REPLY IN SUPPORT OF MOTION TO CONDUCT DISCOVERY IN § 2255 PROCEEDING PAGE 1

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CONNIE C. ARMSTRONG, JR.

8309 Laughing Waters Trail
McKinney Texas, 75070
Telephone: 469-212-2316
e-mail: chip.armstrong@yahoo.com

Petitioner Pro Se

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

CONNIE C. ARMSTRONG, JR.

Petitioner

v.

UNITED STATES OF AMERICA

Respondent
No. CR 94 276 PJH
REPLY IN SUPPORT OF MOTION TO
CONDUCT DISCOVERY IN § 2255
PROCEEDING

Petitioner Connie C. Armstrong, Jr. submits this Reply following the government’s
submission of its opposition to his request for discovery in this section 2255 proceeding.
The government’s opposition is based on two grounds. First, that Petitioner’s allegations
are speculative and, second, that the requested discovery would not entitle Petitioner to section
2255 relief. [Opposition at 1.] As a threshold observation, the government has not opposed or
made complaint as to the scope of the requested discovery; rather, the government opposes
discovery in its entirety. This position is curious in that the government is already conducting
discovery.
While the Rules governing section 2255 cases are somewhat inconsistent as to how
parties are identified, Rule 6 is quite clear that leave of court is required before any party

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conducts discovery. Despite this requirement, the government has identified the need for
discovery to properly present this case and is actually conducting such discovery. For example,
the government reveals that it required consultation with FBI personnel as to the contents and
form of documents at issue in this case. [Opposition at 7; Declaration of Laura Beeler at 1-2
(disclosing meetings with FBI counsel and outlining future discovery efforts]. To the merits,
however, the government’s opposition fails to controvert the good cause demonstrated by
Petitioner’s motion for discovery.
1. Discovery concerning the prior investigation.
The government opens its opposition with discussion of the undisclosed prior
investigation, which is appropriate given the gravity of this omission. In discounting the
seriousness of its failure to disclose, the government states its prior investigation “did not
conclude that Armstrong did not commit a crime but instead merely determined that it did not
have sufficient evidence to prosecute as of September 1988.” [Opposition at 2]. The
government is making the Petitioner’s point. The government had the burden to establish guilt,
and it was not Armstrong’s burden to establish innocence. “Courts do not find people guilty or
innocent. . . . A not guilty verdict expresses no view as to a defendant’s innocence.” Kansas v.
Marsh, 548 U.S. 163, 194 (2006)(quoting People v. Smith, 708 N.E.2d 365, 371 (Ill. 1999).
Rather, it indicates simply that the prosecution has failed to meet its burden of proof. See id.
The suppression of a recent investigation of Armstrong’s company that reached a
contrary prosecution decision obviously implicates Brady. See U.S. v. Fernandez, 559 F.3d 303
(5th Cir. 2009); Reid v. Simmons, 163 F. Supp.2d 81 (D. N.H. 2001). But the improper benefit to
the government in meeting its burden is also obvious, is more serious, and casts doubt upon the
fundamental fairness of Armstrong’s trial. See U.S. v. Boulware, 558 F.3d 971, 974 (9th Cir.

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2009)(“Due process requires that criminal prosecutions comport with prevailing notions of
fundamental fairness and that criminal defendants be afforded a meaningful opportunity to
present a complete defense.”)
Here, the prosecution of Armstrong involved the presentation and explanation of complex
financial transactions to lay jurors who are, generally, ill-equipped to evaluate such evidence.
See U.S. v. Hinojosa, 958 F.2d 624 (5th Cir. 1992)(Holding Batson not implicated when the
structuring of financial transaction was at issue and all jurors without a high-school education
were struck); Memorex Corp. v. IBM Corp., 458 F. Supp. 423 (N.D. Cal. 1978) (approving court
fact-finding after jury disagreement in complex case); Bernstein v. Universal Pictures, Inc., 79
F.R.D. 59 (S.D. N.Y. 1978) (jury disallowed in complex case); In re U. S. Financial Securities
Litigation, 75 F.R.D. 702 (S.D. Cal. 1977) (same). Indeed, one of the key financial concepts at
issue in this case was actually decided in a collateral bankruptcy proceeding after Armstrong’s
indictment. Yet the suppression of the prior investigation completely relieved the government of
the heavy burden of explaining the conflict between the two investigations. Specifically, a
redacted FBI 302 reveals that Hamilton Taft’s operations at the time of the prior investigation—
under different ownership—showed the same characteristics as those for which Armstrong was
prosecuted. [Exhibits, pp. 4-6].
Again for example, the government notes that a portion of Armstrong’s conviction was
based on evidence that he misappropriated “more than $16.5 million for personal use.”
[Opposition at 2]. The trial evidence was undisputed that Armstrong was the sole owner of the
company in question and the Ninth Circuit held that the company was the sole owner of it cash.
But ignoring the interesting philosophical question of whether one can misappropriate one’s own

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assets, the foregoing FBI 302 shows that the “ten to fourteen million dollars” were loaned from
the company to its owners in the year prior to Armstrong’s acquisition. [Exhibits, p. 4].
That year was 1988, the same year as the prior investigation. The government calls the
Petitioner’s allegations speculative, but the government agrees that the prior investigation
occurred, agrees that the prior investigation did not result in a prosecution, and avers that
Armstrong’s later conviction was based in part on loans he took from the company. The FBI 302
shows that these or similar loans were in place at the time of the prior investigation. Far from
speculative, these allegations are supported by the government’s own admissions and FBI
memoranda, which show that the government received a material advantage in this case by
avoiding the necessity of explaining a prior investigation which reached a contrary conclusion.
Good cause exists for discovery related to this issue.
2. Discovery concerning the undisclosed political pressure.
Had the government disclosed its prior investigation, the jury in this trial would have
faced the additional question of which investigation to believe—the September 1988 version or
the February 1991 version. One element that would have aided the jury’s determination,
however, was suppressed by the government; namely, the high level of political involvement at
the onset of the 1991 inquiry. [Exhibits, p. 7-10, Redacted FBI Memo of March 8, 1991]. This
memo describes the interplay between a disgruntled former Hamilton Taft employee, the IRS,
the staffs of Sen. Boxer and Rep. Pelosi, the Wall Street Journal, and the FBI. On the last page
of this interesting memo, the writer discloses a conversation with AUSA Yamaguchi, who noted
the need for additional probable cause before seeking a search warrant for the Hamilton Taft
offices. About this same time, Hamilton Taft became engaged in a contractual dispute with one
of its clients, Federal Express. [Exhibits, pp. 11-17, Original Complaint filed by Federal
Express]. One week later, the Wall Street Journal publishes a negative article about Hamilton

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Taft, citing the disgruntled employee. [Exhibits, pp. 18-19]. FBI memoranda reveal that the
employee was directed to the Wall Street Journal by Nancy Pelosi. [Exhibits, p. 8]. The article
was published on Friday, March 15, 1991. On Sunday, March 17, two days after the article’s
publication and nine days after Yamaguchi’s statement that he lacked probable cause to pursue a
warrant, the DOJ published a press release detailing its investigation of Hamilton Taft. On April
3, 1991, two weeks after the Federal Express filing, FBI Deputy Director Larry Potts sends a
status report to Howard Baker, then a director of Federal Express, and copies the report to
individuals associated with the staffs of Pelosi and Boxer.

[Exhibits, p. 20]. This memo is the
only communiqué produced which reveals contact between Mssrs. Baker and Potts. All
documents initiating the involvement of Mr. Potts are missing, as are the follow-up reports
promised in the memo. These documents are among the documents Petitioner seeks in his
discovery motion.
In short, the investigation of Armstrong’s company began with the polite rebuffing of a
disgruntled former employee by an FBI agent on March 8 and quickly escalated to the Deputy
Director of the FBI sending a status report to a politically-influential director of Federal Express
(but not to any of its corporate officers) and to staff members of Pelosi and Boxer on April 3. It
must have been an exciting 26 days in the San Francisco field office.
Among all the facts proven or suggested by this evidence, the government only questions
whether the “Mr. Baker” referenced in the L.A. Potts’ memo was actually Howard Baker of
Federal Express. Discovery is the precise mechanism for answering such questions.
The government’s failure to disclose this information deprived Armstrong of the
opportunity to argue that his prosecution was politically motivated. See U.S. v. Inzunza, 580
F.3d 894, 910 (9th Cir. 2009) (Finding defense theory that “prosecution was politically

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motivated” entitled government to submit rebuttal argument). A Brady materiality analysis must
consider the cumulative effect of the suppressed evidence. See U.S. v. Blanco, 392 F.3d 382 (9th
Cir. 2004). Under this standard, the political influence both underscores and explains the
government’s reversal on the question of criminal culpability, which found no violation of
federal law in 1988 but commenced a public prosecution 30 months later. This suppression
“undermines confidence in the outcome of the trial,” and would require the reversal of
Armstrong’s conviction. U.S. v. Bagley, 473 U.S. 667, 682 (1985). For this reason, the
Petitioner is entitled to discovery on this topic.
3. Discovery concerning the undisclosed audio tapes.
In opposing Armstrong’s request for discover surrounding the 70 hours of late-disclosed
audio tapes, the government asserts that he has procedurally defaulted his claim. The
government misapprehends the issue. The issue is not whether, on the record before it, the trial
court abused its discretion in denying a continuance to allow review of the tapes. Instead, the
issue is that the record before the trial court included a) the oral assurance of Special Prosecutor
Smetana and b) the sworn affidavit of FBI SA Hatcher, both stating that the audio recordings
were recently discovered and were made by the Dallas FBI office in connection with an
unrelated investigation. [Exhibits, pp. 21-32 at p. 32 as to Smetana; and pp. 33-36 at pp. 35-36
as to Hatcher.]. Both of these statements were lies.
In its opposition to Petitioner’s discovery motion, the government speculates that both the
FBI in San Francisco and U.S. Attorney Yamaguchi “perhaps forgot” about these tapes.
1
While

1
In a latter case, the government and the court were significantly less open-minded on the
topic of late production. During the 2008 case of U.S. v. Roberts, No. CR-07-0100 MHP, the
court and the government were confronted with 18 pages of emails produced the day before trial.
[Exhibits pp. 37-57 at p. 38, 45]. The pages were not withheld by a party but were withheld by a
third party, not before the court, in response to a proper subpoena. [Exhibits p.42]. Unlike the
70 hours of tapes withheld in the instant case, Roberts involved merely 18 pages among

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the government’s generous speculation is admirable, it is not supported by the record. For
example, the lead investigator—Special Agent Hatcher—did not make a minor, forgivable
misstatement under the pressure of a deposition or under intense cross examination. Instead,
after the unpleasantness had already hit the fan in the course of trial—and in the face of defense
motions for a mistrial after more than six weeks of trial—the agent prepared a detailed,
deliberative four-page affidavit where he affirmatively states that the tapes were recently
discovered. [Exhibits, pp. 33-36].
Documents recently delivered to Armstrong pursuant to a FOIA request reveal that both
the oral statement of Smetana and the affidavit of Hatcher were false and the tapes were actually
prepared by the Dallas FBI office at the express authorization of AUSA Yamaguchi in support of
his prosecution of the instant case. [Exhibits, p. 58]. In its opposition, the government argues
that “authorization” means something other its ordinary meaning, points to FBI procedures on
this topic, and disclaims wrongdoing. The Petitioner disagrees, and the requested answer the
questions raised by this evidence. See Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351
(1978)(“[D]iscovery is not limited to issues raised by the pleadings, for discovery itself is
designed to help define and clarify the issues. …Nor is discovery limited to the merits of a case,
for a variety of fact-oriented issues may arise during litigation that are not related to the merits.”)
The Ninth Circuit has explained fraud on the court as follows:
“Fraud upon the court” should, we believe, embrace only that species of fraud
which does or attempts to, defile the court itself, or is a fraud perpetrated by
officers of the court so that the judicial machinery can not perform in the usual
manner its impartial task of adjudging cases that are presented for adjudication.


“terabytes” of information. [Exhibits p. 47]. In Roberts, government counsel requested and
received a continuance, and the judge twice called the conduct “outrageous.” [Exhibits pp.48-
49, 51].

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In re Levander, 180 F.3d 1114, 1120 (9th Cir. 1999)(Recognizing the inherent power of a court
to set aside a judgment when a party deceives the court through perjury, and the perjury was not
discovered until after trial.) See also Weldon v. U.S., 225 F.3d 647 (2nd Cir. 2000)(Sotomayor,
J.)(Explaining that the submission of a false document is one form of fraud on the court.)
Of course, the late disclosure of the subject tapes implicates Brady. See U.S. v. Shaffer,
789 F.2d 682, 690 (9th Cir. 1986)(“If the arguably exculpatory statements of witnesses ... were
in the prosecutor's file and not produced, failure to disclose indicates the ‘tip of an iceberg’ of
evidence that should have been revealed under Brady.”) But the issue for the Special Prosecutor
and the FBI agent was not the content of the tapes; rather, the issue was opposition to a trial
continuance proposed by the defense. [Exhibits, pp. 59-66, trial transcript of hearing discussing
the volume of material and the time needed to review.]
To oppose that continuance, these men lied to the court. Petitioner cannot explain why
they lied, but lie they did. As noted above, this Court has the inherent power to set aside a
judgment obtained through fraud on the court. See In re Levander, 180 F.3d at 1120; In re
Intermagnetics America, Inc., 926 F.2d 912, 916 (9th Cir.1991)(finding fraud on the court
provided an appropriate remedy where an officer of the court made a false declaration.) The trial
court believed the lies and based his denied of a new trial in great part on his belief that the
existence of the tapes was “disclosed just as soon as it was learned.” [Exhibits pp.67-80 at p.
78].
The actions of Smetana and Hatcher were inexcusable and “harmed the integrity” of this
Court’s judicial process. The discovery requested by the Petitioner is not speculative. Indeed,
most of the relevant facts are not in dispute. Because the requested discovery concerns issues at
the heart of the judicial process, good cause exists for that discovery.
4. Discovery concerning collusion with the bankruptcy trustee.

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During trial, U.S. Attorney Yamaguchi argued to the trial court that In re Hamilton Taft
was inapplicable to the instant trial because the government was not a party to the bankruptcy
proceeding. [Exhibits pp. 81-92 at pp. 89]. To the contrary, documents delivered to Armstrong
after trial show a close alignment between the prosecution team and the bankruptcy team, such
that the two are in privity for purposes of collateral estoppel. [Exhibits pp. 93-94, FBI memo
describing a meeting between the lead prosecutor (Yamaguchi), the lead FBI agent (Hatcher),
and counsel for the bankruptcy trustee to “discuss prosecution strategy;”].
“Under collateral estoppel, once a court has decided an issue of fact or law necessary to
its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of
action involving a party to the first case.” Dodd v. Hood River County, 59 F.3d 852, 863 (9th
Cir.1995). Under both California and federal law, collateral estoppel applies where it is
established that
(1) the issue necessarily decided at the previous proceeding is identical to the one
which is sought to be relitigated; (2) the first proceeding ended with a final
judgment on the merits; and (3) the party against whom collateral estoppel is
asserted was a party or in privity with a party at the first proceeding.

Younan v. Caruso, 51 Cal. App. 4th 401, 406-07 (1996). Here, elements one and two are
established. Thus, the remaining inquiry turns on whether the suppressed evidence is probative
of the privity issue, such that the defense was deprived of the opportunity to argue collateral
estoppel.
Privity “is a legal conclusion designating a person so identified in interest with a party to
former litigation that he represents precisely the same right in respect to the subject matter
involved.” U.S. v. Schimmels, 127 F.3d 875, 881(9th Cir. 1997). Parties are in privity when they

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are aligned such that the have the same legal interest. See Ferrell v. West Bend Mut. Ins. Co.,
393 F.3d 786 (8th Cir. 2005).
Here, suppression of FBI documents revealing collusion and cooperation between the
prosecution and the bankruptcy trustee deprived Armstrong of the opportunity to demonstrate
privity and invoke the mandatory strictures of collateral estoppel. The alignment in interests is—
and was—obvious: Armstrong’s conviction would allow the bankruptcy trustee to benefit from
more than $50 million in insurance proceeds triggered by criminal conduct. See Stanford
University Hosp. v. Federal Ins. Co., 1995, WL 912346, *1 (N.D. Cal. 1995)(not designated for
publication)(“Hamilton Taft did carry such a bond with Lloyds, with primary coverage of $20
million and umbrella coverage of $30 million.).
While the “law of the case” argument was a justifiable attempt to fit a square peg into a
round hole, a collateral estoppel theory was fully on point and was mandatory under the facts
suggested by the forgoing evidence. Good cause exists for further discovery on this issue.
SUMMARY
“[W]here specific allegations before the court show reason to believe that the petitioner may, if
the facts are fully developed, be able to demonstrate that he is ... entitled to relief, it is the duty of
the court to provide the necessary facilities and procedures for an adequate inquiry.” Harris v.
Nelson, 394 U.S. 286, 300 (1969); see also RULES GOVERNING § 2255 CASES, Rule 6(a)(adopting
the Harris standard as the test for “good cause.”) Because the Petitioner has made the requisite
showing, he respectfully asks the Court for an order authorizing discovery.
Dated: October 23, 2009.





















REPLY IN SUPPORT OF MOTION TO CONDUCT DISCOVERY IN § 2255 PROCEEDING
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CONNIE C. ARMSTRONG, JR.

8309 Laughing Waters Trail
McKinney Texas, 75070
Telephone: 469-212-2316
e-mail: chip.armstrong@yahoo.com

Petitioner Pro Se


UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

CONNIE C. ARMSTRONG, JR.

Petitioner

v.

UNITED STATES OF AMERICA

Respondent
No. CR 94 276 PJH
EXHIBITS TO
REPLY IN SUPPORT OF MOTION TO
CONDUCT DISCOVERY IN § 2255
PROCEEDING

Petitioner Connie C. Armstrong, Jr. submits these exhibits to his Reply in Support of
Motion to Conduct Discovery in § 2255 Proceeding. The exhibits in this document are
sequentially numbered and correspond to page references in the accompanying Reply.
DATED: October 23, 2009.
Exhibits 1
CHAMBERS
COPY
Exhibits 2
Exhibits 3
fD-302a 11-15-83)
196A-SF-93255
b7C
of FD-302 of On 2/ B/ 9 3 J Page 2 ---- ......1...- • _-----=.-----.;____ _ _
She said that it was apparent to her within the first
twenty-four hours while reviewing Hamilton Taft financial records
that Hamilton Taft was in a cash flow crisis. She said it was
then her job to look at investments and/or loans to determine the
likelihood of these assets generating any She was to
insure that any future capital outflow was ureal investments".
She found out that almost immediately after Maxpharma
purchased Hamilton Taft from cigna corporation that Hamilton Taft
client funds were wire transferred out of Hamilton Taft. These
funds were in the form of notes and were booked at Hamilton Taft
as investments. But she saw no evidence of an attempt to collect
on these notes by Hamilton Taft. She said that some of the
transactions were incredibly complicated.
She said that she had frequent meetings concerning
these notes with Hamilton Taft officers. She discovered that
I I (PHD), Chief Financial Officer,l I
PHO), Director of Operations, I 1President
Comptroller, were the only Hamilton Taft
a knew about the loans by Hamilton Taft which Were
outstanding and uncollected.
She further explained that she recalls ten to fourteen
million dollars in loans had left Hamilton Taft with no payments
returning to Hamilton Taft. She discussed these loans with
I Ibut not with I , All of these loans were
"brokered
ll
through the Maxpharma office in Dallas, Texas. She
discovered that Maxpharma officers would telephoner 1at
Hamilton Taft and instruct her to wire money to
Dallas a9d then the fact.Maxpharma would then send the
b7C notes toL Jln San FranC1SCO.
She felt that the officers at Hamilton Taft were
protective I oftenl accuse
I IOf raiding the funds of Hamilton Taft.1 )was not
very helpful in her audit. She felt that this was because he was
the person who actually wire transferred the funds from Hamilton
alIas. She understood the process being that (FNU)
of Maxpharma in Dallas would
o transfer un s an c::: Iwould then instruct
r---...... the monies. I a director, often
got irate at her inquiries regarding Hamilton Taft loans. A day
or two after she started working at Hamilton Taft she discovered
Exhibits 4
FD-302u (Re.v 11-15-83)
196A-SP-93255
ContinuatIOn of FD-302 of
•On __2-:,./_
8
....:;/_
9
_
3
• PAgo __3__
J7C
a "funny" transaction where two to three million dollars of
Hamilton Taft funds was wired to Dallas, Texas. She understood
thatl working on some deal to raise funds.
She was told that these funds were supposedly to be used to
"recapitalize" Hamil ton Taft. I linstructed her that the
details of the transaction was none of her business
l
but she
believes that the funds went to either Amerimac Company in
California or to Gulftex, a real estate business in Texas.
I that from her examination of Hamilton
Taft financ1ai records she discovered that all the funds sent out
for these loans had to be dedicated Hamilton Taft client funds.
She said that' lhad to know that
Hamilton Taft client funds were being used to finance these
investments. She understood thatl lactually assisted in
the creation of the notes to Hamilton Taft. One of these loans
in 1988 in the amount of approximately $200,000.00 was to a
CONNIE CHIP ARMSTRONG, JR. business in Dallas, Texas by the name
of Dresdner Corporation (PHD).
She said thatl 1 (PHO) I Sales Manager, and
Vice Presldent of dperations, at Hamilton
Taft were both concerned and upset at the news of the loans.
These loans violated Hamilton Taft's written cash management
policy which stated that Hamilton Taft can onJY invest client
funds in safe overnight type of investments. I I said that
she recalls that most of the notes for the 1988 loans were for a
90 or 180 day period. She stated that in or around March 1989
I Iwas fired byl I resigned.
She said that Arthur Anderson C.P.A. firm withdrew from
the Hamilton Taft audit a couple of days after they gave Hamilton
Taft their appointment letter. At that point she said that
management at Hamilton Taft felt that Hamilton Taft did not have
enough interest money to pay Arthur Anderson. Therefore,
Hamilton Taft did not receive any audited financial statements to
give the increasingly concerned Hamilton Taft clients. EDS one
of Hamilton Taft's largest clients was requesting audited
financial statements.
I 'said that she started taking legal action on
the debtors at the notes to Hamilton Taft. She was taking
aggressive collection felt that she could have
collected on the Amerimac'L----Jandl rates if not for
Exhibits 5
FD-30la (Rev 11-15-83)
196A-SF-93255
Conunuullon of FD-302 of
_ ~ ~ ~ ! ! ! ! ! ! ! ! ! ! ! ~ ,---- , On __2-.;.1_
8
.....;1_9_ 3 • Pngc: _4_
the ARMSTRONG takeover of Hamilton Taft in March of 1989. She
said that the I ~ and Amerimac notes totaled approximately $6
million dollars. She personally told ARMSTRONG at the Petit and
Martin law offices about the notes outstanding and her collection
efforts at Hamilton Taft. She told him that he should be able to
collect on some of these loans. She said that he did not seem
interested.
She said that in March of 19891 I concluded that
he was not able to recapitalize Hamilton Taft and that Hamilton
Taft would have to file for Chapter Seven bankruptcy protection
b7C so he conceded Hamilton Taft to ARMSTRONG 4 She recalls a $20
million dollar figure being used at Hamilton Taft around the time
ARMSTRONG took control of Hamilton Taft. She said that the $20
million dollars represented the negative capital and the negative
cash flow at Hamilton Taft. She said that she felt at that time
that this much capital would be necessary to keep Hamilton Taft a
viable company. The financial condition of Hamilton Taft was
constantly being communicated to ARMSTRONG and his attorneys
during the legal actions. I 'said that she sat through
all of the depositions during ARMSTRONG's legal action to gain
control of Hamilton Taft.
She said that she understood that ARMSTRONG's plan for
Hamilton Taft was to recapitalize Hamilton Taft by investing $20
million dollars, rehirel Ito satisfy Wells Fargo Bank and
expand Hamilton Taft's customer base to infuse more revenue into
Hamilton Taft.
Exhibits 6
Memorandum
To
. SAN FRANCISCO (196A-SF-93255) (P) Date 3/8/91
From
sAJ _
(SQ' 5) b7C
Subject
CHIP ARMSTRONG, Jr., dba
Hamilton Taft and Company
1 Market Plaza
Spear street Tower
San Francisco, California
FBW; MFi Tax Fraud;
00: SAN FRANCISCO
The purpose of this memo is tO'document events that
since 6bruary 13 I 1 99 whi,?h is the date that
last interviewed by the writer. On that
__________ a numbs ocuments to iter which
have been disse e y he writer to or the IRS
in San Francisco, telephone number 556-6850. It should:
also be noted. that a copy of these documents along with a
of the writer's review of San Francisco file 196A-2868 has been
prepared and disseminated to AUSA MICHAEL YAMAGUCHI at 556-1328.
A copy of this summary is a matter of record under a separate
communication which is a part of this file.
Due to the fact that AUSA YAMAGUCHI was on annual leave
and did not return to his office until March 4, and/or 5, 1991 no
overt investigation was undertaken. This matter was referred to
Mr. Y GUCHI because of his revious referral w' he handled
re ardin Haml on Taft in which he subse entl f r-
lJlck 0] prosecution.. This matter was investigated by S - -7
I _it was handled under--SF 196A-2868 and was closed
August, 1988.
with regard to information supplied byl I writer
was reluctant to initiate any overt investigation for fear that-
there Eotential liability attached wherein the
£.QB1dJ2e accused.Qf initiatipg the downfall ,of
captioned company bvl'the mere fact that it was making overt
inquiries. [ . ' ,has provided detailed information which,
of this date, has'been unable to be thoroughly corroborated.
Progress is being made to effect such corroDorat2on. .
I. expressed apprehension in his mind regarding
the "extensive
n
time-it was taking for the government to decide
Whether or not to initiate an investigation and to effect some
criminal process. He was told that the government ha_g._:t.Q.........
victim before any process would be forthcoming. He was further
)7C
Memorandum
To
From
Subject
SAN FRANCISCO (196A-SF-93255) (P)
sAJ ..... ___ -----1 (SQ' 5) b7C
CHIP ARMSTRONG, Jr., dba
Hamilton Taft and Company
1 Market Plaza
Spear Street Tower
San Francisco, California
FBW; MFi Tax Fraud;
00: SAN FRANCISCO
Date 3/8/91
The purpose of this_memo is to'document events that
since 13 I which is the date that
________ last interviewed by the writer. On that
___________ provided a numbe ocuments to iter which
have been disse e y he writer to qA or the IRS
in San Francisco, telephone number 556-6850. It should:
also be noted. that a copy of these documents along with a summqry
of the writer's review of San Francisco file 196A-2868 has been
prepared and disseminated to AUSA MICHAEL YAMAGUCHI at 556-1328.
A copy of this summary is a matter of record under a separate
communication which is a part of this file.
Due to the fact that AUSA YAMAGUCHI was on annual leave
and did not return to his office until March 4, and/or 5, 1991 no
overt investigation was undertaken. This matter was referred to
Mr. YAMAGUCHI because of his previous referral which he handled
HamHton Taft -in which he subsequently QIilCl j.n:p for
l.sck OJ pros
e
cntiOIL This matter was investigated by S . -- -7
I _it was handled under--SF 196A-2868 and was closed
August, 1988.
with regard to information supplied byl I writer
was reluctant to initiate any overt investigation for fear that-
there potential liagility qttached wherein the
£QB1d1;!e accused..Q.t initiatipg the pownfall ,of
captioned COmpany byjthe mere fact that it was making overt
inquiries. I .- .has provided detailed informat.ion which I
of this date, has· been unable to be thoroughly corroborated.
Progress is being made to effect such coriOEorat2on.
I . I expressed apprehension in his mind regarding
the "extensive" time-it was taking for the government to decide
whether or not to initiate an investigation and to effect some
criminal process. He was tolc:1 tbat the government haJl._:t.Q ......
victim before any process would be forthcoming. He was further
)7C
Memorandum
To
From
Subject
SAN FRANCISCO (196A-SF-93255) (P)
sAJ ..... ___ -----1 (SQ' 5) b7C
CHIP ARMSTRONG, Jr., dba
Hamilton Taft and Company
1 Market Plaza
Spear Street Tower
San Francisco, California
FBW; MFi Tax Fraud;
00: SAN FRANCISCO
Date 3/8/91
The purpose of this_memo is to'document events that
since 13 I which is the date that
________ last interviewed by the writer. On that
___________ provided a numbe ocuments to iter which
have been disse e y he writer to qA or the IRS
in San Francisco, telephone number 556-6850. It should:
also be noted. that a copy of these documents along with a summqry
of the writer's review of San Francisco file 196A-2868 has been
prepared and disseminated to AUSA MICHAEL YAMAGUCHI at 556-1328.
A copy of this summary is a matter of record under a separate
communication which is a part of this file.
Due to the fact that AUSA YAMAGUCHI was on annual leave
and did not return to his office until March 4, and/or 5, 1991 no
overt investigation was undertaken. This matter was referred to
Mr. YAMAGUCHI because of his previous referral which he handled
HamHton Taft -in which he subsequently QIilCl j.n:p for
l.sck OJ pros
e
cntiOIL This matter was investigated by S . -- -7
I _it was handled under--SF 196A-2868 and was closed
August, 1988.
with regard to information supplied byl I writer
was reluctant to initiate any overt investigation for fear that-
there potential liagility qttached wherein the
£QB1d1;!e accused..Q.t initiatipg the pownfall ,of
captioned COmpany byjthe mere fact that it was making overt
inquiries. I .- .has provided detailed informat.ion which I
of this date, has· been unable to be thoroughly corroborated.
Progress is being made to effect such coriOEorat2on.
I . I expressed apprehension in his mind regarding
the "extensive" time-it was taking for the government to decide
whether or not to initiate an investigation and to effect some
criminal process. He was tolc:1 tbat the government haJl._:t.Q ......
victim before any process would be forthcoming. He was further
Exhibits 7
196A-SF-93255
PKM/sgc
advised on more than one occasion by the writer of the potential
civil liability which miggt attach to the revelation to the
general public that the FBI was conducting or maybe conducting an
investigation into certain alleged criminal activities on the
part of Hamilton Taft. .
Nonetheless, on February 1-1, lsaw fit to
contact the congressional offices here in San Francisco of
Congress persons NANCY PELOSI and BARBARA BOXER.
on resswoman PELOSI's office to whom
spoke ave arne of an investi ative re orter e
consider contacting.. with infOrmat.iQD. On
the as well as lof the Cln
- receiving telephone calls from an attorney at the Department of
Justice making inquiry as to the FBI and/or IRS' connection if
any with Hamilton Taft.
On February 13, 1991, during the interview __
conducted by the writer, he was again questioned as to the reason
for making calls to the aforementioned conaressional offices. He
stated that he was concerned about I
Ifollowing his resignation from Hamilton
It should be noted that I l
during this interview on February 13, 1991 re-iterated that fact.-
thatl I
1 I He was J----
again reminded of potential civil liability problems that might
gn?ue from the publicatiQD Qf the of the FBI
with to-Jiamilton
On Wednesday, March 6 1991, the writer received
telephone call from SAJ ; JIRS CID who advised that he
had been called by a M-. RALPH :IN
W
, an investigative reporter
for the Wall street Journal here in San Francisco. The purpose
of KING's call to SWAIN was to confirm that the IRS was
regarding Hamilton Taft. On the
morning of March 6, 1991, the writer reviewed message slips that
had arrived on Tuesday, March 5, 1991, the writer having been on
sick leave that day and one of, them was from RALPH KING of the
Wall street Journal. The writer did not return KING's phone
call, however, in to a page, for a telephone calIon
the afternoon call of 1991, the writer became connected
to Mr. KING of the Wall street,Journal. The usual inquiries were
made and the usual response, is we can neither confirm
and/or deny the existence of any investigation was provided to
Mr. KING who seemed perturbed £y thi§
2
b7C
196A-SF-93255
PKM/sgc
advised on more than one occasion by the writer of the potential
civil !iability which attach to the revelation to the
general public that the FBI was conducting or maybe conducting an
investigation into certain alleged criminal activities on tne
part of Hamilton Taft. '
Nonetheless, on February ]Ll, I saw fit to
contact the congressional offices here in San Francisco of
congress persons NANCY PELOSI and BARBARA BOXER.
on resswoman PELOSI/s office to whom
spoke ave arne of an investi ative
consider CQDtactjng.. with infdrmat-ion. Qn Fepruar}!'_12.';
the as wall as lof the eIn
receiving telephone calls from an attorney at the Department of
Justice making jnquiry as to the FBI and/or IRS' connection if
any with Hamilton Taft.
On February 13, 1991, during the interview ________ _
conducted by the writer, he was again questioned as to the reason
for making calls to the aforementioned oonaressional offices. He
stated that he was concerned about I
Ifollowing his resignation from Hamilton
It should be noted that I I
during this interview on February 13, 1991 re-iterated that fact
that! !
1 I He was J--'
again reminded of potential civil liability problems tnat might
£n?ue from the publicatigo Qf the of the FBI
with
On Wednesday, March 6 1991, the writer received a
telephone call from SAJ ; JIRS CID who advised that he
had been called by a M-. RALPH an investigative reporter
for the Wall street Journal here in San Francisco. The purpose
of KING's call to SWAIN was to confirm that the IRS was
regarding Hamilton Taft. On the
morning of March 6, 1991, the writer reviewed message slips that
had arrived on Tuesday, March 5, 1991, the writer having been on
sick leave that day and one of, them was from RALPH KING of the
Wall street Journal. The writer did not return KING's phone
call, however, in to a page, for a telephone calIon
the afternoon call of 1991, the writer became connected
to Mr. KING of the Wall street Journal. The usual inquiries were
made and the usual response, is we can neither confirm
and/or deny the existence of any investigation was provided to
Mr. KING who seemed perturped £y
2
b7C
196A-SF-93255
PKM/sgc
advised on more than one occasion by the writer of the potential
civil !iability which attach to the revelation to the
general public that the FBI was conducting or maybe conducting an
investigation into certain alleged criminal activities on tne
part of Hamilton Taft. '
Nonetheless, on February ]Ll, I saw fit to
contact the congressional offices here in San Francisco of
congress persons NANCY PELOSI and BARBARA BOXER.
on resswoman PELOSI/s office to whom
spoke ave arne of an investi ative
consider CQDtactjng.. with infdrmat-ion. Qn Fepruar}!'_12.';
the as wall as lof the eIn
receiving telephone calls from an attorney at the Department of
Justice making jnquiry as to the FBI and/or IRS' connection if
any with Hamilton Taft.
On February 13, 1991, during the interview ________ _
conducted by the writer, he was again questioned as to the reason
for making calls to the aforementioned oonaressional offices. He
stated that he was concerned about I
Ifollowing his resignation from Hamilton
It should be noted that I I
during this interview on February 13, 1991 re-iterated that fact
that! !
1 I He was J--'
again reminded of potential civil liability problems tnat might
£n?ue from the publicatigo Qf the of the FBI
with
On Wednesday, March 6 1991, the writer received a
telephone call from SAJ ; JIRS CID who advised that he
had been called by a M-. RALPH an investigative reporter
for the Wall street Journal here in San Francisco. The purpose
of KING's call to SWAIN was to confirm that the IRS was
regarding Hamilton Taft. On the
morning of March 6, 1991, the writer reviewed message slips that
had arrived on Tuesday, March 5, 1991, the writer having been on
sick leave that day and one of, them was from RALPH KING of the
Wall street Journal. The writer did not return KING's phone
call, however, in to a page, for a telephone calIon
the afternoon call of 1991, the writer became connected
to Mr. KING of the Wall street Journal. The usual inquiries were
made and the usual response, is we can neither confirm
and/or deny the existence of any investigation was provided to
Mr. KING who seemed perturped £y
2
b7C
Exhibits 8
196A-SF-93255
PKMjsgc
On March 6, 1991,1 r head of corporate
security of Sun Micro Systems Inc. at 2550 Garcia Ave., Mountain
View, California 94043, telephone number (415) 336-0496 was
called by the writer in response to call that he had made to our
office on March 5, 1991.
that his office had
been contacted by was
accompanied by an attorneJ one (ph) who advised that
the purpose ofl . _contac lcro Systems was to
advise Sun Micro Systems that it had been the victim of a fraud
perpetrated by Hamilton Taft' on Sun -.Micro Systems and numerous
other corporate clients of Hamilton Taft. I
the writer that he would fax certain documents up to San
Francisco at the writer's 5uggestiqn. These documents· included a
copy of· the service agreement thal: exists Sun .Mic1;"o .
Systems and Hamil ton Taft dated (October 1, __.1987 as well as copies
of certain Federal tax forms whicn had been executed by employees
of Hamilton Taft Company. lalso advised the writer
that I rad of his own volition convened a meeting of _ "
several of the corporate representatives who he had contacted _'J_'- .. '/ .Jr
presumably in the first week of March telling these corporations
who are current and/or former clients of Hamilton Taft, that they
had in fact been ,defrauded by Hamilton Taft. Sun Micro-Systems
reluctantly agreed to "host" this meeting which was to take place .I"'"
during the afternoon of March 8, 1991 at Sun Micro System's ';
offices in Mountain View. ,i' " '
.' , ..
nf
/, :':' ;
Of the mornin: of March 7, H91, I I,throtgh'
his associatel l, an investigator for the
of un Micro Systems, facsimiled oj
documents to the writer. The most salient point of
documents was a letter to Sun Micro Systems dated February 13, "', ,'.' '
1991 from the ,.IRS in-- Fresno. The letter refers to a particular ,/' ;) >')'
tax identification number utilized by' Sun Micro Systems and .
references a tax period ending september 30 I 1990.'- The letter
}
goes on to thank tax payer (Sun Micro Systems) for its reply t ';
dated January 25, 1991 and its payment of $260,784.25 in penaltyJ;'.....
fees and for its late deposit of ($5,215, The -
signifiri:lD:e Of ::mmunication is that Sun Micro Systems .,' ..
throughLJhas represented, as of March 7, 1991, that
it did sen t e appropriate money that is $5,215,684.86
to Hamilton Taft via a wire transfer in order to pay employment
tax obligations do and owing the IRS for the tax period ended
September 30
r
1990. Per an agreement of which the writer is in
receipt, that is, the service agreement between Hamilton Taft and
Sun Micro System?, Hamilton Taft is responsible for the
payment It is an inference drawn by Sun
3
196A-SF-93255
PKM/sgc
On March 6, 1991,1 r head of corporate
security of Sun Micro Systems Inc. at 2550 Garcia Ave., Mountain
View, California 94043
1
telephone number (415) 336-0496 was
called by the writer in response to call that he had made to our
office on March 5, 1991.
office had
been contacted by was
accompanied by an attorney one (ph) who advised that
the purpose of I . _ contac J.cro Systems was to
advise Sun Micro Systems that it had been tBe victim of a fraud
perpetrated by Hamilton Taft' on Sun .. Micro systems and numerous
other corporate clients of Hamilton Taft. I 'advised
the writer that he would fax certain documents up to San
Francisco at the writer's These documents'included a .
copy of the service agreement that( exists Sun . ..
systems and Hamil ton Taft dated (October 1, .. 1981 as well as copies
of certain Federal tax forms whicn had been executed by employees
of Hamilton Taft Company. I I also advised the writer
that I pad of his own volition convened a meeting of .. 0,
several of the corporate representatives who he had contacted
presumably in the first week of March telling these corporations
who are current and/or former clients of Hamilton Taft, that they
had in fact been defrauded by Hamilton Taft. Sun Micro-Systems
reluctantly agreed to "host" this meeting which was to take place .ft"'
during the afternoon of March 8, 1991 at Sun Micro System's "
offices in Mountain View. ,1' "
,,[)if/,
Of the mornin: of March 7, 1991, I Ithrobgh .....
his associatel I, an investigator for the COJ;.porate
Security-. Department of un Micro Systems, facsirniled 16/pages 0,£
documents to the writer. The most salient point of these
documents was a letter to Sun Micro systems dated February 13,
1991 from the ,.IRS in-- Fresno.. The let}:er refers to a particular
tax identification number utilized by Sun Micro Systems and .
references a tax period ending september 30, 1990.; The letter
}
goes on to thank tax payer (Sun Micro Systems) for its reply t·
if
'
dated January 25, 1991 and its payment of $260,784.25 in penaltyJ,
fees and for its late deposit of ($5,215, 684.86). The "
Signifirn:e of is that Sun Micro Systems ... '
through__has represented, as of March 7, 1991, that
it did 1nact sen t e appropriate money that is $5,215,684.86
to Hamilton Taft via a wire transfer in order to pay employment
tax obligations do and owing the IRS for the tax period ended
September 30
r
1990. Per an agreement of which the writer is in
receipt, that is, the service agreement between Hamilton Taft and
Sun Micro Hamilton Taft is responsible for the
payment It is an inference drawn by Sun
3
196A-SF-93255
PKM/sgc
On March 6, 1991,1 r head of corporate
security of Sun Micro Systems Inc. at 2550 Garcia Ave., Mountain
View, California 94043
1
telephone number (415) 336-0496 was
called by the writer in response to call that he had made to our
office on March 5, 1991.
office had
been contacted by was
accompanied by an attorney one (ph) who advised that
the purpose of I . _ contac J.cro Systems was to
advise Sun Micro Systems that it had been tBe victim of a fraud
perpetrated by Hamilton Taft' on Sun .. Micro systems and numerous
other corporate clients of Hamilton Taft. I 'advised
the writer that he would fax certain documents up to San
Francisco at the writer's These documents'included a .
copy of the service agreement that( exists Sun . ..
systems and Hamil ton Taft dated (October 1, .. 1981 as well as copies
of certain Federal tax forms whicn had been executed by employees
of Hamilton Taft Company. I I also advised the writer
that I pad of his own volition convened a meeting of .. 0,
several of the corporate representatives who he had contacted
presumably in the first week of March telling these corporations
who are current and/or former clients of Hamilton Taft, that they
had in fact been defrauded by Hamilton Taft. Sun Micro-Systems
reluctantly agreed to "host" this meeting which was to take place .ft"'
during the afternoon of March 8, 1991 at Sun Micro System's "
offices in Mountain View. ,1' "
,,[)if/,
Of the mornin: of March 7, 1991, I Ithrobgh .....
his associatel I, an investigator for the COJ;.porate
Security-. Department of un Micro Systems, facsirniled 16/pages 0,£
documents to the writer. The most salient point of these
documents was a letter to Sun Micro systems dated February 13,
1991 from the ,.IRS in-- Fresno.. The let}:er refers to a particular
tax identification number utilized by Sun Micro Systems and .
references a tax period ending september 30, 1990.; The letter
}
goes on to thank tax payer (Sun Micro Systems) for its reply t·
if
'
dated January 25, 1991 and its payment of $260,784.25 in penaltyJ,
fees and for its late deposit of ($5,215, 684.86). The "
Signifirn:e of is that Sun Micro Systems ... '
through__has represented, as of March 7, 1991, that
it did 1nact sen t e appropriate money that is $5,215,684.86
to Hamilton Taft via a wire transfer in order to pay employment
tax obligations do and owing the IRS for the tax period ended
September 30
r
1990. Per an agreement of which the writer is in
receipt, that is, the service agreement between Hamilton Taft and
Sun Micro Hamilton Taft is responsible for the
payment It is an inference drawn by Sun
3
Exhibits 9
b7C
196A-SF-93255
PKM/sgc
Micro Systems personnel that this document tends to corroborate
what I I was alleging in his representations to the
government. '
On the afternoon of March 7, 1991, AUSA YAMAGUCHI was
personally visited by the writer and a brief update was provided
to him of events that have taken place. On March 8, 1991, copies
of the aforementioned facsimiles were provided to AUSA YAMAGUCHI
fore his review. On March 8, 1991, Mr. YAMAGUCHI suggested to
the writer ,that efforts continue to accumulate enough probable
cause to cause the issuance of a search warrant for the offices
at Hamilton Taft at the earliest possible date.
The following corporations have been contacted by ]
I land/or his attorney and that they' have been the
victims of fraud perpetrated on them by Hamilton Taft. These
corporations are Costal Savings Bank, Sun Micro Systems, American
West Airlines, and one or two chemical companies located at the
east coast. In addition, I I advised writer that he
has been contacted by of Lloyds of London
Insurance company with respect to Hamilton Taft. It
, __ "_9! .. J)}.e
__ systems, ,on the .afternoon
at-March 8, 1991.
San Francisco at San Francisco, California:
Investigation is continuing.
4*
196A-SF-93255
PKM/sgc
Micro Systems personnel that this document tends to corroborate
what I I was alleging in his representations to the
government.
On the afternoon of March 7, 1991, AUSA YAMAGUCHI was
personally visited by the writer and a brief update was provided
to him of events that have taken place. On March 8, 1991, copies
of the aforementioned facsimiles were provided to AUSA YAMAGUCHI
fore his review. On March 8, 1991, Mr. YAMAGUCHI suggested to
the writer -that efforts continue to accumulate enough probable
cause to cause the issuance of a search warrant for the offices
b7C at Hamilton Taft at the earliest possible date.
The following corporations have been contacted by ]
I land/or his attorney and that they' have been the
victims of fraud perpetrated on them by Hamilton Taft. These
corporations are costal Savings Bank, Sun Micro Systems, American
West Airlines, and one or two chemical companies located at the
east coast. In addition, I I advised writer that he
has been contacted by of Lloyds of London
Insurance company with respect to Hamilton Taft. It is "'y,nkno..wIl
, ___ "_9! .. J)},e
__ Systems ,on the afternoon
8, 1991.
San Francisco at San Francisco, California:
Investigation is continuing.
4*
196A-SF-93255
PKM/sgc
Micro Systems personnel that this document tends to corroborate
what I I was alleging in his representations to the
government.
On the afternoon of March 7, 1991, AUSA YAMAGUCHI was
personally visited by the writer and a brief update was provided
to him of events that have taken place. On March 8, 1991, copies
of the aforementioned facsimiles were provided to AUSA YAMAGUCHI
fore his review. On March 8, 1991, Mr. YAMAGUCHI suggested to
the writer -that efforts continue to accumulate enough probable
cause to cause the issuance of a search warrant for the offices
b7C at Hamilton Taft at the earliest possible date.
The following corporations have been contacted by ]
I land/or his attorney and that they' have been the
victims of fraud perpetrated on them by Hamilton Taft. These
corporations are costal Savings Bank, Sun Micro Systems, American
West Airlines, and one or two chemical companies located at the
east coast. In addition, I I advised writer that he
has been contacted by of Lloyds of London
Insurance company with respect to Hamilton Taft. It is "'y,nkno..wIl
, ___ "_9! .. J)},e
__ Systems ,on the afternoon
8, 1991.
San Francisco at San Francisco, California:
Investigation is continuing.
4*
Exhibits 10
1
2
3
.4
5
6
7
8
9
10
Z 11
0
Z
Z
...,.
12
:ri
~
~
U l- ~
13
_ f.Il Q\
~ ~ ~
~ t; ~ 0
7 ~ ~ ~
14.
-b
:c
15
=-
!!!
.... z. ~ :::
~ 0-
16 -u
:::l ~ z
~ - <
~ c :
Ll.
17
0
z
V"l
-<
Z
U)
0
18
~
:0
19
20
21
22
23
24
25
26
27
28
GILMORE F. DIEKMANN
PATRICIA H. CULLISON
BRONSON, BRONSON & McKINNON
505 Montgomery street
San Francisco, California 94111-2514
Telephone: (415) 986-4200
Attorneys for Plaintiff
FEDERAL EXPRESS CORPORATION
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
FEDERAL EXPRESS CORPORATION,
Plaintiff,
v.
HAMILTON TAFT & COMPANY,
Defendant.
COMPLAINT FOR INJUNCTIVE
RELIEF AND FOR DAMAGES
FOR BREACH OF CONTRACT,
FOR BREACH OF FIDUCIARY
DUTY, AND FOR BREACH OF
THE AGENCY RELATIONSHIP
DEMAND FOR JURy TRIAL
Plaintiff, FEDERAL EXPRESS CORPORATION, hereby alleges as
follows:
I.
PARTIES
1.. Plaintiff FEDERAL EXPRESS CORPORATION ("Federal
Express
ll
) is a corporation organized and existing 'under and by
virtue of the laws of the state of Delaware, and maintains its
principal place of business in Memphis, Tennessee.
2. Plaintiff is informed and believes and thereon alleges
that Defendant HAMILTON TAFT & COMPANY (IIHamilton Taft
tl
) is a
corporation organized and existing under and by virtue of the
laws of the State of California and maintains its principal place
COMPLAINT FOR INJUNCTIVE RELIEF
Exhibits 11
1
2
3
A
5
6
7
8
9
10
Z 11
.......
'.....J
Z
Z
..". 12
;:;;
~
~
':.J
I- :;
13 l.I.l CI
~
t.!J <:
.::=.-
:d
i-Z
~ ~ 8
lA.
~ ~ t;;
.;,
'CI
15
:>
""
z; ...J i
~
o ~
16
=:::::i
:::E U
z;
"" < ~ Q ct
Z "" L:.
17
0
z
V'l
.(
III
Z
0 18
c:::
~
19
20
21
22
23
24
25
26
27
28
of business in Texas.
II.
JURISDICTION AND VENUE
3. This is an action for breach of contract, breach of
fiduciary duty, and breach of agency relationship arising, inter
alia, under the California Civil Code section 2322 et seg. The
amount in controversy exceeds the sum or value of Fifty Thousand
Dollars ($50,000) exclusive of interest and costs. The
jurisdiction of this Court is invoked pursuant to 28 U.S.C.
section 1332 .
4 . Venue properly laid in this Court pursuant to 28
u.s.c. section 1391(a), in that the claims involved arose in this
district.
III.
GENERAL ALLEGATIONS
Count One
(Breach of Contract)
5. Plaintiff realleges and incorporates by reference as
though fully set forth herein each and every allegation contained
in paragraphs 1 through 4 of this Complaint.
6. In December of 1989 Federal Express entered into a
payroll tax service contract with Hamilton Taft. Pursuant to
this agreement, Federal Express would wire transfer its employee
payroll taxes to Hamilton Taft. Under the contract Hamilton Taft
was then obligated to make disbursements to the appropriate
COMPLAINT FOR INJUNCTIVE RELIEF
2
Exhibits 12
z
o
z
z
-or
."
N
t..J !;j
:2 '<!
;1 f: Z
5 g
..,

C\
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
taxing authorities on behalf of Federal Express including the
IRS, and state and local taxing agencies. As consideration for
performing this service, Hamilton Taft had the use of Federal
Express' money from the time of its receipt until the time of its
disbursement to the appropriate taxing authority.
7 • Federal Express has performed all of its obligations
under the contract by promptly delivering to Hamilton Taft all
appropriate payroll tax summary reports and payroll tax funds.
Plaintiff has fully performed all contractual obligations except
where prevented by breach of defendant.
8. Plaintiff is informed and and thereon alleges
that defendant has breached its contractual obligations by,
rather than paying plaintiff's payroll taxes with the money
transferred for that purpose, the money would be held for an
additional 30 to 90 days. Plaintiff is informed and believes and
thereon alleges that in some cases defendant then used a
different client's incoming funds to pay Federal Express taxes
and any federal or state taxing agency penalties for late
payments.
9. Plaintiff is informed and believes that in other cases,
Federal Express taxes simply were not paid, and penalties may be
accruing.
10. Defendant has further breached the contract by not
providing original tax receipts evidencing the tax payments as
requested by plaintiff.
11. As a result of defendant's breach of contract plaintiff
has been damaged in excess of In order to discovery the
true extent of its damages plaintiff is in need of information
COMPLAINT FOR INJUNCTIVE RELIEF
3
Exhibits 13
1
2
3
A-
5
6
7
8
9
10
z 11
0
z
Z
"'!' 12
:;;


;J f-
13 I.Il a\
Ul <

r: z:
III :::: 0
14
-
>- C 0
y :.:.: C;
..0
:c
15
c:">

Z ..J :z
:.n
::!
0-
16 - u
co
.t!. Z.
..... .0(
- 0 0::
Z ..... ;.:..
17
0
z
"J")
<{
(,f.J
Z
0 18
::::::
;::0
19
20
21
22
23
24
25
26
27
28
from the defendant regarding payroll taxes paid and money
currently owed to the appropriate taxing Such
information is within the exclusive control of the defendant and
has not been made available to the plaintiff as requested.
count Two
(Breach of Fiduciary Duty)
12. Plaintiff realleges and incorporates by reference as
though fully set forth herein each and every allegation contained
in paragraphs 1 through 11 of this Complaint.
13. Plaintiff is the trustee of the tax funds withheld from
the wages of its employee. Plaintiff, as trustee of these funds,
is a fiduciary of the withheld funds for the purpose of paying
the required amounts to the united states, and state and local
agencies.
14. As custodian of these funds, defendant owed a fiduciary
duty to the plaintiff to transmit these funds to the appropriate
taxing agency promptly and in the full amount. Defendant also
had a fiduciary duty to invest these funds as a reasonably
prudent investor investing his own money would have done so as
not to jeopardize the principle. On information and belief
plaintiff alleges that by investing in high risk non-liquid
loans, defendant has breached this fiduciary duty.
Count Three
(Breach of Agency Relationship)
15. Plaintiff hereby realleges and incorporates by
reference as though fully set forth herein paragraphs 1 through
COMPLAINT FOR INJUNCTIVE RELIEF
4
Exhibits 14
1
2
3
.4
5
6
7
8
9
10
Z 11
0
Z
Z
"'""
12
~ ~
U
!- ~
13 Ul Q\
:E w -<
a:: _
~ t; ~ 0
14
Z ~ &: ~
,-
~ ~
<0
aO
15
C'I
U"\
2
z ~ 3
a U
16
~
::::E z
• C3 -<
Z U"\ c::
I:-
17
0
z
V) -<
Z
V)
0 18
r.:::
:::Q
19
20
2]
22
23
24
25
26
27
28
11 of this Complaint.
16. Pursuant to the written payroll tax service contract
entered into between the defendant and plaintiff, defendant
became the agent of plaintiff.
17. Defendant consented to the creation of this
relationship by agreeing to accept payroll tax money from the
plaintiff and deposit such money on behalf of the plaintiff in
the appropriate amounts and manner on or before the statutory
deadlines as herein alleged.
18. In consideration of i ~ s entering into an agency
relationship with the plaintiff, defendant had the use of
plaintiff's employee payroll tax funds from the time received by
defendant until the time of disbursement to the appropriate
taxing authorities.
19. Pursuant to its agency relationship with the plaintiff,
defendant owed a duty of loyalty to the plaintiff. This duty of
loyalty required defendant to pay the payroll tax funds owed by
the plaintiff to the appropriate taxing authorities in a timely
manner, and to refrain from administering the payroll tax funds
in a manner harmful to the interest of the plaintiff, includIng
imprudent investments, or investments which might expose the
plaintiff to taxing authority liability.
20. Also pursuant to its agency relationship with the
plaintiff, defendant owed a duty to disclose promptly upon demand
by the plaintiff all documents, including tax receipts, relating
to the defendant's administration of the plaintiff's payroll
account.
21. Defendant has breached its agency relationship by
COMPLAINT FOR INJUNCTIVE RELIEF
5
Exhibits 15
1
failing and refusing to render to Federal Express, upon its
2
demand, an accounting of its fund.
3
22. Defendant·s breach of its agency relationship has
4
caused plaintiff damages in an amount to be specifically
5
ascertained at trial but which is presently alleged to be in
6
excess of $50,000.
7
8
Count Four
9
(Injunctive Relief)
10
23. Plaintiff hereby realleges and incorporates by
Z 11
0
reference as though fully set forth herein paragraphs 1 through
Z
z
~
12
22 of this complaint.
u ~
~ ~
13
24. Unless defendant is restrained by appropriate
~ ~
0
14
>-
c
Z
,... M
"<:T
injunctive relief herein from destroying or otherwise disposing
:is
15
0'1
~
z v ~
~ 0 ~
16
~ ~ ~
.r'\ <t
Z ~ ~ fl:
17
0
z
IJ')
<t
III
of tax receipts and other information in its control documenting
the use and transfer of plaintiff's employee tax funds, and
unless defendant is restrained by appropriate injunctive relief
Z
0 18
c::!
from continuing to operate the "ponzi scheme", and unless
~
19
defendant is ordered to immediately produce tax receipts and/or
20
other information regarding the transfer and use of funds,
21
plaintiff will suffer immediate and irreparable injury for which
22
there is no adequate remedy at law herein.
23
WHEREFORE, plaintiff prays for judgment against defendant as
24
follows:
25
1. For preliminary injunctive relief restraining or
26
otherwise preventing defendant from destroying tax receipts
27
and/or other information regarding the transfer of payment of
28
plaintiff's payroll taxes as alleged, pending trial;
COMPLAINT FOR INJUNCTIVE RELIEF
6
Exhibits 16
1
2
3
5
6
7
8
9
10
11
12
13
1.4
15
16
17
18
19
20
21
22
23
24
25
26
2. For preliminary injunctive relief ordering defendant to
cease using plaintiff's payroll tax funds as part of a "ponzi
scheme", pending trial;
3. For a temporary restraining order enjoining defendant
from destroying tax receipts and/or other information regarding
plaintiff's payroll taxes; and
4. For an order mandating the production of tax receipts
and/or other information in control of the defendant regarding
the payment and transfer of plaintiff's payroll tax funds; and
4. For damages for the acts herein alleged in accordance
with proof ..
JURy DEMAND
Plaintiff Federal Express Corporation hereby makes demand
for jury.
Dated: March 13, 1991
BRONSON, BRONSON & McKINNON

PATRICIA H. CULLISON
Attorneys for Plaintiff
27 \PHC\29296 \ 9999\COMPL T • eMP

28
COMPLAINT FOR INJUNCTIVE RELIEF
7
Exhibits 17
Tax
Was the Big Spender
Just Spending Money
Firms Owed to IRS?
Texan 'Cbip' Armstrong Ran
&heme Processing Funds,
Former Employee Alleges
-
FedEx Frets Over $16 Million
By B.4U'H T, K(NC Ja.
SltaIl iltorll"'>rll'" orr" .. w ....... '''Ull''' .....
Wt year s FO!1l1!1 of JuJy p!rty at t.bt
l,l')(,lG-acre COu\:llt C raneb near
TexlS. "'U II l'CeDt neb! 0111
The 2&0 rutsts ft\'t [Nate<! to B. rodeo In
lJ'!!D3, !he R'lWI)t 01 C1lill'llry IUi1
SI.rn1t, 2M 8.ft hour of firelJrOl'ki a.f-
Ur e slt'dOlllll dinner.
tM host rmtll o-.mer. COOrue C.
Anm;lrong Jr .. was ulebrQl.\llr 11
pefS4!lalldfld of day: HJs b·
mer hId )USt eDmDltle4 an l8'f1\Onth jlU
Il.'nn for J.!I.W)6erlng druC' !'!'lotie)'.
'Tbe eX'Q't vara.n.u was DOU!wortl:\y. lven
by !.be S'W!dard$ of Texas' by tone nI)'
boom 1l.Iltfi at! lSS8 Oup
.lliNtronr. IIOW yean llld. warked u a
S16.,{lOO-a yw I'trem.an e.ni1 b.ad a l\.I.slOI'Y Oi
1:101 tepam baJlk Joans in 19a!l. lI.e de·
clared Iltrr.on.tl DWl:tIptty .ftu the fatl·
ure I)r i tDUlU bUSU'less be ran ()41
&Ide-l.I!mporary worken; IIJred by Mr •
Al1'Il.St
r
onr sprayed Ilre-ri!ta.rdanl mateMalI
00 tile .r.eel tta.mts af amunetdal tKItld·
Ing&.
til •
- tleq:in SUCb nven:a..l1. Mr . .ums:tn:lng
t:h.e.pt'St t&o c:a.m:t UJj VII1tl1 b\lI-
III U\! past tew daY$ .':er Ann-
I$.TOng em\llo1!t I Stelle &.l'lodoH. be:ran to
'PI'Wltely proV\6t I number ofmaiot t<ln\.
p:anl.fS UCI withe. Ilmple
natJar. for Am1.Jtrcng', S\.Iddtnl)'
p.!Il"fllt WId wml/lt\y
Idftll.ltb.
Belote ku.t mMU\. MI. So-
ladoU 'WAI ccn\roUer r.)/ iIll ob5el.lrt San
Frantl.aco firm. H.IUIillltJII Talt , Co ..
by tdr > Id.nu IIarth
1988, Tlltl firm Ulnu.tfy n.S btl·
\lOft In payroll wtlJl.holdl.n£ WK OIVI!od to
In.. !Ill/!'C"I'IJI.I Servi«o lind cthllr !ax
np!l.elr.i (or tllch 1l'Vf:n!o! trnp!oym u
f.'e-dmJ , Castll!' &I
(:cdt. 1)/. State sal'
of CtlIfOMi.a and I.b.e OaklAnd Atll\!l\ci.
Kind Ponzl Sebeme
Mr, Salodo.t! a1Il1fti to (eden! 1"ttu:111'
UtS 911d In A memonmdum Iiled With & fed·
'!lIt wt 01 promPtlY
log eU of tNsc fUndS W'ttb the ptOflel' fav·
4'mnltl'lt as tUpub1ted by
Af!TIlIt1'I)!\g 6.lyeNd INJfY nullkmJ to
1111 0\Im f>rlllllf IrU"S III a bnd of Pom::\
scheme now 01\ Ult verre o( collll.p5!- Some
Ham1ItM Tall CWlICl'1N!tIl cc.nfirm tile dl
\ets.!tm.!, alId Mr, Solodor! uttmateS !.hat
tht-y t.lXa.I nearly noo mUllan.
Hl!.!ntllon T1i!t. It rul'1l!l out. Is (1M (J{ llie
hllliitlit IA>; r.ftlCl!Ul:Il'I in tnt ClllllltrY. But
tblS 1.i'I11 a to be II! rigM
1I0W. I.ASt Yt lif. Ibt [RS tfIe lag 'I1m.e
p.ayday and ux payment" from
Hlnt 4aY1 to one wlth I! JU'ilJJn1Wd de·
pt«est, sharply eulU.lhng /'!W"ttllS.
playetJ lite ADP artd Qa.nltAmtr1ca
I!enmtt Ill!' better lees by Ollertnc e«n-
f1\tte payroll
A«.Dtdlt1f 1£1 Mr. Bi>lodaH. t!'Ie lure for
Mr. AmlStrllllf \IIU flat proftts 00\ hue.
lOWly \lQT'tfUlIttO cash (laws. Al:te:S'& to
ihat money bAs htlped hlm It Uti
rtyle lie cou.!rl ooly lIre.!un of durin: Ul\cw'
tlreba.lst shifli. II \lfe style ttw would al·
low hmi to ,tar In hI.s own lUiyQme
hr V/tshK and 'OallM WCIlIUI\ he
U!l'd UI rut It Irt lOOl!t;' pam.
How It WlIrUd
how !It.tt &ebeme tw)N'
llIi tc Mr, SQlodoffs memClr611i1um filed
With ted,raJ !!.Olin doeltmtnts: ».1IJ.c:
idc.1. w;u It1l1U.Sk the loti", yment 01 tAxes
tn" s:u.rting quwr.lt'a not too t.oog1I. AU
ytIl.1 dA I.s repc.rt to W lil!ncy tbJit you
are maid. tbl! p!Llf'rIlent \aU 11.9
lIew qualUf bq:!ns. 10\1 t&ke W fIN
f\lla.rtl!t' a fill last q\l.lll'teT"&
bole. 1M villi forward Dtlt'
qlJJ:!'!!r, WIUle Pl)"Rlefits recelft!j m ew .
qllUfElr Iftep .lmUI, It n.e bl.r
I1vranj for all !.bill la the. ehunk
01 UI'lpal6 tram tM ttart.lI:Ir QIlAI'!.eT
Irs; tou.1Id R\Oory.
1M tVllnrua.ll.:r. hCll .... 5.!tl.nr rea wry
c.mly. Than wIltre tht Panii aspect
emnts l.h. 'I'M u:tS t.sse'f.ll,eS A. lCl"/. fIe!lAlIV
phls U!.tete:JI on even' Ill"' UJ)-
Ut t:e.m1I\.r at least ltl"h q\lluterly
&.n.nually I lie "foond Vlo.ney"
&CId p..u.s It along to me \.aX man, yOI.I wl!!
have til dI.r the holt that !Dnell< deeper u.cn
tIm.t .... n:lUnd to rep.alr tilt I
.u bltH. itt birrer LTId rnt.rI"t c:.Ilel\1S
• II'f.. blnfll, 1M el'Wlee mcna.s:es that 50l'1'l.I.'
tUttll Will rtt a peNlJty nCilkt Slid aJIk '
questions. llUlcI! HamIltOn tatl'l
. l.U 1!S'''6Ii!\\S!thit'' ae-
• "",,_ .... ):1404> Ali. Col\l:l1l.ltJ
I
!
I
)
I
r
i
I
I
I
I
r
I
j
I
1
I
Exhibits 18
..
- -

'ax Question: WM Big-Spender 'Chip' Armstrong
Just Spending Money That Others Owed to IRS?
c.LlStorn en wUl !ruffer at·
01'.1 Ha.m.t.ltOb talt's
at'llhly 1.0 ge.ne'!1kte q,u.\clQy from UI"
tUn In 0fI tb br:lo.ks. All Ilf Dee. ,
31. It beld tot.al1ng Ifi mWlon frOm
C'ompa.roe.S by Of amJla1ed wIth Mr.
Armrtn:lflg, J.C;C(lrQml UI an I.I1WldJted
eompany b.aLa.nee
"Tbere .IS un<:ert8llll:y 01 the
abUlty I/) meet Its obbgat.li:m.£:' says An,
th<my llotan:stl III 1{PMG Peal MaMek.
Hanulton fait's atcOWltant JD a JUDe 1989
review, Put Ma'l"Wlck dUd a S1.9 milllon
11IOrk1nr-clPltaI dew:U and BLI.d "substan-
li.a.Uy mQn furd!I hv-e been eoDected 1'rO!n
clients thall am ellJ"rt"fltly I 'Iil1able to I18Y
those tu:i!s:' By yeaHnd. 1990, In.
internal sheet ,boWl, that filurl'!
Iw3 1.0 sa7 miUIbn..
6ly5 U has talItd tot twO
.. "m:I\I",U l full QUdll Of tht earn-
i i
Litton Unit's Soviet Venture
BEVERLY Cillf.-A gutw.dlary
of IJn.oa stgned IJl
ment with III COI'lttm w fOrm Il.!o!n\
VeD.tuf\!! Ui proVide teehnlcal Soervices in t/Ir
.RI.!.E:Il.an l'epllblic..
Of tI'Ie a,reemttlt were!! 't dis
Exhibits 19
- ;-.
Mr · Baker:\f7
•.
RE:

ftL P -iitpf1-s
4/3/91
CONNIE/C. JR.,
AKA
DBAvHAMILTON TAFT AND COMPANY;
32ND FLOOR, SPEAR STREET TOWER,
SAN FRANCISCO, CALIFORNIA;
FRAUD BY WIRE; MAIL FRAUD; TAX FRAUD i
00: SAN FRANCISCO
San Francisco has initiated a Fraud By Wire
investigation based on information received from the former
Comptroller of Hamilton Taft and Company (HTC) that the sUbject,
Armstrong, has'embezzled over $100 million from the firm's
clients over the last three years. ,These allegations continue to
be front-page news in San Francisco and on 3/15/91, the Wall
street Journal ran a front7page article detailing the allegations
(copy attached).
HTC contracts ,with companies who owe taxes to numerous
state and local taxing authorities. Client companies make a lump
sum wire transfer of funds to the HTC account, and thereafter,
HTC issues checks to whatever taxing authority is owed money.
The former Comptroller, I I, has alleged that
Armstrong diverted lump sum payments to his own use and
thereafter, incurred penalties associated with late payments and
7(: passed these costs along to the client companies who were not
notified of the late charges. In essence the allegation is that
Armstrong is running a "Ponzi scheme
ll
of considerable magnitude
Which requires increasing amounts of cash to keep the operat'on
going· -3:1,:;"& -"
left HTC in Februar of 1991 and on 3
You will be kept apprised of pertinent developments.
NOT APPROPRIATE FOR DISSEMINATION TO THE PUBLIC

Enclosure
1 - Mr. Jones
1 - Mr. Baker
1 - Mr. Potts
1 - Mr. Bryant
GDM:gdm/sw (9)

1 - Mr. OIHara
1 - Mr. Esposito
1 - Special Assistants, CIn
Exhibits 20
COURT
NORTHERN CT FORNIA
BEFORE THE HONORABLE CHARLES A. LEGGE, JUDGE
UNITED STATES OF AMERICA,
)
)
)
)
)
)
)
)
)
)
PLAINTIFF,
VS. NO, CR 94-0276 CAL
CONNIE C. ARMSTRONG, JR./
AND RICHARD A. FOWLES,
FOR FF:
I CALIFORNIA
MONDAY JANUARY I 1997
VOLUME PAGES 868 - 3048
BY: GEORGE D.
SANTA
RONALD D
ASSISTANT
SOLOMON
94102
90404
388 MARKET STREET, SUITE 1080
SAN 94111
(APPEARANCES CONTINUED ON NEXT : )
REPORTED BY: YEOMANS J CSR
COURT REPORTER!
COMPUTERIZED BY XSCRIBE
JAMES YEOMANS, REPORTER, USDC, 415 863-5179
DISTRICT FORNIA
BEFORE
UNITED OF AMERICA,
PLAINTIFF,
VS.
CONNIE C. AJU4STRONG, JR.,
AND RICHARD A. POWLES,
DEFENDANTS.
FOR PLAINTIFF:
A. LEGGE I JUDGE
450
SAN
)
)
)
)
)
)
)
)
)
)
, CR 94-0276 CAL
CALIFORNIA
t 1997
PAGES 286B - 3048
AVENUE
, CALIFORNIA 94102
BY: GEORGE D, HARDY I ESQ.
lBB
SAN
RONALD D. SMETANA, ESQ.
ASSISTANT UNITED STATES
90404
10S0
94111
CONTINUED
REPORTED BY: YEOMANS I CSR
COURT REPORTER I
COMPUTERIZED
JAMES YEOMANS, REPORTER, 1 415-863-5179
Exhibits 21
2885
GOVERNMENT COUNSEL COME IN, PLEASE, I NEED TO SEE THEM ABOUT A
MATTER HERE.
(PAUSE IN THE PROCEEDINGS)
THE COURT: I RECEIVED FROM THE GOVERNMENT THIS
MORNING A DOCUMENT ENTITLED, IIEX PARTE SUBMISSIONS" REGARDING
WITNESS TERRI ROBINS.
NOW, IS SHE GOING TO BE COMING IN THIS MORNING?
MR. SMETANA: IT WAS OUR INTENT TO DO SO IF MR. HARDY
WAS IN THE PROCESS OF PRE-TRYING YESTERDAY WHEN HE DISCOVERED
THIS.
MR. HARDY: ONE CORRECTION TO THE SUBMISSION. THE
DATES ARE WRONG. APPARENTLY, IT WAS TWO YEARS AFTER THE FACT.
IT WAS 1993 AND 1994.
THE COURT: BUT NOW WHAT BOTHERS ME IS THAT SHE DOES
HAVE AND DOES KNOW OF STATEMENTS BY ARMSTRONG. YOU NOW KNOW OF
STATEMENTS BY ARMSTRONG.
MR. HARDY: WE KNOW SHE APPARENTLY DID RECORD SOME
STATEMENTS.
THE COURT: YOU HAVEN'T SEEN THE STATEMENTS?
MR. SMETANA: AGAIN, WE FOUND OUT YESTERDAY AND SINCE
THIS MORNING TALKED WITH THE FBI SPECIAL AGENT INVOLVED WHO
CONFIRMED FIRST, THAT IT WAS AN INVESTIGATION OF AN ENTIRELY
DIFFERENT COMPANY.
THE COURT: HE STILL MADE STATEMENTS.
MR. SMETANA: AND, SECONDLY, SHE WAS INSTRUCTED NOT TO
JAMES YEOMANS, OFFICIAL REPORTER, USDe, 415-863-5179
2885
GOVERNMENT COUNSEL COME IN, PLEASE, I NEED TO SEE THEM ABOUT A
MATTER HERE.
(PAUSE IN THE PROCEEDINGS)
THE COURT: I RECEIVED FROM THE GOVERNMENT THIS
MORNING A DOCUMENT ENTITLED, "EX PARTE SUBMISSIONSII REGARDING
WITNESS TERRI ROBINS.
NOW, IS SHE GOING TO BE COMING IN THIS MORNING?
MR. SMETANA: IT WAS OUR INTENT TO DO SO IF MR. HARDY
WAS IN THE PROCESS OF PRE-TRYING YESTERDAY WHEN HE DISCOVERED
THIS.
MR. HARDY: ONE CORRECTION TO THE SUBMISSION. THE
DATES ARE WRONG. APPARENTLY I IT WAS TWO YEARS AFTER THE FACT.
IT WAS 1993 AND 1994.
THE COURT: BUT NOW WHAT BOTHERS ME IS THAT SHE DOES
HAVE AND DOES KNOW OF STATEMENTS BY ARMSTRONG. YOU NOW KNOW OF
STATEMENTS BY ARMSTRONG.
MR. HARDY: WE KNOW SHE APPARENTLY DID RECORD SOME
STATEMENTS.
THE COURT: YOU HAVEN'T SEEN THE STATEMENTS?
MR. SMETANA: AGAIN, WE FOUND OUT YESTERDAY AND SINCE
THIS MORNING TALKED WITH THE FBI SPECIAL AGENT INVOLVED WHO
CONFIRMED FIRST, THAT IT WAS AN INVESTIGATION OF AN ENTIRELY
DIFFERENT COMPANY.
THE COURT: HE STILL MADE STATEMENTS.
MR. SMETANA: AND, SECONDLY, SHE WAS INSTRUCTED NOT TO
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
Exhibits 22
ASK OR DISCUSS HAMILTON TAFT.
THE COURT: BUT SAY -- IT'S NOT JUST
THE WITNESS ITSELF I'M CONCERNED ABOUT, IT'S ALSO POSSIBLY
EXCULPATORY THINGS THAT WERE SAID. I THINK THE DEFENSE HAS A
RIGHT TO THOSE STATEMENTS BOTH BECAUSE THEY ARE, AI
STATEMENTS OF THE WITNESS AND, B, BECAUSE THEY'RE POTENTIAL
BRADY MATERIAL. I DON1T KNOW WHETHER THEY ARE OR NOT.
MR. HARDY: WE I VE NEVER SEEN THEM. WE I RE NOT
THAT CONCLUSION AT ALL, THAT'S WHY WE BROUGHT
YOUR ATTENTION.
THE HOW CAN WE GO AHEAD ROB INS?
MR. HARDY: CAN WE DO THIS? WE REVEAL THE FACT
THAT THE PAYMENT OF MONIES BY THE FBI TO TERRI ROBINS DURING
THE PER
DEFENSE
HERE,
CROSS SHE
1993 TO 1994?
THE COURT: DIRECT?
MR, HARDY: IN OUR DIRECT I OR WOULD BE LEFT TO THE
NOW, THEN ORDER UP ALL OF THAT/ GET IT FAXED
FEDEXED OUT HERE.
SHE'S RELEASED FROM TESTIFYING AFTER DIRECT AND
BE RELEASED SUBJECT TO RECALL FOR THE
CROSS-EXAMINATION ON THOSE POINTS. IS THAT IBLE?
TO THE SO THAT WE CAN TURNOVER THE
THEY CAN REVIEW THEM, THEY CAN DECIDE WHETHER OR NOT THEYJRE
ISSUES WANT TO BRING UP.
THE COURT: YOU DON'T THINK IT MIGHT BE BETTER TO
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
6
ASK OR DISCUSS
THE COURT: BUT
TAFT.
SAY -- IT'S NOT JUST
THE WITNESS ITSELF I'M CONCERNED ABOUT, IT'S ALSO POSSIBLY
EXCULPATORY THINGS THAT WERE SAID. I THINK THE DEFENSE HAS A
RIGHT TO THOSE STATEMENTS BOTH BECAUSE THEY ARE, AI
STATEMENTS OF THE WITNESS AND, B, BECAUSE THEY'RE POTENTIAL
BRADY MATERIAL. I DON1T KNOW WHETHER THEY ARE OR NOT.
MR. HARDY: WE I VE NEVER SEEN THEM. WE I RE NOT
THAT CONCLUSION AT ALL, THAT'S WHY WE BROUGHT
YOUR ATTENTION.
THE HOW CAN WE GO AHEAD ROB INS?
MR. HARDY: CAN WE DO THIS? WE REVEAL THE FACT
THAT THE PAYMENT OF MONIES BY THE FBI TO TERRI ROBINS DURING
THE PER
DEFENSE
HERE,
CROSS SHE
1993 TO 1994?
THE COURT: DIRECT?
MR, HARDY: IN OUR DIRECT I OR WOULD BE LEFT TO THE
NOW, THEN ORDER UP ALL OF THAT/ GET IT FAXED
FEDEXED OUT HERE.
SHE'S RELEASED FROM TESTIFYING AFTER DIRECT AND
BE RELEASED SUBJECT TO RECALL FOR THE
CROSS-EXAMINATION ON THOSE POINTS. IS THAT IBLE?
TO THE SO THAT WE CAN TURNOVER THE
THEY CAN REVIEW THEM, THEY CAN DECIDE WHETHER OR NOT THEYJRE
ISSUES WANT TO BRING UP.
THE COURT: YOU DON'T THINK IT MIGHT BE BETTER TO
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
6
Exhibits 23
2887
ROBINS?
MR. SMETANA: WE PROPOSE TO REST
WE'RE ABOUT DONE.
OR WEDNESDAY.
THE COURT: I THINK WE'RE NOW AT A POINT WE HAVE TO
TELL THE DEFENSE ABOUT THE PROBLEM. NOW, SO YOUR SUGGESTION IS
WE GO .. '.u ...... n ~ WITH WHAT WE'VE GOT AND THAT THE ONLY QUESTION THEN
WHAT TO DO ABOUT THE STATEMENTS THEMSELVES? WOULD
THEM
MR« HARDY: CORRECT « THEY MAY NOT WANT TO GO INTO
THEY LOOK AT THEM.
THE COURT! THEY MAY BE JUST TOTALLY IRRELEVANT. BUT
IT'S A PIECE OF MEAT FOR TO JUMP ALL OVER AND I
HAVE TO BE CONCERNED THAT IF SHE HAS RECORDED IT AND THEY ARE
PRODUCED AS WITNESS STATEMENTS AND WHETHER THERE'S POSSIBLY ANY
BRADY MATERIAL IN THERE, YET NONE OF US KNOW THAT.
(PROCEEDINGS HELD IN OPEN NOT PRESENT:)
THE COURT: LET THE RECORD I'VE RECEIVED THIS
A STATEMENT FROM THE GOVERNMENT WITNESS TERRI
ROBINS, AND THIS RAISES SOME ABOUT MS. ROBINS AS A
WITNESS AND'S, I GUESS, ANTICIPATED TO BE YOUR NEXT
WITNESS?
MR. HARDY: THAT'S
THE COURT: APPARENTLY, IT CAME TO LIGHT OVER THE
WEEKEND IN THE PRE-TESTIMONY BETWEEN THE
GOVERNMENT COUNSEL HERE AND MS. ROBINS, WHICH SHE WAS ASSISTING
YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
ROBINS?
MR. SMETANA: WE PROPOSE TO REST
WE'RE ABOUT DONE.
2887
OR WEDNESDAY.
THE COURT: I THINK WE'RE NOW AT A POINT WE HAVE TO
TELL THE DEFENSE ABOUT THE PROBLEM. NOW, SO YOUR SUGGESTION IS
WE GO ~ ~ ~ = ~ WITH WHAT WE'VE GOT AND THAT THE ONLY QUESTION THEN
WOULD WHAT TO DO ABOUT THE STATEMENTS THEMSELVES?
MR« HARDY: CORRECT « THEY MAY NOT WANT TO GO INTO
THEM THEY LOOK AT THEM.
THE COURT! THEY MAY BE JUST TOTALLY IRRELEVANT. BUT
IT'S A PIECE OF MEAT FOR TO JUMP ALL OVER AND I
HAVE TO BE CONCERNED THAT IF SHE HAS RECORDED IT AND THEY ARE
PRODUCED AS WITNESS STATEMENTS AND WHETHER THERE'S POSSIBLY ANY
BRADY MATERIAL IN THERE, YET NONE OF US KNOW THAT.
(PROCEEDINGS HELD IN OPEN NOT PRESENT:)
THE COURT: LET THE RECORD I'VE RECEIVED THIS
A STATEMENT FROM THE GOVERNMENT WITNESS TERRI
ROBINS, AND THIS RAISES SOME ABOUT MS. ROBINS AS A
WITNESS AND'S, I GUESS, ANTICIPATED TO BE YOUR NEXT
WITNESS?
MR. HARDY: THAT'S
THE COURT: APPARENTLY, IT CAME TO LIGHT OVER THE
WEEKEND IN THE PRE-TESTIMONY BETWEEN THE
GOVERNMENT COUNSEL HERE AND MS. ROBINS, WHICH SHE WAS ASSISTING
YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
Exhibits 24
2888
THE FBI AND ANOTHER INVESTIGATION OF HAMILTON TAFT INVOLVING
COMPUTECH AND THAT SHE WAS PAID BY THE FBI FOR WHAT, I DON'T
KNOW, TIME, EXPENSES, I'M NOT SURE WHAT. SHE DID RECORD
CONVERSATIONS WITH MR. ARMSTRONG.
NOW, AS I TOLD GOVERNMENT COUNSEL, I THINK THOSE
STATEMENTS THAT SHE RECORDED HAVE TO BE PRODUCED TO THE DEFENSE
BOTH AS STATEMENTS OF THE DEFENDANT AND FOR POTENTIAL BRADY
MATERIAL. NOBODY HAS YET REVIEWED THESE. IT'S MY
UNDERSTANDING GOVERNMENT COUNSEL DOESN'T KNOW WHAT'S IN THOSE
STATEMENTS, JUST FOUND OUT ABOUT IT THIS WEEKEND.
MR. HARDY! THAT 1 S CORRECT.
THE COURT: SO THE STATEMENTS HAVE TO BE PRODUCED. SO
THE QUESTION IS WHAT WE CAN DO WITH MS. ROBINS WHO'S COMING IN
TO TESTIFY TODAY. THE GOVERNMENT SUGGESTS - - WELL, MAYBE YOU
BETTER STATE THE SUGGESTION.
MR. HARDY: GOVERNMENT SUGGESTS THAT WE PROCEED TODAY
AND WHEN WE'VE FINISHED WITH THE TESTIMONY THAT THE PLAINTIFF
CROSS-EXAMINATION, WHATEVER CROSS-EXAMINATION THAT YOU GO INTO,
THAT SHE BE RELEASED SUBJECT TO RECALL FOLLOWING THE REVIEW OF
THOSE STATEMENTS, SHE BE CALLED ON CROSS ON THOSE POINTS.
WE DON'T KNOW IF YOU'RE GOING TO WANT TO GO INTO THOSE
POINTS OR NOT. WE DON'T KNOW WHAT'S THERE, BUT WE'RE RUNNING
LOW ON WITNESSES.
THE COURT: HOW SOON CAN YOU HAVE THE STATEMENTS?
MR. SMETANA: I DON'T EVEN KNOW AT THIS POINT WHAT
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
2888
THE FBI AND ANOTHER INVESTIGATION OF HAMILTON TAFT INVOLVING
COMPUTECH AND THAT SHE WAS PAID BY THE FBI FOR WHAT, I DON'T
KNOW, TIME, EXPENSES, I'M NOT SURE WHAT. SHE DID RECORD
CONVERSATIONS WITH MR. ARMSTRONG.
NOW, AS I TOLD GOVERNMENT COUNSEL, I THINK THOSE
STATEMENTS THAT SHE RECORDED HAVE TO BE PRODUCED TO THE DEFENSE
BOTH AS STATEMENTS OF THE DEFENDANT AND FOR POTENTIAL BRADY
MATERIAL. NOBODY HAS YET REVIEWED THESE. IT'S MY
UNDERSTANDING GOVERNMENT COUNSEL DOESN'T KNOW WHAT'S IN THOSE
STATEMENTS, JUST FOUND OUT ABOUT IT THIS WEEKEND.
MR. HARDY! THAT'S CORRECT.
THE COURT: SO THE STATEMENTS HAVE TO BE PRODUCED. SO
THE QUESTION IS WHAT WE CAN DO WITH MS. ROBINS WHO'S COMING IN
TO TESTIFY TODAY. THE GOVERNMENT SUGGESTS - - WELL, MAYBE YOU
BETTER STATE THE SUGGESTION.
MR. HARDY: GOVERNMENT SUGGESTS THAT WE PROCEED TODAY
AND WHEN WE'VE FINISHED WITH THE TESTIMONY THAT THE PLAINTIFF
CROSS-EXAMINATION, WHATEVER CROSS-EXAMINATION THAT YOU GO INTO,
THAT SHE BE RELEASED SUBJECT TO RECALL FOLLOWING THE REVIEW OF
THOSE STATEMENTS, SHE BE CALLED ON CROSS ON THOSE POINTS.
WE DON'T KNOW IF YOU'RE GOING TO WANT TO GO INTO THOSE
POINTS OR NOT. WE DON'T KNOW WHAT'S THERE, BUT WE'RE RUNNING
LOW ON WITNESSES.
THE COURT: HOW SOON CAN YOU HAVE THE STATEMENTS?
MR. SMETANA: I DON'T EVEN KNOW AT THIS POINT WHAT
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
Exhibits 25
2889
THEY'RE IN, WHETHER HAVE BEEN TRANSCR WHETHER
THOSE ARE JUST TAPED, WHETHER THERE'S TAPES THEY HAVE BE
THE COURT: DO YOU KNOW THE VOLUME?
MR. SMETANA: I KNOW WHAT WE
ONE OF THE AGENTS WHO IS HERE IN COURT IN TOUCH
FBI AGENTS IN DALLAS AND ARRANGE TO HAVE THOSE
ALONG THE WAY FIND OUT.
IS HAVE
THE
AND
ONE OF THE PROBLEMS WE APPARENTLY ENCOUNTERED IS THERE
IS APPARENTLY ICE AND SLEET IN DALLAS AND THE FBI OFFICE IS
OFFICIALLY CLOSED. AS IT HAPPENS, THE AGENT WENT IN, BUT I
GUESS THEY WERE GIVEN AN ADMINISTRATIVE DAY OFF
WEATHER, SO WE HAVE A PAGER NUMBER FOR THE FBI
HAVE HIM PULL THAT
TO THE
WE CAN
THE COURT: HOW SOON DO YOU THINK YOU CAN GET THE
STATEMENTS HERE, EITHER -- IN WHATEVER FORM THEY'RE IN, TAPES
OR TYPEWRITTEN FORM?
MR. SMETANA: AT A MINIMUM 1 EVEN I F THEY WERE TO
LOCATE THEM IMMEDIATELY AND SEND THEM I IT WOULD
BE TOMORROW UNTIL WE HAVE SOME - - SOME TIME BY FEDEX. THAT'S
THE FASTEST WE CAN POSSIBLY DO IT, AND I DON'T KNOW WHETHER
THAT'S POSSIBLE.
THE COURT: THEN, OF COURSE, THE DEFENSE WOULD NEED A
REASONABLE TIME TO GO OVER THEM TO DECIDE WHAT THEY WANTED TO
WITH THEM OR DO WITH MS, ROBINS.
JAMES YEOMANS I REPORTER, USOC! 415-863-5179
2889
THEY'RE IN, WHETHER HAVE BEEN TRANSCR WHETHER
THOSE ARE JUST TAPED, WHETHER THERE'S TAPES THEY HAVE BE
THE COURT: DO YOU KNOW THE VOLUME?
MR. SMETANA: I KNOW WHAT WE
ONE OF THE AGENTS WHO IS HERE IN COURT IN TOUCH
FBI AGENTS IN DALLAS AND ARRANGE TO HAVE THOSE
ALONG THE WAY FIND OUT.
IS HAVE
THE
AND
ONE OF THE PROBLEMS WE APPARENTLY ENCOUNTERED IS THERE
IS APPARENTLY ICE AND SLEET IN DALLAS AND THE FBI OFFICE IS
OFFICIALLY CLOSED. AS IT HAPPENS, THE AGENT WENT IN, BUT I
GUESS THEY WERE GIVEN AN ADMINISTRATIVE DAY OFF
WEATHER, SO WE HAVE A PAGER NUMBER FOR THE FBI
HAVE HIM PULL THAT
TO THE
WE CAN
THE COURT: HOW SOON DO YOU THINK YOU CAN GET THE
STATEMENTS HERE, EITHER -- IN WHATEVER FORM THEY'RE IN, TAPES
OR TYPEWRITTEN FORM?
MR. SMETANA: AT A MINIMUM 1 EVEN I F THEY WERE TO
LOCATE THEM IMMEDIATELY AND SEND THEM I IT WOULD
BE TOMORROW UNTIL WE HAVE SOME - - SOME TIME BY FEDEX. THAT'S
THE FASTEST WE CAN POSSIBLY DO IT, AND I DON'T KNOW WHETHER
THAT'S POSSIBLE.
THE COURT: THEN, OF COURSE, THE DEFENSE WOULD NEED A
REASONABLE TIME TO GO OVER THEM TO DECIDE WHAT THEY WANTED TO
WITH THEM OR DO WITH MS, ROBINS.
JAMES YEOMANS I REPORTER, USOC! 415-863-5179
Exhibits 26
2890
MR. HARDY:" IT'S MY UNDERSTANDING WE'LL BE BREAKING,
AFTER THE GOVERNMENT FINISHES ITS WITNESSES THIS WEEK, UNTIL
THE DEFENSE BEGINS. THERE WILL BE A GOOD BIT OF TIME FOR
REVIEW AND IF NEED BE WE COULD BRING HER BACK BEFORE YOU START
YOUR CASE.
IN OTHER WORDS, I THINK THERE WILL BE A BLOCK OF TIME
FOR YOU TO REVIEW IT AND FIGURE OUT WHAT YOU WANT TO DO.
MR. SABELLI: WE MAY HAVE RELEVANCE OBJECTION TO ANY
OF THIS AREA. THERE MAY BE 403 CONCERNS AS WELL, 404(B)
CONCERNS. IT MAY BE A BASIS FOR A MOTION TO SEVER ON THE PART
OF MR. FOWLES. I'M NOT SURE IT'S FAIR FOR US TO HAVE TO BEGIN
OUR CROSS-EXAMINATION WITHOUT KNOWING THE NATURE OF THIS
MATERIAL. MAYBE SOMETHING THAT WE CAN USE TO
MR. HARDY: YOUR COMMENTS SUGGEST WE HAVE SOME
INTEREST IN PUTTING SOME OF THAT MATERIAL IN AND USE IT IN SOME
WAY, WE DO NOT. WE HAVE NOT SEEN IT. WE DON'T KNOW WHAT'S IN
IT AND HAVE NO INTENT USING ANY OF THAT MATERIAL.
MR. BROWN: AT THE VERY LEAST, THIS WITNESS -- WE
THINK THIS WITNESS ALREADY HAS A TREMENDOUS BIAS AND SHE
INDICATED IN HER GRAND JURY TESTIMONY III'M UPSET, I'M ANGRY,
I'M VINDICTIVE. II NOW WE FIND OUT SHE BECAME A GOVERNMENT
INFORMANT. CERTAINLY THAT'S SOMETHING WE WOULD WANT TO BRING
UP ON CROSS-EXAMINATION.
THE COURT: I WOULD IMAGINE THAT COULD BE DONE EVEN
BEFORE YOU SEE THE STATEMENTS. WHAT I'M DEBATING HERE, SHOULD
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
2890
MR. HARDY:" IT'S MY UNDERSTANDING WE'LL BE BREAKING,
AFTER THE GOVERNMENT FINISHES ITS WITNESSES THIS WEEK, UNTIL
THE DEFENSE BEGINS. THERE WILL BE A GOOD BIT OF TIME FOR
REVIEW AND IF NEED BE WE COULD BRING HER BACK BEFORE YOU START
YOUR CASE.
IN OTHER WORDS, I THINK THERE WILL BE A BLOCK OF TIME
FOR YOU TO REVIEW IT AND FIGURE OUT WHAT YOU WANT TO DO.
MR. SABELLI: WE MAY HAVE RELEVANCE OBJECTION TO ANY
OF THIS AREA. THERE MAY BE 403 CONCERNS AS WELL, 404(8)
CONCERNS. IT MAY BE A BASIS FOR A MOTION TO SEVER ON THE PART
OF MR. FOWLES. I'M NOT SURE IT'S FAIR FOR US TO HAVE TO BEGIN
OUR CROSS-EXAMINATION WITHOUT KNOWING THE NATURE OF THIS
MATERIAL. MAYBE SOMETHING THAT WE CAN USE TO
MR. HARDY: YOUR COMMENTS SUGGEST WE HAVE SOME
INTEREST IN PUTTING SOME OF THAT MATERIAL IN AND USE IT IN SOME
WAY, WE DO NOT. WE HAVE NOT SEEN IT. WE DON'T KNOW WHAT'S IN
IT AND HAVE NO INTENT USING ANY OF THAT MATERIAL.
MR. BROWN: AT THE VERY LEAST, THIS WITNESS - - WE
THINK THIS WITNESS ALREADY HAS A TREMENDOUS BIAS AND SHE
INDICATED IN HER GRAND JURY TESTIMONY III'M UPSET, I'M ANGRY,
I'M VINDICTIVE. II NOW WE FIND OUT SHE BECAME A GOVERNMENT
INFORMANT. CERTAINLY THAT'S SOMETHING WE WOULD WANT TO BRING
UP ON CROSS-EXAMINATION.
THE COURT: I WOULD IMAGINE THAT COULD BE DONE EVEN
BEFORE YOU SEE THE STATEMENTS. WHAT I'M DEBATING HERE, SHOULD
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
Exhibits 27
2891
WE START ROBINS AT ALL, DIVIDE HER UP AS THE GOVERNMENT
SUGGESTS, OR THE BETTER THING TO DO IS POSTPONE HER UNTIL THE
DEFENSE HAS THE MEANS EVEN MAXIMUM SPEED IT
GETS HERE OVERNIGHT, YOU GET IT TOMORROW, IT'S GOING TO BE
WEDNESDAY BEFORE WE CAN WI MS. ROBINS.
MR. BROWN: I DON'T WE'RE ING TO HAVE, FIRST
OF ALL, A GREAT OF FFI THE GOVERNMENT'S
WE'D BE ABLE TO
IT SEEMED THAT WAY. I
WITNESSES THIS WEEK. THINK THROUGH
COMPLETE WHATEVER, WOULDN'T YOU
WOULD LIKE JUST A MOMENT OR TWO TO CONFER WITH COUNSEL.
YET.
THE COURT: APPARENTLY, THE U"-\.JI\..;;) MEN' T ALL HERE
MR. BROWN: I F WE COULD HAVE A FEW MOMENTS.
THE COURT: GO AHEAD AND CONSULT.
(PAUSE IN THE PROCEEDINGS)
MR. BROWN: YOUR WEtRE STILL IN THE PROCESS OF
DISCUSSING IT AND IF WE DID A LITTLE FOR A FEW
MOMENTS, WHAT -- THE THING I'M TO SAY, I THINK,
THERE ARE SOME CASES TO SUPPORT WHAT I'M ABOUT TO SAY.
THE FIRST MOTION WE WOULD MAKE WOULD BE THAT THE
WITNESS BE EXCLUDED ENTIRELY. THIS COMPUCHECK WE'RE TRYING TO
SET UP THE TIME FRAME. I'M EVEN WONDERING IF IT WAS COMPUCHECK
AND I DON'T EVEN KNOW IF MR. SMETANA OR MR. HARDY KNOWS AT THIS
POINT, BUT I'M WONDERING IF SHE WAS REALLY
COMPUCHECK OR THERE WAS A SPILLOVER HER
GATING
WERE FOR THIS
J k ~ E S YEOr4ANS, OFFICIAL REPORTER, USDC, 415-863-5179
2891
WE START ROBINS AT ALL, DIVIDE HER UP AS THE GOVERNMENT
SUGGESTS, OR THE BETTER THING TO DO IS POSTPONE HER UNTIL THE
DEFENSE HAS THE MEANS EVEN MAXIMUM SPEED IT
GETS HERE OVERNIGHT, YOU GET IT TOMORROW, IT'S GOING TO BE
WEDNESDAY BEFORE WE CAN WI MS. ROBINS.
MR. BROWN: I DON'T
OF ALL, A GREAT OF FFI
ING TO HAVE, FIRST
THE GOVERNMENT'S
WE'D BE ABLE TO
IT SEEMED THAT WAY. I
WITNESSES THIS WEEK. THINK THROUGH
COMPLETE WHATEVER, WOULDN'T YOU
WOULD LIKE JUST A MOMENT OR TWO TO CONFER WITH COUNSEL.
YET.
THE COURT: APPARENTLY, THE 1..I£'"'",.,n..... MEN' T ALL HERE
MR. BROWN: I F WE COULD HAVE A FEW MOMENTS.
THE COURT: GO AHEAD AND CONSULT.
(PAUSE IN THE PROCEEDINGS)
MR. BROWN: YOUR WEtRE STILL IN THE PROCESS OF
DISCUSSING IT AND IF WE DID A LITTLE FOR A FEW
MOMENTS, WHAT -- THE THING I'M GOING TO SAY, I THINK,
THERE ARE SOME CASES TO SUPPORT WHAT I'M ABOUT TO SAY.
THE FIRST MOTION WE WOULD MAKE WOULD BE THAT THE
WITNESS BE EXCLUDED ENTIRELY. THIS COMPUCHECK WE'RE TRYING TO
SET UP THE TIME FRAME. riM EVEN WONDERING IF IT WAS COMPUCHECK
AND I DON'T EVEN KNOW IF MR. SMETANA OR MR. HARDY KNOWS AT THIS
POINT, BUT I'M WONDERING IF SHE WAS REALLY
COMPUCHECK OR THERE WAS A SPILLOVER HER
GATING
WERE FOR THIS
J k ~ E S YEOr4ANS, OFFICIAL REPORTER, USDC, 415-863-5179
Exhibits 28
2892
MATTER.
THE COURT: THAT'S THE ISSUE, THAT'S PART OF THE
QUESTION. NOW, MY FEELING, JUST AS I'M THINKING ABOUT IT, IT'S
NOT FAIR TO THE DEFENSE TO HAVE THEM HAVE TO TAKE MS. ROBINS ON
CROSS AND TIPTOE AROUND THE QUESTION WITHOUT KNOWING THE WHOLE
STORY, THAT YOU GOT THE -- KNOW THE WHOLE STORY. AND BY THE
WHOLE STORY, I MEAN, CERTAINLY THE RECORDED STATEMENTS BEFORE
YOU CROSS-EXAMINE.
MR. BROWN: I AGREE WITH YOU.
THE COURT: I THINK
MR. BROWN: BUT I'M GOING ONE STEP BEYOND THAT FOR MY
FIRST INITIAL DISCUSSION WITH THE COURT. IN THE PREPARATION
OUR DEFENSE, IN AND ANALYZING ALL THESE CASES AND RECEIVING ALL
THE WORK THE GOVERNMENT DID SO NICELY IN ALL THESE BINDERS AND
BOOKS AND LOOKING AT ALL THE 302'S, WE HAD TWO 302'S FROM THIS
WITNESS. SHE GAVE A COUPLE OF DEPOSITIONS AT OR ABOUT THIS
TIME AND SHE HAD GRAND JURY TESTIMONY. IT'S NOT MENTIONED
ANYWHERE. THEY DIDN'T KNOW IT EITHER. SHE'S MISLED THE
GOVERNMENT. SHE J S MI SLED EVERYBODY. AND WE WERE NOT ABLE TO
TAKE THIS INTO ACCOUNT IN PREPARATION OF OUR DEFENSE.
I REALLY THINK SHE NOT BE ALLOWED TO TESTIFY.
THE COURT: I'M NOT GOING TO GO THAT FAR UNTIL I SEE
WHAT IT IS. IT MAY BE HAS ABSOLUTELY NOTHING TO DO WITH THIS
CASE AT ALL, BUT I'M NOT PREPARED TO STRIKE HER, BUT CERTAINLY
NOT GOING TO FORCE YOU FOLKS TO DO YOUR CROSS BEFORE YOU HAVE A
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-B63-5179
2892
MATTER.
THE COURT: THAT'S THE ISSUE, THAT'S PART OF THE
QUESTION. NOW, MY FEELING, JUST AS I'M THINKING ABOUT IT, IT'S
NOT FAIR TO THE DEFENSE TO HAVE THEM HAVE TO TAKE MS. ROBINS ON
CROSS AND TIPTOE AROUND THE QUESTION WITHOUT KNOWING THE WHOLE
STORY, THAT YOU GOT THE -- KNOW THE WHOLE STORY. AND BY THE
WHOLE STORY, I MEAN, CERTAINLY THE RECORDED STATEMENTS BEFORE
YOU CROSS-EXAMINE.
MR. BROWN: I AGREE WITH YOU.
THE COURT: I THINK
MR. BROWN: BUT I'M GOING ONE STEP BEYOND THAT FOR MY
FIRST INITIAL DISCUSSION WITH THE COURT. IN THE PREPARATION
OUR DEFENSE, IN AND ANALYZING ALL THESE CASES AND RECEIVING ALL
THE WORK THE GOVERNMENT DID SO NICELY IN ALL THESE BINDERS AND
BOOKS AND LOOKING AT ALL THE 302'S, WE HAD TWO 302'S FROM THIS
WITNESS. SHE GAVE A COUPLE OF DEPOSITIONS AT OR ABOUT THIS
TIME AND SHE HAD GRAND JURY TESTIMONY. IT'S NOT MENTIONED
ANYWHERE. THEY DIDN'T KNOW IT EITHER. SHE'S MISLED THE
GOVERNMENT. SHE J S MI SLED EVERYBODY. AND WE WERE NOT ABLE TO
TAKE THIS INTO ACCOUNT IN PREPARATION OF OUR DEFENSE.
I REALLY THINK SHE NOT BE ALLOWED TO TESTIFY.
THE COURT: I'M NOT GOING TO GO THAT FAR UNTIL I SEE
WHAT IT IS. IT MAY BE HAS ABSOLUTELY NOTHING TO DO WITH THIS
CASE AT ALL, BUT I'M NOT PREPARED TO STRIKE HER, BUT CERTAINLY
NOT GOING TO FORCE YOU FOLKS TO DO YOUR CROSS BEFORE YOU HAVE A
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-B63-5179
Exhibits 29
2893
LITTLE , AND THAT RAISES THE ABOUT I
SHOULD LET HER ON BEFORE THAT OCCURS, TOO.
MS. LEARY: WE JOIN IN MR. BROWN'S MOTION.
THE COURT: IS THERE A MOTION? WHAT'S THE MOTION?
MS. LEARY: THE MOTION IS EXCLUDE HER AS WITNESS
ON DUE PROCESS GROUNDS, SPECIFICALLY ON BRADY GROUNDS.
THE COURT: WE DON'T KNOW WE HAVE ANY BRADY.
MS. LEARY: WE KNOW THIS WOMEN PARTICIPATED IN AN
INVESTIGATION OF MR. I POSSIBLY MR. FOWLES I
WE HOPE NOT. THE FACT THAT INVESTIGATION DIDN'T RESULT IN
ANYTHING, MAYBE ON ITS FACE BRADY, CERTAINLY IT'S IMPEACHMENT
MATERIAL AND THAT IS A TYPE OF BRADY MATERIAL, THIS RAISES SOME
GRAVE DUE PROCESS CONCERNS.
THIS PERSON HAS HAD CONSTANT CONTACT WITH THE FBI AND
WITH THE GOVERNMENT. 'S TESTIFIED BEFORE THE JURY, AT
NO INDICATING
THE COURT: GRAND JURY WHERE, IN TEXAS?
THAT
MS. LEARY: MR. SMETANA AND MR. YAMAGUCHI DIRECTED
JURY TESTIMONY. SHE AT NO POINT INDICATED --
THE COURT: YOU HAVE THAT
MS. LEARY: WE DO. THIS
CONCERNS. THIS IS SOMETHING THAT
GRAVE DUE
EXTREMELY
MUST HAVE MET WITH MR. YAMAGUCHI, AND MR. SMETANA AT
DIVULGES THIS TYPE INFORMATION.
SHE
POINT
IN FACT, I HAVE A LIST OF IN LIMINE MOTIONS I'D LIKE
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863 5179
2893
LITTLE , AND THAT RAISES THE ABOUT I
SHOULD LET HER ON BEFORE THAT OCCURS, TOO.
MS. LEARY: WE JOIN IN MR. BROWN'S MOTION.
THE COURT: IS THERE A MOTION? WHAT'S THE MOTION?
MS. LEARY: THE MOTION IS EXCLUDE HER AS WITNESS
ON DUE PROCESS GROUNDS, SPECIFICALLY ON BRADY GROUNDS.
THE COURT: WE DON'T KNOW WE HAVE ANY BRADY.
MS. LEARY: WE KNOW THIS WOMEN PARTICIPATED IN AN
INVESTIGATION OF MR. I POSSIBLY MR. FOWLES I
WE HOPE NOT. THE FACT THAT INVESTIGATION DIDN'T RESULT IN
ANYTHING, MAYBE ON ITS FACE BRADY, CERTAINLY IT'S IMPEACHMENT
MATERIAL AND THAT IS A TYPE OF BRADY MATERIAL, THIS RAISES SOME
GRAVE DUE PROCESS CONCERNS.
THIS PERSON HAS HAD CONSTANT CONTACT WITH THE FBI AND
WITH THE GOVERNMENT. 'S TESTIFIED BEFORE THE JURY, AT
NO INDICATING
THE COURT: GRAND JURY WHERE, IN TEXAS?
MS. LEARY: MR. SMETANA AND MR. YAMAGUCHI DIRECTED
THAT JURY TESTIMONY. SHE AT NO POINT INDICATED --
THE COURT: YOU HAVE THAT
MS. LEARY: WE DO. THIS
CONCERNS. THIS IS SOMETHING THAT
GRAVE DUE
EXTREMELY
MUST HAVE MET WITH MR. YAMAGUCHI, AND MR. SMETANA AT
DIVULGES THIS TYPE INFORMATION.
SHE
POINT
IN FACT, I HAVE A LIST OF IN LIMINE MOTIONS I'D LIKE
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863 5179
Exhibits 30
2894
TO MAKE ABOUT HER TESTIMONY TODAY THAT'S THIS,
WHO IS MORE THAN WILLING TO BEND THE TRUTH IN AN
AGGRESSIVE WAY.
AND I THINK THIS IS AN EXTREMELY UPSETTING EXAMPLE OF
THE EXTENT TO WHICH SHE IS IN MR. ARMSTRONG
AND BY IMPLICATION OF MR. FOWLES. AND I WOULD MOVE TO STRIKE
THE TESTIMONY OF SOMEBODY WHO WITHHELD THIS
FOR THIS PERIOD OF TIME.
THE COURT: I'M NOT PREPARED TO
SHE MAY HAVE, QUOTE, "WITHHELD, II AS YOU
OF INFORMATION
FAR. BECAUSE
IT, MAY BE
SOMETHING THAT IS TOTALLY NOT TANGENTIAL BUT TOTALLY IRRELEVANT
TO AN ENTIRE DIFFERENT MATTER.
I'M NOT PREPARED TO SAY IT IS OR ISN'T, BUT I DO THINK
THAT I SHOULD NOT LET MS. ROBINS TESTIFY HERE TODAY UNTIL
RE READY TO CROSS.
THE WHOLE STORY. AND ONCE YOU
I YOU CAN RENEW YOUR MOTION
TO BE A WITNESS AT ALL.
MS. LEARY: THERE'S TWO
THE
STAND NOW AND VOIR DIRE HER OUTSIDE
WE
L YOU HAVE
AND THEN,
THINK
HER
THE PRESENCE THE
JURy WHAT SHE DID, WHAT THE STATEMENTS WERE, AND TRY F
WHAT THE RELEVANCE ON THAT BASIS.
WE CAN ASK THE GOVERNMENT I ALSO, I WHAT
KNOW ABOUT THE COMPUCHECK, INVESTIGATION; WHO INITIATED, WAS IT
JAMES YEOMANS, OFFICIAL REPORTER, USDe, 415-863-5179
2894
TO MAKE ABOUT HER TESTIMONY TODAY THAT'S THIS,
WHO IS MORE THAN WILLING TO BEND THE TRUTH IN AN
AGGRESSIVE WAY.
AND I THINK THIS IS AN EXTREMELY UPSETTING EXAMPLE OF
THE EXTENT TO WHICH SHE IS IN MR. ARMSTRONG
AND BY IMPLICATION OF MR. FOWLES. AND I WOULD MOVE TO STRIKE
THE TESTIMONY OF SOMEBODY WHO WITHHELD THIS
FOR THIS PERIOD OF TIME.
THE COURT: I'M NOT PREPARED TO
SHE MAY HAVE, QUOTE, "WITHHELD, II AS YOU
OF INFORMATION
FAR. BECAUSE
IT, MAY BE
SOMETHING THAT IS TOTALLY NOT TANGENTIAL BUT TOTALLY IRRELEVANT
TO AN ENTIRE DIFFERENT MATTER.
I'M NOT PREPARED TO SAY IT IS OR ISN'T, BUT I DO THINK
THAT I SHOULD NOT LET MS. ROBINS TESTIFY HERE TODAY UNTIL
RE READY TO CROSS.
AND I DON/T THINK YOU/RE READY TO
THE WHOLE STORY. AND ONCE YOU HAVE THE
I YOU CAN RENEW YOUR MOTION
TO BE A WITNESS AT ALL.
MS. LEARY: THERE'S TWO
STAND NOW AND VOIR DIRE HER OUTSIDE
WE
L YOU HAVE
AND THEN,
THINK
HER
THE PRESENCE THE
JURy WHAT SHE DID, WHAT THE STATEMENTS WERE, AND TRY F
WHAT THE RELEVANCE ON THAT BASIS.
WE CAN ASK THE GOVERNMENT I ALSO I I WHAT
KNOW ABOUT THE COMPUCHECK, INVESTIGATION; WHO INITIATED, WAS IT
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
Exhibits 31
2895
} OUT OF TO WHAT EXTENT THESE GENTLEMEN WERE
WERE INVOLVED, IF THE TWO INVESTIGATIONS WERE
COMBINED IN SOME WAY AND SHE KEPT THAT INFORMATION FROM THEM.
THE COURT: AREN'T YOU GOING TO KNOW BETTER WHEN
SEE THE ?
MS. WE MAY, BUT WE CAN CERTAINLY GET A PIECE
OF IT NOW HAVING HER ON THE STAND, VOIR DIRE HER ON THE
MR. I THINK I JUST TO MAKE RECORD I MY
COMPUCHECK WAS A SEPARATE INVESTIGATION IN
DALLAS.
HAD ANY
'S SOMETHING THAT WE HAVE PLAYED A ROLE IN OR
WITH. I NEED TO SPEAK ONLY BECAUSE I I M THE ONE
WHO'S BEEN WITH
RECENT ADDITION.
CASE THE LONGEST. MR. HARDY A FAIRLY
WE'VE NOT BEEN INVOLVED IN COMPUCHECK INVESTIGATION.
I DON'T KNOW IT'S CURRENT STATUS, IF IT'S STILL AN OPEN
INVESTIGATION, I BELIEVE IT IS. JUST FROM MY
MORNING, TO MY KNOWLEDGE THEY'RE TWO TOTALLY SEPARATE
HAD JUST
THE
THIS MORNING I REVIEWED A COPY OF THE 10K OR
FROM SEPTEMBER OF 1993, AND THAT POINT MR.
MS. LEARY:
INTEREST, SO IT IS SOME TWO YEARS
TAFT.
THE GOVERNMENT KNOW WHETHER
MR. MURPHY WAS INVOLVED IN THAT INVESTIGATION?
JAMES YEOMANS, OFFICIAL REPORTER, usnc, 415-863-5179
THIS
NOT
2895
OF TO WHAT EXTENT THESE GENTLEMEN WERE
WERE INVOLVED, IF THE TWO INVESTIGATIONS WERE
COMBINED IN SOME WAY AND SHE KEPT THAT INFORMATION FROM THEM.
THE COURT: AREN'T YOU GOING TO KNOW BETTER WHEN
SEE THE ?
MS. WE MAY, BUT WE CAN CERTAINLY GET A PIECE
OF IT NOW HAVING HER ON THE STAND, VOIR DIRE HER ON THE
MR. I THINK I JUST TO MAKE RECORD I MY
COMPUCHECK WAS A SEPARATE INVESTIGATION IN
DALLAS.
HAD ANY
'S SOMETHING THAT WE HAVE PLAYED A ROLE IN OR
WITH. I NEED TO SPEAK ONLY BECAUSE I I M THE ONE
WHO'S BEEN WITH
RECENT ADDITION.
CASE THE LONGEST. MR. HARDY A FAIRLY
WE'VE NOT BEEN INVOLVED IN COMPUCHECK INVESTIGATION.
I DON'T KNOW IT'S CURRENT STATUS, IF IT'S STILL AN OPEN
INVESTIGATION, I BELIEVE IT IS. JUST FROM MY
MORNING, TO MY KNOWLEDGE THEY'RE TWO TOTALLY SEPARATE
HAD JUST
THE
THIS MORNING I REVIEWED A COPY OF THE 10K OR
FROM SEPTEMBER OF 1993, AND THAT POINT MR.
MS. LEARY:
INTEREST, SO IT IS SOME TWO YEARS
TAFT.
THE GOVERNMENT KNOW WHETHER
MR. MURPHY WAS INVOLVED IN THAT INVESTIGATION?
JAMES YEOMANS, OFFICIAL REPORTER, usnc, 415-863-5179
THIS
NOT
Exhibits 32
1 MICHAEL J. YAMAGUCHI
United states Attorney
2
JOEL R. LEVIN
3 C ~ i e f , Criminal Division
41 RONALD D. SMETANA
Special Assistant U.S. Attorney
5 GEORGE D. HARDY
Assistant U.S. Attorney
6
450 Golden Gate Avenue
7 San Francisco, CA 94102
Telephone: (415) 436-6851
II
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
UNITED STATES OF AKBRlCA,
CONNIE C. ARHSTRONG, JR., Iilnd
RICHARD A.FOlllrLES,
No. OR 94-0276 CAL
All!'lI!'IDAVIT Oll!' WILLARD L.
HATCHER, JR. Illi SUPPORT
OF GQVBRmU!JIIT'S EX-PARTE
SUBHXSSION
Plaintiff,
Dllfondanta.
v.
)
)
)
)
)
)
)
)
)
)
---------------)
11
10
15
16
12
14
17 I, Willard L. Hatcher, Jr., state that:
18 I have been a Special Agent with the Federal Bureau of
19 Investigation ("FBI") for 6 years, and am currently the case
20 agent for the prosecution in United States v. Connie C.
21 Armstrong. Jr .. et al, I have been involved with the
22 investigation of Hamilton Taft and Company since March of 1991.
23 Prior to his retirement on January 1, 1997, FBI special Agent
24 Patrick K. Murphy was the case agent.
25 2. I first learned of the government's possession of
26 recorded conversations of Connie C. Armstrong, Jr., on the night
AFFIDAVITOP WILLARD L HATCHIJIl, lR
IN SUPPORT OF GOYllRNMENT'S EX-PARTE
SUBMISSION
Exhibits 33
1 of January 12, 1997, after witness Terri Robins informed
2 Assistant United states Attorney George Hardy of their existence.
3 3. I telephoned Patrick K. Murphy on January 13, 1997, and
4 asked his knowledge of such recordings. Mr. Murphy stated that
5 he understood that Ms. Robins had made some recordings for the
6 government on an unrelated investigation. Mr. Murphy stated he
7 did not know that Ms. Robins had ever recorded conversations with
8 Armstrong.
4. Mr. Murphy and I knew of the existence of the Dallas
10 FBI's investigation of Armstrong's activity at Comp-U-Check. We
11 understood that this investigation related to conduct that
12 occurred well after the bankruptcy of Hamilton Taft. To our
13 knowledge this investigation was unrelated to Hamilton Taft
14 except for the common involvement of Armstrong.
15 5. Since January 12, 1997, I have contacted Special Agent
16 Peter A. Galbraith, the Dallas FBI case agent for the Comp-U-
17 Check investigation, and requested all taped conversations with
18 Armstrong. I have received thirty-six (36) audio tapes and
19 special Agent Galbraith has assured me that these constitute all
20 of the tape recordings of Armstrong in the possession of the
21 Dallas FBI.
22 6. In addition, Special Agent Galbraith provided to me
23 copies of 302 reports prepared relating to the tapes and
24 documents provided to the Dallas FBI by Terri Robins. He assured
25 me that all of the reports and documents have also been forwarded
26 to San Francisco.
AFFIDAVIT OF WILLAIlD L HATCIlEll, JR
IN SUPPORT OF GOVERNMENT'S E X ~ P A R . T E
SUBMISSION 2
Exhibits 34
1 7. Agent Galbraith expressed concern about the disclosure
2 the tapes, reports and documents to Armstrong because the Comp-U-
3 Check investigation and other related investigations are on-going
4 and he is concerned that disclosure of the materials may
5 jeopardize these investigations. He understood that certain of
6 the tapes, written materials and reports may have to be turned
7 over to Armstrong, but requested that the materials be
a scrutinized carefully and that those ultimately turned over be
9 limited to those necessary to protect Armstrong's rights without
10 harming the investigations.
11 8. Agent Galbraith said that all of the conversations were
12 recorded and documents were received in late 1993 and early 1994,
13 SUbsequent to the Hamilton Taft bankruptcy and before the
14 indictment of Armstrong.
15 9. After review of the tapes and documents by myself,
16 Special Agent Laura Nielson, Assistant United States Attorney
17 George Hardy and special Assistant United states Attorney Ronald
18 Smetana, we determined that Hamilton Taft is mentioned in five
19 (5) tapes; copies of the relevant portions of those tapes have
20 been reproduced for review by the Court for a determination of
21 whether they should be turned Over to Armstrong. In addition,
22 there is one document, a "novella" about Hamilton Taft, that has
23 statements attributed to Armstrong; since I do not know its
24 authorship, that document has been copied for the Court's review.
25 10. All of the reports, tapes and documents received from
26 the Dallas FBI are being made available for the Court's in camera
AFFIDAvrrOF wn.LARD L HATCHER, JR
IN SUPPORT OF GOVEIlNMIlNl"S !lX-FARTE
SUBMISSION 3
Exhibits 35
1 review.
2
3 I declare under penalty of perjury that the foregoing is
4 true and correct. Executed
5 Francisco, California.
Ii
7
8
COUNTY OF SAN FRANCISCO )
9 ) SS.
STATE OF CALIFORNIA )
10
11 Sworn to and subscribed in my presence on January 24, 1997,
12
13
15
in San Francisco, California.
e.eeeeceee.eeeJ
@, . .. '
z • Notory N:>IIc - Co1IlomlrJ !
• ' , Son FrancIDCO CounIV 1
d" 0 0
16 My Commission Expires on ,OJ; :: i.\" ""'\ ie,' . cl
i
.' [CYll
\
17
18
20
21
22
23
24
2S
26
AFFIDAVIT OF WILLAIID L HATCHER, JR
IN SUPPORT OF GOVERNMENT'S EX-PART!!
SUBMLSSION 4
Exhibits 36
Volume 3
Pages 187 - 206
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE MARILYN HALL PATEL
UNITED STATES OF AMERICA, )
)
Plaintiff, )
)
vs. ) NO. CR 07-0100 MHP
)
KENT H. ROBERTS, )
) San Francisco, California
Defendant. ) Wednesday
) September 17, 2008
___________________________________)

TRANSCRIPT OF PROCEEDINGS
APPEARANCES:

For Plaintiff: DAVID L. ANDERSON
Acting United States Attorney
450 Golden Gate Avenue, 11th Floor
San Francisco, California 94102
BY: LAUREL BEELER, AUSA
TIMOTHY J. LUCEY, AUSA

For Defendant: COOLEY GODWARD KRONISH LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto California 94306-2155
BY: STEPHEN C. NEAL, ESQUIRE
NEAL J. STEPHENS, ESQUIRE
SHANNON M. EAGAN, ESQUIRE


Reported By: Katherine A. Powell, CSR #5812, RPR, CRR
Belle Ball, CSR #8785, RMR, CRR
Official Reporters - U.S. District Court

Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page1 of 21
Exhibits 37
188
1 P R O C E E D I N G S
2 SEPTEMBER 17, 2008 8:38 A.M.
3
4 (The following proceedings were held in open court,
5 outside the presence of the jury.)
6 THE CLERK: Calling criminal 07-0100,
7 United States v. Kent Roberts.
8 MS. BEELER: Good morning, Your Honor.
9 Laurel Beeler for the United States.
10 THE COURT: Good morning. What's the problem?
11 MR. NEAL: Good morning, Your Honor. Stephen Neal
12 for Mr. Roberts.
13 MS. BEELER: So yesterday we received a production of
14 e-mails from the company in response to both the defense
15 subpoena and a government request. And the context is that we
16 were looking for specific confirmation of events that happened
17 in November 2000.
18 November 2000, I'll just proffer to the Court, is a
19 relevant date because there's information in the stock
20 administration database about when this particular grant got --
21 was created.
22 So I -- we were pushing for information about -- it's
23 something that I've been doing in this case, generally, to see
24 what information might exist about this particular date.
25 And so not yesterday -- what's today? Today is
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page2 of 21
Exhibits 38
189
1 Wednesday. On Monday I received certain information about
2 travel from -- about Terry Davis. I asked the company for
3 confirmation about his compensation, whether he submitted
4 expenses for reimbursement for that trip. This is the date,
5 supposedly, where the option was repriced in the system.
6 No expense had been submitted for reimbursement so I
7 asked about e-mails. I said I had already looked at his
8 Outlook calendar. The Outlook calendar had nothing. I said,
9 Is there e-mails? There must be e-mails.
10 At the time, because the defense is moving -- as soon
11 as soon as I get information, I produce it to the defense about
12 this particular date. The defense puts in a subpoena for
13 e-mails.
14 Yesterday, in the afternoon or early evening --
15 MR. NEAL: Late afternoon, evening.
16 MS. BEELER: -- early evening, we received one
17 e-mail, one e-mail dated November 15th, that had to do with
18 this particular transaction. Mr. Roberts was one of the people
19 on that e-mail.
20 I then said to the company that I wanted every e-mail
21 going back to July, beginning of July, which is a relevant time
22 period, which we knew from previous e-mail traffic, because it
23 has to do with a board meeting where the initial grant was
24 authorized.
25 I asked for every e-mail between Mr. Roberts,
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page3 of 21
Exhibits 39
190
1 Mr. Davis, and then a third person in stock administration.
2 And then I expanded it to include Prabhat Goyal, who was the
3 CFO and, at that time, Mr. Roberts' direct -- the person he
4 reported to in the chain of command.
5 Last night, at -- 10:40 p.m.? -- somewhere around
6 then, I got another production from the company of additional
7 e-mails.
8 Those additional e-mails -- the source of them was
9 stock administration. My understanding was that they're not --
10 Mr. Davis's e-mails don't exist. But the e-mails -- this is
11 from the company from the internal -- person from the Howrey
12 law firm, that Mr. Roberts' e-mails don't have that. All of
13 this, of course, was responsive to the grand jury -- to the
14 subpoena that we initially issued in 2006.
15 In any event, I had a production of e-mails last
16 night --
17 THE COURT: The subpoena to the company?
18 MS. BEELER: Correct. Back when we were
19 investigating the case.
20 So what do the e-mails mean? There are two parts of
21 it. On the one --
22 THE COURT: When did you start subpoenaing?
23 MS. BEELER: 2006.
24 THE COURT: Was there a subpoena in which you
25 requested the documents you now received, you just now
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page4 of 21
Exhibits 40
191
1 received?
2 MS. BEELER: The answer is these documents are
3 responsive to our subpoena.
4 MR. NEAL: The documents were responsive to the
5 original grand jury subpoenas, beyond any question.
6 They weren't produced. They were produced last
7 night, in response to both requests from the government and
8 additional subpoenas that we had issued on Monday. But they
9 are documents that we have known or believed existed for a long
10 time.
11 THE COURT: Well, is there any reason why -- well,
12 let me back off of that one for a moment, but not for long.
13 When did you first specifically subpoena or attempt
14 to subpoena e-mails, and you were explicit about e-mails?
15 MS. BEELER: 2006.
16 MR. NEAL: There's no question that the --
17 MS. BEELER: We're not disputing -- yeah.
18 MR. NEAL: There's no question that the government
19 subpoenas were defied by the non-production.
20 And I will say it defies credibility to believe that
21 this was inadvertent, because they are e-mails that have our
22 clients' name, the name of Terry Davis, who we have contended
23 for a long time is the one who made the change and approved the
24 change, Terry Davis, who, by the way, has a plea agreement with
25 the government and has lied to the government over and over and
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page5 of 21
Exhibits 41
192
1 over in 302s because he has said for two years he had nothing
2 to do with it. And the documents that came in last night
3 confirmed what we have said all along, which is he is all over
4 it. These were called for in 2006.
5 And if I can interject for a minute, just to give you
6 my perspective, because our view is it's outrageous. Our view
7 is the case really ought to be dismissed at this point.
8 And it's not an issue with the prosecutors. The
9 prosecutors are as much victims here as we are. I've got maybe
10 a couple of views of how they should have done things
11 differently, but on this they are every bit the victim we are.
12 I will say we have said to the prosecutors from the
13 beginning in this case that they were being given slanted and
14 incomplete information by McAfee, by its special committee, and
15 by the law firms that represent both McAfee and special
16 committee.
17 THE COURT: Are any of their attorneys in court
18 today?
19 MR. NEAL: Well, the Howrey side represented the
20 special committee. Wilson Sonsini represents the company.
21 The documents last night came from Wilson Sonsini,
22 although we understand they got them from the special
23 committee.
24 MS. BEELER: That's right.
25 MR. NEAL: Your Honor, Mr. Stephens warned the
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page6 of 21
Exhibits 42
193
1 prosecutor six months ago that documents were being withheld
2 and we were going to see last-minute productions from the
3 company on the eve of trial.
4 Our client has insisted for two years that documents
5 relevant to this, with his name on them, existed and had not
6 been produced in response to government subpoenas.
7 They took his laptop and his hard drive and held it
8 from May of 2006. He's been adamant the documents existed,
9 they were right in front of them.
10 What's now clear from this production is that these
11 documents, which are relevant on the most critical issues in
12 the case, were in fact in the possession of the special
13 committee, presumably reviewed by the special committee,
14 although they never found their way into the special
15 committee's report.
16 And the special committee, when they were subpoenaed
17 by the government, did not turn these documents over. Nor did
18 the company turn these documents over.
19 And it's not the first time we've had a problem like
20 this in the case. The government almost indicted Mr. Roberts
21 with respect to an option involving a man named Art Matin.
22 And at the very last minute, Mr. Stephens
23 correctly -- and the government was responsive -- demonstrated
24 to the government that a critical piece of evidence concerning
25 that grant had been withheld from the production that had been
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page7 of 21
Exhibits 43
194
1 given to the government.
2 And it was brazen. The government had been given two
3 pages out of Mr. Roberts' journal. And the company's lawyers
4 withheld the middle page. And so the government --
5 THE COURT: The company's lawyers being?
6 MR. NEAL: Wilson Sonsini.
7 THE COURT: Wilson Sonsini.
8 MR. NEAL: And I don't know that it was Wilson who
9 made the decision.
10 THE COURT: Wasn't Mr. Feldman going to be your first
11 witness?
12 MS. BEELER: Well, I think Mr. Feldman is not a
13 percipient witness to anything having to do with that.
14 MR. NEAL: I don't think he was involved in this.
15 They produced -- these weren't the actual numbers, but they
16 produced page 1 and page 3 to the government. The government
17 looked at those and said -- they literally almost indicted him
18 on this. And we then showed them there was a missing page
19 which put the story in a totally different context.
20 They now clearly have a witness, Terry Davis, who has
21 lied to them repeatedly. They have other witnesses whose
22 credibility is really thrown into question, who denied any
23 knowledge or involvement with the change in this grant, who are
24 all over these new e-mails.
25 They have a woman, Sylvia Lechelt, who told the
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page8 of 21
Exhibits 44
195
1 special committee and, I believe, the prosecutors, that she was
2 intimidated by the CEO of the company into giving false
3 testimony to the special committee for the purpose of
4 protecting the CEO. The government did nothing about that.
5 Your Honor may or may not be aware of this. We, in
6 the middle of this case, had to sue in the Delaware chancery
7 court to get our fees paid because, notwithstanding an ironclad
8 indemnification agreement, McAfee stopped paying our fees, took
9 the position they wouldn't fund the defense of this case. It's
10 not KPMG, because there's not a whiff of a hint that the
11 prosecution had anything to do with that.
12 But that case ultimately was resolved, and left the
13 company and a couple of key directors, who are going to testify
14 here, hopping mad, and left them understanding that the only
15 way they had a chance to recoup their fees was if Kent Roberts
16 got indicted in this case.
17 And we're not going to do this in front of the jury,
18 but the result of that is that the company and key witnesses
19 who the prosecution is going to call have been determined to
20 try and get this man convicted in part because they are so
21 angry that they've had to advance his fees. And we've warned
22 them about this. We told them about this.
23 And the production last night is an outrage. In --
24 THE COURT: How many pages did you get last night?
25 MR. NEAL: 18 pages.
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page9 of 21
Exhibits 45
196
1 MS. BEELER: Duplicate, some of it, but still --
2 THE COURT: What does it do to your case?
3 MS. BEELER: Here's a couple of comments. I'll
4 answer your question first, and then I just want to respond to
5 a couple of small fact points.
6 As far as our case is concerned, look, the issue --
7 part of the case from the defense perspective is Terry Davis --
8 a sort of reliance on Terry Davis defense, that Terry Davis
9 said it was okay. From the defense perspective, these e-mails
10 show that.
11 But, also, from the government's perspective it shows
12 in more detail a chronology of what happened, starting in July,
13 a period of time we already knew about, adding something in
14 August, and adding something in November.
15 So from the government's case on some levels, on many
16 levels, it provides a chronology that gives context to the
17 government's entire case.
18 So, on the one hand it works for both parties. It's
19 evidence for the defense and it's also evidence for the
20 government, because Terry Davis was always part of this case.
21 So that's how the evidence matters.
22 What -- I will say a couple of things. One, a lot of
23 what Mr. Neal said factually I agree with. I will observe that
24 one of the things I'm trying to do is I tried to replicate, as
25 much as I could, what the special committee did and what the
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page10 of 21
Exhibits 46
197
1 people who were interviewed, to have an independent look at the
2 evidence. And sometimes -- and I'm not saying I was trying to
3 get to the bottom of here, which is troubling to me, of why
4 e-mails that were forensically available to this special
5 committee, to Howrey -- by "forensically" I mean in electronic
6 form, not in paper form -- weren't reduced to paper and
7 provided to the parties.
8 THE COURT: To whom were the subpoenas directed?
9 MS. BEELER: To the company.
10 THE COURT: To the company?
11 MS. BEELER: That's correct.
12 THE COURT: And were they sufficiently broad enough
13 to include or --
14 MS. BEELER: Yes.
15 THE COURT: Would there be any reasonable
16 interpretation why they would not include the special
17 committee?
18 MS. BEELER: No one is disputing that these e-mails
19 fell within the scope of the subpoena.
20 But I will say this. When one is searching for --
21 through terabytes of information, one defines search terms. At
22 the same time the word "grant" during a time period that's
23 perfectly relevant -- I have a hard time, myself, understanding
24 at this moment why I did not get these e-mails.
25 MR. NEAL: These had to have jumped out like a rabbit
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
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Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page11 of 21
Exhibits 47
198
1 out of a hat, Your Honor. The e-mails -- you almost have to
2 believe that somebody affirmatively pulled these out of a
3 production, because they are so integral to the whole story.
4 And if you're looking for e-mails relating to Kent
5 Roberts and Terry Davis, who has lied to the government over
6 and over and over about having any involvement, you look at the
7 time frame, you look at the size of the grant, which was 20,000
8 shares, that stuff is flashing like police lights off these
9 documents. It's incredulous that they weren't produced.
10 MS. BEELER: The bottom line is that the government
11 is asking for one day to look into this, to try to figure out
12 what happened, whether there's anything more out there, whether
13 we, in fact, had the universe of information, and to kind -- to
14 assess what Mr. Neal has said about what this means, these
15 additional documents shedding light on this transaction viewed
16 in light of some of the -- of other transactions in the case
17 that all of the parties are aware of.
18 I think at the end of the day -- these are electronic
19 e-mails. I think the universe of grants, the universe of
20 documents, the scope of what happened at the company is
21 apparent to both parties.
22 The government -- this is a significant issue. And
23 I'd like a day to look into it, to see if I can figure out if
24 there's anything more out there before going forward.
25 THE COURT: Well, but anything more than that may
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
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Exhibits 48
199
1 lead to another day.
2 MS. BEELER: No.
3 THE COURT: Another day.
4 MS. BEELER: I'm just asking for a day. That's all
5 I'm asking for.
6 MR. NEAL: We're opposed to that. And I say that
7 with utmost respect for Ms. Beeler, who I have utmost respect
8 for.
9 At least as we understand, and I think you
10 understand, they are now saying this is it, that we're not
11 getting more documents. And they ought to be able to either
12 make the decision to dismiss this case -- these documents gut
13 one theory of their case.
14 They were coming in here -- and they were misled, but
15 they were prepared to come in here and raise questions about
16 whether Terry Davis, in fact, had anything to do with the
17 change in this grant. It's now clear as the light of day that
18 he was all over it.
19 THE COURT: What was his position with the company?
20 MS. BEELER: Controller.
21 MR. NEAL: He was the controller. And he had the
22 authority to make the changes, Your Honor. And the changes
23 that he made didn't violate any company policies with respect
24 to options when they were made, which will come out in this
25 case.
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page13 of 21
Exhibits 49
200
1 So it's dealt a huge blow to part of the government's
2 case. It is hugely supportive of our theory of the case. And
3 the government -- what they really say --
4 THE COURT: If it's that significant to their case
5 though --
6 MR. NEAL: Pardon?
7 THE COURT: -- why shouldn't they have a day to take
8 a look at it and assess it?
9 MR. NEAL: Because we've had all night to do it. We
10 all know what the documents say. It's not a huge volume. We
11 know what it shows. It shows Terry Davis was all over this.
12 THE COURT: There are several options, I suppose. We
13 have a jury sitting here and we're paying for them. I have not
14 sworn them in. I could excuse them completely. There is no
15 double jeopardy. That's exactly why we do these kinds of
16 things. Things happen. I just know that from experience. And
17 we could start all over again.
18 And I would love to bring in -- because I think we
19 have jurisdiction over them -- whoever it is from the company,
20 whoever it is from Wilson Sonsini and/or Howrey and make them
21 pay the cost of the jury and all those people that were brought
22 in yesterday.
23 MR. NEAL: You also ought to find out what they were
24 doing in response to those grand jury subpoenas.
25 THE COURT: I think the government needs to
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
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Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page14 of 21
Exhibits 50
201
1 investigate what these people were doing. I mean, this is
2 outrageous.
3 MS. BEELER: I have asked specific questions -- I
4 will say this. I've been dealing with one person at Wilson
5 Sonsini, who has been nothing but helpful, in trying to get to
6 the bottom of this information now.
7 THE COURT: Do they have a general counsel at the
8 company now?
9 MS. BEELER: Yes.
10 MR. NEAL: Who's one of the people who was adamantly
11 trying to kill payment of fees to Cooley Godward, by the way,
12 Your Honor.
13 THE COURT: Well, you figure out who needs to be in
14 here, because some way or another some heads have to roll with
15 regards to this. This is outrageous.
16 Now, the other option is just tell the jury to go
17 home today and come back tomorrow.
18 MS. BEELER: I think that probably is --
19 THE COURT: But, you know, I'm not -- I don't have
20 the authority to dismiss the case just because the government
21 is not going to go forward today, because they have a
22 legitimate reason.
23 Or I can compel you to put on witnesses. And if you
24 have to call them back later on, do that. That's another
25 option. Get started.
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page15 of 21
Exhibits 51
202
1 MS. BEELER: Right. I appreciate that's an option.
2 The reason I want a day is I think it's important for us to
3 know what the situation is before going forward.
4 I think that's the way it ought to work, that the
5 government should assess its case in light of this, and try to
6 get to the bottom, to make sure that there's no information.
7 I mean, here at 10:40 last night I receive
8 information. I haven't -- you know, I reached out to everybody
9 on the e-mail chain to not -- to talk with them, to try to
10 illuminate the situation more so the government can make a
11 considered prosecution decision about whether it ought to go
12 forward.
13 And I think that balancing sort of the efficient
14 administration of justice, the fact that we have a jury here,
15 the importance of a disclosure like this, which raises all the
16 same concerns for the government as it does for the Court and
17 for the defense, I think it's entirely appropriate for the
18 government to make that assessment, to make an assessment, and
19 not go forward with witnesses under those circumstances. I
20 don't think that's right and I don't think that's fair.
21 THE COURT: On the other hand, the Court can say
22 you're not ready to go forward; too bad.
23 MS. BEELER: Well, it's not that we're not ready to
24 go forward and couldn't put on witnesses. I just don't think
25 it's appropriate to do so under the circumstances. We're just
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page16 of 21
Exhibits 52
203
1 asking for a day to make sure that we have -- that there are no
2 more surprises.
3 I appreciate the defense's perspective entirely. But
4 I think that the Court -- I would ask the Court to give us the
5 one day, to give us an opportunity to get to the bottom of
6 this.
7 MR. NEAL: I'm running out of freshly-ironed shirts,
8 Your Honor. I've got to go today.
9 MS. BEELER: I wasted a suit.
10 THE COURT: I'm not sure that's a good excuse. Go
11 home and learn how to iron. How's that?
12 (Laughter)
13 MR. NEAL: Sounds like somebody I'm married to.
14 The -- we're -- if what Ms. Beeler is saying is that
15 with a day they might really look hard and make a decision to
16 dismiss this case, if that's what she's saying then I might ask
17 for five minutes to confer with my client before I say no to
18 that.
19 But if what they're saying is, No, we just want to
20 better understand this, I'm opposed. They have had two years
21 to understand this case. Granted, they've been crippled a
22 little bit because they haven't had forthcoming production from
23 people who know better. These are lawyers who were involved in
24 this, who should have known better.
25 My client, on the other hand, has been the fall guy
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page17 of 21
Exhibits 53
204
1 for this for two years, in a context where from our view there
2 is no basis for his having been indicted. There is no question
3 that he didn't commit any crime in the year 2000. And he's
4 been hanging in limbo because of this for two years. We're
5 ready to go.
6 THE COURT: One more day. One more day.
7 I hope it will shorten the time of trial. Because if
8 we go forward today, which is another option, I certainly would
9 leave the door open to certain witnesses being recalled, if you
10 had to do so because of the late production. So I'll put it
11 over until tomorrow morning.
12 MR. NEAL: You're going to put it over?
13 THE COURT: Yes.
14 MR. NEAL: I would really like to start. I'm opposed
15 to putting -- if you're ruling against me, I accept it.
16 THE COURT: And put it over until tomorrow.
17 MS. BEELER: Thank you, Your Honor.
18 THE COURT: I'm going to go tell the jury that I'm
19 excusing them for the day and we'll start tomorrow morning at
20 8:30. Come hell or high water.
21 MS. BEELER: I understand.
22 THE COURT: And I want somebody here of the general
23 counsel of McAfee, or whatever it's called now -- is it called
24 McAfee again?
25 MS. BEELER: It is.
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page18 of 21
Exhibits 54
205
1 THE COURT: And an attorney from Howrey, whoever is
2 responsible, and an attorney from Wilson Sonsini who's
3 responsible, tomorrow morning.
4 MR. NEAL: And I could ask, are you guys going to
5 take a hard look at whether you shouldn't dismiss this case, or
6 are you using the day to get further prepared?
7 THE COURT: I think you should do both.
8 MS. BEELER: Yes.
9 MR. NEAL: Okay. Fair enough.
10 THE COURT: I trust you wouldn't be going forward if
11 those documents indicate to you that you've got some real
12 problems. And we don't need to have a bunch of lying witnesses
13 on the stand.
14 MS. BEELER: I agree.
15 THE COURT: Because if we do have lying witnesses on
16 the stand, I'm referring them for perjury.
17 MS. BEELER: I agree.
18 THE COURT: Okay.
19 MR. NEAL: And you're going to have lying witnesses
20 on the stand. I promise you that. If the case goes forward.
21 THE COURT: Well, then they better be ready, because
22 there's no toleration for that at all, if there is such a word
23 as toleration.
24 MS. BEELER: There is now.
25 MR. NEAL: There is now.
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page19 of 21
Exhibits 55
206
1 THE COURT: Okay.
2 MS. BEELER: All right. Thank you, Your Honor.
3 MR. NEAL: Thank you, Your Honor.
4 THE COURT: Thank you.
5 (At 8:58 the proceedings were adjourned, to
6 recommence Thursday, September 18, 2008, at 8:30
7 a.m.)
8 - - - -
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page20 of 21
Exhibits 56
1
2 CERTIFICATE OF REPORTER
3 I, KATHERINE POWELL SULLIVAN, Official Reporter for
4 the United States Court, Northern District of California,
5 hereby certify that the foregoing proceedings in CR 07-0100
6 MHP, UNITED STATES OF AMERICA vs. KENT H. ROBERTS were reported
7 by me, a certified shorthand reporter, and were thereafter
8 transcribed under my direction into typewriting; that the
9 foregoing is a full, complete and true record of said
10 proceedings at the time of filing.
11
12
s/b Katherine Powell Sullivan
13 _________________________________
14 Katherine Powell Sullivan, CSR #5812, RPR, CRR
15 Wednesday, September 17, 2008
16
17
18
19
20
21
22
23
24
25
Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR Katherine Powell Sullivan, CSR, RPR,CRR
Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR Belle Ball, CSR, RMR, CRR
Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court Official Reporters - U.S. District Court
(415) 794-6659 (415) 794-6659 (415) 794-6659 (415) 794-6659
Case3:07-cr-00100-MHP Document98 Filed09/22/08 Page21 of 21
Exhibits 57
TRANSMIT VIA:
o Teletype
o Facsimile
!KJ AIRTEL
TO
PRECEDENCE:
o Immediate
D Inority
D Routine
DALLAS, SAC
FBI
CLASSIFICATION:
o TOP SECRET
o SECRET
o CONFIDENTIAL
o UNCLAS EFT 0
o UNCLAS
Date 8/4/93
FROM
SUBJECT
SAC, SAN FRANCISCO (196A-SF-93255) (P)
CONNIE CHIP ARMSTRONG, JRj
ET ALi
WIRE FRAUD (A)i
MAIL FRAUDj
00: SAN FRANCISCO
Reference airtel dated February 22,
SA HATCHER has obtained from
united states Attorney, MICHAEL YAMAGUCHT, forL _ I
I Iconfidential source to record conversa lons with b2
subiects of this case. I I
2 - DALLAS
(1) - SAN FRANCISCO
WLH/wlh
1.
" '
Approved:
Transmitted
(Nmnber) (Tune)
PCI' _
Exhibits 58
VB.
CONNIE
STATES
THE A.
C.
OF AMERICA,
PLAHITIFF,
ARMSTRONG, ,. ,
A. FOWLES,
DEFENDANTS.
)
)
)
}
) CR 94-0276
)
)
)
)
)
SAN FORNIA
27, 1997
PAGES 3441 - 3639
ATTORNEY
AVENUE
,CALIFORNIA 102
BY: G E ( ) R G ~ E D,.
n.' •. /L'''.M..I..IJ.J D.
ASSISTANT
CHESTER L. BROWN, ESQ.
2450 BROADWAY, SUITE SSD
SANTA MONICAl CALIFORNIA 90404
SOLOMON WOLLACK,
388 MARKET STREET,
SAN
CONTINUED ON NEXT PAGE:)
1080
111
BY: JAMES J. t CSR
OFFICIAL COURT REPORTER, UBDC
COMPUTERIZED BY XSCRIBE
JAMES YEOMANS, OFFICIAL -863-5179
CAL
NORTHERN
BEFORE THE HO:N01WlLE
UNITED OF
PLAINTIFF,
VS.
• I
DEFENDANTS.
OF
. LEGGE, JtJDGE
)
)
)
}
\
CR 94-0276 CAL J
)
}
)
)
)
SAJ.V FORNIA
27, 1997
PAGES 3441 - 3639
AVENUE
I CALIFORNIA 102
BY; GEORGE D. I ESQ.
RONALD D. SMETANA,
ASSISTANT UNITED STATES
2450 550
SANTA MONICAl CALIFORNIA 90404
SOLOMON WOLLACK, ESQ.
388 STREET I SUITE 1080
SAN I CALIFORNIA 111
ON NEXT PAGE:)
REPORTED BY: JAMES ~ 1 . YEOMANS t CSR
OFFICIAL COuKT REPORTER
COMPUTERIZED BY
JAMES -863-5179
NORTHERN
BEFORE THE HO:N01WlLE
UNITED OF
PLAINTIFF,
VS.
• I
DEFENDANTS.
OF
. LEGGE, JtJDGE
)
)
)
}
\
CR 94-0276 CAL J
)
}
)
)
)
SAJ.V FORNIA
27, 1997
PAGES 3441 - 3639
AVENUE
I CALIFORNIA 102
BY; GEORGE D. I ESQ.
RONALD D. SMETANA,
ASSISTANT UNITED STATES
2450 550
SANTA MONICAl CALIFORNIA 90404
SOLOMON WOLLACK, ESQ.
388 STREET I SUITE 1080
SAN I CALIFORNIA 111
ON NEXT PAGE:)
REPORTED BY: JAMES ~ 1 . YEOMANS t CSR
OFFICIAL COuKT REPORTER
COMPUTERIZED BY
JAMES -863-5179
Exhibits 59
1
2
3
4
5
6
7
8
9
10
11
12
13
.... .1'
14
15
16
17
18
19
20
21
22
23
24
25
3446
THE COURT: YES. COMPUCHECK INVESTIGATION? IS THAT
WHAT YOU'RE TALKING ABOUT? YES. THEY FILED SOME STUFF AND, I
GUESS, THEY GAVE IT JUST TO COUNSEL FOR MR. ARMSTRONG BECAUSE I
DON'T THINK MR. FOWLES IS INVOLVED IN IT, AT LEAST, FROM WHAT I
SAW.
MR. SMETANA: THE QUOTE STATEMENTS OF THE DEFENDANT
THAT WE HAVE AND ANY POTENTIAL BRADY THAT WE HAVE RELATE ONLY
TO MR. ARMSTRONG AND NOT TO MR. FOWLES. THOSE HAVE BEEN
PROVIDED TO COUNSEL FOR MR. ARMSTRONG.
THE COURT: AS I SAID, I GOT A GREAT BIG BOX FRIDAY
AFTERNOON FULL OF MATERIAL ON THAT, SO WHAT DO YOU FOLKS WANT
TO DO?
MR. BROWN: LET'S TALK ABOUT THESE TAPES. I KNOW --
FIRST, I KNOW THE COURT IS PROBABLY VERY CONCERNED, I KNOW WE
ARE. FROM OUR PERSPECTIVE, YOUR HONOR, IT'S A MAJOR PROBLEM.
WE'VE JUST RECEIVED -- WE HEARD ON FRIDAY, I BELIEVE,
AFTERNOON THAT THEY HAD FINALLY AND I DON'T, I DON'T BELIEVE
IT'S MR. SMETANA OR MR. HATCHER OR MR. HARDY'S FAULT, BUT IT'S
ONE GOVERNMENT AND WE ALL KNOW HOW THOSE THEORIES WORK, IT'S
THE ABOUT FBI IN DALLAS.
WHAT APPARENTLY HAS HAPPENED HERE, WHILE MR. ARMSTRONG
WAS CLEARLY REPRESENTED BY COUNSEL AND WHILE THERE WAS, I
BELIEVE, GRAND JURY GOING ON IN THIS CASE, MS. ROBINS WAS
ACTING AS AN INFORMANT FOR THE FBI DOWN IN DALLAS. IT REALLY
IS HARD TO IMAGINE, WITH THE FACT THAT SHE WAS A GRAND JURY
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
1
2
3
4
5
6
7
8
9
10
11
12
13
,",
14
15
16
17
18
19
20
21
22
23
24
2S
3446
THE COURT; YES. COMPUCHECK INVESTIGATION? IS THAT
WHAT YOU'RE TALKING ABOUT? YES. THEY FILED SOME STUFF AND, I
GUESS, THEY GAVE IT JUST TO COUNSEL FOR MR. ARMSTRONG BECAUSE I
DON'T THINK MR. FOWLES IS INVOLVED IN IT, AT LEAST, FROM WHAT I
SAW.
MR. SMETANA: THE QUOTE STATEMENTS OF TIrE DEFENDANT
THAT WE HAVE AND ANY POTENTIAL BRADY THAT WE HAVE RELATE ONLY
TO MR. ARMSTRONG AND NOT TO MR. FOWLES. THOSE HA.VE BEEN
PROVIDED TO COUNSEL FOR MR. ARMSTRONG.
THE COURT: AS I SAID, I GOT A GREAT BIG BOX FRIDAY
AFTERNOON FULL OF MATERIAL ON THAT, SO WHAT DO YOU FOLKS WANT
TO DO?
MR. BROWN: LET'S TALK ABOUT THESE TAPES. I KNOW
FIRST, I KNOW THE COURT IS PROBABLY VERY CONCERNED, I KNOW WE
ARE. FROM OUR PERSPECTIVE, YOUR HONOR, IT'S A MAJOR PROBLEM.
WE'VE JUST RECEIVED -- WE HEARD ON FRIDAY, I BELIEVE,
AFTERNOON THAT THEY HAD FINALLY AND I DON'T, I DON'T BELIEVE
IT'S MR. SMETANA OR MR. HATCHER OR MR. HARDY'S FAULT, BUT IT'S
ONE GOVERNMENT AND WE ALL KNOW HOW THOSE THEORIES WORK, IT'S
THE ABOUT FBI IN DALLAS.
WHAT APPARENTLY HAS HAPPENED HERE, WHILE MR. ARMSTRONG
WAS CLEARLY REPRESENTED BY COUNSEL AND WHILE THERE WAS, I
BELIEVE, GRAND JURY GOING ON IN THIS CASE, MS. ROBINS WAS
ACTING AS AN INFORMANT FOR THE FBI DOWN IN DALLAS. IT REALLY
IS HARD TO IMAGINE, WITH THE FACT THAT SHE WAS A GRAND JURY
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
1
2
3
4
5
6
7
8
9
10
11
12
13
,",
14
15
16
17
18
19
20
21
22
23
24
2S
3446
THE COURT; YES. COMPUCHECK INVESTIGATION? IS THAT
WHAT YOU'RE TALKING ABOUT? YES. THEY FILED SOME STUFF AND, I
GUESS, THEY GAVE IT JUST TO COUNSEL FOR MR. ARMSTRONG BECAUSE I
DON'T THINK MR. FOWLES IS INVOLVED IN IT, AT LEAST, FROM WHAT I
SAW.
MR. SMETANA: THE QUOTE STATEMENTS OF TIrE DEFENDANT
THAT WE HAVE AND ANY POTENTIAL BRADY THAT WE HAVE RELATE ONLY
TO MR. ARMSTRONG AND NOT TO MR. FOWLES. THOSE HA.VE BEEN
PROVIDED TO COUNSEL FOR MR. ARMSTRONG.
THE COURT: AS I SAID, I GOT A GREAT BIG BOX FRIDAY
AFTERNOON FULL OF MATERIAL ON THAT, SO WHAT DO YOU FOLKS WANT
TO DO?
MR. BROWN: LET'S TALK ABOUT THESE TAPES. I KNOW
FIRST, I KNOW THE COURT IS PROBABLY VERY CONCERNED, I KNOW WE
ARE. FROM OUR PERSPECTIVE, YOUR HONOR, IT'S A MAJOR PROBLEM.
WE'VE JUST RECEIVED -- WE HEARD ON FRIDAY, I BELIEVE,
AFTERNOON THAT THEY HAD FINALLY AND I DON'T, I DON'T BELIEVE
IT'S MR. SMETANA OR MR. HATCHER OR MR. HARDY'S FAULT, BUT IT'S
ONE GOVERNMENT AND WE ALL KNOW HOW THOSE THEORIES WORK, IT'S
THE ABOUT FBI IN DALLAS.
WHAT APPARENTLY HAS HAPPENED HERE, WHILE MR. ARMSTRONG
WAS CLEARLY REPRESENTED BY COUNSEL AND WHILE THERE WAS, I
BELIEVE, GRAND JURY GOING ON IN THIS CASE, MS. ROBINS WAS
ACTING AS AN INFORMANT FOR THE FBI DOWN IN DALLAS. IT REALLY
IS HARD TO IMAGINE, WITH THE FACT THAT SHE WAS A GRAND JURY
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
Exhibits 60
1
2
3
4
5
6
7
8
9
10
11
12
13
-II'
14
15
16
17
18
19
20
21
22
23
24
25
3447
WITNESS OF THE GOVERNMENT HERE, THE FBI HERE IN LOS ANGELES DID
A NUMBER OF INTERVIEWS DOWN IN THE DALLAs AREA.
MR. MURPHY WENT DOWN THERE ON OCCAS ION WE KNOW FROM
MR. EVERETT WHO WAS FORMALLY WORKING WITH THE GOVERNMENT
THAT - - ON ONE OCCASION, AT LEAST, THAT WERE SOME DALLAS AGENTS
THAT WORKED WITH MR. MURPHY WHEN THEY WERE IN DALLAS, THAT THIS
INFORMATION WASN'T KNOWN, ALTHOUGH, IT'S NOT REALLY OUR PROBLEM
WHETHER IT WAS COMMUNICATED TO THE SAN FRANCISCO --
THE COURT: IT IS YOUR PROBLEM. WHAT DO YOU WANT TO
DO ABOUT IT? WHAT DO YOU WANT TO DO?
MR. BROWN: YOUR HONOR, WE'VE JUST RECEIVED - - LET ME
TELL YOU WHAT'S HAPPENED. THE GOVERNMENT - - APPARENTLY,
THERE'S SOME -- 35 SOME TAPES WITH 70 SOME HOURS OF INFORMATION
ON IT.
THE COURT: I'VE GOT A GREAT BIG BOX, LITERALLY A BIG
BOX, OF MATERIAL THEY BROUGHT IN MY OFFICE FRIDAY AFTERNOON.
MR. BROWN: ALL WITH SOUND RECORDINGS ON THEM.
THE COURT: NOT ALL, SUBSTANTIAL QUANTITY OF PAPER IN
THERE. I'M NOT SURE QUITE WHAT IT IS. WHAT I ATTEMPTED TO DO
IS START WITH WHAT WAS OBVIOUSLY GREATEST INTEREST TO YOU, THAT
IS THE TAPES AND, I GUESS I THE OTHER STATEMENTS WHICH HAD MR.
ARMSTRONG ON THEM, SO --
MR. BROWN: I'LL TELL YOU, YOUR HONOR, WE WERE TOLD
THAT THERE WERE THREE HOURS WORTH OF SOUND RECORDINGS THAT
SPECIFICALLY MENTIONED HAMILTON TAFT. THE GOVERNMENT
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
1
2
3
4
5
6
7
8
9
10
11
12
13
-"
14
15
16
17
18
19
20
21
22
23
24
25
3447
WITNESS OF THE GOVERNMENT HERE, THE FBI HERE IN LOS ANGELES DID
A NUMBER OF INTERVIEWS DOWN IN THE DALLAs AREA.
MR. MURPHY WENT DOWN THERE ON OCCAS ION WE KNOW FROM
MR. EVERETT WHO WAS FORMALLY WORKING WITH THE GOVERNMENT
THAT - - ON ONE OCCASION, AT LEAST, THAT WERE SOME DALLAS AGENTS
THAT WORKED WITH MR. MURPHY WHEN THEY WERE IN DALLAS, THAT THIS
INFORMATION WASN'T KNOWN, ALTHOUGH, IT'S NOT REALLY OUR PROBLEM
WHETHER IT WAS COMMUNICATED TO THE SAN FRANCISCO --
THE COURT: IT IS YOUR PROBLEM. WHAT DO YOU WANT TO
DO ABOUT IT? WHAT DO YOU WANT TO DO?
MR. BROWN: YOUR HONOR, WE'VE JUST RECEIVED - - LET ME
TELL YOU WHAT'S HAPPENED. THE GOVERNMENT - - APPARENTLY,
THERE'S SOME -- 35 SOME TAPES WITH 70 SOME HOURS OF INFORMATION
ON IT.
THE COURT: I'VE GOT A GREAT BIG BOX, LITERALLY A BIG
BOX, OF MATERIAL THEY BROUGHT IN MY OFFICE FRIDAY AFTERNOON.
MR. BROWN: ALL WITH SOUND RECORDINGS ON THEM.
THE COURT: NOT ALL, SUBSTANTIAL QUANTITY OF PAPER IN
THERE. I'M NOT SURE QUITE WHAT IT IS. WHAT I ATTEMPTED TO DO
IS START WITH WHAT WAS OBVIOUSLY GREATEST INTEREST TO YOU, THAT
IS THE TAPES AND, I GUESS I THE OTHER STATEMENTS WHICH HAD MR.
ARMSTRONG ON THEM, SO --
MR. BROWN: I'LL TELL YOU, YOUR HONOR, WE WERE TOLD
THAT THERE WERE THREE HOURS WORTH OF SOUND RECORDINGS THAT
SPECIFICALLY MENTIONED HAMILTON TAFT. THE GOVERNMENT
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
1
2
3
4
5
6
7
8
9
10
11
12
13
-"
14
15
16
17
18
19
20
21
22
23
24
25
3447
WITNESS OF THE GOVERNMENT HERE, THE FBI HERE IN LOS ANGELES DID
A NUMBER OF INTERVIEWS DOWN IN THE DALLAs AREA.
MR. MURPHY WENT DOWN THERE ON OCCAS ION WE KNOW FROM
MR. EVERETT WHO WAS FORMALLY WORKING WITH THE GOVERNMENT
THAT - - ON ONE OCCASION, AT LEAST, THAT WERE SOME DALLAS AGENTS
THAT WORKED WITH MR. MURPHY WHEN THEY WERE IN DALLAS, THAT THIS
INFORMATION WASN'T KNOWN, ALTHOUGH, IT'S NOT REALLY OUR PROBLEM
WHETHER IT WAS COMMUNICATED TO THE SAN FRANCISCO --
THE COURT: IT IS YOUR PROBLEM. WHAT DO YOU WANT TO
DO ABOUT IT? WHAT DO YOU WANT TO DO?
MR. BROWN: YOUR HONOR, WE'VE JUST RECEIVED - - LET ME
TELL YOU WHAT'S HAPPENED. THE GOVERNMENT - - APPARENTLY,
THERE'S SOME -- 35 SOME TAPES WITH 70 SOME HOURS OF INFORMATION
ON IT.
THE COURT: I'VE GOT A GREAT BIG BOX, LITERALLY A BIG
BOX, OF MATERIAL THEY BROUGHT IN MY OFFICE FRIDAY AFTERNOON.
MR. BROWN: ALL WITH SOUND RECORDINGS ON THEM.
THE COURT: NOT ALL, SUBSTANTIAL QUANTITY OF PAPER IN
THERE. I'M NOT SURE QUITE WHAT IT IS. WHAT I ATTEMPTED TO DO
IS START WITH WHAT WAS OBVIOUSLY GREATEST INTEREST TO YOU, THAT
IS THE TAPES AND, I GUESS I THE OTHER STATEMENTS WHICH HAD MR.
ARMSTRONG ON THEM, SO --
MR. BROWN: I'LL TELL YOU, YOUR HONOR, WE WERE TOLD
THAT THERE WERE THREE HOURS WORTH OF SOUND RECORDINGS THAT
SPECIFICALLY MENTIONED HAMILTON TAFT. THE GOVERNMENT
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
Exhibits 61
1
2
ION THAT THE
THIS
3448
THEIR'
, INVOLVED MR.
3 ARMSTRONG BUT
4
5
'6
7
8
9
lAM
I
THE COURT: I GUESS THAT'S A FAIR
MR • BROWN: THAT I S WE WERE AnVI SED. THESE
HONOR, AT LEAST SOME BRADY MATERIAL.
SAYING I THINK THE GOVERNMENT WOULD
IN ONE OF THEIR MOTIONS THAT THEY FILED THIS MOTION ON
OF MIND. ASKING THAT WHATEVER INFORMATION FROM
10 THESE TAPES INDICATES MR. ARMSTRONG'S DENIAL OF ANY WRONGDOING
11 AT HAMILTON TAFT NOT BE PERMITTED TO BE ADDUCED DURING THE
12 COURSE OF THIS TRIAL.
13 THE COURT: PARDON ME A SECOND. I THINK I SEE MR.
14 SOLODOFF IN THE HALLWAY THERE.
MR. HATCHER, WOULD YOU TELL HIM THAT
TELEPHONE STANDBY AND IF WE NEED HIM WE WILL
JUST TO BE ON
HIM A
17 TELEPHONE CALL. HE SHOULD BE AVAILABLE BY TELEPHONE THIS WEEK.
18
19
GO AHEAD.
MR. BROWN: HONOR, FOR US TO
20 ASSESS THIS, AND I HATE TO SAY THIS, IT'S THREE HOURS, WE WERE
21
22
23
24
25
TOLD ABOUT ON FRIDAY. WE WERE IN THE MIDDLE OF --
WERE ARRIVING.
THE COURT: DOUBT YOU HAVE NOT HAD TIME TO LI STEN
TO THE TAPES. WHAT DO YOU WANT TO DO?
MR. BROWN: I REALLY HATE TO SAY THIS. I THINK WE
JAMES YEOMANS, OFFICIAL REPORTER, USDC/ 415-863-5179
1
2
ION THAT THE
THIS
3448
THEIR'
, INVOLVED MR.
3 ARMSTRONG BUT
4
5
'6
7
8
9
lAM
I
THE COURT: I GUESS THAT'S A FAIR
MR • BROWN: THAT I S WE WERE AnVI SED. THESE
HONOR, AT LEAST SOME BRADY MATERIAL.
SAYING I THINK THE GOVERNMENT WOULD
IN ONE OF THEIR MOTIONS THAT THEY FILED THIS MOTION ON
OF MIND. ASKING THAT WHATEVER INFORMATION FROM
10 THESE TAPES INDICATES MR. ARMSTRONG'S DENIAL OF ANY WRONGDOING
11 AT HAMILTON TAFT NOT BE PERMITTED TO BE ADDUCED DURING THE
12 COURSE OF THIS TRIAL.
13 THE COURT: PARDON ME A SECOND. I THINK I SEE MR.
14 SOLODOFF IN THE HALLWAY THERE.
MR. HATCHER, WOULD YOU TELL HIM THAT
TELEPHONE STANDBY AND IF WE NEED HIM WE WILL
JUST TO BE ON
HIM A
17 TELEPHONE CALL. HE SHOULD BE AVAILABLE BY TELEPHONE THIS WEEK.
18
19
GO AHEAD.
MR. BROWN: HONOR, FOR US TO
20 ASSESS THIS, AND I HATE TO SAY THIS, IT'S THREE HOURS, WE WERE
21
22
23
24
25
TOLD ABOUT ON FRIDAY. WE WERE IN THE MIDDLE OF --
WERE ARRIVING.
THE COURT: DOUBT YOU HAVE NOT HAD TIME TO LI STEN
TO THE TAPES. WHAT DO YOU WANT TO DO?
MR. BROWN: I REALLY HATE TO SAY THIS. I THINK WE
JAMES YEOMANS, OFFICIAL REPORTER, USDC/ 415-863-5179
1
2
ION THAT THE
THIS
3448
THEIR'
, INVOLVED MR.
3 ARMSTRONG BUT
4
5
'6
7
8
9
lAM
I
THE COURT: I GUESS THAT'S A FAIR
MR • BROWN: THAT I S WE WERE AnVI SED. THESE
HONOR, AT LEAST SOME BRADY MATERIAL.
SAYING I THINK THE GOVERNMENT WOULD
IN ONE OF THEIR MOTIONS THAT THEY FILED THIS MOTION ON
OF MIND. ASKING THAT WHATEVER INFORMATION FROM
10 THESE TAPES INDICATES MR. ARMSTRONG'S DENIAL OF ANY WRONGDOING
11 AT HAMILTON TAFT NOT BE PERMITTED TO BE ADDUCED DURING THE
12 COURSE OF THIS TRIAL.
13 THE COURT: PARDON ME A SECOND. I THINK I SEE MR.
14 SOLODOFF IN THE HALLWAY THERE.
MR. HATCHER, WOULD YOU TELL HIM THAT
TELEPHONE STANDBY AND IF WE NEED HIM WE WILL
JUST TO BE ON
HIM A
17 TELEPHONE CALL. HE SHOULD BE AVAILABLE BY TELEPHONE THIS WEEK.
18
19
GO AHEAD.
MR. BROWN: HONOR, FOR US TO
20 ASSESS THIS, AND I HATE TO SAY THIS, IT'S THREE HOURS, WE WERE
21
22
23
24
25
TOLD ABOUT ON FRIDAY. WE WERE IN THE MIDDLE OF --
WERE ARRIVING.
THE COURT: DOUBT YOU HAVE NOT HAD TIME TO LI STEN
TO THE TAPES. WHAT DO YOU WANT TO DO?
MR. BROWN: I REALLY HATE TO SAY THIS. I THINK WE
JAMES YEOMANS, OFFICIAL REPORTER, USDC/ 415-863-5179
Exhibits 62
3449
1 NEED AN OPPORTUNITY TO REVIEW THESE AND/ IF WE NEED TO TAKE A
2 DAY JUST TO REVIEW TAPES, I THINK WE NEED TO DO IT. WE
3 CAN 'T - - THE COURT - - I THINK THE COURT NEEDS TO REVIEW WHAT
4 MATERIAL IT HAS. THIS DEFINITELY HAS BRADY MATERIAL IN IT.
5 THERE'S ALL KINDS OF MOTIONS, AS THE COURT KNOWS,
6 INCLUDING MOTIONS FOR DISMISSAL THAT WE OUGHT TO PERHAPS BE
7 REGARDING THIS SITUATION.
8 THERE/S MACIA PROBLEMS BECAUSE MR. ARMSTRONG IS
9 REPRESENTED BUT COUNSEL AT A TIME WHEN THE INVEST ON
10 CLEARLY HAD FOCUSED ON HIM AND HE WAS A TARGET.
11 THERE'S A NUMBER OF OTHER REMEDIES, THE LEAST OF WHICH
12 WOULD BE TERRI ROBINS SHOULD NOT BE PERMITTED TO TESTIFY.
THE GOVERNMENT HAS ALREADY INDI THAT 13
14
15
16
THE
STEP POSSIBLY
MEAN, I JUST
YOU? MAYBE
AGAIN, WHAT DO YOU WANT TO DO? I
WHAT'S COULD COME OUT FOR
FOR A MOTION TO DISMISS. I DON'T KNOW
17 WHETHER THEY HAVE MERIT OR NOT.
18 MR. BROWN: THAT WOULD OBVIOUSLY BE WHAT WE'RE LOOKING
19 FOR.
20 THE COURT: NOT GOING TO BE WANTING TO PUT MR.
21 ARMSTRONG'S OWN STATEMENTS IN THIS CASE. BECAUSE YOU'D BE
22 DISCLOSING TO THE JURY THE FACT HE'S - OTHER INVESTIGATION IN
23 ANOTHER I WOULDN'T THINK YOU'D WANT TO DO THAT. YOUR
24 CALL, BUT THAT'S A TACTICAL
25 MR. BROWN: WE WERE TOLD AND COURT WOULD HAVE TO
I USDC, 415-863-5179
3449
1 NEED AN OPPORTUNITY TO REVIEW THESE AND/ IF WE NEED TO TAKE A
2 DAY JUST TO REVIEW TAPES, I THINK WE NEED TO DO IT. WE
3 CAN 'T - - THE COURT - - I THINK THE COURT NEEDS TO REVIEW WHAT
4 MATERIAL IT HAS. THIS DEFINITELY HAS BRADY MATERIAL IN IT.
5 THERB'S ALL KINDS OF MOTIONS, AS THE COURT KNOWS,
6 INCLUDING MOTIONS FOR DISMISSAL THAT WE OUGHT TO PERHAPS BE
7 FILED REGARDING THIS SITUATION.
8 THERE/S MACIA PROBLEMS BECAUSE MR. ARMSTRONG IS
9 REPRESENTED BUT COUNSEL AT A TIME WHEN THE INVESTI ON
10 CLEARLY HAD FOCUSED ON HIM AND HE WAS A TARGET.
11 THERE'S A NUMBER OF OTHER REMEDIES, THE LEAST OF WHICH
12 WOULD BE TERRI ROBINS SHOULD NOT BE PERMITTED TO TESTIFY.
13
14
15
16
THE
STEP POSSIBLY
MEAN, I JUST
YOU? MAYBE
THE GOVERNMENT HAS ALREADY INDI THAT
AGAIN, WHAT DO YOU WANT TO DO? I
WHAT'S COULD COME OUT FOR
FOR A MOTION TO DISMISS. I DON'T KNOW
17 WHETHER THEY HAVE MERIT OR NOT.
18 MR. BROWN: THAT WOULD OBVIOUSLY BE WHAT WE'RE LOOKING
19 FOR.
20 THE COURT: NOT GOING TO BE WANTING TO PUT MR.
21 ARMSTRONG'S OWN STATEMENTS IN THIS CASE. BECAUSE YOU'D BE
22 DISCLOSING TO THE JURY THE FACT HE'S - OTHER INVESTIGATION IN
23 ANOTHER I WOOLDN'T THINK YOU'D WANT TO DO THAT. YOUR
24 CALL, BUT THAT'S A TACTICAL
25 MR. BROWN: WE WERE TOLD AND COURT WOULD HAVE TO
, USDC, 415-863-5179
3449
1 NEED AN OPPORTUNITY TO REVIEW THESE AND/ IF WE NEED TO TAKE A
2 DAY JUST TO REVIEW TAPES, I THINK WE NEED TO DO IT. WE
3 CAN 'T - - THE COURT - - I THINK THE COURT NEEDS TO REVIEW WHAT
4 MATERIAL IT HAS. THIS DEFINITELY HAS BRADY MATERIAL IN IT.
5 THERB'S ALL KINDS OF MOTIONS, AS THE COURT KNOWS,
6 INCLUDING MOTIONS FOR DISMISSAL THAT WE OUGHT TO PERHAPS BE
7 FILED REGARDING THIS SITUATION.
8 THERE/S MACIA PROBLEMS BECAUSE MR. ARMSTRONG IS
9 REPRESENTED BUT COUNSEL AT A TIME WHEN THE INVESTI ON
10 CLEARLY HAD FOCUSED ON HIM AND HE WAS A TARGET.
11 THERE'S A NUMBER OF OTHER REMEDIES, THE LEAST OF WHICH
12 WOULD BE TERRI ROBINS SHOULD NOT BE PERMITTED TO TESTIFY.
13
14
15
16
THE
STEP POSSIBLY
MEAN, I JUST
YOU? MAYBE
THE GOVERNMENT HAS ALREADY INDI THAT
AGAIN, WHAT DO YOU WANT TO DO? I
WHAT'S COULD COME OUT FOR
FOR A MOTION TO DISMISS. I DON'T KNOW
17 WHETHER THEY HAVE MERIT OR NOT.
18 MR. BROWN: THAT WOULD OBVIOUSLY BE WHAT WE'RE LOOKING
19 FOR.
20 THE COURT: NOT GOING TO BE WANTING TO PUT MR.
21 ARMSTRONG'S OWN STATEMENTS IN THIS CASE. BECAUSE YOU'D BE
22 DISCLOSING TO THE JURY THE FACT HE'S - OTHER INVESTIGATION IN
23 ANOTHER I WOOLDN'T THINK YOU'D WANT TO DO THAT. YOUR
24 CALL, BUT THAT'S A TACTICAL
25 MR. BROWN: WE WERE TOLD AND COURT WOULD HAVE TO
, USDC, 415-863-5179
Exhibits 63
1
2
3
4
5
6
7
8
9
10
11
12
13
. pI
14
15
16
17
18
19
20
21
22
23
24
25
3450
LOOK AT THE IN CAMERA MATERIAL.
THE COURT: DO I? I REALLY AM CHOKING ON THAT. IT'S
HOURS AND HOURS OF SITTING AND LISTENING.
MR. BROWN: I KNOW.
THE COURT: I'VE NEVER HAD ANY REASON TO QUESTION THE
GOVERNMENT'S GOOD FAITH WHEN THEY SAY HERE'S A TAPE THAT
SOMEBODY'S CONVERSATION IS ON AND THESE TAPES DON'T HAVE THAT
PERSON ON THE TAPE AT ALL. YOU KNOW, I GENERALLY TAKE THE
GOVERNMENT'S WORD ON THOSE THINGS. I'VE NEVER BEEN MISLED BY
THE GOVERNMENT.
MR. BROWN: WE, YOUR HONOR, WITH ALL -- IN ALL CANDOR,
WERE OFFERED THESE TAPES SOMETIME LATE FRIDAY AFTERNOON,
MID-AFTERNOON, AND I SIMPLY ADVISED MR. SMETANA TO FAX OVER
THESE VARIOUS MOTIONS THAT THE COURT HAS ..
IN LOOKING AT THOSE MOTIONS AND COORDINATING OUR
WITNESSES AND GETTING READY FOR TODAY AND THE COMPLETION OF
THAT, WE DID NOT HAVE TIME TO BE LISTENING AND EVALUATING THREE
HOURS.
I HAVE WITNESSES HERE FROM OUT OF TOWN TODAY. TO DO
JUSTICE TO THIS INFORMATION, QUITE FRANKLY, WE WOULD NEED TO
TAKE TODAY TO REVIEW THESE TAPES AND DETERMINE WHAT THE
APPROPRIATE RESPONSE THAT WE WOULD HAVE WI-TH REGARD TO THIS
BRADY MATERIAL AND WHATEVER OTHER INFORMATION PERTAINS TO THIS
CASE. THESE TAPES HAVE THREE HOURS OF COMMENTS BY - - AND
STATEMENTS BY THE DEFENDANT.
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
3450
1 LOOK AT THE IN CAMERA MATERIAL.
2 THE COURT: DO I? I REALLY AM CHOKING ON THAT. IT'S
3 HOURS AND HOURS OF SITTING AND LISTENING.
MR. BROWN: I KNOW. 4
5 THE COURT: I'VE NEVER HAD ANY REASON TO QUESTION THE
6 GOVERNMENT'S GOOD FAITH WHEN THEY SAY HERE'S A TAPE THAT
7 SOMEBODY'S CONVERSATION IS ON AND THESE TAPES DON'T HAVE THAT
8 PERSON ON THE TAPE AT ALL. YOU KNOW, I GENERALLY TAKE THE
9 GOVERNMENT'S WORD ON THOSE THINGS. I'VE NEVER BEEN MISLED BY
10 THE GOVERNMENT.
11 MR. BROWN: WE, YOUR HONOR, WITH ALL -- IN ALL CANDOR,
12 WERE OFFERED THESE TAPES SOMETIME LATE FRIDAY AFTERNOON,
13 MID-AFTERNOON, AND I SIMPLY ADVISED MR. SMETANA TO FAX OVER
14 THESE VARIOUS MOTIONS THAT THE COURT HAS ..
15 IN LOOKING AT THOSE MOTIONS AND COORDINATING OUR
16 WITNESSES AND GETTING READY FOR TODAY AND THE COMPLETION OF
17 THAT, WE DID NOT HAVE TIME TO BE LISTENING AND EVALUATING THREE
18 HOURS.
19 I HAVE WITNESSES HERE FROM OUT OF TOWN TODAY. TO DO
20 JUSTICE TO THIS INFORMATION, QUITE FRANKLY, WE WOULD NEED TO
21 TAKE TODAY TO REVIEW THESE TAPES AND DETERMINE WHAT THE
22 APPROPRIATE RESPONSE THAT WE WOULD HAVE WI-TH REGARD TO THIS
23 BRADY MATERIAL AND WHATEVER OTHER INFORMATION PERTAINS TO THIS
24 CASE. THESE TAPES HAVE THREE HOURS OF COMMENTS BY - - AND
25 STATEMENTS BY THE DEFENDANT.
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
3450
1 LOOK AT THE IN CAMERA MATERIAL.
2 THE COURT: DO I? I REALLY AM CHOKING ON THAT. IT'S
3 HOURS AND HOURS OF SITTING AND LISTENING.
MR. BROWN: I KNOW. 4
5 THE COURT: I'VE NEVER HAD ANY REASON TO QUESTION THE
6 GOVERNMENT'S GOOD FAITH WHEN THEY SAY HERE'S A TAPE THAT
7 SOMEBODY'S CONVERSATION IS ON AND THESE TAPES DON'T HAVE THAT
8 PERSON ON THE TAPE AT ALL. YOU KNOW, I GENERALLY TAKE THE
9 GOVERNMENT'S WORD ON THOSE THINGS. I'VE NEVER BEEN MISLED BY
10 THE GOVERNMENT.
11 MR. BROWN: WE, YOUR HONOR, WITH ALL -- IN ALL CANDOR,
12 WERE OFFERED THESE TAPES SOMETIME LATE FRIDAY AFTERNOON,
13 MID-AFTERNOON, AND I SIMPLY ADVISED MR. SMETANA TO FAX OVER
14 THESE VARIOUS MOTIONS THAT THE COURT HAS ..
15 IN LOOKING AT THOSE MOTIONS AND COORDINATING OUR
16 WITNESSES AND GETTING READY FOR TODAY AND THE COMPLETION OF
17 THAT, WE DID NOT HAVE TIME TO BE LISTENING AND EVALUATING THREE
18 HOURS.
19 I HAVE WITNESSES HERE FROM OUT OF TOWN TODAY. TO DO
20 JUSTICE TO THIS INFORMATION, QUITE FRANKLY, WE WOULD NEED TO
21 TAKE TODAY TO REVIEW THESE TAPES AND DETERMINE WHAT THE
22 APPROPRIATE RESPONSE THAT WE WOULD HAVE WI-TH REGARD TO THIS
23 BRADY MATERIAL AND WHATEVER OTHER INFORMATION PERTAINS TO THIS
24 CASE. THESE TAPES HAVE THREE HOURS OF COMMENTS BY - - AND
25 STATEMENTS BY THE DEFENDANT.
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179
Exhibits 64
3451
1 THE COURT: SO YOU'RE SUGGESTING YOU NEED A DAY OFF
2 TODAY TO REVIEW TAPE?
3
4
MR. BROWN: YES, SIR.
THE THE PROBLEM WITH THAT, OF COURSE, WE
5 BROUGHT THE JURY IN.
6
7
8
9
10
11
12
14
15
16
17
18
19
POSS
TO THEM
MR. I THE NOW. IS IT
WELL, I'D RATHER GIVE THEM A DAY OFF TOMORROW AND I
THEY'
SIMPLY SEND THEM HOME.
, SO BE
I RATHER, IF YOU NEED A DAY OFF, TO TAKE IT OFF
RUDE
TOMORROW OR THE NEXT DAY, BUT INTO
WHAT YOU'RE TO DO
I AND YOU'RE WITH
MR. BROWN: WE CAN DO IT TOMORROW. I UNDERSTAND WHAT
THE COURT IS SAYING. I THINK WE
AS BECAUSE NOW WE'RE
IT AND IT
LOOK THESE AS SOON
DEFENSE,
EVERYTHING.
COURT: I DONIT SEE HOW. I CAN'T
20 DENY YOU THE RIGHT TO DO IT.
21 MR. SMETANA: I HATE TO SUGGEST THIS AS A TEMPEST IN A
22 TEAPOT. IF COUNSEL WILL LISTEN TO THE TAPES HE'LL FIND THERE'S
23 VERY LITTLE OF SUBSTANCE, IF ANYTHING AT ALL, NOTHING THAT
24 HASN'T BEEN SAID OR HEARD
25 MS. LEARY: AS TO MR. FOWLES I WOULD MOVE FOR THE
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863 5179
3451
1 THE COURT: SO YOU'RE SUGGESTING YOU NEED A DAY OFF
2 TODAY TO REVIEW TAPE?
3
4
MR. BROWN: YES, SIR.
THE THE PROBLEM WITH THAT, OF COURSE, WE
5 BROUGHT THE JURY IN.
6
7
8
9
10
11
12
14
15
16
17
18
19
POSS
TO THEM
MR. I THE NOW. IS IT
WELL, I'D RATHER GIVE THEM A DAY OFF TOMORROW AND I
THEY'
SIMPLY SEND THEM HOME.
, SO BE
I RATHER, IF NEED A DAY OFF, TO TAKE IT OFF
RUDE
TOMORROW OR THE NEXT DAY, BUT INTO
WHAT YOU'RE TO DO
I AND YOU'RE WITH
MR. BROWN: WE CAN DO IT TOMORROW. I UNDERSTAND WHAT
THE COURT IS SAYING. I THINK WE
AS BECAUSE NOW WE'RE
IT AND IT
LOOK THESE AS SOON
DEFENSE,
EVERYTHING.
COURT: I DON'T SEE HOW. I CAN'T
20 DENY YOU THE RIGHT TO DO IT.
21 MR. SMETANA: I HATE TO SUGGEST THIS AS A TEMPEST IN A
22 TEAPOT. IF COUNSEL WILL LISTEN TO THE TAPES HE'LL FIND THERE'S
23
24
25
VERY LITTLE OF SUBSTANCE, IF ANYTHING AT , NOTHING THAT
HASN'T BEEN SAID OR HEARD
MS. LEARY: AS TO MR. FOWLES I WOULD MOVE FOR THE
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863 5179
3451
1 THE COURT: SO YOU'RE SUGGESTING YOU NEED A DAY OFF
2 TODAY TO REVIEW TAPE?
3
4
MR. BROWN: YES, SIR.
THE THE PROBLEM WITH THAT, OF COURSE, WE
5 BROUGHT THE JURY IN.
6
7
8
9
10
11
12
14
15
16
17
18
19
POSS
TO THEM
MR. I THE NOW. IS IT
WELL, I'D RATHER GIVE THEM A DAY OFF TOMORROW AND I
THEY'
SIMPLY SEND THEM HOME.
, SO BE
I RATHER, IF NEED A DAY OFF, TO TAKE IT OFF
RUDE
TOMORROW OR THE NEXT DAY, BUT INTO
WHAT YOU'RE TO DO
I AND YOU'RE WITH
MR. BROWN: WE CAN DO IT TOMORROW. I UNDERSTAND WHAT
THE COURT IS SAYING. I THINK WE
AS BECAUSE NOW WE'RE
IT AND IT
LOOK THESE AS SOON
DEFENSE,
EVERYTHING.
COURT: I DON'T SEE HOW. I CAN'T
20 DENY YOU THE RIGHT TO DO IT.
21 MR. SMETANA: I HATE TO SUGGEST THIS AS A TEMPEST IN A
22 TEAPOT. IF COUNSEL WILL LISTEN TO THE TAPES HE'LL FIND THERE'S
23
24
25
VERY LITTLE OF SUBSTANCE, IF ANYTHING AT , NOTHING THAT
HASN'T BEEN SAID OR HEARD
MS. LEARY: AS TO MR. FOWLES I WOULD MOVE FOR THE
JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863 5179
Exhibits 65
3452
1 TAPES AND THE WRITTEN INFORMATION.
..
2 THE 'S NOTHING ON TO MR.
3
4 MS. LEARY: IF INVOLVED TAFT MR.
5 FOWLES/ THERE'S ABOUT HIM IT, THEN IT'S BRADY AS TO
6 MR.
7 THE THEN IF THAT'S TRUE THEN YOU'VE GOT THE
8 GOVERNMENT/S REPRESENTATION TO YOU MR. FOWLES NOT MENT IONED J
9 AND YOUR LISTENING TO TAPES CANJT DO ANY BETTER THAN THAT.
10 MS. LEARY: I UNDERSTAND I YOUR HONOR, BUT I ASK
II THE TAPES AND FOR THE - WHATEVER WRITTEN DOCUMENTATION EXISTS
12 SO THAT WE CAN INVESTIGATE.
13 MR. SABELLI: DOES DEPEND ON WHAT'S ON THE TAPES. THE
,.
14 STATEMENTS MADE ON THE TAPES HAVE TO DO WITH THE STRUCTURE AND
15 OVERFLOW WITHIN HAMILTON TAFT, DECISION MAKING, NOTHING
16 ABOUT MR. FOWLES. THEY MAY VERY WELL BE BRADY STATEMENTS. WE
17 DON'T KNOW WHAT STATEMENTS ARE. SIMPLY KNOWING MR. FOWLES
l8 ISN'T ON THERE ISN'T ENOUGH FOR
19 MR. SMETANA: AGAIN! MY EARLIER COMMENT REALLY MADE IN
20 GOOD , THERE REALLY IS NO DETAILED DESTRUCTION OF
21 THERE'S A PASSING MENTION HERE AND THERE OF
22 HAMILTON I SORT OFI I DIDN'T DO ANYTHING WRONG HAMILTON
23 TAFT, BUT THERE'S NO IN DEPTH PLANNING MEETING THEY DID A
24 DISCUSSION OF HAPPENED TWO EARLIER.
25 THE COURT: WHAT IS FORM OF THE MATERIAL THAT YOU
YEOMANS, CIAL REPORTER, I 415-863-5179
3452
1 TAPES AND THE WRITTEN INFORMATION.
..
2 THE 'S NOTHING ON TO MR.
3
4 MS. LEARY: IF INVOLVED TAFT MR.
5 FOWLES/ THERE'S ABOUT HIM IT, THEN IT'S BRADY AS TO
6 MR.
7 THE THEN IF THAT'S TRUE THEN YOU'VE GOT THE
8 GOVERNMENT/S REPRESENTATION TO YOU MR. FOWLES NOT MENT IONED J
9 AND YOUR LISTENING TO TAPES CANJT DO ANY BETTER THAN THAT.
10 MS. LEARY: I UNDERSTAND I YOUR HONOR, BUT I ASK
II THE TAPES AND FOR THE - WHATEVER WRITTEN DOCUMENTATION EXISTS
12 SO THAT WE CAN INVESTIGATE.
13 MR. SABELLI: DOES DEPEND ON WHAT'S ON THE TAPES. THE
,.
14 STATEMENTS MADE ON THE TAPES HAVE TO DO WITH THE STRUCTURE AND
15 OVERFLOW WITHIN HAMILTON TAFT, DECISION MAKING, NOTHING
16 ABOUT MR. FOWLES. THEY MAY VERY WELL BE BRADY STATEMENTS. WE
17 DON'T KNOW WHAT STATEMENTS ARE. SIMPLY KNOWING MR. FOWLES
l8 ISN'T ON THERE ISN'T ENOUGH FOR
19 MR. SMETANA: AGAIN! MY EARLIER COMMENT REALLY MADE IN
20 GOOD , THERE REALLY IS NO DETAILED DESTRUCTION OF
21 THERE'S A PASSING MENTION HERE AND THERE OF
22 HAMILTON I SORT OFI I DIDN'T DO ANYTHING WRONG HAMILTON
23 TAFT, BUT THERE'S NO IN DEPTH PLANNING MEETING THEY DID A
24 DISCUSSION OF HAPPENED TWO EARLIER.
25 THE COURT: WHAT IS FORM OF THE MATERIAL THAT YOU
YEOMANS, CIAL REPORTER, I 415-863-5179
3452
1 TAPES AND THE WRITTEN INFORMATION.
..
2 THE 'S NOTHING ON TO MR.
3
4 MS. LEARY: IF INVOLVED TAFT MR.
5 FOWLES/ THERE'S ABOUT HIM IT, THEN IT'S BRADY AS TO
6 MR.
7 THE THEN IF THAT'S TRUE THEN YOU'VE GOT THE
8 GOVERNMENT/S REPRESENTATION TO YOU MR. FOWLES NOT MENT IONED J
9 AND YOUR LISTENING TO TAPES CANJT DO ANY BETTER THAN THAT.
10 MS. LEARY: I UNDERSTAND I YOUR HONOR, BUT I ASK
II THE TAPES AND FOR THE - WHATEVER WRITTEN DOCUMENTATION EXISTS
12 SO THAT WE CAN INVESTIGATE.
13 MR. SABELLI: DOES DEPEND ON WHAT'S ON THE TAPES. THE
,.
14 STATEMENTS MADE ON THE TAPES HAVE TO DO WITH THE STRUCTURE AND
15 OVERFLOW WITHIN HAMILTON TAFT, DECISION MAKING, NOTHING
16 ABOUT MR. FOWLES. THEY MAY VERY WELL BE BRADY STATEMENTS. WE
17 DON'T KNOW WHAT STATEMENTS ARE. SIMPLY KNOWING MR. FOWLES
l8 ISN'T ON THERE ISN'T ENOUGH FOR
19 MR. SMETANA: AGAIN! MY EARLIER COMMENT REALLY MADE IN
20 GOOD , THERE REALLY IS NO DETAILED DESTRUCTION OF
21 THERE'S A PASSING MENTION HERE AND THERE OF
22 HAMILTON I SORT OFI I DIDN'T DO ANYTHING WRONG HAMILTON
23 TAFT, BUT THERE'S NO IN DEPTH PLANNING MEETING THEY DID A
24 DISCUSSION OF HAPPENED TWO EARLIER.
25 THE COURT: WHAT IS FORM OF THE MATERIAL THAT YOU
YEOMANS, CIAL REPORTER, I 415-863-5179
Exhibits 66
~ lW u ~ U. PAGES 1 - 54
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE CHARLES A. LEGGE, JUDGE
UNITED STATES OF AMERICA,
PLAINTIFF,
VS.
CONNIE C. ARMSTRONG, JR.,
AND RICHARD A. FOWLES,
DEFENDANTS
)
}
)
)
)
)
)
)
)
)
NO. CR 94-0276 CAL
- - - - - - - - - - ~ - - - - - - - - - - - - - - - )
APPEARANCES:
SAN FRANCISCO, CALIFORNIA
FRIDAY, AUGUST 29, 1997
FOR PLAINTIFF: MICHAEL J. YAMAGUCHI
UNITED STATES ATTORNEY
450 GOLDEN GATE AVENUE
REPORTED BY:
SAN FRANCISCO, CALIFORNIA 94102
BY: GEORGE D. HARDY, ESQ.
ASSISTANT UNITED STATES ATTORNEY
STATE OF CALIFORNIA
DEPARTMENT OF JUSTICE
ATTORNEY GENERAL'S OFFICE
50 FREMONT STREET - SUITE 300
SAN FRANCISCO, CALIFORNIA 94105
BY: RONALD D. SMETANA
DEPUTY ATTORNEY GENERAL
FINANCIAL CRIMES
(APPEARANCES CONTINUED ON NEXT PAGE)
JO ANN BRYCE, CSR NO. 3321
OFFICIAL REPORTER
COMPUTERIZED TRANSCRIPTION BY ECLIPSE
JO ANN BRYCE, CSR 3321 - USDe - (415)437-1301
\ -
~ lw u-- U. PAGES 1 - 54
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE CHARLES A. LEGGE, JUDGE
UNITED STATES OF AMERICA,
PLAINTIFF,
VS.
CONNIE C. ARMSTRONG, JR.,
AND RICHARD A. FOWLES,
DEFENDANTS
)
)
)
)
)
)
)
)
)
)
NO. CR 94-0276 CAL
- - - - - - - - - - ~ - - - - - - - - - - - - - - - )
APPEARANCES:
SAN FRANCISCO, CALIFORNIA
FRIDAY, AUGUST 29, 1997
FOR PLAINTIFF: MICHAEL J. YAMAGUCHI
UNITED STATES ATTORNEY
450 GOLDEN GATE AVENUE
REPORTED BY:
SAN FRANCISCO, CALIFORNIA 94102
BY: GEORGE D. HARDY, ESQ.
ASSISTANT UNITED STATES ATTORNEY
STATE OF CALIFORNIA
DEPARTMENT OF JUSTICE
ATTORNEY GENERAL'S OFFICE
50 FREMONT STREET - SUITE 300
SAN FRANCISCO, CALIFORNIA 94105
BY: RONALD D. SMETANA
DEPUTY ATTORNEY GENERAL
FINANCIAL CRIMES
(APPEARANCES CONTINUED ON NEXT PAGE)
JO ANN BRYCE, CSR NO. 3321
OFFICIAL REPORTER
COMPUTERIZED TRANSCRIPTION BY ECLIPSE
JO ANN BRYCE, CSR 3321 - USDe - (415)437-1301
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Exhibits 67
,
A P P E A R A N C E S : ( C O N T I N U E D )
F O R T H E D E F E N D A N T
C O N N I E C . A R M S T R O N G :
L A W O F F I C E O F C H E S T E R L . B R O W N
2 4 5 0 B R O A D W A Y - S U I T E 5 5 0
F O R T H E D E F E N D A N T
R I C H A R D A . F O W L E S :
S A N T A M O N I C A , C A L I F O R N I A 9 0 4 0 4
B Y : C H E S T E R L . B R O W N
A T T O R N E Y A T L A W
L A W O F F I C E O F S O L W O L L A C K
3 8 8 M A R K E T S T R E E T - S U I T E 1 0 8 0
S A N F R A N C I S C O , C A L I F O R N I A 9 4 1 1 1
B Y : S O L W O L L A C K
A T T O R N E Y A T L A W
B A R R Y J . P O R T M A N
F E D E R A L P U B L I C D E F E N D E R
4 5 0 G O L D E N G A T E A V E N U E
S A N F R A N C I S C O , C A L I F O R N I A 9 4 1 0 2
B Y : C L A I R E M . L E A R Y
M A R T I N S A B E L L I
A S S I S T A N T F E D E R A L P U B L I C D E F E N D E R S
J O A N N B R Y C E , C S R 3 3 2 1 - U S D C - ( 4 1 5 ) 4 3 7 - 1 3 0 1
(
APPEARANCES: (CONTINUED)
FOR THE DEFENDANT LAW OFFICE OF CHESTER L. BROWN
CONNIE C. ARMSTRONG: 2450 BROADWAY - SUITE 550
FOR THE DEFENDANT
RICHARD A. FOWLES:
SANTA MONICA, CALIFORNIA 90404
BY: CHESTER L. BROWN
ATTORNEY AT LAW
LAW OFFICE OF SOL WOLLACK
388 MARKET STREET - SUITE 1080
SAN FRANCISCO, CALIFORNIA 94111
BY: SOL WOLLACK
ATTORNEY AT LAW
BARRY J. PORTMAN
FEDERAL PUBLIC DEFENDER
450 GOLDEN GATE AVENUE
SAN FRANCISCO, CALIFORNIA 94102
BY: CLAIRE M. LEARY
MARTIN SABELLI
ASSISTANT FEDERAL PUBLIC DEFENDERS
JO ANN BRYCE, CSR 3321 - USDe - (415)437-1301
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Exhibits 68
{
\ ' . "
3
l .
2
3
F R I D A Y - A U G U S T 2 9 . 1 9 9 7 2 : 4 9 P . M .
T H E C L E R K : C A L L I N G C R 9 4 - 0 2 7 6 , U N I T E D S T A T E S V .
4 C O N N I E A R M S T R O N G , J U N I O R .
5 M R . S M E T A N A : G O O D A F T E R N O O N , Y O U R H O N O R . R O N A L D D .
6 S M E T A N A A N D G E O R G E H A R D Y F O R T H E U N I T E D S T A T E S .
7 M R . B R O W N : G O O D A F T E R N O O N , Y O U R H O N O R . C H E S T E R L .
8 B R O W N , S O L W O L L A C K O N B E H A L F O F M R . A R M S T R O N G W H O ' S P R E S E N T I N
9 I C O U R T .
J . O T H E C O U R T : A L L R I G H T . N O W I B E L I E V E T H E F I R S T
1 1 M A T T E R W E S H O U L D T A K E U P I S T H E M O T I O N F O R N E W T R I A L . I ' V E
1 2 G O N E O V E R T H E M O V I N G A N D O P P O S I N G P A P E R S , A N D D O E S E I T H E R
1 3
1 4
1 5
C O U N S E L H A V E A N Y T H I N G F U R T H E R Y O U W O U L D L I K E T O A D D ?
M R . B R O W N : J U S T R E A L B R I E F L Y , ' Y O U R H O N O R . I F T H E
C O U R T W O U L D P E R M I T , I W O U L D A S K T H A T I ' M G O I N G T O M A K E J U S T
1 6 S O M E V E R Y B R I E F O V E R A L L C O M M E N T S W I T H T H E C O U R T ' S A P P R O V A L .
1 7 T H E N I A S S U M E T H E G O V E R N M E N T I S G O I N G T O H A V E S O M E C O M M E N T S T O
1 8 M A K E ; A N D I F I T ' S O K A Y W I T H T H E C O U R T , W E ' R E G O I N G T O S P L I T
1 9 T H I S U P A N D M R . W O L L A C K M A Y H A V E A F E W F I N A L R E M A R K S . W E I R E
2 0 G O I N G T O B E B R I E F A N D N O T T R Y T O O V E R L A P W H A T ' S I N T H E M O V I N G
2 1 P A P E R S .
2 2 T H E C O U R T : A L L R I G H T .
2 3 M R . B R O W N : T H A N K Y O U , S I R .
2 4 J U S T V E R Y B R I E F L Y , Y O U R H O N O R , A S T H E C O U R T I S W E L L
2 5 A W A R E , R U L E 3 3 O F T H E F E D E R A L R U L E S P E R M I T S T H E C O U R T , W I T H I N
J O A N N B R Y C E , C S R 3 3 2 1 - U S D C - ( 4 1 5 ) 4 3 7 - 1 3 0 1
1
2
3
4
5
6
7
8
9
10
11
12
13
\ ~
14
15
16
17
18
19
20
21
22
23
24
25
3
FRIDAY - AUGUST 29, 1997 2:49 P.M.
THE CLERK: CALLING CR 94-0276, UNITED STATES V.
CONNIE ARMSTRONG, JUNIOR.
MR. SMETANA: GOOD AFTERNOON, YOUR HONOR. RONALD D.
SMETANA AND GEORGE HARDY FOR THE UNITED STATES&
MR. BROWN: GOOD AFTERNOON, YOUR HONOR. CHESTER L.
BROWN, SOL WOLLACK ON BEHALF OF MR. ARMSTRONG WHO'S PRESENT IN
COURT.
THE COURT: ALL RIGHT. NOW I BELIEVE THE FIRST
MATTER WE SHOULD TAKE UP IS THE MOTION FOR NEW TRIAL. I'VE
GONE OVER THE MOVING AND OPPOSING PAPERS, AND DOES EITHER
COUNSEL HAVE ANYTHING FURTHER YOU WOULD LIKE TO ADD?
MR. BROWN: JUST REAL BRIEFLY,· YOUR HONOR. IF THE
COURT WOULD PERMIT, I WOULD ASK THAT 11M GOING TO MAKE JUST
SOME VERY BRIEF OVERALL COMMENTS WITH THE COURT'S APPROVAL.
THEN I ASSUME THE GOVERNMENT IS GOING TO HAVE SOME COMMENTS TO
MAKE; AND IF IT'S OKAY WITH THE COURT, WE'RE GOING TO SPLIT
THIS UP AND MR. WOLLACK MAY HAVE A FEW FINAL REMARKS. WE'RE
GOING TO BE BRIEF AND NOT TRY TO OVERLAP WHAT'S IN THE MOVING
PAPERS.
THE COURT: ALL RIGHT.
MR. BROWN: THANK YOU, SIR.
JUST VERY BRIEFLY, YOUR HONOR, AS THE COURT IS WELL
AWARE, RULE 33 OF THE FEDERAL RULES PERMITS THE COURT, WITHIN
JO ANN BRYCE, CSR 3321 - US DC - (415)437-1301
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Exhibits 69
( = , ' ' ' ' ' 0 : : : : ; ' , ' ' ' '
\ . . . . - 1
4
1
2
3
I T S D I S C R E T I O N , W H E N I T ' S I N T H E I N T E R E S T O F J U S T I C E , T O G R A N T
A N E W T R I A L B E C A U S E O F V A R I O U S E R R O R S O R V A R I O U S O T H E R T H I N G S
T H A T O C C U R R E D D U R I N G T H E C O U R S E O F T H E T R I A L .
4 A S A P R E L I M I N A R Y M A T T E R , W E ' R E N O T N A I V E . T H I S
5 T R I A L C O S T A L O T O F M O N E Y , T O O K A L O N G T I M E A N D W E W O U L D B E
6 L E S S T H A N C A N D I D I F W E I N D I C A T E D T H A T W E E X P E C T T H E C O U R T T O
7 G R A N T T H E M O T I O N F O R N E W T R I A L .
8 W E W O U L D I N D I C A T E T H A T W E D O B E L I E V E I T ' S A
9 M E R I T O R I O U S M O T I O N . W E D O B E L I E V E T H A T T H E R E W E R E T H I N G S T H A T
1 0 O C C U R R E D D U R I N G T H E T R I A L T H A T D I D N O T G I V E U S A N E V E N P L A Y I N G
1 1 F I E L D .
1 2
1 3
A S M R . W O L L A C K B E A U T I F U L L Y D I D I N H I S M O V I N G P A P E R S ,
I B E L I E V E r T H E R E W E R E S E V E R A L M A T T E R S , I J U S T W A N T T O P L A C E
1 4 T H E M O N T H E R E C O R D .
1 5 T H E T A P E S T H A T W E R E D I S C O V E R E D B Y T H E P R O S E C U T I O N
1 6 D U R I N G T H E M I D D L E O F T H E T R I A L O F A G O V E R N M E N T W I T N E S S , W E
1 7 A S K E D I N I T I A L L Y F O R A M I S T R I A L A N D T H E N F O R A C O N T I N U A N C E S O
1 8 T H A T W E C O U L D H A V E A N O P P O R T U N I T Y T O P R O P E R L Y D I G E S T T H E M A N D
1 9 P R O P E R L Y P R E S E N T T H E M .
2 0 W E R E C O G N I Z E T H E C O U R T G A V E T H A T A L O T O F
2 1 C O N S I D E R A T I O N , T R I E D T O D O W H A T W A S A P P R O P R I A T E . T H E R E W A S A
2 2 J U R Y I N P L A C E ; B U T , Q U I T E F R A N K L Y , Y O U R H O N O R , W E D I D N ' T G E T A
2 3 C H A N C E T O P R O P E R L Y U T I L I Z E T H O S E T A P E S .
2 4 T H E Y D I D C O N T A I N A G R E A T D E A L O F E X C U L P A T O R Y
2 5 I N F O R M A T I O N . F O R E X A M P L E , A S W E I N D I C A T E I N O U R M O V I N G P A P E R S ,
J O A N N B R Y C E , C S R 3 3 2 1 - U S D C - ( 4 1 5 ) 4 3 7 - 1 3 0 1
(
4
1
2
3
4
ITS DISCRETION, WHEN IT'S IN THE INTEREST OF JUSTICE, TO GRANT
A NEW TRIAL BECAUSE OF VARIOUS ERRORS OR VARIOUS OTHER THINGS
THAT OCCURRED DURING THE COURSE OF THE TRIAL.
AS A PRELIMINARY MATTER, WE'RE NOT NAIVE. THIS
5 TRIAL COST A LOT OF MONEY, TOOK A LONG TIME AND WE WOULD BE
6 LESS THAN CANDID IF WE INDICATED THAT WE EXPECT THE COURT TO
7 GRANT THE MOTION FOR NEW TRIAL.
S WE WOULD INDICATE THAT WE DO BELIEVE IT'S A
9 MERITORIOUS MOTION. WE DO BELIEVE THAT THERE WERE THINGS THAT
10 OCCURRED DURING THE TRIAL THAT DID NOT GIVE US AN EVEN PLAYING
11 FIELD.
12
13
AS MR. WOLLACK BEAUTIFULLY DID IN HIS MOVING PAPERS,
I BELIEVE, THERE WERE SEVERAL MATTERS, I JUST WANT TO PLACE
14 THEM ON THE RECORD.
15 THE TAPES THAT WERE DISCOVERED BY THE PROSECUTION
16 DURING THE MIDDLE OF THE TRIAL OF A GOVERNMENT WITNESS, WE
17 ASKED INITIALLY FOR A MISTRIAL AND THEN FOR A CONTINUANCE SO
18 THAT WE COULD HAVE AN OPPORTUNITY TO PROPERLY DIGEST THEM AND
19 PROPERLY PRESENT THEM.
20 WE RECOGNIZE THE COURT GAVE THAT A LOT OF
21 CONSIDERATION, TRIED TO DO WHAT WAS APPROPRIATE. THERE WAS A
22 JURy IN PLACE; BUT, QUITE FRANKLY, YOUR HONOR, WE DIDN'T GET A
23 CHANCE TO PROPERLY UTILIZE THOSE TAPES.
24 THEY DID CONTAIN A GREAT DEAL OF EXCULPATORY
25 INFORMATION. FOR EXAMPLE, AS WE INDICATE IN OUR MOVING PAPERS,
JO ANN BRYCE, CSR 3321 - USDC - (415)437-1301
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Exhibits 70
t
\ ' "
5
1
2
3
M R . A R M S T R O N G O N V A R I O U S O C C A S I O N S W A S A S K E D B Y M I S S R O B B I N S ,
W H A T E X A C T L Y O C C U R R E D A T T H E H A M I L T O N T A F T M A T T E R . O F C O U R S E ,
T H I S I N V E S T I G A T I O N I N V O L V E D A N O T H E R C O M P A N Y S U B S E Q U E N T , T H E
4 C O M P U C H E C K C O M P A N Y , A N D H E M A D E S T A T E M E N T S T H A T W E R E I D E N T I C A L
5 T O C E R T A I N S T A T E M E N T S T H A T W E R E C O N T A I N E D I N V A R I O U S W R I T I N G S
6 A N D I N V A R I O U S T A P E S T H A T W E R E T R A N S C R I B E D D U R I N G T H E A C T U A L
7 E V E N T S O F T H I S T R I A L .
S W E W E R E N O T A B L E T O P R O P E R L Y D I G E S T T H O S E T A P E S .
9 T H E Y W E R E M A S S I V E . N O O N E W A S W I L L I N G T O C O M E I N A S A S P E C I A L
1 0 M A S T E R . W E A T T E M P T E D T O L O C A T E A N U M B E R O F P E O P L E A N D , Q U I T E
1 1 F R A N K L Y , W E F E E L T H A T P R E J U D I C E D U S .
1 2 M O R E I M P O R T A N T L Y , I D O B E L I E V E W E P R E S E N T E D T O T H E
1 3 C O U R T , A N D M Y P R E D E C E S S O R C O U N S E L D I D A S W E L L , A N D T H E C O U R T
1 4 I W O N ' T T A K E A L O T O F T I M E W I T H T H I S - - T H E C O U R T I S T O T A L L Y
1 5 F A M I L I A R W I T H T H I S , T H E D E B T O R / C R E D I T O R R E L A T I O N S H I P T H E O R Y O F
1 6 O U R D E F E N S E . A N D T H E C O N C E R N W E H A D P R E T R I A L , I T W A S A M O T I O N
1 7 T O D I S M I S S , T H A T T H E S E W E R E D E B T O R / C R E D I T O R F U N D S A N D T H E R E
1 8 C O U L D N O T B E A D I V E R S I O N I F I N F A C T T H E Y W E R E D E B T O R / C R E D I T O R
1 9 F U N D S .
2 0 W E T H E N A S K E D F O R A M O T I O N I N L I M I N E S O T H A T T H E
2 1 C O U R T W O U L D P R E V E N T T H E G O V E R N M E N T F R O M R E F E R R I N G T O T H E S E
2 2 I T E M S A S I N F A C T C L I E N T S ' T A X D O L L A R S , B U T R A T H E R S O M E O T H E R
2 3 T E R M W H I C H W O U L D N O T G I V E I T T H E I M P R E S S I O N T H A T T H E M O N E Y W A S
2 4 B E I N G M I S U S E D .
2 5 W E T H E N A S K E D F O R A T H E O R Y - O F - D E F E N S E I N S T R U C T I O N
J O A N N B R Y C E , C S R 3 3 2 1 - U S D C - ( 4 1 5 ) 4 3 7 - 1 3 0 1
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1.5
16
17
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24
25
5
MR. ARMSTRONG ON VARIOUS OCCASIONS WAS ASKED BY MISS ROBBINS,
WHAT EXACTLY OCCURRED AT THE HAMILTON TAFT MATTER. OF COURSE,
THIS INVESTIGATION INVOLVED ANOTHER COMPANY SUBSEQUENT, THE
COMPUCHECK COMPANY, AND HE MADE STATEMENTS THAT WERE IDENTICAL
TO CERTAIN STATEMENTS THAT WERE CONTAINED IN VARIOUS WRITINGS
AND IN VARIOUS TAPES THAT WERE TRANSCRIBED DURING THE ACTUAL
EVENTS OF THIS TRIAL.
WE WERE NOT ABLE TO PROPERLY DIGEST THOSE TAPES.
THEY WERE MASSIVE. NO ONE WAS WILLING TO COME IN AS A SPECIAL
MASTER. WE ATTEMPTED TO LOCATE A NUMBER OF PEOPLE AND, QUITE
FRANKLY, WE FEEL THAT PREJUDICED US.
MORE IMPORTANTLY, I DO BELIEVE WE PRESENTED TO THE
COURT, AND MY PREDECESSOR COUNSEL DID AS WELL, AND THE COURT
I WON'T TAKE A LOT OF TIME WITH THIS -- THE COURT IS TOTALLY
FAMILIAR WITH THIS, THE DEBTOR/CREDITOR RELATIONSHIP THEORY OF
OUR DEFENSE. AND THE CONCERN WE HAD PRETRIAL, IT WAS A MOTION
TO DISMISS, THAT THESE WERE DEBTOR/CREDITOR FUNDS AND THERE
COULD NOT BE A DIVERSION IF IN FACT THEY WERE DEBTOR/CREDITOR
FUNDS.
WE THEN ASKED FOR A MOTION IN LIMINE SO THAT THE
COURT WOULD PREVENT THE GOVERNMENT FROM REFERRING TO THESE
ITEMS AS IN FACT CLIENTS' TAX DOLLARS, BUT RATHER SOME OTHER
TERM WHICH WOULD NOT GIVE IT THE IMPRESSION THAT THE MONEY WAS
BEING MISUSED.
WE THEN ASKED FOR A THEORY-OF-DEFENSE INSTRUCTION
JO ANN BRYCE, CSR 3321 - USDC - (415)437-1301
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Exhibits 71
6
1 P R E T R I A L T O T R Y T O M A K E T H E T R I A L F ~ I R F O R , O U R C L I E N T A N D G I V E
2 I T H E J U R y S O M E I D E A O F W H A T W A S G O I N G O N W I T H T H I S M O N E Y . T H I S
3 I C O U R T I T S E L F I N A N E A R L I E R M A T T E R S A I D , A N D C O R R E C T L Y S O , T H A T
4 T H E C H A R A C T E R O F T H O S E F U N D S I S A M A T T E R - - I S A Q U E S T I O N O F
5 L A W N O T O F F A C T i A N D T H E W A Y T H I S T R I A L W A S C O N D U C T E D , T H A T W A S
6 A Q U E S T I O N T H A T W A S L E F T A S A F A C T U A L Q U E S T I O N F O R T H E J U R Y T O
7 , D E C I D E .
S A N D T H E C O U R T D I D I N D I C A T E P R E T R I A L T H A T A L T H O U G H I T
9 W O U L D N O T D I D N O T F E E L I T W A S A P P R O P R I A T E F O R A P R E T R I A L
1 0 I N S T R U C T I O N , T H E C O U R T I N D I C A T E D T H A T I T W A S I N C L I N E D T O G I V E
1 1 U S S O M E K I N D O F A N I N S T R U C T I O N A F T E R T H E T R I A L W A S O V E R I N I T S
1 2 O V E R A L L I N S T R U C T I O N S A T T H E C O N C L U S I O N O F T H E C A S E ; B U T W H E N
1 3 T H A T T I M E C A M E , W E W E R E A G A I N D E N I E D T H A T I N S T R U C T I O N .
1 4 W E F E E L , U N D E R T H E C A S E S A S P R E S E N T E D I N O U R M O V I N G
1 5 P A P E R S , T H A T W E W E R E E N T I T L E D T O T H A T I N S T R U C T I O N . W E F E E L I T
1 6 C A U S E D J U R Y C O N F U S I O N . I T W A S A C R I T I C A L I S S U E , A N D T H A T A L O N E
1 7 S H O U L D B E T H E B A S I S O F A N E W T R I A L .
1 8 T H E R E W E R E O T H E R M A T T E R S W H I C H W E F E L T W E R E U N F A I R
1 9 A N D W O U L D B E T H E B A S I S F O R A N E W T R I A L . I W O N ' T B E L A B O R T H E M ,
2 0 B U T O N E W O U L D I N V O L V E M R . S O L O D O F F . M R . S O L O D O F F , O F C O U R S E ,
2 1 W A S T H E P E R S O N T H A T W A S T H E F O U N D A T I O N F O R T H E C A S E B E I N G
2 2 B R O U G H T I N T H E F I R S T P L A C E . A N D A S T H E C O U R T W I L L R E C A L L , H E
2 3 W A S T H E O N E T H A T C A L L E D A M E E T I N G T O G E T H E R A N D A L L T H E S E
2 4 P E O P L E , A L L T H E S E C L I E N T S L A T E R F I L E D F I R S T A C I V I L S U I T A N D
2 5 T H E N A N I N V O L U N T A R Y B A N K R U P T C Y P R O C E E D I N G .
J O A N N B R Y C E , C S R 3 3 2 1 - U S D C - ( 4 1 5 ) 4 3 7 - 1 3 0 1
6
1 PRETRIAL TO TRY TO MAKE THE TRIAL F ~ I R FOR OUR CLIENT AND GIVE
2 THE JURy SOME IDEA OF WHAT WAS GOING ON WITH THIS MONEY. THIS
3 COURT ITSELF IN AN EARLIER MATTER SAID, AND CORRECTLY SO, THAT
4 THE CHARACTER OF THOSE FUNDS IS A MATTER -- IS A QUESTION OF
5 LAW NOT OF FACTi AND THE WAY THIS TRIAL WAS CONDUCTED, THAT WAS
6 A QUESTION THAT WAS LEFT AS A FACTUAL QUESTION FOR THE JURy TO
7 DECIDE.
S AND THE COURT DID INDICATE PRETRIAL THAT ALTHOUGH IT
9 WOULD NOT DID NOT FEEL IT WAS APPROPRIATE FOR A PRETRIAL
10 INSTRUCTION, THE COURT INDICATED THAT IT WAS INCLINED TO GIVE
11 US SOME KIND OF AN INSTRUCTION AFTER THE TRIAL WAS OVER IN ITS
12 OVERALL INSTRUCTIONS AT THE CONCLUSION OF THE CASE; BUT WHEN
13 THAT TIME CAME, WE WERE AGAIN DENIED THAT INSTRUCTION.
14 WE FEEL, UNDER THE CASES AS PRESENTED IN OUR MOVING
15 PAPERS, THAT WE WERE ENTITLED TO THAT INSTRUCTION. WE FEEL IT
16 CAUSED JURy CONFUSION. IT WAS A CRITICAL ISSUE, AND THAT ALONE
17 SHOULD BE THE BASIS OF A NEW TRIAL.
18 THERE WERE OTHER MATTERS WHICH WE FELT WERE UNFAIR
19 AND WOULD BE THE BASIS FOR A NEW TRIAL. I WON'T BELABOR THEM,
20 BUT ONE WOULD INVOLVE MR. SOLODOFF. MR. SOLODOFF, OF COURSE,
21 WAS THE PERSON THAT WAS THE FOUNDATION FOR THE CASE BEING
22 BROUGHT IN THE FIRST PLACE. AND AS THE COURT WILL RECALL, HE
23 WAS THE ONE THAT CALLED A MEETING TOGETHER AND ALL THESE
24 PEOPLE, ALL THESE CLIENTS LATER FILED FIRST A CIVIL SUIT AND
25 THEN AN INVOLUNTARY BANKRUPTCY PROCEEDING.
JO ANN BRYCE, CSR 3321 - USDe - (415)437-1301
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Exhibits 72
1
_ .... _-_........ __...
..,
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7
WE FELT WE WERE ENTITLED TO SHOW THAT MR. SOLODOFF
HAD BEEN DISMISSED FOR COCAINE ABUSE, AND WE FELT WE WERE
ENTITLED TO SHOW THAT MR. SOLODOFF FILED LAWSUITS ASKING FOR
MILLIONS OF DOLLARS AS HIS MOTIVE.
THE COURT DISAGREED. WE ALSO FELT IT WAS CRITICAL,
AND PERHAPS MORE IMPORTANT THAN SOLODOFF, WITH KEITH VOIGTS, A
LONG-TIME ACCOUNTANT WITH PEAT MARWICK, AN INDIVIDUAL THAT HAD
AN EARLIER STATEMENT, YOUR HONOR, UNDER OATH IN DECLARATION
FORM AS WELL AS TESTIMONY THAT, IN FACT, HE BELIEVED THAT
MR. ARMSTRONG HAD DONE NO WRONG, HE CONDONED MR. ARMSTRONG'S
CONDUCT. MR. ARMSTRONG RELIED ON HIS ADVICE.
THE GOVERNMENT, WHEN MR. VOIGTS WAS GOING TO TESTIFY
ON BEHALF OF THE BANKRUPTCY TRUSTEE, GRANTED HIM IMMUNITY.'
MR. SMETANA: THAT'S ACTUALLY AN ERROR, SOMETHING I
NEED TO CORRECT.
MR. BROWN: YET IN THIS CASE THEY REFUSED TO GRANT
HIM IMMUNITY, AND WE ASKED THE COURT TO DO SO. THE COURT
REFUSED. AND THEN TO MAKE MATTERS WORSE, WE WEREN'T ALLOWED TO
USE A DECLARATION THAT MR. VOIGTS HAD PREPARED WHICH WE BELIEVE
WAS A DECLARATION AGAINST INTEREST, AND AT THE VERY LEAST WE
SHOULD HAVE BEEN ALLOWED TO INTRODUCE THAT.
THERE WAS ANOTHER MATTER, EXHIBIT 1802, WHICH WAS A
STATEMENT BY MR. ARMSTRONG PRIOR AND CONTEMPORANEOUS, WE
BELIEVED, WITH THE FIRST TIME CHECKS WERE HELD IN WHICH HE SAID
VARIOUS THINGS ABOUT WHY IT WAS NECESSARY FOR HIM TO WITHHOLD
JO ANN BRYCE, CSR 3321 - USDC - (415)437-1301
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Exhibits 73
8

1 THOSE CHECKS AT THAT PARTICULAR TIME.
(
2 WE FELT THAT WAS A STATE -- IT SHOWED HIS STATE OF
3 MIND. WE FELT THAT THOSE PARTICULAR NOTES AND THE
4 TRANSCRIPTION OF THEM SHOULD HAVE BEEN ALLOWED IN EVIDENCE. WE
5 WERE DENIED THAT.
6 AND, FINALLY, OF COURSE, THE MATTER OF THE
7 TRANSCRIPT OF THE DORA DUNN TESTIMONY WHICH FOUND ITS WAY INTO
8 THE JURY ROOM. AND THE CASES -- UNFORTUNATELY, IN THIS CASE
9 THE CASE HAD ENDED, THE JURY WAS IN THE COURSE OF ITS
10 DELIBERATIONS AND THE JURY RECEIVED THE TRANSCRIPT; AND THE
11 CASE LAW IS CLEAR, I BELIEVE, THAT WITHOUT A CAUTIONARY
12 INSTRUCTION, THE REVIEW OF A TRANSCRIPT IS PREJUDICIAL ERROR.
13 NOW, YOUR HONOR, REASONABLE MINDS CAN DIFFER. THE
14 GOVERNMENT, THE COURT AND THE DEFENSE MAY HAVE DIFFERENT WAYS
15 OF VIEWING THIS. WE WOULD SUBMIT, YOUR HONOR, THAT SOME OF
16 THESE INDIVIDUALLY BUT CERTAINLY CUMULATIVELY GIVE RISE TO A
17 SITUATION WHERE THE COURT SHOULD PROPERLY EXERCISE ITS
18 DISCRETION IN FAVOR OF GRANTING A NEW TRIAL.
19 AT THE VERY LEAST BEFORE I CONCLUDE, I WOULD LIKE TO
20 STATE IN LINE WITH WHAT I SAID INITIALLY, BECAUSE OF THE LENGTH
21 AND THE COST OF THE TRIAL, THAT AT THE VERY LEAST WHEN THE
22 COURT LA'TER RULES ON ANOTHER MATTER BEFORE THE COURT TODAY, THE
23 BOND PENDING APPEAL AND THE ISSUE OF THE MERITORIOUSNESS OF THE
24 APPEAL, THAT EVEN IF THIS MOTION BE DENIED FOR WHATEVER REASON,
25 CERTAINLY THESE ISSUES DO RISE TO THE LEVEL OF SUBSTANTIAL
JO ANN BRYCE, CSR 3321 - USDC - (415)437-1301
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Exhibits 74
\ .. ,
9
1 ISSUES OR MERITORIOUS ISSUES FOR PURPOSES OF APPEAL.
2
3
4
THAT CONCLUDES MY REMARKS, AND MR. WOLLACK MAY WISH
TO RESPOND.
THE COURT: DO YOU WISH TO ADD TO ANYTHING TO YOUR
5 PAPERS?
6 MR. SMETANA: YOUR HONOR, I AM PREPARED TO SUBMIT
7 THE GOVERNMENT'S ARGUMENT ON THE PAPERS.
8 THE ONE THING I DO WANT TO CORRECT IS THE ASSERTION,
9 BOTH IN THE BRIEF BY THE DEFENDANT AND NOW MR. BROWN'S
10 STATEMENT, THAT THE GOVERNMENT BY SOME ACT ON ITS PART GRANTED
11 IMMUNITY ON THE PREVIOUS OCCASION TO MR. VOIGTS AND THEN
REFUSED TO DO SO AT A LATER TIME. 12
13 THAT WAS A MATTER IN THE CIVIL LITIGATION WHERE THE
14 PARTIES, THAT IS TO SAY THE CIVIL LITIGANTS APPLIED TO THE
15 SUPERIOR COURT PURSUANT TO DALY VERSUS SUPERIOR COURT, A
16 DECISION OF THE CALIFORNIA SUPREME COURT, FOR A GRANT OF
17 IMMUNITY WHICH THAT COURT THEN GRANTED FOR PURPOSES OF THAT
18 LITIGATION. IT WAS NOT DONE BY ACT OF GOVERNMENT.
19
20
THE COURT: OKAY.
MR. WOLLACK: YOUR HONOR --
21 THE COURT: I'M SORRY. I DIDN'T GIVE YOU A CHANCE
22 TO RESPOND.
23 MR. WOLLACK: YOUR HONOR, ON THE DALY PROCEDURES,
24 WITH WHICH I'M FAMILIAR BECAUSE MR. SMETANA HIMSELF JUST HELPED
25 ME WITH THIS ON ANOTHER CASE, THE GOVERNMENT GETS AN
JO ANN BRYCE, CSR 3321 - USDC - (415)437-1301
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Exhibits 75
10
1 OPPORTUNITY TO OBJECT.
2
3
THE WAY IT WORKS IS YOU APPLY TO THE SUPERIOR COURT,
YOU NOTIFY WHATEVER GOVERNMENT AGENCY MIGHT CARE ABOUT THE
4 IMMUNITY THAT'S BEING SOUGHT, AND THEN THE GOVERNMENT HAS A
5 CHANCE TO -- IF THEY DON'T RESPOND, THEN THE IMMUNITY CAN
6 AUTOMATICALLY TAKE EFFECT IF THE COURT GRANTS IT.
7 IN THIS CASE THERE ACTUALLY WAS A RESPONSE FROM EB
8 LUCKEL, A VERY BRIEF TWO-SENTENCE REPLY, SAYING "WE DON'T
9 OBJECT TO MR. VOIGTS BEING GRANTED IMMUNITY."
10 JUST TWO QUICK POINTS I WANT TO ADD. THESE ISSUES
11 HAVE ALL BEEN BRIEFED AT LENGTH. I JUST WANTED TO EMPHASIZE
12 THAT BOTH FOR THE NEW TRIAL AS WELL AS THE BAIL PENDING APPEAL
13
14
THAT WILL BE CONSIDERED IN A MOMENT, IT'S -- WE THINK THESE
ISSUES ARE ALL MERITORIOUS.
15 IT'S NOT NECESSARY OBVIOUSLY FOR THIS COURT TO FIND
16 THAT IT MADE ERROR, THAT IT COMMITTED ERROR OR REVERSIBLE ERROR
17 TO GRANT A NEW TRIAL, TO GRANT BOND PENDING APPEAL. IT'S JUST
18 ARE THESE ISSUES THE KIND WHICH, A, UPON WHICH REASONABLE MINDS
19 MIGHT DIFFER, UPON WHICH THERE'S SOME SUPPORT IN THE CASE LAW;
20 AND I THINK ON AT LEAST THREE OR FOUR OF THESE THE ANSWER WOULD
21 HAVE TO BE YES. WE THINK ALL SIX PERHAPS, BUT AT LEAST ON
22 THREE OR FOUR IT SEEMS TO ME THERE IS DEFINITELY SOME NINTH
23 CIRCUIT PRECEDENT THAT CLEARLY WOULD AT LEAST SUPPORT OUR
24 POSITION WHILE WE UNDERSTAND THAT REASONABLE MINDS COULD
25 DIFFER.
JO ANN BRYCE, CSR 3321 - USDC - (415)437-1301
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Exhibits 76
11
-'-':>-':'''''':,-",;'
1 AND THEN THE SECOND ISSUE IS ~ E T H E R THEY iRE THE
(
2 KINDS OF ERRORS THAT IF THEY ARE OVERTURNED ON APPEAL, SORT OF
3 CUT RIGHT TO THE HEART OF THE CASE; AND THAT IS, THEY'RE
4 REVERSIBLE, THEY'RE NOT JUST HARMLESS. AGAIN, I THINK THE
5 NINTH CIRCUIT HAS SPOKEN ON AT LEAST TWO OR THREE OF THESE
6 ISSUES, THE TRANSCRIPTS IN THE JURy ROOM AND THE DEFENSE
7 INSTRUCTION SPECIFICALLY.
8 THE LAST POINT I WANTED TO MAKE DOES GO RIGHT TO THE
9 DORA DUNN TRANSCRIPTS. I BELIEVE I MENTIONED THIS IN THE
10 REPLY. THE GOVERNMENT IN THEIR PAPERS TRIED TO KIND OF MAKE IT
11 SEEM AS THOUGH, ALTHOUGH THE JURY DID GET THESE TRANSCRIPTS,
12 THEY'D ALREADY DECIDED MR. ARMSTRONG'S GUILT BY THEN. THEY
13 WERE JUST KIND OF SORTING OUT THE CASE WITH REGARD TO
.#'
14 MR .. FOWLES.
15 IT SEEMS TO ME THAT THAT KIND OF ANALYSIS IS THE
16 STUFF OF HARMLESS ERROR ANALYSIS AND HERNANDEZ HAS SPOKEN AND
17 HERNANDEZ COURT -- AND IT'S TRUE IT IS A HARMLESS ERROR
18 STANDARD WHEN THERE IS A REREAD OF TRANSCRIPTS IN THE JURy
19 ROOM. IN HERNANDEZ AS WELL AS IN THIS CASE THE JURORS ACTUALLY
20 GOT A PHYSICAL COpy OF THE TRANSCRIPT, AND WE WOULD SUBMIT THAT
21 THAT'S A LITTLE DIFFERENT. THEY HAVE IT THERE. THEY CAN LOOK
22 AT IT AS MANY TIMES AS THEY WANT. IT REALLY DOES PUT AN UNDUE
23 EMPHASIS ON THAT ONE WITNESS' TESTIMONY, AND THOSE WERE THE
24 CIRCUMSTANCES THAT LED THE COURT, THE NINTH CIRCUIT IN
25 HERNANDEZ TO REVERSE THE CASE; AND WE SUBMIT IT'S THE SAME
JO ANN BRYCE, CSR 3321 - USDC - (415)437-1301
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Exhibits 77
(
12
1 CIRCUMSTANCES HERE.
2 ARGUABLY EVEN MORE COMPELLING, SINCE SHE WAS ONE OF
3 ABOUT 30 OR 40 GOVERNMENT WITNESSES, WHEREAS, IN HERNANDEZ
4 THERE WERE ONLY ONE OR TWO, IT REALLY DOES PLACE AN EMPHASIS ON
5 THIS ONE PRETTY MINOR WITNESS.
6 WE'D SUBMIT IT.
7 THE COURT: ALL RIGHT. THE MOTION FOR NEW TRIAL HAS
8 BEEN MADE ON MR. ARMSTRONG'S BEHALF ON WHAT I WILL DESCRIBE AS
9
10
11
12
13
FOUR GROUNDS, ALTHOUGH ONE OF THEM ENCOMPASSES THREE.
FIRST OF ALL, WITH RESPECT TO THE ROBBINS TAPES, I
DON'T BELIEVE THAT THOSE ARE REALLY -- OR THERE WAS ANY BRADY
VIOLATION HERE. AS SOON AS THE GOVERNMENT SPOTTED THE PROBLEM,
IT WITHDREW ROBBINS AS A WITNESS AND ROBBINS DID NOT T E S T ~ F Y ..
14 THE INFORMATION WAS DISCLOSED TO THE DEFENSE JUST AS
15 SOON AS IT WAS LEARNED, AND I OFFERED TO PAY FOR THE EXPENSE OF
16 A SPECIAL MASTER FROM CJA FUNDS SO THAT THE MATTERS COULD BE
17 GONE OVER RAPIDLY.
18 I ALSO THINK THAT THERE'S REALLY HARDLY ANY SHOWING
19 HERE OF ANY TRULY EXCULPATORY MATERIAL. THE FACT OF ONE
20 CONSISTENT STATEMENT BY MR. ARMSTRONG I REALLY DON'T THINK
21 RISES TO THAT LEVEL OF BEING EXCULPATORY.
22 WITH RESPECT TO THE GROUND FOR THE MOTION ON THE
23 FAILURE TO INSTRUCT THE JURY ON THE DEFENSE THEORY, I'M
24 SATISFIED THAT THE INSTRUCTIONS AS A WHOLE AND INDIVIDUALLY
25 TOLD THE JURY THE ISSUES AND INSTRUCTED THEM. AND I THINK EVEN
JO ANN BRYCE, CSR 3321 - USDe - (415)437-1301
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Exhibits 78
13
1 IF I WERE TO HAVE ACCEPTED THE DEFENSE THEORY, THAT THE OFFERED
2 INSTRUCTION WAS REALLY NOT EVEN CONSISTENT AND NOT CORRECT EVEN
3 UNDER THAT THEORY.
4 WITH RESPECT TO THE ALLEGED EVIDENTIARY ERRORS,
5 MR. SOLODOFF, MR. VOIGTS AND EXHIBIT 1802, I BELIEVE THOSE
6 EVIDENTIARY RULINGS WERE CORRECT AND I STATED FULLY MY REASONS
7 FOR THAT DURING THE TRIAL.
8 WITH RESPECT TO THE DORA DUNN TRANSCRIPTS, FIRST OF
9 ALL, I THINK THE TRANSCRIPT OF THAT WITNESS WAS REALLY MORE
10 RELEVANT TO MR. FOWLES THAN IT WAS TO MR. ARMSTRONG AND
11 SERIOUSLY QUESTIONED WHETHER IT WAS RELEVANT TO HIM AT ALL;
12 BUT, IN ANY EVENT, THE IMPORTANT THING IS THAT THE PROCEDURES
13 WERE CORRECTED BEFORE THE JURy FINALLY RETURNED ITS. VERDICT.
\ -
14 SO FOR THOSE REASONS THE MOTION FOR A NEW TRIAL IS DENIED.
15 NOW, WE ARE HERE FOR THE SENTENCING OF MR. ARMSTRONG
16 WHO HAS BEEN CONVICTED BY THE JURY OF 21 COUNTS. I HAVE
17 RECEIVED, OF COURSE, THE PRESENTENCE REPORT, MR. ARMSTRONG'S
18 SENTENCING MEMORANDUM AND MOTION FOR DOWNWARD DEPARTURE, AND
19 THE GOVERNMENT'S SENTENCING MEMORANDUM TOGETHER WITH CERTAIN
20 LETTERS SENT TO ME ON MR. ARMSTRONG'S BEHALF.
21 NOW, FIRST OF ALL, MR. ARMSTRONG, HAVE YOU READ AND
22 REVIEWED THE PRESENTENCE REPORT?
23 THE DEFENDANT: YES, SIR.
24 THE COURT: AND HAVE YOU DISCUSSED IT WITH YOUR
25 ATTORNEY?
JO ANN BRYCE, CSR 3321 - USDC - (415)437-1301
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Exhibits 79
... .IJII'
CERTIFICATE OF REPORTER
I, JO ANN BRYCE, OFFICIAL REPORTER FOR THE UNITED
STATES COURT, NORTHERN DISTRICT OF CALIFORNIA, HEREBY CERTIFY
THAT THE FOREGOING PROCEEDINGS WERE REPORTED BY ME, A CERTIFIED
SHORTHAND REPORTER, AND WERE THEREAFTER TRANSCRIBED UNDER MY
DIRECTION INTO TYPEWRITING; THAT THE FOREGOING IS A FULL,
COMPLETE AND TRUE RECORD OF SAID PROCEEDINGS.
n r
a ~ ~ ~
JO ANN BRYCE, CSR, RPR, RMR, eRR
JO ANN BRYCE, CSR 3321 - USDC - (415)437-1301
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Exhibits 80
1 MICHAEL J. YAMAGUCHI
United states Attorney
2
JOEL R. LEVIN
3 Chief, Criminal Division
4
5
6
7
8
RONALD D. SMETANA
Special Assistant U.S. Attorney
GEORGE D. HARDY
Assistant U.S. Attorney
450 Golden Gate Avenue
San Francisco, CA 94102
Telephone: (415) 436-6851
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
12 UNITED STATES OF AMERICA, )
)
13 Plaintiff,)
)
14 v. )
)
15 CONNIE C. ARMSTRONG, JR., and )
RICHARD A.FOWLES, )
16 )
Defendants. )
17 )
18
Criminal No. 94-0276-CAL
GOVERNMENT'S OPPOSITION
TO ARMSTRONG'S MOTION TO
DISMISS AND/OR REQUEST
FOR PRETRIAL INSTRUCTION
Date: Nov. 8, 1996
Time: 1:30 p.m.
Courtroom: 10
(Han. Charles A. Legge)
19 .L..
20
Introduction
\
Defendant Connie C. Armstrong, Jr., seeks (again) to
21 dismiss counts seven through twenty-one of the Indictment. In the
22 alternative, he seeks an instruction on the "law of the case." For
23 the reasons set forth below, the government opposes this motion.
24 II. Argument
25 ~ Statement of facts.
26 As set forth in the grand jury's Indictment, the charges
000156
Exhibits 81
1 arise from defendant's operation of Hamilton Taft, a San Francisco
2 based company that provided payroll tax services to large
3 companies. Client companies transferred their payroll taxes to
4 Hamilton Taft and Hamilton Taft was obligated to pay the taxes to
5 the Internal Revenue Service and other taxing authorities on time.
6 At the time the defendant acquired Hamilton Taft the
7 company had a working capital deficit of more than $14 million.
8 Over a period of two years, as money was siphoned out and Hamilton
9 Taft accrued interest and penalties on money it did not have, the
10 withholding of tax payments grew from $19.4 million to $68.2
11 million per quarter. When Hamilton Taft ultimately collapsed,
12 approximately $85 million in taxes were unpaid.
13 Despite the fact that the defendant was aware that he
14 could not pay the taxes of his clients when due, he induced a
15 number of companies to contract with Hamilton Taft with
16 representations that Hamilton Taft had the ability to pay taxes
17 when due, was paying taxes when due and would continue to pay
18 taxes when due.
19 As a further part of the scheme, the defendant concealed
20 the non-payment of taxes to induce the victims to continue sending
21 (on a weekly, biweekly or monthly basis) their tax payments and to
22 avoid the wholesale cancellation of contracts. Finally, when the
23 defendant's scheme was exposed, he sent out lulling letters denying
24 the existence of the scheme and encouraging to continue
25 sending payments.
26 II
J
GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 2
0001.57
Exhibits 82
1 .a....
2
Defendant's Reliance on In re Hamilton Taft & Co. is
misplaced.
3 The litigation underlying In re Hamilton Taft & Co., 53
4 F.3d 285 (9th Cir. 1995), was between two parties over a fixed sum
5 of money whether the trustee in bankruptcy would be able to
6 reclaim for the larger group of victims funds paid to the IRS on
7 behalf of S & S Credit. The Ninth Circuit initially ruled that a
8 preferential payment had been made on behalf of S & S and that the
9 funds paid to the IRS on its behalf would have to be repaid by S &
10 S to the trustee. S & S petitioned for rehearing, and before the
11 matter could be heard, the case was settled, the appeal was
12 dismissed as moot, and the decision was vacated. In re Hamilton
13 Taft & Co., 68 F.3d 337 (9th Cir. 1995). The Ninth Circuit· s
14 vacation of the opinion nullifies and renders the judgment
15 inoperative. United States v. Munsingwear, 340 U.S. 36, 40-41
16 (1950). Arguably, the parties could now relitigate the issues.
17 340 U.S. at 40.
18 Hamilton Taft & Co.
In short, this Court is not bound by In re
19 This conclusion is made more compelling by the fact that
\
20 the government was not a party to the litigation at the time the
21 opinion was rendered by the Ninth Circuit. When the petition for
22 rehearing was filed the Court obviously recognized that its opinion
23 could well interfere with the government·s right and ability to
24 collect employee taxes and thus invited the government to
25 participate in the case as an amicus curiae. The government did
26 file a brief advocating the theory that the funds were held by
J
GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 3
000158 Exhibits 83
1 Hamilton Taft in trust for the government. The case was settled
2 and the opinion vacated before the government's position could be
3 considered. To resolve the i;§sue t;,o
4 which had tQ b_t;.. heq.rcLi§,"",fundsIDWt:lllY
5 )£}is) ro •
6 The inescapable conclusion from this discussion is:
7 there is no "l,,!w Rather, there remains a dispute of
8 fact that can be resolved only by the scheduled jury trial.
11
9
10
has again pummeled a straw man.
The trial evidence will show that, at a minimum, all of
defendant's argument is his premise that he complied with the
conditions of his contracts and thus did nothing wrong. Defendant
However, fundamental to
Contrary To Defendant's Contention, Hamilton Taft Did Not
Comply with Its Contractual Duties.
The government will subsequently demonstrate why counts
Hamilton Taft's contracts required timely payment of taxes on or
before the statutory deadlines.
1
Some of the contracts also
specifically limited the short-term investments that could be made.
Thus, Scott Paper's contract stated that:
7 through 21 should not be dismissed.
20
19
14
15
16
17
18
12
13
In order to satisfy Hamilton Taft's investment criteria
21 (Security of Principal, High Degree of Liquidity), Hamilton
Taft's investments are limited to investments collateralized
22 by United States Government securities and United States
Government sponsored obligations.
23
24
25
26
lContrary to defendant's assertion that he "occasionally" paid
the taxes late (Defendant's Memorandum 10:16), he intentionally
failed to make more than 300 payments aggregating more than $255
million, and the frequency of missed payments as well as .their
dollar amounts were increasing almost logarithmically.
GOVERNMENT'S OPPOSITION TO ARMSrRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 4
J
000159
Exhibits 84
....
payments is to assure an adequate supply of current payments.
continued payment. The only way to pay past due taxes with current
contracts were executed, but on an ongoing basis in order to assure
the money was paid over to Hamilton Taft that he could use it for
any purpose he wanted. He induced his clients to do business with
Hamilton Taft on the representation that he could and would pay the
will amply demonstrate.
Defendant did not just commit fraud at the time the
taxes on a timely basis. His knowing and intentional use of the
funds otherwise clearly constitutes fraud, as the trial evidence
1 Others limited Hamilton Taft to benefits accruing from temporary
2 use of client funds or benefits accruing from proper use of client
3 funds. Given the intentional failures to pay taxes on time, the
long-term use of client funds and the other than proper use,
defendant's assertion that he complied with the contracts is
nothing less than revisionist history.
Similarly erroneous is defendant's assertion that once
Defendant and his employees concealed the tax withholds as much as
possible. When discovered, they lied about the basis for missed
payments. Thus, each payment from each of the victims was directly
attributable to the fraud and a direct and intended consequence of
22 the ongoing fraud.
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7
8
9
10
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12
13
14
15
16
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20
."
21
23 Defendant's argument that this was not a Ponzi scheme
24 (Defendant's Memorandum, 10:8-10) is similarly without merit. The
25 defendant is not before this court because he paid "Client A's
26 taxes with Client B's and Client C's money;" the government would
GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 5
000160
Exhibits 85
1 expect that all of A, Band C's payments would be made from the
2 collective contributions from A, Band C. Rather, defendant is
3 before the court, in part, because he bought a ranch with A's money
4 paid to Hamilton Taft for a January tax payment (while
5 intentionally failing to make A's tax payment), and then used Band
6 C's funds paid to Hamilton Taft in April for their April tax
7 payment to make A's January payment while failing to make Band C's
8 April tax payment.
9 Indeed, the description of a Ponzi scheme in In re United
10 Energy Corp., 944 F.2d 589, 590 at fn.l (9th Cir. 1991)2 describes
11 precisely what defendant was doing. Defendant made tax payments
12 for clients with monies obtained from later tax payments from other
13 clients. By funnelling later payments to earlier taxes defendant
14 created the illusion that taxes were being timely paid and that
15 (bankrupt) Hamilton Taft had the financial wherewithal to pay the
16 taxes, inducing continued use of Hamilton Taft's services, all the
17 while siphoning out funds for defendant's personal benefit. The
18 only sorcery involved was the defendant's sleight of hand;
19 unfortunately for him, the audience caught on to the trick!
,
20 IL..
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22
There is no basis for the dismissal of Counts Seven through
Twenty-One.
Regardless of how the relationship between Hamilton Taft
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25
26
2"A Ponzi scheme is a fraudulent arrangement in which an
entity makes payments to investors from monies obtained from later
investors The fraud consists of funnelling proceeds
received from new investors in guise of profits from the alleged
business venture, thereby cultivating an illusion that a legitimate
profit-making business opportunity exists and inducing further
investment.
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GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 6
000161
Exhibits 86
1 and its clients is categorized, Counts Seven through Twenty-One
2 withstand attack.
3 Defendant appears to argue that the government can
4 proceed on counts One through Six, the fraud in the inducement, but
5 that proceeding on the other counts is "illogical, excessive and
6 totally prejudicial ••• " (Defendant's Memorandum 14:15-16) As he
7 has done throughout these proceedings, defendant has made a lengthy
8 and colorful argument all the while ignoring the one document
9 relevant to the inquiry -- the Indictment. It does not depend on
10 the existence of any particular relationship between defendant and
11 the victim companies. Rather it alleges a fraudulent course of
12 conduct in addition to and beyond the inducement to keep the money
13 flowing into Hamilton Taft. The Indictment alleges fraud on an
14 ongoing basis to keep money flowing into Hamilton Taft by a cover-
15 up3, false tax returns
4
, a change in cover-up methodology5, the
16 selection of specific clients for withholding and Armstrong's
17 attempt to disseminate a false account of what was happening to
18 client funds. All of these allegations are incorporated by
19 reference in each of the counts. (Indictment, paragraph 24.)
20
21
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23
24
25
26
3"This concealment enabled Hamilton Taft to continue to
receive funds from its clients, to avoid massive cancellation of
its contracts, and to preserve the opportunity for new business."
4"The clients who received these returns were thereby falsely
led to believe that all their taxes had been paid."
5"By choosing to pay past due taxes instead of currently due
taxes, Armstrong was able to delay, for a much longer time,
discovery by the clients that their taxes had been paid late. At
the same time, he was able to create the false impression that
Hamilton Taft's business was running smoothly."
GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUESr FOR
PRETRIAL INSTRUCTION 7
000162
Exhibits 87
1 Defendant argues, however, that all allegations of the
2 Indictment, other than the fraud in the inducement allegations, are
3 legally insufficient to charge criminal activity because of the
4 Ninth Circuit opinion of In re Hamilton Taft & Co. which
5 establishes (or so defendant claims) the "law of the case" contrary
6 to the government's charging theory. The "law of the case" that
J
7 defendant sees in that opinion and on which defendant focuses his
8 argument is the conclusion that the relationship between Hamilton
9 Taft and its clients was one of "debtor-creditor", and not a trust
10 relationship. From that "law of the case", the defendant seeks to
11 extrapolate to the further conclusion that the defendant was free
12 to do with the clients' tax money whatever he wanted, because it
13 was Hamilton Taft's "property". Hence, he argues that any criminal
14 fraud allegations in the Indictment which describe what the
15 defendant did with client's tax money after the contracts were
16 signed must be legally insufficient, and therefore dismissed. His
17 argument is further based on the factual predicate that Hamilton
18 Taft complied w-ith the terms of the contracts with its clients.
19 Defendant's argument is factually and legally flawed •

20 As noted earlier, the Ninth Circuit opinion has no
21 precedential .or controlling effect on this Court (and therefore can
22 not be considered "the law of the case") because it was vaca'ted.
23 It should also have little, if any, persuasive effect on this Court
24 because it was vacated in the context of a motion for
25 reconsideration, before the Ninth Circuit had heard from the
26 government. Furthermore, even if this Court were to conclude that
GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 8
000163
Exhibits 88
....
1 the legal relationship between Hamilton Taft and its clients was
2 one of "debtor-credi tor", the further coneIus ion that the defendant
3 could do whatever he wished with the tax money (send it to a secret
4 Swiss bank account?) does not logically, or legally, follow. Can
5 a debtor never defraud a creditor? The answer is obvious. In
6 fact, the defendant acknowledged as much when he said:
7 "For instance, had Mr. Armstrong s imply taken clients'
monies and opened a Swiss bank account, while totally
8 ignoring his contractual duty to pay their taxes, he
almost certainly could be charged with engaging in a
9 scheme to defraud." (Motion, p. 9)
10 The defendant asserts as a matter of fact that he complied
11 with his contractual duty to pay the taxes of the Hamilton Taft
12 clients. The government intends to prove that he did not comply
13 with his contractual dutiesl Jury trials are the vehicle by which
14 such factual disputes are resolved, not motions to dismiss. There
15 is no basis for this Court to dismiss counts Seven through Twenty-
16 One.
17 .L. The Court should not make a finding of "the law of the case."
18 The government is persuaded by defendant's eloquence in
19 arguing that this court should not follow In re Hamilton Taft & Co.
20 (Defendant's Memorandum, 15:16-18), but cannot agree that the
21 vacated opinion is "a scholarly, lucid, and unassailable
22 explication of the common law of trusts" (Id. at 21-22) since the
23 court sought to implicate the government's rights without giving
24 the government an opportunity to be heard. Regardless of how
25 "scholarly" or "lucid" the opinion may be on the common law of
26 trusts, as noted above it is not "the law of the case", and clearly
I
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GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 9
000164
Exhibits 89
1 should not be used to justify making a ruling on an issue that is
2 nothing but a red herring.
3 It is clear what the defendant is attempting to do. He
4 wants the jury not to hear relevant evidence. He doesn't want the
5 jury to hear about the Ranch acquisition, or the limousine rides,
6 or the luxury jet purchase. He also doesn't want the jury to hear
7 what his lawyers and senior management were telling him--that he
8 couldn't use client tax money for long-term personal investments.
9 He also doesn't want the jury to hear about the lies he told his
10 employees regarding the source of funds for his ranch and other
11 purchases. He doesn't want the jury to hear about the lies he told
12 the victim companies in order to lull them into a false sense of
13 security. But all of this evidence is relevant to prove the
14 charges in the Indictment.
15 To his credit, the defendant spells out the remarkable
16 ramifications of a decision to declare that In re Hamilton Taft &
17 Co. represents the "law of the case". He wants:
18
19
20
21
22
23
24
25
26
1.
2.
3.
4.
Defense counsel to be able to refer to monies at
issue, in both opening and closing statements as the
property of Hamilton Taft or Hamilton Taft cash
flow;
The government not to refer to those monies as
"client monies" or "client funds" and not to state
or imply that Hamilton Taft held those monies in
trust;
The government not to present evidence of any advice
which Mr. Armstrong received from lawyers or other
experts, to the extent that such advice was
inconsistent with the "law of the case";
The court to instruct the jury that monies, once
delivered to Hamilton Taft, became the property of
J
GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 10
000165.
Exhibits 90
..
1
2
3
4
5
6
7
5.
6.
Hamilton Taft;
The court to instruct that Hamilton Taft was free to
use its cash flow to cover its operating expense or
to invest those monies for its own benefit and in
anyway it wished;
The court to instruct the jury that Hamilton Taft's
sole duties to its clients were those duties stated
contractually but that clients were free to sue for
breach, if Hamilton Taft ever failed to live up to
those duties.
J
8 Nothing in the language, logic, or holding of the vacated
9 opinion in In re Hamilton Taft & Co. comes close to justifying such
10 a gutting of the government's case.
11 The defendant's motion to characterize, as a matter of law,
12 the nature of the relationship between Hamilton Taft and the victim
13 clients, in the form of a pretrial ruling should not be granted.
14 The characterization has not been settled as a matter of law. The
15 characterization, even if accepted as "debtor-creditor", does not
16 negate the presence of a fraudulent scheme or support in any way
17 the six conclusions cited above. The characterization would only
18 confuse the jury, leaving them to wonder about the illogical
19 technicalities of the law.
20 II
21 II
22 II
23 II
24 II
25 II
26 II
GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 11
000166
Exhibits 91

1 III. Conclusion
2 For the foregoing reasons, the government respectfully
3 submits that the motion to dismiss be denied and that the Court
4 deny the request to make In re Hamilton Taft & Co. the law of the
5 case.
6 DATED:
7
8
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13
14
15
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November 5, 1996 Respectfully submitted,
YAMAGUCHI
.. __

RONALD D. SMETANA
Special Assistant U.S. Attorney
J
GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 12
HOnlG1
Exhibits 92
Memorandum
To
From
SAC, San Francisco ((Q(,J}-SF-Cf1}S"5)(P) 3/8/92
I b7C
Subject Connie Chip Armstrong, et al
dba, Hamilton Taft and Company, et al
San Francisco, Ca.
FBW (B); Mail Fraud, Bankruptcy Fraud, (A);
OO:SF
712
On the afternoon of March 5, 1992 a meeting was held at
the office of AUSA Michael Yamaguchi to discuss __
strategy in the above referenced matter. Present
ESQ. representing the bankruptcy trustee. Also present was Mr.
Ronald Smetana, Deputy Attorney General, Major Fraud unit of the
california state Attorney General's office. SA's will Hatcher and
re resented the FBI.
i u.
J
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(I) It-SF-cr)aS,
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Exhibits 93
2
On February 27, 1992 the accountant for the trustee
finished his second interim report for the bankruptcy which
includes among other thing a tracing of over $4,000,000 directly
into the pockets of Armstrong himself. The report cites payments
by Armstrong using Hamilton Taft funds to a stripper' and the use
of over $225,000 to purchase Dallas Cowboy "skyboxes
lt

The next investigative step is to apply for an ex parte
order for Armstrong's personal tax returns for 1988, 1989, and
1990. Also several interviews of former Armstrong associates will
be conducted in Texas.
Finally due to the continuing effort being expended by
SA Will Hatcher and his anticipated involvement in this matter it
is requested that he be designated co-case agent for the
remainder of the investigation of this case.
2
Exhibits 94

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