 I don't think this has been admitted, but I would

14 admit it. It's Government's Exhibit 209. If there is no

15 objection.

16 THE COURT: Any objection, Mr. Morris?

17 MR. MORRIS: No, Your Honor.

18 THE COURT: Mr. Tedmon?

19 MR. TEDMON: No, Your Honor.

20 THE COURT: Mr. Samuel?

21 MR. SAMUEL: No.

22 THE COURT: All right. 209 is admitted.

23 (Government Exhibit 209, Email dated 5/11/2005

24 From Domonic McCarns To Pang Yang; Kou Yang; Heather Worch

25 CC Charles Head Subject: Disanto, John & Kelly admitted into

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1 evidence.)

2 Q. BY MR. GREINER: All right. Now that's an e-mail

3 from Domonic McCarns, correct?

4 A. Yes.

5 Q. To you and two other people that worked under you,

6 correct?

7 A. Yes.

8 Q. All right. And they are -- or he's talking about the

9 DiSanto file, correct?

10 A. Yes.

11 Q. And he's telling you that there is a date and put

12 that date on the file, right?

13 A. Yes.

14 Q. Now, do you recall the DiSanto file?

15 A. Yes.

16 Q. All right. And you know that the DiSanto file, John

17 and Kelly, they actually bought their property back, didn't

18 they?

19 A. I'm not exactly sure. But if they did, then, yes.

20 Q. Okay. All right. Thank you.

21 I'm not sure this has been admitted, Judge, but it's

22 Government Exhibit 214.

23 THE COURT: It is not admitted.

24 MR. GREINER: So I would move for its admission.

25 THE COURT: Any objection, Mr. Morris?

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1 MR. MORRIS: No, Your Honor.

2 THE COURT: Mr. Tedmon?

3 MR. TEDMON: No, Your Honor.

4 THE COURT: Mr. Samuel?

5 MR. SAMUEL: No, Your Honor.

6 THE COURT: All right. 214 is admitted.

7 (Government Exhibit 214, Email dated 6/15/2005

8 From Kou Yang To Charles Head admitted into evidence.)

9 Q. BY MR. GREINER: And if we could go to the third page

10 of this exhibit, please.

11 Now this is a whole string of e-mails, okay, and if

12 you get confused, or you need to see all of it, we can, but I

13 just want to highlight a couple things if we can go through it

14 quickly.

15 What I've enlarged on the screen is part of the

16 e-mail that's from a Latasha Butts that's back in April of

17 2005, do you see that?

18 A. Yes.

19 Q. And this was connected to, at the very beginning of

20 the e-mail -- and we can go back if you want to see it -- but

21 your final e-mail to Charles Head, do you want to see that on

22 page one?

23 A. Yes.

24 Q. Okay. If we go back to page one.

25 A. (Witness reviewing document.) Okay.

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1 Q. Okay. So it's a string of e-mails, and it ends with

2 you sending something to Charles, fair?

3 A. Yes.

4 Q. Now let's go to page three. In this portion of

5 Government's Exhibit 214 it shows an e-mail from Latasha Butts

6 on April 12th, 2005, do you see that?

7 A. Yes.

8 Q. Do you recall the Latasha Butts file by any chance?

9 A. Yes.

10 Q. She's in Florida, right?

11 A. Yes.

12 Q. And Latasha Butts was a loan officer for Option One

13 Mortgage, wasn't she?

14 A. Yes.

15 Q. All right. Thank you.

16 I don't think this one has been admitted either,

17 Judge. It's Exhibit 215, Government's exhibit.

18 THE COURT: Any objection, Mr. Morris?

19 MR. MORRIS: No, Your Honor.

20 THE COURT: Mr. Tedmon?

21 MR. TEDMON: No.

22 THE COURT: Mr. Samuel?

23 MR. SAMUEL: No.

24 THE COURT: All right. 215 is admitted.

25 (Government Exhibit 215, Email dated 6/15/2005

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1 From Kou Yang; Keith Brotemarkle; Ed Shaffer; Charles

2 Head Subject: FW: Mckenzie (ff.com) admitted into evidence.)

3 Q. BY MR. GREINER: And I've highlighted the top portion

4 of that exhibit. Do you see that, Ms. Yang?

5 A. Yes.

6 Q. It's from Domonic McCarns, correct?

7 A. Yes.

8 Q. And to you and Keith and Ed and Charles, correct?

9 A. Yes.

10 Q. Again, all of the upper management at the company,

11 correct?

12 A. Yes.

13 Q. And it's talking about the McKenzie file. Do you

14 recall the McKenzie file?

15 A. Yes.

16 Q. McKenzie, that was Yolanda McKenzie, and that was in

17 Minnesota, do you remember that?

18 A. Yes.

19 Q. And you also remember that Yolanda McKenzie didn't

20 really want to come in the program because she wanted to try

21 another investor and see if that investor could help out,

22 right?

23 A. Yes.

24 Q. And she had a family member that could actually give

25 her money, but she was embarrassed to ask, do you remember

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1 that?

2 A. Yes.

3 Q. And then finally she was getting up to the sale and

4 the foreclosure, and she was just going to lose her house,

5 right?

6 A. Yes.

7 Q. But instead of just walking away and losing her house

8 and getting a foreclosure on her credit report -- which would

9 happen, right?

10 A. Yes.

11 Q. I mean, you know, based upon all of your experience

12 that Mr. Morris has demonstrated to the ladies and gentlemen of

13 the jury, that if the house actually gets sold and put in

14 foreclosure that detrimentally affects a person's credit

15 rating, right?

16 A. Yes.

17 Q. So if an individual, based upon all of your

18 experience that Mr. Morris has demonstrated, if an individual

19 can keep from having a foreclosure on their credit rating, I

20 mean that's a benefit, isn't it?

21 A. Yes.

22 Q. Okay. And so in this situation, Ms. McKenzie, at the

23 final hour, she decided she was going to do the program, get a

24 little money out of it, and she wouldn't have a foreclosure on

25 her credit, isn't that right?

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1 A. Yes.

2 Q. All right. Thank you.

3 Now, do you recall a file -- and it may be a

4 different first name so hold on for a second.

5 Do you remember a file or a client named Korall

6 Solares?

7 A. The Solares file rings a bell, yes.

8 Q. Would you know the first name as Kory Solares, would

9 that help?

10 A. I don't remember. What city is the property in?

11 Q. I'm going to be say either Clearwater, Florida or

12 just outside of Miami, Florida. Does that help?

13 A. Yeah. It's one of his initial orders. I remember.

14 MR. TEDMON: Objection. Can we clarify?

15 THE COURT: Mr. Greiner, a follow up question to

16 clarify.

17 Q. BY MR. GREINER: When you said "one of his," you were

18 talking about Domonic McCarns?

19 A. Yes.

20 Q. Correct. And by talking about it, is it refreshing

21 your memory to some degree?

22 A. Yes.

23 Q. Let me ask you this question, do you have any

24 recollection of who -- and I'll say Kory because that's on a

25 lot of the e-mails -- Kory Solares, who she had worked for when

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1 she was just going through the foreclosure process?

2 A. I don't remember who she worked for. No.

3 Q. Let me try to refresh your memory without using any

4 names. Do you recall if her employment was at a law office?

5 A. She could have been. I don't -- I don't remember.

6 Q. If you don't remember, guessing doesn't help anybody.

7 You don't remember?

8 A. I don't remember.

9 Q. All right. Then we won't talk about her.

10 When you were working at Long Beach -- not Long

11 Beach --

12 A. Costa Mesa?

13 Q. Yeah. When you were working at Costa Mesa and

14 Domonic McCarns was there. A series of questions regarding

15 that time period. Okay?

16 You knew, dealing with the various mortgage lenders

17 and the banks, that lending policies varied from institution to

18 institution, correct?

19 A. Yes.

20 Q. In fact, there was some banks that had very loose

21 requirements in that time period, correct?

22 A. Yes.

23 Q. And there were some that would almost on a daily

24 basis change whatever policies they had regarding how they

25 would accept loans, fair statement?

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1 A. Yes.

2 Q. And you saw that in your day-to-day operation,

3 working in Costa Mesa, right?

4 A. I don't know about daily, but I do know that it does

5 happen.

6 Q. All right. Let's broaden it out. We'll go weekly,

7 monthly. You knew in that time period at Costa Mesa, before

8 you moved to Tustin, that the banks and the lending

9 institutions had lending policies that changed quite

10 frequently?

11 A. Yes.

12 Q. And those policies, when they changed, weren't to

13 tighten up the policies, but they were to loosen the policies,

14 correct?

15 A. Yes.

16 Q. Because from your vantage point, being the processor,

17 the banks and the lending institutions in that timeframe, 2005,

18 Costa Mesa, before you went to Tustin, the lending institutions

19 and the mortgage companies wanted as many loans as they could

20 get, right?

21 MR. MORRIS: Objection. Calls for speculation.

22 THE COURT: Sustained.

23 Q. BY MR. GREINER: Based upon all of your experience

24 that Mr. Morris has given to the ladies and gentlemen of the

25 jury, when you worked in Costa Mesa, from what you saw, you saw

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1 lending institutions that wanted loans, as many as they could

2 get, fair?

3 A. I don't work for those lending institutions, so I

4 don't know what their -- what they were trying to do.

5 Q. And I appreciate your answer. But directing you back

6 to my question.

7 My question was, based upon all of your experience,

8 working in Costa Mesa 2005 through 2006, until you moved to

9 Tustin, from everything you saw working in the process

10 department, you saw lending institutions that wanted to have as

11 many loans as they could get, fair?

12 A. Yes. I guess. I can't be sure.

13 Q. Well --

14 A. I don't work for them, so I don't know what they -- I

15 was just -- I had a job, and I just did my job. I don't know

16 what the lenders want.

17 Q. And I didn't ask what the lenders want, did I?

18 A. You said from what I know, what did I think the

19 lenders wanted, and I don't know what they wanted.

20 Q. Then let me ask a better question.

21 From 2005 -- let's take February 1st, from when

22 Domonic McCarns started there.

23 From February 2005 until you moved to Tustin, about

24 the end of August 2006, based upon all the experience that

25 Mr. Morris has demonstrated to the jury, when you were in

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1 processing, lenders would take as many files as they could from

2 your organization, is that fair?

3 A. No. Within guidelines.

4 Q. And those guidelines changed, we've covered that,

5 right?

6 A. Yeah. They would change from time to time. Yes,

7 they would.

8 Q. And they became looser as they changed, correct?

9 A. No. There were banks that were also making them

10 tighter. I mean, these were just what their guidelines are. I

11 can't answer for them. I don't know. I don't know.

12 Q. So your answer is you don't know?

13 A. I don't know.

14 Q. Okay. And you had mortgage brokers come to the

15 company and pitch for loans, right?

16 A. Not mortgage brokers.

17 Q. Lending brokers?

18 A. They were sales people that worked for lenders.

19 Q. And they would come to the company and pitch to send

20 us loan, correct?

21 A. Yes.

22 Q. And that would happen on a regular basis, right?

23 A. Not in Costa Mesa.

24 Q. Did it ever happen in Costa Mesa?

25 A. No.

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1 Q. Not one time?

2 A. I do not recall. Only in Long Beach.

3 Q. All right. You are familiar with the program called

4 Catalyx?

5 A. No.

6 Q. You don't know what that is?

7 A. Is it the loan program?

8 Q. Did you use a program on a daily basis?

9 A. Yes.

10 Q. Was it named Catalyx?

11 A. I don't remember the name of the program.

12 Q. In February of 2005 to August -- the end of

13 August 2006 in Costa Mesa, who did you understand to be your

14 quality control person?

15 A. The quality control person?

16 Q. Yes.

17 A. We didn't have a quality. I don't understand.

18 Q. Weren't you the quality control person for the loan

19 processing?

20 A. For the loan processing, yes.

21 Q. Wasn't Keith the control person for investors?

22 A. Yes.

23 Q. And for loan applications?

24 A. Yes.

25 Q. And for finding banks?

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1 A. Yes.

2 Q. And wasn't Ed Shaffer the quality control person for

3 doing the marketing to find the investors?

4 A. Yes.

5 Q. To give the investors to Keith?

6 A. Yes.

7 Q. I want to make sure that I've covered --

8 All right. Now, did you ever have any contact with a

9 Mike Mattice?

10 A. I'm sure that I did. He was a seller, was he?

11 Q. No --

12 A. I'm not --

13 Q. Do you have a recollection of who Mike Mattice is?

14 A. I don't remember, no.

15 Q. Do you have a recollection who Mark Wilson was?

16 A. Yes. Wilson. I remember Wilson. He was the IT guy.

17 Q. Okay. Do you have a recollection of who Amber

18 Ferrantello was?

19 A. Yes, she was a straw buyer.

20 Q. Well, she was an investor, that's how you know her,

21 right?

22 A. There's different names that you can use for them.

23 Q. And where these different names came from -- let's go

24 back.

25 When you talked to the Government back in March --

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1 A. Yes.

2 Q. -- you never used the term straw buyer, did you?

3 A. I don't recall.

4 Q. When you talked to the Government in April of this

5 year, you never used the term straw buyer, did you?

6 A. I don't recall.

7 Q. The first time that you've used the term straw buyer

8 was testifying in front of the jury, correct?

9 A. Yeah. I've said --

10 Q. Because that's the term that you've heard the

11 Government in conversations with you?

12 A. No, sir. In our business, the business that we were

13 in, the loan business, straw buyer was commonly used.

14 Everybody that was in the loan business understood a

15 straw buyer to be someone that was purchasing a property that

16 they were not going to live in, that was not for them. It was

17 a terminology that you use commonly. So straw buyer is not the

18 first time I've heard it from them.

19 Q. And yet you never used the term when you talked to

20 the Government when you were under a plea agreement to tell

21 them the truth, correct?

22 A. Because the word "investor" --

23 Q. Just my question is simple. You never did that, did

24 you?

25 A. Yes.

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1 Q. Did you ever talk to an Abraham Urena?

2 A. I don't remember.

3 Q. Did you ever talk to a Michael Scanlon (sic)?

4 A. Yes.

5 Q. Okay. Who is Michael Scanlon?

6 A. I have not spoken to him, but I remember that file.

7 Q. Okay. And what file is that?

8 A. It's one of our files that we worked on. I cannot

9 give you date or time, but it is a file that we had in our

10 system.

11 Q. Other than knowing it's a file, you don't have any

12 recollection at all of who it is?

13 A. Because I don't talk to them.

14 Q. You don't --

15 A. No.

16 Q. -- have a recollection of who the file is?

17 A. No.

18 Q. Okay. How about Brett Cavillo?

19 A. No.

20 Q. How about Howard Peters?

21 A. No.

22 Q. How about Marjorie Sly?

23 A. I remember that name.

24 Q. What do you remember about it?

25 A. It was one of our files.

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1 Q. And do you remember what file?

2 A. No.

3 Q. How about Kenneth Sly?

4 A. It's a name that sounds familiar, but I don't

5 remember.

6 Q. How about a Charmaine Ratcliff?

7 A. It's a name that I remember.

8 Q. But you can't connect anything to it, can you?

9 A. It's been eight, nine -- it's been eight years. I

10 don't remember.

11 Q. I understand. So can you connect it to anything?

12 A. It's a loan that we had in our system.

13 Q. Do you know which one?

14 A. No.

15 Q. Okay. How about Daniel Castillo?

16 A. It is one of our loans also.

17 Q. Do you know what file or what it goes to?

18 A. No.

19 Q. And how about Armil Rucker?

20 A. It is also one of our loans.

21 Q. But you can't connect it to a file?

22 A. I don't remember.

23 Q. So the answer would be you can't connect it, correct?

24 A. Yes.

25 Q. Now to your personal knowledge, can you tell the

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1 ladies and gentlemen of the jury if you ever heard Domonic

2 McCarns talk to a Mark Wilson?

3 A. No.

4 Q. Can you tell the ladies and gentlemen of the jury if

5 you ever heard Domonic McCarns talk to a Mike Mattice?

6 A. No.

7 Q. Can you tell the ladies and gentlemen of the jury if

8 you ever heard Domonic McCarns talk to Amber Ferrantello?

9 A. No.

10 Q. Can you tell the ladies and gentlemen of the jury if

11 you ever heard Domonic McCarns talk to Abraham Urena?

12 A. No.

13 Q. Can you tell the ladies and gentlemen of the jury if

14 you heard Domonic McCarns talk to Bunny Clevenger?

15 A. No.

16 Q. Can you tell the ladies and gentlemen of the jury if

17 you ever heard Domonic McCarns talk to a Michael Scanlon (sic)?

18 A. No.

19 Q. Can you tell the ladies and gentlemen of the jury if

20 you ever heard Domonic McCarns talk to a Brett Cavillo?

21 A. No.

22 Q. Can you tell the ladies and gentlemen of the jury if

23 you ever heard Domonic McCarns talk to a Howard Peters?

24 A. No.

25 Q. Can you tell the ladies and gentlemen of the jury if

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1 you ever heard Domonic McCarns talk to a gentlemen named Kerry

2 Budoff?

3 A. No.

4 Q. Can you tell the ladies and gentlemen of the jury if

5 you ever heard Domonic McCarns talk it a Marjorie Sly?

6 A. No.

7 Q. Can you tell the ladies and gentlemen of the jury if

8 you ever heard Domonic McCarns talk to a Kenneth Sly?

9 A. No.

10 Q. Can you tell the ladies and gentlemen of the jury if

11 you ever heard a Domonic McCarns talk to a Charmayne Ratcliff?

12 A. No.

13 Q. Can you tell the ladies and gentlemen of the jury if

14 you ever heard Domonic McCarns talk to a Daniel Castillo?

15 A. No.

16 Q. Can you tell the ladies and gentlemen of the jury if

17 you ever heard Domonic McCarns talk to Armil Rucker?

18 A. No.

19 Q. If I could have just one moment, Judge. Okay. I

20 have two final areas then I'm going to be complete.

21 One area has two segments. Okay. I want to talk to

22 you about loan officers at the company and sales agents.

23 All right. Loan officer, from your knowledge they

24 sold the loan program, correct?

25 A. Yes.

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1 Q. Structured the loans?

2 A. Yes.

3 Q. Selected loan programs with the banks?

4 A. Yes.

5 Q. Priced the loans on the rate sheets?

6 A. Yes.

7 Q. Filled out the loan applications with the investor?

8 A. Yes.

9 Q. And spoke to the person getting the loan?

10 A. Yes.

11 Q. And that was what we've talked about Mr. Sandoval,

12 Mr. Wiley, Mr. Coffman and Michael Head, correct?

13 A. Yes.

14 Q. The sales agents, they spoke on the phone about the

15 program?

16 A. Yes.

17 Q. Correct? They mailed the equity purchase agreement

18 to the people?

19 A. Yes.

20 Q. Correct. They ordered the appraisals?

21 A. Yes.

22 Q. And they requested the demand payoff, correct?

23 A. Yes.

24 Q. And just so we know, the demand payoff is what they

25 get from the bank as to what actually needs to be paid off on

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1 the property, correct?

2 A. Yes.

3 Q. And at some point in time you know that Domonic

4 McCarns actually got properties that were, like, going to be

5 redeemed, I mean he talked to properties that were like on the

6 doorstep of being sold, right?

7 A. Mostly everybody did, yes.

8 Q. And stopped them from being sold and got extensions,

9 correct?

10 A. Yes.

11 Q. All right. And that's sales agents, that's what

12 Domonic McCarns was, right?

13 A. I mean, like I said, we referred to them as loan

14 officers slash sales. That's how we referred to them.

15 Q. Just a moment, Judge.

16 It's a question. If you refer to the person on the

17 phone selling, like Domonic McCarns, how can you refer to

18 Domonic McCarns as a loan officer, he doesn't fill out the

19 loans?

20 A. Right. But that's -- in our office that was what we

21 called them.

22 Q. Okay. Just so I make sure I got the answer, Domonic

23 McCarns didn't fill out the loan documents, but he was talking

24 on the phone, and you called him a loan officer?

25 A. Yes. That's what we called them.

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1 Q. A better term might have been just to call them a

2 sales agent?

3 A. I didn't make up the term. Sorry.

4 Q. All right. Last area I want to talk with you about.

5 Domonic McCarns questioned everything, didn't he?

6 A. I mean a lot of people questioned a lot of stuff.

7 Q. But Domonic was the one that questioned things that

8 you did, right?

9 A. Yes.

10 Q. Questioned you why you were so slow at times, right?

11 A. Yes.

12 Q. Why things couldn't get done faster?

13 A. Yes.

14 Q. Questioned what Keith was doing?

15 A. He didn't question me about what Keith was doing, so.

16 Q. Do you know when Domonic got fired from the company?

17 A. I didn't know he got fired. I don't remember that he

18 got fired.

19 Q. Do you remember a period of time when Domonic wasn't

20 there at the Costa Mesa office?

21 A. There was a period -- I mean, he didn't come to work

22 for a lot of the times, but those were probably personal

23 reasons.

24 Q. Do you have a recollection around December of 2005,

25 January of 2006 that Domonic wasn't there?

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1 A. I don't remember.

2 Q. Do you remember that Domonic would question other

3 employees as to what they were doing?

4 A. I don't know why he would question somebody. I don't

5 remember.

6 Q. Okay. But you do know that you and Domonic just

7 didn't get along?

8 A. Domonic was just another loan officer, and that's

9 just how they were. They want their loan to fund so that they

10 can make money. So because we weren't moving fast enough for

11 him, he would, you know, try to tell us, you know, why are you

12 not moving fast enough or why isn't my file funded. But it's

13 normal. Most loan officers are like that.

14 Q. Okay. Well, who's the person that got beat up at the

15 company, physically beat up?

16 MR. MORRIS: Objection. Assumes facts not in

17 evidence.

18 THE COURT: Sustained.

19 Q. BY MR. GREINER: Well, you had a disagreement with

20 Domonic at one time, correct?

21 A. Yes.

22 Q. And because of that disagreement, your significant

23 other came to the office, isn't that correct?

24 A. Yes.

25 Q. And your significant other physically beat up

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1 Domonic, correct?

2 A. Yes.

3 Q. And Domonic called the cops, correct?

4 A. I don't know if he did. I didn't see any police.

5 Q. You didn't see any police come to the office?

6 A. No.

7 Q. Okay. All right. So --

8 A. Do you have the police report because I never saw

9 one?

10 Q. You know, you asked me a question again.

11 A. I don't know.

12 Q. We did that before the break. You're under oath.

13 I'm not. So I get to ask the questions. Thank you, though.

14 A. I don't remember.

15 Q. Did you ever see Domonic call the police after that

16 physical altercation?

17 A. No.

18 Q. Did you see him get beat up?

19 A. No.

20 Q. But you knew he did?

21 A. I heard about it, but.

22 Q. It was your significant other, right?

23 A. I was not there.

24 Q. Okay. Let me check one more time, Judge.

25 Let me go back one, two subjects ago. When you were

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1 working at Costa Mesa --

2 A. Yes.

3 Q. -- before you moved to Tustin --

4 A. Yes.

5 Q. -- you never saw Domonic talk to anyone that was

6 getting a loan, correct?

7 A. If I walked into his office, then I would hear him

8 talking to customers on the phone. But I don't know who they

9 were. But I do know that he was speaking to customers on the

10 phone because that was his job. But because of the location of

11 my office, that's why I didn't hear him. Because I'm all the

12 way down the hall, and he's all the way down the other hall, I

13 could not have heard him.

14 Q. Okay. And I appreciate your answer, but directing

15 you back to my question. In the time period you worked in

16 Costa Mesa --

17 A. Uh-huh.

18 Q. -- you never saw Domonic McCarns meet with any person

19 that was getting a loan?

20 A. No.

21 Q. Fair?

22 A. Yes.

23 Q. And you never heard Domonic McCarns talk to anybody

24 that was getting a loan, fair statement?

25 A. I have heard him talk on the phone before to

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1 customers.

2 Q. Okay. To customers. I'm not talking about people

3 he's selling the product to. I'm talking about people that got

4 loans.

5 A. You mean the borrowers?

6 Q. The loan applications? Borrowers?

7 A. No. Not to the borrowers.

8 Q. And you never saw Domonic McCarns meet with any

9 borrowers in the timeframe we're talking about, February 2005

10 in Costa Mesa to the end of August 2006, correct?

11 A. No.

12 Q. "No" being that's correct?

13 A. Yes. No. He did not meet with anybody.

14 Q. And then just to finish up. When you moved to

15 Tustin, you were not in the office that Domonic McCarns was at?

16 A. No.

17 Q. So you never saw him when you moved to Tustin?

18 A. No.

19 Q. You never worked with him in an office when you moved

20 to Tustin?

21 A. No.

22 Q. You never saw if he met with anybody at all when you

23 moved to Tustin, correct?

24 A. No.

25 Q. Just one second, Judge.

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1 When you worked in Costa Mesa 2005 to 2006, before

2 moving to Tustin, it was Keith that talked to the borrowers,

3 correct?

4 A. Yes.

5 Q. And Keith is the one that would talk to the borrowers

6 to fill out the loan applications?

7 A. Yes.

8 Q. Not Domonic McCarns, correct?

9 A. Correct.

10 MR. GREINER: Thank you, Judge.

11 THE COURT: All right. Mr. Samuel.

12 Mr. Samuel will now begin his cross-examination. We

13 may not get through it today, but he'll at least begin.

14 CROSS-EXAMINATION

15 BY MR. SAMUEL:

16 Q. I just need a minute to shuffle my papers, Your

17 Honor. Could we have 5A1.

18 THE COURT: 5A1?

19 Q. BY MR. SAMUEL: That's correct. Already in evidence.

20 And the next one will be 10A5.

21 You've got that in front of you, 5A1?

22 A. Yes.

23 Q. You've already testified that 5A1 is in your

24 handwriting, correct?

25 A. Yes.

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1 Q. And you are the person that actually wrote the word

2 "Benjamin" there?

3 A. Yes.

4 Q. And so that would be your handwriting, correct?

5 A. Yes.

6 Q. All right. Let's go on to the next one, 10A5. You

7 see that as well?

8 A. Yes.

9 Q. And you also testified that this is in your

10 handwriting as well?

11 A. Only the part in the box.

12 Q. The "Cardenas"?

13 A. Not the "Cardenas," no.

14 Q. No?

15 A. No. Only the bottom where it says "lease."

16 Q. Okay. So we don't know who put the name on the top?

17 A. It's probably the processor.

18 Q. All right. But the bottom portion of the document is

19 in your handwriting?

20 A. Yes.

21 Q. And did you, on occasion, write on various documents

22 when communicating with others in the office?

23 A. Yes.

24 Q. All right. Now, what I'd like to do is have you

25 bring up BB-E1, and that has not been offered into evidence as

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1 of yet, so don't come up yet. However, it is part of the

2 stipulation, Your Honor, that we previously entered into.

3 THE COURT: It's BB-1?

4 MR. SAMUEL: BB-E1.

5 THE COURT: I didn't get the entire --

6 MR. SAMUEL: BB-E1, and it has multiple pages

7 therefrom.

8 THE COURT: So BB-E1. Any objection, Mr. Morris?

9 MR. MORRIS: No objection, Your Honor.

10 THE COURT: Mr. Tedmon?

11 MR. TEDMON: No.

12 THE COURT: Mr. Greiner?

13 MR. GREINER: No, Your Honor.

14 THE COURT: All right. BB-E1 is admitted.

15 (Defendants' Exhibit BB-E1, Uniform Residential Loan

16 Application for 22 Noyes Street, Duxbury, MA 02332 admitted

17 into evidence.)

18 Q. BY MR. SAMUEL: And before we get started, you

19 already testified that you had forged various signatures on

20 various documents, correct?

21 A. Yes.

22 Q. All right. And this is a 1003, commonly known as a

23 1003 document, correct?

24 A. Well, I don't see it.

25 Q. Sorry.

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1 A. Okay. It's here.

2 Q. So if we look at the top, is that your handwriting?

3 A. No.

4 THE COURT: Mr. Anderson or Mr. Morris, would you

5 assist by just showing Mr. Samuel.

6 Q. BY MR. SAMUEL: What I would like you to do, however,

7 is now go to the fifth page of the document.

8 THE COURT: Mr. Samuel, you need to speak up. You're

9 still in BB-E1?

10 Q. BY MR. SAMUEL: Yes. Same document, fifth page. And

11 you see the handwriting at the bottom?

12 A. Yes.

13 Q. Notice how "Benjamin" is penned?

14 A. Yes.

15 Q. Looks very similar to your handwriting of "Benjamin";

16 is that correct?

17 A. Yes.

18 Q. Did you sign Benjamin Budoff's name for this

19 document?

20 A. I probably did. Yes.

21 Q. Did you often sign the name for Benjamin Budoff

22 without his knowledge?

23 A. No.

24 Q. How many times would you say you did sign Benjamin

25 Budoff's --

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1 A. I don't recall.

2 Q. You never had an authorization to do so from

3 Mr. Budoff, did you?

4 A. No.

5 Q. All right. So you're taking actions that Mr. Budoff

6 was not aware of, is that correct?

7 A. Yes.

8 Q. All right. Finally -- and I apologize to everybody.

9 I just obtained this document this morning. And it's entitled

10 BB-F and BB-F1.

11 THE COURT: Do you have copies?

12 MR. SAMUEL: You know, I didn't have time to make

13 copies, Your Honor. I apologize. But counsel has seen it

14 because they provided it to me.

15 MR. ANDERSON: Your Honor, just to be clear, this is

16 a document that was provided several years ago, but Mr. Samuel

17 asked for another copy, so we've given it to him today.

18 THE COURT: Any objection to BB-F1?

19 MR. MORRIS: No, Your Honor.

20 MR. SAMUEL: It was not enumerated.

21 THE COURT: We don't need to talk about it. Any

22 objection, Mr. Tedmon?

23 MR. TEDMON: No.

24 THE COURT: Mr. Greiner?

25 MR. GREINER: No, Judge.

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1 THE COURT: All right. BB-F1 is admitted.

2 (Defendants' Exhibit BB-F1, Month-to-Month Agreement,

3 Dated 12/1/03 admitted into evidence.)

4 Q. BY MR. SAMUEL: At the top of that do you see the

5 title of the document?

6 A. Yes.

7 Q. And it's a Month-to-Month Agreement?

8 A. Yes.

9 Q. And do you see who the document is for?

10 A. Yes.

11 Q. And who is it for?

12 A. Elizabeth Huerta and Leonard Bernot.

13 Q. And Elizabeth Huerta is who?

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